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My Town Supermarket #1 v. United States

United States District Court, M.D. Pennsylvania

July 12, 2019

MY TOWN SUPERMARKET #1, and LUIS M. PAYANO, Plaintiffs
v.
UNITED STATES OF AMERICA, Defendant

          MEMORANDUM

          MALACHY E. MANNION UNITED STATES DISTRICT JUDGE

         Plaintiffs My Town Supermarket #1 (the “store”) and its owner, Luis M. Payano, filed this action against the United States seeking the court's de novo review, pursuant to 7 U.S.C. §2023, of the permanent disqualification of the West Hazleton grocery store from participating in Supplemental Nutrition Assistance Program (“SNAP”) after it was found to have engaged in trafficking SNAP benefits.[1] Pending before the court is the report and recommendation of Magistrate Judge Schwab filed on May 17, 2019, (Doc. 46), which recommends that the United States's motion for summary judgment be granted.[2] Plaintiffs filed objections to the report, (Doc. 49), along with a brief in support thereof, (Doc. 49-1). The government filed a response to plaintiffs' objections.[3] (Doc. 50). Upon review, the report will be ADOPTED and the United States's summary judgment motion will be GRANTED. Plaintiffs' objections will be OVERRULED.

         I. STANDARD OF REVIEW

         When objections are timely filed to the report and recommendation of a magistrate judge, the district court must review de novo those portions of the report to which objections are made. 28 U.S.C. §636(b)(1); Brown v. Astrue, 649 F.3d 193, 195 (3d Cir. 2011). Although the standard is de novo, the extent of review is committed to the sound discretion of the district judge, and the court may rely on the recommendations of the magistrate judge to the extent it deems proper. Rieder v. Apfel, 115 F.Supp.2d 496, 499 (M.D.Pa. 2000) (citing United States v. Raddatz, 447 U.S. 667, 676 (1980)).

         For those sections of the report and recommendation to which no objection is made, the court should, as a matter of good practice, “satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.” Fed.R.Civ.P. 72(b), advisory committee notes; see also Univac Dental Co. v. Dentsply Intern., Inc., 702 F.Supp.2d 465, 469 (2010) (citing Henderson v. Carlson, 812 F.2d 874, 878 (3d Cir. 1987) (explaining judges should give some review to every Report and Recommendation)). Nevertheless, whether timely objections are made or not, the district court may accept, not accept or modify, in whole or in part, the findings or recommendations made by the magistrate judge. 28 U.S.C. §636(b)(1); Local Rule 72.31.

         II. DISCUSSION [4]

         “The burden is placed upon the store owner to prove by a preponderance of the evidence that the violations did not occur.” Shreegi Enterprises, 2018 WL 1919576, *2 (citations omitted); see also Famous Int'l Market v. United States, 2018 WL 3015249, at *9 (E.D.Pa. June 15, 2018) (“At trial, the Market bears the burden to prove by a preponderance of the evidence SNAP trafficking did not occur”). “[E]ven a single incident of trafficking is enough to justify permanent disqualification.” Shreegi Enterprises, 2018 WL 1919576, *2 (citations omitted). “The de novo standard of review applies to determine if a violation occurred”, and the standard of review to determine if the sanction was appropriate “is whether the sanction was ‘unwarranted in law or without justification in fact,' or was ‘arbitrary or capricious.'” Id. (citations omitted). However, “[a] sanction ‘is not arbitrary or capricious if it complies with FNS's own policy.'”[5] Id. (citation omitted). “The plaintiff has the burden of proof on the sanction issue as well.” Id. (citation omitted). The court “must reach its own factual and legal conclusions”, id. (citation omitted), “[it] is not limited to matters considered in the administrative proceedings”, id. (quoting Freedman v. Dep't of Agric., 926 F.2d 252, 261 (3d Cir. 1991), and “the plaintiff may offer any relevant evidence available to support his case.” Id. (citations omitted). “To survive summary judgment, a plaintiff in a Food Stamp Program disqualification case must raise material issues of fact as to each alleged violation.” Id. (quoting Ganesh v. United States, 658 Fed.Appx. 217, 219 (6th Cir. 2016)).

         The store's permanent disqualification from SNAP for trafficking SNAP benefits, based on “transactions that establish clear and repetitive patterns of unusual, irregular, and inexplicable activity”, was upheld by the USDA on May 17, 2017. In the plaintiffs' present action, they seek the court's de novo review of the store's disqualification pursuant to 7 U.S.C. § 2023 and 7 C.F.R. § 279.7.

         No doubt that “[i]t is illegal to traffic in SNAP benefits.” Shreegi Enterprises, 2018 WL 1919576, *3 (citations omitted). “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....'” Id. (citing 7 C.F.R. §271.2). “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. (citing 7 C.F.R. §271.2).

         The store was permanently disqualified by FNS when it found that the store engaged in trafficking SNAP benefits. FNS examined four categories of suspicious patterns of EBT transactions at the store.[6] After separately analyzing the four categories of the violations charged against the store, Judge Schwab finds that the store failed to meet its burden to prove that the violations did not occur and that it did not traffic SNAP benefits. As such, she recommends that the government's motion for summary judgment be granted since the record supports FNS's finding that the store trafficked SNAP benefits and that the store should be permanently disqualified from SNAP.

         The first category of violations is rapid and repetitive transactions made in a short period of time by various households, and the report finds there are no issues of material fact that these violations occurred. The report details the government's evidence with respect to the first category, (Doc. 46 at 20-21), and concludes:

Given the physical characteristics of My Town's store-as noted above, the store only used one of its two cash registers during the relevant time period, did not use an optical scanner, and did not have a working conveyor belt-the government argues, and we agree, that it is implausible that My Town's cashiers could process two transactions back to back as quickly as they did in the thirty-three sets that the government has compiled. See doc. 35 at 19.

         Plaintiffs did not dispute that the transactions occurred, rather they contend that the government failed to show that the transactions amounted to trafficking. The report finds that plaintiffs failed to meet their burden of showing that a violation did not occur. The report also states that “generalized or conclusory arguments are not sufficient to create a genuine issue of material fact, Famous Int'l Mkt., 2018 WL 3015249, at *10, and My Town may not simply rely on general statements about its customers' practices to defeat the government's summary judgment motion. Shreegi, 2018 WL 1919576, at *20.” (Id. at 23).

         In their objections pertaining to all four categories of transactions at issue, plaintiffs contend that “the court should reject the precedent in this District that general shopping behavior and business explanations are insufficient to survive summary judgment ....” The court declines to do so, and it concurs with the well reasoned decision in Shreegi, id. at *20, as well as the decisions in the other districts cited in Shreegi, which have held that stores “may not rely on generalized or conclusory arguments to create genuine issues of material fact.” Famous Int'l Market, 2018 WL 3015249, at *10. Seealso Cheema, 365 F.Supp.3d at 182 (“Even when asserting blanket rebuttals to proffered evidence of trafficking, ...


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