056 Deli & Grocery Corp. v. United States

Background

The Food and Nutrition Service (FNS), part of the United States Department of Agriculture, revoked 056 Deli & Grocery Corp.’s Supplemental Nutrition Assistance Program (SNAP) benefits. FNS’s electronic alert system identified transaction patterns it considered consistent with possible electronic benefits transfer (EBT) trafficking. After investigating, including comparing the store’s transactions with those of other stores, FNS concluded that the unusual activity justified removing 056 Deli from SNAP.

The plaintiffs—056 Deli & Grocery Corp. and Sandra Pichardo Majias, identified as the corporation’s president and chief executive officer—challenged that decision. The defendants produced a 941-page certified administrative record containing the information FNS relied on. The plaintiffs then sought additional discovery outside that record, including household data, transaction data, agency files, information about the alert system, internal agency materials, final agency decisions, and depositions of FNS employees.

Legal standard

The court stated that, at the first step of judicial review of an FNS decision disqualifying a SNAP retailer, the retailer must disprove each identified instance of SNAP trafficking. Additional discovery had to be relevant to that burden and could not be cumulative or speculative. The court also noted that courts often decide SNAP cases without allowing discovery beyond the administrative record.

Rulings on the discovery requests

The court granted in part and denied in part the plaintiffs’ request for additional discovery. It found the request for complete transaction histories and contact information for every household named in the charging letter, covering January 2021 through July 2022, vastly overbroad. However, the court allowed the plaintiffs 45 days to subpoena New York State for household identification and transaction details from February 2022 through July 2022, limited to information stemming from 056 Deli & Grocery Corp. and to households specified in the charging letter. If the plaintiffs obtained that information, they could separately ask the court for permission to take depositions.

The court denied the request for all of the plaintiffs’ EBT transaction data and all transaction data from comparator stores because the plaintiffs did not explain how the information would help disprove the trafficking allegations. It also denied requests for the data used to prepare the charging letter, the plaintiffs’ SNAP retailer file, and all materials used to disqualify them because those materials appeared to be in the administrative record or the requests were too broad to identify what was missing.

The court denied requests for alert-system data, software or computational formulas, internal agency documents, training materials, and investigative reports. It explained that attacking FNS’s internal procedures or the reliability of its alert system would not help the plaintiffs meet their burden of showing that trafficking did not occur. The court also denied the request for all final agency decisions involving other SNAP retailers because the plaintiffs had not shown that those decisions would help them disprove the specific allegations against them. Finally, it denied requests to depose FNS employees about investigative procedures for the same reason.

Disposition and significance

Judge Jennifer E. Willis granted the plaintiffs’ household-data request only to the limited extent that they could subpoena the specified information from New York State, and denied all remaining discovery requests. This was a discovery ruling; the order did not decide whether the plaintiffs actually engaged in SNAP benefits trafficking or whether FNS’s disqualification decision was ultimately valid.