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January 27, 1997

UNITED STATES OF AMERICA, and DAN GLICKMAN, Secretary of the U.S. Department of Agriculture, Defendants.

The opinion of the court was delivered by: LEGGE


 Plaintiffs Alfredo and Guadalupe Lopez are the owners of Chavez Meat Market in Newark, California. In January 1994 Alfredo Lopez applied to the Food and Consumer Service (formerly known as the Food and Nutrition Service and hereinafter as "FCS" or "the agency") to participate in the Food Stamp Program. Chavez Meat Market was then authorized by the government to accept food stamps for certain items and to redeem them for their face value from the government.

 Between January 19, 1995 and April 18, 1995, the agency conducted routine investigations to ascertain whether the store was complying with the program requirements. The agency made three investigatory visits to the store. On the first visit, an investigator's aide used food stamps to purchase eight items including fabric softener, toilet paper, and detergent, ineligible items under the program. 7 U.S.C. § 2012(g). On the second visit Alonzo Lopez, the owners' son, sold the aide the ineligible items fabric softener, paper towels, and detergent. Raphael Pena, another clerk, also purchased food stamps with a face value of sixty-five dollars for thirty dollars in cash that he took from his wallet. On the third and last investigative shopping trip, Alonzo Lopez purchased sixty-five dollars worth of food stamps for forty dollars cash taken from the register, and also sold ineligible items for food stamps.

 On June 6, 1995, the agency sent plaintiffs a certified letter informing them of the results of the investigation. The letter informed plaintiffs that because their employees had trafficked *fn1" in food stamps their market could face permanent disqualification. The letter further informed plaintiffs that the regulations allow for a civil money penalty, instead of disqualification, if plaintiffs can show that they had an effective policy and program to prevent violations in effect at the time of the violations. The agency enclosed a copy of the regulations, which also included the following caution, as required by 7 C.F.R. § 278.6(b)(1): "YOU MUST SUBMIT YOUR REQUEST FOR A CIVIL MONEY PENALTY, AS WELL AS THE REQUIRED DOCUMENTATION, TO THIS OFFICE WITHIN 10 DAYS OF YOUR RECEIPT OF THIS LETTER IN ORDER TO BE ELIGIBLE FOR CONSIDERATION."

 Guadalupe Lopez wrote a letter in response on June 14, 1995. Ms. Lopez apologized for the violations and explained that her son had been home from school visiting at the time and had not been properly trained. Ms. Lopez also noted that she had no explanation for Mr. Pena's actions, but that he was aware that his actions were not allowed under the program and unacceptable to Chavez Meat Market. Ms. Lopez pointed out that neither she nor her husband had known of Pena's actions and that the store had received no benefit as a result of them. Finally, Ms. Lopez wrote:

I realize that this explanation doesn't change what has occurred and that we are guilty of negligence. But I can assure you that we have taken the following steps to prevent this from ever happening again.
1. We have had a meeting of all the staff and explained again the regulations of the food stamps program.
2. We're in the process of translating the regulations into the Spanish Language so it will be fully understood by all of our employees and future employees.
3. We have fully explained to our children the regulations of the food stamp program.
I respectfully beg your forgiveness, and ask if our case could possibly be re-evaluated. Perhaps we could be placed on probation for a period of time rather than disqualification of the program.

 Ms. Lopez did not submit any documentary evidence of a prevention program with her letter.

 On July 10, 1995, the agency wrote to plaintiffs that the field office had evaluated plaintiffs' response and determined that permanent disqualification was appropriate. The agency based this determination in large part on its finding that plaintiffs had not requested the civil money penalty within the ten-day time period and had not provided documentation to justify such a request. This letter also informed plaintiffs of their rights to an administrative review of the agency's actions.

 Plaintiffs requested administrative review of the agency's actions and their request was timely received by the Administrative Review Division. On July 26, 1995, plaintiff wrote a letter to the review division stating that she had not understood that she needed to specifically request the civil money penalty in lieu of disqualification. She also stated that she had not understood that, in order to be considered for the money penalty, she also had to enclose copies of all documentation demonstrating the violation prevention policy in use at her store. At this time, plaintiff enclosed copies of all materials which she claimed had been used to train her employees. She also noted that because she had requested an appointment or personal interview in her letter of June 6, 1995, she had assumed that there would be additional personal contact or written correspondence before a final decision was reached concerning her store.

 In a letter dated November 2, 1995, the administrative review officer notified plaintiffs that he had completed review of their case. He sustained the initial decisions to permanently disqualify plaintiffs' ...

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