The Brothers Grocery & Deli Corp. v. United States

Background

Bernardino Mora and The Brothers Grocery & Deli Corp. challenged their permanent disqualification from the Supplemental Nutrition Assistance Program (SNAP), which followed the Food and Nutrition Service’s finding that they trafficked SNAP benefits. Trafficking means exchanging SNAP benefits for cash or something other than eligible food. The United States moved for summary judgment, asking the court to dismiss the complaint in its entirety.

The Food and Nutrition Service investigated Brothers Grocery after its electronic benefit transfer data showed patterns it considered potentially suspicious. During the review period from August 2019 through January 2020, the agency examined 503 transactions over $40. It identified, among other things, large transactions ending in the same cents values, repeated large transactions by the same household within short periods, and unusually large purchases that depleted most of households’ monthly benefits. The agency also compared the store’s transactions with those of nearby and comparable stores.

The plaintiffs offered explanations involving the store’s inventory, purchases of multiple items, customer co-shopping, rounding prices, and credit extended to customers. They also requested additional discovery under Federal Rule of Civil Procedure 56(d), including depositions and information about the agency’s transaction-analysis system. The parties’ scheduling order had stated that discovery was unnecessary at that stage and set a schedule for a summary-judgment motion.

Court’s analysis

The court denied the plaintiffs’ request to delay or deny summary judgment for additional discovery. It found that the plaintiffs had received the administrative record earlier than they claimed, had agreed to proceed directly to summary judgment, and had not shown what efforts they made to obtain the requested discovery or why those efforts failed.

Because SNAP regulations permit permanent disqualification for a single trafficking violation, the court independently reviewed whether the cited transactions were legitimate. It rejected the plaintiffs’ broad challenge to the reliability of the agency’s electronic transaction-alert system. The court explained that the system helped identify transactions for investigation, but the agency also relied on the actual transaction data, an on-site inspection, photographs and store-layout information, recipient shopping patterns, and comparisons with other stores.

The court found the evidence of trafficking sufficient. It concluded that the large same-cents transactions did not fit the store’s usual pricing structure; that repeated, high-dollar transactions by the same households within short periods were not credibly explained by multiple meals, co-shopping, or employee familiarity with prices; and that accepting SNAP benefits to repay credit was prohibited. The court also found significant the large transactions that depleted most of households’ benefits early in the month and the comparison showing that Brothers Grocery had substantially greater redemptions and more investigative flags than a larger nearby grocery store.

The court separately reviewed the agency’s refusal to impose a civil monetary penalty instead of permanent disqualification. To qualify for that alternative penalty, the plaintiffs had to provide substantial evidence of an effective compliance policy and training program that existed before the violations, among other requirements. At the administrative level, they provided only a document showing a December 2019 SNAP training, while the review period began in August 2019. The court held that the later evidence submitted in the lawsuit could not establish that the agency’s administrative decision was arbitrary or capricious.

Disposition

Judge McCarthy granted the United States’ motion for summary judgment, denied the plaintiffs’ request for additional discovery, upheld the permanent SNAP disqualification, and dismissed the plaintiffs’ claims in their entirety. The Clerk was directed to terminate the motion and close the case.