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PT Nguyen, Inc. v. United States

United States District Court, M.D. Louisiana

September 23, 2019

PT NGUYEN, INC. D/B/A JASMIN FOOD MART
v.
UNITED STATES OF AMERICA

          RULING AND ORDER

          JOHN W. deGRAVELLES JUDGE

         This matter comes before the Court on Defendant United States of America’s (“Defendant” or “United States”) Motion for Summary Judgment. (Doc. 17). Plaintiff, PT Nguyen, Inc. d/b/a Jasmin Food Mart (“Plaintiff” or “Jasmin Food Mart”), opposed the motion. (Doc. 20). Defendant replied. (Doc. 21). The Court has carefully considered the law, the facts in the record, and the arguments and submissions of the parties and is prepared to rule. For the following reasons, Defendant’s motion for summary judgement is granted.

         I. Relevant Factual and Procedural Background

         Jasmin Food Mart, under the ownership of Peter Q. Nguyen, Nhung N. Tu, Thinh Q. Nguyen, and Kim Thoa Nguyen, is a Louisiana corporation that operates a retail convenience store and food market on North Sherwood Forest Drive in Baton Rouge, Louisiana. (Doc. 1, ¶¶ 1, 7). Plaintiff alleges that “at all times relevant hereto”, Jasmin Food Mart was an authorized participant retailer in the Supplemental Nutrition Assistance Program (“SNAP”). (Id.). SNAP is administered by the United States Department of Agriculture (“USDA”), Food and Nutrition Service (“FNS”). (Doc. 1, ¶ 1).

         On October 17, 2016, Plaintiff alleges that the FNS issued a letter to Jasmin Food Mart, alleging that records of Electronic Benefit Transfer (“EBT”) transactions at Jasmin Food Mart between the months of April 2016 and November 2016[1] showed “clear and repetitive patterns of unusual, irregular, and inexplicable activity for [Jasmin’s] type of firm.” (Doc. 1, ¶ 8). SNAP benefits are issued to households through an EBT system. SNAP benefits are stored in a central computer database and electronically accessed by households at the point of sale via reusable plastic cards. SNAP benefits may also be issued through an off-line EBT system in which benefit allotments can be stored on a card or in a card access device and used to purchase authorized items at a point-of sale terminal. FNS monitors retailer transaction data through EBT system reporting. (Doc. 1, ¶ 6).

         In its letter to Plaintiff, the FNS alleged that the EBT records showed (1) multiple transactions were made from individual benefit accounts in unusually short time frames; and (2) excessively large purchase transactions were made from recipient accounts. (Doc. 1, ¶ 8). Based on this information, the FNS charged Jasmin Food Mart with “trafficking” as defined by 7 C.F.R. § 271.2. (Id.).

         On October 24, 2016, Jasmin Food Mart alleges that it responded to the charges and provided a written explanation regarding the EBT records. (Doc. 1, ¶ 9). Plaintiff asserted that many of its customers shopped daily, if not multiple times per day. Plaintiff noted that its fresh seafood sales accounted for the higher priced transactions. Plaintiff asserted that there was a higher volume of SNAP recipients following the flooding in Baton Rouge in August 2016. Also, during this time, SNAP participants were permitted to purchase hot food items not ordinarily eligible for purchase with SNAP benefits, which increased the volume of purchases with SNAP benefits at the store. (Doc. 1, ¶ 10).

         Plaintiff alleges that it provided FNS with additional information and supporting documentation in response to the charges, including inventory invoices from seafood and meat distributors, between October 24, 2016 and November 3, 2016. (Doc. 1, ¶ 11).

         On July 5, 2017, FNS issued a letter to Jasmin Food Mart, advising that it had reviewed the available information and found that the violations had occurred as cited. FNS then permanently disqualified Jasmin Food Mart from SNAP pursuant to 7 C.F.R. §§ 278.6(c), 278.6(e)(1). (Doc. 1, ¶ 12).

         In response, Jasmin Food Mart made a written request on July 14, 2017, for a review of the FNS decision. Plaintiff alleges that it reiterated its previous contentions and provided additional documentation for transactions between April 2016 and October 2016. Plaintiff also requested the results of the FNS investigation. (Doc. 1, ¶ 13).

         FNS issued its final agency decision dated December 28, 2017, upholding the permanent disqualification of Jasmin Food Mart. (Doc. 1, ¶ 15). Plaintiff alleges that FNS improperly relied “solely on analysis of EBT records and disregarded or gave insufficient consideration to facts presented by Jasmin Food Mart and/or information that was otherwise available to the FNS, concerning the nature of Jasmin Food Mart’s business, its purchases and sales, its customers’ typical transactions, and the extenuating circumstances surrounding the time period of the investigation”. (Doc. 1, ¶ 16). Plaintiff alleges that FNS “failed to consider the nature and scope of the alleged violations”, failed to warn Jasmin Food Mart about the possibility of violations, and failed to evidence Jasmin Food Mart’s intent to violate SNAP regulations. (Doc. 1, ¶ 17).

         Plaintiff instituted suit pursuant to 7 U.S.C. § 2023 for de novo judicial review of the final agency decision by the FNS, which permanently disqualified Jasmin Food Mart from participation as an authorized retailer in SNAP. (Doc. 1, ¶ 1).

         II. Relevant Standard

         “The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). If the mover bears his burden of showing that there is no genuine issue of fact, “its opponent must do more than simply show that there is some metaphysical doubt as to the material facts … [T]he nonmoving party must come forward with ‘specific facts showing that there is a genuine issue for trial.’” See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (internal citations omitted). The non-mover’s burden is not satisfied by “conclusory allegations, by unsubstantiated assertions, or by only a ‘scintilla’ of evidence.” Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994)(citations and internal quotations omitted). The party opposing the motion for summary judgment may not sit on his hands, complacently relying on the pleadings. Weyant v. Acceptance Ins. Co., 917 F.2d 209 (5th Cir. 1990). “Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no ‘genuine issue for trial.’” Matsushita Elec. Indus. Co., 475 U.S. at 587. General allegations that fail to reveal detailed and precise facts will not prevent the award of summary judgment. Walton v. Alexander, 20 F.3d 1350, 1352 (5th Cir. 1994). Further:

In resolving the motion, the court may not undertake to evaluate the credibility of the witnesses, weigh the evidence, or resolve factual disputes; so long as the evidence in the record is such that a reasonable jury drawing all inferences in favor of the nonmoving party could arrive at a verdict in that party’s favor, the court must deny the motion.

Int’l Shortstop, Inc. v. Rally’s Inc., 939 F.2d 1257, 1263 (5th Cir. 1991).

         III. Discussion

         A. Parties’ Arguments

         1. Defendant’s Memorandum in Support (Doc. 17-1)

         Defendant explains that the FNS utilized the Anti-Fraud Locator Using Electronic Benefit Transfer Retailer Transactions (“ALERT”) System to monitor and identify suspicious patterns of EBT card usage that may suggest SNAP benefits are being trafficked. (Doc. 17-1, p. 4 (citing Doc. 17-3, p. 3; Rockland Convenience Store v. United States, Civ. A. No. 10-260, 2011 WL 5120410, *3 (D.N.H. Oct. 27, 2011)). In 2016, the ALERT System “flagged” Plaintiff’s EBT transaction data as having met patterns consistent with possible SNAP trafficking violations. (Doc. 17-1, p. 6 (citing A.R. 104)). As a result, FNS opened an investigation and analyzed data covering a six-month period from April 2016 through September 2016. (Doc. 17-1, p. 6 (citing A.R. 103-121)). A “Charge Letter” was issued on October 17, 2016, by FNS to Plaintiff, notifying Jasmin Food Mart of a charge of trafficking in SNAP benefits. (Doc. 17-1, p. 7 (citing A.R. 122-141)). The Charge Letter identified instances of multiple transactions from individual SNAP accounts in a short time frame. (Doc. 17-1, p. 7 (citing A.R. 122; 125)). Defendant provides examples of the “flagged” transactions. (Doc. 17-1, p. 7).

         Plaintiff submitted a written response to the Charge Letter on October 24, 2016. (Doc. 17-1, p. 8 (citing A.R. 144-145)). Defendant admits that Plaintiff explained the effects of the flood of August 2016, as well as its seafood business and customer purchasing habits. (Id.).

         Defendant issued a “Determination Letter” on July 5, 2017, informing Plaintiff that the charged trafficking violations had occurred and permanently disqualified Jasmin Food Mart from SNAP. (Doc. 17-1, p. 8 (citing A.R. 223-226)). On July 14, 2017, Plaintiff requested administrative review with the Administrative Review Branch of the FNS. (Doc. 17-1, p. 9 (citing A.R. 229-231)). Plaintiff claimed that the charge of trafficking and resulting disqualification of Jasmin Food Mart from SNAP was “arbitrary, without cause, and in violation of Plaintiff’s due process rights”. (Id.). The Administrative Review Officer requested additional information on July 19, 2017, and Plaintiff submitted same on August 1, 2017. (Doc. 17-1, p. 9 (citing A.R. 265-266, 270-1463)). Plaintiff reiterated that it provided documentation to justify the high volume of sales of higher priced items and of SNAP benefits transactions; that high dollar transactions and increased frequency of SNAP benefits was attributed to the August 2016 flood, later implemented by FNS as the “Special Disaster Rules”; that FNS authorized SNAP benefits for purchasing hot foods through October 17, 2016; that FNS did not conduct an on-site investigation; and FNS did not charge Plaintiff with a violation of SNAP prior to this time. (Doc. 17-1, pp. 9-10).

         A “Final Agency Decision” was issued December 28, 2017, supporting the trafficking determination and permanent disqualification of Plaintiff from ...


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