695 F.Supp.2d 474 (S.D.Tex. 2010), Civ. B-06-105, Gonzalez v. United States Dept. of Commerce, Nat. Oceanic and Atmospheric Admin.
|Docket Nº:||Civil B-06-105.|
|Citation:||695 F.Supp.2d 474|
|Opinion Judge:||ANDREW S. HANEN, District Judge.|
|Party Name:||Jorge GONZALEZ, et al., Plaintiffs, v. UNITED STATES DEPARTMENT OF COMMERCE, NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION, Defendant.|
|Attorney:||Javier Gonzalez, Royston, Rayzor, Vickery & Williams, L.L.P., Brownsville, TX, for Plaintiffs. Mark Arthur Brown, U.S. Department of Justice, Washington, DC, for Defendant.|
|Case Date:||March 15, 2010|
|Court:||United States District Courts, 5th Circuit, Southern District of Texas|
[Copyrighted Material Omitted]
Memorandum Opinion and Order
On June 30, 2006, the Plaintiffs filed their first Complaint in this Court, challenging
four separate but related administrative actions concerning civil penalty assessments and permit sanctions issued by the United States Department of Commerce, National Oceanic and Atmospheric Administration (" NOAA" or " the Agency" ). (Doc. No. 1.) On August 11, 2008, Plaintiffs filed their Second Amended Complaint after the actions had gone through the administrative process. (Doc. No. 20.)
On June 24, 2009, this Court issued an Order granting in part and denying in part the Defendant's Motion to Dismiss. 632 F.Supp.2d 642 (S.D.Tex.2009). Specifically, the Court determined that two of the Agency's actions-the Notices of Violation and Assessment of Administrative Penalty (" NOVA" ) in cases SE001412FM and SE030369FM-were time-barred, and it therefore dismissed all claims arising from those NOVAs. ( Id. at 651-54.) The remaining NOVAs, SE043022FM (" 43022" ) and SE050027FM (" 50027" ), were not dismissed in the June 24, 2009 Order. ( Id. at 653-54.)
On September 11, 2009, Plaintiffs filed an Opposed Motion for Leave to File Third Amended Complaint. (Doc. No. 34.) As pointed out by the Defendant's Response in Opposition (Doc. No. 36), the proposed Third Amended Complaint continues to assert claims that were previously dismissed by this Court. ( See, e.g., Doc. No. 34-1 at ¶ 3.4 (alleging that " [t]he Office of Administrative Law Judge's final action ... in Case No. SE030369 and ... in Case No. SE001412FM ... was incorrect." ).) 1 Therefore, on September 29, 2009, 2009 WL 3157355, the Court granted the Motion for Leave to Amend with the caveat that such leave did not revive the dismissed claims. (Doc. No. 39.) Thus, Plaintiffs' Third Amended Complaint is the live pleading in this case. (Doc. No. 34-1.)
Now pending before the Court are the Plaintiffs' Motion for Summary Judgment (Doc. No. 35) and the Defendant's Motion for Summary Judgment (Doc. No. 42). Having considered the parties' motions, replies, and the administrative record, the Court hereby finds that the Defendant's Motion for Summary Judgment is GRANTED IN PART and DENIED IN PART and the Plaintiffs' Motion for Summary Judgment is also GRANTED IN PART and DENIED IN PART.
For the reasons discussed herein, the only claim for which Plaintiffs are entitled to summary judgment is the claim that the Defendant denied certain " non-violating" corporate Plaintiffs a hearing on the permit sanctions issued against them for other corporations' nonpayment of penalties. The Agency's decisions denying these Plaintiffs a hearing on the permit sanctions are therefore REVERSED, the corresponding sanctions are VACATED, and the matter is REMANDED to the Agency for additional administrative proceedings.
I. BACKGROUND 2
A. The Dismissed Claims
With the exception of Plaintiff Gonzalez, all other Plaintiffs are Texas corporations that either now or at one time owned a shrimp trawler and that have as their sole officer/director/shareholder Plaintiff Gonzalez. Plaintiff Gonzalez is also a resident of Texas. On September 12, 2002, the Agency issued a Notice of Violation and Assessment of Administrative Penalty
(" NOVA" ) against Plaintiff Rio Purificacion, Inc. in Case No. 1412. 1412/30369 AR Ex. 1.3 The two-count NOVA charged Rio Purificacion with violating both the Endangered Species Act and the Magnuson-Stevens Fishery Management and Conservation Act (the " Magnuson-Stevens Act" ) by failing to have installed turtle excluder devices and bycatch reduction devices on its vessel, the F/V RIO CONCHOS. Id. (citing 16 U.S.C. §§ 1538(a)(1)(G), 1857(1)(A) and implementing regulations). Plaintiff Rio Purificacion was assessed penalties totaling $ 14,000. Id. Rio Purificacion did not timely seek a hearing, and this Court therefore found that NOVA 1412 became final agency action thirty days after the respondent (Rio Purificacion) was served with the NOVA, or on December 18, 2002. (632 F.Supp.2d at 651-53.) Since Plaintiffs did not timely seek judicial review of NOVA 1412, this Court dismissed all claims arising from NOVA 1412. ( Id. at 651-53.)
On April 22, 2004, the Agency issued a NOVA against Plaintiff Rio San Marcos, Inc. in Case No. 30369. 1412/30369 AR Ex. 11. This NOVA charged Rio San Marcos with violating the Magnuson-Stevens Act when its vessel, the F/V RIO SAN MARCOS, was found fishing for shrimp in the Gulf Exclusive Economic Zone without a valid permit. Id. The penalty assessed was $30,000. Id. Rio San Marcos did not seek a hearing within the thirty days provided by agency regulations, and therefore this Court determined that NOVA 30369 became final agency action thirty days after Rio San Marcos was served. (632 F.Supp.2d at 653-54.) Plaintiffs did not seek timely judicial review of NOVA 30369, and therefore this Court dismissed all claims arising from NOVA 30369 as well. ( Id. at 653-54.)
B. NOVA 50027
On March 22, 2005, the Agency issued a NOVA against Plaintiff Gonzalez Fisheries, Inc. in Case No. 50027. 50027 AR Vol. 1, Ex. 1. According to the NOVA, Gonzalez Fisheries violated the Magnuson-Stevens Act because its vessel, the F/V AZTECA, was found to be fishing for shrimp in the Gulf Exclusive Economic Zone without a valid permit. Id. The NOVA also noted that 1,354 pounds of shrimp from the AZTECA had been seized and sold for $5,912.65. Id. The Agency also assessed a civil penalty of $30,000 for the violation. Id. On May 2, 2005, Gonzalez Fisheries submitted a timely request for a hearing. 50027 AR Vol. 1, Ex. 1; 15 C.F.R. § 904.102(a). Such request was processed, and the hearing ultimately took place before a U.S. Coast Guard Administrative Law Judge on March 21, 2006 in Ft. Myers, Florida. 50027 AR Vol. 4, Ex. 43. On December 4, 2006, the Administrative Law Judge issued a decision finding that Gonzalez Fisheries was liable for the shrimp fishing permit violation, under the doctrine of respondeat superior; that service of the NOVA upon Gonzalez Fisheries had been proper; that the $30,000 civil penalty assessed by the Agency was within the guidelines and appropriate; and that Gonzalez Fisheries had the ability to pay the penalty. 50027 AR Vol. 4, Ex. 38 at 14.
Prior to the hearing, Gonzalez Fisheries indicated in its Preliminary Positions on Issues and Procedures that it would be challenging the amount of the penalty assessed due to its inability to pay the full amount of the penalty. 50027 AR Vol. 1,
Ex. 7 at 7. In support of its claim, Gonzalez Fisheries attached copies of tax returns for the company and for Mr. Gonzalez, the corporation's registered agent. 50027 AR Vol. 1, Ex. 7 Attachment. The Agency then made written requests for additional financial information, including tax returns from Mr. Gonzalez's other businesses and certain financial disclosure forms, from Gonzalez Fisheries' counsel. 50027 AR Vol. 1, Ex. 9 at 2-3; Ex. 10 at 4-5.
Since counsel for Gonzalez Fisheries did not provide the complete information sought, the Agency filed a Motion to Compel Production or Exclude Evidence/Testimony regarding the corporation's ability to pay. 50027 AR Vol. 1, Ex. 9. On November 30, 2005, the Administrative Law Judge granted the Agency's Motion based on consideration of the applicable legislative history, case law, and regulations. 50027 AR Vol. 1, Ex. 12. Specifically, the Administrative Law Judge found that " if the Respondent wants his ability to pay to be considered, he must present verifiable financial information to Agency counsel to the extent that Agency counsel determines is adequate to evaluate Respondent's financial condition." Id. at 5 (relying on 15 C.F.R. § 904.108). Further, the Administrative Law Judge determined that " since the Administrative Law Judge has no authority to rule on whether the financial information presented to Agency counsel is adequate," there was no need for the Administrative Law Judge to " memorialize" the income tax statements that Gonzalez Fisheries had submitted. Id. at 6. Ultimately, Gonzalez Fisheries did not submit " verifiable financial information in accordance with 15 C.F.R. § 904.108(c) and [the Administrative Law Judge's] Order of November 30, 2005" and the Administrative Law Judge therefore determined that Gonzalez Fisheries did have the ability to pay the $30,000 penalty. 50027 AR Vol. 4, Ex. 38 at 14.
On January 4, 2007, Gonzalez Fisheries submitted a Petition for Discretionary Review to the Agency Administrator. 50027 AR Vol. 4, Ex. 39. On May 1, 2007, the Administrator denied the Petition, determining that " the ALJ's decision is supported by substantial evidence in the record, and no error of law occurred." 50027 AR Vol. 4, Ex. 42. In its June 24, 2009 Order, this Court noted that Plaintiffs had " exhausted their administrative remedies and timely filed for review" and therefore considered Plaintiffs' request for judicial review of Case No. 50027 properly filed and within its jurisdiction. (632 F.Supp.2d at 653-54.)
C. NOVA 43022
On June 24, 2005, the Agency issued a NOVA against Plaintiff Rio San Marcos, Inc. in Case No. 43022. 43022 AR Vol. 1, Ex. 1. According to the NOVA, Rio San Marcos violated...
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