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J.C.B. Super Markets Inc. v. United States

decided: March 2, 1976.


Appeal from a judgment of the United States District Court for the Western District of New York, Hon. John T. Curtin, Chief Judge, dismissing plaintiff's complaint challenging its disqualification from participation in the Food Stamp Program (7 U.S.C. § 2011 et seq.) for thirty days. Affirmed.

Hays, Mulligan and Gurfein, Circuit Judges.

Author: Mulligan

MULLIGAN, Circuit Judge:

J.C.B. Super Markets, Inc. (JCB) brought this action under 7 U.S.C. § 2022*fn1 in the United States District Court for the Western District of New York to obtain judicial review of its disqualification by the United States Department of Agriculture (USDA) from participation in the Food Stamp Program (7 U.S.C. § 2011 et seq.) for a period of thirty days because of violations by JCB in accepting food stamps for non-food items. On December 15, 1972, the Hon. John T. Curtin, now Chief Judge, denied USDA's motion for summary judgment, 57 F.R.D. 500, and conducted a trial de novo on July 30 and 31, 1973. In a decision and order dated June 10, 1975, he directed entry of judgment in favor of the defendants dismissing the complaint. An application for stay of the judgment pending this appeal by JCB was granted. We affirm the judgment below.


JCB operates a supermarket at 409 Niagara Street, Buffalo, New York in an area which has a large percentage of welfare recipients. In early 1973 some ten-and-one-half per cent of its business consisted of food stamp sales. JCB was authorized to participate in the food stamp program (7 U.S.C. § 2011) in March, 1966 when it was operated by its original owners. On March 30, 1968, Joseph Perna and his associates, the present owners, purchased the outstanding stock of the corporation. An approved retail food concern can accept food stamps only for food or food products for home consumption except alcoholic beverages and tobacco (7 U.S.C. § 2012(b)). USDA shoppers were able to obtain from JCB ineligible non-food items on September 1 and October 4, 1967 and February 2, 1968. Store personnel were given warnings in each case and JCB was advised in writing of the violations. The court below, while admitting evidence of these prior violations, noted that USDA, in the administrative proceedings which preceded this action, did not charge this prior history against the present proprietors. On October 23, 1968, however, a field representative of USDA observed JCB's store manager, John Cusack, make an ineligible food stamp transaction. The agency sent an official warning letter to the store addressed to the attention of Joseph Perna advising him that such a violation would result in a loss of authorization to accept food stamps and further warning that visits would be made in the near future to determine if the store was in compliance with the regulations.

Annie Mae Crum, a USDA investigative aide, "shopped" the store on March 25, 26 and 27, 1969 and on each occasion purchased with food stamps such ineligible articles as six-packs of beer, a knife, moth balls and shoe laces. The ineligible list was prepared by Solomon Goodman who accompanied Miss Crum on her visits to the supermarket; he remained in his car outside the store and checked the purchased items and obtained her descriptions of the clerk. As a result of the purchases, USDA notified JCB on May 14, 1969, in writing, charging that on March 25 and 26, 1969, Betty Gainer, a clerk in the store, had made food stamp sales for ineligible articles and that the store manager on March 27, 1969 had committed a similar offense. Mr. Perna submitted a "statement in mitigation" on May 19, 1969. The Buffalo office of USDA recommended a thirty-day suspension from the program to the District Director who in turn recommended a sixty-day suspension. JCB then appealed to the Food Stamp Review Officer who met with JCB officials and considered written arguments on JCB's behalf. The period of suspension was ultimately fixed at thirty days and the present de novo action ensued.


On appeal, JCB argues that the Government failed to prove by sufficient evidence the identity of the clerks who made the sales which were the basis for the disqualification imposed. We note that the clerks involved have not been charged with any offense and their identity is not crucial here. The disqualification section (7 U.S.C. § 2020) is directed to the store and the required finding is that "such store or concern" has violated any provision of the statute. The record presents overwhelming evidence that the unauthorized food coupon purchases were made on the dates charged in the JCB store. Both Miss Crum and Mr. Goodman testified in detail about each transaction and Judge Curtin found as a fact that "the shoppings of March 25, 26 and 27, 1969 were made and that on these occasions the investigative aide for the Department of Agriculture purchased the ineligible non-food items charged." We cannot reasonably characterize this finding as "clearly erroneous." Fed.R.Civ.P. 52(a). We note that JCB does not dispute the dates, times and place of the violations or the amount or character of the sales. Although the identity of the clerk is not essential to the Government's case, it is significant that neither Miss Gainer nor Mr. Cusack, according to Mr. Perna's own testimony, ever denied making the sales.

JCB further argues that according to Miss Crum's testimony, the March 26 sale cannot be properly charged to it since Miss Gainer told the witness that she was not allowed to make it, was "not supposed to let me have those items . . . but she would let me have them that day." Appellant's position is that the respondeat superior principle is not applicable where the agent is advancing his own rather than the corporation's interest. The statement relied upon, however, is equivocal; it may have meant that Miss Gainer knew that she was violating the law rather than the instructions of her employer. In any event, since she was clearly acting within the scope of her authority, receiving food stamps for the benefit of her employer, JCB, and since she derived no personal benefit from the transaction, there is no reason to depart here from traditional agency principles.*fn2

The suggestion that the employee's wrongful act did not advance the interests of the employer and therefore should not be imputed to it entirely overlooks the basic concept of respondeat superior. Presumably no tortious act by an agent redounds to the benefit of the principal where the latter is held responsible for the damage which results. Yet if this reasoning were followed no principal would ever be liable. Obviously, the corporate entity here can only act through its agents and there is no question but that both Miss Gainer and Mr. Cusack were authorized to make sales. If the fact that they were not authorized to make illegal sales would exculpate the employer, it would be practically impossible to impose any penalties under the statute. The precise point was decided against a retailer in Marbro Foods, Inc. v. United States, 293 F. Supp. 754 (N.D. Ill. 1968).

Appellant further argues that this is not a case of awarding actual damages to a third party because of the tortious conduct of an agent but involves a punitive or penal sanction so that normal respondeat superior liability should not be imposed. We have necessarily recognized the general rule that where punitive damages are to be imposed, the principal must be shown to be somehow involved in the wrongdoing. Fort v. White, 530 F.2d 1113, slip op. at 1793-94 (2d Cir. 1976). We do not think the issue here is analogous. JCB had been authorized to participate in the Food Stamp Program which has the laudable aim of raising the nutritional levels of low income families. The abuse of that program by employees authorized to act by JCB suffices to inculpate the corporation. Cf. United States v. Illinois Cent. R.R., 303 U.S. 239, 244, 82 L. Ed. 773, 58 S. Ct. 533 (1938). In any event, it is established in the record below that Mr. Perna had been advised of the previous October, 1968 infraction and further had been alerted that future inspections would be made. Moreover, the evidence to establish that JCB had instructed its employees with respect to the regulations involved is vague at best. Thus, Mr. Perna testified that JCB personnel were trained in food stamp procedures but in response to the question, "And who trains them?", he replied:

A. Well, it's, -- by the time they reach the point where they do have this responsibility, they have probably trained themselves and then we check ...

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