Abdulla v. United States

[4] 5 UNITED STATES DISTRICT COURT 6 EASTERN DISTRICT OF CALIFORNIA [7] 8 ADEL NABEEL ALI ABDULLA, an CASE NO. 1:19-cv-00543-AWI-SKO individual; ABDUL MOHAMED, an 9 individual; and ECONOMY MARKET, a California partnership, ORDER DISMISSING ACTION FOR 10 LACK OF SUBJECT MATTER Plaintiffs, JURISDICTION 11 v. 12 UNITED STATES OF AMERICA, (Doc. No. 14) 13 Defendant. [16] 17 INTRODUCTION 18 Plaintiffs Adel Nabeel Ali Abdulla and Abdul Mohamed (“Plaintiffs”) own a grocery store 19 that was disqualified from the Supplemental Nutrition Assistance Program (“SNAP”) by the Food 20 and Nutrition Service (“FNS”) based on a disqualification from California’s Special Supplemental 21 Nutrition Program for Women, Infants, and Children (“WIC”). Plaintiffs filed suit for judicial 22 review of the disqualification and denial of a civil monetary penalty in lieu of the disqualification, 23 and Defendant United States of America (“United States”) brought the instant motion for 24 summary judgment. For the reasons set forth below, the Court will dismiss this action in its 25 entirety for lack of subject matter jurisdiction. 26 BACKGROUND 27 SNAP is intended “to promote the general welfare, [and] to safeguard the health and well28 being of the Nation’s population by raising the levels of nutrition among low-income households.” [1] 7 U.S.C. § 2011 . Persons eligible for SNAP can redeem SNAP benefits for food items at stores 2 that have been approved to participate in the program. Id. § 2013(a). SNAP is administered by the 3 FNS on behalf of the United States Department of Agriculture (“USDA”). Wong v. United States, [4] 859 F.2d 129, 130 (9th Cir. 1988). Stores who run afoul of SNAP regulations face disqualification 5 or monetary penalty. 7 U.S.C. §§ 2018 & 2021(a); 7 C.F.R. §§ 278.2 (a) & 278.6(a). 6 WIC is a program related to SNAP that provides food and education relating to nutrition to 7 at-risk pregnant, postpartum and breast-feeding women, as well as infants and young children 8 from low-income families. See 42 U.S.C. § 1786 (a); Cal. Health & Safety Code §§ 123275 et seq. 9 The WIC program in California is administered by the California Department of Public Health 10 (“DPH”) pursuant to relevant provisions in California’s Health and Safety Code. See Jungil Kim 11 v. United States, 2016 WL 7647669 , at *1 (C.D. Cal. July 27, 2016); see also, Cal. Health & 12 Safety Code § 123280. A store that is disqualified from WIC is subject to reciprocal 13 disqualification or a civil monetary penalty under SNAP, depending on the circumstances. 7 14 U.S.C. § 2021 (g); 7 C.F.R. §§ 278.6 (e)(8), (f)(1). 15 Plaintiffs are the owners of Economy Market, a “medium grocery store” in Selma, 16 California. Doc. No. 1 ¶¶ 1-2. On June 26, 2018, DPH temporarily disqualified Economy Market 17 from WIC for overcharging, Administrative Record (lodged with the Court on December 17, 18 2019) (“A.R.”) 81-92, and on March 22, 2019, the FNS issued a Final Agency Decision affirming 19 a reciprocal disqualification of Economy Market from SNAP pursuant to 7 C.F.R. § 278.6 (e)(8) 20 based on the WIC disqualification. A.R. 159-163. 21 Plaintiffs filed this action on April 26, 2019. Doc. No. 1. The one count alleged in the 22 Complaint – which remains the operative pleading in this action – seeks “de novo judicial review 23 of the denial of a Hardship Civil Money Penalty in lieu of … disqualification.” Doc. No. 1 ¶ 39. 24 Plaintiffs allege that the FNS “errantly found that the disqualification of the Plaintiff’s store would 25 not cause an undue hardship upon the local population,” id. ¶ 40 ; that “the local population would 26 be limited in their food options and availability in the absence of the Plaintiffs’ store,” id. ¶ 41 ; 27 and that, consequently, “the three (3) year disqualification against the Plaintiffs should be set aside 28 by this Court in favor of the issuance of a Hardship [Civil Monetary Penalty] ….” Id. ¶ 42 . 1 Further, the Complaint calls for the Court to “conduct a Judicial Review of the Defendant’s three 2 (3) year disqualification of the Plaintiffs, and subsequently enter Judgment against the Defendant 3 for improperly disqualifying the Plaintiffs for three (3) years ….” Id. at 10:10-19 . 4 The United States brought a motion for summary judgment on December 17, 2019, 5 arguing, in essence, that the Court generally lacks jurisdiction as to SNAP actions based on WIC 6 disqualification, and that, in any event, there is no dispute that “FNS’s decision to temporarily 7 disqualify [Economy Market] from SNAP was properly and legally rendered.” Doc. No. 14-1 at 8 2:11-13 & Part B. 9 LEGAL STANDARD 10 Although the United States seeks summary judgment pursuant to Rule 56 of the Federal 11 Rules of Civil Procedure, its motion also raises questions as to the Court’s jurisdiction over the 12 two issues – namely disqualification and “denial” of a civil money penalty in lieu of 13 disqualification – that Plaintiffs raise in the Complaint and in their opposition to the United States’ 14 motion for summary judgment. 15 Federal subject matter jurisdiction is a threshold issue that goes to the power of a court to 16 hear a case. Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94 (1998). “Without jurisdiction 17 the court cannot proceed at all in any cause.” Id. (citation and internal quotation marks omitted). 18 “Jurisdiction is power to declare the law, and when it ceases to exist, the only function remaining 19 to the court is that of announcing the fact and dismissing the cause.” Id. (citation and internal 20 quotation marks omitted). 21 Accordingly, federal courts are under a continuing duty to confirm their jurisdictional 22 power and are even “obliged to inquire sua sponte whenever a doubt arises as to [its] existence 23 ….” Mt. Healthy City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S. 274, 278 (1977) (citations 24 omitted); Gilder v. PGA Tour, Inc., 936 F.2d 417, 421 (9th Cir. 1991) (stating that even where 25 neither party contests subject matter jurisdiction, courts are “bound to address it sua sponte if it is 26 questionable”). “[W]hen a federal court concludes that it lacks subject-matter jurisdiction, the 27 court must dismiss the complaint in its entirety.” Arbaugh v. Y&H Corp., 546 U.S. 500 , 514 28 (2006). 1 ANALYSIS 2 “The United States is immune from suit unless it consents to waive its sovereign 3 immunity.” Hodge v. Dalton, 107 F.3d 705, 707 (9th Cir. 1997) (citing Lehman v. Nakshian, 453 4 U.S. 156 , 160 (1981)). “The doctrine of sovereign immunity applies to federal agencies and to 5 federal employees acting within their official capacities,” id. (citing South Delta Water Agency v. 6 U.S., Department of Interior, 767 F.2d 531 , 536 (9th Cir.1985)), and “[t]he terms of the United 7 States’ consent to be sued in any court define that court’s jurisdiction to entertain the suit.” Id. 8 (citing Lehman, 453 U.S. at 160). 9 The scope of a court’s jurisdiction in connection with SNAP is defined by 7 U.S.C. § 2023 10 and 7 U.S.C § 2021. See Salmo v. U.S. Dep’t of Agric., 226 F. Supp. 2d 1234 , 1235–36 (S.D. Cal. 11 2002) (citing Shoulders v. United States Department of Agriculture, 878 F.2d 141, 143 (4th Cir. 12 1989)); see also, Gallo Cattle Company v. United States Dept. of Agriculture, 159 F.3d 1194 , 13 1197 (9th Cir.1998) (statute providing for judicial review of USDA’s Dairy Promotion Program 14 defines scope of federal court’s subject matter jurisdiction as to such program). [15] 7 U.S.C. § 2023 provides for judicial review of a finite set of FNS actions in connection 16 with SNAP, including FNS actions resulting in denial of an application to participate in SNAP 17 pursuant to 7 U.S.C. § 2018 ; forfeiture of a bond under 7 U.S.C. § 2021 (d); denial of a store claim 18 (or part of a claim) under 7 U.S.C. § 2022 ; and, of particular relevance to this case, 19 disqualification or imposition of a civil monetary penalty under 7 U.S.C. § 2021 . See 7 U.S.C. § 20 2023(a)(1), (a)(13). 21 Under 7 U.S.C. § 2023 , a store “aggrieved” by any of the foregoing actions may “file a 22 written request for an opportunity to submit information in support of its position” prior to a final 23 administrative determination and to “obtain judicial review” of “such final determination” in state 24 or federal court. 7 U.S.C. § 2023 (a)(3), (a)(13). Thus, 7 U.S.C. § 2023 (a)(13) “provides a limited 25 waiver of sovereign immunity” with respect to certain aspects of SNAP administration. Twin 26 Grocery v. Deegan, 2017 WL 2362410 , at *4 (E.D. Pa. May 31, 2017). [27] 7 U.S.C. § 2021 , for its part, states that “[t]he Secretary [of the United States Department 28 of Agriculture] shall issue regulations providing criteria for the disqualification … of an approved 1 retail food store or a wholesale food concern that is disqualified from accepting benefits under 2 [WIC],” 7 U.S.C. § 2021 (g)(1), and that, “notwithstanding” 7 U.S.C. § 2023 , such a 3 disqualification “shall not be subject to judicial or administrative review.” Id. § 2021(g)(2)(C). 4 As to the regulations promulgated pursuant to 7 U.S.C. 2021(g)(1)-(2), 7 C.F.R § 5 278.6(e)(8) states that “FNS shall disqualify from SNAP any firm which is disqualified from the 6 WIC Program” (subject to certain additional criteria that are not relevant here); 7 C.F.R. § 7 278.6(e)(8)(ii) states that “FNS shall not disqualify a firm from SNAP on the basis of a WIC 8 disqualification unless … [a] determination is made … that such action will not cause a hardship 9 for participating SNAP households”; and 7 C.F.R § 278.6(e)(8)(iii)(C) states that a “SNAP 10 disqualification” pursuant to 7 C.F.R. § 278.6 (e)(8) “[s]hall not be subject to administrative or 11 judicial review under SNAP.” 12 As set forth below, the Court finds that these provisions do not allow for judicial review of 13 SNAP disqualification or the “denial” of a civil monetary penalty in lieu of SNAP disqualification 14 where FNS action is predicated on a WIC disqualification and that this action must therefore be 15 dismissed, in its entirety, for lack of subject matter jurisdiction. 16 I. Judicial Review of SNAP Disqualification Based on WIC Disqualification 17 The Court first addresses Plaintiffs’ plea “pursuant to 7 U.S.C. § 2023 for a judicial review 18 of the … decision to disqualify [Economy Market] from participation in” SNAP. Doc. No. 15-1 at 19 1:24-28. 20 The United States contends that no judicial review of the FNS’s decision to disqualify the 21 store is available because 7 U.S.C. § 2021 (g)(2)(C) “unequivocally prohibits review of reciprocal 22 disqualifications from SNAP resulting from WIC violations.” Doc. No. 14-1 at 3:20-23 (quoting 23 Hamdi Halal Market LLC v. United States, 947 F. Supp. 2d 159, 162 (D. Mass. 2013) (internal 24 quotation marks omitted)). 25 Plaintiffs, on the other hand, argue based on Goldstein v. United States, 9 F.3d 521 (6th 26 Cir. 1993) that the Court has jurisdiction to review Economy Market’s reciprocal SNAP 27 disqualification despite 7 U.S.C. § 2021 (g)(2)(C) because Plaintiffs are merely challenging the 28 application of SNAP regulations and are not challenging “the factual contents of the 1 disqualification.” Doc. No. 15-1 at 4:1-7. Specifically, Plaintiffs acknowledge that the overcharge 2 violations on which the WIC disqualification was predicated took place but contend that they do 3 not constitute a “pattern” of wrongdoing, as required for SNAP disqualification under 7 C.F.R. § 4 278.6(e)(8)(i)(E). Doc. No. 15-1 at 7:9-9:27. And Plaintiffs do not dispute the contents of the 5 notice issued in connection with the WIC disqualification but contend that said notice did not 6 constitute the “individual and specific” notice of potential reciprocal SNAP disqualification 7 required under 7 C.F.R § 278.6(e)(8)(ii)(A). Id. at 10:2-11:19. 8 Goldstein has no applicability to this case, however, because it deals solely with 9 jurisdiction under 7 U.S.C. § 2023 in connection with FNS action based on direct violations of 10 SNAP regulations, with no reference at all to reciprocal SNAP disqualifications based on WIC 11 disqualifications. See Dasmesh Enterprises, Inc. v. United States, 501 F. Supp. 2d 1033 , 1038 12 (W.D. Mich. 2007) (finding that Goldstein did not address “mandatory reciprocal disqualification 13 … based a disqualification from the WIC Program”); see also, Islam Corp. v. Johanns, 2007 WL 14 1520930, at *2 (W.D. Ky. May 21, 2007) (finding Goldstein did not deal with SNAP 15 disqualification based on WIC disqualification). Indeed, Goldstein was decided three years before [16] 7 U.S.C. § 2021 (g)(1) (providing for reciprocal SNAP disqualification based on WIC 17 disqualification) and 7 U.S.C. § 2021 (g)(2)(C) (denying courts jurisdiction over such 18 disqualifications) were enacted by Congress in 1996. See Simone Enterprises, LLC v. U.S. Dep’t 19 of Agric., 2011 WL 3236222 , at *2–3 (E.D. Wis. July 27, 2011) (stating that 7 U.S.C. § 20 2021(g)(1)-(2) were enacted in 1996); see also, Islam Corp., 2007 WL 1520930 , at *2 21 (disregarding cases “decided before the 1996 amendments to 7 U.S.C. § 2021” in performing 22 jurisdiction analysis). 23 Consistent with the plain language of 7 U.S.C. § 2021 (g)(2)(C) and its regulatory 24 counterpart, 7 C.F.R. § 278.6 (e)(8)(iii)(C), courts uniformly hold that reciprocal SNAP 25 disqualification based on WIC disqualification pursuant to 7 C.F.R. § 278.6 (e)(8) is not subject to 26 judicial review. See e.g, Hamdi Halal Market, 947 F. Supp. 2d at 162 ; M.J. Martins Enterprises, 27 Inc. v. U.S. Dep’t of Agric., 881 F. Supp. 2d 229, 231 (D. Mass. 2012) (“In light of the clear 28 statutory command and uniform judicial consensus, this Court concludes that it lacks subject1 matter jurisdiction to review the plaintiff's reciprocal disqualification from SNAP.”); Simone 2 Enterprises, 2011 WL 3236222 , at *2–3 (“Based on the plain language of the relevant statute and 3 applicable regulations, as well as persuasive case law addressing the issue, the court finds that it 4 does not have jurisdiction to review the petitioner’s reciprocal disqualification from SNAP.”); 5 Islam Corp., 2007 WL 1520930 , at *3 (dismissing case for lack of subject matter jurisdiction 6 where SNAP disqualification was based on WIC disqualification); Dasmesh, 501 F. Supp. 2d at 7 1039 (dismissing for lack of subject-matter jurisdiction plaintiff's challenge to a reciprocal SNAP 8 disqualification); Salmo, 226 F. Supp. 2d at 1237 (“Congress has unambiguously stated that 9 decisions by the FNS disqualifying a store from participating in [SNAP] as a result of a prior WIC 10 disqualification are not subject to administrative or judicial review.”); Guzman v. U.S. Dep’t of 11 Agric. Food & Nutrition Serv., 931 F. Supp. 2d 488, 495 (S.D.N.Y. 2013) (finding that 7 U.S.C. § 12 2021(g)(2)(C) and 7 C.F.R. § 278.6 (e)(8)(iii)(C) “plainly preclude judicial review of a SNAP 13 disqualification that is premised on an earlier WIC disqualification”). 14 Plaintiffs have provided no authority to support their contention that this Court has 15 jurisdiction to test facts underlying the WIC disqualification against SNAP regulations or 16 otherwise investigate or evaluate the reciprocal disqualification at issue in this case. See Kokkonen 17 v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377 (1994) (finding that “the burden of 18 establishing [jurisdiction] rests upon the party asserting jurisdiction” (citations omitted)). The 19 Court therefore dismisses this action for lack of subject matter jurisdiction to the extent the 20 Complaint seeks review of Economy Market’s SNAP disqualification under 7 U.S.C. § 21 278.6(e)(8). 22 II. Judicial Review of Denial of Civil Monetary Penalty in Lieu of Disqualification 23 The Court turns now to Plaintiffs’ request for “judicial review of the denial of a Hardship 24 Civil Monetary Penalty in lieu of … disqualification.” See Doc. No. 1 ¶ 39. 25 The United States asserts that district courts are divided on the question of whether judicial 26 review is available here, Doc. No. 14-1 at 4:12-22, while Plaintiffs cite two cases finding that 27 courts have jurisdiction over decisions not to impose civil monetary penalties in lieu of 28 disqualification in FNS actions arising from WIC disqualifications. Doc. No. 15-1 at 4:1-15 (citing 1 Guzman, 931 F. Supp. 2d at 495 and Dasmesh, 501 F. Supp. 2d at 1033 ). In the first of these 2 cases, Guzman v. U.S. Department of Agriculture, the court found that the “FNS had discretion to 3 choose whether to disqualify [the store in question] or subject [it] to a civil monetary penalty” 4 subject to review under an “arbitrary or capricious” standard. 931 F. Supp. 2d at 495 . And the 5 other case, Dasmesh Enterprises, Inc. v. United States, found that courts have jurisdiction to 6 determine whether the FNS conducted a hardship assessment prior to choosing between 7 disqualification and a civil monetary penalty. 501 F. Supp. 2d at 1039 . 8 In the Court’s view, however, these cases rest on a false distinction between 9 disqualification, on the one hand, and denial of a civil monetary penalty in lieu of disqualification, 10 on the other, and erroneously assume that the FNS has discretion to substitute a civil monetary 11 penalty for disqualification in actions arising from WIC disqualification. 12 With respect to reciprocal disqualification, applicable regulations state that: “FNS shall 13 disqualify from SNAP any firm which is disqualified from the WIC Program” (provided one or 14 more additional criteria irrelevant to this analysis are satisfied), 7 C.F.R. § 278.6 (e)(8)(i) 15 (emphasis added); that “FNS shall not disqualify a firm from SNAP on the basis of a WIC 16 disqualification unless … [a] determination is made … that such action will not cause a hardship 17 for participating SNAP households,” 7 C.F.R. § 278.6 (e)(8)(ii)(C) (emphasis added); and that “a 18 SNAP disqualification” pursuant to 7 C.F.R. § 278.6 (e)(8) “[s]hall not be subject to … judicial 19 review under SNAP.” 7 C.F.R. § 278.6 (e)(8)(iii)(C). 20 As to civil monetary penalties, 7 C.F.R. § 278.6 (a) states (emphasis added): “FNS may, in 21 lieu of a disqualification, subject a firm to a civil monetary penalty … if FNS determines that a 22 disqualification would cause hardship to participating households.” And 7 C.F.R. § 278.6 (f)(1) 23 states (emphasis added): 24 FNS may impose a civil monetary penalty as a sanction in lieu of disqualification 25 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 26 households …. 27 The FNS, therefore, can take no action at all in connection with a WIC disqualification 28 without first making a hardship determination. If the FNS determines, in an action arising from 1 WIC disqualification, that SNAP disqualification would not cause hardship for SNAP households, 2 reciprocal disqualification is mandated and the FNS has no discretion to substitute a civil 3 monetary penalty (or any other sanction). See 7 C.F.R. § 278.6 (e)(8)(i)-(ii). And if, conversely, the 4 FNS determines in an action arising from a WIC disqualification that SNAP disqualification 5 would cause hardship for SNAP households, the regulations allow FNS to impose a civil monetary 6 penalty (or no sanction at all), but expressly prohibit disqualification. See 7 C.F.R. §§ 278.6 (a), 7 (f)(1), (e)(8)(ii). 8 Consequently, the Court sees no scenario arising from a WIC disqualification (as opposed 9 to a direct violation of SNAP regulations1) where the FNS has discretion to impose a civil 10 monetary penalty “in lieu of disqualification.” At least in the context of an action arising from a 11 WIC disqualification, the sanction flows from the outcome of the hardship assessment required by [12] 7 C.F.R. § 278.6 (e)(8)(ii), and the two sanctions in question – disqualification and civil monetary 13 penalty – are never interchangeable. Thus, as to FNS action predicated on a WIC disqualification, 14 “denial of a civil monetary penalty in lieu of disqualification” – or a “decision not to impose a 15 civil monetary penalty in lieu of disqualification” – is, at best, another way of referring to 16 reciprocal disqualification. And where, as here, a plaintiff putatively seeks review of the “denial” 17 of a civil monetary penalty in lieu of SNAP disqualification based on WIC disqualification, that 18 plaintiff is necessarily seeking (as the Complaint in this case amply demonstrates2) review of the 7 19 U.S.C. § 278.6 (e)(8) disqualification itself. As set forth supra in Part I, the Court has no power to 20 provide such review, see Salmo, 226 F. Supp. 2d at 1235–36, and this case must therefore be [21] 22 1 Unlike reciprocal disqualifications based on WIC disqualifications under 7 C.F.R. § 278.6 (e)(8), disqualifications for direct violations of SNAP regulations do not require a threshold determination that “such action will not cause a 23 hardship for participating SNAP households.” See 7 C.F.R. § 278.6 (e). Therefore, in actions arising from direct violation of SNAP regulations, the FNS could well find itself with discretion to impose a civil monetary penalty in 24 lieu of disqualification after the fact, based on a hardship analysis that is separate from and subsequent to the initial disqualification determination. Cases such as those cited by Plaintiffs that allow for limited judicial review of sanction 25 selection (after a predicate liability determination has been made) make sense in that context. 2 See, e.g. Doc. No. 1 ¶ 39 (seeking “de novo judicial review of the denial of a Hardship Civil Money Penalty in lieu 26 of … disqualification”); id. ¶ 40 (alleging that the FNS “errantly found that the disqualification of the Plaintiff’s store would not cause an undue hardship upon the local population”); id. ¶ 42 (arguing that “the three (3) year 27 disqualification against the Plaintiffs should be set aside by this Court in favor of the issuance of a Hardship CMP ….”); id. 10:10-19 (calling for the Court to “conduct a Judicial Review of the Defendant’s three (3) year 28 disqualification of the Plaintiffs, and subsequently enter Judgment against the Defendant for improperly disqualifying 1 | dismissed for lack of subject matter jurisdiction to the extent it concerns “denial” of a civil 2 monetary penalty in lieu of disqualification. 3 CONCLUSION 4 For the foregoing reasons, the Court finds it lacks jurisdiction over either of the issues 5 | presented by Plaintiffs in the Complaint and their opposition to the United States’ motion for 6 |summary judgment. Plaintiffs have not identified — and, after thorough review, the Court cannot 7 |find — any other causes of action in the Complaint. The Court is therefore constrained to dismiss 8 | this action in its entirety for lack of subject matter jurisdiction. See Arbaugh, 546 U.S. at 514 . [9] 10 ORDER 11 Accordingly, IT IS HEREBY ORDERED that: 12 } 1. This case is DISMISSED for lack of subject matter jurisdiction; 13 }2. Defendant’s motion for summary judgment (Doc. No. 14) is DENIED as moot in light of 14 the Court’s jurisdictional findings; 15 }3. All currently set dates and deadlines, including the trial date, are VACATED; and 16 The Clerk of the Court is directed to CLOSE this case. [17] 18 IT IS SO ORDERED. 19 |Dated: _March 10, 2020 —. 7 Zz : Z Cb Led — SENIOR DISTRICT JUDGE [28] Ww