MARTINEZ GROCERY II v. UNITED STATES, 1:18-cv-00627

Background

Martinez Grocery II, a small convenience store in Camden, NJ, participated in SNAP since 1998 and operated near many other SNAP retailers.
FNS’s automated “Alert System” flagged Martinez Grocery II based on Dec 2016–May 2017 SNAP transaction patterns; an FNS site visit observed limited staple inventory, one register, and some items with prices ending in .00/.50.
FNS analyzed store redemption data against nearby retailers and household shopping histories and identified suspicious patterns: many transactions ending in .00/.50, multiple rapid transactions from the same SNAP accounts, and unusually large redemptions for a small store.
Plaintiffs supplied invoices and other documents; FNS concluded those records could not account for the total SNAP redemptions and determined trafficking likely occurred.
FNS permanently disqualified the store for trafficking; Plaintiffs exhausted administrative appeals, then filed suit seeking trial de novo and arguing the sanction was arbitrary and capricious.
The District Court granted the government’s summary judgment motion, finding Plaintiffs failed to rebut FNS’s determination or show the sanction was arbitrary or capricious.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
1. Did plaintiffs rebut FNS’s finding of SNAP trafficking?	Martinez argues FNS was wrong; submitted invoices, pricing photos, and challenged the Alert System.	FNS contends its multi-factor investigation and transaction analysis established trafficking; plaintiffs bore burden to prove no violation.	Court: Plaintiffs failed to prove by preponderance that trafficking did not occur; judgment for Defendants.
2. Is summary judgment premature because plaintiffs need discovery about the Alert System?	Martinez sought discovery into Alert System reliability and contended investigation was triggered in error.	Defendants: investigation’s procedures (not the Alert trigger) are not challenged; Alert System reliability does not invalidate investigation results.	Court: No material dispute; Alert System reliability irrelevant where investigation was properly conducted.
3. Do pricing photos/.00 or .50 pricing create a genuine factual dispute?	Martinez submitted photos and argued the store uses many .00/.50 prices to explain suspicious transactions.	Defendants: photos are undated, limited, and do not show pricing during the review period—insufficient to rebut FNS analysis.	Court: Photos do not create a genuine dispute; plaintiffs failed to produce evidence within their control.
4. Was FNS’s permanent disqualification arbitrary or capricious?	Martinez asserts notice and explanation were inadequate under regs and that FNS failed to consider mitigating factors.	FNS: trafficking mandates automatic disqualification; plaintiffs did not request a civil monetary penalty; FNS provided charge letter and a detailed Final Agency Decision.	Court: Sanction was not arbitrary or capricious; regulation mandates disqualification for trafficking and plaintiffs did not meet burden to show otherwise.

Key Cases Cited

Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment standard; plaintiff must show genuine dispute)
Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment: party opposing must set out specific facts showing genuine issue)
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (consequences when only scintilla of evidence exists)
Freedman v. U.S. Dep't of Agric., 926 F.2d 252 (3d Cir. 1991) (de novo judicial review compatible with summary judgment when no material facts are disputed)
Willy's Grocery v. United States, 656 F.2d 24 (2d Cir. 1981) (standard: sanction arbitrary or capricious if unwarranted in law or without justification in fact)
Grocery Town Mkt., Inc. v. United States, 848 F.2d 392 (3d Cir. 1988) (trafficking offenses mandate automatic disqualification)
Han v. Food & Nutrition Serv., 580 F. Supp. 1564 (D.N.J. 1984) (plaintiff bears burden to prove administrative disqualification is factually incorrect)