COLLEEN KOLLAR-KOTELLY, United States District Judge
Plaintiff Romeo Morgan has filed suit against Defendants Jaime Ragan and the
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(1)(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). 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
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:
Id. § 278.1(b)(1)(iv) (emphasis added).
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:
AR 15. The January 3, 2014 visit also noted "empty coolers" and "broken coolers" and offered the following comments:
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 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.
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 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
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 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.
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.
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.
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.
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,
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."
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
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) (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, 566 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.
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 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
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 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
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 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
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 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.
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 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
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.
