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Willy's Grocery v. United States, 656 F.2d 24, 2d Cir. (1981)
Willy's Grocery v. United States, 656 F.2d 24, 2d Cir. (1981)
2d 24
The United States appeals from a decision of the United States District Court
for the District of Connecticut, T. F. Gilroy Daly, Judge, holding that a sanction
imposed by the Secretary of Agriculture against Willy's Grocery for food stamp
violations was improper under the Secretary's own guidelines. We believe that
the district court misread the guidelines and that they were properly applied by
the Secretary.
Mr. Sam does not draw a salary; he simply shares in the revenue earned by the
store.
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This case arises out of food stamp violations committed by William Sam in
April 1977, specifically, accepting food stamps for purchases including
ineligible non-food items, returning cash as change in amounts exceeding that
allowed by regulation, and, most significantly, first buying $100 worth of food
stamps at a discounted price and later buying $500 worth of food stamps for
$250. William Sam ultimately pleaded guilty to one count of discounting food
stamps and was sentenced to a one-year suspended sentence and placed on
probation for two years. After the criminal proceeding, FNS brought an
administrative disqualification action against the store, and on February 7,
1979, the FNS regional office ordered the store disqualified from participation
in the food stamp program for a period of one year, a decision that was affirmed
by an FNS review officer on July 31, 1979.
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e. Any other evidence which shows that the owner or management had to be
aware the violations were occurring and did nothing to stop them.
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(Emphasis added.) The district court read the store policy guidelines as
requiring that subsection (e) be present in each case, apparently in addition to
one of the factors listed in subsections (a) through (d). We believe that this
interpretation of the FNS guidelines was erroneous. Subsections (a) through (e)
list five separate methods by which store policy may be found; subsection (e) is
merely a catchall provision. In this case, therefore, it was not arbitrary or
capricious for the Secretary to find that Willy's Grocery was engaged in
discounting coupons for cash as a matter of store policy, since the factor in
subsection (a) was present: there was clearly "substantial participation" in the
violation by a responsible member of the owner's family, namely William Sam.
Thus the FNS's action was directly pursuant to its own guidelines.
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