The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge
Plaintiff filed a motion on December 9, 2011, in which he seeks to "stay enforcement of the administrative determination of Defendant . . . to disqualify Plaintiff from participating in the Supplemental Nutrition Assistance Program ('SNAP') . . . for six months." (Mot. 1:4-7.) Defendant opposes the motion, arguing Plaintiff "cannot satisfy [the applicable stay factors in] 7 U.S.C. § 2023, the judicial review provision for Food Stamp enforcement actions, which requires him to show both irreparable injury and a likelihood of prevailing on the merits . . . ." (Opp'n 2:8-10.)
Plaintiff is the owner of Dawes Wine & Spirits, which, prior to its six-month disqualification, participated in SNAP, a program that enables qualifying stores to accept food stamp benefits in exchange for eligible food items. On February 1, 2011, the Food and Nutrition Service ("FNS") began a series of five investigative visits to Plaintiff's store in which an agent attempted to purchase ineligible non-food items with a food stamp card. (Minhas Decl. Exs. A & B.) On four of the five visits, the agent was successful in purchasing ineligible non-food items with his food stamp card, each time from the same clerk. Id. In total, he purchased the following items: one box of Penley forks, one box of Penley spoons, three Chore boy sponges, and six boxes of Penley cutlery. Id. During these same visits, the agent unsuccessfully attempted to purchase a box of matches and a bottle of wine with his food stamp card. Id. The agent also attempted a cash transaction on his fifth visit, which was refused. Id.
On August 31, 2011, FNS sent Plaintiff a letter that detailed his store's violations of the SNAP program and stated the following:
Your firm is charged with accepting SNAP benefits in exchange for merchandise, which, in addition to eligible foods, included common non-food items. The misuse of SNAP benefits noted in [the] Exhibits . . . violated Section 278.2(a) of the SNAP regulations (enclosed).
Further, the violations in [these] Exhibits . . . warrant a disqualification period of six months (Section 278.6(e)(5)). Under certain conditions, FNS may impose a civil money penalty ("CMP") in lieu of a disqualification (Section 278.6(f)(1)).
(Minhas Decl. Ex. A.) On September 12, 2011, Plaintiff filed a reply to the August 31, 2011 letter and attended an administrative hearing. Id. ¶ 10. FNS sent Plaintiff a letter dated September 29, 2011, informing him that it has "determined that [Plaintiff] is not eligible for the CMP because there are other authorized retail stores in the area selling as large a variety of staple foods at comparable prices." Id. Ex. C. On October 5, 2011, Plaintiff filed a written request for review with FNS and on November 8, 2011, FNS sent Plaintiff the final agency decision of the FNS affirming the six-month disqualification previously imposed.
(Knox Decl. ¶¶ 3-7.) On December 1, 2011, Plaintiff filed this action in federal court, arguing the sanction imposed by FNS was arbitrary and capricious. (ECF No. 2.) Plaintiff does not dispute that the sale of ineligible items occurred. The six-month disqualification commenced on December 11, 2011.
Section 2023(a)(17) prescribes:
During the pendency of such judicial review, or any appeal therefrom, the administrative action under review shall be and remain in full force and effect, unless on application to the court on not less than ten days' notice, and after hearing thereon and a consideration by the court of the applicant's likelihood of prevailing on the merits and of irreparable injury, the court temporarily stays such administrative action pending disposition of such trial or appeal.
7 U.S.C. § 2023(a)(17). Therefore, a court "may temporarily stay [an] administrative action if it determined that the aggrieved party will [likely] suffer irreparable injury and is likely to prevail on the merits of his case." Poeng v. United States, 167 F. Supp. 2d 1136, 1139 (S.D. Cal. 2001) (emphasis added).
Plaintiff argues he will prevail on the merits of his claims since Defendant's imposition of a six-month SNAP disqualification is arbitrary and capricious; specifically, Plaintiff argues the Administrative Review Officer did not rely on or consider any evidence of carelessness or poor supervision by the firm's management or ownership in the Final Agency Decision. (Mot. 8:6-14.) In determining whether to sanction a store, FNS regulations require it to consider "(1) whether the store has been previously warned of possible violations; (2) whether the charged violations indicate firm practice or result from the carelessness of clerical personnel; and (3) the type of ineligible items sold." Id. (citing 7 C.F.R. § 278.6(e)). The FNS shall "[d]isqualify the firm for 6 months if it is to be the first sanction for the firm and the evidence shows that personnel of the firm have committed violations such as but not limited to the sale of common nonfood items due to carelessness or poor supervision by the firm's ownership or management."
7 C.F.R. § 278.6(e)(5). "[R]review of the sanction imposed by the FNS is governed by the arbitrary and capricious standard." Wong v. United States, 859 F.2d 129, 132 (9th Cir. 1988). "Under the arbitrary and capricious standard, the court examines the sanction imposed by the FNS in light of the administrative record to judge whether the agency properly applied the regulations and to determine whether the sanction is unwarranted in law or without justification in fact." Id. (internal quotation marks omitted). "Although [a court] may uphold a decision of less than ideal clarity if the agency's path may reasonably be discerned, [it] cannot infer an agency's reasoning . . . where the agency failed to address significant objections and alternative proposals." Beno v. Shalala, 30 F.3d 1057, 1073 (9th Cir. 1994). Further, a "reviewing court may not substitute reasons for agency action that are not in the record." Ariz. Cattle Growers Ass'n v. U.S. Fish & Wildlife, 273 F.3d 1229, 1236 (9th Cir. 2001).
In its Final Agency Decision, FNS neither provides facts supporting its conclusion that the violations were the result of carelessness or poor supervision nor responds to Plaintiff's objection that the agency had not provided evidence supporting this conclusion. At the December 19, 2011 hearing on Plaintiff's motion to stay, Defendant conceded that the Final Agency Decision did not include facts to support a conclusion that the violations were the result of carelessness or poor supervision. Although Defendant argues evidence is in the record that supports this conclusion, the agency must "articulate a rational connection between the facts found and the choice made." Ariz. Cattle Growers Ass'n, 273 F.3d at 1236; see ...