Court Opinion

ID: 2677114
Source: CourtListenerOpinion
Date Created: 2014-06-04 20:00:44.603873+00
Date Added: 2024-06-11T09:34:28.616771
License: Public Domain

UNITED STATES DISTRICT COURT
                            FOR THE DISTRICT OF COLUMBIA

ROMEO MORGAN,

            Plaintiff,

       v.
                                                            Civil Action No. 14-684 (CKK)
JAIME RAGAN,
USDA FNS SNAP

            Defendant.

                                  MEMORANDUM OPINION
                                      (June 4, 2014)

       Plaintiff Romeo Morgan has filed suit against Defendants Jaime Ragan and the U.S.

Department of Agriculture, Food and Nutrition Service, Supplemental Nutrition Assistance

Program, seeking review of the FNS’s Final Agency Decision sustaining a decision by FNS

Retailer Operations to withdraw the authorization of Morgan’s Seafood, owned by Plaintiff, to

participate as a retailer in the Supplemental Nutrition Assistance Program. Presently before the

Court is Plaintiff’s [2] Motion for an Emergency Stay, which seeks to stay this withdrawal.

Upon consideration of the pleadings 1, the relevant legal authorities, and the record at this point in

the proceedings, the Court finds that Plaintiff is unlikely to succeed on the merits of his claim

and has not made a sufficient showing of irreparable harm in the absence of a stay. Given these

considerations, the Court finds that the stay sought by Plaintiff is not warranted at this time and

Plaintiffs’ motion is DENIED.

       1
        Compl., ECF No. [1]; Pl.’s Mot. for Emergency Stay, ECF No. [2] (“Pl.’s Mot.”);
Admin. Record, ECF No. [8] (“AR”); Defs.’ Opp’n. to Pl.’s Mot. for Emergency Stay of
Administrative Action, ECF No. [9] (“Defs.’ Opp’n”); Pl.’s Ans. to Defs.’ Opp’n to Pl.’s Mot.,
ECF No. [12] (“Pl.’s Reply”).

                                                  1
                                         I. BACKGROUND

    A. Statutory Background

        Congress created the food stamp program in 1964 to “permit those households with low

incomes to receive a greater share of the Nation’s food abundance.” The Food Stamp Act of

1964, Pub. L. No. 88-525, § 2, 78 Stat. 703, 703. “Retail stores authorized to participate in the

program may accept food stamp benefits instead of cash for designated food items.” Affum v.

United States, 566 F.3d 1150, 1153 (D.C. Cir. 2009) (citing 7 U.S.C. § 2013(a).). “The stores

then redeem these benefits with the government for face value.” Id.                 In 2008, Congress

amended the Food Stamp Act, renaming it the Food and Nutrition Act and renaming the “food

stamp program” the “supplemental nutrition assistance program” or “SNAP.” Id.

        A business seeking approval as a “retail food store” under SNAP must comply with the

requirements of 7 U.S.C. § 2018. This provision authorizes the Secretary of Agriculture to issue

regulations governing the approval and reauthorization of retail food stores to participate in the

SNAP. 7 U.S.C. § 2018(a)(2). Pursuant to this statutory authority, the Secretary has issued the

regulation at issue here, 7 C.F.R. § 278.1. This provision states, in relevant part, that the Food

and Nutrition Service of the Department of Agriculture (“FNS”), “shall withdraw the

authorization of any firm authorized to participate in the program for any of the following

reasons: . . . (iii) The firm fails to meet the requirements for eligibility under Criterion A or B, as

specified in paragraph (b)(1)(i) of this section . . . .” 7 C.F.R. § 278.1(l)(1).

        Criterion A and B are standards governing the variety and quantity of food sold by a

particular retailer. In order to meet Criterion A, the store must offer “for sale, on a continuous

basis, a variety of qualifying foods in each of the four categories of staple foods as defined in §

271.2 of this chapter, including perishable foods in at least two of the categories.” Id. §

278.1(b)(1)(i)(A). See also id. § 278.1(b)(1)(ii) (explaining this definition in greater detail).

                                                   2
Criterion B is satisfied if “more than 50 percent of the total gross retail sales of the establishment

or route [are] in staple foods.” Id. § 278.1(b)(1)(i)(A). See also id. § 278.1(b)(1)(iii) (explaining

this definition in greater detail). As defined by 7 C.F.R. § 271.2, “[s]taple food means those food

items intended for home preparation and consumption in each of the following food categories:

meat, poultry, or fish; bread or cereals; vegetables or fruits; and dairy products.” Id. § 271.2.

       Another provision of 7 C.F.R. § 278.1 sets out “ineligible firms” for participation in the

SNAP, and explicitly qualifies Criterion A and B. This provision states:

       Ineligible firms under this paragraph include, but are not limited to, stores selling
       only accessory foods, including spices, candy, soft drinks, tea, or coffee; ice
       cream vendors selling solely ice cream; and specialty doughnut shops or bakeries
       not selling bread. In addition, firms that are considered to be restaurants, that is,
       firms that have more than 50 percent of their total gross retail sales in hot and/or
       cold prepared foods not intended for home preparation and consumption, shall
       not qualify for participation as retail food stores under Criterion A or B. This
       includes firms that primarily sell prepared foods that are consumed on the
       premises or sold for carryout. Such firms may qualify, however, under the
       special restaurant programs that serve the elderly, disabled, and homeless
       populations, as set forth in paragraph (d) of this section.

Id. § 278.1(b)(1)(iv) (emphasis added).

   B. Factual Background

       In March 2008, FNS authorized Morgan’s Seafood, an unincorporated business in

Washington, DC, to participate in the SNAP. AR 1-13. On June 14, 2013, Plaintiff, as the

owner of Morgan’s Seafood, completed an FNS-252-R reauthorization application in order to

continue his participation in the program. AR 51. As part of its review of this application and its

assessment of the continued eligibility of Morgan’s Seafood to participate in the SNAP, FNS

contract review officials conducted two separate store visits of Morgan’s Seafood. AR 14-50,

90-116. These visits occurred on November 7, 2013 and January 3, 2014. The November 7,

2013 review identified as issues “empty coolers” and “broken coolers” and provided the

following observations:

                                                  3
        1) Owner stated that his display cooler is broken, forcing him to store most of his
           seafood in the back coolers. The food used for making hot food was mixed []
           with the raw (as-is) seafood but the reviewer asked what is what. Prepared
           salads are also in the back coolers. The beef/meat/sausage in the storage
           cooler was for cooking only, per owner.
        2) The empty tank in photo #693 is of a tank that was full of lobsters that were
           stolen by burglars, per owner statement.
        3) Prices for the deli are not posted. Owner claims that he recently acquired the
           cooler and deli products but has not created a price list. The menu did not
           include sandwiches.
        4) The prepared cold salads and the yams are also for sale as-is or by themselves,
           per owner, if customers choose so. However, the cooked yams are on the
           menu and salads come as sides to hot dishes.

AR 15. The January 3, 2014 visit also noted “empty coolers” and “broken coolers” and offered

the following comments:

        Store did not have prices posted for meat/cheese. Owner stated that alcohol is not
        for sale, it’s for personal use even though it’s posted on the menu so I did not
        mark alcohol on the survey. Sandwiches are made to order.

AR 91. Both reviewers took a number of photographs of the interior of Morgan’s Seafood,

which have been included in the administrative record. AR 20-50, 96-116.

        By letter dated December 10, 2014 (but apparently issued January 10, 2014), the FNS

Retailer Operations Branch informed Plaintiff that the authorization of Morgan’s Seafood to

participate in the SNAP was being withdrawn. AR 119-121. The letter advised Plaintiff that

based on the two visits discussed above, FNS had concluded that Plaintiff’s business did not

meet the eligibility criteria for stores set forth in 7 C.F.R. § 278.1(b)(1). Id. The letter stated that

“[i]t is the determination of the Food and Nutrition Service that your firm is primarily a

Restaurant . . . Your firm does not meet the definition and requirements of a retail food store as

set forth in section 271.2 and 278.1(b)(1) of the SNAP regulations because more than 50 percent

of your firm’s total sales is in hot and/or cold prepared, ready-to-eat foods that are intended for

immediate consumption and require no additional preparation.” AR 119. Plaintiff requested an

                                                   4
administrative review of the withdrawal action by letter dated January 24, 2014. AR 122. FNS

granted this appeal of the Retailer Operations Branch decision, and implementation of the

withdrawal of Plaintiff’s SNAP authorization was held in abeyance pending completion of the

administrative appeal. AR 132.

       By letter dated February 10, 2014, Plaintiff provided a written response to the withdrawal

determination, stating that the FNS visits to his store “do not present a clear picture of my

inventory for three reasons.” AR 127.

       The first issue that may have been misleading is the fact that at the time of the
       visits my display case was not up and running. The display case would normally
       show a wide variety of seafood. It allows for a visual display of the inventory that
       is available for retail sale.

       The second reason is the unique nature of the seafood business. In order to be
       able to keep my reputation of providing quality fresh seafood[,] I choose not [to]
       maintain a large inventory of items that may or may not sell or that are extremely
       perishable such as Crabs, Shrimp, Oysters and Clams. My inventory must be
       replenished on a daily basis in order for the product to be acceptable to my
       customers.

       A third issue is the fact that my business is seasonal in nature. The bulk of my
       sales are in the summer. At the time of the visits it was late fall and the start of
       the holiday season. A large portion of my retail business comes from the sale of
       fresh crabs. Not only are they extremely perishable but they are difficult to obtain
       during the winter. There are times when due to availability I have no inventory of
       crabs. Even when crabs are available the prices are so high, due to limited supply,
       that I am unable to make a profit on them.

       An additional point for you to consider when evaluating my application is the fact
       that for many years Morgans Seafood has participated, without issue, in the food
       stamp program the store has provided its customers with quality, healthy
       nutritionally beneficial food choices in the inner city. If you were to deny
       Morgans Seafood from participating in the SNAP program my customers will
       have an additional financial burden of finding transporta[t]ion to other seafood
       retail outlets.

Id. On March 6, 2014, an FNS Administrative Review Officer issued a Final Agency Decision

concluding that there was “sufficient evidence to support a finding that the Retailer Operations

                                                5
Division . . . properly imposed the withdrawal of the authorization of Morgan’s Seafood . . . to

participate as a retailer in the Supplemental Nutrition Assistance Program (SNAP).” AR 131.

After summarizing Plaintiff’s objections as stated in his February 10, 2014 letter, the Decision

included the following analysis of Plaintiff’s appeal and the record compiled by FNS.

       The FNS onsite visit revealed that the establishment presents itself to the public as
       a restaurant serving hot and cold prepared ready-to-eat foods intended for
       immediate consumption or takeout requiring no additional preparation. There is a
       prominent menu board for prepared items, and store signage advertises prepared
       food items such as soul food, smoked ribs, beef and pork, and seafood meals. The
       limited food inventory onsite is located behind service counters and in the kitchen
       area. These foods appear to be used for the preparation of ready-to-eat meals as
       posted and custom made sandwiches. The restaurant has a countertop for food
       orders, and customer waiting for prepared orders. There are stools, table tops, and
       a counter area for eating in. The firm has signage for beer, and alcohol is visible
       in the photographs. There is a deli case with cheese and luncheon meat, and some
       prepared pies and cakes in single serve containers. The kitchen and food
       preparations area and equipment take up most of the space and are representative
       that this is a restaurant rather than a retail food store. The inventory indicated that
       there were no prices posted for meat/cheese and that sandwiches are made to
       order. A Food Establishment Inspection Report by the District of Columbia
       Department of Health submitted by the retailer indicated that the firm was out of
       compliance with a number of rating criteria. The tax returns list the business
       name as Morgan’s Seafood and Bar and Grill and the business is described as
       food and drink service.

       The January 3, 2014 inventory conducted by the FNS representative indicated that
       the business lacked sufficient staple foods and did not meet Criteria A. Retailer
       Operations determined that Appellant was ineligible for authorization under
       Criterion B per 7 CFR § 278.1(b)(1)(iii) since staple food sales must comprise
       more than 50 percent of a firm’s annual gross retail sales. More importantly,
       Retailer Operations determined that not only does this business not meet Criteria
       A or B for authorization as a retail food store, it does not meet the very definition
       of a retail food store as set forth in sections 7 CFR § 271.2 and § 278.1(b)(1) cited
       herein. Retailer Operations determined that the business had more than 50
       percent of its total gross retail sales in hot and/or cold prepared, ready-to-eat foods
       that are intended for immediate consumption onsite or for carry-out, and require
       no additional preparation, and by definition is not eligible for SNAP participation
       as retail food store.

AR 134.    Based on this determination, the Decision advised Plaintiff that the decision to

withdraw authorization for Morgan’s Seafood to participate as a retailer in the SNAP was

                                                 6
sustained. AR 135. Consistent with 7 C.F.R. § 278.1(k)(2), the Decision advised Plaintiff that

he was ineligible to reapply for participation in the SNAP for a minimum period of six months

from the effective date of withdrawal. 2 AR 135.

       The Decision further advised Plaintiff of 7 U.S.C. § 2023 and 7 C.F.R. § 279.7, the

provisions governing judicial review of the denial of his appeal. Id. The Decision stated, “if a

judicial review is desired, the Complaint, naming the United States as the defendant, must be

filed in the U.S. District Court for the district in which the Appellant’s owner(s) reside or are

engaged in business . . . If any Complaint is filed, it must be filed within thirty (30) days of

receipt of this Decision.” Id. Shipping records included in the administrative record indicate

that Plaintiff received the Decision on March 10, 2014. AR 136.

   C. Procedural Background

       Plaintiff filed suit in this Court on April 23, 2014 arguing that “Defendant improperly

denied Plaintiff an authorization to participate in the Department of Agriculture’s SNAP program

[sic] and its decision was arbitrary and improper” as “Plaintiff complied with 7 CFR

278.1(b)(1)(iii) and other CFR provisions.” Compl. ¶¶ 6-7. The following day, he filed the

present Motion for an Emergency Stay, stating that if he remained unable to participate in the

SNAP, Morgan’s Seafood would be forced out of business. Pl.’s Mot. at 1. Plaintiff seeks a stay

of the withdrawal of his authorization to participate in the SNAP during the pendency of these

proceedings.

       On April 29, 2014, the Court held an on-the-record telephonic hearing with Plaintiff and

counsel for Defendants. During this conference call, counsel for Defendants expressed concern

that Plaintiff had filed his suit more than thirty days after Plaintiff’s receipt of the FNS
       2
          Because the effective date of withdrawal was held in abeyance pending the resolution of
Plaintiff’s administrative appeal, AR 132, the Court understands this six-month period to run
from March 6, 2014, barring Plaintiff from reapplying until September 6, 2014.

                                               7
Administrative Review Officer’s Final Agency Decision.            Plaintiff responded that he had

actually filed suit within the thirty day time frame but that the Clerk of the Court had rejected his

initial complaint due to a filing defect. This Court subsequently conferred with the Clerk of the

Court, which provided evidence to support Plaintiff’s explanation. See Order, ECF No. [15].

Based on the records of the Clerk of the Court, Plaintiff attempted to file an identical complaint

on behalf of himself and Morgan’s Seafood against the United States (rather than the current

Defendants) on April 9, 2014. 3 By Order issued April 14, 2014, Chief Judge Richard W.

Roberts returned the Complaint to Plaintiff as deficient, advising Plaintiff that he could not “file

papers to represent an entity other than [himself] if [he is] not an active member of the bar of this

Court.” Abiding by Chief Judge Roberts’ instructions, Plaintiff omitted Morgan’s Seafood from

his revised complaint, which he filed on April 23, 2014. 4

       Following the schedule set out during the April 29, 2014 telephonic hearing and

memorialized in the [3] Order issued the same day, Defendants filed the administrative record

and the accompanying Declaration of Completeness on May 7, 2014, Defendants filed their

Opposition to Plaintiff’s Motion for an Emergency Stay on May 9, 2014, and Plaintiff filed his

       3
         Plaintiff’s initial Complaint correctly named the United States as Defendant. By its
June 2, 2014 [14] Order, the Court required Plaintiff to file an Amended Complaint by June 16,
2014. This Amended Complaint should also re-caption this case to name the United States as
Defendant.
       4
          Although Defendants again raise the argument that Plaintiff’s Complaint was untimely
in their Opposition, this brief was filed without the benefit of the documentation from the Clerk’s
Office. See Defs.’ Opp’n at 12 n. 2 (“Defendants understand that Morgan represented on the
telephonic conference with Court that he may have correspondence from the Clerk’s Office to
substantiate his claim that he attempted to file the complaint on April 9, 2014; however,
Defendants do not presently have a copy of any such correspondence.”). By separate Order
issued this day, the Court places the documents received from the Clerk’s Office on the docket.
See Order, ECF No. [15]. Accordingly, the Court considers this argument addressed for
purposes of this motion. To the extent Defendants continue to press this argument in spite of this
documentation, they may do so in subsequent briefing in this case.

                                                 8
Reply in support of the Motion on May 30, 2014. Accordingly, the motion is now ripe for

review. 5

                                      II. LEGAL STANDARD

        Pursuant to 7 U.S.C. § 2023(a)(17), “[d]uring the pendency of . . . judicial review, or any

appeal therefrom, the administrative action under review shall be and remain in full force and

effect, unless on application to the court on not less than ten days’ notice, and after hearing

thereon and a consideration by the court of the applicant’s likelihood of prevailing on the merits

and of irreparable injury, the court temporarily stays such administrative action pending

disposition of such trial or appeal.” 6

        5
          On May 30, 2014, Plaintiff also filed two separate motions, which the Court resolved by
its June 2, 2014 [14] Order. First, the Court granted Plaintiff’s [11] Motion to Amend Complaint
as Plaintiff was entitled to amend his complaint once as a matter of course pursuant to Federal
Rule of Civil Procedure 15(a)(1). Second, the Court denied without prejudice Plaintiff’s [13]
Motion to Compel for failure to comply with Local Civil Rule 7(m). As stated in the Court’s
June 2, 2014 Order, the resolution of these motions has no effect on the disposition of Plaintiff’s
present [2] Motion for an Emergency Stay.
        6
          As noted, on April 29, 2014, the Court held an on-the-record telephonic hearing on
Plaintiff’s motion. However, it is unclear whether the statute requires such an oral hearing.
Other district courts to consider stay motions brought pursuant to 7 U.S.C. § 2023(a)(17) have
concluded that the statute’s use of “hearing” does not mandate an oral hearing before ruling on
the motion to stay. See, e.g., Phany Poeng v. United States, 167 F.Supp.2d 1136, 1138 (S.D.
Cal. 2001) (“The Court decides the matter on the papers submitted and without oral argument
pursuant to Civil Local Rule 7.1(d.1).”); Sheikh’s, Inc. v. United States, No. 10-cv-62004, 2010
WL 5253531, at *3 (S.D. Fla. Dec. 15, 2010) (“the Court will exercise its discretion under Local
Rule 7.1(b) to deny Plaintiff’s request for a hearing”). In addition, other subsections of 7 U.S.C.
§ 2023 – in contrast to 7 U.S.C. § 2023(a)(17) – use the more particular phrase “oral hearing.”
See 7 U.S.C. § 2023(a)(10) (“Such summary procedure need not include an oral hearing.”). The
use of the unmodified term “hearing” within the same provision suggests that an oral hearing is
not required under 7 U.S.C. § 2023(a)(17). See Barnhart v. Sigmon Coal Co., 534 U.S. 438, 452
(2002) (“[W]hen Congress includes particular language in one section of a statute but omits it in
another section of the same Act, it is generally presumed that Congress acts intentionally and
purposely in the disparate inclusion or exclusion.”) (internal citations and quotation marks
omitted).

                                                 9
                                        III. DISCUSSION

   A. Likelihood of Success on the Merits

       In assessing Plaintiff’s likelihood of prevailing on the merits, the Court looks to the

standard applicable in ruling on Plaintiff’s claim. Pursuant to 7 U.S.C. § 2023(a)(15), “[t]he suit

in the United States district court or State court shall be a trial de novo by the court in which the

court shall determine the validity of the questioned administrative action in issue . . . .” “If the

court determines that such administrative action is invalid, it shall enter such judgment or order

as it determines is in accordance with the law and the evidence.” Id. § 2023(a)(16).

       “ ‘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.’” Affum, 566 F.3d at 1160 (quoting Kim v. United States,

121 F.3d 1269, 1272 (9th Cir. 1997)). “The trial de novo provision of the Act ‘is clearly broader

than the review standard provided for under the Administrative Procedure Act. It requires the

district court to examine the entire range of issues raised, and not merely to determine whether

the administrative findings are supported by substantial evidence.’” Id. (quoting Modica v.

United States, 518 F.2d 374, 376 (5th Cir. 1975). In undertaking this inquiry, the burden of

proof is “placed upon the store owner to prove by a preponderance of the evidence that the

violations did not occur.” Kim, 121 F.3d at 1272.

       However, although the validity of the underlying violation is reviewed de novo, “judicial

review of the agency’s choice of penalty is focused on whether the Secretary has abused his

discretion.” Affum, 566 F.3d at 1162. See also id. at 1160-61 (“considering the statutory scheme

as a whole, we think that Congress meant to impose different standards of review for a judicial

action challenging the agency’s finding of a violation as opposed to a judicial action challenging

the Secretary’s choice of penalty.”); Lawrence v. United States, 693 F.2d 274, 276 (2d Cir. 1982)

                                                 10
(where plaintiff conceded the fact of the violations, “[t]he sole issue before the District Court . . .

was whether the FNS imposition of a one-year suspension as a penalty was arbitrary and

capricious”). “Under the applicable standard of review, the Secretary abuses his discretion in his

choice of penalty if his decision is either ‘unwarranted in law’ or ‘without justification in fact,’

or is ‘arbitrary’ or ‘capricious.’” Affum, 556 F.3d at 1161 (internal citations omitted).

       Here, Plaintiff has sought an emergency stay, arguing that “his business sufficiently

meets all applicable agency regulations.”        Compl. ¶ 5.      Accordingly, because Plaintiff is

challenging the existence of a violation here, the Court reviews the FNS conclusion that Plaintiff

is not eligible for the SNAP de novo. 7 As noted, Plaintiff is not limited to relying on the

administrative record in pursuing his claim. However, in his filings, Plaintiff has not provided

the Court with any materials outside the administrative record in support of his claim. Rather, he

relies on the materials in the administrative record to show that the FNS has wrongfully

concluded that Morgan’s Seafood is ineligible for participation in the SNAP pursuant to 7 C.F.R.

§ 278.1(b)(1).

       In making this claim, Plaintiff relies primarily on a series of photographs of the interior of

Morgan’s Seafood which are contained in the administrative record.               These photographs,

apparently taken by the two FNS reviewers who visited Morgan’s Seafood on November 7, 2013

       7
          Plaintiff does not clearly take issue with Defendants’ choice of penalty, and any review
of this decision is only for abuse of discretion. To the extent Plaintiff also challenges the choice
of his penalty here – withdrawal of eligibility and a six-month bar on reapplication – the Court
notes that these penalties are set out in the applicable regulations and their application here does
not constitute action that is arbitrary or capricious or “unwarranted in law” or “without
justification in fact.” See 7 C.F.R. § 278.1(l)(1) (FNS shall withdraw the authorization of any
firm authorized to participate in the program . . . [if] (iii) The firm fails to meet the requirements
for eligibility under Criterion A or B, as specified in paragraph (b)(1)(i) of this section”); id. at
278.1(k)(2) (“Any firm that has been denied authorization on these bases shall not be eligible to
submit a new application for authorization in the program for a minimum period of six months
from the effective date of the denial.”).

                                                  11
and January 3, 2014, respectively, show a series of food products contained in Plaintiff’s store.

AR 20-50, 96-116. Plaintiff points to these pictures as evidence that Morgan’s Seafood is

operating as a “retail establishment” selling fresh seafood, and not as a restaurant. See Pl.’s

Reply at 2 (“If Mr. Morgan is not operating as a retail establishment what are pictures A.R. 21,

A.R. 22, A.R. 23, A.R. 24, A.R. 25, A.R. 26, A.R. 28, A.R. 29, A.R. 31, A.R. 33, A.R. 34, A.R.

36, A.R. 37, A.R. 38, A.R. 39, A.R. 40, A.R. 41, A.R. 42, A.R. 43, A.R. 44, A.R. 45, A.R. 48,

A.R. 49, Clearly shows retail items.”); id. (“Morgan has clearly shown according to their pictures

which are listed in #5 which shows unprepared foods in his establishment”).

       Yet these photographs do not provide the clear evidence Plaintiff hopes.      Importantly,

Plaintiff does not clarify which of these photographs show items for direct sale to consumers and

which, by contrast, show items used in the preparation of meals for carryout. AR 22, AR 32, and

AR 39, three of the photographs cited by Plaintiff, show the menu board for Morgan’s Seafood.

Other photographs in the administrative record also show this menu board from various angles.

See AR 98, 100, 102, 105, 106, 107, 113, 115, 116. This menu, as noted by the FNS Decision,

lists a series of carryout options in the categories “Soul Food”, “Sides” and “Dinners” and

“Combinations.” The menu options in these categories include, among many others, “baked

chicken”, “rib sandwich”, “pork chop”, “fried mussels” and “fried okra.” AR 113; see also AR

134 (“[T]he establishment presents itself to the public as a restaurant serving hot and cold

prepared ready-to-eat foods intended for immediate consumption or takeout requiring no

additional preparation. There is a prominent menu board for prepared items, and store signage

advertises food items such as soul food, smoked ribs, beef and pork, and seafood meals.”). The

photographs show other indicia of a carryout business, such as condiments and packaging for

take-out meals. AR 105. Although the photographs cited by Plaintiff show a series of food

                                               12
products – including bread, cheese, vegetables, and various seafood – he provides no evidence to

show that these are anything but ingredients and inventory used in preparing the meals for

customers listed on the menu board. The Court is willing to accept that some of the food items

in these photos may be for sale directly to consumers without preparation. Indeed, AR 36 shows

several boxes of cereal stacked atop a cooler, apparently for sale to consumers. Moreover, there

appears to be no dispute that at least some of Plaintiff’s business comes from the direct sale of

fresh seafood.   However, Plaintiff fails to define the scope of his sale of staple foods in

comparison to his sale of prepared foods.      In light of the menu board and other indicia that

Morgan’s Seafood operates at least in part as a restaurant, Plaintiff’s blanket statement that all of

the photographs show “retail items” is simply implausible. These photographs do not provide

sufficient evidence that Plaintiff complies with Criterion A or B, or that Plaintiff is not a

“restaurant” within the meaning of 7 C.F.R. § 278.1(b)(1)(iv). Without further evidence, they do

not show that (a) Plaintiff offers for sale foods in each of four categories of staple food,

including perishable foods in at least two of the categories, or (b) more than 50 percent of

Plaintiff’s total gross retail sales are in staple foods.      See 7 C.F.R. § 278.1(b)(1)(i)(A).

Furthermore, they do not undermine the conclusion that more than 50 percent of Plaintiff’s total

gross retail sales are in hot and/or cold prepared foods not intended for home preparation and

consumption, rendering him an ineligible restaurant under 7 C.F.R. § 278.1(b)(1)(iv). While

additional explanation may render these photographs relevant in applying the standards 7 C.F.R.

§ 278.1, standing alone, they are insufficient to show a likelihood of success.

       Plaintiff’s related arguments fail for similar reasons.       Plaintiff points to the FNS’

reviewers’ photographs of his coolers.       Because these coolers (which the Court notes are

partially empty) appear to contain seafood, Plaintiff contends that he has established his seafood

                                                 13
inventory. See Pl.’s Reply at 1 (“According to pages A.R. 21, A.R. 24, A.R. 28, A.R. 41, A.R.

43, and A.R. 45, clearly shows refrigeration in working order on all fresh seafood inside are very

perishable and would have spoiled, and if the coolers were empty it clearly shows inventory.”).

Yet, again, the Court has no proof from Plaintiff that these materials, along with the other food

products shown in these photographs, were for direct sale to customers, and not simply

ingredients used in preparing food for carryout. The Court is thus left guessing as to what

percentage of Plaintiff’s business comes from sale of staple foods and what percentage comes

from sale of carryout meals. In addition, to the extent Plaintiff is arguing that the empty coolers

are indicative of his inventory (apparently because he has sold whatever was in the coolers), he

goes too far. The Court is unpersuaded, in the absence of additional evidence such as receipts

and inventory records, that an empty cooler indicates that Plaintiff has sold out whatever supply

of fresh seafood he offered for direct sale to customers on a particular day.

       Plaintiff also argues that the FNS reviewers’ depiction of his store’s layout, contained at

AR 19, “clearly does not show any hot food steam table with food ready to be served.” Pl.’s

Reply at 1; see also id. at 2 (“nor does their drawing show on page A.R. 19 of equipment

showing consistent hot foods.”). The Court is somewhat unclear as to this objection, but notes

that the reviewer’s sketch of the layout of Morgan’s Seafood at AR 19 does say “hot food” in its

description of the area behind several coolers in Plaintiff’s store. Photographs displaying this

area show what appears to be a grill or stove, although not clearly. AR 32, 105. In addition,

Plaintiff’s 2011 tax return lists business expenses associated with “stoves.” AR 56. In any case,

if Plaintiff is arguing that he does not actually prepare hot food, as he lacks equipment consistent

with preparation of hot food, his argument goes nowhere. First, the menu board depicted in

various photographs would appear to directly contradict Plaintiff’s claim, as it offers for sale

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various items that are typically of the hot food prepared variety, such as “baked chicken”, “rib

sandwich”, “pork chop”, “fried mussels” and “fried okra.” Second, the definition of “restaurant”

in 7 C.F.R. § 278.1 is not limited to firms selling hot prepared foods.               See 7 C.F.R. §

278.1(b)(1)(iv) (“firms that are considered to be restaurants, that is, firms that have more than 50

percent of their total gross retail sales in hot and/or cold prepared foods not intended for home

preparation and consumption, shall not qualify for participation as retail food stores under

Criterion A or B.”) (emphasis added).

       Plaintiff’s remaining arguments are unpersuasive in showing that he meets Criterion A or

B or that he is not a “restaurant” pursuant to 7 C.F.R. § 278.1. First, Plaintiff points to a

photograph of the exterior of his store, and notes that the signage for the business reads

“Morgan’s Seafood” and not “Morgan’s Seafood Restaurant.” Pl.’s Reply at 1 (citing AR 20).

Yet the mere fact that Plaintiff does not explicitly call his firm a restaurant is not conclusive for

purposes of applying the restaurant definition in 7 C.F.R. § 278.1(b)(1)(iv). Moreover, it bears

noting, that in his tax returns, Plaintiff has held out his business as a restaurant, listing his

business name as “Morgan Seafood Bar and Grill.” AR 55. Second, as an additional argument

for the stay, Plaintiff states, “[o]n page 8 when speaking with the inspector [I] told them that [I]

drink more alcohol than [I] sell, not that I do not sell alcohol, and at the time of re-certifying [I]

was not selling alcohol.” Pl.’s Reply at 1. This objection is immaterial to Plaintiff’s claim.

Although mentioned in the FNS Decision, AR 134, the sale of alcohol was not a basis for the

withdrawal of Plaintiff’s authorization to participate in the SNAP. Accordingly, whether or not

Plaintiff sold alcohol is irrelevant to Plaintiff’s likelihood of success on the merits.

       The administrative record contains a factual record developed during two site visits to

Morgan’s Seafood. Based on these visits, FNS determined that Morgan’s Seafood did not meet

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Criterion A or B and was operating as a restaurant in violation of 7 C.F.R. § 278.1. Reviewing

the materials in the administrative record de novo, the Court does not find clear evidence that

Plaintiff meets the necessary requirements. Moreover, at this point in the litigation, Plaintiff has

provided nothing outside the administrative record to disturb this conclusion.           His present

showing fails to satisfy his burden “to prove by a preponderance of the evidence that the

violations did not occur.” Kim, 121 F.3d at 1272. While Plaintiff may ultimately be able to

provide additional evidence in support of his claim, at this point in the litigation, he has failed to

establish a likelihood of success on the merits.

   B. Irreparable Injury

       The Court’s conclusion that Plaintiff has failed to show a likelihood of success on the

merits is sufficient to deny his motion. See Sheikh’s, Inc., 2010 WL 5253531, at *2 (“Even

though Plaintiff will suffer irreparable harm absent a stay, the Court cannot grant the stay unless

Plaintiff also demonstrates its likely success on the merits.”). Nevertheless, Plaintiff’s failure to

demonstrate an irreparable injury provides an additional reason to deny his request for a stay.

       As other courts have held, “[l]osing a substantial percentage of a store’s business,

especially when coupled with the closing of the store, is enough to constitute irreparable harm.”

Id. at * 2. See also Phany Poeng, 167 F.Supp.2d at 1143 (“The majority of district courts

addressing this issue have concluded that a loss of at least thirty percent of a plaintiff’s business

can constitute irreparable harm.”).     Here, Plaintiff contends that the withdrawal of SNAP

authorization “greatly impacts [his] business because this is 67% of [his] sales” and he further

alleges that “these actions will put me out of business.” Pl.’s Mot. at 1. Yet Plaintiff provides no

proof for these statements beyond his bare allegations. To be sure, he states in his reply that

“Morgan’s can show disparity of sales since the loss of SNAP with bank statements” and also

states elsewhere in the reply “Here are copies of bank statements from last year and this years

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sales.” Pl.’s Reply at 1, 2. Yet Plaintiff never actually provides these bank statements, or for

that matter, any other documentation of the effect on his business from Defendants’ withdrawal

of his SNAP authorization. Without any evidence, the Court is unable to find irreparable harm.

See Phany Poeng, 167 F.Supp.2d at 1143 (“Plaintiff herein has not established, via objective and

reasonable documentary evidence, that Plaintiff will necessarily lose fifty percent of his business

while barred from the food stamp program.”); Howard v. United States, No. 3:13-cv-1301, 2013

WL 4046370, at *4 (N.D. Ohio, Aug. 7, 2013) (looking to “financial summary documents

provided to the Court” in assessing irreparable harm); Alkabsh v. United States, 733 F.Supp.2d

929 (W.D. Tenn. 2010) (“there must be a likelihood that irreparable harm will occur.

Speculative injury is not sufficient; there must be more than unfounded fear on the part of the

applicant.”) (quoting 11A CHARLES A. WRIGHT       ET AL.,   FEDERAL PRACTICE   AND   PROCEDURE §

2948.1 (2d ed. 1995)). Plaintiff’s conclusory allegations, in the absence of at least some

evidence, are insufficient to show irreparable harm, and provide an additional reason to deny his

request for an emergency stay.

                                      IV. CONCLUSION

       For the foregoing reasons, the Court concludes that Plaintiff is not entitled to a stay

pursuant to 7 U.S.C. § 2023(a)(17), as he has not, on the present filings, established a likelihood

of success on the merits or made a showing of irreparable injury in the absence of relief.

Accordingly, Plaintiff’s [2] Motion for an Emergency Stay is DENIED. An appropriate Order

accompanies this Memorandum Opinion.

Dated: June 4, 2014

                                                                  /s/
                                                             COLLEEN KOLLAR-KOTELLY
                                                             United States District Judge

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