Smith & Wesson Brands, Inc. v. Attorney Gen. of N.J.

• Decision Date: 10 March 2022
• Docket Number: No. 21-2492,21-2492
• Parties: SMITH & WESSON BRANDS, INC.; Smith & Wesson Sales Company ; Smith & Wesson Inc., Appellants v. ATTORNEY GENERAL OF the State of NEW JERSEY; New Jersey Division of Consumer Affairs
• Court: U.S. Court of Appeals — Third Circuit

27 F.4th 886

SMITH & WESSON BRANDS, INC.; Smith & Wesson Sales Company ; Smith & Wesson Inc., Appellants

v.ATTORNEY GENERAL OF the State of NEW JERSEY; New Jersey Division of Consumer Affairs

No. 21-2492

United States Court of Appeals, Third Circuit.

Argued on November 9, 2021

Filed: March 10, 2022

Courtney G. Saleski [Argued], DLA Piper, 1650 Market Street, One Liberty Place, Suite 5000, Philadelphia, PA 19103, Joseph A. Turzi, Edward S. Scheideman, DLA Piper, 500 Eighth Street, NW, Washington, DC 20004, Christopher M. Strongosky, DLA Piper, 51 John F. Kennedy Parkway, Suite 120, Short Hills, NJ 07078, Counsel for Appellants

Andrew J. Bruck, Jeremy M. Feigenbaum, Angela Cai [Argued], Stephanie J. Cohen, Robert J. McGuire, Michael T. Moran, Tim Sheehan, John T. Passante, Office of Attorney General of New Jersey, 25 Market Street, Richard J. Hughes Justice Complex, Trenton, NJ 08625, Counsel for Appellees

Before: HARDIMAN, MATEY, and SCIRICA, Circuit Judges

OPINION OF THE COURT

HARDIMAN, Circuit Judge.

Smith & Wesson appeals an order of the District Court dismissing its federal civil rights complaint in view of a subpoena enforcement action pending in the New Jersey state courts. Because the District Court violated its "virtually unflagging obligation ... to exercise the jurisdiction given," Colo. River Water Conservation Dist. v. United States , 424 U.S. 800, 817, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976), we will vacate and remand.

I

The New Jersey Attorney General is investigating Smith & Wesson for possible violations of the New Jersey Consumer Fraud Act. See N.J. Stat. Ann. § 56:8-2 (prohibiting "any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing concealment, suppression, or omission of any material fact"). The Act empowers the Attorney General to "investigate consumer-fraud complaints." Cox v. Sears Roebuck & Co. , 138 N.J. 2, 647 A.2d 454, 460 (1994) (citing N.J. Stat. Ann. § 56:8-4 ). It also authorizes him to issue subpoenas, "which shall have the force of law," N.J. Stat. Ann. § 56:8-4, when he believes someone has violated the Act or "when he believes it to be in the public interest that an investigation should be made to ascertain whether a person in fact has engaged in, is engaging in[,] or is about to engage in, any such practice," id. § 56:8-3. The Attorney General may request orders from New Jersey courts: "(a) Adjudging [a subpoena violator] in contempt of court; (b) Granting injunctive relief without notice restraining the sale or advertisement of any merchandise by [a subpoena violator]; or (c) Vacating, annulling, or suspending the corporate charter of a corporation." Id. § 56:8-6.

In October 2020, the New Jersey Attorney General issued a subpoena under the Act seeking documents from Smith & Wesson related to the company's advertisements in New Jersey. The subpoena first made a general demand that Smith & Wesson produce copies of and supporting documentation for "all advertisements for [Smith & Wesson's] [m]erchandise that are or were available or accessible in New Jersey [c]oncerning home safety, concealed carry, personal protection, personal defense, personal safety, or home defense benefits of a [f]irearm." App. 25. The subpoena then specifically demanded all documents related to topics of special concern to the Attorney General:

a. Whether Smith & Wesson's [f]irearms can be legally carried and concealed by any [c]onsumer, [i]ncluding by New Jersey [c]onsumers, while in New Jersey;

b. Whether the concealed carry of a [f]irearm enhances one's lifestyle;

c. Whether it is safer to confront a perceived threat by drawing a [f]irearm rather than seeking to move away from and avoid the source of the perceived threat;

d. Whether having a Smith & Wesson [f]irearm or other [f]irearm makes a home safer;

e. Whether Smith & Wesson [f]irearms are designed to be more safe, reliable, accurate, or effective than [f]irearms made by other [f]irearm manufacturers for use in personal or home defense or other activities; and

f. Whether novice, untrained [c]onsumers could successfully and effectively use a Smith & Wesson [f]irearm for personal or home defense.

Id. The Attorney General's focus included questions especially concerning Smith & Wesson's comparative claims, such as whether its firearms are "[p]recision built to be the most accurate and reliable." See Archive: M & P 9 No Thumb Safety , Smith & Wesson, https://www.smith-wesson.com/firearms/archive-mp-9-no-thumb-safety-0 (last visited Feb. 4, 2022).

Instead of producing the documents when due under the subpoena, Smith & Wesson filed a complaint in the District of New Jersey under 42 U.S.C. § 1983, alleging the subpoena violated the First, Second, Fourth, Fifth, and Fourteenth Amendments. Two months later, in February 2021, the New Jersey Attorney General sought to enforce the subpoena in state court. The state trial court ordered Smith & Wesson to show cause and threatened the company with contempt and a total ban on sales in New Jersey. In response, Smith & Wesson raised many of the same constitutional arguments it presented in its federal suit. The state court summarily rejected those arguments and required Smith & Wesson to produce the subpoenaed documents within 30 days. Smith & Wesson sought an emergency stay of production, but the Appellate Division of the New Jersey Superior Court and the New Jersey Supreme Court denied it.

Meanwhile, in federal court, Smith & Wesson amended its complaint to add claims that the Attorney General's suit was "retaliation for Smith & Wesson's exercise of its First Amendment-protected right to petition [the District] Court for redress." App. 83. The Attorney General then moved to dismiss that complaint, claiming abstention was required under Younger v. Harris , 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971). The District Court agreed and dismissed Smith & Wesson's amended complaint. Smith & Wesson Brands, Inc. v. Grewal , 2021 WL 3287072, at *3 (D.N.J. Aug. 2, 2021) (holding that abstention under Younger was necessary because "the subpoena-enforcement action involves orders in the furtherance of state court judicial function"). Smith & Wesson eventually produced the subpoenaed documents under a protective order, which requires the Attorney General to return the documents if the subpoena is later held unlawful. Smith & Wesson appeals the District Court's order dismissing its amended complaint.

II

The District Court had jurisdiction under 28 U.S.C. § 1331 because Smith & Wesson asserted claims under 42 U.S.C. § 1983.¹ We have jurisdiction under 28 U.S.C. § 1291 to review the District Court's order dismissing the case. "We exercise plenary review over a trial court's ... determination of whether Younger abstention is proper." Hamilton v. Bromley , 862 F.3d 329, 333 (3d Cir. 2017).

III

"To promote comity between the national and state governments, Younger requires federal courts to abstain from deciding cases that would interfere with certain ongoing state proceedings." Malhan v. Sec'y U.S. Dep't of State , 938 F.3d 453, 461 (3d Cir. 2019) (citations omitted). Younger involved a pending state criminal prosecution, 401 U.S. at 40–41, 91 S.Ct. 746, but the Supreme Court later extended the doctrine to some state civil proceedings, see Huffman v. Pursue, Ltd. , 420 U.S. 592, 607, 95 S.Ct. 1200, 43 L.Ed.2d 482 (1975). In the years that followed, federal courts expanded Younger and abstained too frequently, so the Supreme Court reined in that expansion. ACRA Turf Club, LLC v. Zanzuccki , 748 F.3d 127, 135–36 (3d Cir. 2014) ; see Sprint Commc'ns, Inc. v. Jacobs , 571 U.S. 69, 81–82, 134 S.Ct. 584, 187 L.Ed.2d 505 (2013). The Supreme Court has since consistently narrowed abstention doctrines, including Younger , because they "conflict[ ] with federal courts' ‘virtually unflagging’ obligation to exercise their jurisdiction."

Malhan , 938 F.3d at 462 (quoting Sprint , 571 U.S. at 77, 134 S.Ct. 584 ); see also id. at 458 (citing Colo. River , 424 U.S. at 817, 96 S.Ct. 1236 ).

The Court's most recent guidance in Sprint explains that " Younger extends ... no further" than three "exceptional circumstances": (1) "state criminal prosecutions"; (2) "civil enforcement proceedings"; and (3) "civil proceedings involving certain orders uniquely in furtherance of the state courts' ability to perform their judicial functions." 571 U.S. at 78, 82, 134 S.Ct. 584 (cleaned up).² The Court clarified that "[a]bstention is not in order simply because a pending state-court proceeding involves the same subject matter." Id. at 72, 134 S.Ct. 584. In doing so, " Sprint narrowed Younger 's domain." Malhan , 938 F.3d at 462.

This appeal does not involve a pending state criminal prosecution, so the first Younger category is inapplicable. The District Court invoked the third category, holding that the state proceedings involve "orders in the furtherance of state court judicial function." Smith & Wesson , 2021 WL 3287072, at *3. In response to Smith & Wesson's arguments in this appeal, the Attorney General argues that abstention is also appropriate under the second Younger category because the subpoena enforcement action is a civil enforcement proceeding akin to a criminal prosecution.

A

We first consider whether the subpoena enforcement action falls within the second Younger category—is it a "civil enforcement proceeding"? To qualify as such, the underlying state action must be "akin to a criminal prosecution in important respects." Sprint , 571 U.S. at 79, 134 S.Ct. 584 (cleaned up). In other words, "the state civil enforcement proceeding must be ‘quasi-criminal’ in nature." ACRA Turf , 748 F.3d at 138 (quoting Sprint , 571 U.S. at 81, 134 S.Ct. 584 ). Three factors guide this inquiry: "whether (1) the action was commenced by the State in its sovereign capacity, (2) the proceeding was initiated to sanction the federal plaintiff for some wrongful act, and (3) there are other similarities to criminal...