Savera Super Store, LLC (SSS Tobacco Oulet) v. USA

2016 DNH 004

• Court: District Court, D. New Hampshire
• Decided: January 5, 2016
• Docket: 14-cv-554-JD
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Savera Super Store, LLC (SSS Tobacco Outlet)

v. Civil No. 14-cv-554-JD Opinion No. 2016 DNH 004 United States of America

O R D E R

After Savera Super Store, LLC (“Savera”) was permanently

disqualified from the Supplemental Nutrition Assistance Program

(“SNAP”) by the United States Department of Agriculture, Savera

sought review under 7 U.S.C. § 2023 and 7 C.F.R. § 279.7. The

United States moves for summary judgment, asserting that the

undisputed facts show that Savera trafficked in SNAP benefits.

Savera objects, arguing that the circumstances cited by the

United States as evidence of trafficking in SNAP benefits are

ordinary shopping activities at the store.

Standard of Review

After a final disqualification decision, the aggrieved

party can file a complaint seeking judicial review. 7 U.S.C.

§ 2023(a)(13). The review is “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). The store owner who seeks review bears the burden of showing, by a

preponderance of the evidence, that the agency’s decision was

invalid. Fells v. United States, 627 F.3d 1250, 1253 (7th Cir.

2010); A Touch of Merengue, LLC – The Atom v. United States,

2014 WL 6609478, at *2 (D.R.I. Nov. 20, 2014); Rockland

Convenience Store v. United States, 2011 WL 5120410, at *3

(D.N.H. Oct. 27, 2011).

Summary judgment is an appropriate procedure in cases

brought under § 2023(a)(13). Nadia Int’l Market v. United

States, 2015 WL 7854290, at *5 (D. Vt. Dec. 2, 2015). Summary

judgment may be granted when the moving party “shows that there

is no genuine dispute as to any material fact and the movant is

entitled to judgment as a matter of law.” Fed. R. Civ. P.

56(a). “A genuine dispute is one that a reasonable fact-finder

could resolve in favor of either party and a material fact is

one that could affect the outcome of the case.” Flood v. Bank

of Am. Corp., 780 F.3d 1, 7 (1st Cir. 2015). Reasonable

inferences are taken in the light most favorable to the

nonmoving party, but unsupported speculation and evidence that

“is less than significantly probative” are not sufficient to

avoid summary judgment. Planadeball v. Wyndham Vacation

Resorts, Inc., 793 F.3d 169, 174 (1st Cir. 2015) (internal

quotation marks omitted).

2 In the context of review under § 2023, courts recognize

that the agency decision of disqualification may be based on the

investigation, redemption data, and transaction reports from the

store. Nadia Int’l Mkt., 2015 WL 7854290, at *5. For that

reason, summary judgment may be appropriate based on that record

evidence even in the absence of “red handed” evidence of

trafficking. Id.; 109 Merrick Deli Corp. v. United States, 2014

WL 6891944, at 4 (E.D.N.Y. Sept. 30, 2014).

Background

The Food and Nutrition Service (“FNS”) operates SNAP on

behalf of the Department of Agriculture to provide a means for

low income persons to buy food at retail food stores. 7 U.S.C.

§ 2013(a); 7 C.F.R. § 271.3(a). SNAP provides benefits through

electronic benefit (“EBT”) cards, and a recipient can then buy

eligible food at an authorized store with the EBT card. See 109

Merrick Deli Corp, 2014 WL 6891944, at *1. Stores may not sell

ineligible items through an EBT transaction or exchange EBT

benefits for cash, which is trafficking in SNAP benefits.1 Id.

1 Trafficking specifically means “buying, selling, or otherwise effecting an exchange of SNAP benefits issued and accessed via [EBT] cards, card numbers and personal identification numbers (PINs), or by manual voucher and signature, for cash or consideration other than eligible food, either directly, indirectly, in complicity or collusion with others, or acting alone.” 7 C.F.R. § 271.2. Trafficking also means “[t]he exchange of firearms, ammunition, explosives, or controlled substances . . . for SNAP benefits.” Id.

3 Authorized stores have EBT terminals to swipe the SNAP

recipient’s EBT card for a SNAP purchase, and the recipient

enters a personal identification number for the transaction.

The purchase amount is deducted from the recipient’s account and

credited to the store. The terminal makes a receipt for each

transaction, which shows the balance in the recipient’s account.

SNAP benefit transactions are monitored by the FNS. Each

EBT card transaction is electronically recorded, showing the

date and time of the purchase, the amount of the purchase, and

the card number. The FNS uses a program called “ALERT” to

detect and then begin an investigation when irregular activity

is recorded from an EBT card. FNS has determined that irregular

activity includes rapid and repetitive EBT debits of low dollar

amounts, an unusually high number of transactions where the

amount ends in “00”, and debits of large amounts in small stores

that do not have shopping baskets and have limited inventory of

eligible SNAP items.

Muhammed I. Toor owns Savera Super Store, which is a

convenience store that sells some inexpensive food items along

with other items on Laurel Street in Manchester, New Hampshire.

Toor applied for SNAP authorization in October of 2012. In the

application, Toor stated that only 5% of the sales at the store

would be SNAP eligible. The application was granted in January

of 2013.

4 The store primarily sells tobacco products, does not have

shopping baskets or carts, and has only one small check-out

location with one register. The store is open from 7:00 am to

12:00 am, every day. Food sales are a small part of the

business at the store. Within a mile of the Savera Super Store,

there are forty-five SNAP authorized stores, including many

convenience stores, three small grocery stores, six medium

grocery stores, and one large grocery store.

Transactions at Savera Super Store triggered the ALERT

program in late 2013. As a result, transactions at the store

were analyzed from November of 2013 through January of 2014. An

investigator visited the store on February 22, 2014, with notice

to and consent from the store. Through his on-site visit, the

investigator confirmed that the Savera Super Store primarily

stocked products that were not eligible for SNAP, did not have

shopping carts or baskets, had one cash register with limited

space, and did not stock any expensive eligible food or ethnic

items that were not available at other locations.2 On March 10,

2014, a fire occurred at the Savera Super Store.

2 Although Toor states in his declaration that Savera Super Store carries “a wide variety of food products that are preferred in the Nepalese community,” he does not provide any detail about what products are preferred, whether the preferred products are SNAP eligible, and whether they are available at other less expensive stores.

5 The FNS concluded that Savera Super Store was engaging in

trafficking of SNAP benefits based on the investigation. The

FNS notified Savera Super Store on July 7, 2014, that it was

charged with trafficking. The activities identified as showing

trafficking were rapid and repetitive transactions for the same

household, an excessive number of high dollar amount

transactions, and an unusual number of transactions ending in

the same cents amount. Toor denied the charges made by FNS and

provided explanations for the cited transactional patterns.

Toor also represented that he could not provide documentary

evidence to contest the FNS’s findings because his records had

been lost in the fire.

After reviewing the information provided by Toor about

Savera Super Store’s transactions, the FNS sustained the charge

of trafficking and permanently disqualified the store from SNAP.

The FNS found that Savera Super Store was not eligible for a

monetary penalty because it had not submitted evidence to

support a request for that alternative penalty. The

Administrative Review Officer sustained permanent

disqualification.

Discussion

The United States moves for summary judgment on the ground

that the facts show that Savera Super Store engaged in

6 trafficking of SNAP benefits. Savera Super Store objects,

arguing that the activities cited by the United States are not

unusual, irregular, or inexplicable, as alleged, but instead are

common at the store. As a result, Savera Super Store contends,

disputed material facts preclude summary judgment.

The FNS is authorized to disqualify a store for SNAP

violations based on its analysis of EBT transactions and

redemptions and its investigator’s report from visiting the

store. Nadia Int’l Market, 2015 WL 7854290, at *5 (citing 7

U.S.C. § 2021(a)(2). Although the parties are able to present

any relevant evidence that meets the Rule 56 standard for

purposes of de novo review, both the United States and Savera

Super Store primarily relied on the evidence presented in the

record.

A. Transactions Ending in “00” Amounts

During the three-month investigation period, 25% of the

SNAP benefit sales ended in “00”. The FNS found that pattern

suspicious because few items in the SNAP-eligible inventory at

the store had whole dollar prices and many of the goods ended in

“.09”. Other courts have concluded that a disproportionately

high number of transactions ending in “00” are evidence of

trafficking. See Nadia Int’l Mkt., 2015 WL 7854290, at *6; 109

Merrick Deli Corp., 2014 WL 6891944, at *4; Onukwugha v. United

7 States, 2013 WL 1620247, at *8-*9 (E.D. Wis. Apr. 12, 2013);

Rockland Convenience Store, 2011 WL 5120410, at *9.

Savera Super Store argues that the “00” amounts are common

among all of its transactions, not just the SNAP transactions,

and that its sales and special offers of two for $2.00 or five

for $10.00 explain the transaction amounts.3 Savera Super Store,

however, does not address the specific prices charged for its

SNAP-eligible products or the government’s finding that few SNAP

eligible items ended in “00”. Sales and specials for non-

eligible items would not affect legitimate SNAP purchases.

Therefore, Savera Super Store has not shown a factual

dispute as to whether the relatively high percentage of

transactions with “00” amounts indicates trafficking.

B. Repeat Transactions in Short Time Periods

The FNS concluded that the low cost of the SNAP eligible

items, the lack of shopping carts and baskets, and the

restricted checkout space at the Savera Super Store were

inconsistent with the number of repetitive transactions in a

short period. Specifically, the FNS cited an example from

December 5, 2013, when the same recipient first made an EBT

The customer affidavits that repeat that sales of multiple 3

items for a round dollar amount were offered at the store do not state what items were offered in those sales other than a general reference to groceries.

8 transaction for $49.47 and then a minute and a half later made a

transaction for $58.50. The FNS noted the unlikely total of

$107.97 for SNAP eligible items, which are low priced, and the

unlikely time frame of repeat transactions within a minute and a

half of each other.

Savera Super Store explains that the repeat transactions

occurred on less than twenty percent of the days the store was

open and that it was not uncommon for customers to make a

purchase and then realize they needed other items and make

another purchase. The store also represents that customers

might return for additional purchases later the same day. The

store further explains that because it is located in a poor

neighborhood where customers have to walk to the store, they

make bigger purchases to avoid walking to another store at a

greater distance. The store cites customer affidavits that show

customers did make repeat purchases in the same day.

Savera Super Store, however, did not address the low prices

of its SNAP-eligible products, cited by the FNS, or the

logistics of managing a large number of low-priced items to show

how a customer could make repeat purchases of eligible products,

totaling over $100, in just a few minutes. For example, the

store did not explain how a customer would have time to buy

$49.47 in SNAP-eligible products and then in a minute and a half

find, carry to the checkout, and purchase another $58.50 worth

9 of SNAP-eligible products. As such, Savera Super Store’s

evidence of some legitimate repeat purchases does not undermine

the evidence that other transactions on EBT cards were not

legitimate. See, e.g., Nadia Int’l Mkt., 2015 WL 7854290, at

*6; A Touch of Merengue, LLC - The Atom, 2014 WL 6609478, at

*3-*4; Hajifarah v. United States, 779 F. Supp. 2d 191, 205-06

(D. Me. 2011); Alkabsh v. United States, 733 F. Supp. 2d 929,

937-38 (W.D. Tenn. 2010).

C. Large Transaction Amounts

The FNS investigation also found that the Savera Super

Store had an inordinate number of high dollar amount

transactions, which were 300% higher than purchases in similar

stores. The store justifies the amount of its transactions

based on the closing of two grocery stores in the area and

provided customer affidavits that they made large purchases at

the store. Savera Super Store provides affidavits of a few

customers who state that they have made SNAP purchases in excess

of $30.00.

The United States provides evidence that despite the

closing of two grocery stores, there were forty-five other

stores within a mile of Savera Super Store that were authorized

to accept SNAP benefits. The United States notes that Savera

Super Store’s customers preferred that store because of its

10 location and would not have shopped at the larger grocery stores

that were farther away. Therefore, Savera Super Store has not

shown that the closing of two grocery stores, which were more

than a mile away, affected its business.

In addition, other stores close to Savera Super Store, such

as Market Basket, sold many more SNAP-eligible products at lower

prices. The United States provides evidence that on one

occasion during the investigation a SNAP recipient bought

$199.57 worth of items at Savera Super Store with the EBT card,

then bought $31.21 worth of items at Market Basket with the EBT

card, and twenty-two minutes later returned to Savera Super

Store to buy another $34.95 worth of items on the EBT card.

That series of transactions, and similar transactions, are

evidence of trafficking because buying more at Savera Super

Store than at Market Basket is not consistent with legitimate

activity. Similarly, another recipient bought $234.52 worth of

items on an EBT card in one day at Savera Super Store, despite

having access to and using Market Basket on other occasions.

Transactions of large amounts, particularly in a series, are

evidence of trafficking. See, e.g., Arias v. United States,

2014 WL 5004409, at *8-*9 (S.D.N.Y. Sept. 29, 2014); Narin Mkt.,

LLC v. United States, 2014 WL 1820447, at *2-*3 (D.R.I. May 7,

2014); Hajifarah, 779 F. Supp. 2d at 207.

11 The undisputed evidence shows that Savera Super Store

engaged in suspicious transactions that support trafficking

findings. Savera Super Store has not shown a material factual

dispute, about whether it engaged in trafficking, to avoid

summary judgment.

Conclusion

For the foregoing reasons, the defendant’s motion for

summary judgment (document no. 12) is granted.

The clerk of court shall enter judgment accordingly and

close the case.

SO ORDERED.

________________________________ Joseph DiClerico, Jr. United States District Judge

January 5, 2016

cc: Jenna Marie Bergeron, Esq. Michael J. Iacopino, Esq. Terry L. Ollila, Esq.