Dale & Selby Superette & Deli v. United States Department of Agriculture

836 F. Supp. 669, 1993 U.S. Dist. LEXIS 16055, 1993 WL 461753
CourtDistrict Court, D. Minnesota
DecidedNovember 8, 1993
DocketCiv. No. 4-93-738
StatusPublished
Cited by1 cases

This text of 836 F. Supp. 669 (Dale & Selby Superette & Deli v. United States Department of Agriculture) is published on Counsel Stack Legal Research, covering District Court, D. Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dale & Selby Superette & Deli v. United States Department of Agriculture, 836 F. Supp. 669, 1993 U.S. Dist. LEXIS 16055, 1993 WL 461753 (mnd 1993).

Opinion

ORDER

DOTY, District Judge.

This matter is before the court on cross-motions for summary judgment. The parties agreed that this matter shall be decided upon submissions and without further hearing. Based upon a review of the file, record and proceedings herein and for the reasons stated below, the court grants plaintiffs’ motion for summary judgment. and denies defendant’s motion for summary judgment.

BACKGROUND

The facts of the case are virtually undisputed. Plaintiffs are a St. Paul convenience store and its owners and managers. On October 31,1991, the store was authorized by the United States Department of Agriculture, Food and Nutrition Service (“FNS”), to participate in the food stamp program which is part of the Food Stamp Act of 1964, 7 U.S.C. § 2011 .et aeq. On June 8, 1992, FNS received a complaint that the store was purchasing food stamps at one-half of their face value. In response to this complaint FNS requested that its Compliance Branch conduct an investigation into the store’s food stamp activities. The initial complaint was not substantiated by this investigation. However, over a four month period, investigators were able to purchase ineligible items with food stamps in eight of twelve attempts. The total value of the ineligible items was $46.26.

In a letter dated March 9, 1993, FNS advised the store’s owners of the results of the investigation and their possible disqualification from the food stamp program. In response to the letter, plaintiff Hyatt Taweelah, one of the store managers, telephoned FNS to discuss the investigation. She did not deny that the alleged purchases occurred. Rather, she said, by way of explanation, that she and her husband had been involved in a serious accident. As a result, the clerks responsible for the ineligible transaction had been inadequately supervised. These clerks had, however been fired. She denied that either she or her husband had been involved in illegal food stamp transactions.

On March 26,1993, FNS sent the plaintiffs a letter informing them that they would be disqualified for a period of six months. The letter stated two reasons for temporary disqualification. First, “[ejight transactions occurred involving obviously ineligible items.... The evidence in this case indicates that such actions represent carelessness or poor supervision.” The plaintiffs do not dispute the occurrence of these transactions. Neither do plaintiffs dispute the attribution of the occurrences to carelessness or poor supervision.

The letter immediately goes on to state a second reason for the six-month disqualification. “Furthermore, the record shows that you had been advised previously both orally and in writing in a letter dated_, about the possibility that violations were occurring and of the possible consequences of violating.” The March 26 letter left a blank space where the date of an earlier letter might have been stated. Plaintiffs allege that they received no such letter. FNS now acknowledges that no prior warning letter was sent. FNS alleges that reference to an earlier letter was a typographical error. FNS also does not suggest that an oral warning was ever given to plaintiffs.

Plaintiffs seek judicial review of the FNS sanction of six months disqualification. Plaintiffs argue that the penalty is too severe for the violations. They argue that a warning letter, rather than six months disqualification, is the appropriate sanction. Defendant argues that the choice of a sanction is within the discretion of the agency and ought therefore to be upheld on the basis of the undisputed facts.

DISCUSSION

Oversight of the food stamp program is entrusted to the Secretary of the Department of Agriculture. Initial determinations of program compliance and sanctions for noncompliance are handled internally. There is an internal review process .available to stores which are subject to sanctions. Judicial re[671]*671view by the federal district court of FNS sanctions is provided for in 7 U.S.C. g 2023(a). A store which has been disqualified may file suit in the United States District Court. That suit:

shall be a trial de novo by the court in which the court shall determine the validity of the questioned administrative action in issue.... If the court determines that such administrative action is invalid, it shall enter such judgment or order as it determines is in accordance with the law, and the evidence.

7 U.S.C. § 2023(a).

In the Eighth Circuit,1 judicial review involves two separate inquiries with distinct standards.

[T]he district court is authorized to conduct a de novo review of the validity of the Department of Agriculture’s determination that the Food Stamp Act has been violated. A more limited scope of review applies, however, when the administrative determination that a violation has occurred is valid and the challenge is to the sanction imposed on the violator of the Act____ [T]he district court must limit its review to a determination of whether the sanction imposed on the violator is arbitrary and capricious.

Studt v. United States, 607 F.2d 1216, 1218 (8th Cir.1979). Whether a sanction is arbitrary and capricious is determined by examining the facts in the particular case. Id. at 1219.

In this case there is no question that the store and at least some of its clerks violated the Act. The plaintiffs have admitted that the violation occurred. The only questions before the court are whether the six-month disqualification is an arbitrary and capricious sanction under the circumstances and, if so, what sanction is appropriate.

The various sanctions which FNS may impose are set forth in 7 C.F.R. § 278.-6(e)(1) — (7). Applicable sanctions range from permanent disqualification, when the store “trafficks” in food stamps or has been subject to two prior sanctions, 7 C.F.R. § 278.6(e)(1), to the sending of a warning letter when “the violations are too limited to warrant a disqualification.” 7 C.F.R. § 278.6(e)(7). A warning letter is not treated as a “prior sanction” if a store is later subject to sanctions by FNS. A six-month disqualification can be imposed “if it is the first sanction and employees had sold common nonfood items due to carelessness or poor supervision by the owner or management.” 7 C.F.R. § 278.6(e)(5). Thus, on the undisputed facts of the ease, plaintiffs might be subject to the sanction of six months disqualification.

However, several factors indicate that while technically within the parameters of the regulations, the FNS sanction against the plaintiffs was arbitrary and capricious. First, in adopting the arbitrary and capricious standard of review, the Eighth Circuit made it clear that the district court must consider the compliance efforts made by FNS prior to the imposition of a lower level sanction. Studt, 607 F.2d at 1218-1219.

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836 F. Supp. 669, 1993 U.S. Dist. LEXIS 16055, 1993 WL 461753, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dale-selby-superette-deli-v-united-states-department-of-agriculture-mnd-1993.