United States District Court, D. Massachusetts
K & O FOOD MART, ORLANDO OVALLES and DIGNA N. ALMONTE, Plaintiffs,
UNITED STATES DEPARTMENT OF AGRICULTURE, Defendant.
MEMORANDUM AND ORDER REGARDING DEFENDANT'S MOTION
FOR SUMMARY JUDGMENT (DOCKET NO. 36)
KATHERINE A. ROBERTSON, U.S. MAGISTRATE JUDGE
matter is before the court on the unopposed motion for
summary judgment of the United States Department of
Agriculture ("the government" or "USDA")
(Dkt. No. 36). The Plaintiffs, K & O Food Mart ("K
& O"), Orlando Ovalles, and Digna N. Almonte
(collectively "Plaintiffs"), commenced this action,
pursuant to 7 U.S.C. § 2023(a)(13), seeking judicial
review of the USDA's Food and Nutrition Service's
("FNS") decision to permanently disqualify them
from participating in the Supplemental Nutrition Program
("SNAP") because they likely trafficked in SNAP
benefits. The parties have consented to this court's
jurisdiction (Dkt. No. 18). See 28 U.S.C. §
636(c); Fed.R.Civ.P. 73. For the reasons that follow, the
court grants the USDA's motion for summary judgment.
Ovalles and Ms. Almonte owned K & O, a 1, 250 square foot
convenience store in the Indian Orchard neighborhood of
Springfield, Massachusetts (Administrative Record
"A.R." at 52, 162). Plaintiffs sold general staple
items, tobacco products, alcohol, lottery tickets,
"some" fresh meat, deli meats, cheese, and
"limited" fresh produce (A.R. at 55, 164, 165,
204). The store had three shopping baskets available for
customers' use, but did not have shopping carts (A.R. at
52). A large slide-top floor freezer stood in front of the
one small (about 12'' x 15"), cluttered checkout
counter (A.R. at 37, 53, 69, 164, 204, 206).
authorized Plaintiffs' participation in SNAP on September
19, 2012 (A.R. at 241). The store had one SNAP point-of-sale
device (A.R. at 53).
established SNAP 'to safeguard the health and well-being
of the Nation's population by raising levels of nutrition
among low-income households.'" Irobe v. U.S.
Dep't of Agric., 890 F.3d 371, 375 (1st Cir. 2018)
(quoting 7 U.S.C. § 2011). See 7 C.F.R. §
271.1. Approved retail food stores may accept SNAP benefits
as payment for eligible food items. See 7 U.S.C.
§§ 2012(k), 2013(a).
meeting the requirements to obtain SNAP benefits use
electronic benefit transfer ("EBT") cards, which
are similar to debit cards, to purchase eligible food items
at authorized stores. See 7 U.S.C. §§
2012(i), 2014, 2016. "In a typical SNAP transaction, a
cashier rings up the total food purchases, a household member
pays using her EBT card through a point-of-sale device, and
the funds in the household's SNAP account are
electronically transferred to the store's bank
account." Irobe, 890 F.3d at 375.
food or food product for home consumption except alcoholic
beverages, tobacco, and hot foods or hot food products ready
for immediate consumption" are eligible to be purchased
with SNAP benefits. 7 U.S.C. § 2012(k); 7 C.F.R. §
271.2. Qualified households are not permitted to use their
EBT cards to obtain cash. See id.
that exchanges SNAP benefits for noneligible items, including
cash, engages in unlawful trafficking. See J & L
Liquor, Inc. v. United States, No. 16-10717, 2017 WL
4310109, at *1 n.1 (E.D. Mich. Sept. 28, 2017)
("Trafficking is the term for a number of fraudulent
schemes including buying, selling, stealing, or otherwise
effecting an exchange of SNAP benefits issued and accessed
via . . . EBT cards for cash or consideration other than
eligible food.") (citing 7 C.F.R. § 271.2).
"For instance, a store trafficks when it 'accept[s]
food stamps for sales that never took place,' allowing
its customers to receive 'cash rather than
merchandise.'" Irobe, 890 F.3d at 375
(alteration in original) (quoting Idias v. United
States, 359 F.3d 695, 698-99 (4th Cir. 2004)).
administers and polices SNAP. See Hamdi Halal Mkt., LLC
v. United States, 947 F.Supp.2d 159, 161-62 (D. Mass.
The [FNS] tracks each SNAP household's use of its SNAP
benefits through the EBT point of sale system found in each
SNAP retailer's location. Each time a SNAP participant
uses his EBT card as payment, the EBT point of sale system
collects and sends data to the [FNS]. The [FNS] aggregates
the data and analyzes it though the Anti-Fraud Locator Using
Electronic Benefit Transfer Retailer Transactions
("ALERT") system. The ALERT system is designed to
detect suspicious SNAP benefit usage indicative of fraud or
SNAP benefit trafficking.
Famous Int'l Mkt. v. United States, CIVIL ACTION
NO. 17-4897, 2018 WL 3015249, at *1 (E.D. Pa. June 15, 2018).
If the FNS detects a statistically unusual pattern of SNAP
transactions at a SNAP-authorized store, it typically refers
the matter to a program specialist who arranges for a
contractor to visit the store and conduct an on-site
investigation. After completing her review of the relevant
EBT data and whatever reports emerge from the on-site
investigation, the program specialist makes a recommendation
to the FNS section chief. If this recommendation is for
further action, the section chief sends a charge letter
detailing the allegations to the store and affords the store
an opportunity to respond. Thereafter, the FNS issues its
Irobe, 890 F.3d at 375-76 (citing 7 C.F.R. §
278.6(b), (c)). "If . . . the FNS determines that a
store has engaged in trafficking, the store is permitted to
pursue an appeal to an administrative review officer
('ARO')." Madi v. United States, Civil
Action No. 3:16-cv-30064-KAR, 2018 WL 3130641, at *2 (D.
Mass. June 26, 2018) (citing 7 U.S.C. § 2023(a)(3); 7
C.F.R. §§ 279.1(a)(2), 279.5)).
is required to permanently disqualify a firm from
participating in SNAP if it finds that personnel of the firm
have trafficked. See 7 U.S.C. §§
2021(b)(3)(B); 7 C.F.R. § 278.6(e)(1)(i). "In
certain circumstances, [however, ] the agency may impose
civil monetary penalties instead of a ban."
Madi, 2018 WL 3130641, at *2. See 7 U.S.C.
§ 2021(b)(3)(B); 7 C.F.R. § 278.6(i). The store has
the right to appeal the agency's final decision to a
federal district court. See 7 U.S.C. §
2023(a)(13); 7 C.F.R. § 279.7.
The FNS Investigation and Disqualification of
instant case, after "K & O appeared on the EBT ALERT
System as having met patterns consistent with possible EBT
trafficking violations," the FNS analyzed K &
O's transaction data for six months, from December 2016
to May 2017, compared that data with the EBT data from
similar convenience stores, and conducted an on-site visit in
June 2017 (A.R. at 162-75). The FNS's analysis revealed
two patterns that it deemed to be consistent with trafficking
(A.R. at 166-75). Consequently, on July 27, 2017, the Section
Chief of the FNS Retailer Operations Division sent Plaintiffs
a letter notifying them that they were being charged with
trafficking in SNAP benefits (the "charge letter")
and inviting their response (A.R. at 176-93). Plaintiffs'
attorney's response to the charge letter included eleven
register receipts (A.R. at 195-202). After receiving the
store's answer to the charge, on September 13, 2017, the
FNS determined that Plaintiffs had engaged in trafficking
(A.R. at 211-14).
filed a timely written request for an administrative review
of the FNS's decision to permanently disqualify them from
participating in SNAP (A.R. at 215-28). On March 27, 2018,
the ARO affirmed the FNS's determination that the store
had engaged in trafficking and its decision to impose a
permanent disqualification (A.R. at 240-52).
filed a complaint in this court challenging the FNS's
determination that Plaintiffs had engaged in trafficking
(Dkt. No. 1). See 7 U.S.C. § 2023(a)(13). The
administrative record was submitted to the court (Dkt. No.
38). The USDA has moved ...