JB's Food Mart et al v. United States of America et al
Filing
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Memorandum Opinion and Order granting 16 Defendant's Motion for Summary Judgment. Judge Jack Zouhary on 4/16/2014. (D,L)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OHIO
WESTERN DIVISION
JB’s Food Mart, et al.,
Case No. 3:13 CV 1869
Plaintiffs,
MEMORANDUM OPINION
AND ORDER
-vsJUDGE JACK ZOUHARY
United States of America,
Defendant.
INTRODUCTION
Plaintiffs JB’s Food Mart (“JB”) and Tannous Touma (“Touma”) filed this action alleging the
United States improperly revoked JB’s authorization to participate in the Supplemental Nutrition
Assistance Program (“SNAP”). The United States moved for summary judgment, arguing the issue
of procedural due process is moot and Plaintiffs lack the requisite business integrity for SNAP
authorization (Doc. 16). Plaintiffs responded, contesting the issue of procedural due process only
(Doc. 17).
BACKGROUND
JB is a Toledo, Ohio convenience store (Doc. 15-1 at 2). In March 2010, T&M Touma, LLC
(“T&M”) purchased JB from its prior owner, J.H. Eid & Sons, Inc. (“Eid & Sons”) (id. at 85–92).
Touma was a 35 percent shareholder in Eid & Sons and the company’s treasurer (id. at 95–98).
Touma owns T&M (id. at 74–78).
Between July 2003 and December 2003, the Ohio Department of Public Safety (“ODPS”)
investigated JB for illegal use of, and trafficking in, food stamps (id. at 2–5).
During the
investigation, confidential informants exchanged food stamps for ineligible items, including cleaning
supplies, clothing, alcohol, music CDs, movie DVDs, fireworks, cell phones, and money orders (id.
at 2–12). Touma and Jacques J. Eid (“Eid”), President of Eid & Sons, were arrested on December 11,
2003 (id. at 3). In May 2004, a state court found Touma guilty of attempted illegal use of food stamps
(id. at 31–32).
JB’s 2004 Disqualification from SNAP
The USDA’s Food and Nutrition Service (“FNS”) administers SNAP. On June 24, 2004, FNS
sent JB -- then owned by Eid & Sons -- a letter by certified mail detailing ODPS’s investigation (id.
at 6–13). The letter stated “careful analysis of [JB] Ohio Direction Card/Electronic Benefit Transfer
(EBT) transactions . . . disclosed clear and repetitive patterns of Food Stamp Program activity
markedly incompatible with legitimate food sales and indicative of trafficking” (id. at 9). FNS
explained it would consider disqualifying JB from SNAP participation and described the procedure
to qualify for a civil money penalty (“CMP”) in lieu of disqualification (id. at 10). The letter invited
JB to present any evidence or explanation regarding the charges within ten days (id. at 10–11).
FNS sent JB another letter by certified mail dated July 13, 2004 (id. at 14, 17) advising that
JB’s failure to renew an irrevocable letter of credit, which expired July 7, 2004, meant that its food
stamp authorization was terminated effective July 8, 2004 (id. at 14). In other words, the failure to
renew disqualified JB from SNAP (id.). The July 13, 2004 letter further explained FNS found JB had
committed trafficking violations, subjecting JB to permanent disqualification from SNAP (id. at
14–15). The letter noted JB was not eligible for CMPs in lieu of permanent disqualification because
such relief requires that “[f]irm ownership . . . . not (be) [sic] aware of, . . . [] approve [of], . . . []
benefit from, . . . or [] (be) [sic] in any way involved in the conduct or approval of trafficking
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violations” (id. at 15) (ellipses in original). Eid participated in, and derived personal benefit from,
the trafficking violations, rendering JB ineligible for CMPs (id.).
FNS Denies JB’s First Post-Sale Application
On September 24, 2010, shortly after T&M acquired JB, Plaintiffs filed a new application for
SNAP authorization (id. at 20–25). FNS sent Plaintiffs a letter denying SNAP authorization via
Federal Express on November 17, 2010 and delivered the next day (id. at 33–34). Someone present
at the store signed for the letter, as Touma was overseas (see id. at 36). FNS did not notify Plaintiffs’
counsel of the SNAP denial, even though Plaintiffs’ counsel filed the SNAP application on Plaintiffs’
behalf (id.).
Touma found the November 2010 denial letter upon his return to the United States. He then
faxed the letter to his counsel on December 16, 2010 (id.). The same day, his counsel mailed a letter
to FNS, requesting review of JB’s application denial (id.). FNS denied the request as untimely by
letter dated December 20, 2010 (id. at 41). Plaintiffs submitted an Appeal Request on December 30,
2010 (id. at 48). The record shows no agency response to that Request (see Doc. 17 at 2).
Plaintiffs filed a “second appeal” request on October 26, 2011 (Doc. 15-1 at 55–56). See also
id. at 58–59, 61–62, 64–65 (December 5, 2011, January 10, 2012, and January 27, 2012 letters from
Plaintiffs’ counsel to FNS, all following-up on “second appeal” request). On January 30, 2012, FNS
denied the “second appeal” request as untimely (id. at 67).
Touma then sought judicial review of FNS’s denial decisions in this Court. See JB’s Food
Mart v. United States, Case No. 3-12-cv-585-JZ (N.D. Ohio 2012). In August 2012, this Court
dismissed that prior case without prejudice, following a settlement agreement between the parties
(Doc. 15-1 at 70).
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FNS Denies JB’s Second Post-Sale Application
Two months later, on October 12, 2012, Plaintiffs filed a second application for SNAP
authorization (id. at 73–78). FNS requested additional information on Eid & Sons’ sale of JB to T&M
(id. at 82). Plaintiffs provided FNS with copies of the Purchase Agreement, Promissory Note, and
Touma’s food and liquor licenses (id. at 85–98).
FNS denied JB’s second application for SNAP authorization by letter dated November 6, 2012
(id. at 103–04). FNS found Touma held a shareholder, officer, and/or owner interest in JB at the time
of the 2004 violations, subjecting Plaintiffs to permanent denial under 7 C.F.R. § 278 (1)(k) (id. at
103). The letter advised Plaintiffs of the right to request review of the decision within ten days (id.).
Plaintiffs timely requested administrative review in a letter dated November 14, 2012 (id. at
107–09). The letter alleged Touma did not have an ownership interest in JB at the time of the 2004
disqualification (id. at 107), but rather only had a 35 percent interest in Eid’s liquor permit, not JB
itself (id. at 107–08). Plaintiffs further cited Touma’s expungement of his 2004 conviction, an attempt
to invalidate another ground for FNS’ denial: Touma’s personal involvement in the trafficking
violations (id. at 108).
FNS acknowledged receipt of the request for administrative review, advising Plaintiffs they
could supplement the application with additional appropriate information (id. at 127). Plaintiffs did
not submit any supplemental information (id. at 130). FNS issued its Final Agency Decision denying
SNAP authorization on July 23, 2013 (id. at 153–58). The decision explained there was sufficient
evidence to support denial of SNAP authorization, including that Touma had an interest in JB at the
time of the 2004 disqualification (id. at 153–58). FNS explained Plaintiffs’ right to seek review of
the final agency decision (id. at 158). Plaintiffs timely filed this action (see Doc. 1).
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SUMMARY JUDGMENT STANDARD
Pursuant to Federal Civil Rule 56(a), summary judgment is appropriate where there is “no
genuine issue as to any material fact” and “the moving party is entitled to judgment as a matter of
law.” This burden “may be discharged by ‘showing’-- that is, pointing out to the district court -- that
there is an absence of evidence to support the nonmoving party’s case.” Celotex Corp. v. Catrett, 477
U.S. 317, 323 (1986). When considering a motion for summary judgment, the court must draw all
inferences from the record in the light most favorable to the non-moving party. See Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The court is not permitted to weigh the
evidence or determine the truth of any matter in dispute; rather, the court determines only whether the
case contains sufficient evidence from which a jury could reasonably find for the non-moving party.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248–49 (1986). The administrative record supports
FNS’s conclusions regarding JB’s business integrity, and JB does not oppose summary judgment on
that ground. See Federal Civil Rule 56(e)(3).
DISCUSSION
A claim becomes moot when the issues surrounding the claim are no longer live. Cleveland
Branch, N.A.A.C.P. v. City of Parma, 263 F.3d 513, 530 (6th Cir. 2001) (citing County of Los Angeles
v. Davis, 440 U.S. 625, 631 (1979)). Issues are no longer live when “subsequent events make it
absolutely clear that the allegedly wrongful behavior cannot be expected to recur and interim relief
or events have completely and irrevocably eradicated the effects of the alleged violation.” Cleveland
Branch, N.A.A.C.P, 263 F.3d at 530–31 (internal quotation marks omitted).
Procedural due process requires “notice reasonably calculated . . . to apprise interested parties
of the pendency of the action” and an opportunity to be heard. Mullane v. Central Hanover Bank &
Trust Co., 339 U.S. 306, 314 (1950). An initial denial of procedural due process may be cured by
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subsequent events, such as de novo trial. See Kim v. United States, 121 F.3d 1269, 1274–75 (9th Cir.
1997).
Plaintiffs’ due process claim focuses on the 2010 denial of SNAP authorization -- in Plaintiffs’
words, “Plaintiffs’ central challenge is that [FNS] deprived them of due process of law by
permanently denying [Plaintiffs’] authority to participate as a retailer in SNAP without proper notice”
(Doc. 17 at 4). Plaintiffs argue the November 2010 denial letter, sent to JB while Touma was abroad,
provided constitutionally inadequate notice. Further, Plaintiffs argue that FNS’s failure to respond
to repeated letters and phone calls following counsel’s receipt of the November 2010 denial letter
means “the[] review process was impermissibly inundated with repeated denials of due process which
offend accepted constitutional protections” (id. at 6).
Even if the November 2010 denial letter provided constitutionally inadequate notice,
subsequent events moot Plaintiffs’ procedural due process claim. This is so because when FNS
considered the subsequent October 2012 application for SNAP authorization, Plaintiffs received
precisely what they claim was denied them by the manner in which FNS sent the November 2010
denial letter -- a substantive FNS decision regarding whether, in light of JB’s “new” ownership, JB
could again participate in SNAP. That substantive decision was then followed by administrative
review.
Plaintiffs do not argue that any aspect of the second review process was procedurally
inadequate. Nor do they challenge the substance of the decision to deny JB’s second SNAP
application. FNS’s decision is supported by evidence in the record, which shows Touma both
personally committed food stamp trafficking offenses and had an earlier ownership interest in JB
when it committed trafficking offenses (see Doc. 15-1 at 2–4, 6–12, 31–32, 71–72, 94–98).
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CONCLUSION
For the above reasons, Defendant’s Motion for Summary Judgment (Doc. 16) is granted.
IT IS SO ORDERED.
s/ Jack Zouhary
JACK ZOUHARY
U. S. DISTRICT JUDGE
April 16, 2014
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