The opinion of the court was delivered by: ROBERT L. BITTNER
The plaintiffs commenced this action on December 6, 1990, pursuant to 7 U.S.C. § 2023 and 7 C.F.R. § 279.10, seeking judicial review of the FNS' decision withdrawing their authorization to participate in the food stamp program for a period of three (3) years. They alleged the FNS decision was contrary to the evidence, in that Zaki Pantry Food, Inc. did not: a) engage in business absent Special Supplemental Food Program for Women, Infants, and Children (hereinafter referred to as WIC) authorization; b) have an unacceptable history with the food stamp program; or c) submit false, erroneous, or misleading information relative to ownership and management, nor did plaintiff Elham Rahim submit such information. They further alleged the decision of the FNS was harsh and oppressive, because it withdrew their food stamp authorization for an indefinite period of time. As relief, the plaintiffs sought a trial de novo and reversal of the FNS decision, with reinstatement to the food stamp program or remand for further proceedings.
Subsequently, the parties consented to United States Magistrate jurisdiction, pursuant to 28 U.S.C. § 636(c) and Local Rule 13.05 (E.D. Wis.). On March 15, 1991 this Court entered an order granting the plaintiffs' motion for stay of action, pursuant to 7 U.S.C. § 2023 and 7 C.F.R. § 279.10(d), thereby permitting the plaintiffs to accept food stamps and participate fully in the food stamp program until further order of the Court. On June 12, 1992 this Court ruled the proviso of 7 U.S.C. § 2023(a) for de novo review was compatible with a summary judgment disposition, in cases where there are no material facts in dispute, and set a briefing schedule for summary judgment motions. In accordance with that schedule, the defendant filed its motion for summary judgment. No response was filed by the plaintiffs and the time for any such submission expired.
As this case arises under 7 U.S.C. § 2023, this Court has jurisdiction under 28 U.S.C. § 1346.
From the defendant's statement of undisputed facts, the following facts do not appear to be in dispute. See Local Rule 6.05(d) (E.D. Wis.) (in deciding a motion for summary judgment, the Court will conclude there is no genuine issue as to any proposed findings of fact to which no response is set out).
By letter of July 19, 1990 the State of Wisconsin, Department of Health and Human Services, Division of Health (hereinafter referred to as DH&HS), informed the plaintiffs they were being disqualified from WIC, based on Zaki Pantry Food, Inc.'s: 1) acceptance of WIC drafts without program authorization, 2) submission of false information to WIC regarding store ownership, and 3) the adverse history of Mohammad Zaki Ahmad with the WIC and food stamp program, which resulted in a September 21, 1989 notice of termination from WIC for three (3) years for program abuse.
According to this letter, the DH&HS' investigation revealed the plaintiffs were accepting and depositing WIC drafts as late as May 24, 1990, despite a change of ownership in the Zaki Pantry Food, Inc. on April 1, 1990, in violation of administrative regulations which provide a change of ownership automatically terminates the previous vendor's WIC authorization. The disqualification letter further stated John P. Sabin, Vendor Relations Manager for the Wisconsin WIC, informed plaintiff Elham Rahim on April 19, 1990 that she could not accept WIC drafts until authorized to do so. The letter indicated that, under Wis. Admin. Code § HSS 149.06(1)(a)(7)(c) & (10), provision of false information on a WIC application regarding the vendor's ownership or management, and acceptance of WIC drafts prior to receiving authorization from the state WIC office, respectively, are Class A Offenses. Finally, the plaintiffs were advised of their right to appeal from the WIC disqualification decision and that federal regulations provide for withdrawal of the food stamp program authorization for a store disqualified from WIC, and, consequently, the food stamp program would be informed of the WIC disqualification. The plaintiffs did not appeal the July 19, 1990 WIC disqualification.
Thereafter, by letter dated September 25, 1990, the FNS notified the plaintiffs that food stamp program authorization was being withdrawn because of the denial of WIC authorization, with citation to 7 C.F.R. § 278.1(b)(3)(ii) and 7 C.F.R. § 278.1(o)(1) (recodified as 7 C.F.R. § 278.1[n] eff. 9-30-90). The plaintiffs were further informed their authorization to participate in the food stamp program was being withdrawn for three (3) years, because of the seriousness of their previous activities in WIC and their three (3) year disqualification from WIC. The withdrawal decision became the final decision of the FNS on November 7, 1990, when the Administrative Review Division affirmed the order withdrawing Zaki Pantry Food, Inc.'s participation in the food stamp program, relying upon 7 C.F.R. § 278.1(o),
and §§ 278.1(b)(ii), (iv), (v), and (vi).
A June 21, 1990 letter from the FNS, notifying the plaintiffs of their authorization to participate in the food stamp program, advised them to become familiar with the food stamp regulations, because violations of such regulations could ...