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May 7, 1993

Hun Jong Kim, Plaintiff,
United States of America et ano., Defendants.

The opinion of the court was delivered by: CHARLES P. SIFTON


 SIFTON, District Judge.

 Plaintiff, Hun Jong Kim, as proprietor of Kim's Family Market, commenced this action pursuant to 7 U.S.C. § 2023(a) seeking judicial review of a final determination by the Food and Nutrition Service ("FNS") disqualifying plaintiff as a vendor under the food stamp program for a period of three years. By order to show cause plaintiff seeks a preliminary injunction staying the withdrawal while this action is pending. For the reasons set forth below, the motion is denied.

 The following facts are essentially undisputed. Plaintiff operates a "green grocery" located at 1819 Flatbush Avenue in Brooklyn, New York. The FNS suspended plaintiff from the food stamp program because plaintiff was disqualified for a period of three years from participating in the Supplemental Food Program for Women, Infants and Children ("WIC").

 The New York State Department of Health ("DOH") disqualified Kim from participating in WIC because of various alleged violations of Kim's WIC vendor contract and of New York State Department of Health regulations. These violations included the following: (1) accepting a WIC check in exchange for items not specified on the face of the WIC check -- specifically "non-WIC Hawaiian Punch"; (2) numerous instances in which WIC checks were accepted without verifying the signature of the customers' WIC identification card against the signature on the customers' WIC check; (3) numerous instances in which the WIC check was redeemed for amounts which exceeded the purchase price of the goods exchanged for the WIC check.

 By letter dated March 25, 1992, DOH notified plaintiff that, effective April 14, 1992, Kim was suspended from participating in WIC. In addition to notifying plaintiff of the impending disqualification from WIC, this letter advised plaintiff of the alleged infractions that formed the basis for the disqualification action, informed plaintiff of his right to a hearing prior to the disqualification from WIC, and informed plaintiff that the disqualification from WIC might also result in the withdrawal of plaintiff's authorization to participate in the federal food stamp program.

 Plaintiff, who was born in Korea and immigrated to the United States in 1985, states that he did not understand the March 25 letter because the letter was written in English, in which he is not literate. Because he did not understand the letter, plaintiff says, he did not exercise his right to a hearing.

 Plaintiff eventually became aware of his disqualification from WIC after his bank refused to honor WIC vouchers. Thereafter, plaintiff says, he brought a subsequent notice from the DOH directing plaintiff to desist from accepting WIC vouchers to his attorney, who explained the import of the letter. Plaintiff has apparently still not contested the disqualification from WIC in an Article 78 proceeding in the New York courts; however, he states that, due to his delay in recognizing the import of the notice, he is at present unable to offer any evidence to rebut the alleged infractions.

 On May 15, 1992, plaintiff received a letter from the FNS notifying plaintiff that he was disqualified as a vendor under the food stamp program as a result of his disqualification from WIC. Plaintiff requested an administrative review of that decision. Disqualification was stayed pending administrative review. By letter dated September 16, 1992, plaintiff was advised that upon review the FNS had reaffirmed the decision to disqualify plaintiff and that the disqualification would become effective thirty days after plaintiff's receipt of the letter. Plaintiff then filed this action on October 16, 1992.

 In his affidavit in support of the motion for a stay of the administrative action pending the resolution of this matter, plaintiff alleges that at least 30% of his gross weekly income results from his participation in the food stamp program. He alleges that withdrawal from the food stamp program, compounded by the disqualification from WIC, will force his business to close. He also alleges that withdrawal will disrupt the good will of his business because customers who sometimes purchase goods with food stamps and other times purchase goods with cash will frequent other retailers who are authorized to accept food stamps.

 Plaintiff argues that he is likely to succeed on the merits of this action because (1) FNS did not follow its own regulations in withdrawing plaintiff's authorization, (2) the FNS did not consider as a mitigating factor the circumstance that, due to inadequate notice, plaintiff was never afforded a meaningful opportunity to challenge the allegations that led to his WIC disqualification, and (3) the disqualification from the food stamp program for a period of three years is arbitrary and capricious.


 Plaintiff requests that this Court issue a preliminary injunction pursuant to 7 U.S.C. § 2023(a), staying the withdrawal of plaintiff's authorization to participate in the food stamp program pending judicial review of the final administrative disqualification.

 Plaintiff carries the burden of establishing two facts to prevail in his motion for a preliminary injunction. Section 2023(a) provides:

During the pendency of such judicial review, or any appeal therefrom, the administrative action under review shall be and remain in full force and effect, unless on application to the court on not less than ten days' notice, and after hearing thereon and a consideration by the court of the applicant's likelihood of prevailing on the merits and of irreparable injury, the court temporarily stays such administrative action pending disposition of such trial or appeal.

 7 U.S.C. § 2023 (a). First, plaintiff must convince the Court of plaintiff's likelihood of prevailing on the merits, and second, plaintiff must show that disqualification will cause irreparable injury to plaintiff. Ibrahim v. United States, 650 F. Supp. 163, 165 n.1 (N.D.N.Y.), aff'd, 834 F.2d 52 (2d Cir. 1987). Plaintiff suggests that he is entitled to a preliminary injunction because he has raised a fair ground for litigation and the balance of hardships tips in his favor. However, as noted, this is not the standard that applies in these matters. See De La Nueces v. United States, 778 F. Supp. 191, 193 (S.D.N.Y. 1991). The governmental action involved in this case is taken in the public interest: it ensures that the limited funds available for the food stamp program benefit needy participants by removing from the program vendors who have violated the FNS regulations. See Plaza Health Laboratories, Inc. v. Perales, 878 F.2d 577, 580 (2d Cir. 1989); De La Nueces v. United States, 778 F. Supp. at 194 n.2.

 Irreparable Harm

 In support of his argument that the withdrawal during the pendency of judicial review will cause Kim irreparable harm, Kim has submitted an affidavit alleging that the withdrawal will result in damage to the store's good will and in the loss of approximately 30% of the store's gross weekly income; Kim further alleges that this loss of income will force his store out of business. Although Kim does not provide the Court with any information concerning his profits, losses, and financial condition to support these claims, the government does not directly dispute them.

 The loss of 30% of gross weekly receipts coupled with the inevitable closing of the plaintiff's store constitutes irreparable harm. See, e.g., De La Nueces v. United States, 778 F. Supp. at 194; Ibrahim, 650 F. Supp. at 165-66; Barbosa v. United States, 633 F. Supp. 16, 18 (E.D. Wis. 1986); Turnage v. United States, 639 F. Supp. 228, 231-32 (E.D.N.C. 1986). But see Gurtzweiler v. United States, 601 F. Supp. 883, 885 (N.D. Ohio 1985).

 Likelihood of Success

 Pursuant to section 2023(a), a district court reviews de novo the FNS's disqualification from the food stamp program. See Ibrahim v. United States, 834 F.2d 52, 53 (2d Cir. 1987); De La Nueces v. United States, 778 F. Supp. at 194.

 1. First Claim

 Plaintiff is not likely to prevail on his claims that the FNS failed to follow its own regulations and does not have sufficient grounds on which to withdraw plaintiff from participation in the food stamp program. Plaintiff argues that the FNS misconstrued the applicable statutory and regulatory provisions in determining that FNS must disqualify plaintiff from the food stamp program because of plaintiff's disqualification from WIC. The government in response argues that FNS's actions complied with 7 C.F.R. § 278.1(n)(1), which is discretionary. *fn1" This part of Title 7 of the Code of Federal Regulations provides:

FNS shall withdraw the Food Stamp Program authorization of any firm which is disqualified from the WIC Program based in whole or in part on any act which constitutes a violation of that program's regulation and which is shown to constitute a misdemeanor or felony violation of law, or for any of the following specific program violations:
. . . .
(iv) Accepting WIC food instruments from ...

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