United States v. Advance Mach. Co., Civ. No. 3-82-152.

Citation547 F. Supp. 1085
Decision Date06 August 1982
Docket NumberCiv. No. 3-82-152.
PartiesUNITED STATES of America, Plaintiff, v. ADVANCE MACHINE COMPANY, a corporation, formerly also doing business as Commercial Mechanisms, Inc., Defendant.
CourtUnited States District Courts. 8th Circuit. United States District Court of Minnesota

COPYRIGHT MATERIAL OMITTED

James M. Rosenbaum, U. S. Atty., Francis X. Hermann, Asst. U. S. Atty., Minneapolis, Minn., J. Patrick Glynn, Chief, Consumer Affairs Section, Rosalind Avnet Lazarus, Atty., Consumer Affairs Section, Antitrust Division, U. S. Dept. of Justice, Washington, D. C., for plaintiff; Martin Howard Katz, Gen. Counsel, Alan H. Schoem, Asst. Gen. Counsel, Leonard H. Goldstein, Atty., Consumer Product Safety Commission, Washington, D. C., of counsel.

Edward J. Schwartzbauer and James B. Lynch, Washington, D. C., for defendant.

MEMORANDUM AND ORDER

RENNER, District Judge.

Before the Court is defendant's motion to dismiss or, in the alternative, for summary judgment. The motion was submitted on briefs.

In support of its motion, defendant advances four grounds: (1) The action is barred by the five-year statute of limitations, 28 U.S.C. § 2462; (2) the action is further barred by res judicata and the rule against splitting a cause of action; (3) defendant has never been a manufacturer of baseball pitching machines, and, therefore, cannot be charged with a violation of the Consumer Product Safety Act "CPSA", 15 U.S.C. § 2051 et seq.; and (4) the Government failed to specify the amount of civil penalty to be sought, as required by the CPSA. Defendant also asserts that the action should be in the name of the Consumer Product Safety Commission rather than the United States of America.

The Government submits that dismissal of the complaint is inappropriate because defendant has not met its burden of demonstrating that the claims asserted cannot be established on any possible theory. The Government further asserts that defendant's alternative motion for summary judgment is premature since discovery relating to numerous factual issues has not yet commenced.

I. FACTUAL BACKGROUND
A. The Parties

The United States of America brings this action at the request of the Consumer Product Safety Commission. This independent regulatory commission, established pursuant to section 4 of the Consumer Product Safety Act, 15 U.S.C. § 2053, is charged with protecting the public from unreasonable risks of injury associated with consumer products.

Defendant Advance Machine Company "Advance" is a Minnesota corporation with headquarters in Spring Park, Minnesota. In 1971 Advance acquired all of the outstanding stock in Commercial Mechanisms, Inc. "CMI", a Missouri corporation. CMI manufactured and distributed pressure washers and automatic baseball pitching machines from the time of its incorporation, 1962, until it was dissolved in 1975.

B. Statement of the Case

On February 22, 1977, Inspector Jerome Boog of the Consumer Product Safety Commission inspected defendant at its premises in Spring Park, Minnesota. During this inspection, Boog obtained information regarding a possible defect in the CMI pitching machine.

After receiving injury data from Advance, and verifying the presence of a defect through an engineering analysis of the pitching machine, the Commission, on June 29, 1977, inspected Dudley Sports Company, "Dudley", a division of Athlone Industries Inc. "Athlone", the primary distributor and private labeler of the pitching machines.

On July 28, 1977, the Commission filed an action in the United States District Court for the District of Columbia, pursuant to section 12 of the CPSA, 15 U.S.C. § 2061, against Advance, CMI, Dudley, Athlone, and five other defendants, seeking an injunction and a declaration that the automatic baseball pitching machines they manufactured and distributed in interstate commerce were imminently hazardous consumer products causing numerous severe injuries. The suit also sought repair of all existing machines. The Commission alleged that the pitching machine, even when disconnected from its power source, retained such a high degree of tension in its spring and cable that, at the slightest vibration, the pitching arm would unexpectedly swing forward and downward at great speed, striking any person within its range.

The proceedings in that action continued for almost a year before the parties agreed in May 1978 to a consent judgment which set forth a corrective action plan to be undertaken by the defendants. The Commission did not incorporate into the suit or the consent judgment any claim for civil penalties.

On May 24, 1979, the Commission notified Advance, Dudley, and Athlone of the investigation by its compliance staff into their failure to provide information as mandated by the reporting requirement of section 15(b) of the CPSA, 15 U.S.C. § 2064(b).

On May 15, 1980, the Commission notified Advance that it had voted to issue an administrative complaint seeking a civil penalty for the violation of the reporting requirement at the expiration of 30 days, unless a settlement was reached. Advance and Robert J. Pond filed suit on June 19, 1980, in the United States District Court for the District of Minnesota, seeking to stop the Commission from issuing the administrative complaint and asking for a declaration that the Commission does not have the authority to administratively assess a civil penalty.

Upon cross-motions for summary judgment, Judge Alsop ruled that the Commission possessed authority to assess civil penalties through administrative hearings. Advance Machine Co. v. Consumer Product Safety Commission, 510 F.Supp. 360, 364-66 (D.Minn.1981). Relying upon a statutory amendment passed after Judge Alsop's decision, the Eighth Circuit Court of Appeals reversed that ruling. Advance Machine Co. v. Consumer Product Safety Commission, 666 F.2d 1166, 1168 (8th Cir. 1981). The Government filed this action on February 19, 1982.

II. DISCUSSION

For purposes of deciding a motion to dismiss, the Court construes the complaint in the light most favorable to plaintiff and its well pleaded allegations are taken as true. Park View Heights Corp. v. City of Black Jack, 467 F.2d 1208, 1212 n.3 (8th Cir. 1972). In appraising the sufficiency of the complaint, the Court follows the accepted rule that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of the pleaded claim which would entitle plaintiff to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957); Seven-Up Bottling Co. v. Seven-Up Co., 561 F.2d 1275, 1285-86 (8th Cir. 1977). The motion to dismiss for failure to state a claim is viewed with disfavor and is usually granted only when the plaintiff includes allegations that show that there is some insurmountable bar to relief. Thomas W. Garland, Inc. v. City of St. Louis, 596 F.2d 784, 787 (8th Cir. 1979), cert. denied, 444 U.S. 899, 100 S.Ct. 208, 62 L.Ed.2d 135 (1979). Accordingly, affirmative defenses such as the running of the statute of limitations, Guy v. Swift, 612 F.2d 383, 385 (8th Cir. 1980), or res judicata, Moch v. East Baton Rouge Parish School Board, 548 F.2d 594, 596 n.3 (5th Cir. 1977), may form the basis of a rule 12(b)(6) motion.

If, on a rule 12(b)(6) motion, matters outside the pleading are presented to and not excluded by the Court, the motion shall be treated as one for summary judgment pursuant to Fed.R.Civ.P. 56. Summary judgment is appropriately granted only when after viewing the facts in the light most favorable to the party against whom judgment is sought, the Court concludes there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Kelsey v. Ewing, 652 F.2d 4, 5 (8th Cir. 1981).

A. Statute of Limitations

Defendant asserts that this action is barred by the running of the controlling statute of limitations. The statute of limitations applicable to civil fines or penalties provides:

Except as otherwise provided by an Act of Congress, an action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise, shall not be entertained unless commenced within five years from the date when the claim first accrued.

28 U.S.C. § 2462. The parties agree that the deciding issue is when did the statute begin to run.

Defendant argues that since the complaint alleges that the first violation of the Consumer Product Safety Act occurred on or before January 1974, the action accrued no later than that date. Since this lawsuit was not filed until February 19, 1982, the five year period has assertedly expired, and any attempt to seek a civil penalty is barred. Defendant's underlying premise is that since the Consumer Product Safety Act requires immediate reporting of information concerning defects which could create a substantial product hazard, once a manufacturer fails to inform the Commission the violation is complete and a civil action could be maintained successfully by the Government.

Defendant further argues that the alleged violation is not a "continuing" wrong and points to the language of 15 U.S.C. § 2069(a)(1). This section sets out the civil penalties for violation of 15 U.S.C. § 2068. Defendant correctly notes that while section 2069(a)(1) specifically provides that a violation of 15 U.S.C. § 2068(a)(3) shall be a continuing violation for each day of failure to provide certain information, there is no such specification for a violation of the statute in question, 15 U.S.C. § 2064(b). When viewed in conjunction with the legislative history of the Act, this omission is advanced as proof that the Act does not impose a continuing duty to report the required information. Rather, that if a manufacturer fails to report to the Commission within 24 hours, the violation is complete and the cause of action accrues.

After considering the language and intent of the Act, the Court must...

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