TWIN GROCERY v. DEEGAN et al

Filing 9

MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE MITCHELL S. GOLDBERG ON 5/31/17. 5/31/17 ENTERED AND COPIES EMAILED.(rf, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
__________________________________________
:
TWIN GROCERY,
:
Plaintiff,
:
CIVIL ACTION
:
:
v.
:
No. 16-6151
:
ROBERT T. DEEGAN, et al.,
:
Defendants.
:
:
Goldberg, J.

May 31, 2017
Memorandum Opinion

Plaintiff Alex M. Torres seeks review of an administrative decision disqualifying his
business, Twin Grocery, from participating in the United States Department of Agriculture’s
Supplemental Nutrition Assistance Program for three years.1 Plaintiff also contends that the
process by which the disqualification decision was made violated his due process rights.
Presently before me is Defendants’ motion to dismiss in part and for summary judgment in part.
Plaintiff failed to file a response to Defendants’ motion. For the reasons that follow, the motion
will be granted in its entirety.
I.

STATUTORY FRAMEWORK
This action is brought under the Food and Nutrition Act of 2008, 7 U.S.C. § 2011 et seq.,

formerly referred to as the food stamp program and now known as the Supplemental Nutrition
Assistance Program (“SNAP”). SNAP is intended to enable “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.
1

While the caption of the Complaint names Twin Grocery as the Plaintiff, the body of the
Complaint refers to Alex M. Torres, Twin Grocery’s proprietor, as the Plaintiff.
1

The Supplemental Nutrition Assistance Program for Women, Infants and Children
(“WIC”), an outgrowth of SNAP, was established to provide “supplemental foods and nutrition
education” to “pregnant, postpartum, and breastfeeding women, infants, and young children from
families with inadequate income.” 42 U.S.C. § 1786(a).
The Food and Nutrition Service (“FNS”) is an agency of the USDA that administers WIC
and SNAP through collaboration with state-level entities.
Pursuant to this arrangement, the Pennsylvania Department of Health (“DOH”) is
responsible for imposing sanctions on stores for violations of the WIC program’s terms and
conditions. Sanctions can range from a civil money penalty (“CMP”) to permanent
disqualification from participating in the WIC program. 28 Pa. Code §§ 1107.1–1107.2.
The FNS, however, is responsible for imposing sanctions on stores that violate SNAP’s
terms and conditions. 7 C.F.R. § 278.6(a). In some circumstances, the FNS is required to
disqualify a store from participation in SNAP when the store has been disqualified from
participation in WIC. For example, as is relevant to the case before me, reciprocal SNAP
disqualification is required where a store has been disqualified from WIC based on a “pattern of
claiming reimbursement for the sale of an amount of a specific food item which exceeds the
store’s documented inventory of that food item for a specified period of time.” 7 C.F.R.
§ 278.6(e)(8)(i)(A). This mandatory SNAP disqualification must be for the same duration as the
WIC disqualification. 7 U.S.C. § 2021(g)(2)(A).
However, the FNS has discretion to impose a CMP in lieu of this disqualification where
“disqualification would cause hardship” to households receiving SNAP benefits. 7 C.F.R.
§ 278.6(f)(1). Such a hardship applies where a store “subject to a disqualification is selling a
substantial variety of staple food items . . . and . . . there is no other authorized retail food store in

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the area selling as large a variety of staple food items at comparable prices.” 7 C.F.R.
§ 278.6(f)(1).
II.

FACTUAL BACKGROUND2
Alex M. Torres owns and operates a neighborhood convenience store, Twin Grocery, in

Chester, Pennsylvania. Twin Grocery has participated in SNAP for the past six (6) years.
(Compl. ¶ 1.) In the Complaint, Torres alleges that a former employee made “an honest mistake
for WIC over-payments in an amount totaling less than $30.” Torres states that, after he learned
of the issue, he terminated the employee, reimbursed all moneys owed and took other steps to
ensure that he was in full compliance. Torres further alleges that (1) he never knowingly violated
the terms of the WIC or SNAP programs, (2) a WIC agent told him that he was in “full
compliance” with all WIC requirements on December 10, 2015 and (3) he never received any
written notice regarding his alleged non-compliance from the WIC office. (Id. at ¶¶ 4-9.)
The administrative record discloses the following:
During unannounced “compliance buys” conducted on July 8, 2015 and September 18,
2015, the DOH determined that Twin Grocery was overcharging for certain items.
(Administrative Record 78-80.)
The DOH sent Torres a letter dated May 6, 2016 setting forth the violations discovered
during the compliance buys and notifying Torres that, as a result, Twin Grocery was disqualified
2

In support of their motion, Defendants submitted a statement of undisputed facts. This
statement almost exclusively relies upon evidence contained in the underlying administrative
record. As noted above, Torres failed to respond to the instant motion and, therefore, the facts
laid out by Defendants will be considered undisputed. See Fed. R. Civ. P. 56(e)(2).
Furthermore, in the absence of any argument from Plaintiff that Defendants’ motion for
summary judgment is premature, I conclude it is appropriate to entertain Defendants’ arguments
for summary judgment. See Lugo v. United States, 2009 WL 928136, at *3 (S.D.N.Y. Mar. 30,
2009) (whether FNS’ imposition of a particular penalty is “arbitrary or capricious is a matter of
law appropriately determined on a motion for summary judgment.”)
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from participating in the WIC program for three years. (A.R. 78-82; 28 Pa. Code § 1107.1a(c)(3)
(DOH “will disqualify a WIC authorized store for 3 years for . . . [t]wo or more incidences of
overcharges”)). The letter also informed Torres of his right to appeal the WIC disqualification
through state-level administrative review as well as the possibility of a reciprocal SNAP
disqualification. Torres did not appeal the WIC disqualification. (A.R. 81-82.)
By letter dated July 1, 2016, the FNS notified Torres that, in light of the WIC
disqualification, Twin Grocery was being reviewed for disqualification from SNAP or,
alternatively, a CMP. The letter informed Torres that he may present information or evidence
indicating that he had not been disqualified from WIC, that he had not been informed of the
possibility of a reciprocal SNAP disqualification, or that an appeal of the WIC disqualification
was ongoing. (A.R. 83-84.) Torres received this letter on July 5, 2016. (A.R. 85.)
Torres responded by letter dated July 7, 2016 in which he claimed that he mailed a letter
of appeal to DOH on an unspecified date and that DOH never informed him that he faced a
reciprocal SNAP disqualification. Torres explained that he terminated the employee responsible
for the overcharges, his customers relied on the SNAP benefits and he “wouldn’t be able to keep
his business” without SNAP. (A.R. 88-89.)
The FNS reviewed Torres’ submission as well as data on other SNAP participating stores
in Twin Grocery’s area. The FNS determined that a CMP in lieu of disqualification was not
appropriate because there were thirteen SNAP participating stores selling as large a variety of
staple food items at comparable prices within a one-mile radius of Twin Grocery.3 As such, the

3

In the Complaint, Torres disputes “upon information and belief” the number of SNAP
participating stores in his “service area.” (Compl. ¶ 12.) He, however, did not respond to the
instant motion and offers no evidence in support of this assertion or the other allegations
contained in the Complaint.
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FNS concluded that there would be no hardship to SNAP households if Twin Grocery was
disqualified. (A.R. 90-93.)
By letter dated September 12, 2016, Torres was advised of this determination and his
right to appeal the denial of a CMP to the FNS Administrative Review Branch. (A.R. 94-95.)
Torres timely requested such an appeal. In support of his appeal, he stated that approximately
70% of his customers use SNAP benefits and he reiterated that he terminated the employee who
had made the overcharges, had taken additional steps to ensure compliance and that he feared he
would lose his business without SNAP. (A.R. 98.)
By letter dated September 22, 2016, Administrative Review Officer Robert Deegan
acknowledged Torres’ appeal and requested that Torres submit any information in support of his
position within three weeks. Torres did not submit any supporting information. (A.R. 101, 105.)
On October 26, 2016, Deegan issued the Final Agency Decision, in which Deegan
concluded that the three year reciprocal disqualification was properly imposed and a CMP was
properly denied. Deegan determined that DOH properly notified Torres of the WIC violations,
his appeal rights and the possibility of a reciprocal SNAP disqualification. Deegan found no
evidence that Torres exercised his right to appeal the WIC disqualification. Deegan concluded
the denial of a CMP was proper because there were a number of other stores in the area selling as
large a variety of staple food items at comparable prices as Twin Grocery. (A.R. 106-111.)
The Complaint names the United States, Deegan, and, Tom Vilsack, who was the
Secretary of the USDA at the time the Complaint was filed.
III.

LEGAL STANDARD
Under Federal Rule of Civil Procedure 56(a), summary judgment is proper “if the movant

shows that there is no genuine dispute as to any material fact and the movant is entitled to

5

judgment as a matter of law.” A dispute is “genuine” if there is a sufficient evidentiary basis on
which a reasonable jury could return a verdict for the non-moving party, and a factual dispute is
“material” if it might affect the outcome of the case under governing law. Kaucher v. County of
Bucks, 455 F.3d 418, 423 (3d Cir. 2006) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986)). The court must view the evidence in the light most favorable to the non-moving
party. Galena v. Leone, 638 F.3d 186, 196 (3d Cir. 2011). However, “unsupported assertions,
conclusory allegations or mere suspicions” are insufficient to overcome a motion for summary
judgment. Schaar v. Lehigh Valley Health Servs., Inc., 732 F. Supp. 2d 490, 493 (E.D. Pa. 2010)
(citing Williams v. Borough of W. Chester, Pa., 891 F.2d 458, 461 (3d Cir. 1989)).
The movant “always bears the initial responsibility of informing the district court of the
basis for its motion, and identifying those portions of [the record] which it believes demonstrate
the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986). Where the non-moving party bears the burden of proof on a particular issue at trial, the
moving party’s initial Celotex burden can be met by showing that the non-moving party has
“fail[ed] to make a showing sufficient to establish the existence of an element essential to that
party’s case.” Id. at 322.
After the moving party has met its initial burden, summary judgment is appropriate if the
non-moving party fails to rebut the moving party’s claim by “citing to particular parts of
materials in the record, including depositions, documents, electronically stored information,
affidavits or declarations, stipulations . . . , admissions, interrogatory answers, or other materials”
that show a genuine issue of material fact or by “showing that the materials cited do not establish
the absence or presence of a genuine dispute.” Fed. R. Civ. P. 56(c)(1)(A).

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IV.

DISCUSSION
a. Who is a Proper Defendant in this Action?
Defendants urge that the claims against Defendants Deegan and Vilsak must be dismissed

because, under the Food and Nutrition Act of 2008, sovereign immunity has been waived solely
with respect to the United States.
“The basic rule of federal sovereign immunity is that the United States cannot be sued at
all without the consent of Congress.” Block v. N. Dakota, 461 U.S. 273, 287 (1983). “A
necessary corollary of this rule is that when Congress attaches conditions to legislation waiving
the sovereign immunity of the United States, those conditions must be strictly observed, and
exceptions thereto are not to be lightly implied.” Id.
The relevant statute provides a limited waiver of sovereign immunity. It states, in
relevant part, if a store “feels aggrieved by such final determination, it may obtain judicial
review thereof by filing a complaint against the United States. . . .” 7 U.S.C. § 2023(a)(13)
(emphasis added).
Section 2023(a)(13) bars suits against any other entity or individual other than the United
States. See Calderon v. USDA, Food & Nutrition Serv., 756 F. Supp. 181, 184 (D.N.J. 1990) (the
statutory language permitting suits “against the United States” was not meant to waive immunity
“with regard to any governmental party other than the United States itself”); Ratsamy v. USDA,
2008 WL 919545, at *2 (D. Minn. Apr. 2, 2008) (same); Arias v. United States, 2014 WL
5004409, at *14 (S.D.N.Y. Sept. 29, 2014) (same). As such, the claims against Defendants
Deegan and Vilsack must be dismissed.

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b. Challenge to Three Year Disqualification
The Government argues that this Court lacks subject matter jurisdiction to review the
FNS’ imposition of a reciprocal SNAP disqualification following Twin Grocery’s WIC
disqualification. I agree. Pursuant to the regulations discussed above, imposition of the reciprocal
disqualification is mandatory. See 7 C.F.R. § 278.6(e)(8)(i)(A); see also 7 U.S.C. 2021(g)(2)(A).
Furthermore, the applicable statutes and regulations explicitly preclude judicial review of a
reciprocal SNAP disqualification. 7 U.S.C. § 2021(g)(2)(C) (reciprocal disqualification “shall
not be subject to judicial or administrative review”); 7 C.F.R. § 278.6(e)(8)(iii)(C) (reciprocal
disqualification “[s]hall not be subject to administrative or judicial review under the Food Stamp
Program”).
These statutes and regulations deprive courts of subject matter jurisdiction to review
reciprocal disqualifications like the one imposed in the case before me. See, e.g., Salmo v.
United States, 226 F. Supp. 2d 1234, 1237 (S.D. Cal. 2002) (“Congress has unambiguously
stated that decisions by the FNS disqualifying a store from participating in [SNAP] as a result of
a prior WIC disqualification are not subject to administrative or judicial review”); Guzman v.
USDA, 931 F. Supp. 2d 488, 495 (S.D.N.Y. 2013); Simone Enterprises, LLC v. USDA, 2011
WL 3236222, at *3 (E.D. Wis. July 27, 2011); Dasmesh v. United States, 501 F. Supp. 2d 1033,
1038-39 (W.D. Mich. 2007); Islam Corp. v. Johanns, 2007 WL 1520930, at **2-3 (W.D. Ky.
May 21, 2007).
Consistent with the above analysis, I conclude that this Court does not have subject
matter jurisdiction to review the imposition of a reciprocal SNAP disqualification. However, the
refusal to impose a CMP in lieu of disqualification presents a separate issue and one that is not
expressly exempted from judicial review. See Simone Enterprises, LLC, 2011 WL 3236222, at

8

*3; Dasmesh, 501 F. Supp. 2d at 1039; Guzman, 931 F. Supp. 2d at 494–95. The merit of Torres’
challenge to the decision not to impose a CMP in lieu of disqualification is discussed below.
c. Whether the Denial of a Civil Monetary Penalty was Arbitrary or Capricious
“The standard of review for the imposition of a sanction under SNAP is whether the
Secretary’s action was arbitrary or capricious, i.e., whether it was ‘unwarranted in law or without
justification in fact.’” Reyes v. United States, 2013 WL 5786360, at *3 (E.D. Pa. Oct. 28, 2013)
(quoting Atl. Deli & Grocery v. United States, 2011 WL 2038758 (D.N.J. May 23, 2011)).
As noted above, the FNS may impose a CMP in lieu of disqualification only when “the
firm subject to a disqualification is selling a substantial variety of staple food items . . . and . . .
there is no other authorized retail food store in the area selling as large a variety of staple food
items at comparable prices.” 7 C.F.R. § 278.6(f)(1).
In determining whether FNS’ decision was arbitrary or capricious, the following
undisputed facts are relevant: there were at least thirteen stores within one mile of Twin Grocery
that sold as large a variety of staple food items at comparable prices and accepted SNAP benefits
and Torres submitted no evidence of hardship to the community.4
The FNS’ decision to deny a CMP in lieu of a three-year disqualification followed
rationally from these facts. See Lugo v. United States, 2009 WL 928136, at *4 (S.D.N.Y. Mar.
30, 2009) (concluding that the decision to deny a CMP was not arbitrary nor capricious as “the

4

In the Complaint, Torres argues that the “agency abused its discretion in not imposing a lesser
penalty, including a civil monetary penalty (CMP), based on the erroneous conclusion that
Plaintiff failed to submit sufficient evidence to demonstrate that Plaintiff had established an[d]
implemented an effective compliance policy and program to prevent violations of the SNAP.”
(Compl. ¶ 18.) Whether or not Torres implemented an effective policy and program to prevent
future violations of SNAP is irrelevant to the inquiry before me which is focused solely on
hardship to the community. Contrary to Torres’ characterization, the denial of a CMP was not
premised on his failure to implement a compliance program but rather the lack of hardship to the
community. (See A.R. 110.)
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record is unchallenged that there are several authorized retail food stores within one mile of
Plaintiff's store that sell as large a variety of staple food items at comparable prices”). Under
these circumstances, no reasonable fact finder could conclude that the decision was arbitrary and
capricious. Therefore, summary judgment in Defendants’ favor is appropriate.
d. Due Process
Defendants also argue that they are entitled to summary judgment on Torres’ due process
claim. “At a minimum, due process requires notice and a hearing.” Wilson v. MVM, Inc., 475
F.3d 166, 178 (3d Cir. 2007) (citing Reichley v. Pa. Dept. of Agriculture, 427 F.3d 236, 247 (3d
Cir. 2005)). However, “when that notice and hearing must be provided and how intensive the
hearing must be is a determination that depends on the balancing of three interests: (1) the
private interest at stake, (2) the risk of error in the procedure used compared with the degree of
improved accuracy that additional procedures would provide, and (3) the government’s interest.”
Wilson, 475 F.3d at 178.
In the Complaint, Torres argues that the USDA violated his due process rights under the
Fifth Amendment through the following actions:
25. [ ] [The Agency failed] to inform a retailer under the SNAP program by a
clear statement, as to how, when and in what specific format the Appellant is to
submit sufficient evidence to demonstrate that it had established an effective
compliance policy and program to prevent violations of the SNAP.
26. The USDA charge letter to Plaintiff dated May 6, 2016 failed to state that the
Plaintiff was required had established an implemented [sic] an effective
compliance policy and program to prevent violations of the SNAP.
27. The USDA charge letter to Plaintiff dated May 6, 2016 failed to provide
Plaintiff with any form of notice and/or clear statement informing the Plaintiff
that he was required to establish an implemented an effective [sic] compliance
policy and program to prevent violations of the SNAP together with providing
Plaintiff sufficient information, as to the method, format and procedure for
submitting this information.

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28. The USDA charge letter to Plaintiff dated May 6, 2016 failed to provide
Plaintiff with any form or information of any form of lesser penalty than a three
year disqualification.
29. The final agency decision dated October 26, 2016 is arbitrary, capricious and
error [sic] in violation of Plaintiff’s right of due process of law under the
provisions of the Fifth Amendment.
(Compl. ¶¶ 25-29.)
For the reasons discussed above in footnote four, paragraphs 25, 26 and 27 are immaterial
because the existence of an effective compliance policy is irrelevant.
The allegation in paragraph 28 is contradicted by evidence contained in the
administrative record. On July 1, 2016, the FNS sent Torres a letter stating that he was being
considered for a three-year penalty or a CMP and advising him that he had a right to reply to the
charges. (A.R. 83.) Torres has not offered any evidence to suggest that he did not receive this
letter, even assuming such a failure could constitute a denial of due process.
Paragraph 29 is conclusory and, for the reasons discussed above, the evidence does not
support a conclusion that the agency decision was arbitrary or capricious.
Rather, the undisputed evidence establishes that: (1) Torres was given notice of and an
opportunity to be heard regarding his WIC disqualification; (2) he was informed of the
possibility of a reciprocal SNAP disqualification; (3) he was given an opportunity to present
evidence that he had not been disqualified from WIC, that he had not been informed of the
possibility of a reciprocal SNAP disqualification, or that an appeal of the WIC disqualification
was ongoing; (4) he was invited to submit evidence in support his appeal to the Administrative
Review Branch; and (5) he failed to provide any such evidence.
Twin Grocery arguably has a property interest in continued participation in SNAP. Cross
v. United States, 512 F.2d 1212, 1217 (4th Cir. 1975) (“in a very real sense plaintiff will be

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deprived of ‘property’ if he is disqualified from participation in the program for any period of
time”). That said, there are “strong governmental interests in reducing food stamp abuse and in
administering the program for the primary beneficiaries, namely, the SNAP recipients.” Tony’s
Pantry Mart Inc. v. United States of Am. Dep’t of Agric. Food & Nutrition Serv., 175 F. Supp.
3d 987, 996 (N.D. Ill. 2016).
In light of the balancing of these interests and the undisputed evidence establishing that
Torres was given prior notice and invited to present evidence in support of his hardship position,
I conclude that Torres was given sufficient notice and an opportunity to be heard twice before the
final decision to deny a CMP in lieu of disqualification was made. As such, Defendants are
entitled to summary judgment.
V.

CONCLUSION
For the foregoing reasons, Defendants’ motion will be granted in its entirety. An

appropriate order follows.

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