Goodman v. U.S.

• Decision Date: 02 September 1975
• Docket Number: No. 74-2140,74-2140
• Citation: 518 F.2d 505
• Parties: Elsie Inez GOODMAN, Owner Goodman's Drive-In Grocery, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 505

518 F.2d 505

Elsie Inez GOODMAN, Owner Goodman's Drive-In Grocery, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.

No. 74-2140.

United States Court of Appeals, Fifth Circuit.

Sept. 2, 1975.

Daniel P. Self, Jr., Robert W. Bailey, Meridian, Miss., for plaintiff-appellant.

Robert E. Hauberg, U. S. Atty., Joseph E. Brown, Asst. U. S. Atty., Jackson, Miss., for defendant-appellee.

Appeal from the United States District Court for the Southern District of Mississippi.

Before WISDOM, SIMPSON and RONEY, Circuit Judges.

RONEY, Circuit Judge:

In this case, we hold that the judicial review provision of the Food Stamp Act does not limit the court's review to the finding of a violation of the Act by a retail store, but also permits the court to review the sanction imposed on the store by the Department of Agriculture. This decision is in accord with the Fourth Circuit, and contrary to the Sixth Circuit, the only other Circuits which have directly addressed the question. An opinion from the Seventh Circuit indicates it may have aligned itself with the Sixth Circuit, contrary to our holding here.

The Food Stamp Act, 7 U.S.C.A. § 2020, empowers the Secretary of Agriculture to disqualify a food store from further participation in the Food Stamp Program on a finding made in accord with the Secretary's regulations that the store violated either the Act or the regulations. The Secretary imposes the sanction of disqualification for a fixed period of time as determined in accordance with his regulations. This appeal questions the scope of judicial review of such an administrative determination under 7 U.S.C.A. § 2022, which provides that a food store aggrieved by a final administrative determination may obtain a "trial de novo" in which a federal district court shall determine "the validity of the questioned administrative action in issue." The pivotal issue on this appeal is whether this judicial review provision of the Food Stamp Act merely encompasses review of the Secretary's underlying determination of violation, or whether the courts must extend their consideration to the validity of the sanction imposed upon violators of the Act or regulations.

Holding that Elsie Inez Goodman, as owner of Goodman's Drive-In Grocery, was validly disqualified from the program for her transgressions, the District Court for the Southern District of Mississippi construed 7 U.S.C.A. § 2022 to preclude any judicial review of the period of disqualification. We reverse the judgment of the district court insofar as it interprets § 2022 to prevent judicial review of the administratively imposed sanction and remand for consideration of whether the sanction in the case sub judice is valid and not arbitrary and capricious.

Elsie Inez Goodman is the owner and operator of Goodman's Drive-In Grocery in Meridian, Mississippi. On three separate occasions during the fall of 1971, Celia Spencer and Nora Scarbrough, hourly employees of the United States Department of Agriculture under the direction of Joseph Brooks, an agency inspector, entered Goodman's Drive-In Grocery and exchanged food coupons, or food stamps, for items other than "eligible food." At the time Spencer and Scarbrough made their purchases, "eligible food" was defined by Food Stamp Regulations, specifically 7 C.F.R. § 270.2(i) (1971), (substantially the same as 7 C.F.R. § 270.2(s) (1975)), as any food for human consumption ". . . except alcoholic beverages, tobacco, those foods which are identified on the package as being imported, and meat and meat products which are imported." The exchange of ineligible food for food stamps violates the Act. On the basis of the purchases made by Spencer and Scarbrough, the Secretary of Agriculture disqualified Mrs. Goodman, as owner of Goodman's Drive-In Grocery, from participating in the Food Stamp Program for a period of six months.

Mrs. Goodman sought judicial review of the agency's action by filing suit in district court pursuant to 7 U.S.C.A. § 2022. The district court found as a matter of fact that Mrs. Goodman, either personally or through her employee, had accepted food stamps from Spencer and Scarbrough in exchange for ineligible items on three different occasions. Accordingly, the district court affirmed the administrative action of disqualification. The district court refused to review the period of disqualification, however, ruling that it had neither the power nor the authority under 7 U.S.C.A. § 2022 to substitute its judgment for that of the agency in connection with the period of disqualification.

On appeal, Mrs. Goodman presents two arguments for reversal: first, that the United States failed to prove by substantial evidence that she, as owner of Goodman's Drive-In Grocery, had violated the provisions of the Food Stamp Act or the regulations; and second, that the district court erred in refusing to review the administratively imposed sanction, a six month period of disqualification from participation in the program.

I.

In Redmond v. United States, 507 F.2d 1007 (5th Cir. 1975), we held that the burden of proof in the judicial review proceeding provided in 7 U.S.C.A. § 2022 is upon the aggrieved store to establish the invalidity of the administrative action by a preponderance of the evidence. This burden remains with the aggrieved store throughout the trial de novo in the district court. The agency action prevails, unless the store proves that it should be set aside.

In the case at bar, the district court properly placed the burden upon Mrs. Goodman, as owner of Goodman's Drive-In Grocery, to prove the administrative action invalid. On appeal, Mrs. Goodman argues that she met her burden by offering substantial evidence that neither she nor her employee had accepted food stamps for ineligible items at her store. At that point, the burden shifted to the United States to prove by substantial evidence that she had, in fact, committed such violations. Mrs. Goodman now asserts that the United States failed to meet that burden.

The evidence which Mrs. Goodman presented in the district court was in the nature of a denial of the charges against her. Both Mrs. Goodman and her former employee testified that they had not exchanged ineligible items for food stamps. Mrs. Goodman's daughter corroborated their testimony. The United States, as party defendant, presented the testimony of Spencer, Scarbrough and Joseph Brooks, all employees of the Department of Agriculture, to establish that Mrs. Goodman, as owner of the store, had violated the provisions of the Food Stamp Act.

In finding that either Mrs. Goodman or her employee had accepted food stamps in exchange for ineligible items on three separate occasions, the district court made essential credibility choices between the witnesses for plaintiff and defendant. The familiar rule is that findings of fact will not be overturned on appeal unless clearly erroneous. F.R.Civ.P. 52(a). A complete record review reveals that the district court's findings of fact are not clearly erroneous. Accordingly, we affirm the district court's decision to uphold the administrative determination that the grocery violated the Food Stamp Act.

II.

A store which violates the provisions of either the Food Stamp Act or the regulations may be disqualified from further participation in the Food Stamp Program. The Food Stamp Act provides that "(s)uch disqualification shall be for such period of time as may be determined in accordance with regulations issued pursuant to this chapter." 7 U.S.C.A. § 2020. ¹ The regulations provide the disqualification may be for a reasonable period of time, not to exceed three years. 7 C.F.R. § 272.6(a) (1975). The critical issue on this appeal is whether the judicial review provision of the Food Stamp Act precludes review of the sanction imposed under 7 C.F.R. § 272.6(a) (1975), once the underlying determination of violation is held to be valid. At least two Circuits have considered the identical issue and have reached differing decisions. A plain reading of § 2022 leads us to conclude that Congress granted the district courts full review of the agency's action when conducting a "de novo" proceeding, including review of the imposed sanction.

The administrative judicial review section of the Act, 7 U.S.C.A. § 2022, ² provides that whenever a store is disqualified under the provisions of § 2020, notice of the administrative action is issued, and the store aggrieved by such action may "file a written request for an opportunity to submit information in support of its position" to a Department of Agriculture review body, constituted in accordance with the Secretary's regulations. The Food and Nutrition Service, the currently designated agency review body, is empowered to review evidence which goes to the severity of the penalty, as well as evidence which establishes or refutes the violation itself. 7 C.F.R. § 272.6(b) (1975). "(S)ubject to the right of judicial review," that agency review body will "make a determination which shall be final," i. e., final in the sense that it is the terminal stage in the administrative proceeding. Section 2022 further provides that "(i)f the store or concern feels aggrieved by such final determination he may obtain judicial review thereof." Court action on review "shall be a trial de novo by the court in which the court shall determine the validity of the questioned administrative action in issue." By following the proper linguistic antecedents within the statute, one can see that the "questioned administrative action" refers to the "determination" by the agency review body, which in turn is a determination of the propriety of the § 2020 disqualification. As previously noted, the § 2020 disqualification includes two components: first, the determination that a store has violated the law or the regulations; and second, a determination of a period during which the store will be disqualified. Both components are subject to...