American Arms Intern. v. Herbert

• Decision Date: 20 April 2009
• Docket Number: No. 08-1302.,08-1302.
• Citation: 563 F.3d 78
• Parties: AMERICAN ARMS INTERNATIONAL, trading as Gilbert Guns Unlimited; Gilbert Indoor Range, LLC, Petitioners-Appellants, v. Arthur W. HERBERT, Director of Industry Operations, Bureau of Alcohol, Tobacco, Firearms and Explosives, Respondent-Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

563 F.3d 78

AMERICAN ARMS INTERNATIONAL, trading as Gilbert Guns Unlimited; Gilbert Indoor Range, LLC, Petitioners-Appellants, v. Arthur W. HERBERT, Director of Industry Operations, Bureau of Alcohol, Tobacco, Firearms and Explosives, Respondent-Appellee.

No. 08-1302.

United States Court of Appeals, Fourth Circuit.

Argued: January 29, 2009.

Decided: April 20, 2009.

ARGUED: Richard E. Gardiner, Fairfax, Virginia, for Appellants. Ariana Wright Arnold, Office of the United States Attorney, Baltimore, Maryland, for Appellee. Rod J. Rosenstein, United States Attorney, Baltimore, Maryland; Jeffrey A. Cohen, ATF Associate Chief, Philadelphia, Pennsylvania, for Appellee.

Before GREGORY and DUNCAN, Circuit Judges, and Arthur L. ALARCÓN, Senior Circuit Judge of the United States Court of Appeals for the Ninth Circuit, sitting by designation.

Affirmed by published opinion. Judge GREGORY wrote the opinion, in which Judge DUNCAN and Senior Judge ALARCÓN joined.

OPINION

GREGORY, Circuit Judge:

Appellants American Arms International ("AAI") and Gilbert Indoor Range, LLC ("GIR") appeal the judgment of the district court upholding the decision of the Bureau of Alcohol, Tobacco, Firearms and Explosives ("ATF") to revoke AAI's firearms dealer's license and to deny GIR's application for a new firearms license. Over the past three decades, Charles Gilbert, the owner of both AAI and GIR, has been cited by the ATF multiple times for numerous violations of the regulatory requirements of the Gun Control Act of 1968 ("GCA"), codified as amended at 18 U.S.C. § 921 et seq. (2006). The decision to revoke AAI's license and to deny GIR's license application was prompted by a 2003 ATF inspection of Gilbert's operations in which thousands of record-keeping and other violations were discovered. Our de novo review of this appeal reveals no error in the district court's grant of summary judgment to ATF, and we therefore affirm.

I.

The ATF first inspected Gilbert's operations in February 1984, and the inspection revealed that Gilbert had failed to record both the transfer of twenty-three firearms and the acquisition of six National Firearms Act ("NFA") firearms in the store's Acquisition and Disposition Records ("A & D Records").¹ ATF cited Gilbert for these and other violations.

In June 1986, ATF sent Gilbert a warning letter after another ATF inspection revealed a number of new regulatory violations. The letter advised that "failure to conduct future operations in accordance with the regulations ... will be considered willful and could result in administrative proceedings to revoke your license." (1 Admin. R. ("A.R.") 23.) Gilbert was cited again in July 1987 for, inter alia, failure to record the disposition of seven missing firearms, failure to properly maintain disposition records for repaired firearms, and improper maintenance of ATF Form 4473.²

In 1991, an ATF inspector found another discrepancy in an inventory of Gilbert's NFA firearms, as well as at least one other record-keeping violation. The inspector recommended that ATF issue an admonitory letter. In June 2000, an inspection revealed nineteen instances where Gilbert failed to record the date of sale in his A & D Records and numerous failures to ensure proper completion of ATF Form 4473.

In December 2000, when Gilbert was applying to renew his dealer's license, an ATF inspector met with him to review the federal firearms regulations, including all record-keeping, requirements. An ATF inspector held a similar review of the regulations with Gilbert in September 2002, covering requirements for maintenance of A & D Records, proper completion of ATF Form 4473, and reporting of missing firearms.

Nonetheless, in an August 2003 inspection of Gilbert's operations, inspectors discovered thousands of regulatory violations. A review of Gilbert's inventory revealed that 427 firearms were missing, meaning they were not locatable either in physical inventory or the A & D Records. The inspection further found a number of discrepancies in the A & D Records, including the following: on 85 occasions, Gilbert failed to record disposition information in the A & D Records within seven days of disposition; on 118 occasions, Gilbert failed to report a federal firearms license number in the acquisition section of the A & D Records; on two occasions, Gilbert failed to report the name and address of the person from whom a firearm was received; and, on one occasion, Gilbert failed to record the disposition date of a firearm in the A & D Record. The inspection further found that Gilbert had been using an expired ammunition manufacturer license number rather than his actual dealer's license number to stamp at least 250 ATF Forms 4473.³ The inspection also turned up numerous additional violations related to improperly filling out ATF Form 4473, including failing on thirty occasions to properly complete the needed information for a transfer of NFA weapons to non-licensees; failing in thirteen instances to obtained the required additional documentation to establish residence for legal-alien purchasers prior to transferring a firearm; and failing on six occasions to include National Instant Criminal Background Check ("NICS") information with ATF Form 4473. Gilbert was also cited for failing to timely report the theft or loss of firearms; transferring a firearm to a Virginia resident in violation of Virginia and federal law, transferring a firearm to someone who indicated on ATF Form 4473 that she was not the firearm purchaser, and illegally operating as a gunsmith at an unlicensed premise.

As a result of the 2003 inspection, ATF issued a Notice of Revocation of License to AAI on January 21, 2005. The Notice indicated that AAI had willfully violated the provisions and regulations of the GCA and it detailed the aforementioned history of noncompliance. On January 13, 2006, the ATF issued a Notice of Denial for GIR's application for renewal of its federal firearms license.

At Gilbert's request, a hearing regarding these decisions was held before an ATF Hearing Officer on March 30, 2006. At this hearing, Gilbert, represented by counsel, introduced no evidence to contest the factual basis for the revocation and denial, and he refused to testify when called as a witness by the Government. On May 22, 2006, the Hearing Officer issued his report, recommending revocation and denial.

On June 24, 2006, ATF's Director of Industry Operations for the Baltimore Field Division, Arthur Herbert, issued a Final Notice of Revocation/Denial to Gilbert. The Final Notice stated that Gilbert had "willfully engaged in repeat violations of the Gun Control Act." (2 A.R. 796.) At Gilbert's request, ATF stayed the effective date of the revocation pending review by the United States District Court for the District of Maryland pursuant to 18 U.S.C. § 923(f)(3) (2006).⁴

Gilbert's petition for review asked the district court to "1) decide that [ATF] erred and was not authorized to revoke AAI's license or to deny GIR's license application; 2) order [ATF] to withdraw the revocation and denial; and 3) award such other relief, including costs and attorney's fees ... as appropriate." (J.A. 32.) Instead, the district court granted summary judgment to ATF on February 19, 2008.

The administrative record was essentially the only evidence before the district court at summary judgment. The only additional evidence Gilbert provided to the district court was his own affidavit in which he denied that any of the violations for which he was cited by the ATF were willful. He characterized many of them instead as "clerical" in nature. Then, while not specifically denying any of the violations (except the allegation that he operated as a gunsmith at an unlicensed premises), he proceeded to explain the circumstances surrounding each violation: how he remedied (or attempted to remedy) the violation, how he had arranged alternative procedures for accomplishing the purpose of the given violated regulation, or how he had been unaware of the unlawful nature of his actions at the time. He also noted that in a May 2001 inspection, the inspector had told him that AAI was doing a "good job." (J.A. 227.)

In granting summary judgment to ATF, the district court found there was "substantial evidence to support Respondent's finding that Petitioner willfully committed `hundreds of ... violations ... after a history of previous violations.'" (J.A. 54 (alteration in original).) "Revocation," the court continued, "was not only `authorized' but well justified where Petitioners continued to commit hundreds of violations of the GCA after repeated warnings about the unlawfulness of the licensee's prior noncompliance." (Id.)

After the district court denied Gilbert's Motion to Alter Judgment, he timely appealed to this court. In his appeal, Gilbert challenges the district court's finding that his violations of the GCA were willful and he questions the lawfulness of several of the regulations which he was found to have violated.

II.

"The Attorney General may, after notice and opportunity for hearing, revoke any license issued [pursuant to 18 U.S.C. § 923] if the holder of such license has willfully violated any provision of [the GCA] or any rule or regulation prescribed by the Attorney General under [the GCA]...." 18 U.S.C. § 923(e) (2006); see also 27 C.F.R. § 478.73(a) (2008) ("Whenever the [ATF] Director of Industry Operations has reason to believe that a licensee has willfully violated any provision of the [GCA] ... a notice of revocation of the license ... may be issued.").⁵ A federal court reviewing such a revocation may grant summary judgment "if no genuine issue of material fact exists about whether [the licensee] will-fully violated an applicable statutory or regulatory provision." Armalite, Inc. v. Lambert, 544 F.3d 644, 647 (6th Cir.2008). We review a district court's grant of summary judgment de novo. Blaustein & Reich, Inc. v. Buckles, 365 F.3d 281, 286 (...