Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_17-cv-00532/USCOURTS-casd-3_17-cv-00532-1/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 07:2023(a) Judicial Review of Food Stamp Disqualification

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

SUE THA LEI PAW, et al.,

Plaintiffs,

v.

UNITED STATES OF AMERICA,

Defendant.

Case No.: 17-cv-0532-BTM-JLB

ORDER DENYING WITHOUT 

PREJUDICE DEFENDANT’S 

MOTION FOR SUMMARY 

JUDGMENT [ECF No. 12]

Presently before the Court is Defendant United States of America’s motion 

for summary judgment. (Def.’s Mot. for Summ. J., ECF No. 12.) For the reasons 

discussed below, Defendant’s motion is denied without prejudice. 

I. BACKGROUND

On March 16, 2017, Plaintiffs Sue Tha Lei Paw, Friday Moe Ro, Nyien 

Nyien Aye, Win Htut, Tar Lue, and Yoon Wady Food Store (collectively 

“Plaintiffs”) brought an action against Defendant for disqualifying Yoon Wady 

Food Store (“Yoon Wady”) from the federal Supplemental Nutritional Assistance 

Program (“SNAP”, formerly known as the food stamps program), which is 

overseen by the Food and Nutrition Service (“FNS”) of the United States 

Department of Agriculture (“USDA”). (ECF No. 1.) Plaintiffs brought this action 

for a de novo review of the agency’s final decision. 

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A. The Supplemental Nutritional Assistance Program

SNAP was implemented by Congress “to safeguard the health and wellbeing of the Nation’s population by raising levels of nutrition among low-income 

households.” 7 U.S.C. § 2011. The program operates by increasing low-income 

families’ purchasing power. Id. Qualifying households receive benefits in the 

form of Electronic Benefit Transfer (“EBT”) cards with which they can purchase 

eligible food items. 7 U.S.C. § 2016(a), (c). Only approved stores are eligible to 

participate in the program and accept SNAP benefits in exchange for eligible 

food items. 7 U.S.C. § 2018. A qualifying store may be fined a civil money 

payment or permanently disqualified from the program if it accepts SNAP

benefits in violation of the program’s regulations. 7 U.S.C. § 2021(a). 

SNAP expressly forbids “trafficking,” which is “[t]he buying, selling . . . or 

otherwise effecting an exchange of SNAP benefits issued and accessed via 

[EBT] cards . . . for cash or consideration other than eligible food.” 7 C.F.R. § 

271.2. If the FNS determines that a participating store trafficked SNAP benefits, 

it may permanently disqualify that retailer from participating in SNAP. 7 C.F.R. § 

278.6(a). When determining whether disqualification is warranted, the FNS may 

rely on evidence such as “facts established through on-site investigations, 

inconsistent redemption data, evidence obtained through a transaction report 

under an electronic benefit transfer system, or the disqualification of a firm from 

the Special Supplemental Nutrition Program for Women, Infants and Children 

(WIC) . . . .” Id. 

B. Factual Background

Plaintiff Yoon Wady Food Store is a store located in San Diego, California 

that carries dried Thai, Burmese (Myanmar) and Asian food. (Administrative 

//

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Record1(“AR”) 36, 109.) Before July 14, 2016, Yoon Wady was an authorized 

SNAP retailer. After Yoon Wady’s SNAP redemption triggered an alert on the 

Anti-Fraud Locator using EBT Retailer Transactions (“ALERT”) system for

trafficking, the FNS audited the store from October 2015 to March 2016. (Id. at

32.) During its review, the FNS analyzed Yoon Wady’s EBT transactions and 

observed multiple purchases from the same SNAP accounts within short time 

periods and in excessively large amounts. (Id. at 40, 90, 605–11.) On April 20, 

2016, FNS visited Yoon Wady and noted only one cash register, one SNAP 

terminal device, no conveyor belt, no optical scanner, one shopping basket, and 

no shopping carts. (Id. at 34.) The FNS also compared Yoon Wady to other 

stores in the neighborhood, including stores that allegedly sell comparable Asian 

food items. (Id. at 41.) 

Based on EBT transaction data as well as the store visit, FNS concluded 

that these patterns were consistent with trafficking, which warranted issuance of 

a charge letter in accordance with the program’s regulations. (Id. at 90–91.) On 

July 14, 2016, the FNS sent Plaintiffs the charge letter. (Id.) The letter identified 

two patterns of SNAP transaction activity indicative of trafficking: (1) multiple 

transactions from a single account in unusually short time frames; and (2) 

excessively large purchase transactions. (Id. at 93–104.) The letter cited to 64 

instances in which multiple transactions were made from the same SNAP 

accounts in unusually short time frames. (Id. at 93–96.) The letter also 

instructed Plaintiffs on how to request a civil money penalty in lieu of permanent 

disqualification. (Id. at 90–91.) Plaintiffs replied to the charge letter in writing, 

providing pictures, a stock list, invoices, customer affidavits, and various 

documentation including Yoon Wady’s 2015 tax documents. (Id. at 107–269.) 

 

1 On June 23, 2017, Defendant lodged with the Court the Certified Administrative Record by delivering a hard 

copy and a disk containing an electronic copy to the Clerk of the Court. (ECF No. 8.)

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The FNS ultimately determined that Plaintiffs’ evidence did not outweigh the 

evidence gathered during the investigation. (Id. at 286–87.) Because Plaintiffs 

did not submit evidence demonstrating Yoon Wady’s eligibility for a civil money 

penalty, FNS permanently disqualified Yoon Wady from SNAP. (Id.) 

On October 28, 2016, Plaintiffs appealed the FNS’s determination and 

requested administrative review. (Id. at 290.) They submitted a brief along with 

supporting materials, including more than a dozen affidavits by SNAP 

beneficiaries who shop at Yoon Wady. (Id. at 301–529.) On February 13, 2017, 

the FNS issued its final agency decision. (Id. at 598–619.) On March 16, 2017, 

Plaintiffs initiated this action against Defendant seeking a de novo review of the 

permanent disqualification. At this juncture, the parties have not engaged in 

discovery and Defendant has submitted the instant motion for summary judgment 

based on the Administrative Record. 

III. LEGAL STANDARDS

A. Summary Judgment Standard 

Summary judgment is appropriate under Rule 56 of the Federal Rules of 

Civil Procedure if the moving party demonstrates the absence of a genuine issue 

of material fact and entitlement to judgment as a matter of law. Celotex Corp. v. 

Catrett, 477 U.S. 317, 322 (1986). A fact is material when, under the governing 

substantive law, it could affect the outcome of the case. Anderson v. Liberty 

Lobby, Inc., 477 U.S. 242, 248 (1986); Freeman v. Arpaio, 125 F.3d 732, 735 

(9th Cir. 1997). A dispute as to a material fact is genuine if there is sufficient 

evidence for a reasonable jury to return a verdict for the nonmoving 

party. Anderson, 477 U.S. at 323 (1986).

 A party seeking summary judgment always bears the initial burden of 

establishing the absence of a genuine issue of material fact. Celotex, 477 U.S. 

at 323. The moving party can satisfy this burden in two ways: (1) by presenting 

evidence that negates an essential element of the nonmoving party’s case; or (2) 

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by demonstrating that the nonmoving party failed to establish an essential 

element of the nonmoving party’s case on which the nonmoving party bears the 

burden of proving at trial. Id. at 322-23. “Disputes over irrelevant or unnecessary 

facts will not preclude a grant of summary judgment.” T.W. Elec. Serv., Inc. v. 

Pacific Elec. Contractors Ass’n, 809 F.2d 626, 630 (9th Cir. 1987).

 Once the moving party establishes the absence of genuine issues of 

material fact, the burden shifts to the nonmoving party to demonstrate that a 

genuine issue of disputed fact remains. Celotex, 477 U.S. at 314. The 

nonmoving party cannot oppose a properly supported summary judgment motion 

by “rest[ing] on mere allegations or denials of his pleadings.” Anderson, 477 U.S. 

at 256. Rather, the nonmoving party must “go beyond the pleadings and by her 

own affidavits, or by ‘the depositions, answers to interrogatories, and admissions 

on file,’ designate ‘specific facts showing that there is a genuine issue for 

trial.’” Celotex, 477 U.S. at 324 (quoting Fed.R.Civ.P. 56(e)).

The court must view all inferences drawn from the underlying facts in the 

light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. 

Zenith Radio Corp., 475 U.S. 574, 587 (1986). “Credibility determinations, the 

weighing of evidence, and the drawing of legitimate inferences from the facts are 

jury functions, not those of a judge, [when] he [or she] is ruling on a motion for 

summary judgment.” Anderson, 477 U.S. at 255.

Federal Rule of Civil Procedure 56(d) affords a nonmoving party additional 

time to take discovery if the “nonmovant shows by affidavit or declaration that, for 

specified reasons, it cannot present facts essential to justify its opposition . . . .” 

Fed. R. Civ. P. 56(d). Ordinarily, “[w]here . . . a summary judgment motion is 

filed so early in the litigation, before a party has had any realistic opportunity to 

pursue discovery relating to its theory of the case, district courts should grant any 

Rule 56(d) motion fairly freely.” Burlington N. Santa Fe R.R. v. Assiniboine & 

Sioux Tribes of the Fort Peck Reservation, 323 F.3d 767, 773 (9th Cir. 2003). 

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B. Review of SNAP Program Disqualification 

A retailer may challenge the FNS’s final decision in federal court. 7 U.S.C. 

§ 2023(a)(13); Kim v. United States, 121 F.3d 1269, 1272 (9th Cir. 1997). The 

reviewing court will determine the validity of the FNS’s penalty in a “trial de novo.” 

7 U.S.C. § 2023(15). “A trial de novo is a trial which is not limited to the 

administrative record—the plaintiff may offer any relevant evidence available to 

support his case, whether or not it has been previously submitted to the agency.” 

Kim, 121 F.3d at 1272 (quoting Redmond v. United States, 507 F.2d 1007, 

1011–12 (5th Cir. 1975)). “Unlike the substantial evidence standard employed in 

reviewing determinations under the Administrative Procedure Act, 5 U.S.C. § 

500, et. seq., the trial de novo provision allows courts to look beyond the 

administrative record and reach its own factual and legal conclusions.” Kahin v. 

United States, 101 F. Supp. 2d 1299, 1303 (S.D. Cal. 2000) (internal citation

omitted). The retailer bears the burden of proving by a preponderance of the 

evidence that the violations did not occur. Plaid Pantry Stores, Inc. v. United 

States, 799 F.2d 560, 563 (9th Cir. 1986). 

The reviewing court ultimately determines two questions: “(1) Did the 

violation occur? and (2) Is the penalty valid?” Id. Even a single instance of 

trafficking requires the court to uphold a permanent disqualification. Kahin, 101 

F. Supp. 2d at 1303. If the store fails to satisfy this burden, then the court 

reviews the penalty to determine “whether the sanction is unwarranted in law or 

without justification in fact.” Id. (internal citation omitted). 

IV. DISCUSSION 

A. Whether Yoon Wady Engaged in Trafficking

Defendant argues that Plaintiffs cannot meet their burden in rebutting the 

agency’s final decision. Defendant submits the following evidence to 

demonstrate that Yoon Wady engaged in trafficking: “(1) multiple withdrawals 

from the same SNAP beneficiary EBT account in rapid succession; (2) 

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excessively large debits from SNAP beneficiary EBT accounts; (3) inadequate 

store infrastructure and inventory to support these large and rapid transactions; 

(4) SNAP redemptions exceeding Yoon Wady’s food purchases; and (5) a more 

than 50% reduction in SNAP EBT transactions after FNS placed Plaintiffs on 

notice that it had evidence that Yoon Wady was trafficking.” (Def.s Mot. for 

Summ. J. 6.) 

Plaintiffs, on the other hand, argue that based on the current state of the 

evidence, there are enough disputes of material of fact that must be resolved at 

trial. Moreover, because Plaintiffs are not limited to the administrative record, 

they have included a Rule 56(d) affidavit in their Opposition, seeking extensive 

discovery related to the ALERT system, an unredacted administrative record, 

information related to the households identified in the charging letter, and 

information related to all the stores that FNS used as comparisons. (Andrew 

Tapp Affidavit, Pl.s’ Opp’n, Ex. G, ECF No. 14–8.) 

At the outset, Plaintiffs challenge the FNS’s use of the ALERT system. The 

Court is not persuaded by these arguments because the ALERT system is 

merely used as a detection tool. (Pl.s’ Opp’n, Ex. C, 21:9–10.) Here, for 

example, after receiving the data, the FNS conducted an investigation to support 

its determination that Yoon Wady was trafficking. The Court also does not 

believe that further discovery related to the ALERT system would create a 

genuine issue of material fact as to the FNS’ use of data to detect suspicious 

behavior. Indeed, courts have upheld a store’s disqualification from SNAP based 

on irregular patterns in the store’s EBT data. See, e.g., Idias v. United States, 

359 F.3d 695, 698 (4th Cir. 2004) (“Congress expressly authorized the FNS to 

consider ‘evidence obtained through a transaction report under an electronic 

benefit system’ in disqualifying food stores for food stamp trafficking.” (quoting 7 

U.S.C. § 2021(a))); Young Choi, Inc. v. United States, 639 F. Supp. 2d 1169, 

1182 (D. Haw. 2009) (“The law is clear that FNS may base its finding of a 

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violation on analysis of EBT transaction reports or on-site store surveys.”). 

Nevertheless, the Court finds that Defendant’s evidence is not so 

undeniable as to dismiss the argument that additional evidence would assist

Plaintiffs in creating a genuine issue of material fact. See ANS Food Market v. 

United States, No. JKB-14-2071, 2015 WL 1880155, at *3–4 (D. Md. April 22, 

2015) (denying defendant’s motion for summary judgment and permitting further 

discovery because the evidence was not “undeniable” and plaintiff submitted a 

Rule 56(d) affidavit); see also Rodriguez Grocery & Deli v. United States, No. 

WDQ-10-1794, 2011 WL 1838290, at *5–6 (D. Md. May 12, 2011) (granting 

discovery despite strong evidence of trafficking because certain data used by the 

agency in making its determination remained within its exclusive control); but see 

AJS Petroleum, Inc. v. United States, No. L-11-1085, 2012 WL 683538, at *5 (D. 

Md. Mar. 1, 2012) (“Because additional discovery would not change the factual 

landscape in this case, an analysis under the summary judgment standard is 

appropriate.”). 

First, Plaintiffs dispute that multiple, rapid withdrawals from the same SNAP 

account demonstrate that Yoon Wady was trafficking. They argue that Yoon

Wady’s customers often make multiple purchases at the store, in large part 

because of its phone-in service. Customers utilizing this service call in their 

orders and once at the store often times decide to purchase more items. In their 

response to the charge letter, Plaintiffs offered this explanation for at least one 

household—Q026. (AR 110). Without access to data matching Yoon Wady’s 

customers to the underlying suspicious transactions, Plaintiffs cannot reasonably 

account for other instances. Indeed, some courts have recognized the value of 

obtaining this information in challenging the agency’s findings. See, e.g., 

Rodriguez Grocery & Deli, 2011 WL 1838290, at *5–6; Idias, 359 F.3d at 698 

(recognizing that the store had rebutted some of the Government’s evidence by 

introducing “affidavits from some of the customers whose transactions had been 

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flagged as questionable, each of whom denied ever having received cash in 

exchange for using an EBT card.”) 

Second, Defendant identified 415 EBT transactions during the six-month 

period of $45.59 or more. (AR 68–75, 610–11.) Plaintiffs argue that the large 

transactions are not abnormal because the store sells several items like fish and 

rice that Yoon Wady’s customers regularly purchase in bulk at the beginning of 

the month. Additionally, Plaintiffs submit that its customers primarily shop at 

Yoon Wady because it is the only Burmese/Karen speaking store within miles 

that caters to a specific immigrant refugee community. Plaintiffs submit affidavits 

in support of this contention. (See Pls.’ Opp’n Exs. D-F, ECF No. 14-5–14-7.) 

Defendant claims that there are other stores within the area that sell similar 

goods, but without the identity of those stores, Plaintiffs cannot fairly dispute that 

claim. 

Third, Plaintiffs challenge the claim that Yoon Wady’s infrastructure and

inventory cannot support these large and rapid transactions or that its SNAP 

redemptions exceed its food purchases. Defendants argue that Yoon Wady’s 

invoices demonstrate that it did not have the inventory to support the volume of 

SNAP redemptions during the review period. Plaintiffs, on the other hand, point 

to Yoon Wady’s 2015 tax return, which accounts for three months of the review 

period, to argue that the cost of goods sold is consistent with the gross receipts. 

Though, as Defendant notes, the tax return may not segregate the SNAP-eligible 

items from the ineligible items that Yoon Wady carries, the Court cannot weigh

the effectiveness of the tax return and must draw inferences in the light most 

favorable to Plaintiffs. See Anderson, 477 U.S. at 255; see also Brothers Food & 

Liquor, Inc. v. United States, 626 F. Supp. 2d 875, 881 (N.D. Ill. 2009). 

Lastly, Defendant in its reply argues that because Plaintiffs have not 

offered evidence or even attempted to dispute that Yoon Wady’s SNAP 

redemptions dropped dramatically after it was put on notice, the Court should 

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grant its motion. Based on the evidence that Plaintiffs have submitted and their 

request for discovery, the Court cannot conclude as a matter of law that Plaintiffs 

have failed to meet their burden based on this claim alone. The Court is not 

inclined to deprive Plaintiffs of the opportunity to develop their case, particularly 

when material evidence remains within Defendant’s exclusive control. 

V. CONCLUSION

For the reasons discussed above, Defendant’s motion for summary 

judgment (ECF No. 12) is DENIED without prejudice. Defendant may renew its 

motion relying on its present motion after completion of discovery. The matter is 

referred to Magistrate Judge Burkhardt to conduct a case management 

conference (“CMC”). Discovery shall be completed within 120 days of the CMC. 

The pretrial conference will be held on October 23, 2018 at 2:00 p.m. 

IT IS SO ORDERED. 

Dated: March 29, 2018

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