Hanif v. United States of America, USDA
OPINION AND ORDER granting 11 the United States's Motion for Summary Judgment. (Signed by Judge Melinda Harmon) Parties notified.(rhawkins)
United States District Court
Southern District of Texas
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
MOHAMMAD HANIF d/b/a SUNNY’S
UNITED STATES OF AMERICA,
February 02, 2017
David J. Bradley, Clerk
CIVIL ACTION NO. H-15-2718
OPINION AND ORDER OF DISMISSAL
Pending before the Court in the above referenced cause,
seeking judicial review of an administrative decision under 7
U.S.C. § 2013, is a motion for summary judgment (instrument #11),
filed by the United States on behalf of the Secretary, United
States Department of Agriculture (“USDA”), Food and Nutrition
Service (“FNS”), by and through the United States Attorney for the
Southern District of Texas, seeking affirmation of the USDA, FNS’
final decision against Plaintiff Mohammad Hanif d/b/a Sunny’s Food
Store (“Plaintiff”), which permanently disqualified Plaintiff from
Nutrition Assistant Program (“SNAP”) and denied him a civil money
penalty in lieu of disqualification.
Although represented by
counsel, Plaintiff has failed to file a response to the motion.
In 1963 Congress passed the Food Stamp Act of 1964, Pub. L.
No. 88-525, § 2, 78 Stat. 703, 703, codified at 7 U.S.C. §§ 20112036, to “permit those households with low incomes to receive a
greater share of the Nation’s food abundance” and “to obtain a more
nutritious diet through normal channels of trade by increasing food
Under it, “[r]etail stores authorized to
participate in the program may accept food stamp benefits instead
of cash for designated food items,” and then the stores would
“redeem these benefits with the government for face value.”
v. U.S., 566 F.3d 1150, 1153 (D.C. Cir. 2009), citing 7 U.S.C. §
Congress amended the statute in 2008, renaming it the
Food and Nutrition Act and changing the name of the “food stamp
program” to the Supplemental Food and Nutrition (“SNAP”).
It is a
federal benefits program that allows qualified households, or
“beneficiaries,” to buy only food at approved participating stores,
Instead of paper stamps, SNAP benefits
are provided by FNS to eligible households through electronic
benefit transfer (“EBT”) cards, plastic cards that are swiped like
credit cards at the cash register.
7 U.S.C. §§ 2012 and 2016(a).
These EBT cards may be used “only to purchase food in retail stores
that have been approved for participation” in SNAP, § 2016(b), “may
be accepted . . . only in exchange for eligible food,” 7 C.F.R. §
278.2(a), and generally “may not be accepted in exchange for cash,”
7 C.F.R. § 278(a).
disqualify any approved retail food store and/or assess a civil
penalty of up to $100,000 for each violation of the statute
the regulations promulgated under it. 7 U.S.C. § 2021(a).
appropriate regional FNS office must send the noncomplying store a
letter of charges indicating the particular violations or actions
that the FNS believes are violations of the Act and give the store
ten days to respond with evidence, information or explanation.
C.F.R. § 278.6.1
The FNS then reviews the letter of charges, the
response, and any other information.
7 C.F.R. § 278.6(c).
The agency’s determination is final unless the aggrieved party
files a written request for further review under an arbitrary and
capricious standard under 7 C.F.R. § 278.6(n).
If the agency’s
decision to disqualify a store is based on trafficking in SNAP
benefits, that disqualification is effective immediately upon
receipt of the notice of disqualification and no stay will be
7 C.F.R. § 278.6(b)(2)(I).
Standard of Review
Once a final decision of permanent disqualification from SNAP
has been issued by the USDA, an aggrieved party can file a
complaint against the United States seeking judicial review under
7 U.S.C. § 2023(a)(13) in the United States District Court in the
A firm, after receiving the letter from the FNS (“the
charge letter”), can request a civil monetary penalty in the
place of disqualification, 7 C.F.R. § 278.6(b)(a). The firm
must respond orally or in writing within ten days of receipt of
the charge letter. Id.
jurisdiction within 30 days after the date of receipt of the notice
The court’s review is “a trial de novo,” by
which “the court shall determine the validity of the questioned
administrative action in issue.”
§ 279.7(a) and (c).
§ 2023(a)(13) and (15); 7 C.F.R.
The store owner/plaintiff bears the burden of
challenged agency decision was not valid because the alleged
violations of the statute did not occur.
Fells v. U.S., 627 F.3d
1250, 1253 (7th Cir. 2010)(“Although the statute itself is silent
as to the issue of which party bears the burden of proof in a trial
de novo under § 2023, other circuits have held consistently that,
given the nature of the statutory scheme, a store owner who seeks
to set aside an agency action bears the burden of proof.”), citing
Kim v. U.S., 121 F.3d 1269 (9th Cir. 1997), Warren v. U.S., 932 F.2d
582, 586 (6th Cir. 1991), and Redmond v. U.S., 507 F.2d 1007 (5th
That burden stays with the aggrieved party throughout
the trial de novo, and the agency prevails unless that aggrieved
party proves it should be set aside. Redmond, 507 F.2d at 1011-12.
By permitting a trial de novo, Congress indicated that the district
court was not bound by the evidence in the administrative record.
Id. at 1011.
A court “may review not only the determination that
a violation took place, but also the propriety of the sanction
Aliraj Enterprises, Inc. v. U.S., Civ. No. SA-12-CV-
00389-DAE, 2012 WL 690530, at *2 (W.D. Tex. Feb. 25, 2013), citing
Otto v. Block, 693 F.2d 472, 473 (5th Cir. 1982).
A sanction is
valid if it is not arbitrary and capricious, i.e., if it is
warranted in law or justified in facts.
arbitrary and capricious if it is unwarranted in law or without
regulations is a question of fact, and the district court must view
the opposing party’s evidence to determine whether the agency’s
decision is supported by the facts.
Goodman, 18 F.2d at 511.
disqualification is within the discretion of the administrator, the
scope of review is not as broad as that of the fact of violation,
and “[s]hould the district court conclude that the sanction is
invalid, the court would be empowered under § 2011 to enter such
judgment or order as it determines is in accordance with the law
and the evidence.”
Plaintiff’s complaint asserts that the decision to disqualify
him and his store permanently from SNAP and/or, alternatively, to
deny him instead the payment of a civil
monetary penalty, is
unlawful, arbitrary, and capricious, and contrary to law. #1, ¶9.
The United States disagrees and argues (1) the complaint should be
dismissed because it consists of legal conclusions unsupported by
any facts nor by law, and thus fails to state a claim for which
Plaintiff’s complaint that the government’s actions violated his
substantive and procedural due process rights; and (3) Plaintiff
failed to exhaust his administrative remedies by submitting an
untimely response to FNS’s charge letter.
Statement of Facts
The United States presents a statement of facts supported by
references to the exhibits attached to its motion for summary
judgment. Because Plaintiff has failed to respond, these facts are
During an investigation from 2014-15 by USDA, FNS, undercover
informants made eight visits to Sunny’s Food Store.
In seven of
those visits2 the informants were permitted by two store employees
to buy non-food items (e.g., paper, plastic items, soap, alcohol,
and cigarettes) with EBT cards, and on one visit, to obtain $5.00
in cash for $5 in EBT food benefits.
for EBT food benefits is known as a trafficking transaction.3
summary of the undercover informants’ visits to the store is found
at A.R. 57.
The FNS based its permanent disqualification sanction
on the most serious violation, the trafficking transaction.
The FNS sent a charge letter to Plaintiff on April 13, 2015
and advised him that the United States was considering assessing a
permanent disqualification from SNAP against him, based on the
alleged trafficking in $5.00 exchanged for EBT food benefits. A.R.
Plaintiff claims that he was traveling abroad and did not
These visits occurred in 7/8/14; 8/13/14; 8/18/14;
9/23/14; 10/1/14; 12/15/14, and 2/18/15.
For a full definition see § 271.2.
receive the charge letter, and that an employee put it away and
failed to give it to him, and thus he failed to respond to the
charge letter within the ten days he was given to do so.
On May 8,
2015, the FNS Operations Division issued a determination notice
permanently disqualifying Plaintiff.
In a letter
postmarked May 14, 2015, Plaintiff requested and was granted an
administrative review of the decision.
claimed that an FNS agent persuaded an uneducated employee to give
him $5.00 in cash.
On August 25, 2015 a Final Agency Decision was issued,
affirming the FNS decision to permanently disqualify Plaintiff and
his store for trafficking under 7 U.S.C. § 2021(b)(3)(B) and 7
C.F.R. § 278.6(e)(1)(i), after reviewing the information that
Plaintiff submitted in the request for review.
USDA’s final decision found that Plaintiff did not provide evidence
supporting his argument that he did not exchange SNAP benefits for
cash and that he was not eligible for a civil monetary penalty
because he had not submitted substantial evidence that he “had
established and implemented an effective compliance policy and
program to prevent violations of” SNAP.
#1, ¶ 6.
Plaintiff then filed the instant request for judicial review
on December 15, 2015.
Under 7 U.S.C. § 2023(a)(13), the
aggrieved Plaintiff must fil[e] a complaint against the United
States within thirty days after the date of delivery or service of
the final notice of determination upon it, requesting the court to
set aside such determination. Razzak, 2014 WL 582079, at *1; Ruhee
M., Inc. v. U.S., 2006 WL 1291356, at *4 (S.D. Tex. May 5, 2006).
“When waiver legislation contains a statute of limitations, the
limitations provision constitutes a condition on the waiver of
sovereign immunity,” and that condition must be strictly observed.
Block v. N. Dakota, 461 U.S. 273, 287 (1983).
If the Plaintiff
fails to meet the limitations deadline, the Court lacks subject
Omari v. U.S., No. C-12-1592 MEJ, 2012 WL
3939362, at *3 (N.D. Cal. Sept. 10, 2012).
Standard of Review
Summary judgment under Federal Rule of Civil Procedure 56(c)
is appropriate when, viewing the evidence in the light most
pleadings, depositions, answers to interrogatories and admissions
on file, together with the affidavits, show that there is no
genuine issue as to any material fact and that the moving party is
entitled to judgment as a matter of law.”
A dispute of material
fact is “genuine” if the evidence would allow a reasonable jury to
find in favor of the nonmovant. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986).
Where the nonmovant bears the burden of proof at trial,
the movant must offer evidence that undermines the nonmovant’s
claim or point out the absence of evidence supporting essential
elements of the nonmovant’s claim; the movant may, but does not
have to, negate the elements of the nonmovant’s case to prevail on
Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986); Lujan v. National Wildlife Federation, 497 U.S. 871, 885
(1990); Edwards v. Your Credit, Inc., 148 F.3d 427, 431 (5th Cir.
“A complete failure of proof concerning an essential
element of the nonmoving party’s case necessarily renders all other
Celotex, 477 U.S. at 323.
If the movant meets its burden and points out an absence of
evidence to prove an essential element of the nonmovant’s case on
which the nonmovant bears the burden of proof at trial, the
nonmovant must then present competent summary judgment evidence to
support the essential elements of its claim and to demonstrate that
there is a genuine issue of material fact for trial.
Ass’n of Gov’t Employees v. City Pub. Serv. Board, 40 F.3d 698, 712
(5th Cir. 1994).
“[A] complete failure of proof concerning an
essential element of the nonmoving party’s case renders all other
Celotex, 477 U.S. at 323.
The nonmovant may
unsubstantiated assertions that a fact issue exists, but must set
forth specific facts showing the existence of a genuine issue of
material fact concerning every element of its cause(s) of action.
Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir.
preclude summary judgment.
National Ass’n of Gov’t Employees v.
City Pub. Serv. Board, 40 F.3d at 713; Eason v. Thaler, 73 F.3d
1322, 1325 (5th Cir. 1996).
“‘[T]he mere existence of some alleged
factual dispute between the parties will not defeat an otherwise
properly supported motion for summary judgment . . . .’”
Farm Life Ins. Co. v. Gutterman, 896 F.2d 116, 118 (5th Cir. 1990),
quoting Anderson v. Liberty Lobby, Inc.. 477 U.S. 242, 247-48
“Nor is the ‘mere scintilla of evidence’ sufficient;
‘there must be evidence on which the jury could reasonably find for
Id., quoting Liberty Lobby, 477 U.S. at 252. The
Id., quoting In re Municipal Bond Reporting
Antitrust Litig., 672 F.2d 436, 440 (5th Cir. 1978), and citing
Fischbach & Moore, Inc. v. Cajun Electric Power Co-Op., 799 F.2d
194, 197 (5th Cir. 1986).
“If the evidence is merely colorable,
Thomas v. Barton Lodge II, Ltd., 174 F.3d 636, 644 (5th
Cir. 1999), citing Celotex, 477 U.S.
at 322, and Liberty Lobby,
477 U.S. at 249-50.
Allegations in a plaintiff’s complaint are not evidence.
1996)(“[P]leadings are not summary judgment evidence.”); Johnston
v. City of Houston, Tex., 14 F.3d 1056, 1060 (5th Cir. 1995)(for the
party opposing the motion for summary judgment, “only evidence-–not
argument, not facts in the complaint--will satisfy’ the burden.”),
citing Solo Serve Corp. v. Westown Assoc., 929 F.2d 160, 164 (5th
It is well established in the Fifth Circuit that “[a]
federal court may not grant a ‘default’ summary judgment where no
response has been filed.”
Bradley v. Chevron U.S.A., Inc., No.
Civ. A. 204CV092J, 2004 WL 2847463, *1 (N.D. Tex. Dec. 10, 2004),
citing Eversley v. MBank of Dallas, 843 F.2d 172, 174 (5th Cir.
Anonima, 776 F.2d 1277, 1279 (5th Cir. 1985).
no response to the motion for summary judgment has been filed,
the court may find as undisputed the statement of facts in the
motion for summary judgment.
Id. at *1 and n. 2, citing id.; see
also Thompson v. Eason, 258 F. Supp. 2d 508, 515 (N.D. Tex.
2003)(where no opposition is filed, the nonmovant’s unsworn
movant’s evidence may be accepted as undisputed).
See also Unum
Life Ins. Co. of America v. Long, 227 F. Supp. 2d 609 (N.D. Tex.
2002)(“Although the court may not enter a ‘default’ summary
undisputed.”); Bookman v. Shubzda, 945 F. Supp. 999, 1002 (N.D.
Tex. 1996)(“A summary judgment nonmovant who does not respond to
the motion is relegated to [his] unsworn pleadings, which do not
constitute summary judgment evidence.”).
A plaintiff challenging his permanent disqualification from
SNAP bears the burden of proving by a preponderance of the
evidence that the agency’s action was “invalid.”
2021(a); Redmond, 507 F.2d at 1011-12.
7 U.S.C. §
The court reviews the
plaintiff below retains the burden of proving every essential
element of a cause of action.”
Redmond, 507 F.2d at 1011.
sum, by “permitting a trial de novo, Congress intended nothing
more than that the district court could not be bound by the
administrative record.” Id. “[T]he agency action stands, unless
the plaintiff proves that it should be set aside.
He may offer
any relevant evidence available to support his case, whether or
not its has been previously submitted to the agency, and the
agency itself may offer any evidence available to support its
action, whether or not in the administrative record.”
the preliminary agency action is extensive but neither
the act nor the regulations promulgated thereunder
provide for a full adversary hearing or formal record
at the administrative level.
By according the
administrative action in question a presumption of
investigation and determination of the agency.
providing the aggrieved food store with a new trial
where the store may introduce evidence outside the
administrative record, the statute also protects the
rights and interests of the store against final adverse
action without the opportunity for an adversary
Nevertheless, if the Plaintiff puts on no evidence, then the
record would be enough to justify the Court in upholding a
Redmond, 507 F.2d at 1012.
Permanent disqualification from SNAP is a mandatory penalty
disqualification based upon” trafficking in SNAP benefits.
U.S.C. § 2021((b)(3)(B); Kashif v. U.S., Case No. 14-cv-30180MGM, 2016 WL 3886164, at *5 (D. Mass. May 12, 2016).
disqualification if the agency finds “substantial evidence that
such store . . . had an effective policy and program in effect to
prevent violations of [the statute] and regulations,” and the
store was unaware that trafficking was occurring.
7 U.S.C. §
582079, at *3 (W.D. Tex. Feb. 13, 20140; Reyes d/b/a Puebla Mini
Market, LLC v. U.S., Civ. A. No. 13-1825, 2013 WL 5786360, at *3
(E.D. Pa. Oct. 28, 2913).
To impose the civil monetary penalty
instead of disqualification, the Secretary must find that the
store owner meets each of four criteria:
(1) the store must have
regulations, in place before the charge letter was issued; (2)
the plaintiff must show that both its compliance policy and its
program were in operation at the location where the violation(s)
occurred; (3) the firm had developed and instituted an effective
278.6(i)(2); and (4) the firm ownership was not aware of and did
not approve or benefit from, or was not in any way involved in
the conduct of approval of trafficking violations.
7 C.F.R. §
278.6(i); Razzak, 2014 WL 582079, at *3; Reyes, 2013 WL 5786360,
employee exchanged money for SNAP benefits is irrelevant because
“as a matter of law, approved food store owners are responsible
for the acts of their employees irrespective of the owner’s
knowledge or lack of participation in trafficking.” Kashif, 2016
WL 3886164, at *5, citing Bakal Bros., Inc. v. U.S., 103 F.3d
1085, 1089 (6th Cir. 1997).
See 7 C.F.R. § 278.6(e)(1)(i)
(“Disqualify a firm permanently if:
Personnel of the firm have
trafficked as defined in § 271.2.”
United States’ Motion for Summary Judgment
As the United States points out, it has actually moved for
dismissal under Federal Rule of Civil Procedure 12(b)(1)(for
failure to exhaust timely his administrative remedies, and thus
a lack of subject matter jurisdiction, when he failed to respond
to the charge letter within ten days (by April 23, 2015) of
delivery of such notice (April 13, 2015), 7 U.S.C. § 2023(a)(if
a timely request for review of the initial notice is not made,
See Razzak, 2014 WL 582079 at *3 (“If a timely request for
review of the initial notice is not made, ‘the administrative
determinations shall be final. § 2013(a0(4). Only a timely
request for review entitles a store owner to an administrative
appeal and subsequent judicial review. § 2023(a)(5), citing
Ruhee, 2006 WL 1291356 at *3 (“holding a failure to timely
request administrative review constitutes a failure to exhaust
composed of conclusory allegations and unsupported assertions
that do not permit this Court “to draw a reasonable inference
that the defendant is liable for the misconduct alleged.”5; and
Rule 56 because it fails to allege specific facts demonstrating
that there is a genuine issue of fact for trial, including any
that might show the investigation was inadequate in any way.
most the complaint is speculative and should be dismissed.
The Court chooses to review the current action under Rule
The United States asserts that the bases for this suit are
(1) the United States acted in excess of statutory authority
because it unconstitutionally deprived Plaintiff of the right to
contract; (2) its acts were arbitrary, capricious, and in bad
faith and constitute a denial of Plaintiff’s substantive and due
process rights in that there is no rational basis in law for such
improper, and insufficient.
The United States asserts that Plaintiff’s complaint has not
contended that illegal trafficking of SNAP benefits occurred, but
only seems to dispute that non-eligible items were sold in
exchange for SNAP benefits.
Regarding Plaintiff’s burden to
establish the existence of a violation, the Complaint states that
The United States points out that the USDA’s detailed
Report of Positive Investigation documents Plaintiff’s repeated
pattern of selling non-eligible food items in exchange for SNAP
benefits and trafficking of SNAP benefits. A.R. 62-87.
“[a]pparently, Defendant’s personnel attempted to coerce the
Plaintiff’s personnel to traffic on seven different occasions
with no luck” and that “Defendant claims it was successful in
squeezing $5.00 cash out of the ‘unidentified clerk’ its agent
wrongfully pressured and coerced.”
#1, ¶ 6.
In response the United States argues the USDA’s acts were
not arbitrary and capricious or in bad faith.
“If] an agency
action adheres to its internal guidelines, it is not arbitrary
Bordeleon v. Black, 810 F.2d 468, 471 (5th Cir.
1986), citing Otto v. Block, 693 F.2d 472, 473-74 (5th Cir. 1982).
Under 7 U.S.C. § 2021(b)(3) a retail store which violates a
provision of SNAP may be permanently disqualified on “the first
occasion . . . except when the Secretary [has] the discretion to
impose a civil penalty . . . in lieu of disqualification . . . if
the Secretary determines there is substantial evidence that such
store . . . had an effective policy and program in effect to
prevent violations of the chapter and the regulations . . . . “
Under 7 C.F.R. § 278.6(a), a disqualification based on 7 C.F.R.
§ 278.6(e)(1) shall be permanent.
Section 278.6(e)(1) states
“trafficked as defined in § 271.2", which includes selling SNAP
benefits by way of EBT cards..
7 C.F.R. § 278.6(e)(1)(i).
the USDA Report of Investigation provides detailed evidence of
one incident of trafficking on December 15, 2014 when a Sunny’s
Food Store employee gave a USDA Compliance Investigator $5 in
cash for $5 in SNAP benefits.
Plaintiff has not denied that
trafficking took place, nor provided any evidence that it did
Furthermore, Sunny’s Food Store does not qualify for a
civil money penalty in place of disqualification because it never
submitted, no less did so timely, the requisite information to be
considered for such a penalty.
Finally, the United States challenges Plaintiff’s claim of
violation of procedural and substantive due process in the
assessment of permanent disqualification from the SNAP program
and denial of a civil monetary penalty in lieu of that.
To establish a substantive due process violation, a
plaintiff must first both carefully describe that right
and establish it as ‘deeply rooted in this Nation’s
history and tradition.’
If the right is so deeply
rooted--if it is fundamental--we subject it to more
exacting standards of review. If it is not, we review
it only for a rational basis.
Malagon de Fuentes v. Gonzales, 462 F.3d 498, 505 (5th Cir. 2006).
A number of courts have determined the SNAP disqualification
scheme to be constitutional.
The right to SNAP benefits is a
disqualification scheme establishing that all owners, whether
they are innocent or knowing, are subject to some penalty,
regardless of fault, “to ensure that the person in the best
position to prevent fraud--the owner--had sufficient incentive to
Traficanti v. U.S., 227 F.3d 170, 174-75 (4th Cir. 2000)(“[W]e
hold that the statute’s strict liability regime is rationally
related to the government’s interest in preventing fraud.”). See
also Kim v. U.S., 121 F.3d 1269, 1274 (9th Cir. 1997)(rejecting
disqualification of “innocent store owners whose employees engage
in trafficking violations for their own benefit and without the
owner’s knowledge or consent” is rationally related to Congress’
goal of promoting adoption of effect SNAP compliance policies);
TRM, Inc. v. U.S., 52 F.3d 941, 947 (11th Cir. 1995)(“Congress
could rationally have concluded that a store owner who risks
losing the ability to accept food stamps is more likely to be
challenges to the SNAP disqualification scheme.
Razzak, 2014 WL
582079, at *5 (due process requires at least notice and an
opportunity to be heard at a meaningful time in a meaningful
manner; “[t]he SNAP disqualification scheme offers aggrieved
store owners avenues for administrative review and judicial
review by means of a ‘trial de novo’ in district court . . .
[and] comports with procedural due process requirements.”)(citing
Malago de Fuentes, Traficanti, Kim, TRM).
After a through review of the record, the Court fully agrees
with the United States that it is entitled to dismissal of this
suit as a matter of law and that there is no genuine issue of
material fact for trial.
Accordingly, the Court
ORDERS that the United States’s motion for summary judgment
Plaintiff from participation in the SNAP program is AFFIRMED, and
this case is DISMISSED with prejudice.
SIGNED at Houston, Texas, this 2nd day of February , 2017.
UNITED STATES DISTRICT JUDGE
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?