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Kee Lee Dba Chin's Market and Kitchen v. United States of America; and Does 1 Through 100

January 8, 2013

KEE LEE DBA CHIN'S MARKET AND KITCHEN, PLAINTIFF,
v.
UNITED STATES OF AMERICA; AND DOES 1 THROUGH 100, INCLUSIVE, DEFENDANTS.



ORDER RE: SUMMARY JUDGMENT

I. History

Plaintiff Kee Lee is the owner of Chin's Market and Kitchen ("Chin's Market"), a small grocery store and restaurant that also sold large roasted meats primarily to members of the local Hmong community. In the spring of 2009, Chin's Market started participating in the food stamp program which is administered by the United States Department of Agriculture Food and Nutrition Service ("FNS"). The FNS examined the food stamp redemption records from Chin's Market over the period October 2009-March 2010 and became suspicious of certain transactions. The FNS made an on-site visit to Chin's Market in April 2010. The FNS accused Plaintiff of redeeming food stamps for some amount of money (typically 50% of the face value of the redemption) instead of food, commonly termed trafficking. The FNS sent Plaintiff a formal charge letter dated May 21, 2010 detailing their investigation and soliciting a response. Doc. 24, Administrative Record, 50-52.*fn1 The FNS deemed Plaintiff's defense against the charges insufficient and issued a final agency decision on April 28, 2011, finding that Plaintiff trafficked food stamps and permanently disqualified him from participating in the program under 7 C.F.R. § 278.6(e)(1)(i). Doc. 24, Administrative Record, 177-190. Plaintiff filed suit in federal court against Defendant United States, challenging this determination per 7 C.F.R. § 279.7. The United States filed the present motion for summary judgment, which Plaintiff opposes.

II. Legal Standards

Summary judgment is appropriate when it is demonstrated that there exists no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970); Fortyune v. American Multi-Cinema, Inc., 364 F.3d 1075, 1080 (9th Cir. 2004). The party seeking summary judgment bears the initial burden of informing the court of the basis for its motion and of identifying the portions of the declarations (if any), pleadings, and discovery that demonstrate an absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). A fact is "material" if it might affect the outcome of the suit under the governing law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986); Thrifty Oil Co. v. Bank of America Nat'l Trust & Savings Assn, 322 F.3d 1039, 1046 (9th Cir. 2002). A dispute is "genuine" as to a material fact if there is sufficient evidence for a reasonable jury to return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Long v. County of Los Angeles, 442 F.3d 1178, 1185 (9th Cir. 2006).

Where the moving party will have the burden of proof on an issue at trial, the movant must affirmatively demonstrate that no reasonable trier of fact could find other than for the movant. Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). Where the non-moving party will have the burden of proof on an issue at trial, the movant may prevail by presenting evidence that negates an essential element of the non-moving party's claim or by merely pointing out that there is an absence of evidence to support an essential element of the non-moving party's claim. See James River Ins. Co. v. Schenk, P.C., 519 F.3d 917, 925 (9th Cir. 2008). If a moving party fails to carry its burden of production, then "the non-moving party has no obligation to produce anything, even if the non-moving party would have the ultimate burden of persuasion." Nissan Fire & Marine Ins. Co. v. Fritz Companies, 210 F.3d 1099, 1102-03 (9th Cir. 2000). If the moving party meets its initial burden, the burden then shifts to the opposing party to establish that a genuine issue as to any material fact actually exists. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The opposing party cannot "'rest upon the mere allegations or denials of [its] pleading' but must instead produce evidence that 'sets forth specific facts showing that there is a genuine issue for trial.'" Estate of Tucker v. Interscope Records, 515 F.3d 1019, 1030 (9th Cir. 2008).

The evidence of the opposing party is to be believed, and all reasonable inferences that may be drawn from the facts placed before the court must be drawn in favor of the opposing party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Stegall v. Citadel Broad, Inc., 350 F.3d 1061, 1065 (9th Cir. 2003). Nevertheless, inferences are not drawn out of the air, and it is the opposing party's obligation to produce a factual predicate from which the inference may be drawn. See Juell v. Forest Pharms., Inc., 456 F.Supp.2d 1141, 1149 (E.D. Cal. 2006); UMG Recordings, Inc. v. Sinnott, 300 F.Supp.2d 993, 997 (E.D. Cal. 2004). "A genuine issue of material fact does not spring into being simply because a litigant claims that one exists or promises to produce admissible evidence at trial." Del Carmen Guadalupe v. Agosto, 299 F.3d 15, 23 (1st Cir. 2002); see Galen v. County of Los Angeles, 477 F.3d 652, 658 (9th Cir. 2007); Bryant v. Adventist Health System/West, 289 F.3d 1162, 1167 (9th Cir. 2002). Further, a "motion for summary judgment may not be defeated ...by evidence that is 'merely colorable' or 'is not significantly probative.'" Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986); Hardage v. CBS Broad. Inc., 427 F.3d 1177, 1183 (9th Cir. 2006). Additionally, the court has the discretion in appropriate circumstances to consider materials that are not properly brought to its attention, but the court is not required to examine the entire file for evidence establishing a genuine issue of material fact where the evidence is not set forth in the opposing papers with adequate references. See Southern Cal. Gas Co. v. City of Santa Ana, 336 F.3d 885, 889 (9th Cir. 2003). If the non-moving party fails to produce evidence sufficient to create a genuine issue of material fact, the moving party is entitled to summary judgment. See Nissan Fire & Marine Ins. Co. v. Fritz Companies, 210 F.3d 1099, 1103 (9th Cir. 2000).

III. Statement of Material Facts

1. Kee Lee applied for the store, Chin's Market and Kitchen ("Chin's Market"), to participate in the Food Stamp Program and completed an application providing that they agreed to follow the Food Stamp Program regulations

Undisputed.

2. He agreed that exchanging cash for food stamp benefits ("trafficking") was a violation of the Food Stamp Program regulations. He agreed that any violation of the governing regulations could result in the disqualification of Chin's Market and Kitchen from participation in SNAP.

Undisputed.

3. In the fall of 2009, FNS, which monitors retail store compliance with the governing regulations, was alerted to suspicious EBT activity, potentially trafficking, at Chin's Market. Trafficking means "the buying or selling of coupons . . . or other benefit instruments for cash or consideration other than eligible food." 7 C.F.R. § 271.2.

Undisputed.

4. The suspicious EBT transactions at Chin's Market included high-dollar transactions, depletion of almost an entire monthly benefit in one transaction, multiple transactions of high amounts in a short time frame, and purchases in round-figure amounts (or other same-cents values).

Undisputed.

5. FNS compared the EBT data at Chin's Market and Kitchen with other similarly situated stores, and because the high number of suspicious EBT transactions at Chin's Market and Kitchen occurred for several months, it was determined that a store visit would be conducted to further evaluate the suspect EBT transactions.

Disputed. No other stores comparable or similarly situated.

6. On April 13, 2010, FNS conducted an in-store inspection of Chin's Market and spoke with Lee. ("Store owner Lee followed reviewers around the store.")

Undisputed.

7. The inside of Chin's Market was typical of a small-sized grocery store with a substantial restaurant business that catered to an Asian, mostly Hmong, customer base.

Disputed. No other stores comparable or similarly situated.

8. Upon inspection, Chin's Market did not sell any dairy products, produce, fresh meat, poultry or seafood. The eligible SNAP items consisted primarily of bagged rice, dry noodles, a variety of sauces and canned fruits and vegetables. Chin's Market also sold ineligible items such as household, pharmacy and hardware items in the retail area. There were five shopping carts, two of which were outside the store and a third was filled with kitchen equipment.

Undisputed.

9. Chin's Market had one EBT point of service device and one cash register without a conveyor ...


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