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Shreegi Enterprises, Inc. v. United States

United States District Court, M.D. Pennsylvania

April 24, 2018

SHREEGI ENTERPRISES, INC., d/b/a/ SHENANDOAH STOP SHOP, Plaintiff
v.
UNITED STATES OF AMERICA; UNITED STATES DEPARTMENT OF AGRICULTURE FOOD AND NUTRITION SERVICE Defendant

          MEMORANDUM

          SYLVIA H. RAMBO UNITED STATES DISTRICT JUDGE

         I. Introduction

         Plaintiff, Shreegi Enterprises, Inc., d/b/a Shenandoah Stop Shop (hereinafter “Plaintiff, ” “Shreegi, ” or “store”), a convenience store, filed this action against the defendant, the United States of America (“Defendant”), also naming the United States Department of Agriculture Food and Nutrition Service (“FNS”). Plaintiff is challenging FNS's decision to permanently disqualify Shreegi from the Supplemental Nutrition Assistance Program (“SNAP”), also known as the food stamp program.

         SNAP uses electronic benefit transfer (EBT) cards to deliver benefits. FNS permanently disqualified Shreegi after it determined that Plaintiff had illegally trafficked in SNAP benefits, principally based upon FNS's examination of four suspicious patterns of EBT transactions at the store. It also decided that Shreegi was not entitled to pay a civil money penalty (“CMP”) in lieu of permanent disqualification.

         Defendant has filed a motion for summary judgment, arguing that FNS's decision was correct and indeed mandated by the law. In opposing summary judgment, Shreegi argues that the shopping habits of its SNAP customers in making their EBT transactions provide an innocent explanation for the patterns. Plaintiff also argues that, in any event, FNS should have imposed a CMP rather than permanent disqualification.

         II. Summary Judgment Standard

         Federal Rule of Civil Procedure 56 sets forth the standard and procedures for the grant of summary judgment. Rule 56(a) provides that “[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to summary judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-323 (1986). A factual dispute is “material” if it might affect the outcome of the suit under the applicable substantive law, and is “genuine” only if there is a sufficient evidentiary basis that would allow a reasonable fact-finder to return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When evaluating a motion for summary judgment, a court “must view the facts in the light most favorable to the non-moving party” and draw all reasonable inferences in favor of the same. Hugh v. Butler Cty. Family YMCA, 418 F.3d 265, 267 (3d Cir. 2005).

         III. Jurisdiction and Scope of Review for a SNAP Disqualification

         A store can seek judicial review of a final agency determination permanently disqualifying it from the SNAP by filing a complaint against the United States in federal district court. 7 U.S.C. § 2023(a)(13). “The suit . . . shall be a trial de novo by the court in which the court shall determine the validity of the questioned administrative action in issue . . . .” Id. § 2023(a)(15). “If the court determines that such administrative action is invalid, it shall enter such judgment or order as it determines is in accordance with the law and the evidence.” Id. § 2023(a)(16). In light of the trial de novo requirement, the district court is “to examine the entire range of issues raised and not merely to determine whether the administrative findings of the agency are supported by substantial evidence. The court must reach its own factual and legal conclusions and is not limited to matters considered in the administrative proceedings.” Freedman v. Dep't of Agric., 926 F.2d 252, 261 (3d Cir. 1991)(citations omitted). “A trial de novo is a trial which is not limited to the administrative record - the plaintiff may offer any relevant evidence available to support his case, whether or not it has been previously submitted to the agency.” Affum v. United States, 566 F.3d 1150, 1160 (D.C. Cir. 2009)(quoting Kim v. United States, 121 F.3d 1269, 1272 (9th Cir. 1997))(internal quotation marks omitted). “However, de novo review is compatible with a summary judgment disposition if there are no material facts in dispute.” Freedman, 926 F.2d at 261.

         FNS may find a violation or disqualify a store “on the basis of evidence that may include facts established through on-site investigations, inconsistent redemption data, or evidence obtained through a transaction report under an electronic benefit transfer system.” 7 C.F.R. § 278.6(a). See also 7 U.S.C. § 2021(a)(2);. Reliance on EBT transaction data alone is sufficient. Duchimaza v. United States, 211 F.Supp.3d 421, 432-33 (D. Conn. 2016)(quoting Idias v. United States, 359 F.3d 695, 698 (4th Cir. 2004)); Young Choi Inc. v. United States, 639 F.Supp.2d 1169, 1182 (D. Haw. 2009)(“The Food Stamp Act expressly provides for permanent disqualification of a retail food store using EBT evidence alone to support a finding of trafficking.”).

         “The burden is placed upon the store owner to prove by a preponderance of the evidence that the violations did not occur.” Kim, supra, 121 F.3d at 1272. See also White Horse No. 2 v. United States, No. 11-CV-1538, 2012 WL 1533468, at *2 (D.N.J. Apr. 30, 2012). “[E]ven a single incident of trafficking is enough to justify permanent disqualification.” Rockland Convenience Store v. United States, No. 10-CV-260, 2011 WL 5120410, at *9 (D.N.H. Oct. 27, 2011)(citing in part Kahin v. United States, 101 F.Supp.2d 1299, 1303 (S.D. Cal. 2000)). See also Ganesh v. United States, 658 Fed.Appx. 217, 219 (6th Cir. 2016)(nonprecedential)(“To survive summary judgment, a plaintiff in a Food Stamp Program disqualification case must raise material issues of fact as to each alleged violation.”)(internal quotation marks and quoted case omitted).

         That even a single incident is enough follows from the statutory language that requires permanent disqualification upon “the first occasion or any subsequent occasion of . . . trafficking, ” 7 U.S.C. § 2021(b)(3)(B), with an exception for FNS to exercise discretion to impose a CMP instead if the plaintiff had “an effective policy and program to prevent violations . . . .” Id.; Suuqa Bakaro Grocery v. Dep't of Agric., No. 16-CV-254, 2017 WL 3141919, at *3 (D. Me. July 24, 2017). See also Idias v. United States, 359 F.3d 695, 697 (4th Cir. 2004)(“In fact, a store that is caught trafficking in food stamps even one time must be permanently disqualified from the Food Stamp Program, unless the Secretary of Agriculture determines that the store had in place an effective anti-trafficking policy.”).

         The de novo standard of review applies to determine if a violation occurred. White Horse No. 2, supra, 2012 WL 1533468, at *2. A different standard of review applies to determine if the sanction was appropriate. That standard is whether the sanction was “unwarranted in law or without justification in fact, ” or was “arbitrary or capricious.” Affum, 566 F.3d at 1161 (cited case and internal quotation marks omitted). See also Atl. Deli & Grocery v. United States, No. 10-CV-4363, 2011 WL 2038758, at *5 (D.N.J. May 23, 2011)(standard is whether the sanction “was arbitrary or capricious, i.e., whether it was ‘unwarranted in law or without justification in fact'”)(quoting Willy's Grocery v. United States, 656 F.2d 24, 26 (2d Cir. 1981)). A sanction “is not arbitrary or capricious if it complies with FNS's own policy.” Rosario v. United States, No. 14-CV-907, 2017 WL 4316093, at *2 (D. Conn. Sept. 27, 2017).

         The plaintiff has the burden of proof on the sanction issue as well. White Horse No. 2, supra, 2012 WL 1533468, at *3. This includes “‘the burden of introducing evidence into the record that would allow the Court to conclude that the agency's determination . . . is unwarranted in law or fact.'” Id. (quoting Willy's Grocery, 656 F.2d at 26). “A complaining party is still entitled to a trial de novo to create a factual record on the [agency's] determination not to a impose a civil money penalty in lieu of disqualification, and judicial review of the [agency's] choice of penalty is based on that de novo record.” Affum, 656 F.3d at 1161.

         IV. Background

         A. SNAP Transactions and Suspicious Patterns

         “EBT cards operate like a debit card.” (Doc. 31-1, Declaration of Gilda Torres, section chief of FNS's Retailer Operations Division, ¶ 6). Eligible food items can be purchased by swiping the EBT card through an EBT terminal at the authorized SNAP retailer. (Id.). “Upon swiping the EBT card, funds from the SNAP household's account are electronically transferred to the retailer's designated bank account. The Government then redeems the benefits by paying the firm the full face value of the benefits.” (Id. ¶ 7). According to Defendant's brief in support of summary judgment, SNAP benefits are distributed to beneficiaries at the beginning of each month. (Doc. 31, Def.'s Br. in Supp. at ECF p. 11).

         “FNS is able to electronically monitor stores' EBT transactions through a national database that records the details of every EBT transaction at every retail store in the United States that is authorized to accept SNAP benefits.” (Doc. 31, Def.'s Br. in Supp. at ECF p. 12, citing Doc. 31-1, Torres Decl. ¶¶ 8-10). “FNS uses a computerized fraud detection tool - Anti-Fraud Locator Using EBT Retailer Transactions (‘ALERT') - that is capable of identifying EBT transaction patterns indicative of trafficking.” (Doc. 31-1, Torres Decl. ¶ 14). Specifically, ALERT “can identify EBT transactions that are statistically unusual and fall within particular patterns suggesting that a retailer is not complying with SNAP regulations.” (Id. ¶ 15).

         It is illegal to traffic in SNAP benefits. See 7 U.S.C. § 2021(b)(3)(B); 7 C.F.R. § 278.6(a) and (e)(1)(i). In relevant part, “trafficking” is defined as “buying, selling . . . or otherwise effecting an exchange of SNAP benefits . . . for cash or consideration other than eligible food . . . .” 7 C.F.R. § 271.2. In pertinent part, “Eligible foods means: (1) Any food or food product intended for human consumption except alcoholic beverages, tobacco, and hot foods and hot food products prepared for immediate consumption . . . .” Id.

         B. Shreegi's Circumstances

         The following background is taken from Defendants' statement of material facts (DSMF)(Doc. 32), Plaintiff's answer (Doc. 35) to DSMF, and Plaintiff's counterstatement of material facts (PCSMF)(Doc. 36). The parties' language will sometimes be borrowed without attribution, but quotation marks will sometimes be used to indicate the party's language is being quoted in a particular instance. As required by the summary judgment standard, the evidence will be presented in the light most favorable to Plaintiff. The Court will also note when the facts are disputed.

         Shreegi owns and operates Shenandoah Stop Shop, a convenience store located in Shenandoah, Pennsylvania. (Doc. 32, DSMF ¶ 1, admitted by Plaintiff). Shenandoah Stop Shop became an authorized SNAP retailer on May 21, 2013. (Id., DSMF ¶ 2, admitted by Plaintiff). FNS conducted a compliance review visit of the store on March 26, 2015. (Id., DSMF ¶ 4, admitted by Plaintiff). The store manager, Jaime Stevens, was present and consented to the review. (Id., DSMF ¶ 5, admitted by Plaintiff).

         At the time of the compliance visit, the store had three cash registers with three scanners and one EBT device. (Doc. 36, PCSMF ¶¶ 11, 13 and 14, citing Doc. 36-4, ECF pp. 3-7, Hemang Patel Dep.; Doc. 36-5, ECF pp. 3-5, Kirit Patel Dep.; Doc. 36-2, ECF p. 3 Tiffany Becker Dep.). It also had less than ten shopping carts, and more than ten shopping baskets, with the carts available at the front and back of the store. (Doc. 36, PCSMF ¶¶ 11 and 12, citing Doc. 36-4, ECF pp. 3-7, Hemang Patel Dep.; Doc. 36-5, ECF pp. 3-5, Kirit Patel Dep.).[1]

         The store sold hot foods or foods for on-site consumption and had a deli or prepared food section containing prepared/made-to-order items and other refrigerated foods. (Doc. 32, DSMF ¶ 8, admitted by Plaintiff). The store's deli section was in a separate section that sold alcohol. (Id., DSMF ¶ 9, admitted by Plaintiff).

         The compliance reviewer noted that, at the time of the March 26, 2015 visit, the store did not offer meat or seafood specials or fruit or vegetable boxes for sale. (Id., DSMF ¶ 10, citing Doc. 28, ECF p. 34, compliance report).[2] The reviewer also noted at that time there was a small section of empty shelves, which the manager told the reviewer was being “reset.” (Id., DSMF ¶ 11, admitted by Plaintiff). Various dairy, fruit and vegetable, bread and cereal, and meat, poultry, and fish items were available at the store. (Id., DSMF ¶ 12, admitted by Plaintiff). The store's staple food inventory included canned goods, bread, cereal, cheese, milk, and eggs. (Id., DSMF ¶ 15, admitted by Plaintiff). The store also sold frozen bacon, pancakes, pizza, chicken strips, single serve frozen meals, and ice cream. (Id., DSMF ¶ 16, admitted by Plaintiff). The store had a limited supply of fresh produce, no fresh meat or seafood, but it did have deli meats. (Id., DSMF ¶ 17, admitted by Plaintiff).

         The reviewer sketched the layout of the public areas of the store and took photos of its interior and exterior. (Id., DSMF ¶ 13, admitted by Plaintiff). The FNS analysis of the information gathered from the compliance review revealed that the store was approximately 3, 400 square feet. (Id., DSMF ¶ 14, admitted by Plaintiff).

         1. Four Suspicious Patterns of Transactions

         As part of the compliance review, FNS reviewed Shenandoah Stop Shop's SNAP data for January 2015 through March 2015, and the review revealed four suspicious patterns of transactions. (Id., DSMF ¶ 18, admitted by Plaintiff).

         a. The First Pattern

         In the first pattern, 36 sets of transactions, two transactions to a set, totaling $5, 547.92, were rapid and repetitive transactions made in a short period of time by various households. (Doc. 32, DSMF ¶ 19, citing Doc. 28, ECF pp. 77-84, admitted by Plaintiff).[3] In most of these sets of transactions, the second transaction took place less than two minutes after the previous transaction. (Doc. 32, DSMF ¶ 20, citing Doc. 28-3, ECF p. 49).[4] FNS found this suspicious given the numerous steps involved for a cashier in making and processing a legitimate purchase, including the cashier's manually handling the item to determine the price in the absence of an optical scanner, the manual keying of amounts into the register, and bagging the items. (Doc. 32, DSMF ¶¶ 20 and 21, citing Doc. 28-3, ECF p. 49, Ahmed case analysis).[5]

         Defendant highlights two examples. In one instance, a $185.50 transaction for one household was followed less than two minutes later by a $116.80 transaction for another household. (Doc. 32, DSMF ¶ 22, citing Doc. 28, ECF p. 81, transactions 17 and 18; admitted by Plaintiff). In another instance, one transaction of $44.79 is followed 30 seconds later by a second transaction of $287.10 for another household. (Doc. 32, DSMF ¶ 23, citing Doc. 28, ECF p. 82, transactions 37 and 38; admitted by Plaintiff).

         Plaintiff does not dispute these transactions took place but provides an explanation why they were not trafficking ones as follows. According to Plaintiff, it was a “common practice” for its customers to place orders in advance, and some customers would ask Shreegi to purchase items for them from another store and make it part of their order with Shreegi. (Doc. 36, PCSMF ¶ 3, citing Doc. 49-1, ECF pp. 40-41, 45-46), Falguni Patel Dep.). After Shreegi purchased the merchandise from the other store, an employee would ring up all the items, scan them into the computer, put them in a bag, and write the total on the receipt. (PCSMF ¶ 4, citing Doc. 49-1, ECF p. 46, Falguni Patel Dep.). When the customer came in to pick the order up, the employee only had to recall the invoice from any of the three cash registers and then process the transaction immediately through the EBT system. (PCSMF ¶ 5, citing Doc. 49-1, ECF pp. 47-49, Falguni Patel Dep.). Thus, Plaintiff argues, two SNAP purchases could be processed within a few minutes of each other because the orders were already in the system.

         b. The Second Pattern

         In the second suspicious transaction pattern found during the EBT analysis, there were rapid and repetitive transactions in a short period of time from the same household account. This pattern contained 26 sets of rapid transactions in which a household's EBT card was used repetitively within a 24-hour period, totaling $5, 304.73. (Doc. 32, DSMF 24, citing Doc. 28, ECF pp. 85-87; admitted by Plaintiff). In one set of transactions, a household account conducted a transaction for $151.09, which was followed 57 seconds later by a transaction for $149.98 for the same account. (Doc. 32, DSMF ¶ 25, citing Doc. 28, ECF p. 85, transactions 73 and 74; admitted by Plaintiff). In another set, a transaction for $149.50 was followed 20 minutes later by a transaction for $101.50 from the same account. (Doc. 32, DSMF ¶ 26, citing Doc. 28, ECF p. 85, transactions 87 and 88; admitted by Plaintiff). In another instance, a household recorded a transaction of $266.20, then a second transaction of $27.34, a third transaction of $252.49, and a fourth transaction of $141.45, all in less than 24 hours. (Doc. 32, DSMF ¶ 27, citing Doc. 28, ECF p. 87, transactions 119 through 122; admitted by Plaintiff). FNS has found that multiple transactions such as these are methods stores use to avoid high-dollar transactions and are suggestive of trafficking.[6] (Doc. 32, DSMF ¶ 28, citing Doc. 28-3, ECF p. 50, Ahmed case analysis).

         Plaintiff does not dispute these transactions took place but provides evidence that it says explains that the transactions were not trafficking ones. First, Plaintiff says “it was not uncommon” for one household to make more than one transaction in a 24-hour period since Shenandoah is a poor town and most of Shreegi's customers anxiously awaited their funds to arrive on their cards. (Doc. 35, Pl.'s answer to DSMF ¶ 24).[7]

         Second, Plaintiff says the transactions are not unusual because “many customers” would typically use the funds within the first day or two when funds became available to get everything they needed for the whole month. (Doc. 35, Pl.'s answer to DSMF ¶ 25).[8]

         Third, the transactions were not unusual because “it was not uncommon” for a customer to place an order with the store, then arrive at the store to pick up the ordered items, and then purchase additional items under a separate transaction. (Doc. 35, Pl.'s answer to DSMF ¶ 26).[9]

         Fourth, it was not unusual, as in the last example Defendant cites, to see three transactions following an initial one for the amounts mentioned, to see “multiple transactions, ” as Plaintiff puts it. Customers placed their orders ahead of time to make sure they received what they needed due to the fact that the store is generally busier in the beginning of the month. (Doc. 35, Pl.'s answer to DSMF ¶ 27).[10]

         c. The Third Pattern

         The third suspicious transaction pattern was the depletion of the majority or all of a household's benefits in a short time frame. (Doc. 32, DSMF ¶ 29, admitted by Plaintiff). There were 25 sets of suspicious transactions involving 16 households totaling $4, 493.69. (Doc. 32, DSMF ¶ 30, admitted by Plaintiff). One account depleted its balance from $355.31 to $35.03 through a series of five transactions that occurred on the same day. (Doc. 32, DSMF ¶ 31, citing Doc. 28, ECF p. 88, transactions 125 through 129; admitted by Plaintiff). FNS identified at least five other examples of a household depleting its balance in one or two transactions at Shenandoah Stop Shop. (Doc. 32, DSMF ¶ 32, citing Doc. 28, ECF pp. 88-90; admitted by Plaintiff).

         FNS has found that depleting a household's entire allotment in one or a few transactions or within one or two days, leaving little or no benefits for the rest of the month, is inconsistent with normal shopping patterns of SNAP households and is often indicative of trafficking. (Doc. 32, DSMF ¶ 33, citing Doc. 28-3, ECF pp. 50-51).[11]

         Plaintiff does not dispute these transactions took place but provides evidence that it says explains that the transactions were not trafficking ones. First, Plaintiff says it was not unusual for a household to use most or all of its benefits in a short period of time. (Doc. 35, Pl.'s answer to DSMF ¶ 29).[12] Second, it was not unusual for one household to make separate transactions on the same day. (Doc. 35 Pl.'s answer to DSMF ¶ 31).[13]

         d. The Fourth Pattern

         The fourth suspicious pattern found in the data was a series of EBT transactions that were excessively large compared to the average convenience store transaction in Pennsylvania.[14] (Doc. 32, DSMF ¶ 34, citing Doc. 28, ECF pp. 91-94, citing the attachment to the charge letter.) This fourth pattern contained 195 transactions totaling $21, 076.87. (Doc. 32, DSMF ¶ 35, citing Doc. 28, ECF pp. 91- 94, citing the attachment to the charge letter; admitted by Plaintiff). The average transaction at a convenience store in Pennsylvania during the review period was about $9.00, while 195 out of 2, 625 transactions at the Shenandoah Stop Shop during the review period were for more than $35, which is 300% above the state average. (Doc. 32, DSMF ¶ 36, citing Doc. 28-3, ECF p. 51, Ahmed case analysis; admitted by Plaintiff). The average transaction at the store during the review period was $15.02, which is 69% above the state average. (Doc. 32, DSMF ¶ 37, citing Doc. 28-3, ECF p. 51, Ahmed case analysis; admitted by Plaintiff).

         Plaintiff argues that these transactions are normal when other facts are considered. It contends that “Shenandoah is a very poor town compared to other towns in the state where the needs may not be as high.” (Doc. 35, Pl.'s answer to DSMF ¶ 36).[15] Since “Shenandoah is a very poor town, and most of Shreegi's customers did not drive, ” they made “Shreegi a place where customers would tend to spend most of their benefits, ” thus “increas[ing] the average for the store.” (Doc. 35, Pl.'s answer to DSMF ¶ 37).[16]

         The 2015 store compliance visit did not reveal any expensive food or other specialty items that FNS believed would justify the large average amount of each EBT transaction. (Doc. 32, DSMF ¶ 38, citing Doc. 28-3, ECF p. 51, Ahmed case analysis: “the store layout and inventory do not support such a high percentage of transactions markedly exceeding the average transaction amount of similar stores.”).

         Plaintiff disputes this statement, contending that the photos from the compliance report revealed expensive food items. Plaintiff also maintains that since the store visit took place on March 26, 2015, it was close to the end of the month when the store was in the process of restocking the shelves for the beginning of the next month, (Doc. 35, Pl.'s answer to DSMF ¶ 38), thus explaining the lack of inventory on the shelves.[17] The beginning of the month is the busiest time for Shreegi. (Doc. 49-1, ECF p. 22, Falguni Patel Dep.).

         FNS also analyzed the location of other SNAP-authorized stores nearby and found that within a one-mile radius, there were two small grocery stores, one supermarket, two combination stores, and four other convenience stores that were authorized to accept SNAP benefits. (Doc. 32, DSMF ¶ 39, citing Doc. 28-3, ECF p. 52, Ahmed case analysis; admitted by Plaintiff).

         A comparison of Shenandoah Stop Shop EBT data against state-wide averages for convenience stores found that during the review period, patterns at Shenandoah Stop Shop were not typical and exhibit “an excessive number of high dollar transactions” given that the store does not sell any unique items that cannot be purchased at the other stores in the area. (Doc. 32, DSMF ¶ 40, citing Doc. 28-3, ECF pp. 52-54, Ahmed case analysis; admitted by Plaintiff).[18]

         FNS also examined the shopping patterns of four households during the review period that were involved in some of the suspicious transactions. In each case, the households had access to and did in fact shop at larger, better stocked supermarkets and grocery stores, yet the households still spent substantial sums of SNAP benefits at Shenandoah Stop Shop, which FNS believed indicated possible trafficking. (Doc. 32, DSMF ¶ 41, citing Doc. 28-3, ECF pp. 54-56, Ahmed case analysis; admitted by Plaintiff).

         Plaintiff does not dispute this statement but would qualify it with the following evidence. The first household in question only shopped at Boyers Food Markets Inc., one of the stores mentioned, once per each month monitored. The second household shopped at Boyers once in February and twice in March 2015. The remainder of that household's shopping was at the Shenandoah One Stop. (Doc. 35, Pl.'s answer to DSMF ¶ 41, citing Doc. 28-3, ECF p. 54-56, Ahmed case analysis).

         Having considered all of the information set forth above, FNS found a “clear and repetitive pattern of unusual, irregular and inexplicable SNAP activity, ” which would warrant issuance of a trafficking charge letter. (Doc. 32, DSMF ¶ 42, citing Doc. 28-3, ECF p. 56, Ahmed case analysis).[19]

         2. The Charge Letter and Plaintiff's Response

         FNS sent Shreegi the Charge Letter dated May 4, 2015. (Doc. 32, DSMF ¶ 43, citing Doc. 28, ECF pp. 77-79, the Charge Letter; admitted by Plaintiff). The letter charged Shreegi with trafficking based on FNS's analysis of the EBT transactions for January 2015 through March 2015, which established the four suspicious patterns of EBT activity. (Doc. 32, DSMF ¶¶ 44 and 45, citing Doc. 28, ECF p. 77; admitted by Plaintiff). The letter grouped the suspicious transactions into the patterns described above, (Doc. 32, DSMF ¶ 46, citing Doc. 28, ECF p. 77; admitted by Plaintiff), with the suspicious transaction details attached to the letter, broken down by pattern into four attachments. (Doc. 32, DSMF ¶ 47, citing Doc. 28, ECF pp. 80-94, the attachments; admitted by Plaintiff).

         The letter informed Shreegi it was being considered for permanent disqualification from the SNAP, (Doc. 32, DSMF ¶ 45, citing Doc. 28, ECF p. 77; admitted by Plaintiff), and gave it the opportunity to reply to the charges by contacting Arif Ahmed. (Doc. 32, DSMF ¶ 48, citing Doc. 28, ECF pp. 78-79; admitted by Plaintiff). The letter also stated the store could request a CMP in lieu of permanent disqualification. (Doc. 32, DSMF ¶ 49, citing Doc. 28, ECF pp. 77-78; admitted by Plaintiff).

         In response to the letter, Shreegi provided FNS with copies of store receipts from SNAP transactions from March 11-31, 2015. (Doc. 32, DSMF ¶ 52, citing Doc. 28-1, ECF pp. 39-64; admitted by Plaintiff). Shreegi stated that the receipts demonstrated that the items purchased met the requirements of the SNAP. Shreegi also provided the following items: a spreadsheet summarizing all food purchases made by the store and copies of inventory purchase receipts. (Doc. 32, DSMF ¶ 53, admitted by Plaintiff; Doc. 28, ECF p. 99; Doc. 28-1, ECF pp. 3-9 (spreadsheet); Doc. 28-1, ECF pp. 10-38 (inventory receipts); and Doc. 28-1, ECF p. 66 to 28-3, ECF p. 43 (inventory receipts).

         By way of a letter dated may 13, 2015, Shreegi's lawyer provided the following response in denying SNAP trafficking. First, the surrounding area is very poor and many people wait until they receive their SNAP benefits to do all or most of their shopping. (Doc. 32, DSMF ¶ 54, citing Doc. 28, ECF p. 99, Plaintiff's lawyer's letter of May 13, 2015; admitted by Plaintiff). Second, many of its customers did not have vehicles and relied upon the store to purchase items from other retailers for the customers. (Doc. 32, DSMF ¶ 55, citing Doc. 28, ECF p. 99, Plaintiff's lawyer's letter of May 13, 2015; admitted by Plaintiff).

         Further, the letter requested that if the information provided did not address FNS's concerns, the agency impose a CMP in lieu of SNAP disqualification. (Doc. 32, DSMF ¶ 56, citing Doc. 28, ECF p. 99; admitted by Plaintiff). In support of the alternative sanction, Plaintiff alleged that it maintains a comprehensive training policy to prevent SNAP violations. (Doc. 32, DSMF ¶ 57, citing Doc. 28, ECF p. 99; admitted by Plaintiff). Plaintiff provided a copy of its training policy.[20] (Doc. 32, DSMF ¶ 58, citing Doc. 28, ECF p. 100 to Doc. 28-1, ECF p. 2, the training manual; admitted by Plaintiff). Shreegi stated that it was not aware of, nor did it approve, any conduct which was alleged in the Charge Letter. (Doc. 32, DSMF ¶ 59, citing Doc. 28, ECF p. 99; admitted by Plaintiff).

         3. FNS's Response

         After reviewing the material provided by Plaintiff, FNS concluded that the information did not sufficiently explain the suspicious transactions. (Doc. 32, DSMF 60, citing Doc. 28-3, ECF pp. 58-70, FNS sanction recommendation report).[21]

         a. The First Pattern

         With respect to the first pattern - sets of rapid and repetitive transactions made in a short period of time by various households - FNS determined that it would be difficult to complete legitimate transactions in the short periods of time, given the dollar amounts of the transactions involved and all of the steps needed to complete the transactions. (Doc. 32, DSMF ¶ 61, citing Doc. 28-3, ECF p. 60, FNS sanction recommendation report). The sanction recommendation report provides more detail on these steps, including the cashier's manually handling the item to determine the price in the absence of an optical scanner, the manual keying of amounts into the register, and bagging the items. (Doc. 28-3, ECF p. 60, FNS sanction recommendation report).

         Plaintiff disputes this statement with evidence that there were three cash registers and one EBT device. This meant that “[m]ultiple cashiers could check out different customers at the same time and then wait in line to use the EBT machine which could recall orders instantaneously making it possible for orders to be processed within a matter of seconds.” (Doc. 35, Pl.'s answer to DSMF ¶ 61).[22]

         FNS found that these pattern-one transactions were made too rapidly to be credible and were strong indicators of trafficking and Shreegi did not provide any valid explanation for the transactions in this pattern. (Doc. 32, DSMF ¶ 62, citing Doc. 28-3, ECF p. 60, FNS sanction recommendation report).

         Plaintiff disputes this statement, providing evidence that orders could be recalled from all three cash registers, with the EBT card then being swiped through the EBT device, a process that would take only about five seconds. (Doc. 35, Pl.'s answer to DSMF ¶ 62, citing Doc. 49-1, ECF pp. 48-50, Falguni Patel Dep.).

         b. The Second Pattern

         With respect to the second pattern, FNS found that multiple transactions from a household's EBT account in short time frames are typical methods used by stores that engage in trafficking to avoid single high-dollar transactions, (Doc. 32, DSMF ¶ 63, citing Doc. 28-3, ECF p. 61, FNS sanction recommendation report), and that Plaintiff did not provide a valid explanation for these transactions. (Doc. 32, DSMF ¶ 64, citing Doc. 28-3, ECF p. 61, FNS sanction recommendation report). In response to these statements, Plaintiff admits that multiple transactions from the same household in a short time frame may indicate trafficking, but disputes that it happened here. As noted above, Plaintiff provides evidence that the multiple transactions resulted from customers placing orders before coming to the store and then buying other items when they arrived to pick up the order. (Doc. 35, Pl.'s answer to DSMF ¶¶ 63 and 64; Doc. 49-1, ECF pp. 40-46, and 49-48, Falguni Patel Dep.).

         c. The Third Pattern

         With respect to the third pattern, FNS concluded that a household depleting its entire monthly SNAP allotment in one or a few transactions is inconsistent with normal shopping behavior of SNAP benefit households, and Plaintiff did not provide a reasonable explanation for this pattern. (Doc. 32, DSMF ¶ 65, citing Doc. 28-3, ECF pp. 61-62, FNS sanction recommendation report).

         In response to this allegation, Plaintiff denies that this pattern is inconsistent with normal shopping behavior, explaining that “Shenandoah is a very poor community and many people wait until they receive funds on their EBT Card in order to make all or most of their food purchases.” (Doc. 35, Pl.'s answer to DSMF ¶ 65, citing and quoting Doc. 28, ECF p. 99, Plaintiff's lawyer's letter of May 13, 2015).

         d. The Fourth Pattern

         With respect to the fourth pattern, FNS found that the pictures and visible inventory from the March 2015 store visit did not support the high percentage of the store's transactions that exceeded the average convenience store transactions in Pennsylvania. (Doc. 32, DSMF ¶ 66, citing Doc. 28-3, ECF p. 62).

         Plaintiff disputes this statement because the store visit happened on March 26, 2015, near the end of the month, and the manager told the inspector that the shelves were in the process of being restocked. (Doc. 35, Pl.'s answer to DSMF ¶ 66, citing Doc. 28, ECF p. 35, compliance report). Restocking near the end of the month “is [also] consistent with the testimony that most transactions with SNAP occur within the first two weeks of the month.” (Doc. 35, Pl.'s answer to DSMF ¶ 66, citing Doc. 49-1, ECF p. 22, Falguni Patel Dep.).

         FNS also found that the SNAP data disclosed that four households that made large dollar transactions at Shenandoah Stop Shop also shopped at larger and better stocked stores that were, in some cases, closer to the customers' homes than Shenandoah Stop Shop. (Doc. 32, DSMF ¶ 67, citing Doc. 28-3, ECF p. 63 and Doc. 28-3, ECF p. 68, FNS sanction recommendation report).

         Plaintiff admits that these four households did shop at other stores, but has cited to evidence that shows most of the shopping occurred at Shreegi. Household One shopped at Shreegi eleven times and other stores three times between January and March 2015. Household Two shopped at Shreegi nineteen times and other stores three times during the three-month period. Household Three shopped at Shreegi thirteen times and other stores seven times during the three-month period. Household Four shopped at Shreegi five times and other stores four times during the three-month period. (Doc. 35, Pl.'s answer to DSMF ¶ 67, citing Doc. 28-3, ECF pp. 55-56, Ahmed case analysis).

         e. Review of Plaintiff's Submissions

         As part of its review, FNS scrutinized the receipts and invoices that Shreegi submitted and concluded that 74 invoices were from outside of the review period. (Doc. 32, DSMF ¶ 68, citing Doc. 28-3, ECF p. 60; admitted by Plaintiff).

         Of the 75 EBT receipts produced for the review period, most included a “nontax” item, but provided no further description; thus it was impossible to determine if these represented valid transactions. (Doc. 32, DSMF ¶ 69, citing Doc. 28-3, ECF pp. 67-68; admitted by Plaintiff).[23] In many cases, the “non-tax” was the most expensive item on the receipt. (Doc. 32, DSMF ¶ 70, citing Doc. 28-3, ECF pp. 67-68; admitted by Plaintiff).

         4. The Determination Letter

         On July 13, 2015, FNS issued a Determination Letter, which informed Shreegi that after reviewing all of the information provided, the agency had found that the violations cited in the Charge Letter had occurred at the Shenandoah Stop Shop. (Doc. 32, DSMF ¶ 71; Doc. 28-3, ECF p. 71; admitted by Plaintiff). FNS advised Shreegi that it was ineligible for a CMP because it had failed to provide sufficient evidence to demonstrate that it had implemented an effective training program to prevent SNAP violations. (Doc. 32, DSMF ¶ 72; Doc. 28-3, ECF p. 71; admitted by Plaintiff). Shreegi was advised of its right to appeal to the agency's Administrative Review Branch. (Doc. 32, DSMF ¶ 73, citing Doc. 28-3, ECF p. 71; admitted by Plaintiff). Plaintiff's counsel pursued the appeal.

         5. The Final Agency Decision

         On October 23, 2015, the Agency issued its Final Agency Decision, signed by Administrative Review Officer (ARO) Mary Kate Karagiorgos, which concluded that the permanent disqualification was appropriate. (Doc. 32, DSMF ¶ 77, citing Doc. 28-6, ECF p. 91 to Doc. 28-7, ECF p. 4, the Final Agency Decision; admitted by Plaintiff). ARO Karagiorgos summarized the evidence submitted by Shreegi, as well as the information obtained during the store visit and through the EBT data, and concluded that the agency had presented a prima facie case that Shreegi had trafficked in SNAP benefits. (Doc. 32, DSMF ¶ 79, citing Doc. 28-6, ECF pp. 95-96).[24] ARO Karagiorgos concluded that “[e]ach attachment furnished with the charge letter represents the questionable and unusual patterns of SNAP transactions indicative of trafficking which were conducted at [the store] during the review period. As there is more than one pattern of irregular transactions, the case of trafficking becomes more convincing.” (Doc. 32, DSMF ¶ 80, citing Doc. 28-6, ECF p. 96).[25]

         a. The ...


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