7 F.3d 212 (Fed. Cir. 1993), 92-5125, Mitchell Arms, Inc. v. United States

Docket Nº:92-5125.
Citation:7 F.3d 212
Party Name:MITCHELL ARMS, INC., Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee.
Case Date:October 14, 1993
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit

Page 212

7 F.3d 212 (Fed. Cir. 1993)

MITCHELL ARMS, INC., Plaintiff-Appellant,


The UNITED STATES, Defendant-Appellee.

No. 92-5125.

United States Court of Appeals, Federal Circuit

October 14, 1993

Page 213

Alvin S. Kaufer, Nossaman, Guthner, Knox & Elliott, Los Angeles, CA, argued for plaintiff-appellant. With him on the brief was John Ossiff, of counsel.

Mark B. Stern, Atty., Dept. of Justice, Washington, DC, argued for defendant-appellee. With him on the brief were Stuart M. Gerson, Asst. Atty. Gen. and Michael Jay Singer, Atty.

Before RICH, LOURIE, and SCHALL, Circuit Judges.

SCHALL, Circuit Judge.

Mitchell Arms, Inc. (Mitchell), appeals from the April 14, 1992 judgment of the United States Claims Court dismissing its complaint under Rule 12(b)(4) of the United States Claims Court (RUSCC) for failure to state a claim upon which relief could be granted. 1 In its complaint, Mitchell contended that the actions of the Bureau of Alcohol, Tobacco, and Firearms (ATF) revoking permits issued to Mitchell for the importation of certain firearms and suspending for ninety days the permits for the importation of certain other firearms constituted compensable takings under the Fifth Amendment of the United States Constitution. In ordering the dismissal of Mitchell's complaint, the Claims Court concluded that Mitchell had not asserted the kind of property right that could be the subject of a taking claim. Mitchell Arms, Inc. v. United States, 26 Cl.Ct. 1 (1992). We affirm.


The pertinent facts are not in dispute. The Gun Control Act of 1968, Pub.L. No. 90-612, 82 Stat. 1213 (codified as amended at 18 U.S.C. §§ 921-930 (1988)), provides four exceptions to a general prohibition on the importation of firearms. Under one of those exceptions, the Secretary of the Treasury, through ATF, "shall authorize" the importation of firearms which are, among other limitations, "generally recognized as particularly suitable for or readily adaptable to sporting purposes...." 18 U.S.C. § 925(d)(3).

Mitchell is a federally-licensed firearms importer involved in the sale of commercial firearms to wholesale distributors and retail dealers. In 1986, it entered into a contract with the Federal Directorate of Supply of Yugoslavia (the Directorate) to buy certain firearms, commonly referred to as "assault rifles." 2

Mitchell submitted for ATF inspection a sample of each rifle to be imported under its

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contract with the Directorate. In 1987, after approval of the samples, ATF issued Mitchell permits authorizing the importation of the rifles. Each import permit was valid for six months and specified a type and quantity of firearms. Once a permit expired, a new permit was required in order for Mitchell to continue importation of the previously-approved firearms. See 27 C.F.R. § 178.112(b) (1988).

Mitchell imported rifles under the permits throughout 1987 and 1988. In December of 1988, Mitchell obtained renewal of four permits authorizing the importation of some 9,000 assault rifles.

On March 14, 1989, ATF issued a news release announcing the suspension of pending applications for import permits. Following the announcement, Mitchell contacted ATF and was told that it could rely on its issued permits. Shortly thereafter, Mitchell confirmed an order with the Directorate for a quantity of assault rifles. Mitchell apparently intended to import the rifles under its existing permits, which were to expire in June of 1989. Before manufacturing the rifles, however, the Directorate required that Mitchell obtain an irrevocable letter of credit in order to pay for the firearms.

On March 21, 1989, ATF suspended the importation of assault rifles under existing permits, pending a study to determine if the assault rifles identified in the permits met revised criteria for the sporting purposes exception of 18 U.S.C. § 925(d). Mitchell received notification of the suspension on March 31, 1989. On April 3, 1989, Mitchell executed an irrevocable letter of credit formalizing the financial arrangements for its March order with the Directorate.

The assault rifles were shipped to Mitchell in April and May of 1989, arriving at Los Angeles and New York port facilities. The United States Customs Service refused entry of the rifles for lack of a valid import permit.

On July 12, 1989, ATF issued a preliminary determination generally banning further importation of assault rifles. In the determination, ATF found that assault rifles like the ones covered by Mitchell's suspended permits no longer satisfied the statutory criteria for importation under the sporting purposes exception. In conjunction with the suspension and revocation of permits to import assault rifles, ATF also temporarily suspended permits to import .22 caliber semiautomatic rimfire rifles, to the detriment of Mitchell, which was in the process of importing such rifles. This suspension lasted approximately ninety days.

After receiving comment from Mitchell and other interested parties, ATF issued a final decision on November 6, 1989, rejecting the various arguments for continued importation of assault rifles. In its final decision, ATF refused Mitchell's request that the ban on assault rifles not be extended to weapons for which import permits had previously been approved.

The final ATF decision included provisions designed to alleviate the hardship resulting from the revocation of existing permits. Specifically, ATF advised Mitchell and other affected importers of alternative commercial uses for the banned rifles, including sale to certain government agencies and export to other countries. ATF also suggested that Mitchell modify the rifles to meet new import criteria. Mitchell modified and disposed of approximately half of the original 9,000 rifles seized by the Customs Service.

Gun South, Inc. (Gun South), a firearms importer similarly situated to Mitchell, challenged ATF's authority to temporarily suspend issued import permits and the Customs Service's seizure of its firearms. Gun South sought a declaratory judgment and injunctive relief in federal district court under provisions of the Administrative Procedure Act (APA), 5 U.S.C. § 706 (1988). The district court concluded that ATF's actions were ultra vires and enjoined further government interference in the importation of firearms under validly issued permits. On appeal, the United States Court of Appeals for the Eleventh Circuit reversed, concluding, contrary to the district court, that ATF had not acted outside the scope of its statutory authority when it temporarily suspended Gun South's permits. See Gun South, Inc. v. Brady, 877 F.2d 858, 861-64 (11th Cir.1989), rev'g 711 F.Supp. 1054 (N.D.Ala.1989).

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On October 19, 1990, Mitchell filed an action in the Claims Court alleging that the suspension and revocation of its import permits constituted a compensable taking under the Fifth Amendment. As noted above, the Claims Court dismissed Mitchell's complaint for failure to state a claim upon which relief could be granted. In its decision accompanying the order to dismiss, the court concluded that neither the permits themselves nor Mitchell's expectations arising from the combination of the permits and its contract with the Directorate amounted to "a property interest" within the meaning of the Just Compensation Clause of the Fifth Amendment. This appeal followed.




A motion to dismiss for failure to state a claim upon which relief can be granted is appropriate where the plaintiff cannot assert a set of facts which would support its claim. Chang v. United States, 859 F.2d 893, 894 (Fed.Cir.1988). In reviewing the granting of a motion to dismiss under RUSCC 12(b)(4), we must "assume all well-pled factual allegations are true and indulge in all reasonable inferences in favor of...

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