Minhas v. Vilsack
Filing
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ORDER signed by Judge Garland E. Burrell, Jr. on 12/20/2011 granting plaintiff's. The 6-Month Disqualification is STAYED until there is a final determination on the merits. (Marciel, M)
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IN THE UNITED STATES DISTRICT COURT
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FOR THE EASTERN DISTRICT OF CALIFORNIA
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MANBINDER SINGH MINHAS,
Plaintiff,
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v.
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TOM VILSACK, in his capacity as
Secretary of the United States
Department of Agriculture,
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Defendant.
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2:11-cv-03200-GEB-EFB
ORDER
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Plaintiff filed a motion on December 9, 2011, in which he
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seeks to “stay enforcement of the administrative determination of
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Defendant . . . to disqualify Plaintiff from participating in the
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Supplemental
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months.” (Mot. 1:4-7.) Defendant opposes the motion, arguing Plaintiff
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“cannot satisfy [the applicable stay factors in] 7 U.S.C. § 2023, the
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judicial review provision for Food Stamp enforcement actions, which
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requires him to show both irreparable injury and a likelihood of
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prevailing on the merits . . . .” (Opp’n 2:8-10.)
Nutrition
Assistance
Program
(‘SNAP’)
.
.
.
for
six
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Plaintiff is the owner of Dawes Wine & Spirits, which, prior
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to its six-month disqualification, participated in SNAP, a program that
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enables qualifying stores to accept food stamp benefits in exchange for
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eligible food items. On February 1, 2011, the Food and Nutrition Service
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(“FNS”) began a series of five investigative visits to Plaintiff’s store
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in which an agent attempted to purchase ineligible non-food items with
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a food stamp card. (Minhas Decl. Exs. A & B.) On four of the five
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visits, the agent was successful in purchasing ineligible non-food items
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with his food stamp card, each time from the same clerk. Id. In total,
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he purchased the following items: one box of Penley forks, one box of
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Penley spoons, three Chore boy sponges, and six boxes of Penley cutlery.
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Id. During these same visits, the agent unsuccessfully attempted to
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purchase a box of matches and a bottle of wine with his food stamp card.
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Id. The agent also attempted a cash transaction on his fifth visit,
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which was refused. Id.
On August 31, 2011, FNS sent Plaintiff a letter that detailed
his store’s violations of the SNAP program and stated the following:
Your firm is charged with accepting SNAP
benefits in exchange for merchandise, which, in
addition to eligible foods, included common nonfood items. The misuse of SNAP benefits noted in
[the] Exhibits . . . violated Section 278.2(a) of
the SNAP regulations (enclosed).
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Further, the violations in [these] Exhibits .
. . warrant a disqualification period of six months
(Section 278.6(e)(5)). Under certain conditions,
FNS may impose a civil money penalty (“CMP”) in
lieu of a disqualification (Section 278.6(f)(1)).
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(Minhas Decl. Ex. A.) On September 12, 2011, Plaintiff filed a reply to
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the August 31, 2011 letter and attended an administrative hearing. Id.
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¶ 10. FNS sent Plaintiff a letter dated September 29, 2011, informing
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him that it has “determined that [Plaintiff] is not eligible for the CMP
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because there are other authorized retail stores in the area selling as
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large a variety of staple foods at comparable prices.” Id. Ex. C. On
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October 5, 2011, Plaintiff filed a written request for review with FNS
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and on November 8, 2011, FNS sent Plaintiff the final agency decision of
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the FNS affirming the six-month disqualification previously imposed.
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(Knox Decl. ¶¶ 3-7.) On December 1, 2011, Plaintiff filed this action in
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federal court, arguing the sanction imposed by FNS was arbitrary and
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capricious. (ECF No. 2.) Plaintiff does not dispute that the sale of
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ineligible items occurred. The six-month disqualification commenced on
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December 11, 2011.
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Section 2023(a)(17) prescribes:
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During the pendency of such judicial review, or any
appeal therefrom, the administrative action under
review shall be and remain in full force and
effect, unless on application to the court on not
less than ten days’ notice, and after hearing
thereon and a consideration by the court of the
applicant’s likelihood of prevailing on the merits
and of irreparable injury, the court temporarily
stays
such
administrative
action
pending
disposition of such trial or appeal.
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7 U.S.C. § 2023(a)(17). Therefore, a court “may temporarily stay [an]
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administrative action if it determined that the aggrieved party will
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[likely] suffer irreparable injury and is likely to prevail on the
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merits of his case.” Poeng v. United States, 167 F. Supp. 2d 1136, 1139
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(S.D. Cal. 2001) (emphasis added).
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Plaintiff argues he will prevail on the merits of his claims
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since Defendant’s imposition of a six-month SNAP disqualification is
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arbitrary
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Administrative Review Officer did not rely on or consider any evidence
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of
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ownership in the Final Agency Decision. (Mot. 8:6-14.) In determining
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whether to sanction a store, FNS regulations require it to consider “(1)
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whether the store has been previously warned of possible violations; (2)
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whether the charged violations indicate firm practice or result from the
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carelessness of clerical personnel; and (3) the type of ineligible items
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sold.” Id. (citing 7 C.F.R. § 278.6(e)). The FNS shall “[d]isqualify the
and
carelessness
capricious;
or
poor
specifically,
supervision
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by
Plaintiff
the
firm’s
argues
management
the
or
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firm for 6 months if it is to be the first sanction for the firm and the
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evidence shows that personnel of the firm have committed violations such
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as
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carelessness or poor supervision by the firm's ownership or management.”
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7 C.F.R. § 278.6(e)(5).
but
not
limited
to
the
sale
of
common
nonfood
items
due
to
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“[R]eview of the sanction imposed by the FNS is governed by
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the arbitrary and capricious standard.” Wong v. United States, 859 F.2d
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129, 132 (9th Cir. 1988). “Under the arbitrary and capricious standard,
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the court examines the sanction imposed by the FNS in light of the
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administrative record to judge whether the agency properly applied the
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regulations and to determine whether the sanction is unwarranted in law
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or
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omitted). “Although [a court] may uphold a decision of less than ideal
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clarity if the agency’s path may reasonably be discerned, [it] cannot
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infer an agency’s reasoning . . . where the agency failed to address
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significant objections and alternative proposals.” Beno v. Shalala, 30
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F.3d 1057, 1073 (9th Cir. 1994). Further, a “reviewing court may not
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substitute reasons for agency action that are not in the record.” Ariz.
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Cattle Growers Ass’n v. U.S. Fish & Wildlife, 273 F.3d 1229, 1236 (9th
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Cir. 2001).
without
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justification
in
fact.”
Id.
(internal
quotation
marks
In its Final Agency Decision, FNS neither provides facts
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supporting
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carelessness or poor supervision nor responds to Plaintiff’s objection
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that the agency had not provided evidence supporting this conclusion. At
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the December 19, 2011 hearing on Plaintiff’s motion to stay, Defendant
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conceded that the Final Agency Decision did not include facts to support
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a conclusion that the violations were the result of carelessness or poor
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supervision. Although Defendant argues evidence is in the record that
its
conclusion
that
the
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violations
were
the
result
of
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supports this conclusion, the agency must “articulate[] a rational
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connection between the facts found and the choice made.” Ariz. Cattle
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Growers Ass’n, 273 F.3d at 1236; see also id. (“Judicial review is
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meaningless, however, unless we carefully review the record to ensure
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that agency decisions are founded on a reasoned evaluation of the
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relevant factors.”).
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Further, the agency’s response to Plaintiff’s objection states
as follows:
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With regard to this portion of the aforementioned
contention, it cannot be accepted as a valid basis
for dismissing any of the charges, or for
mitigating the impact of those charges. Regardless
of whom the ownership of a store may utilize to
handle store business, the ownership is accountable
for the proper training; [sic] monitoring and
handling of SNAP benefit transactions. To allow
store ownership to disclaim accountability for the
acts of persons whom the ownership chooses to
utilize to handle store business would render
virtually meaningless the enforcement provisions of
the Food and Nutrition Act of 2008 and the
enforcement efforts of the USDA.
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(Knox Decl. Ex. 4.) However, this statement does not address Plaintiff’s
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objection, which was an insufficiency-of-the-evidence argument. Instead,
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the agency counters with a wholly non-responsive assertion regarding the
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accountability of ownership under the regulations. Therefore, the FNS
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“failed to address [a] significant objection” raised by Plaintiff. Ariz.
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Cattle Growers Ass’n, 273 F.3d at 1236. Since the Final Agency Decision
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neither
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Plaintiff’s objection, Plaintiff has shown a likelihood of success on
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the merits.
provides
facts
supporting
its
conclusion
nor
responds
to
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Further, Plaintiff argues he “is likely to suffer irreparable
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injury if the six-month disqualification is not stayed pending trial in
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this matter” since his claims will be moot, he will suffer substantial
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loss of revenue, and he will be unable to recover damages for lost
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sales. (Mot. 5:26-27.) Plaintiff argues his action will be moot if the
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six-month
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scheduled the Initial Scheduling Conference for March 26, 2012. By that
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date, more than 50% of the six-month SNAP disqualification will have
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taken place, unless the disqualification.” Id. 6:9-14. Plaintiff also
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argues he “will suffer substantial loss of revenue if [the] six-month
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disqualification is not stayed.” Id. 6:15-16. Plaintiff avers in a
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declaration that his “store processes approximately $8,500.00-9,000.00
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in SNAP benefits every month” and that he “will lose approximately
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$51,000.00-$54,000.00 if the six-month disqualification is enforced.”
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Id. 6:17-21. Plaintiff also avers “he will also lose much of the non-
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SNAP business because his SNAP customers will be forced to find another
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SNAP retailer to use their SNAP benefits.” Id. 6:22-26.
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disqualification
Defendant
is
counters,
not
stayed
arguing
since
“[t]he
Plaintiff
has
court
not
has
shown
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irreparable injury since he “does not assert, let alone provide any
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evidence, that the disqualification will require him to close his store
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or fire its employees, or that he will lose almost 50% of his sales and
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that he is already operating at a loss[.]” (Opp’n 12:26-13:1.) Although
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“[i]n general, lost revenue does not constitute irreparable harm because
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an award of damages at the end of a case, if appropriate, will make a
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party
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Jefferson Village Enter., Inc. v. United States, 2011 WL 740896, at *4
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(E.D. Mich. Feb. 24, 2011); see also Cal. Pharm. Ass’n v. Maxwell-Jolly,
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563 F.3d 847, 852 (9th Cir. 2009) (“Because the economic injury doctrine
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rests only on ordinary equity principles precluding injunctive relief
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where a remedy at law is adequate, it does not apply where, as here, the
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Hospital Plaintiffs can obtain no remedy in damages against the state
whole[,
t]hat
general
proposition
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does
not
apply
here[.]”
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because of the Eleventh Amendment.”). Under FNS regulations, “[i]f the
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disqualification action is reversed through administrative or judicial
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review, the Secretary shall not be liable for the value of any sales
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lost during the disqualification period.” 7 C.F.R. § 279.7(d); see also
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Jefferson Village Enterprises, 2011 WL 740896, at *4 (“That the statute
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possibly bars the court from awarding damages to Plaintiff in the event
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it prevails compounds the concern of mootness.”). Plaintiff’s showing is
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sufficient to demonstrate he will likely suffer irreparable economic
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loss if the stay is not granted.
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Therefore, Plaintiff’s motion to stay is GRANTED, and the six-
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month disqualification is stayed until there is a final determination on
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the merits.
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Dated:
December 20, 2011
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GARLAND E. BURRELL, JR.
United States District Judge
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