Nephew Mini Mkt. v. United States
Docket Number | Civil Action ELH-21-2318 |
Decision Date | 18 August 2022 |
Parties | NEPHEW MINI MARKET, LLC, et al., Plaintiffs, v. UNITED STATES OF AMERICA, Defendant. |
Court | U.S. District Court — District of Maryland |
This case arises under the Supplemental Nutrition Assistance Program (“SNAP” or the “Program”). It concerns the penalty of permanent disqualification imposed on plaintiff Nephew Mini Market, LLC (“Mini Market” or the “Store”), a SNAP retailer, because of two “trafficking” violations.
SNAP was established pursuant to the Food Stamp Act of 1964, as amended, 7 U.S.C. § 2011 et seq. (the “Act”). It is administered by the Food and Nutrition Service (“FNS” or the “Agency”), which is part of the U.S. Department of Agriculture (“USDA”). See 7 C.F.R § 271.3.[1] FNS determined that the Store engaged in the trafficking of SNAP benefits when Nadeem Asghar, the owner of the Store, exchanged benefits for cash on two occasions in one day. See ECF 17-2 at 89-107. Although plaintiffs sought a civil money penalty (“CMP”), FNS determined to permanently disqualify the Store from participation in the Program. See 7 U.S.C. § 2021(a); 7 C.F.R. § 278.6; see also ECF 17-2 at 192-94 (Determination Letter). Plaintiffs sought administrative review of that decision. ECF 17-2 at 197-98. However, in a Final Agency Decision (“FAD”) issued on January 29, 2021, the Agency upheld the disqualification. See id. at 201.
Thereafter Mini Market and Asghar filed suit against the United States (the “Government”) in the Circuit Court for Baltimore City, seeking judicial review of the FAD. ECF 4 (the “Complaint”); ECF 1-5 (same). Specifically plaintiffs challenged whether “a trafficking offense occurred” as well as the appropriateness of the “penalty issued by the USDA” regarding the Store's “eligibility for and amount of any CMP.” ECF 4, ¶¶ 14-16. The Complaint was accompanied by five exhibits. ECF 1-6 through ECF 1-10.
The Government removed the case to this Court, pursuant to 28 U.S.C. §§ 1441, 1442, and 1446. ECF 1 (the “Notice”). Thereafter, defendant moved to dismiss the Complaint for lack of subject matter jurisdiction, under Fed.R.Civ.P. 12(b)(1), and for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6) or, in the alternative, for summary judgment. ECF 15. The motion is supported by a memorandum. ECF 15-1 (collectively with ECF 15, the “Motion”). The Government has submitted a copy of “the administrative appeal record.” See ECF 17-2 (the “Record”); see also ECF 17-1 (Declaration of Vicky Robinson, Chief, Administrative Review Branch).[2]
Plaintiffs oppose the Motion (ECF 20), supported by a memorandum. ECF 20-1 (collectively, the “Opposition”), and one exhibit. ECF 20-2. And, the Government has replied (ECF 25, the “Reply”), accompanied by two exhibits. ECF 25-1; ECF 25-2.
No hearing is necessary to resolve the Motion. See Local Rule 105.6. For the reasons that follow, I shall dismiss the suit for lack of subject matter jurisdiction. To the extent the Court has jurisdiction, however, I shall construe the Motion as one for summary judgment and I shall grant it.
SNAP was enacted “to promote the general welfare, to safeguard the health and wellbeing of the Nation's population by raising the levels of nutrition among low-income households.” 7 U.S.C. § 2011. To achieve that mission, SNAP provides qualifying individuals and families with supplemental funds to purchase eligible items from approved retailers. Id. §§ 2013, 2018; 7 C.F.R. § 278.1.
Beneficiaries of SNAP are provided with benefits by way of an Electronic Benefits Transfer (“EBT”) card. See 7 U.S.C. § 2016(j)(1)(A). The EBT card operates like a debit card. But, it may only be used to buy designated food items from authorized SNAP retailers. Id. § 2013(a); see also 7 C.F.R. § 271.2 ( ); 7 U.S.C. § 2018 (“Approval of Retail Food Stores and Wholesale Food Concerns”); 7 C.F.R. § 278.1 (same).
Notably, “trafficking” in SNAP benefits is prohibited. See 7 U.S.C. § 2021(b)(3)(B); 7 C.F.R. § 278.6(e)(1)(i). “Trafficking” is defined, in pertinent part, as “buying, selling, stealing or otherwise effecting an exchange of SNAP benefits issued and accessed” via EBT cards “for cash or consideration other than eligible food, either directly, indirectly, in complicity or collusion with others, or acting alone.” 7 C.F.R. § 271.2.
Periodically, FNS reviews authorized retailers and may disqualify an approved retail store that violates the Act or its implementing regulations. In particular, 7 U.S.C. § 2021(a) provides (bold in original):
SNAP regulations require FNS to consider three factors in making a disqualification or penalty determination: “(1) The nature and scope of the violations committed by personnel of the firm, (2) Any prior action taken by FNS to warn the firm about the possibility that violations are occurring, and (3) Any other evidence that shows the firm's intent to violate the regulations.” 7 C.F.R. § 278.6(d). However, when it comes to trafficking, the Agency's discretion, and its consideration of these factors, is sharply circumscribed.
Originally, the Food Stamp Act of 1964 left the issue of disqualification for trafficking violations to the discretion of the Secretary of USDA (the “Secretary”). See Corder v. United States, 107 F.3d 595 (8th Cir. 1997) ( ); Ghattas v. United States, 40 F.3d 281, 283-84 (8th Cir. 1994) (same); Ahmed v. United States, 47 F.Supp.2d 389, 393 (W.D.N.Y. 1999) (same). From 1982 to 1988 the Act precluded the exercise of any discretion and mandated permanent disqualification for trafficking violations. See Castillo v. United States, 989 F.Supp. 413, 417 (D. Conn. 1997). In 1988 Congress amended the statute, conferring discretion on the Secretary to impose a monetary penalty in lieu of permanent disqualification, but only under certain circumstances. See Hunger Prevention Act of 1988, S. 2560, 100th Cong. § 344, 102 Stat. 1645, 1664 (1988); Ahmed, 47 F.Supp.2d at 391.[3]
Section 2021(b)(3)(B) of 7 U.S.C. provides:
The legislative history pertinent to § 2021(b) addressed the reasons for the inclusion of the civil money penalty as a possible sanction. H.R. Rep. No. 100-828, pt. 1, at 27-28 (1988) states (emphasis added):
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