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SIMS v. USDA

January 6, 1988

James Sims, Owner of Sims Enterprises, Plaintiff
v.
United States Department of Agriculture, Food & Nutrition Service and The United States of America, Defendants



The opinion of the court was delivered by: HOWARD

 This proceeding, in essence, is a review of a three-year disqualification of James Sims, owner of Sims Enterprise, a retail food store, from participating in the Food Stamp Program established pursuant to the Food Stamp Act, 7 U.S.C. ยง 2011 et seq., for allegedly violating food stamp regulations - the acceptance of food stamps in payment for ineligible food items. After carefully scrutinizing the applicable facts and the law, the Court holds that the sanction of three years disqualification is unwarranted in law and without justification in fact and, therefore, the sanction imposed is arbitrary and capricious as fully discussed below.

 RELEVANT FACTS

 Sims Enterprise is located in Marvell, Phillips County, Arkansas, and was authorized to participate in the food stamp program on February 10, 1984. Sims, a black male, purchased the store sometime in 1982 from a Chinese male who had operated this establishment for approximately forty-three (43) years, catering primarily to blacks, in this agriculture community, who constitute approximately 50% of the population.

 This retail establishment, under the operation of Sims' predecessor, had a high rate of food stamp redemption. The United States Food and Nutrition Service (FNS), which administers the food stamp program concluded, after conducting a thorough investigation of Sims' predecessor, after manifesting some concern of the predecessor's high redemption rate, that the high rate of coupon redemption was not due to any abuse of the food stamp program, but because of depressed economic conditions in Phillips County, blacks had access to food stamps on a rather large scale.

 
"This letter is to confirm the discussion of Food Program Specialist Rowena Buchanan with you on September 19, 1984. During the visit, Mrs. Buchanan discussed with you your unusually high rate of coupon redemptions. She pointed out to you that your redemption rate is much higher than that of other stores in your area. She also indicated our concern that this high rate might indicate the presence of violations of the Food Stamp Program Regulations in your store. You said that the high rate was due to attracting majority of the Black trade in town; carrying low-income preferred meats such as ham hocks, slab bacon, neck bones, also lunch meats sliced-to-order. You stated that the store had a history of being an ethnic store. Former owner had the store 43 years and he attracted the Black trade.
 
You furnished March through August 1984 total sales as $ 44,350, with 75% food sales and credit business as 10% of total sales.
 
You denied that any violations have occurred in the store. Mrs. Buchanan completely reviewed the regulations governing food coupon transactions with special emphasis on those which prohibit sales of ineligible items (Sections 271.2 and 276.2(a)), payment of charge accounts with coupons (Section 278.2(f)), the exchange of cash for coupons (Section 278.2(d)). . . ."

 On February 6, 1985, Bobby J. Hood, officer in charge of the Little Rock FNS office, requested Joseph T. Turecky, Chief Compliance Management Section, Southwest Region, FNS, to conduct an investigation of Sims' store for possible food stamp violations. Pursuant to this request, an investigation was conducted between May 29, 1985, and June 18, 1985. Andrew Jackson, FNS investigator, made six visits during this period to Sims' store and on five occasions, made, purportedly, purchases of twenty-nine ineligible items with stamps. A clerk, Bertha Johnson, was responsible for two of these alleged transactions and Sims, the owner, was responsible for three.

 The following is a schedule of both the ineligible as well as eligible items during the six visits made by Andrew Jackson:

 1. Transaction of May 29, 1985:

 
Ineligible items: *fn1" 1-23 oz. bottle of clorox bleach,.71 cents; 1-17 oz. box of super suds laundry detergent,.93 cents; 1-14 oz. can of Comet cleanser,.55 cents.
 
Eligible items: 1-7 1/2 oz. bag of potato chips,.99 cents; 1-8 oz. box of saltine crackers $ 1.12; 2-5 oz. cans of vienna sausage, $ 1.38; 2-3 3/4 oz. cans of sardines, $ 1.58; 1-8 oz. jar sandwich spread, ...

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