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Cheema v. United States

United States District Court, D. Massachusetts

March 12, 2019





         This matter is before the court on the defendant the United States Department of Agriculture's (“USDA”) Motion for Summary Judgment. (Docket No. 52). The plaintiff Rifat M. Cheema d/b/a/ Cheema's Supermarket (“Cheema's”) has filed this action against the USDA in order to contest an agency ruling which found that Cheema's likely trafficked in Supplemental Nutrition Assistance Program benefits, and which disqualified Cheema's from participating in that program. Cheema's bears the burden of proving by a preponderance of the evidence at trial that the agency's ruling was incorrect. To survive summary judgment, Cheema's must present credible evidence at this stage of the case on which a jury could reasonably find for Cheema's at trial. For the reasons herein, the court rules that Cheema's fails to make that showing. This court, therefore, ALLOWS the USDA's Motion and grants summary judgment in its favor.


         The following facts are undisputed unless otherwise indicated.[2]

         SNAP Benefits

         The Supplemental Nutrition Assistance Program (“SNAP”), established through the Food Stamp Act, 7 U.S.C. § 2011, et seq., is intended “to promote the general welfare, [and] to safeguard the health and well-being of the Nation's population by raising the levels of nutrition among low-income households.” 7 U.S.C. § 2011. (DF ¶ 1). SNAP is operated by the Food and Nutrition Service (“FNS” or the “Agency”). (Id. ¶ 2). Through SNAP, eligible participants are allotted funds to spend on certain food items. SNAP funds are used by beneficiaries through electronic benefit transfer or “EBT” cards, which are loaded monthly and operate in a similar fashion to debit cards. (Id. ¶¶ 3-5).

         EBT cards can be used at approved stores on approved items. (Id. ¶ 6). For example, SNAP regulations provide that certified retail stores cannot accept EBT benefits for particular goods including alcohol, cigarettes, tobacco, lottery tickets, pet foods, soaps, paper products, household supplies, vitamins, medicines, and hot prepared foods. (Id. ¶ 15). FNS certifies stores to participate in the program and classifies each store based on its size and the types of goods sold. (See id. ¶¶ 8-14).

         A retail store that violates SNAP regulations may be subject to civil penalties or disqualification from the program. (Id. ¶ 17). One such regulation is the prohibition on retail stores from exchanging EBT benefits for cash, which is considered trafficking. (Id. ¶¶ 18-19). Regulators monitor EBT transactions in order to detect suspicious behavior. All EBT transactions are recorded in a database maintained by the USDA. (Id. ¶ 21). The database records the date, time, and amount of each transaction, and the store and household identification numbers related to each. (Id. ¶23). The balance remaining in each beneficiary's account is also recorded after each transaction. (Id. ¶ 24). The database has the capacity to produce certain reports of suspicious activity known as “Anti-Fraud Locator using EBT Retailer Transactions, ” or “ALERT” reports. (Id. ¶ 25). FNS, and its Investigative Analysis Branch, is responsible for monitoring stores and investigating suspicious activity. (Id. ¶¶ 31-32).

         If an investigation results in disciplinary action by FNS, administrative and judicial review is conducted pursuant to 7 C.F.R. §§ 278, 279. Where, as here, FNS permanently disqualifies a store for trafficking benefits, the disqualification is effective from the date the retailer receives notice of the decision. 7 U.S.C. § 2023(a)(18). A retailer may request review of a penalty from an Administrative Review Officer (“ARO”). 7 U.S.C. § 2023(a)(3); 7 C.F.R. § 279.2. The ARO is then charged with making a final agency determination. 7 U.S.C. § 2023(a)(5); 7 C.F.R. 279.5. Once that final determination has been made, a retailer can seek review in federal court. 7 U.S.C. § 2023(a)(13).


         Cheema's is a grocery store located in Allston, Massachusetts. (DF ¶ 39). Brothers Farhat, Nusrat, and Rifat Cheema own the store. (Id. ¶ 41).[3] In March of 1997, Cheema's became authorized to accept SNAP benefits. (Id. ¶ 42). Cheema's was approved to accept SNAP benefits as a retail store, but not as a wholesaler. (Id. ¶ 47). Cheema's originally was classified as a “small grocery store” for SNAP purposes and was later reclassified as a “combination store/other” in 2011. (Id. ¶ 43). In 2015, based on the store's inventory and stock, Cheema's was reclassified as a “medium grocery store.” (Id. ¶ 53). The store is approximately 1300 square feet, has a single cash register, and has no scanning devices. (Id. ¶¶ 44-45). Cheema's offers customers small handheld baskets as opposed to large shopping carts. (Id. ¶ 50). At all times, one of the Cheema brothers works the cash register and uses a calculator to tally purchases. (Id. ¶ 45).

         Cheema's claims that since the store's inception, Cheema's has attracted loyal customers who travel long distances to shop at the store. (Owners' Aff. ¶ 4). Cheema's asserts that the store specializes in unique Halal meats, much of which is sold at a significant markup. (Id. ¶¶ 4, 10). The store alleges that its customers often buy Halal meat for an entire month at once, quickly depleting an individual's SNAP benefits for that given month. (Id. ¶¶ 11, 14; Customers' Aff. ¶ 6). While the store has no carts for customers, Cheema's avers that one of the owners carries meat orders to the checkout counter for customers and that most orders fit within typical shopping bags. (Owners' Aff. ¶ 9). Cheema's alleges that “[m]any of our customers place orders with us over the phone, and then come in at a later time to pick up their order. When the customers arrive, [Cheema's] already [has] the total price of their purchase calculated.” (Id. ¶ 12). Since the purchases are pre-tallied, Cheema's asserts that it is common for customers to “make purchases beyond the meat. Oftentimes, these customers swipe their cards twice: once for the items ordered by phone, and a second time for the items picked up in-person.” (Id.; Customers' Aff. ¶ 3). In order to keep track of the large amount of phone orders placed by customers, Cheema's avers that the brothers use a notebook, replaced about every three months. (Pl. Mem. at 9-10 (referencing Cheema's most recent phone book, submitted as Ex. C and produced to the court at Docket No. 65)).

         The Trafficking Investigation

         Before June of 2015, the USDA's ALERT system discovered suspect transactions from Cheema's. (DF ¶ 51). Thereafter, FNS commenced an investigation into potential trafficking. (Id. ¶ 52). FNS began by analyzing transaction data for Cheema's in the months of June, July, and August of 2015. (Id.). On September 28, 2015, an FNS contractor visited Cheema's, where he observed Cheema's inventory and stock. (Id. ¶¶ 52-53). After the store visit, Program Specialist Richard O'Toole provided his Section Chief, Gilda Torres, an analysis weighing Cheema's location, layout, storage capabilities, inventory, available equipment, the transactions tracked by the ALERT reports, and a comparison between Cheema's transactions and those of comparable stores. (Id. ¶¶ 54, 55).

         Following Specialist O'Toole's report, Section Chief Torres sent Farhat Cheema and Rifat Cheema a “Charge Letter” explaining the investigation and charging Cheema's with SNAP benefit trafficking. (Id. ¶¶ 56, 57). The letter informed the brothers that the Agency was considering disqualifying Cheema's from SNAP as a result of the alleged conduct. (Id.). The Charge Letter detailed the suspicious transactions underlying the decision, and grouped suspicious activity into four categories. (Id. ¶ 58). The trafficking charge was based on: (1) multiple transactions made too rapidly to be credible; (2) multiple transactions made from individual accounts in short time frames; (3) transactions where all or most of an allotment of benefits were used in a short time frame; and (4) unusually large transactions. (Id.). The Charge Letter accused Cheema's of 830 individual violations. (Id. ¶ 70). The Charge Letter allowed for Cheema's to submit evidence combatting the allegations. (Id. ¶ 71). Cheema's responded with two fax submissions. (Id. ¶ 73).

         In responding to the allegations, Cheema's alleged that: (1) the store was exceptionally busy during the period they were under review because of the Muslim holy months of Ramzan and Haj; (2) Cheema's credit card sales were more than twice that of EBT transactions; (3) many Somali customers order by phone and then pick up their orders in the store; (4) many customers who swipe their EBT cards realize they have a balance and make another transaction; (5) some of Cheema's customers travel long distances for Cheema's goods and buy groceries at once for the entire month; and (6) customers often shop in groups and swipe the same card for multiple purchases. (Id. ¶ 74; A.R. 100-101). Cheema's also submitted credit card statements for the months of the investigation to support their claims. (DF ¶ 75).

         After submitting their objections to the allegations and associated evidence, Mr. Rifat Cheema spoke with Specialist O'Toole who requested copies of meat invoices and records of telephone orders. (Id. ¶¶ 76-78). Cheema's provided the meat invoices and, after a subsequent request from Specialist O'Toole, also submitted non-meat invoices for review. (Id. ¶¶ 79-81). It does not appear from the record that Cheema's ever submitted the requested phone evidence for review. (Id. ¶ 84). Cheema's now submits a more recent notebook of phone orders as an example of how Cheema's tracks phone orders and the type of volume the store experiences. (Docket No. 65).

         The Agency reviewed Cheema's submitted responses and evidence[4], and ultimately concluded that the rendered explanations failed to explain the suspicious transactions. (DF ¶ 83). Specifically, the Agency found that the evidence did not support the proffered statement that Cheema's received 15-20 phone orders each day, and did not refute the Agency's conclusions that the store's small checkout counter and lack of carts for customers did not support the contention that large purchases were frequently made, that the store's lack of scanners did not support the idea that multiple large purchases could be completed in quick succession, that the holy months did not explain the high sales in August of 2015, that the store's EBT transaction amounts during the holy months matched those of other months during the year, that Cheema's assertion that many customers traveled long distances to pick up groceries was not credible, that the physical storage space and observed inventory did not support the assertion that most of Cheema's sales were of fresh meat, and finally that Cheema's reported inventory did not account for Cheema's actual reported sales. (Id. ¶¶ 84-104). The Agency concluded that it was more likely than not that Cheema's had engaged in trafficking. (Id. ¶ 105).

         On April 27, 2016, FNS sent Cheema's a letter including its decision and disqualifying Cheema's from SNAP. (Id. ¶ 109). The plaintiff requested review of the decision by FNS' Administrative Review Branch (“ARB”) on May 3, 2016. (Id. ¶ 113). ARO Ronald Gwinn was assigned to the case and asked the plaintiff for information in support of Cheema's position. (Id. ¶ 115). He informed Cheema's that if such documentation was not provided within a three-week period, no review would occur. (Id.). Cheema's did not submit the requested information. (Id. ¶ 116). ARO Gwinn reviewed the case nonetheless and determined that it was more likely true than not that Cheema's had engaged in trafficking. (Id. ¶ 117). The final Agency decision affirmed the disqualification of Cheema's from SNAP. (Id. ¶ 118).

         Cheema's filed their Second Amended Complaint in federal court on September 11, 2017. (Docket No. 23). Therein, Cheema's sought “de novo review of the USDA's Final Agency Determination and request[ed] that the Court reverse the determination barring [Cheema's] from the SNAP program as an authorized retailer.” (Id. at 3). The USDA filed the Motion for Summary Judgment on August 22, 2018. (Docket No. 52). After briefing from the parties, the court held a hearing on the motion on December 13, 2018.

         Additional facts will be provided herein where appropriate.

         III. ANALYSIS

         A. Summary Judgment Standard of Review

         “The role of summary judgment is ‘to pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.'” PC Interiors, Ltd. v. J. Tucci Constr. Co., 794 F.Supp.2d 274, 275 (D. Mass. 2011) (quoting Mesnick v. Gen. Elec. Co., 950 F.2d 816, 822 (1st Cir. 1991)) (additional citation omitted). The burden is upon the moving party to show, based upon the discovery and disclosed materials on file, and any affidavits, “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). Material facts are those that “possess[] the capacity to sway the outcome of the litigation under the applicable law[, ]” and there is a genuine dispute where an issue “may reasonably be resolved in favor of either party.” Vineberg v. Bissonnette, 548 F.3d 50, 56 (1st Cir. 2008) (internal quotation and citation omitted). The court must ...

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