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Rashid v. United States

United States District Court, C.D. California

July 9, 2019

KAZI A. RASHID, Plaintiff,




         Plaintiff Kazi A. Rashid (“Plaintiff”) brings this action pro se, seeking review of an administrative decision permanently disqualifying him from accepting SNAP benefits at his store, Harry's Market. Presently before the Court is Defendant's Motion for Summary Judgment, in which it argues that Plaintiff fails to present a genuine issue of material fact, and that it is entitled to judgment as a matter of law. For the following reasons, the Court GRANTS Defendant's Motion.[1] (Mot. for Summ. J. (“Mot.”), ECF No. 19.)


         Plaintiff is the owner and operator of Harry's Market, located at 8751 Compton Avenue, Los Angeles, California, 90002. (Compl. 2, ECF No. 1.)

         On June 8, 2018, Plaintiff filed a Complaint seeking review of an administrative decision of the United States Department of Agriculture (“USDA”), which permanently disqualified Plaintiff's store from the Supplemental Nutrition Assistance Program (“SNAP”) for trafficking in food stamps. (See Compl.)

         SNAP is intended “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. SNAP benefits may only be used at authorized stores for eligible food items, i.e. “[a]ny food or food product for home consumption except alcoholic beverages, tobacco, hot foods or hot food products ready for immediate consumption.” 7 U.S.C. § 2012(k); see 7 C.F.R. § 271.2 (similar); see also 7 U.S.C. § 2013(a). In Los Angeles, SNAP utilizes electronic benefit transfer (“EBT”) systems rather than food coupons or stamps. (Statement of Uncontroverted Facts (“SUF”) 9, ECF No. 19-2; Decl. of Luz Pena (“Pena Decl.”) ¶ 6, ECF No. 19-3.) Benefit recipients are issued plastic cards, similar to credit cards, which have magnetic strips encoded with a card number that is linked to the recipient's personal information. (SUF 10.) Authorized stores run the EBT cards through a Point of Sale (“POS”) device, which is connected to a personal identifying number (“PIN”) entry pad, and a printer for producing receipts. (Id.) The POS interacts with a host computer that processes and stores information and communicates with other computers as necessary. (Id.) This system allows the USDA's Food and Nutrition Service (“FNS”) to track benefits from the recipient to the retailer. (SUF 11.) Every transaction at an authorized retail store is recorded electronically to identify the recipient card number, the amount of the EBT purchase, and the exact date and time of the transaction. (Id.) Thus, FNS can identify transactions consistent with food stamp trafficking from the electronic data. (See id.)

         Trafficking in food stamps is defined to include the “buying, selling, stealing, or otherwise effecting an exchange of SNAP benefits . . . for cash or consideration other than eligible food.” 7 C.F.R. § 271.2. If FNS determines that a store has engaged in trafficking, it may permanently disqualify the store from SNAP. See 7 U.S.C. § 2021(b)(3); 7 C.F.R. § 278.6. Such a penalty is warranted for even a single trafficking violation. See Lee v. United States, 623 Fed.Appx. 886, 887 (9th Cir. 2015); Kahin v. United States, 101 F.Supp.2d 1299, 1303 (S.D. Cal. 2000); 7 U.S.C. § 2021(b)(3)(B) (disqualification shall be “permanent” upon the “first occasion” of a disqualification based on “trafficking.”) (emphasis added); 7 C.F.R. § 278.6(e) (“The FNS regional office shall . . . [d]isqualify a firm permanently if . . . [p]ersonnel of the firm have trafficked as defined in § 271.2.”).

         The FNS has discretion to impose a civil monetary penalty (“CMP”) in lieu of permanent disqualification if the store had “an effective compliance policy and program to prevent violations.” 7 C.F.R. § 278.6(i). To be eligible for a CMP, a store must “timely submit[] to FNS substantial evidence” that: (1) it had developed an effective compliance policy; (2) the policy and program were in place prior to the violation(s); (3) the store had developed and instituted an effective training program; and (4) the store owner was unaware of, did not approve, did not benefit from, or was in no way involved in the violation. Id.

         FNS investigated EBT transactions at Harry's Market from June 2017 to November 2017. (Compl. 2; SUF 12.) On October 16, 2017, FNS conducted a store visit, where it took photographs and wrote a summary describing the interior of the store, as well as the state of cash registers and the number of shopping carts. (SUF 3- 8.)

         On December 18, 2017, FNS sent a charge letter to Plaintiff explaining why it believed he had trafficked in food stamps. (SUF 13.) In the letter, FNS addressed two categories of suspicious transactions: (1) 215 transactions totaling $19, 895.89 in what it called “excessively large purchase transactions”; and (2) 104 transactions totaling $6, 393.93 that were made in “unusually short time frames.” (SUF 14-15.)

         The letter also advised Plaintiff of the investigation and notified him that the Market had been charged with trafficking, and that the “sanction for the trafficking violation(s) . . . is permanent disqualification.” (Decl. of Grace Park (“Park Decl.”), Ex. 2, Part 1, at 36, ECF No. 19-6). The charge letter further advised Plaintiff that the SNAP regulations also provide that under certain conditions, FNS may instead impose a CMP. (Id.) Finally, the letter explained the requirements to be considered for a CMP:

The SNAP regulations, Section 278.6(1), list the criteria that you must meet in order to be considered for a CMP. If you request a CMP, you must meet each of the four criteria listed and provide the documentation as specified within 10 calendar days of your receipt of this letter. No extension of time can be granted for making a request for a CMP or for providing the required documentation. If your request and the ...

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