Opinion
15-CV-7307 (CBA) (VMS)
09-30-2017
1413 AVENUE J SUPERMARKET, INC., Plaintiff, v. THE UNITED STATES OF AMERICA, Defendant.
NOT FOR PUBLICATION
MEMORANDUM & ORDER AMON, United States District Judge :
Plaintiff 1413 Avenue J. Supermarket Inc. filed the instant action against defendant The United States of America pursuant to the Food Stamp Act, 7 U.S.C. § 2011 et seq., seeking judicial review of the United States Department of Agriculture Food and Nutrition Service's ("USDA's") decision to disqualify plaintiff from participation as a vendor in the Supplemental Nutrition Assistance Program ("SNAP"). (D.E. # 1 "Compl.").) The Court set a briefing schedule for defendant's proposed motion for summary judgment to be fully briefed by August 12, 2016. (D.E. dated Apr. 15, 2016.) On consent of the parties, the Court extended the briefing schedule on August 3, 2016, with the fully briefed motion due on September 30, 2016. (D.E. dated Aug. 3, 2016.)
On September 23, 2016, defendant filed a motion for leave to file its motion unopposed. (D.E. # 16.) Defendant explained that plaintiff had failed to comply with the briefing schedule and that defendant had been unable to make any contact with plaintiff's counsel through phone or email. (Id.) On September 30, 2016, the Court granted defendant's request, and defendant filed the instant motion. (D.E. dated Sept. 30, 2016; D.E. # 18.) Also on the same day, plaintiff's counsel filed a motion to withdraw as counsel, stating that communications with plaintiff had stalled, and that counsel had been unable to gain plaintiff's cooperation in prosecuting the matter. (D.E. # 17.) Plaintiff again failed to appear by representative at an October 19, 2016, status conference before the Honorable Vera M. Scanlon, United States Magistrate Judge, and as a result, Magistrate Judge Scanlon granted the counsel's motion to withdraw. (D.E. dated Oct. 19, 2016; D.E. # 19.) In the withdrawal order, she informed plaintiff that oral argument for the instant motion was scheduled for November 1, 2016, and that plaintiff was still required to appear by representative. (D.E. # 19.) Copies of the order and docket sheet, which contained information advising plaintiff of the need to appear at the oral argument, were mailed to plaintiff at its last two known addresses. (Id.) Yet plaintiff again failed to appear at the November, 1, 2016, oral argument for the instant motion. (D.E. dated Nov. 1, 2016.) On November 4, 2016, the copies mailed to plaintiff's addresses were returned as "undeliverable." (D.E. # 20.)
For the following reasons, the Court grants defendant's motion for summary judgment.
BACKGROUND
The Court draws facts from the record, with the help of defendant's Rule 56.1 statement. "In reviewing and evaluating the evidence in support of an unopposed motion for summary judgment, the movant's Rule 56.1 statement is 'an important guide.'" Polanco v. 34th St. P'ship, 724 F. Supp. 2d 420, 425 (S.D.N.Y. 2010) (quoting Shark v. City of N.Y., No. 03-CV-2616 (PKC), 2008 WL 4444122, at *3 (S.D.N.Y. Sept. 29, 2008)); see also Levitant v. N.Y. Human Res. Admin., No. 08-CV-397 (KAM), 2012 WL 6212695, at *2 (E.D.N.Y. Dec. 13, 2012). The Court has reviewed the "evidence in the record" and finds that the assertions in the Rule 56.1 statement cited in this Memorandum and Order are supported. See Vt. Teddy Bear Co. v. 1-800 Beargram Co., 373 F.3d 241, 244 (2d Cir. 2004).
Congress has authorized the USDA to "regulate strictly 'retail food stores and wholesale food concerns' allowed to accept and redeem food stamps." Abdelaziz v. U.S., Through Dep't of Agriculture, 837 F.2d 95, 97 (2d Cir. 1988) (quoting 7 U.S.C. § 2018(a)). As part of the regulatory regime, USDA administers SNAP, which provides financial assistance to qualified households to buy food items from participating retail food stores. (D.E. # 18-2 ("Def. 56.1") ¶ 2.) USDA also funds Special Supplemental Nutrition Program for Women, Infants, and Children ("WIC"), which provides "supplemental foods and nutrition education" to children and "pregnant, postpartum, and breastfeeding women . . . from low-income families." See 42 U.S.C. § 1786. In each state, a designated agency operates the WIC program. (Def. 56.1 ¶ 4.) In New York, the New York State Department of Health ("DOH") authorizes vendors to participate in WIC and sanctions them if they violate the program's guidelines. (Id.)
Plaintiff 1413 Avenue J. Supermarket, Inc.—which is also known as K J Supermarket and does business as Associated—is a vendor once authorized to accept WIC and SNAP checks as payment for food and redeem them at full purchase price. (Id. ¶¶ 1-6.) USDA categorized plaintiff as a SNAP "Large Grocery Store." (Id. ¶ 5.)
From April to May 2013, plaintiff engaged in a pattern of redeeming WIC checks from DOH for more money than the purchase prices of the food items it had sold. (Decl. of AUSA Matthew J. Mailloux, Ex. 1, USDA/FNS Official Record ("A.R.") at 11, D.E. # 18-3 at 17.) Instead of disqualifying plaintiff, DOH issued a civil sanction of $44,000 against plaintiff for the "pattern of overcharges." (Id. at 11-12: see also 7 C.F.R. § 246.12(l)(1).) In an August 14, 2013, letter, DOH stated that failure to pay the sanction by September 4, 2013, "will result in [plaintiff's] disqualification from the WIC Program . . . for a period of three years," and that "WIC disqualification may result in a non-appealable disqualification from" SNAP. (A.R. at 12.) Although plaintiff could challenge the sanction in an administrative hearing, it would need to pay the sanction up front first. (See id. at 12.) Plaintiff decided not to challenge the sanction, instead agreeing to pay it in an installment plan afforded to active WIC vendors. (See id. at 113.)
Plaintiff did not retain its active status for long. In an entirely separate matter, a DOH representative visited the store on November 14, 2014, to inspect 130 WIC checks that WIC households had provided plaintiff. (Id. at 30.) The representative determined deficiencies in 87 of the checks and confiscated them. (Id.) DOH disqualified plaintiff from WIC for one year effective December 5, 2014, and an administrative law judge ("ALJ") affirmed the disqualification in a February 13, 2015, Report and Order. (Id. at 32.)
On December 11, 2014, six days after DOH had issued its one-year disqualification decision for the on-site inspection, plaintiff received a letter from DOH following up on the August 14, 2013, civil penalty. (See id. at 13.) DOH noted that plaintiff's "status has changed as a WIC vendor," and that plaintiff was no longer permitted to pay in installments. (Id.) DOH demanded payment of the remaining $26,888.92 by December 31, 2014, on penalty of three years' disqualification. (Id.) In the letter, DOH stated that "disqualification from the WIC Program may result in a non-appealable disqualification from" SNAP. (Id.) DOH also notified plaintiff of its right to a hearing about "the issue of the alleged failure to pay," this time without a requirement that plaintiff pay the funds in advance. (See id.) Plaintiff decided not to appeal and instead defaulted on the payment. (Id. at 14.) As a result of plaintiff's default, DOH disqualified plaintiff from the WIC program for three years, effective January 13, 2015. (Id.) In the instant action, Plaintiff has not challenged any of DOH's decisions or procedures described above.
The WIC disqualification triggered federal regulations providing for reciprocal mandatory disqualification from the federally administered SNAP program. Promulgated by USDA pursuant to 7 U.S.C. § 2021(g)(1), the regulations provide that USDA "shall disqualify" from SNAP any vendor disqualified from a state-administered WIC program "for the same length of time as the WIC disqualification," if the vendor, like plaintiff, engages in a "pattern of charging WIC customers more for food than non-WIC customers or charging WIC customers more than the current shelf price." 7 C.F.R. §§ 278.6(e)(8)(i)(F), 278.6(e)(8)(iii)(A). However, the mandatory disqualification may not occur unless: (1) the vendor had been provided "individual and specific notice" of potential SNAP disqualification before DOH made its WIC disqualification decision; (2) DOH provided a signed and dated copy of the notice to USDA; and (3) USDA finds that disqualification "will not cause a hardship for participating SNAP households." Id. § 278.6(e)(8)(ii)(C). The "hardship" exception is further explained in § 278.6(f)(1):
[USDA] may impose a civil money penalty as a sanction in lieu of disqualification when the firm subject to a disqualification is selling a substantial variety of staple food items, and the firm's disqualification would cause hardship to SNAP households because there is no other authorized food store in the area selling as large a variety of staple food items at comparable prices.
On August 25, 2015, USDA sent a letter (the "Charge Letter") to plaintiff, advising it that, based on the December 11, 2014, letter from DOH and the resulting three-year WIC disqualification, USDA "was considering disqualifying plaintiff from SNAP or imposing a civil money penalty in lieu of disqualification." (Def. 56.1 ¶¶ 23-24.) The Charge Letter advised plaintiff that a reciprocal disqualification from SNAP would not be subject to administrative review. (Id. ¶ 24 (citing A.R. at 15).) In the letter, USDA advised that plaintiff may provide, within 10 days, evidence indicating that "(1) your firm has not been disqualified from the WIC Program; (2) you were not informed of the possibility of [SNAP] disqualification in response to the WIC disqualification action; and (3) all opportunities for appeal of the WIC State agency action have not been exhausted or expired." (A.R. at 15.) Plaintiff never replied to the Charge Letter. (A.R. at 18.)
On September 29, 2015, USDA sent a letter to plaintiff (the "Determination Letter"), informing plaintiff that it would be disqualified from SNAP for a three-year period (the "SNAP disqualification decision"), and that USDA had determined plaintiff to be ineligible for a civil penalty (the "civil penalty decision"). (Def. 56.1 ¶¶ 28-29; see also A.R. 23-24.) The Determination Letter also informed plaintiff that the SNAP disqualification decision was final and not subject to administrative review, but that plaintiff had the right to appeal the civil penalty decision. (Def. 56.1 ¶¶ 28, 30.)
Plaintiff timely appealed the civil penalty decision and was given more than a month to provide supporting evidence to an Administrative Review Officer (the "ARO") for USDA. (See A.R. at 61-68.) Counsel provided a copy of the ALJ's February 13, 2015, Report and Order, which affirmed the one-year disqualification resulting from DOH's November 14, 2014, inspection but did not discuss the three-year disqualification resulting from plaintiff's December 31, 2014, default on paying $26,888.92 in civil penalties. (Id. at 93-116.) Nonetheless, counsel argued that February 13, 2015, Report and Order reduced the three-year WIC disqualification period to one year. Counsel also included a personal plea from plaintiff's owner stating, among other things, that "[r]evoking our [SNAP] license will be a hardship for many people [and] . . . is going to hurt the community as well as the employees of the supermarket." (Id. at 101-03.)
On December 1, 2015, USDA upheld the civil penalty decision in a Final Agency Decision. (Def. 56.1 ¶ 44.) The ARO rejected counsel's arguments both that he was subject to the reduced disqualification period and that the neighborhood would suffer. (A.R. at 125.) The ARO noted an April 24, 2015, letter by DOH notifying the USDA that plaintiff's disqualification period indeed lasted for three years. (Id.) The ARO also found that counsel's contentions "cannot be accepted as a basis for reversing or mitigating the WIC determination." (Id.) In addition, the ARO determined that plaintiff did not qualify for the civil penalty because (1) USDA policy provides that plaintiff's community suffer no hardship from its disqualification if another store "selling as large a variety of staple food items at comparable prices" exists within one mile of plaintiff's location; (2) six "alternative" SNAP Large Grocery Stores are located within one mile; and (3) these "alternative" stores "are identified as selling as large a variety of staple food items at prices comparable to those of" plaintiff. (A.R. at 125-26.) Finally, the ARO reiterated that that the SNAP disqualification decision was "not subject to administrative review." (Id. at 125.)
On December 23, 2015, plaintiff filed the instant action, asking this Court to set aside both the SNAP disqualification decision and civil penalty decision, because they not only are arbitrary and capricious in violation of the Food Stamp Act, but also violate his procedural due process rights under the Fifth Amendment. (Def. 56.1 ¶ 46. See generally Compl.)
STANDARD OF REVIEW
Under 7 U.S.C. § 2023(a)(13), a retailer challenging the civil penalty decision "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 . . . requesting the court to set aside such determination." The lawsuit "shall be a trial de novo by the court in which the court shall determine the validity of the questioned administrative action in issue." 7 U.S.C. § 2023(a)(15) (emphasis added). However, unlike the civil penalty decision, the SNAP "disqualification . . . shall not be subject to judicial or administrative review." Id. § 2021(g)(2).
Despite § 2023's emphasis on "trial," this Court may dispose of plaintiff's statutory and constitutional claims at the summary judgment stage. See Nadia Int'l Market v. United States, 689 F. App'x 30, 33-34 (2d Cir. 2017). Summary judgment is appropriate when the pleadings and evidence that would be admissible at trial show that there is "no genuine issue as to any material fact and [that] the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Major League Baseball Props., Inc. v. Salvino, Inc., 542 F.3d 290, 309 (2d Cir. 2008). The Court's function is not to resolve disputed issues of fact but rather to identify genuine issues to be tried. See Anderson, 477 U.S. at 249.
As the moving party, defendant carries the burden of producing evidence that shows an absence of genuine trial issues. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The reviewing court is required to view the evidence in the light most favorable to plaintiff and to resolve all reasonable inferences and ambiguities against defendant. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970); Salvino, 542 F.3d at 309. Nevertheless, plaintiff cannot rely on mere allegations, speculation, or denials. See Fed. R. Civ. P. 56(e); Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir. 1998). "Instead, the non-movant must produce specific facts indicating that a genuine factual issue exists." Scotto, 145 F.3d at 114 (internal quotation marks omitted).
When, as here, plaintiff fails to oppose a summary judgment motion, the Court may "grant summary judgment if the motion and supporting materials—including the facts considered undisputed—show that the movant is entitled to it." Fed. R. Civ. P. 56(e). An unopposed summary judgment motion, however, may fail "where the undisputed facts fail to show that the moving party is entitled to judgment as a matter of law." Vt. Teddy Bear, 373 F.3d at 244 (internal quotation marks omitted); see also N.Y. Civil Liberties Union v. Grandeau, 528 F.3d 122, 132 (2d Cir. 2008). In addition, even "where the non-moving party 'chooses the perilous path of failing to submit a response to a summary judgment motion, the district court may not grant the motion without first examining the moving party's submission to determine if it has met its burden of demonstrating that no material issue of fact remains for trial.'" Vt. Teddy Bear, 373 F.3d at 244 (quoting Amaker v. Foley, 274 F.3d 677, 681 (2d Cir. 2001)). "If the evidence submitted in support of the summary judgment motion does not meet the movant's burden of production, then 'summary judgment must be denied even if no opposing evidentiary matter is presented.'" Id. (emphasis in original) (citations omitted).
DISCUSSION
As stated above, Plaintiff asserts that the SNAP disqualification decision and civil penalty decision (1) are arbitrary and capricious in violation of the Food Stamp Act, and (2) violate procedural due process. Upon de novo review of the entire record, the Court finds that Plaintiff's claims fail as a matter of law. In turn, the Court addresses the statutory and constitutional challenges.
I. Arbitrary and Capricious Review of the SNAP Disqualification Decision
The relevant statute and regulation "plainly preclude" review of plaintiff's claim that the SNAP disqualification decision is arbitrary and capricious. Guzman v. U.S. Dep't of Agric. Food & Nutrition Serv., 931 F. Supp. 2d 488, 495 (S.D.N.Y. 2013). As stated above, under 7 U.S.C. § 2021(g)(2)(C), the SNAP "disqualification . . . shall not be subject to judicial or administrative review." Likewise, 7 C.F.R. § 278.6(e)(8)(iii)(C) provides that SNAP "disqualification . . . [s]hall not be subject to administrative or judicial review." Accordingly, the Court dismisses plaintiff's arbitrary and capricious challenge to the SNAP disqualification decision.
II. Arbitrary and Capricious Review of the Civil Penalty Decision
Defendant concedes that the Court may review plaintiff's remaining claims. However, defendant contends that the civil penalty decision—which, as explained above, is the decision not to impose a civil penalty in lieu of disqualification—was neither arbitrary nor capricious. (Id. at 9.) Specifically, defendant contends that USDA properly found no "hardship to the community" under 7 C.F.R. § 278.6(f)(1). (Id. at 9-10.) The Court agrees.
The de novo trial provision "does not clearly specify which party bears the burden of proof in the review of a disqualification action," and the Second Circuit has not ruled on the issue. Nadia Int'l Market, 689 F. App'x at 33 n.1. Like the Second Circuit, this Court assumes for purposes of the instant motion that defendant has the burden of proof. See id.
The de novo trial provision, 7 U.S.C. § 2023(a)(13), "embodies a different and broader scope of review than that available under the" Administrative Procedure Act, 5 U.S.C. § 706. Ibrahim v. U.S. Through Dep't of Agriculture, 834 F.2d 52, 53 (2d Cir. 1987). The provision requires this Court to perform an "independent, de novo review" of the factual record. Nadia Int'l Market, 689 F. App'x at 34 (emphasis in original); see also Ibrahim, 834 F.2d at 54 ("[T]he record in the district court, not the record before the agency, is what counts."). The review "requires a reexamination of the entire matter rather than a mere determination of whether the administrative findings are supported by substantial evidence." Ibrahim, 834 F.2d at 53. The Court "must reach its own factual and legal conclusions based on a preponderance of the evidence, and should not limit its consideration to matters previously appraised in the administrative proceedings." Id. at 53-54.
But a de novo trial does not mean de novo legal review. See Affum v. United States, 566 F.3d 1150, 1160 (D.C. Cir. 2009). "[J]udicial review of the agency's choice of penalty is focused on whether [USDA] has abused [its] discretion"—that is, whether USDA's decision is arbitrary and capricious. El Tepeyac Grocery, Inc. v. United States, 515 F. App'x 55, 56 (2d Cir. 2013) (quoting Affum, 566 F.3d at 1162). The Court determines simply whether the USDA "properly applied its own regulations and guidelines to" plaintiff's case. See Willy's Grocery v. United States, 656 F.2d 24, 26 (2d Cir. 1981); see also Young Jin Choi v. United States, 944 F. Supp. 323, 325 (S.D.N.Y. 1996).
Upon review of the record, the Court finds that the civil penalty decision was neither arbitrary nor capricious. USDA properly found no "hardship" exception because (1) six "alternative" SNAP Large Grocery Stores are located within one mile of plaintiff's location, and (2) the "alternative" stores "are identified as selling as large a variety of staple food items at prices comparable to those of plaintiff. (Def. 56.1 ¶ 45 (quoting A.R. at 126).) These unchallenged findings are consistent with the factors listed in 7 C.F.R. § 278.6(f)(1) and are amply supported by the record. (See, e.g., A.R. at 20-21); see also Lawrence v. United States, 693 F.2d 274, 277 (2d Cir. 1982) (holding that the "record amply support[ed]" a finding that the store did not qualify for hardship monetary penalty when other qualified stores were located "in an approximately one-mile radius"); Lugo v. United States, No. 08-CV-2960 (RJS), 2009 WL 928136, at *4 (S.D.N.Y. Mar. 30, 2009) ("[T]he record is unchallenged that there are several authorized retail food stores within one mile of [p]laintiff's store that sell as large a variety of staple food items at comparable prices. . . . Under these facts, the Court concludes that the penalty imposed on [p]laintiff cannot be said to be arbitrary and capricious.").
For these reasons, the Court finds no genuine issue of material fact, and defendant shows by a preponderance of the evidence that the civil penalty decision was neither arbitrary nor capricious as a matter of law. The Court therefore grants summary judgment in favor of defendant with respect to plaintiff's statutory challenge to the civil penalty decision.
III. Plaintiff's Due Process Claims
Plaintiff asserts that he was deprived of procedural due process claims with regard to both the SNAP disqualification decision and the civil penalty decision. (Compl. ¶ 16.) It is well settled that the defendant is entitled to summary judgment with respect to the latter decision, because courts repeatedly have held that any USDA decision subject to the de novo trial provision "clearly" comports with procedural due process, see, e.g., Ibrahim, 834 F.2d at 54.
The due process challenge with respect to the SNAP disqualification decision is also meritless but requires further explanation. As an initial matter, the Court concludes that it has jurisdiction over the due process claim. As stated above, 7 U.S.C. § 2023(a) generally grants the Court jurisdiction to review SNAP decisions by the USDA. But § 2021 (g)(2) creates an exception, providing that "[a] disqualification[,] . . . notwithstanding section 2023 of this title, shall not be subject to judicial or administrative review." See also 7 C.F.R. § 278.6(e)(8)(iii)(C) (same). The Court construes narrowly the jurisdiction-stripping carve-out to § 2023(a). "It is well-established that judicial review exists over allegations of constitutional violations even when the agency decisions underlying the allegations are discretionary." Wong v. Warden, FCI Raybrook, 171 F.3d 148, 149 (2d Cir. 1999). And in interpreting jurisdiction-stripping statutes such as § 2021(g)(2), the Court applies a "strong presumption in favor of judicial review of administrative action." McNary v. Haitian Refugee Ctr., Inc., 498 U.S. 479, 498-99 (1991). In this case, § 2021(g)(2), which proscribes judicial review of only the "disqualification," see 7 U.S.C. § 2021(g)(2)(C), "simply does not speak to challenges mounted against the method by which" the USDA determines disqualification, "rather than the determinations themselves," see Bowen v. Mich. Academy of Family Physicians, 476 U.S. 667, 680 (1986) (emphasis in original); see also McNary, 498 U.S. at 491-99 (distinguishing jurisdictional statutes covering "a single act" from those covering "a group of decisions or a practice or procedure employed in making decisions"). Here, plaintiff's procedural due process claim attacks only the automatic nature of the reciprocal disqualification process. Moreover, an interpretation of § 2021(g)(2) to the contrary likely would prevent "meaningful judicial review"—indeed, any review—of the constitutional claim. See Chau v. SEC, 655 F. App'x 67, 70-71 (2d Cir. 2016). Accordingly, the Court finds that the Food Stamp Act's general jurisdiction-granting provision, § 2023(g), applies to the due process challenge, and that it may reach the constitutional issue.
Defendant in its briefing does not contest the Court's jurisdiction over the constitutional claim.
Plaintiff asserts that the reciprocal SNAP disqualification decision, which is generally mandated by 7 C.F.R. § 278.6(e)(8), was made "without affording [p]laintiff a full and fair opportunity to be heard . . . in that . . . the factual allegations relied upon by [USDA] were unsworn; no hearing was held at which [p]laintiff could have called witnesses and confronted those making allegations against it; and the administrative procedures otherwise did not provide a meaningful adjudicative process consistent with the requirements of due process." (Compl. ¶ 16.) The Court construes the pleading as a constitutional challenge to the regulation itself and its application.
Whether the due process challenge is facial or as-applied, plaintiff fails to prove a due process violation. A procedural due process claim comprises two elements: (1) that plaintiff has a "cognizable liberty or property interest under state or federal law," and (2) that plaintiff was not "afforded the process [it] was due under the Constitution." McKithen v. Brown, 626 F.3d 143, 151 (2d Cir. 2010). The Second Circuit has not decided whether a vendor's interest in making SNAP-related sales is an entitlement subject to procedural due process protections. See, e.g., Ibrahim, 834 F.2d at 54 (holding only that, if the entitlement exists, the de novo trial provision provides "full procedural due process"). Still, the Fourth Circuit has held that the "opportunity to engage in food stamp transactions as a retailer" constitutes a property interest under the Due Process Clause. See Cross v. United States, 512 F.2d 1212, 1217 (4th Cir. 1975) (en banc). For purposes of the instant motion, the Court assumes that the entitlement exists.
Defendant has demonstrated that plaintiff received adequate process to protect this entitlement. "An essential principle of due process is that a deprivation of life, liberty, or property 'be preceded by notice and opportunity for hearing appropriate to the nature of the case.'" Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 542 (1985) (quoting Mullane v. Cent. Hanover Bank & Tr. Co., 339 U.S. 306, 313 (1950)). As the pleadings show, plaintiff challenges the adequacy of not his notice but rather his opportunity to be heard. (See Compl. ¶ 16.) The Court must consider (1) "the private interest"; (2) "the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards"; and (3) the government's interest. Mathews v. Eldridge, 424 U.S. 319, 335 (1976).
With respect to the private interest, the Fourth Circuit suggested that the vendor's interest is significant, and the Court assumes as much. See Cross, 512 F.2d at 1217. However, the federal government has significant interests in curbing administrative costs, respecting decisions of state governments, and ensuring the prevention of fraud in the SNAP program. See, e.g., Abdelaziz, 837 F.2d at 98. As another district court in this Circuit has stated in a different context:
[T]he private interest—continued participation in the food stamp program—is strong; however, . . . retailers are only incidental beneficiaries under the statutory scheme. Their interest . . . must be placed in perspective and considered in light of . . . the government's interest in administering the program for the primary beneficiaries. As the legislative history . . . indicates, Congress hoped to reduce food stamp abuse by rapidly implementing disqualification decisions.Ibrahim v. U.S. Through Dep't of Agriculture, 650 F. Supp. 163, 167 (N.D.N.Y. 1987), aff'd on other grounds, 834 F.2d 52 (2d Cir. 1987). Moreover, the Court notes that reciprocal disqualification occurs only when the vendor is found to commit the most troublesome of conduct, such as "a misdemeanor or felony violation of law," or a pattern of overcharging. 7 U.S.C. § 278.6(e)(8)(i). The federal government has a compelling interest in curbing such abuses in the SNAP system. This Court finds that the government interest outweighs plaintiff's private interest.
Moreover, the challenged regulation provides significant procedural safeguards, requiring, among other things, that the vendor must receive "individual and specific" notice of potential SNAP disqualification before the state agency issues a decision on WIC disqualification. See 7 C.F.R. § 278.6(e)(8)(ii)(C). With respect to plaintiff's case, the record shows that, since August 14, 2013, plaintiff has known that his SNAP authorization was in jeopardy. (See, e.g., A.R. at 125-26.) Moreover, there is no dispute that plaintiff had a fair hearing for DOH's WIC disqualification decision; plaintiff simply did not avail itself of the process. Yet because plaintiff had notice of potential SNAP disqualification during the WIC proceedings, it had every incentive to provide, at the state level, as much evidence as possible to ensure a fair hearing and prevent disqualification at both the state and federal levels. The review and adequate hearing by New York officials seriously diminishes the potential for error in plaintiff's case. In addition, the regulation provides plaintiff with the opportunity at the federal level to provide written submissions and evidence in support of, among other things, the "hardship" exception, which USDA uses to further prevent erroneous disqualifications. See 7 C.F.R. § 278.6(e)(8)(ii)(C); see also Nnebe v. Daus, 184 F. Supp. 3d 54, 62-63 (S.D.N.Y. 2016) (noting that procedural due process requires some opportunity to prove or disprove facts related to the underlying substantive standard used by adjudicators). Given the opportunity to do so here, plaintiff failed to make that showing. Upon review of the record, the Court is convinced that risk of error, if any, is slight. Combined with the strong government interest in setting up a rapidly implementing disqualification regime, the potential risk does not demand additional process—at least with respect to WIC disqualifications in New York. Accordingly, the Court finds as a matter of law that the USDA's mandatory disqualification regulation complies with due process in plaintiff's case. And because plaintiff's as-applied challenge fails, so too does its facial challenge. See Wash. State Grange v. Wash. State Republican Party, 552 U.S. 442, 449 (2008) (noting that a facial challenge succeeds only when "no set of circumstances exists under which the [government action] would be valid").
The Court acknowledges, and disagrees with, the Fourth Circuit's dicta to the contrary. See Cross, 512 F.2d at 1217 (suggesting that "full procedural due process is not provided at the administrative levels where the fact and duration of disqualification are determined"). --------
For these reasons, the Court grants defendant's motion for summary judgment in favor of defendant with respect to the due process claims.
CONCLUSION
The Court dismisses plaintiff's arbitrary and capricious challenge to the reciprocal SNAP disqualification decision and GRANTS defendant's motion for summary judgment on the due process claims and the arbitrary and capricious challenge to the civil penalty decision. The Clerk of Court is directed to enter judgment and close the case.
SO ORDERED. Dated: September 30, 2017
Brooklyn, New York
/s/ Carol Bagley Amon
Carol Bagley Amon
United States District Judge