Shalva v. U.S. Dep't of Agric., 11 Civ. 2746 (PAC)

Decision Date01 March 2013
Docket Number11 Civ. 2746 (PAC)
PartiesCONGREGATION MACHNA SHALVA ZICHRON ZVI DOVID, Plaintiff, v. UNITED STATES DEPARTMENT OF AGRICULTURE; AUDREY ROWE, in her official capacity as Administrator of the Food and Nutrition Service; NEW YORK STATE EDUCATION DEPARTMENT; FRANCES N. O'DONNELL, in her official capacity as Coordinator of the Child Nutrition Program; and MAUREEN LAVARE, in her official capacity as Hearing Officer, Defendants.
CourtUnited States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
OPINION & ORDER

HONORABLE PAUL A. CROTTY, United States District Judge:

Plaintiff Congregation Machna Shalva Zichron Zvi Dovid ("Shalva" or "Plaintiff") instituted this action challenging the denial of its application to participate in the Summer Food Service Program ("SFSP"), a federally funded, state-administered program which provides free food to needy children during the summer months. Shalva asserts two claims against the United States Department of Agriculture ("USDA") and Audrey Rowe, in her official capacity as Administrator of the Food and Nutrition Service (collectively, "federal Defendants" or "Defendants"), contending that (1) Rule 7 C.F.R. § 225.11(c) violates the Administrative Procedure Act ("APA") because it contradicts its authorizing statute and is "arbitrary and capricious"; and (2) the rule violates the Regulatory Flexibility Act ("RFA") because the USDA has failed to conduct periodic review of the rule. Shalva seeks injunctive relief under 28 U.S.C.§ 2201 to enjoin the rule's enforcement. Shalva and the federal Defendants cross move for summary judgment. There is no basis whatsoever for Shalva's claims against the federal Defendants. Accordingly, the Court DENIES Shalva's motion for summary judgment and GRANTS the federal Defendants' motion for summary judgment on both claims.

Shalva asserts three claims against state Defendants. The first two are 42 U.S.C. § 1983 claims. Specifically, Shalva contends that Frances N. O'Donnell, in her official capacity as Coordinator of the Child Nutrition Program, and Maureen Lavare, in her official capacity as a New York State Education Department ("NYSED") Hearing Officer (1) violated Shalva's Fourteenth Amendment procedural due process rights; and (2) violated 42 U.S.C. § 1761's statutory eligibility requirements. For both claims, Shalva seeks a declaration pursuant to 28 U.S.C. § 2201 that Shalva "is and was" entitled to participate in the Summer Food Service Program in the 2010 summer. Shalva's final claim asserts that the NYSED, O'Donnell and Lavare (collectively, "state Defendants" or "Defendants") failed to properly administer federal statutes and regulations in violation of New York's Civil Practice Law and Rules ("CPLR") § 7803. Shalva requests an order directing O'Donnell and Lavare to reverse their denial of Shalva's application. The state Defendants move to dismiss under Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction and 12(b)(6) for failure to state a claim. For the reasons below, the Court GRANTS the state Defendants' motion to dismiss all claims against them on Eleventh Amendment immunity and jurisdictional grounds, and does not reach the merits of Shalva's claims.

BACKGROUND1

In 1968, Congress amended the National School Lunch Act to create the Summer Food Service Program ("SFSP").2 The SFSP "provide[s] children in areas with poor economic conditions and/or high concentrations of working mothers with a food service program during the summer months . . . ." H.R. Rep. No. 95-281, at 4 (1977), reprinted in 1977 U.S.C.C.A.N. 3517, 3519. Under the program, the USDA assists states "through grants-in-aid to conduct nonprofit food service programs for children during the summer months . . . ." 7 C.F.R. § 225.1. State educational agencies are responsible for providing "sufficient qualified consultative, technical, and managerial personnel to administer the Program, monitor performance, and measure progress in achieving Program goals." 7 C.F.R. 225.6(a). Funding goes to eligible public and private nonprofit service institutions, sometimes called "sponsors," to provide regular food services. H.R. Rep. No. 95-281, at 4. States select sponsors based on their ability to meeteligibility criteria contained in federal regulations. 7 C.F.R. 225.6(b)(4). Sponsors, in turn, purchase lunches from vendors and distribute them to children at feeding sites. United States v. Buigues, 568 F.2d 269, 271 (2d Cir. 1978).

The program had limited success during the period from 1968 to 1973 due in part to a lack of clarity in the program's rules. H.R. Rep. No. 95-281, at 4. In an effort to increase participation, Congress relaxed the eligibility standards and provided that "any eligible service institution shall receive the summer food program upon its request." Pub. L. No. 94-105, 89 Stat. 516 (1975). The amendment opened the floodgates and led to wholesale abuses by sponsors. In 1977, Congress amended the NSLA to provide new and higher eligibility criteria for sponsor participation in the program. Pub. L. No. 95-166, 91 Stat. 1325 (November 10, 1977). The amendment, as it now appears in Section 1761(a)(3), provides:

"Eligible service institutions entitled to participate in the program shall be limited to those that—
(A) demonstrate adequate administrative and financial responsibility to manage an effective food service;
(B) have not been seriously deficient in operating under the program;
(C) (i) either conduct a regularly scheduled food service for children from areas in which poor economic conditions exist; or (ii) qualify as camps; and
(D) provide an ongoing year-round service to the community to be served under the program . . . .

42 U.S.C. § 1761.

The USDA promulgates implementing regulations applicable to the summer food service program. The regulation at issue in this case, 7 C.F.R. § 225.11(c) provides:

"Except as specified below, the State agency shall not enter into an agreement with any applicant sponsor identifiable through its corporate organization, officers, employees, or otherwise, as an institution which participated in any Federal child nutrition program and was seriously deficient in its operation of any such program." (emphasis added).
SHALVA'S CHALLENGES

Shalva challenges the regulation on the basis of two clauses. First, under the "identifiable through" clause, states may disapprove applicants who can be "identified" as disqualified sponsors through their "corporate organization, officers, employees, or otherwise." Second, Shalva contests the "cross-disqualification" clause, which defines disqualified sponsors as those who are disqualified under any Federal child nutrition program, including non-SFSP programs. Shalva argues that the regulation exceeds the scope of its enabling statute because Section 1761(a)(3)(B) limits disqualification to deficiencies in the SFSP. Shalva also contends that 225.11(c) is "arbitrary and capricious" under the APA.

Plaintiff Shalva is a religious corporation which operated a summer camp at 653 Heiden Road, Sullivan County, New York and has participated in the SFSP each summer from 2005 to 2009. (Shalva 56.1 ¶¶ 3, 4.) On May 12, 2010, Shalva renewed its application to the NYSED to participate for the summer of 2010. (Am. Compl. ¶ 21.) On June 1, 2010, the NYSED informed Shalva that it would need a Section 501(c)(3) determination letter from the United States Department of Treasury before its application could be approved. (Id. ¶¶ 23, 24.) Shalva explained that as a church, it did not need to submit, nor could the Treasury Department provide, such a letter. (Id. ¶ 25.) On June 16, 2010, the NYSED repeated its demand for the 501(c)(3) letter. (Id. ¶ 26.) Shalva now contends that it should have received formal notification of the NYSED's decision to approve or deny its application by June 11, 2010. (Id.)3 Discussions of Shalva's not-for-profit status continued through June 2010. (Id. ¶¶ 27, 28.)

Notwithstanding the fact that its application had not been approved, Shalva commenced the SFSP summer program on June 27, 2010, based upon its belief that the parties would resolve the not-for-profit issue and that the NYSED had no other basis for denying Shalva's application. (Id. ¶¶ 36, 43.) On June 29, 2010, two days after the program started, the NYSED sent Shalva a letter informing it that it would not be eligible to participate in the 2010 summer program because of its failure to prove its not-for-profit status. (Id. ¶ 30; Fasten Dec. Ex. 1.) Nonetheless, Shalva operated its daily meal service through the summer of 2010, at its own expense, while continuing to discuss its status with the NYSED. (Am. Compl. ¶¶ 32-35; Shalva 56.1 ¶¶ 9, 10.)

On October 5, 2010, O'Donnell, the Coordinator of the Child Nutrition Program, formally notified Shalva that the NYSED was retroactively denying its application, but for a new and different reason. (Shalva 56.1 ¶ 11.) The NYSED stated that Shalva was a part of an organization known as Bobover Yeshiva Bnei Zion ("BZ"), which the New York Department of Health ("NYDOH") determined on June 30, 2010 was "seriously deficient" in the Child and Adult Care Food Program. (Am. Compl. ¶¶ 44, 45.) As a result, NYDOH placed BZ on a Child Nutritional National Disqualified List. (Id. ¶ 44; Fasten Dec. Ex. 2.) The NYSED's October 5 denial letter stated that the NYSED was treating Shalva and BZ as the "same entity." (Id.) Applying 7 C.F.R. 225.11's "identifiable through" and "cross disqualification" provisions, the NYSED disqualified Shalva because it was associated with an entity that had been disqualified under another federal nutrition program. (Fasten Dec. Ex. 2.)

Shalva requested a formal review. (Am. Compl. ¶ 50.) At a hearing held on December 14, 2010, the NYSED conceded that Shalva provided adequate documentation for its not-for-profit status and relied instead Shalva's association with BZ. (Id. ¶ 51; Fasten Dec. Ex. 3 at 4.)Lavare, the hearing officer, affirmed the denial, determining that Shalva was...

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