Challenger To Supplemental Nutrition Assistance Program Disqualification Has The Burden Of Proof
FELLS v. UNITED STATES (December 23, 2010)
Stephen Fells owned and operated a small convenience store in Milwaukee, Wisconsin. The store participated in the Supplemental Nutrition Assistance Program (formerly known as the Food Stand Program). An automated monitoring program identified a number of questionable transactions at Fells’ store in 2007. The United States Department of Agriculture conducted an investigation, which revealed a significant number of transactions larger than normal for a store of that size and a significant number of unusual, even-dollar transactions. The USDA determined that Fells violated Program regulations and disqualified him from the Program. Fells appealed administratively. The USDA affirmed its determination. Fells sought judicial review. Magistrate Judge Goodstein (E.D. Wis.) upheld the agency's determination, ruling that Fells had the burden of proof to establish the invalidity of the determination and that he failed to sustain his burden. Fells appeals.
In their opinion, Seventh Circuit Judges Ripple, Manion, and Sykes affirmed. The Court first addressed the burden of proof issue. The statute provides for a trial de novo on judicial review of an agency determination. The statute provides no other guidance on the trial procedures or the burden of proof. The Court noted that it had never directly resolved the issue but that it had consistently followed the Fifth Circuit's decision in Redmond, in which that court concluded that the agency action was entitled to a "presumption of validity." The Sixth and Ninth Circuits have also concluded that a store owner challenging agency action has the burden of proof. The Court thus made explicit the rule that its earlier decisions had adopted implicitly -- that the store owner had the burden to prove by a preponderance of evidence that the challenged determination was invalid. Applying a clearly erroneous standard, the Court determined that Fells failed to carry his burden. Although the evidence was largely circumstantial, the district court did review the evidence and Fells' explanations. Its affirmance of the agency's determination was not clearly erroneous.
Michael Rigney practices in the law offices of GVC Ltd. in Chicago. In this blog, he reports on select