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Al-Sharari v. United States

United States District Court, N.D. Ohio, Western Division

June 27, 2019

Zuhair Al-Sharari, et al., Plaintiffs
United States of America, Defendant.


          James G. Carr Sr. U.S. District Judge.

         This is an appeal from an administrative decision by the Food and Nutrition Services (FNS) of the United States Department of Agriculture (USDA) arising under The Food Stamp Act (The Act), 7 U.S.C. § 2011 et seq.

         The plaintiff, Zuhair Al-Sharari, owns a corporation, Zuhair of Toledo, Inc. (d/b/a Beer Dock), which sells beer, wine, and other items in Toledo, Ohio. On May 29, 2018, FNS disqualified Al-Sharari and his businesses from participation in the Supplemental Nutrition Assistance Program (SNAP) for three years. That disqualification resulted from a 2017 decision by the Ohio Department of Health (ODH) disqualifying the Beer Dock from participating in the state equivalent of SNAP, known as Special Supplemental Nutrition Program for Women, Infants, and Children, commonly known as WIC.

         Al-Sharari contends that FNS should have allowed him to pay a civil monetary penalty (CMP) in lieu of the three-year disqualification. He further argues that the disqualification violated his Fifth Amendment due process rights by, inter alia, denying access to the evidence against him; using “inaccurate and unsworn” evidence; not holding a hearing; and denying a “meaningful adjudicative process.” (Doc. 1 at 4, ¶15.)

         Jurisdiction is proper under 28 U.S.C. § 1331.

         Pending is the defendants' Fed.R.Civ.P. 12(b)(1) and (6) motion to dismiss. (Doc. 6). For the following reasons, I grant the motion under Rule 12(b)(6).


         Through FNS, the USDA administers a program of aiding low-income and other vulnerable persons through an allotment of funds, previously known as food stamps, to increase their access to a more nutritious and, thus, healthy diet. See 7 U.S.C. § 2013; 7 C.F.R. §§ 246 & 271. Retailers can fill out an application to accept SNAP food stamps in their stores.[1] Approved retailers must then follow both statute and FNS regulations to remain authorized to accept SNAP food stamps.

         If retailers violate either statute or regulation FNS may, after an investigation, directly disqualify them. 7 U.S.C. § 2021; 7 C.F.R. § 278.6. FNS can also impose “reciprocal disqualification” on a retailer where a state agency, such as ODH, has disqualified the retailer from participating in the WIC program. 7 U.S.C. § 2021(g)(1). Reciprocal disqualification automatically follows, as a matter of law, the initial WIC disqualification. (Doc. 6 at 6). Once the state informs FNS about its disqualification decision, FNS must disqualify the retailer from SNAP for the same amount of time as the state-imposed disqualification. 7 U.S.C. § 2021(g)(2)(A).

         But FNS has discretion to impose a civil money penalty (CMP) in lieu of such disqualification. To exercise this option, the agency must find that disqualification would cause “hardship to participating households.” 7 C.F.R. § 278.6(a). Under 7 C.F.R. § 278.6(f)(1) FNS uses a two-factor test to determine hardship, and thus eligibility for a CMP: 1) the retailer must sell “a substantial variety of staple food items”; and 2) disqualification would cause hardship to SNAP households because there is no other authorized retail food store in the area selling at comparable prices as large a variety of staple food items.[2] Id.

         A. The Beer Dock and Its Disqualification from WIC and SNAP

         The ODH disqualified the Beer Dock from WIC in September 2017.

         Following receipt of notice of the disqualification, FNS informed Al-Sharari in October 2017 that, as a result of the ODH decision, a reciprocal disqualification from SNAP (or a CMP) could follow. Al-Sharari replied, via counsel, submitting additional documents for FNS Retailer Operations Division (ROD) to consider before it determined the ultimate sanction it would impose. (Doc. 1 at 9).

         In December 2017, FNS notified Al-Sharari that he was not eligible for a hardship-based CMP in lieu of a disqualification, and accordingly the three-year reciprocal disqualification from SNAP would stand. (Id.).

         Al-Sharari then filed an administrative appeal of ROD's denial of the hardship CMP, requesting that the agency take another look at the decision to deny a CMP. (Id.). Al-Sharari provided “Additional Documentation in Support of Request for Administrative Review.” (Id. at 11). He argued that the agency had: 1) applied the wrong standard of review; and 2) failed to make a required factual finding that nearby SNAP authorized retailers sold “as large a variety” of required food items at comparable prices. In May 2018, FNS upheld the decision to impose reciprocal disqualification rather than a CMP. (Id. at 13).

         B. Litigation

         In this suit under 7 U.S.C. § 2023 Al-Sharari asserts two claims. First, he claims FNS should have allowed him to pay a CMP in lieu of suspension. Second, he contends the agency violated his procedural-due-process rights by, inter alia: 1) not letting him see the evidence against him; 2) relying on inaccurate, unsworn factual allegations; and 3) not holding a hearing. (Doc. 1 at ¶¶12, 15). The government seeks dismissal for want of jurisdiction and failure to state a claim.

         Standard of Review

         A jurisdictional challenge under Fed.R.Civ.P. 12(b)(1) can raise either “a facial attack or a factual attack.” Wayside Church v. Van Buren Cnty., 847 F.3d 812, 817 (6th Cir. 2017).

         A facial attack questions “the sufficiency of the pleading, ” while “a factual attack ... raises a factual controversy requiring the district court to weigh the conflicting evidence to arrive at the factual predicate that subject-matter [jurisdiction] does or does not exist.” Id.

         Here the government asserts a facial challenge: namely, 7 U.S.C. § 2021(g)(2)(C) precludes judicial review. (Doc. 6 at 6). Accordingly, just as I do with Rule 12(b)(6) motions, in considering the government's jurisdictional arguments here I “take[ ] the allegations in the complaint as ...

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