10-1537 Fells, D/B/A Stepehen Snack Foods Candy & Variety v. U.S.

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Administrative Law
Food stamp trafficking; SNAP disqualification; preponderance of evidence

Where a USDA investigation found that a convenience-store operator routinely engaged in large food stamp transactions and an unusually high number of even-dollar transactions, the trial court was correct when it applied the preponderance of evidence standard as the government’s burden of proof at trial, and that burden was met, so that the judgment disqualifying him permanently from SNAP participation must be affirmed.

The applicable statute, 7 U.S.C. § 2023, is silent as to the issue of which party bears the burden of proof in a trial de novo under § 2023, other circuits have held consistently that, given the nature of the statutory scheme, a store owner who seeks to set aside an agency action bears the burden of proof. [Citations.] In the watershed case, Redmond v. United States, 507 F.2d 1007 (5th Cir. 1975), the Fifth Circuit recognized that the statute calls for the court to “determine the validity of the questioned administrative action,” not to revisit the issue as if the USDA decision never had occurred. …Although we have not addressed directly the question of which party bears the burden of proof when a plaintiff seeks to upset a USDA disqualification determination, we have applied consistently the standard articulated by the court in Redmond when confronted with similar questions invoked under the Program….

“Therefore, based upon prior decisions of this court, as well as the decisions of other circuits, we now make explicit what has been implicit in our earlier decisions. The district court correctly determined that Mr. Fells bore the burden of proving, by a preponderance of the evidence, that the agency’s determination was invalid. Because the judicial proceeding considers the issues de novo, Mr. Fells could have proved the determination invalid by demonstrating ‘that the factual determination was wrong.’ McGlory v. United States, 763 F.2d 309, 311 (7th Cir. 1985) (per curiam) (‘The district court must determine the validity of the agency’s factual determinations anew, on a fresh record.’)….

“The district court carefully examined all of the evidence-store photos, inventory receipts and information about customer purchasing patterns at surrounding stores-which amply supported the agency’s finding that Mr. Fells trafficked in food stamps. Mr. Fells was ‘free to rebut’ that evidence. Redmond, 507 F.2d at 1012 (quotation marks omitted). Here on appeal, however, Mr. Fells has not demonstrated that the district court’s conclusion that his explanations were unpersuasive and unsupported by the record is clearly erroneous. Accordingly, we must conclude that the district court correctly found that Mr. Fells failed to provide enough evidence at trial to invalidate the agency’s determination.

Affirmed.

10-1537 Fells, D/B/A Stepehen Snack Foods Candy & Variety v. U.S.

Eastern District of Wisconsin, Goodstein, Mag. J., Ripple, J.

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