United States District Court, E.D. California
29, 2019, plaintiff Tawfiq Morrar moved to preliminarily
enjoin the United States and the USDA Food & Nutrition
Service (“FNS” or collectively,
“defendants”) from further posting his name on
the General Service Administration's System for Award
Management's Excluded Parties List. Mot., ECF No. 7-1.
Plaintiff represents that if his name is not removed from the
list by June 28, 2019, he will be terminated from his
employment as general counsel for Children's Choice
Pediatric Dental Care. Id.; Saladin Decl., ECF No.
7-4, ¶¶ 10-18. Defendants opposed the motion,
Opp'n, ECF No. 7, and plaintiff replied, Reply, ECF No.
21. On June 26, 2019, the court heard oral argument on the
motion. Stewart Fried and Bashar Ahmad appeared on behalf of
plaintiff; Edward Olsen appeared on behalf of defendants.
After thorough consideration of the arguments and governing
authority, the court GRANTED plaintiff's motion for
preliminary injunction on June 27, 2019. ECF No. 26. The
court's reasons for its decision are provided below.
FACTUAL AND PROCEDURAL BACKGROUND
a practicing attorney admitted to the California bar, serves
as general counsel for Children's Choice Pediatric Dental
Care (“Children's Choice”), which is located
in Sacramento, California. Compl., ECF No. 1, ¶ 12.
Children's Choice participates in federal healthcare
programs, including Medicare and Medicaid, which means it is
subject to possible disgorgement, fines and penalties should
it employ any person identified on the General Service
Administration's System for Award Management's
Excluded Parties List (“SAM list” or
“EPL”). Id. ¶ 13; Saladin Decl.
¶ 11. Plaintiff also owns Folsom Food Market (“the
Market”), a retail food store located in Folsom,
California. Compl. ¶¶ 17, 19. In 2015, the Market
obtained authorization to participate in Supplemental
Nutrition Assistance Program (“SNAP”), a program
of the Food and Nutrition Act of 2008. Id. ¶
March 6, 2017, following an undercover investigation, FNS
sent plaintiff a letter charging the Market with
“trafficking” in SNAP benefits in violation of
FNS's SNAP regulations as set forth in 7 C.F.R. §
271.2. Id. ¶ 25; Admin. Rec.
(“AR”), ECF No. 14-1, at 72. On March 15, 2017,
plaintiff responded by letter to the FNS charges, explained
what efforts he had made to rectify the purported violation
and requested imposition of a civil monetary penalty in lieu
of being disqualified from participating in SNAP, as allowed
by the regulations. AR 116- 19. After considering
plaintiff's response, and the documentation he presented,
FNS denied plaintiff's request for a civil monetary
penalty and permanently disqualified the Market from
participating in SNAP. Compl. ¶ 28; AR 165-66, ECF No.
14-1 (reporting “your firm shall be permanently
disqualified”). On August 15, 2017, in light of this
disqualification, FNS added plaintiff's name to the SAM
list. Compl. ¶ 29.
about April 9, 2019, Children's Choice conducted a
sanctions check as part of a multi-pronged compliance program
it had begun implementing. Compl. ¶ 32; Saladin Decl.
¶¶ 9-10. In the course of the sanctions check
Children's Choice discovered plaintiff's name on the
SAM list and then immediately notified him of the discovery.
Compl. ¶ 32. Plaintiff was unaware his name had been
placed on the SAM list until he heard the news from
Children's Choice. Morrar Decl., ECF No. 7-3, ¶ 14.
On April 17, 2019, Children's Choice suspended plaintiff
from his job because of the potential adverse effect his
continued employment might have on its eligibility to receive
federal and state subsidies. Saladin Decl. ¶ 11.
Children's Choice will reinstate plaintiff, however, if
his name is removed from the SAM list. Id. ¶
12. Children's Choice has extended plaintiff's time
to obtain removal of his name from the SAM list, but if he is
unable to accomplish this goal by June 28, 2019,
Children's Choice will permanently terminate
plaintiff's employment. Id. ¶ 16.
April 26, 2019, plaintiff filed a petition with FNS
Administrator and USDA Deputy Acting Under Secretary, Brandon
Lipps, requesting that plaintiff's name be removed from
the SAM list. Compl. ¶ 33. As plaintiffs' counsel
reported at hearing, plaintiff's petition was granted in
part and denied in part, but FNS ultimately declined to
remove his name from the SAM list.
10, 2019, plaintiff and his wife co-plaintiff Amna Salameh,
filed suit in this court seeking declaratory and injunctive
relief on the following grounds: (1) FNS acted outside the
authority delegated it by Congress, engaging in actions
ultra vires in listing plaintiffs on the SAM list,
and (2) those acts violated the Due Process Clause of the
Fifth Amendment because FNS failed to provide procedural due
process protections before listing plaintiffs on the SAM
list. See generally Compl. Plaintiff asserts,
without opposition, that the court's jurisdiction over
these claims and authority to grant declaratory relief is
predicated on 28 U.S.C. §§ 1331, 1346, 2201-2202.
On May 29, 2019, plaintiff filed his preliminary injunction
motion seeking to enjoin FNS from further posting his name on
the SAM list. Mot.
STATUTORY AND REGULATORY FRAMEWORK
2008, Congress enacted the Food and Nutrition Act of 2008
(the “Act”), 7 U.S.C. §§ 2011-2036, a
modern iteration of the Food Stamp Act of 1964. The purpose
of the Act is “to safeguard the health and well-being
of the Nation's population by raising levels of nutrition
among low-income households.” Id. § 2011.
SNAP is a key component of the Act because it provides
financial aid to low-income families in order to assist with
monthly food expenses. Id. §§ 2011,
2013(a). Participating families receive an electronic benefit
transfer card, which they can use to purchase eligible food
items from participating food retail stores. Id.
become a SNAP-eligible retailer, a store must apply and
receive authorization from FNS. Id. § 2018.
Once approved, a store is subject to stringent FNS regulatory
standards, with prevention of SNAP-benefit trafficking being
chief among these regulatory goals. See Id. §
2021; 7 C.F.R. § 271.2. The import of a trafficking
offense is clear: violators face potential permanent
disqualification, even as first-time offenders. 7 U.S.C.
§ 2021(b)(3)(B). Apart from the statutory and regulatory
language itself, SNAP application, training and violation
notice materials all advise participating retailers of the
consequences of violating SNAP regulations. Id.
§ 2071; 7 C.F.R. § 278.1; AR 19, 28, 73, 144. If a
violation determination becomes final, after a firm charged
with a violation has exhausted or waived administrative
review, FNS regulations provide that the violator is subject
to the following disclosure provision:
Public disclosure of firms sanctioned for SNAP violations.
FNS may disclose information to the public when a retail food
store has been disqualified or otherwise sanctioned for
violations of the Program after the time for administrative
and judicial appeals has expired. This information is limited
to the name and address of the store, the owner(s')
name(s) and information about the sanction itself. FNS may
continue to disclose this information for as long as the
duration of the sanction. In the event that a sanctioned firm
is assigned a civil penalty in lieu of a period of
disqualification, as described in § 278.6(a), FNS may
continue to disclose this information for as long as the
duration of the period of disqualification or until the civil
penalty has been paid in full, whichever is longer.
7 C.F.R. § 278.1(q)(5). While the FNS regulations do not
reference the SAM list, FNS represents that it has posted the
names of owners of disqualified firms on the SAM list since
2012. Ocanovic Decl., ECF No. 13-1, ¶ 2.
noted above, the SAM list is maintained by the federal
General Services Administration; the list includes
information regarding individuals who are suspended, debarred
or disqualified from covered procurement-related
transactions. See 2 C.F.R. §§
180.45(a)(1), 180.500. As relevant here, disqualification is
meaningfully different from suspension or debarment. It is
undisputed that plaintiff's disqualification is not from
participating in procurement-related transactions. AR 165
(advising of permanent disqualification from SNAP). As
explained by the USDA, a disqualified individual is barred
from participation in specific agency programs, such as SNAP,
whereas suspended or debarred individuals are barred from
participating in programs government-wide. Departmental
Regulation (“DR”) 2280-001, Fried Decl., ECF No.
7-2, Ex. B, at 28 (section entitled
“Disqualification”). FNS's practice of
disclosing a disqualified person such as plaintiff on the SAM
list, rather than providing public disclosure in some other
manner, is at the heart of this dispute.
preliminary injunction is an extraordinary remedy never
awarded as of right[, ]” Winter v. Natural Res.
Def. Council, Inc., 555 U.S. 7, 24 (2008), and
“should not be granted unless the movant, by a clear
showing, carries the burden of persuasion[, ]”
Lopez v. Brewer, 680 F.3d 1068, 1072 (9th Cir. 2012)
(quoting Mazurek v. Armstrong, 520 U.S. 968, 972
(1997) (emphasis in original)). In determining whether to
issue a preliminary injunction, federal courts must consider
whether the moving party “ is likely to succeed on
the merits, . . .  is likely to suffer irreparable harm in
the absence of preliminary relief, . . .  the balance of
equities tips in [the movant's] favor, and . . .  an
injunction is in the public interest.” Id. at
Ninth Circuit has “also articulated an alternate
formulation of the Winter test.” Farris v.
Seabrook, 677 F.3d 858, 864 (9th Cir. 2012). That
formulation is referred to as the “serious
questions” or the “sliding scale” approach:
“‘serious questions' going to the merits and
a balance of hardships that tips sharply towards the
plaintiff can support issuance of a preliminary injunction,
so long as the plaintiff also shows that there is a
likelihood of irreparable injury and that the injunction is
in the public interest.” Alliance for the Wild
Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir. 2011)
(“the ‘serious questions' approach survives
Winter when applied as part of the four-element
Winter test, ” id. at 1132).
“In other words, ‘serious questions going to the
merits' and a hardship balance that tips sharply toward
the plaintiff can support issuance of an injunction, assuming
the other two elements of the Winter test are also
met.” Id. at 1132. Under the “serious
questions” approach to a preliminary injunction,
“[t]he elements of the preliminary injunction test must
be balanced, so that a stronger showing of one element may
offset a weaker showing of another.” Lopez,
680 F.3d at 1072.
moving party asks the court to “order a responsible
party to ‘take action, ” as plaintiff does here,
that requested “relief is treated as a mandatory
injunction.” Garcia v. Google, Inc., 786 F.3d
733, 740 (9th Cir. 2015) (quotations omitted). “The
‘district court should deny such relief unless the
facts and law clearly favor the moving party.'”
Id. (citing Stanley v. Univ. of S. Cal., 13
F.3d 1313, 1320 (9th Cir.1994) (some internal quotations
omitted)). In other words, “mandatory injunctions
should not issue in ‘doubtful cases.'”
Id. (citing Park Vill. Apartment Tenants
Ass'n v. Mortimer Howard Trust, 636 F.3d 1150, 1160
(9th Cir. 2011)). This standard does not supersede the Ninth
Circuit's “serious questions” test. Rather,
the severity of the legal questions correlates with a
movant's likelihood of success; the greater the
likelihood of success, the less doubtful the case. Cf.
Fonseca v. Kaiser Permanente Med. Ctr. Roseville, 222
F.Supp.3d 850, 874 (E.D. Cal. 2016) (denying preliminary
injunction where plaintiff failed to present serious
questions, reasoning that “[m]andatory injunctions are
incompatible with doubtful cases like this one.”).
in each case and irrespective of the approach to resolving a
preliminary injunction, a court must balance the competing
alleged harms while considering the effects on the parties of
the granting or withholding of the injunctive relief.
Winter, 555 U.S. at 24. In exercising that