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Yennes Food Mart v. United States

United States District Court, W.D. Kentucky, Louisville

March 14, 2018



          Charles R. Simpson III, Senior Judge

         This matter is before the court for consideration of the motions of plaintiff Yennes Food Mart (“YFM”) and of defendant United States of America, United States Department of Agriculture, Food and Nutrition Service (“United States”) for summary judgment. DNs 15, 16. The United States has also moved to strike YFM’s “Resply [sic] to defendant’s motion for summary judgment.” DN 18. We will address the motion to strike first.

         The parties agreed to the deadlines of May 30, 2017 for the filing of dispositive motions, June 27, 2017 for responses to those motions, and July 19, 2017 for replies to the motions. The United States filed a motion for summary judgment on May 30th. DN 15. Instead of filing a response by the deadline, YFM filed its own summary judgment motion (DN 16) on June 27, 2017, twenty-seven days after the deadline and without an accompanying motion for leave to file the motion out of time. It did not file a timely response to the United States’ motion. Instead, it filed a “resply [sic] to defendant’s motion for summary judgment” (DN 17) on July 17th. This filing is clearly a response to the United States’ motion. It, too, was filed well out of time and without an accompanying motion for leave to file late. The United States filed a response to YFM’s motion for summary judgment noting that it was filed out of time without leave of court to do so. DN 19. It also filed a motion to strike the untimely and unauthorized response to its motion. DN 18.

         Not only did YFM fail to comply with the agreed deadlines and filed out-of-time pleadings without seeking leave of court to do so, but it simply chose not to respond to the motion to strike. The present posture of the matter might thus warrant the striking of YFM’s filings, and consideration of the motion of the United States as unopposed, in light of its decision to ignore the motion to strike and to continue to exhibit complete disregard for the order of this court establishing the deadlines in issue. Orders of the court are to be respected.

         However, the court, in its discretion, will deny the motion to strike YFM’s response (ne Resply) and will also consider its motion for summary judgment, in order to afford a full and fair review of the agency’s decision.

         This matter comes before the court for a de novo review of the final agency decision of the U.S. Department of Agriculture, Food and Nutrition Service (“USDA”) upholding the charge of trafficking in SNAP benefits and permanently disqualifying YFM from participating in the SNAP program.[1]

         Hussein Yennes (“Yennes”), sole owner and officer of Yennes Market, Inc., was notified of the trafficking charge against his store, YFM, by letter dated May 23, 2016. He responded by letter dated May 30, 2016 and by telephone June 1, 2016.[2] The USDA considered the explanations offered, and responded by letter dated June 6, 2016 concluding that trafficking occurred at YFM and informing Yennes that the determination would become final unless he submitted a timely request for review. By letter dated June 16, 2016, attorney Paul Hobbs requested a review on behalf of Yennes and YFM. The USDA acknowledged the request and indicated that Yennes must file support for his explanation of the store transaction activity within twenty-one days of receipt of the acknowledgment. Attorney Hobbs filed a written response and a number of items of documentation. The USDA conducted a review of the response and documentation and determined that Yennes did not provide sufficient evidence to refute the allegations. Yennes was provided a copy of the August 31, 2016 final agency decision which concluded that “based on a review of all of the evidence in this case, by a preponderance of the evidence, it is more likely true than not true that program violations did occur as charged by Retail Operations. Based on the discussion herein, the decision to impose a permanent disqualification against [YFM] is sustained.” DN 20[3], PageID #556. Yennes was advised of his right to seek judicial review. Id. This action followed.

         The matter is now before the court on motion of the United States for summary judgment. An aggrieved retailer bears the burden of proving by a preponderance of the evidence that the USDA’s determination is invalid. Warren v. United States, 932 F.2d 582, 586 (6th Cir. 1991). Where he fails to affirmatively establish that a genuine issue of fact exists material to this burden, entry of summary judgment is proper. See McClain’s Market v. U.S., 214 Fed.App’x. 502, 505 (6th Cir. 2006), citing Kahin v. United States, 101 F.Supp.2d 1299, 1303 (S.D.Cal. 2000)(to survive summary judgment, a plaintiff in a Food Stamp Program[4] disqualification case must raise material issues of fact as to each alleged violation). The well-established standard for summary judgment applies.

         Before granting a motion for summary judgment, the Court must find that “there is no genuine issue of material fact such that the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “[W]here the moving party has the burden-the plaintiff on a claim for relief or defendant on an affirmative defense-his showing must be sufficient for the court to hold that no reasonable trier of fact could find other than for the moving party.” Calderone v. United States, 799 F.2d 254, 259 (6th Cir. 1986) (internal quotations and emphasis omitted).

         The Court must view the evidence in a light most favorable to the non-moving party. Scott v. Harris, 550 U.S. 372, 378 (2007). However, the non-moving party “must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The non-moving party must show that a genuine factual issue exists by “citing to particular parts of materials in the record” or by “showing that the materials cited do not establish the absence ... of a genuine dispute[.]” Fed. R. Civ. P. 56(c)(1). “The mere existence of a scintilla of evidence in support of the [non-moving party’s] position will be insufficient; there must be evidence on which the jury could reasonably find for the [non-moving party].” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).

         When both parties move for summary judgment, this Court “must evaluate each motion on its merits and view all facts and inference in the light most favorable to the nonmoving party.” Westfield Ins. Co. v. Tech Dry, Inc., 336 F.3d 503, 506 (6th Cir. 2003).

         The following underlying facts are not in dispute.

         Hussein Yennes has owned Yennes Food Mart for approximately twelve years. It is a small grocery store located in the lower level of the J.O. Blanton House in downtown Louisville, Kentucky, providing housing primarily to low income tenants. The store is approximately 750 square feet with no exterior entrance or outside signage. The store visit report documented, and the photographs confirm, that there were approximately five handheld shopping baskets, and no shopping carts were visible. Yennes states that the store does have shopping carts which are kept in a closet due to constraints on space. There was one point of sale (“POS”) device, one register, and no optical scanner. The checkout area consisted of a 2.5’ x 4’ counter. YFM carried some staple foods, fresh produce, refrigerated or frozen meat and dairy items, and accessory food items.[5] The store was poorly lit, there were expired and outdated foods, and empty shelving. The store also sold a number of SNAP-ineligible items including tobacco, household goods, shirts, cleaning supplies, charcoal, health and beauty items, and paper products. It offered no expensive food items, bulk or specialty items for sale. The store does not sell alcoholic beverages.

         YFM became an authorized SNAP firm[6] in 2004. SNAP benefits are provided to eligible households through the Electronic Benefit Transfer (“EBT”) card system. The function of the SNAP program is “to promote the general welfare, to safeguard the health and well-being of the Nation’s population by raising the levels of nutrition among low-income households.” 7 U.S.C. § 2011. SNAP firm owners must certify that they understand and will comply with the program regulations. 7 U.S.C. § 2021(a) and (b)(3)(B), and 7 C.F.R. § 278.6(a) establish permanent disqualification as the penalty for the first instance of trafficking in SNAP benefits.

         Trafficking means:

(1) The buying, selling, stealing, or otherwise effecting an exchange of SNAP benefits issued and accessed via Electronic Benefit Transfer (EBT) cards, card numbers and personal identification numbers (PINs), or by manual voucher and signature, for cash or consideration other than eligible food, either directly, indirectly, in complicity or collusion with others, or acting alone;

7 C.F.R. § 271.2. 7 U.S.C. § 2023 provides that “If the store…feels aggrieved by such final determination, it may obtain judicial review by filing a complaint against the United States for the district in which it resides or is engaged in business…”

         The Food and Nutrition Service (“FNS”) of the USDA administers the SNAP. 7 CFR 271.3. The USDA has determined that “most trafficking occurs in smaller retail food stores…” H.R. 104-651, at 68-69 (June 27, 1996) reprinted in 1996 U.S.C.C.A.N. 2183, 2201. The FNS monitors store activity through a computer program known as ALERT.[7] ALERT identifies irregular or unusual patterns of transactions that may indicate trafficking activity.

         YFM’s transactions processed through the EBT system triggered ALERT in early 2016 to patterns consistent with possible trafficking violations. FNS then opened a file to further investigate the activity. FNS performed an analysis of SNAP EBT transaction data from August 2015 through April 2016, an apparently arbitrarily chosen period for review of a store’s transaction data. FNS found two patterns which were indicative of trafficking: (1) multiple transactions made from individual benefit accounts within unusually short time frames, and (2) excessively large purchase transactions made from recipient accounts. On May 13, 2016 an FNS investigator made a store visit which resulted in the Store Visit Report and the observations about the premises which were set forth earlier herein.

         The Summary of Evidence in the ALERT Case Analysis Document[8] states that:

Multiple withdrawals were made from the account of a single SNAP household within unusually short time frames. For the review period, there are 79 sets of violations listed completed by 24 different households. All of the multiple purchases from individual benefit accounts occurred within a 24 hour time period. The Store Visit Report does not indicate any compelling reason for customers to consider Yennes Food Mart a first choice destination to fulfill large purchases of food, or that they would have made relatively large, multiple purchases at the store within 24 hours. Multiple transactions ...

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