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KASSEM v. U.S. DEPARTMENT OF AGRICULTURE

April 15, 2003

DAIFAH KASSEM, PRESIDENT, AND SENECA STREET MINI MART, PLAINTIFFS, VS. UNITED STATES OF AMERICA, DEPARTMENT OF AGRICULTURE, DEFENDANT.


The opinion of the court was delivered by: John T. Elfvin, Senior District Judge.

MEMORANDUM and ORDER*fn1

Plaintiffs*fn2 commenced this action pursuant to 7 U.S.C. § 2023(a)(13) (1999 Supp. 2003) on July 30, 2002 in order to challenge their disqualification by the U.S. Department of Agriculture ("USDA") from continued participation in the Federal Food Stamp Program ("FFSP").*fn3 The USDA filed a motion for summary judgment October 28, 2002, to which plaintiffs made no reply.*fn4 The USDA's motion was submitted on the papers January 31, 2003.*fn5 For the reasons set forth below, defendant's motion for summary judgment will be granted.

Plaintiffs have not filed any papers in opposition to the USDA's motion for summary judgment. This Court must nonetheless determine whether the USDA has satisfied its burden under Rule 56 of the Federal Rules of Civil Procedure ("FRCvP") by "demonstrating that no material issue of fact remains for trial." Amaker v. Foley, 274 F.3d 677, 680-681 (2d Cir. 2001); Bon Supermarket & Deli v. U.S., 87 F. Supp.2d 593, 600 (E.D.Va. 2000) (same). Inasmuch as plaintiffs have not refuted the USDA's LRCvP 56 Statement, the facts contained therein are deemed admitted. See Bon, at 600 n. 12; note 4 supra. Indeed, the facts of this case — which are primarily taken from the administrative record — are straightforward and undisputed.*fn6

Kassem is the President of Seneca Street Mini Mart, a convenience store that participated in the FFSP until plaintiffs' disqualification in March 2002. By letter dated February 11, 2002, the USDA sent Kassem a letter outlining numerous violations stemming from thirteen transactions and informing plaintiffs that the USDA was considering disqualifying them from further participation in the FFSP and/or the imposition of a civil monetary penalty ("Violation Notice").*fn7 The Violation Notice indicated that employees of the store had accepted food stamps for ineligible items (i.e., beer and non-food items) and had trafficked food stamps (i.e., bought food stamps at discounted prices) on six occasions.*fn8 The Violation Notice informed plaintiffs, inter alia, that they must submit a request for such penalty within ten days of their receipt of the Violation Notice in order to be eligible for consideration for the civil monetary penalty — as opposed to permanent disqualification.*fn9

Plaintiffs' responded via counsel in a letter dated February 22, 2002.*fn10 Plaintiffs' response indicated that Kassem was out of the country and that Kassem's daughter, Kathy Hussein, was plaintiffs' agent. Hussein submitted an affidavit to the USDA that stated, inter alia, that "[w]hile I am not in a position to deny the allegations, I can assure the Department that any such lapses were not in accordance with store policy and training; that the employees involved have been trained and instructed in proper procedures for handling Food Stamps transaction [sic], and that they have been cautioned on pain of termination, not to repeat their behavior." Admin. Rec. at 58; Hussein Aff., at ¶ 4. Hussein also requested a civil monetary penalty.

By letter dated March 15, 2002, the USDA informed plaintiffs, inter alia, that they were permanently disqualified from the FFSP and that they were deemed ineligible for a civil monetary penalty because plaintiffs failed to submit the requisite documentation. By letter dated March 28, 2002, Kassem requested an administrative review of plaintiffs' disqualification. Beverly King, an Administrative Review Officer at the USDA, reviewed plaintiffs' disqualification and in a letter dated June 20, 2002 sustained such disqualification. King's letter also informed plaintiffs of their right to file suit in federal court, which they did July 30, 2002.

Rule 56(c) of the Federal Rules of Civil Procedure ("FRCvP") states that summary judgment may be granted only if the record shows "that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." In other words, after discovery and upon a motion, summary judgment is mandated "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Summary judgment is thus appropriate where there is "no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).*fn11

With respect to the first prong of Anderson, a genuine issue of material fact exists if the evidence in the record "is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, at 248.*fn12 Stated another way, there is "no genuine issue as to any material fact" where there is a "complete failure of proof concerning an essential element of the nonmoving party's case." Celotex, at 323. Under the second prong of Anderson, the disputed fact must be material, which is to say that it "might affect the outcome of the suit under the governing law ***." Anderson, at 248.

Furthermore, "[i]n assessing the record to determine whether there is a genuine issue as to any material fact, the district court is required to resolve all ambiguities and draw all factual inferences in favor of the party against whom summary judgment is sought." St. Pierre v. Dyer, 208 F.3d 394, 404 (2d Cir. 2000) (citing Anderson, at 255). Nonetheless, mere conclusions, conjecture, unsubstantiated allegations or surmise on the part of the non-moving party are insufficient to defeat a well-grounded motion for summary judgment. Goenaga, at 18.*fn13 Indeed, "[s]ummary judgment has been held to be appropriate on de novo judicial review of a disqualification of a retail food store from participating in the food stamp program if no genuine issue of material fact exists." Haskell v. United States Dep't of Agriculture, 743 F. Supp. 765, 767 (D.Kan. 1990), aff'd, 930 F.2d 816 (10th Cir. 1991); Nagi v. U.S. Dep't of Agriculture, 1997 WL 252034, at *2 (S.D.N.Y. 1997) (granting summary judgment in favor of USDA and sustaining permanent disqualification).*fn14

Turning to the merits, section 2023(a)(13) provides:

"If the store, concern, or State agency feels aggrieved by such final determination, it may obtain judicial review thereof by filing a complaint against the United States in the United States court for the district in which it resides or is engaged in business, or, in the case of a retail food store or wholesale food concern, in any court of record of the State having competent jurisdiction, within thirty days after the date of delivery or service of the final notice of determination upon it, requesting the court to set aside such determination." 7 U.S.C. § 2023(a)(13) (2003) (emphasis added).
Inasmuch as the USDA — as opposed to the United States — is the only named defendant, this action fails for lack of subject matter jurisdiction. See De La Nueces v. U.S., 1992 WL 58851, at *1 (S.D.N.Y. 1992) (dismissing suit against defendant USDA for lack of subject matter jurisdiction because complaint improperly named the USDA as a defendant).*fn15 Accordingly, this action will be dismissed.

In any event, this action also fails on the merits. As noted above, this Court must review de novo whether plaintiffs violated the FFSP. 7 U.S.C. § 2023(a)(15); Ibrahim v. U.S., 834 F.2d 52, 53 (2d Cir. 1987).*fn16 Plaintiffs do not deny that the alleged violations occurred. See Admin. Rec. at 58; Hussein Aff., at ¶ 4; Compl. at ¶¶ 7-9. This fact coupled with a de novo review of the Administrative Record leads this Court to conclude that the violations did occur as alleged.

Plaintiffs do, however, challenge the sanction of permanent disqualification. The sole issue to be determined is whether the sanction imposed by the USDA was arbitrary and capricious. See Lawrence v. United States, 693 F.2d 274, 276 (2d Cir. 1982); Willy's Grocery v. United States, 656 F.2d 24 (2d Cir. 1981), cert. denied, 454 U.S. 1148 (1982); Nagi, at *2. An agency's decision is arbitrary and capricious if it was "unwarranted in law or without justification in fact." Willy's Grocery, at 26. Where, however, the USDA has followed the applicable laws and regulations, its decision may not be overturned as arbitrary and capricious. Ibid.*fn17

The USDA's decision to permanently disqualify plaintiffs was not arbitrary and capricious. Indeed, it is well-established that a store owner is responsible for any violations of the Food Stamp Act and regulations by the store's employees. See 7 C.F.R. § 278.6(e)(1)(i); J.C.B. Super Markets Inc. v. United States, 530 F.2d 1119, 1122 (2d Cir. 1976) ("The abuse of [the FFSP] by employees authorized to act by [the corporation] suffices to inculpate the corporation.").*fn18 It is undisputed that plaintiffs' employees committed the alleged violations and that plaintiffs are responsible for such violations. Accordingly, in order to ...


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