Rockland Convenience Store v. United States
| Decision Date | 27 October 2011 |
| Docket Number | Civil No. 10-cv-260-LM |
| Parties | Rockland Convenience Store v. United States; the Department of Agriculture; Food and Nutrition Service; and Northeast Region Compliance Center |
| Court | U.S. District Court — District of New Hampshire |
Rockland Convenience Store ("Rockland") appeals a decision of the United States Department of Agriculture ("USDA") to permanently disqualify Rockland from participating in the Supplemental Nutrition Assistance Program ("SNAP"), established under the Food Stamp Act of 1964, 7 U.S.C. §§ 2011-2036, and operated by the USDA's Food and Nutrition Service ("FNS"). Before the court is defendants' motion for summary judgment. Rockland objects. For the reasons that follow, defendants' motion for summary judgment is granted.
Summary judgment shall be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(a). "An issue is genuine if 'the evidence is suchthat a reasonable jury could return a verdict for the nonmoving party.'" Chadwick v. WellPoint, Inc., 561 F.3d 38, 43 (1st Cir. 2009) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). "A fact is material only if it possesses the capacity to sway the outcome of the litigation under the applicable law." Vineberg v. Bissonnette, 548 F.3d 50, 56 (1st Cir. 2008) (quoting Cadle Co. v. Hayes, 116 F.3d 957, 960 (1st Cir. 1997)) (internal quotation marks and brackets omitted). "The object of summary judgment is to 'pierce the boilerplate of the pleadings and assay the parties' proof in order to determine whether trial is actually required.'" Dávila v. Corporación de P.R. para la Diffusión Pública, 498 F.3d 9, 12 (1st Cir. 2007) (quoting Acosta v. Ames Dep't Stores, Inc., 386 F.3d 5, 7 (1st Cir. 2004)). "[T]he court's task is not to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Noonan v. Staples, Inc., 556 F.3d 20,_25 (1st Cir. 2009) (citations and internal quotation marks omitted).
"Once the moving party avers an absence of evidence to support the non-moving party's case, the non-moving party must offer 'definite, competent evidence to rebut the motion,'" Meuser v. Fed. Express Corp., 564 F.3d 507, 515 (1st Cir. 2009) (citing Mesnick v. Gen. Elec. Co., 950 F.2d 816, 822 (1st Cir. 1991)), and "cannot rest on 'conclusory allegations, improbableinferences, [or] unsupported speculation,'" Meuser, 564 F.3d at 515 (quoting Welch v. Ciampa, 542 F.3d 927, 935 (1st Cir. 2008)). When ruling on a party's motion for summary judgment, a trial court "constru[es] the record in the light most favorable to the nonmovant and resolv[es] all reasonable inferences in [that] party's favor." Meuser, 564 F.3d at 515 (citing Rochester Ford Sales, Inc. v. Ford Motor Co., 287 F.3d 32, 38 (1st Cir. 2002)).
This case arises out of a decision by the USDA to disqualify Rockland from its status as a food store approved for participation in the SNAP.
SNAP is designed to "permit low-income households to obtain a more nutritious diet through normal channels of trade by increasing food purchasing power for all eligible households who apply for participation." 7 U.S.C. § 2011. SNAP benefits are provided to eligible households by means of electronic benefit transfer ("EBT") cards. See 7 U.S.C. §§ 2012(i), 2016(a). "The EBT system is the modern replacement for traditional paper food stamps." Idias v. United States, 359 F.3d 695, 696 (4th Cir. 2004). It "utilizes plastic cards which are 'swiped' at the cash register like a credit card." McClain's Mkt. v. UnitedStates, 411 F. Supp. 2d 772, 773 n.2 (N.D. Ohio 2005) ().
EBT cards, in turn, may be used "only to purchase food in retail food stores which have been approved for participation in [SNAP]." 7 U.S.C. § 2016(b). EBT cards "may be accepted . . . only in exchange for eligible food," 7 C.F.R. § 278.2(a), which means that, as a general rule, EBT cards "may not be accepted in exchange for cash,"1 id. In addition, SNAP "benefits shall not be accepted . . . in payment for items sold to a household on credit." 7 C.F.R. § 278(f).
The statutes governing SNAP benefits also provide that if an approved food store violates the applicable statutes or regulations, it may be disqualified from participating in the program, assessed a civil money penalty, or both. See 7 U.S.C. § 2021(a). An approved food store can be disqualified for "trafficking" in benefits, see 7 U.S.C. § 2021(b)(3)(B), which is defined to include "the buying or selling of coupons . . . or other benefit instruments for cash or consideration other than eligible food," 7 C.F.R. § 271.2. In one common scenario, trafficking is afoot when a store "accept[s] food stamps for sales that never took place, while customers . . . receiv[e]cash instead of merchandise." Idias, 359 F.3d at 698; see also R & T Mini Mart, Inc. v. U.S. Dep't of Agric, Food & Nutrition Serv., No. 07-15171, 2008 WL 108592, at *1 ) (). A food store may also be disqualified for accepting SNAP benefits to pay for items sold on credit. See 7 C.F.R. § 278(f).
For trafficking in SNAP benefits, a food store shall be disqualified permanently, unless "the Secretary [of Agriculture] determines that there is substantial evidence that such store . . . had an effective policy and program in effect to prevent violation of the [statute] and regulations." 7 U.S.C. § 2021(b)(3)(B). If the Secretary makes such a determination, he or she has the discretion to impose a civil money penalty in lieu of disqualification.2 See id. For accepting SNAP benefitsto pay for items sold on credit, a food store "shall be disqualified from participation in [SNAP] for a period of one year." 7 C.F.R. § 278.2(f).
A food store that is disqualified pursuant to 7 U.S.C. § 2021(a) has a right to administrative review. See 7 U.S.C. § 2023(a)(3), (5)-(12). That administrative review, in turn, is subject to judicial review:
7 U.S.C. § 2021(b)(3)(B). Eligibility for a civil money penalty in lieu of disqualification appears not to be an issue in this case.
(6th Cir. 1991); Modica v. United States, 518 F.2d 374, 376 (5th Cir. 1975) (citing Redmond v. United States, 507 F.2d 1007, 1011 (5th Cir. 1975)); Hajifarah v. United States, 779 F. Supp. 2d 191, 204 (D. Me. 2011).
Trial de novo, however, pertains only to judicial review of the USDA's determination that a violation took place. See Objio v. United States, 113 F. Supp. 2d 204, 208 (D. Mass. 2000) (). Once a court upholds the USDA's determination that a violation has taken place, review of the sanction imposed by the USDA is based on the administrative record, and the sanction may be overturned only if its imposition was arbitrary or capricious. See Hajifarah, 779 F. Supp. 2d at 208 n.11 (citing Wong v. United States, 859 F.2d 129, 132 (9th Cir. 1988)); see also Objio, 113 F. Supp. 2d at 208 (citing Broad St. Food Mkt. v. United States, 720 F.2d 217, 220 (1st Cir. 1983); Collazo v. United States, 668 F.2d 60, 65 (1st Cir. 1981); Kulkin v. Bergland, 626 F.2d 181, 184 (1st Cir. 1980)).
In some cases, the USDA has based a SNAP disqualification on an undercover FNS investigator's successful attempt(s) to exchange SNAP benefits for ineligible items. See, e.g., Atl. Deli & Grocery v. United States, Civil No. 10-4363 (JBS/AMD),2011 WL 2038758, at *1 ; Ratsamy v. United States, Civil No. 10-975 ADM/JJD, 2011 WL 1533170, at *1 (D. Minn. Apr. 21, 2011). However, it is well established that a store can be held liable for trafficking even without being caught red-handed. See Idias, 359 F.3d at 698 (citing Kahin v. United States, 101 F. Supp. 2d 1299, 1303-04 (S.D. Cal. 2000)); Young Choi, Inc. v. United States, 639 F. Supp. 2d 1169, 1178 (D. Haw. 2009). This is because the Food Stamp Act expressly provides that disqualification from SNAP may be based on "facts established through on-site investigations, inconsistent redemption data, or evidence established through a transaction report under an electronic benefit transfer system." 7 U.S.C. § 2021(a)(2) (emphasis added); see also 7 C.F.R. § 278.6(a).
"Because EBT debits are electronically recorded, the records can be scanned by various computer programs for irregularities and abnormalities." Idias, 359 F.3d at 696. "The stored electronic data includes the recipient's card number, the amount of the food stamp purchase, the store number, and the date and time of the transaction." Young Choi, 639 F. Supp. 2d at 1173. Those electronic data, in turn, "provide[ ] a tool for identifying the type and pattern of transaction indicative of food stamp trafficking." Id. FNS identifiessuspicious patterns of ETB card usage by...
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