H & L Axelsson, Inc. v. Pritzker

• Citation: 16 F.Supp.3d 353
• Decision Date: 15 April 2014
• Docket Number: Civil Action No. 13–183 JBS/KMW.
• Court: United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
• Parties: H & L AXELSSON, INC., et al., Plaintiffs, v. Penny PRITZKER, et al., Defendants.

16 F.Supp.3d 353

H & L AXELSSON, INC., et al., Plaintiffs

v.Penny PRITZKER, et al., Defendants.

Civil Action No. 13–183 JBS/KMW.

United States District Court, D. New Jersey.

Signed April 15, 2014.

Kevin J. Thornton, Esq., Cooper Levenson, P.A., Atlantic City, NJ, and Stephen M. Oullette, Esq., Ouellette Law Office, Gloucester, MA, for Plaintiffs.

John Brett Grosko, Esq., Environment & Natural Resources Division, Wildlife & Marine Resources Section, United States Department of Justice, Washington, DC, for Defendants.

OPINION

SIMANDLE, Chief Judge:

I. INTRODUCTION¹

Plaintiffs H & L Axelsson, Inc., Dan Axelsson and Lars Axelsson (collectively, “Plaintiffs” or “the Axelssons”) bring this action to reverse and vacate the assessment of fines and penalties against them by the National Oceanographic and Atmospheric Administration (“NOAA”), pursuant to 16 U.S.C. § 1858(b).² Plaintiffs, who are commercial fishermen based in Cape May County, N.J., failed to comply with some reporting requirements of the Magnuson–Stevens Fisheries Conservation and Management Act (“MSA” or “the Act”), 16 U.S.C. § 1801 et seq., related to their harvesting of Atlantic herring for a six-month period in 2007. Plaintiffs' failure to make reports about their Atlantic herring catches constituted 27 separate violations of the MSA, for which NOAA fined the Axelssons $270,000 and issued 24 months of permit sanctions. After an administrative hearing, an administrative law judge (“ALJ”) suspended the majority of the penalties, and an agency administrator further reduced the fine to $54,000 with no suspended penalties and reduced the outright permit sanction to one month. Plaintiffs now seek judicial review of the ALJ's decision and urge the Court to vacate the assessment of fines. Before the Court are crossmotions for summary judgment, although, in substance, this case is an appeal of an administrative action. [Docket Items 20 & 28.]

Plaintiffs raise three main challenges to the penalties: (1) the ALJ improperly denied Plaintiffs' motion to dismiss based on the Paperwork Reduction Act (“PRA”), 44 U.S.C. §§ 3501 et seq.; (2) the ALJ's decision was not in accordance with governing statutes or agency guidelines; and (3) the excessive fine violated the Eighth Amendment to the U.S. Constitution.³ Neither party has requested oral argument and these crossmotions are decided upon the submissions of counsel without oral argument pursuant to Rule 78, Fed.R.Civ.P.

For reasons explained below, because the fines do not violate the Eighth Amendment, and because substantial evidence supports the ALJ's ruling, the Court will affirm the agency's assessment of penalties. Reviewing the Paperwork Reduction Act motion on the merits, the Court finds that the agency complied with the statute and accompanying regulations, and therefore the ALJ was correct to deny Plaintiffs' motion to dismiss. Accordingly, the Court will affirm the agency proceedings below, grant Defendants' cross-motion for summary judgment, and deny Plaintiffs' motion for summary judgment.

II. BACKGROUND

A. Facts

The material facts are undisputed.⁴ Plaintiffs Dan and Lars Axelsson are owners of H & L Axelsson, Inc., a family-owned commercial fishing operation out of Erma, N.J. The Axelssons have been fishing for more than 30 years. (SMF ¶ 1.) H & L Axelsson and Dan Axelsson own and operate the fishing vessel known as F/V Dyrsten; H & L Axelsson and Lars Axelsson own and operate the F/V Flicka. (Id. ¶¶ 4, 7.) The Axelssons have fished for a number of heavily regulated species such as bluefish, trout, flounder, mackerel, and others (id. ¶ 2), and hold permits to fish for Atlantic herring. (R. at AR002227, AR002259.)

NOAA's National Marine Fisheries Service (“NMFS”) requires permitted Atlantic herring vessels to submit multiple reports about their harvests, known as “landings,” in order to monitor fish populations and prevent overfishing.⁵ See Atlantic Herring Fishery Management Plan, 65 Fed.Reg. 77,450, 77,450, 77,452 (Dec. 11, 2000) (codified in relevant part at 50 C.F.R. pt. 648); (R. at AR02227). The Atlantic Herring Fishing Management Plan requires permitted fishermen to complete monthly Vessel Trip Reports (“VTRs”), which record fishing efforts, landings and discards on paper forms supplied by a regional administrator. 65 Fed.Reg. at 77,452 ; 50 C.F.R. § 648.7(b)(1). However, because the processing of these monthly paper reports is slow—accurate statistics are available only on a 30– to 45–day lag—the NMFS also requires certain Atlantic herring vessels to be equipped with a Vessel Monitoring System (“VMS”) unit and to file weekly “Interactive Voice Response” (“IVR”) reports by calling a toll-free number and entering data by pressing numbers on a touchtone phone. 65 Fed.Reg. at 77,452 ; 50 C.F.R. § 648.7(b)(2). Atlantic herring dealers are required to submit weekly reports by mail and may be required to submit weekly IVR reports, if so determined by the regional administrator. 65 Fed.Reg. at 77,452.

Until late 2006, Plaintiffs did not file IVR reports directly with NOAA, but sent their information to Ms. Kohl Kanwit, a researcher who worked for the Maine Division of Marine Resources, who in turn forwarded the Axelssons' data to NOAA. (SMF ¶ 30.) When Ms. Kanwit transitioned out of that job, she sent an e-mail to a group of fishermen, including Plaintiffs, stating: “If you have been e-mailing or calling me with your IVR numbers you will now have to call them in to [NM]FS directly.” (R. at AR001094.) Plaintiffs “admit that such an e-mail was sent and may have been received by Lars Axelsson.” (Pl. Response to SMF [Docket Item 30–1] ¶ 30.)

Plaintiffs concede that when Ms. Kanwit stopped making IVR reports to NOAA, they did not immediately begin submitting their own reports. (Pl. Resp. to SMF ¶ 36.) Plaintiffs admit that Dan Axelsson failed to submit nine IVR reports between January 10, 2007 and April 4, 2007, arising from the operation of the F/V Dyrsten (SMF ¶ 4), and Lars Axelsson failed to submit six IVR reports between January 24, 2007 and July 16, 2007, arising from the operation of the F/V Flicka. (SMF ¶ 7; see also Pl. Mot. Br. at 2 (stating that Plaintiffs “do not dispute” that “for a period of time they failed to report their herring landings over the IVR system”).) During approximately the same time period, Lars Axelsson did not timely file 12 VTRs. (SMF ¶ 9; see also Pl. Mot. Br. at 2 (admitting “that Lars Axelsson submitted several months worth of VTRs late”).) These missing or late reports would have communicated to NMFS that Plaintiffs landed 3.25 million pounds of herring over that period. (SMF ¶ 14.) Plaintiffs contend that the amount of their harvest was nonetheless reported to NOAA in the dealer reports, even if the Axelssons themselves did not directly report the numbers to NOAA in a timely fashion using the IVR reports or the VTRs. (Pl. Resp. to SMF ¶ 14.)

The MSA provides a maximum civil penalty of $140,000 for each violation of the Act or the regulations issued pursuant to the Act. 16 U.S.C. § 1858(a) (setting the civil penalty maximum at $100,000 per violation); 15 C.F.R. § 6.4(f)(14) (adjusting the maximum penalty up to $140,000 per violation, due to inflation). On October 1, 2008, NOAA fined Plaintiffs $270,000 jointly and severally for the 27 violations: $180,000 assessed against H & L and Lars Axelsson for the 18 IVR and VTR violations, and $90,000 against H & L and Dan Axelsson for the nine IVR reporting violations. (SMF ¶¶ 6, 10, 11.) NOAA also issued permit sanctions totaling 24 months against the Axelssons. (SMF ¶ 42; Def. Cross–Mot. at 1.)

Plaintiffs requested an administrative hearing to challenge the penalties. (SMF ¶ 17.) Administrative Law Judge Michael Devine held a hearing on June 16, 2009.

B. ALJ's decision

The ALJ first ruled on Plaintiffs' motion to dismiss, which was predicated on the Paperwork Reduction Act (“PRA”), arguing that federal law requires NOAA to “display” certain information on the forms associated with the collection of information, and NOAA failed to do so in this case. (R. at AR000223.) Plaintiffs argued that NOAA's failure to comply with the PRA barred the agency from enforcing the reporting requirements. (R. at AR000225.) The ALJ denied the motion for three reasons:

First, [the Axelssons'] filing of this motion at the beginning of the hearing, as a surprise legal issue, is in violation of the regulations. 15 C.F.R. § 904.240(a)(3). A party has an ongoing affirmative duty to supplement its Preliminary Positions on Issues and Procedures (PPIP). Id. This includes legal issues in dispute. Id. On this basis alone, [the Axelssons'] Motion to Dismiss should be denied. Additionally, the undersigned does not have authority to rule on challenges to the validity of Agency regulations. 15 C.F.R. § 904.200(b). Therefore, the regulations that provide for reporting requirements are deemed valid. Finally, [the Axelssons'] Motion also lacks merit.... [T]he Agency did obtain Paperwork Reduction Act clearance to collect all the information required to be submitted for both the FVTR and IVR reporting systems. Each of these reasons independently supports denial of the motion to dismiss ....

(R. at AR000382.)

Moving to the merits of the case, the ALJ found that the agency proved the 27 charged violations. (R. at AR000386.) Next, the ALJ considered each of the statutorily required factors: (1) the nature, circumstances, extent and gravity of the violations; (2) the degree of culpability; (3) any history of prior offenses; and (4) any other matter as justice requires. (Id., citing 15 C.F.R. § 904.108(a) and 16 U.S.C. § 1858(a) ). As to the first factor, the ALJ found that the Agency had a valid concern in preventing overfishing, but “no over-fishing resulted as a result of Respondents' failure to report.” (R. at AR000388.) Next, the ALJ determined that while no evidence showed that the Axelssons intentionally failed to report in order to derive an economic advantage, “their conduct is of...