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HERNANDEZ v. USDA FOOD & CONSUMER SERV.

April 16, 1997

MYRTHA HERNANDEZ, d/b/a Tito's Corner Store, Plaintiff,
v.
UNITED STATES DEPARTMENT OF AGRICULTURE FOOD AND CONSUMER SERVICE, Defendant.



The opinion of the court was delivered by: LARIMER

 Plaintiff Myrtha Hernandez brings this action pursuant to 7 U.S.C. § 2023. She asks this Court to set aside a determination made by the United States Department of Agriculture, Food and Consumer Services (FCS), withdrawing her store's authorization to participate in the federal Food Stamp Program. For the reasons set forth below, plaintiff's request is denied. The determination of the FCS is upheld and plaintiff's authorization to participate in the federal Food Stamp Program is hereby terminated.

 BACKGROUND

 This matter involves a store's loss of authorization to deal in the United States Department of Agriculture Food Stamp Program. Plaintiff owns a small market called "Tito's Corner Store," which has been a participant in the Food Stamp Program and allegedly relies heavily on customers who deal in food stamps. Plaintiff's husband, Hiram "Tito" Hernandez, worked in the store and identified himself as being a store manager.

 By letter dated May 31, 1996, sent by certified mail, return receipt requested, the FCS notified plaintiff that "[her] authorization to participate in the Food Stamp Program ... [was] being withdrawn." The basis for the withdrawal was an investigation by the Rochester Police Department and the arrest of her husband, on charges of food stamp fraud, welfare fraud, and criminal usury. The letter stated that "your fraudulent behavior demonstrates your firm's lack of the necessary business integrity and reputation to further the aims of the Food Stamp Program."

 As was her right, plaintiff requested administrative review of this decision. By letter dated June 27, 1996, plaintiff appealed and asserted that the welfare and food stamp fraud charges against her husband had been dismissed, that neither she nor the "store" had ever been charged with any fraudulent behavior, and that her business integrity was impeccable.

 By letter dated September 25, 1996 the initial administrative decision was sustained. The Reviewing Officer's letter stated in relevant part as follows:

 
Based on my review of the investigative file of the District Attorney's Office I believe that Hiram Hernandez ... did participate in a scheme to advance money to welfare recipients and to use their welfare cards to pay himself interest on the loans. Even if Mr. Hernandez is not the owner of Tito's Corner Store, he conducted an illegal business as a store employee, which calls into question the business integrity of your firm. It is my understanding that Mr. Hernandez has now been sentenced to three to nine years in jail.
 
The regulations governing the Food Stamp Program give the Department the authority to withdraw the authorization of retailers to participate in the program if there has been a criminal conviction or evidence of fraudulent behavior of officers, managers or employees of the firm. Therefor, it is my determination that the initial decision of the Regional Office to withdraw the authorization of Tito's Corner Store to participate in the Food Stamp Program as a retailer is sustained.

 The letter informed plaintiff that she was entitled to seek judicial review within thirty days.

 Plaintiff, acting pro se, timely commenced this action in October 1996. The FCS voluntarily stayed enforcement of its determination for several weeks during which time plaintiff attempted to sell the store. After such attempts failed, the FCS notified plaintiff that its withdrawal of authorization would go into effect March 8, 1997. By Order of this Court, following oral argument on plaintiff's application for a stay, enforcement has been stayed pending my final ruling on this matter.

 THE LEGAL STANDARD

 This Court has jurisdiction over this matter pursuant to 7 U.S.C. § 2023. That statute provides that a plaintiff is entitled to a de novo review of the FCS's actions, "in which the court shall determine the validity of the questioned administrative action." Thus, I must reexamine the agency's decision on a fresh record and make a determination based upon the preponderance of the evidence. Ibrahim v. United States, 834 F.2d 52, 53 (2d Cir. 1987). It is plaintiff's burden to prove by a preponderance of the evidence that she is entitled to relief from the FCS's determination. However, in reviewing the sanction imposed, the standard of review is different: in that situation it is whether the FCS's determination was arbitrary and capricious. See De La Nueces v. United States, 1992 U.S. Dist. LEXIS 3179, 1992 WL 58851, *2 (S.D.N.Y. 1992); Ibrahim v. United States, 650 F. Supp. 163, 165 (N.D.N.Y.), aff'd, 834 F.2d 52 (2d Cir. 1987).

 In this instance, both parties have submitted documentary evidence and legal memoranda in support of their positions. The essential facts are undisputed: only the law is contested. *fn1" Accordingly, I will resolve the matter on the papers submitted, on summary judgment. See Freedman v. United States, 926 F.2d 252, 261 (3d Cir. 1991)("de novo review is compatible with a summary judgment disposition if there are no material facts in dispute"); ...


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