CEDAR FOOD MARKET 7, INC v. UNITED STATES OF AMERICA

Filing 25

OPINION. Signed by Judge Renee Marie Bumb on 12/19/2019. (rtm, )

[Docket No. 21]
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAMDEN VICINAGE

CEDAR FOOD MARKET 7, INC.,
Plaintiff,

Civil No. 18-3470 (RMB/KMW)

v.

OPINION

UNITED STATES OF AMERICA,
Defendant.

APPEARANCES:
JOHN P. MORRIS, ESQ.
142 West Broad Street
P.O. Box 299
Bridgeton, New Jersey 08302
Attorney for Plaintiff
OFFICE OF THE UNITED STATES ATTORNEY
DISTRICT OF NEW JERSEY
By: Ben Kuruvilla, AUSA
970 Broad Street, Suite 700
Newark, New Jersey 07102
Attorneys for Defendant
BUMB, UNITED STATES DISTRICT JUDGE:
The United States Department of Agriculture, Food and
Nutrition Service (“FNS”), which administers SNAP 1 (commonly known
as the food stamp program), decided to permanently disqualify
Plaintiff, Cedar Food Market 7, Inc., from participating in SNAP
after finding that Cedar Food Market had trafficked in SNAP

1

“Supplemental Nutrition Assistance Program.”
1

benefits. 2

Pursuant to 7 U.S.C. § 2023(a)(13), Plaintiff seeks

judicial review of FNS’ final determination.
FNS moves for summary judgment, asserting that no reasonable
factfinder could find on this record that Cedar Food Market did
not traffic in SNAP benefits.
opposition to the motion. 3

Cedar Food Market has filed no

For the reasons stated herein, the

motion will be granted.
I.

FACTUAL BACKGROUND
“Cedar Food Market is a small grocery store located at 1125

Arctic Avenue in Atlantic City, New Jersey.”
Statement of Material Facts 4, “SMF,” ¶ 4)

(Defendant’s

It “became an authorized

2

Trafficking in food stamps typically involves exchanging
food stamps for cash-- often less cash than the face value of the
stamps. See, e.g., Freedman v. U.S. Dept. of Agriculture, 936
F.2d 252, 253 (3d Cir. 1991) (“Between November 12 and December
15, 1987, the [store] clerk . . . trafficked in food stamps . . .
on four separate occasions, purchasing stamps with a total value
of $1,500 for $750 from an undercover investigator for the
[FNS].”). As SNAP benefits are now provided electronically on
electronic benefit transfer (“EBT”) cards, rather than through the
use of actual stamps, trafficking usually means “using the SNAP
card as a bank debit card for cash not groceries.” Famous Int’l
Mkt. v. United States, 2018 WL 3015249 at *1 (E.D. Pa. June 15,
2018); see generally, 7 C.F.R. 271.2 (providing six definitions of
“trafficking,” including, “effecting an exchange of SNAP benefits
. . . for cash or consideration other than eligible food.”).
3

Cedar Food Market’s opposition was due June 17, 2019.

4

FNS’ Statement of Material Facts has not been opposed
because Cedar Food Market has filed no opposition at all to the
instant motion. Accordingly, facts contained in the Statement of
Material Facts are “deemed undisputed for purposes of the summary
judgment motion.” L. Civ. R. 56.1(a).

2

SNAP retailer on July 25, 2001.”

(Id., ¶ 6)

“In 2017, the FNS

Retailer Operations Division began an investigation into Cedar
Food Market because the agency’s “ALERT” System 5 indicated that the
store’s EBT data contained patterns consistent with possible EBT
trafficking violations between February 2017 and June 2017.” (Id.,
¶ 8)
On May 11, 2017, a FNS investigator visited Cedar Food Market
and observed that it “was a moderately-stocked small grocery store
with staple foods that included canned goods, rice, pasta, bread,
ice cream, butter, milk, some fresh produce, deli meat & cheese
sold by the pound, and eggs.”

(SUF, ¶¶ 9, 11)

FNS also conducted a review of Cedar Food Market’s SNAP EBT
data from the relevant time period which resulted in the
identification of 165 “suspicious transactions.”

(SUF, ¶ 12)

Of

the 165 transactions, 17 sets of transactions were deemed
suspicious because they “involved rapid and repetitive
transactions in a short period of time (mostly within a 24-hour
period) from the same households.”

(Id., ¶¶ 13-14) 6

Another 119

transactions were deemed suspicious because they “were excessively
large-- specifically, at least 300% larger-- as compared to the

5

The ALERT system “is designed to detect suspicious SNAP
benefit usage indicative of fraud or SNAP benefit trafficking.”
(SUF, ¶ 7)
6

For example, “one household account conducted five
transactions within a 24-hour period in the amounts of $49.85,
$30.26, $24.07, $40.35 and $54.50.” (SUF, ¶ 15)
3

average convenience store transaction in New Jersey.” (Id., ¶ 1718)

In addition to this data being inherently suspicious for the

reasons already stated, FNS compared the data to three comparable
grocery stores and found Cedar Food Market’s data patterns to be
“abnormal” relative to the other stores.

(Id., ¶¶ 20-21)

Moreover, “FNS found that the appearance, quality and
quantity of products at Cedar Food Market did not warrant SNAP
recipients conducting so many transactions at the store.”
23)

(SUF, ¶

It “also reviewed the shopping patterns of four selected

households who were involved in suspicious transactions during the
period under review and found that all of these households were
also shopping at larger and better-stocked stores.”

(Id., ¶ 24)

Lastly, “FNS noted that it seemed unreasonable for a household to
spend such a large amount of SNAP benefits at [Cedar Food Market],
when it had access to larger, better-stocked, and presumably less
expensive grocery options.”

(Id., ¶ 25)

Based on all of this evidence, FNS charged Cedar Food Market
with trafficking in SNAP benefits on September 19, 2017.
26, 28)

(SUF, ¶¶

With the assistance of an attorney retained to represent

it in the matter, Cedar Food Market replied to the charge by
submitting two documents to FNS: (1) a declaration of Issa
Nammour, one of the store’s two “corporate officers” (Id., ¶ 5);
and (2) a copy of “the FNS Training Guide for Retailers,” a
document prepared by FNS, “which Issa claimed they ‘review
carefully.’” (Id., ¶ 41)
4

Nammour’s Declaration “states categorically that ‘at no time
have we ever tolerated any kind of trafficking whatsoever.’”
(SUF, ¶ 33)

Notably, the Declaration does not challenge the

accuracy of the transaction data; rather, it provides the
following explanations for the suspicious transactions:
(a) the Store “had observed an individual
attempting to purchase items for others using
SNAP benefits and were also informed that
another person approached customers outside
the Store offering to buy food for them with
his SNAP benefits in exchange for a discount,”
but the Store stopped them from continuing
their scheme by “‘asking people for their I.D.
and putting them on notice.’” (SUF, ¶¶ 34, 35)
(b) “the Store had a spike in volume for the
months of February, March, April, and May which
was attributable to special promotions at
reduced prices in order to encourage a higher
volume of transactions” (Id., ¶ 36); and
(c) “the Store was the only store in the area
selling a ‘large variety of staple foods at
reasonable prices’ and that many of their
customers are older or disabled and shop
several times per day to be able to carry their
purchases home because they do not own motor
vehicles” (Id., ¶ 38). 7
FNS considered this evidence and determined:
(a) “that typically [individuals trying to use
SNAP benefits to purchase food for others in
exchange for cash] would also occur at
neighboring stores, and those stores were not
displaying the same transaction patterns;
instead
only
Cedar
Food
Market’s
SNAP
transactions were displaying such patterns.
(SUF, ¶ 44); and “if this alleged conduct had
occurred and the Store addressed it, . . . the
7

The Declaration also states that “‘subsidized housing
people with drug problems’” made large purchases multiple times a
day because they “‘mismanage their money.’” (SUF, ¶ 39)
5

conduct would only have caused a few days’
worth of suspicious transactions, not several
months, as reflected in the data.” (Id., ¶ 46);
(b) “Cedar Food Market did not submit any
documentary
evidence
supporting
Issa’s
assertion that Cedar Food Market offered
special promotions that caused a spike in
transactions
during
the
review
period.
Moreover, no special promotions were observed
during the site visit. Without such documented
evidence, including any EBT or store register
receipts or promotional advertising material,
FNS could not substantiate Issa’s statements.”
(Id., ¶ 43);
(c) “the Store was located within 1/4 mile of
4 convenience stores, 2 small grocery stores,
1 medium grocery store, and 2 combination
grocery stores, and within a 1 mile radius,
there was 39 traditional authorized retailers
where SNAP households can and did shop, but
none
of
these
displayed
the
same
EBT
transactions patterns as the Store” (Id., ¶
45); and “the Store’s EBT customers were also
shopping at [these stores]-- demonstrating
that these customers did not have difficulty
traveling to different stores.” (Id., ¶ 48)
Accordingly, FNS concluded that the suspicious transactions were
not “sufficiently explained” and were “indicative of trafficking.”
(SUF, ¶¶ 42, 51)

On October 10, 2017, FNS issued a Determination

Letter informing Cedar Food Market that FNS had concluded that the
store had engaged in trafficking.

(Id., ¶ 52)

Cedar Food Market, through its attorney, duly invoked its
right to administrative review of the determination.

An

Administrative Review Officer “reviewed all of the information

6

submitted by Cedar Food Market 8, and on February 8, 2018, FNS
issued its final agency decision, which concluded that permanent
disqualification [from the SNAP program] was appropriate.”
¶ 64)
II.

(SUF,

This suit followed.

LEGAL STANDARD
When an “aggrieved” party seeks “judicial review” of an

adverse “final determination” with regard to participation in
SNAP, 7 U.S.C. § 2023(a)(13), “[t]he suit in the United States
district court . . . shall be a trial de novo by the court in
which the court shall determine the validity of the questioned
administrative action in issue.”

§ 2023(a)(15).

Thus, although

this Court is reviewing a final agency determination, the
governing statute provides that this case shall proceed in the
same manner as a typical civil action. 9

Therefore, all of the

procedural mechanisms under the Federal Rules of Civil Procedure
are generally available, including-- as relevant to the instant

8

Cedar Food Market relied on the evidence discussed above
and a declaration from an employee. (SUF, ¶¶ 61-62) However, the
employee’s declaration stated that he or she had worked at Cedar
Food Market for only one month in March of 2016, i.e., before the
time period during which the store was charged with trafficking.
(Administrative Record, p. 215) Moreover, the one-page
declaration only stated, in relevant part, that an unidentified
supervisor “periodically” cautioned employees “to be on the
lookout” for patrons who appear to be involved in trafficking.
(Id.)
9

Although the statute does not limit this Court’s review to
facts contained in the administrative record, Freedman, 926 F.2d
at 261, in this case, no discovery was taken and the parties
“proceeded directly to summary judgment based on the
administrative record.” (Defendant’s Moving Brief, p. 20 n.6)
7

motion-- Federal Rule of Civil Procedure 56.

Freedman, 926 F.2d

at 261 (“de novo review [under § 2023(a)(15)] is compatible with a
summary judgment disposition if there are no material facts in
dispute. . . . In reality, an ordinary private civil action is a
de novo proceeding in the sense that the court makes an original
determination of the law and the facts but such a case may, when
appropriate, be resolved on summary judgment.”).
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 judgment as a matter of law.”
56(a).

Fed. R. Civ. P.

A fact is “material” if it will “affect the outcome of the

suit under the governing law[.]”
477 U.S. 242, 248 (1986).

Anderson v. Liberty Lobby, Inc.,

A dispute is “genuine” if it could lead

a “reasonable jury [to] return a verdict for the nonmoving party.”
Id.
“[W]hen a properly supported motion for summary judgment [has
been] made, the adverse party ‘must set forth specific facts
showing that there is a genuine issue for trial.’”
U.S. at 250 (citing Fed. R. Civ. P. 56(e)).

Anderson, 477

In the face of a

properly supported motion for summary judgment, the nonmovant’s
burden is rigorous: it “must point to concrete evidence in the
record”; mere allegations, conclusions, conjecture, and
speculation will not defeat summary judgment.

Orsatti v. New

Jersey State Police, 71 F.3d 480, 484 (3d Cir. 1995); accord,
Jackson v. Danberg, 594 F.3d 210, 227 (3d Cir. 2010) (citing
8

Acumed LLC v. Advanced Surgical Servs., Inc., 561 F.3d 199, 228
(3d Cir. 2009) (“[S]peculation and conjecture may not defeat
summary judgment.”)).

Failure to sustain this burden will result

in entry of judgment for the moving party.
The same basic legal analysis applies when a summary judgment
motion is unopposed, Anchorage Associates v. Virgin Islands Board
of Tax Review, 922 F.2d 168 (3d Cir. 1990), however, the material
facts put forth by the movant are deemed undisputed pursuant to L.
Civ. R. 56.1(a) (“any material fact not disputed shall be deemed
undisputed for purposes of the summary judgment motion.”).
III. ANALYSIS
“It is [] well established that the plaintiff challenging the
administrative action has the burden of proving by a preponderance
of the evidence that the charged SNAP violation did not occur.”
Atl. Deli & Grocery v. United States, 2011 WL 2038758 at *4
(D.N.J. May 23, 2011) (Simandle, D.J.) (citing authorities). 10

10

In

See also, Irobe v. U.S. Dep’t of Agric., 890 F.3d 371, 378
(1st Cir. 2018)(“All of the courts of appeals that have addressed
the burden-of-proof issue under Section 2023 have placed the
burden of proof on the party challenging the USDA’s finding of
liability. We join those courts and hold that when a store
challenges the USDA’s determination that the store trafficked in
SNAP benefits, the store bears the burden of proving by a
preponderance of the evidence that its conduct was
lawful.”)(citing decisions from the 7th, 9th, 6th, and 5th
Circuits); SS Grocery, Inc. v. U.S. Dep’t of Agric., 340 F.
Supp.3d 172, 180 (E.D.N.Y. 2018)(“Plaintiffs . . . bear the burden
of proving by a preponderance of the evidence that the agency’s
action was invalid.”).

9

this case, Cedar Food Market has filed no opposition to FNS’
Motion for Summary Judgment, and therefore it has come forward
with no particular evidence that it did not traffic in SNAP
benefits.
Moreover, the evidence in the administrative record-- which
is undisputed here-- does not support a finding by a preponderance
of the evidence that Cedar Food Market did not traffic in SNAP
benefits.

As set forth above, the EBT data demonstrated patterns

consistent with SNAP trafficking. 11

Cedar Food Market’s

explanations for these patterns are, as FNS found, either
incomplete or inconsistent with the evidence, and therefore
insufficient to defeat summary judgment.

See Irobe, 890 F.3d at

380 (“The large number of aberrational transactions reflected in
the Store’s EBT database are adequate to ground a strong inference
of trafficking, especially given the Store’s characteristics.

11

See, e.g., Negash v. United States, 772 F. App’x 34, 36-37
(4th Cir. 2019) (“the USDA rightfully concluded that there is no
logical explanation for 72 individuals spending over $100 on
convenience store items when Appellants’ store does not have a
single shopping cart or basket [and] households were visiting
larger grocery stores in addition to Appellants’ store.”); Irobe,
890 F.3d at 379 (unusually “high-dollar SNAP transactions” and
“multiple purchases in quick succession”); Cheema v. United
States, 365 F. Supp.3d 172, 185-187 (D. Mass. 2019) (multiple
transactions made from the same EBT account in short time frames,
unusually large transactions); SS Grocery, 340 F. Supp.3d at 181
(recipients making multiple transactions in unusually short time
frames, recipients making excessively large purchase
transactions); McClain’s Mkt. v. United States, 214 F. App’x 502,
505 (6th Cir. 2006)(“McClain’s has simply offered no evidence to
explain the volume, frequency, or size of the transactions
identified by the government.”).
10

While that inference is rebuttable, the allocation of the burden
of proof dictates that the Store must point to some significantly
probative evidence to rebut it (and, thus, fend off summary
judgment).”).
Cedar Food Market has failed to sustain its summary judgment
burden of putting forth evidence to support its claim that FNS’
determination was invalid. 12

Accordingly, the Motion for Summary

Judgment will be granted.
IV.

CONCLUSION
For the foregoing reasons, FNS’ Motion for Summary Judgment

will be granted.

An appropriate Order shall issue on this date.

Dated: December 19, 2019

__s/ Renée Marie Bumb_______
RENÉE MARIE BUMB
UNITED STATES DISTRICT JUDGE

12

Cedar Food Market’s Complaint does not alternatively
assert that even if FNS’ determination as to trafficking was
valid, the sanction of permanent disqualification was arbitrary
and capricious. See Atl. Deli & Grocery, 2011 WL 2038758 at *5
(“The standard of review for the imposition of a sanction under
SNAP is whether the Secretary’s action was arbitrary or
capricious.”). Nonetheless, FNS moves for summary judgment on
this issue. Assuming arguendo for purposes of this motion only,
that Cedar Food Market does challenge the severity of the sanction
imposed, the Court holds that FNS correctly concluded that the
record did not contain “substantial evidence that [the] store . .
. had an effective policy and program in effect to prevent
[trafficking],” 7 U.S.C. § 2021(b)(3)(B) (emphasis added), and
therefore did not arbitrarily or capriciously impose the sanction
of permanent disqualification from the SNAP program.
11