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Paw v. United States

United States District Court, S.D. California

March 29, 2018

SUE THA LEI PAW, et al., Plaintiffs,


          Barry Ted Moskowitz, Chief Judge

         Presently before the Court is Defendant United States of America's motion for summary judgment. (Def.'s Mot. for Summ. J., ECF No. 12.) For the reasons discussed below, Defendant's motion is denied without prejudice.

         I. BACKGROUND

         On March 16, 2017, Plaintiffs Sue Tha Lei Paw, Friday Moe Ro, Nyien Nyien Aye, Win Htut, Tar Lue, and Yoon Wady Food Store (collectively “Plaintiffs”) brought an action against Defendant for disqualifying Yoon Wady Food Store (“Yoon Wady”) from the federal Supplemental Nutritional Assistance Program (“SNAP”, formerly known as the food stamps program), which is overseen by the Food and Nutrition Service (“FNS”) of the United States Department of Agriculture (“USDA”). (ECF No. 1.) Plaintiffs brought this action for a de novo review of the agency's final decision.

         A. The Supplemental Nutritional Assistance Program

         SNAP was implemented by Congress “to safeguard the health and well-being of the Nation's population by raising levels of nutrition among low-income households.” 7 U.S.C. § 2011. The program operates by increasing low-income families' purchasing power. Id. Qualifying households receive benefits in the form of Electronic Benefit Transfer (“EBT”) cards with which they can purchase eligible food items. 7 U.S.C. § 2016(a), (c). Only approved stores are eligible to participate in the program and accept SNAP benefits in exchange for eligible food items. 7 U.S.C. § 2018. A qualifying store may be fined a civil money payment or permanently disqualified from the program if it accepts SNAP benefits in violation of the program's regulations. 7 U.S.C. § 2021(a).

         SNAP expressly forbids “trafficking, ” which is “[t]he buying, selling . . . or otherwise effecting an exchange of SNAP benefits issued and accessed via [EBT] cards . . . for cash or consideration other than eligible food.” 7 C.F.R. § 271.2. If the FNS determines that a participating store trafficked SNAP benefits, it may permanently disqualify that retailer from participating in SNAP. 7 C.F.R. § 278.6(a). When determining whether disqualification is warranted, the FNS may rely on evidence such as “facts established through on-site investigations, inconsistent redemption data, evidence obtained through a transaction report under an electronic benefit transfer system, or the disqualification of a firm from the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) . . . .” Id.

         B. Factual Background

         Plaintiff Yoon Wady Food Store is a store located in San Diego, California that carries dried Thai, Burmese (Myanmar) and Asian food. (Administrative Record[1] (“AR”) 36, 109.) Before July 14, 2016, Yoon Wady was an authorized SNAP retailer. After Yoon Wady's SNAP redemption triggered an alert on the Anti-Fraud Locator using EBT Retailer Transactions (“ALERT”) system for trafficking, the FNS audited the store from October 2015 to March 2016. (Id. at 32.) During its review, the FNS analyzed Yoon Wady's EBT transactions and observed multiple purchases from the same SNAP accounts within short time periods and in excessively large amounts. (Id. at 40, 90, 605-11.) On April 20, 2016, FNS visited Yoon Wady and noted only one cash register, one SNAP terminal device, no conveyor belt, no optical scanner, one shopping basket, and no shopping carts. (Id. at 34.) The FNS also compared Yoon Wady to other stores in the neighborhood, including stores that allegedly sell comparable Asian food items. (Id. at 41.)

         Based on EBT transaction data as well as the store visit, FNS concluded that these patterns were consistent with trafficking, which warranted issuance of a charge letter in accordance with the program's regulations. (Id. at 90-91.) On July 14, 2016, the FNS sent Plaintiffs the charge letter. (Id.) The letter identified two patterns of SNAP transaction activity indicative of trafficking: (1) multiple transactions from a single account in unusually short time frames; and (2) excessively large purchase transactions. (Id. at 93-104.) The letter cited to 64 instances in which multiple transactions were made from the same SNAP accounts in unusually short time frames. (Id. at 93-96.) The letter also instructed Plaintiffs on how to request a civil money penalty in lieu of permanent disqualification. (Id. at 90-91.) Plaintiffs replied to the charge letter in writing, providing pictures, a stock list, invoices, customer affidavits, and various documentation including Yoon Wady's 2015 tax documents. (Id. at 107-269.)

         The FNS ultimately determined that Plaintiffs' evidence did not outweigh the evidence gathered during the investigation. (Id. at 286-87.) Because Plaintiffs did not submit evidence demonstrating Yoon Wady's eligibility for a civil money penalty, FNS permanently disqualified Yoon Wady from SNAP. (Id.)

         On October 28, 2016, Plaintiffs appealed the FNS's determination and requested administrative review. (Id. at 290.) They submitted a brief along with supporting materials, including more than a dozen affidavits by SNAP beneficiaries who shop at Yoon Wady. (Id. at 301-529.) On February 13, 2017, the FNS issued its final agency decision. (Id. at 598-619.) On March 16, 2017, Plaintiffs initiated this action against Defendant seeking a de novo review of the permanent disqualification. At this juncture, the parties have not engaged in discovery and Defendant has submitted the instant motion for summary judgment based on the Administrative Record.


         A. Summary ...

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