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Grocery v. United States

United States District Court, D. New Jersey

September 27, 2019

MARTINEZ GROCERY II, et al. Plaintiffs,
UNITED STATES OF AMERICA, et al. Defendants.

          Brian E. Turner, Esq. Attorney for Plaintiffs

          Craig Carpenito, United States Attorney By: John Tudor Stinson, Jr., Assistant U.S. Attorney Attorneys for Defendants




         This matter comes before the Court by way of a motion for summary judgment filed by Defendants United States of America and the Secretary of the United States Department of Agriculture, Sonny Perdue, (hereinafter, collectively, “Defendants”) seeking judgment in their favor as to all counts of the Complaint [Docket Item 1] filed by Plaintiffs Martinez Grocery II and Juana Martinez (hereinafter, collectively, “Plaintiffs”). (See Defs.’ Mot. [Docket Item 13].) The Court will grant Defendants’ motion.

         II. BACKROUND[1]

         A. The Supplemental Nutrition Assistance Program

         This case revolves around the Supplemental Nutrition Assistance Program (“SNAP”), which is administered by the Food and Nutrition Service of the United States Department of Agriculture (“FNS”). 7 U.S.C. §§ 2011–2036. SNAP provides assistance to eligible households by supplementing their available funds to spend on food items. 7 U.S.C. § 2013(a). Participants use their SNAP benefits to purchase food items at authorized stores, and the United States then redeems those benefits by paying the store the full face value of the benefits. 7 U.S.C. §§ 2013(a), 2016(b), 2018, 2019. Participation in the program by such stores is managed by FNS and governed by the relevant statutory and regulatory regime in order to achieve SNAP’s objectives, while also preventing or minimizing fraud and abuse. 7 U.S.C. § 2011.

         B. Martinez Grocery II

         Martinez Grocery II is a small convenience store that opened in 1998 in Camden, New Jersey. Shortly after opening, Plaintiffs applied to participate in SNAP and were accepted into the program. As of June 2017, there were 45 SNAP-participating retailers within one mile of Martinez Grocery II of varying size and description.

         On May 13, 2017, FNS conducted a site visit to Martinez Grocery II, which noted that the store did not provide customers with shopping carts or baskets, only had a single cash register, and that items for sale exhibited a typical pricing structure, wherein most prices ended with “x9” cents.[2] At the time, the most expensive items eligible for SNAP were $19.99, $11.99, and $5.99.

         C. FNS Investigation

         In June 2017, FNS began investigating Plaintiffs after their “Alert System” indicated that Plaintiffs’ recent pattern of SNAP transactions indicated possible trafficking in SNAP benefits, [3] in violation of SNAP regulations. As part of the ensuing investigation, FNS staff collected Plaintiffs’ SNAP transaction records for the time-period running from December 2016 through May 2017 and analyzed it in conjunction with data from other nearby SNAP retailers, with the transaction histories of certain nearby SNAP households, and with established patterns of SNAP benefit trafficking.[4]

         As a result of the investigation, FNS sent Plaintiffs a letter on July 27, 2017, charging Plaintiffs with SNAP benefits trafficking based on three types of suspicious activities uncovered by FNS’s investigation:

1. An unusually large number of transactions ending in $.00 or $.50
2. Multiple transactions from an individual SNAP account in a short period of time
3. Numerous excessively large transactions, relative to the nature of Martinez Grocery II as a small convenience store

         The July letter indicated that the default sanction for SNAP trafficking is permanent disqualification from SNAP participation, but that a retailer could request that FNS consider a civil monetary penalty instead.

         D. Administrative Proceedings

         Plaintiffs requested and were granted numerous extensions of time to respond to the July 2017 letter. On August 15, 2017, Plaintiffs responded to FNS through counsel, asserting that they had not violated any SNAP regulations. Specifically, Plaintiffs alleged that they sell many items that end in $.00 or $.50, that all same-household transactions were hours apart, and that Plaintiffs cannot control a SNAP recipient’s desire to purchase large amounts of items in a single visit to Martinez Grocery II. Plaintiffs did not request that FNS consider a civil monetary penalty in lieu of permanently disqualifying Plaintiffs from participating in SNAP. Attached to Plaintiffs’ letter were a number of additional invoices, allegedly related to Martinez Grocery II’s inventory.

         FNS analyzed Plaintiffs’ response and determined that

[Plaintiffs’] response to [FNS’s] letter of charges failed to justify or adequately explain the very suspicious transaction activity noted in [FNS’s] charge letter or demonstrated by the specific household shopping activity detailed in [FNS’s] case analysis. . . . A review of client shopping data for the review period shows that clients shopping at Martinez Grocery II are also shopping at other area grocery stores, as well as full-line supermarkets and superstores that offer customers a much larger quantity and variety of eligible food items. It is our conclusion that the firm's transactions more likely than not represent trafficking.

(A.R. [Docket Item 12], 341.) Specifically with respect to the invoices provided by Plaintiffs, FNS determined that

[Plaintiffs’] reply contains invoices from Sun Wholesale Inc. dated December 1, 2016 through August 8, 2017 and a summary report of all the purchases from Sam’s Club dated December 9, 2016 through July 31, 2017. [FNS’s] analysis revealed that [Plaintiffs] provided invoices belonging to two different stores ...

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