Appalachian Resources Development Corp. v. McCabe

• Decision Date: 20 October 2004
• Docket Number: No. 03-5537.,03-5537.
• Parties: APPALACHIAN RESOURCES DEVELOPMENT CORPORATION, d/b/a BEND OF THE RIVER, Petitioner-Appellant, v. Harry L. McCABE, III, in his official capacity as Director, Industry Operations, Nashville Division, Bureau of Alcohol, Tobacco & Firearms, Respondent-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

387 F.3d 461

APPALACHIAN RESOURCES DEVELOPMENT CORPORATION, d/b/a BEND OF THE RIVER, Petitioner-Appellant, v. Harry L. McCABE, III, in his official capacity as Director, Industry Operations, Nashville Division, Bureau of Alcohol, Tobacco & Firearms, Respondent-Appellee.

No. 03-5537.

United States Court of Appeals, Sixth Circuit.

Argued: August 4, 2004.

Decided and Filed: October 20, 2004.

Appeal from the United States District Court for the Middle District of Tennessee, William J. Haynes, Jr., J ARGUED: Dale A. Tipps, Levine, Mattson, Orr & Geracioti, Nashville, TN, for Appellant. Terry J. Haycox, Assistant United States Attorney, Nashville, TN, for Appellees. ON BRIEF: Dale A. Tipps, Richard W. Mattson, Levine, Mattson, Orr & Geracioti, Nashville, TN, for Appellant. Terry J. Haycox, Assistant United States Attorney, Nashville, TN, for Appellees.

Before: CLAY and GILMAN, Circuit Judges; MATIA, Chief District Judge.^*

MATIA, D. J., delivered the opinion of the court, in which GILMAN, J., joined. CLAY, J. (pp. 467-68), delivered a separate concurring opinion.

OPINION

MATIA, Chief Judge.

Appalachian Resources Development Corporation appeals the district court's grant of summary judgment in favor of the Bureau of Alcohol, Tobacco and Firearms ("ATF"), affirming the revocation of its licenses to sell firearms and ammunition for willfully violating the Gun Control Act of 1968, 18 U.S.C. §§ 921 et seq. For the reasons set forth below, we AFFIRM the decision of the district court.

I. BACKGROUND

On July 16, 1997, eighteen year old Aaron Rains, a resident of Cookeville, Tennessee, committed suicide with a .25 caliber handgun. The ATF soon thereafter began an investigation of Bend of the River Shooting Supplies ("appellant"), a store located in Cookeville, Tennessee, that had been duly licensed to sell firearms and ammunition since the early 1970s. Law enforcement officials began to scrutinize appellant after evidence found at the scene of Mr. Rains's suicide indicated that the.25 caliber ammunition used in his handgun was purchased from Bend of the River.¹ Although appellant claims that it does not recollect ever selling ammunition to Mr. Rains, a sales receipt and cashed check are evidence that William West, a sales clerk at Bend of the River, did in fact sell .25 caliber Automatic Colt Pistol ("ACP") ammunition to Mr. Rains on July 16, 1997.

On March 17, 2000, the ATF served appellant with Notices of Revocation of its four federal firearms licenses for selling handgun ammunition in violation of the Gun Control Act ("GCA") of 1968.² Appellant was specifically charged with violating 18 U.S.C. § 922(b)(1), which, in pertinent part, prohibits a licensed firearms dealer from selling ammunition, for other than a shotgun or rifle, "to any individual who the licensee knows or has reasonable cause to believe is less than twenty-one years of age." Appellant requested an administrative hearing to review the revocation. On November 30, 2000, the hearing officer found that appellant willfully violated the GCA, therefore upholding the revocation of appellant's firearms licenses.

Appellant next filed suit in United States District Court for the Middle District of Tennessee, seeking review of the revocation. After considering the evidence de novo, the district court granted the ATF's motion for summary judgment. In ruling in favor of the government, the district court determined that appellant "willfully" violated 18 U.S.C. § 922(b)(1) because it had "knowledge of the obligation" not to sell handgun ammunition to underage persons and because of "repeated violations" of that obligation.³ In reaching this conclusion, the district court ultimately rejected appellant's argument that .25 ACP ammunition is "interchangeable" (i.e., can be used in both handguns and rifles), thus finding that the sale was not exempt under the GCA. This timely appeal followed.

II. ANALYSIS

A. Standard of Review

This court reviews a district court's grant of summary judgment and all legal conclusions drawn by that court de novo, using the same standard employed by the district court. See Moore v. Philip Morris Cos., Inc., 8 F.3d 335, 339 (6th Cir.1993). Summary judgment is appropriate where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c). In deciding upon a motion for summary judgment, we must view the factual evidence and draw all reasonable inferences in favor of the non-moving party. Matsushita Elec. Ind. Co. Ltd., v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

B. Willful Violation of the GCA

The GCA prohibits a licensed dealer from selling handgun ammunition to any individual who the licensee knows or has reasonable cause to believe is less than twenty-one years of age. 18 U.S.C. § 922(b)(1); 27 C.F.R. § 178.99(b). Pursuant to 18 U.S.C. § 923(e), the government may revoke a firearms license if the dealer "willfully" violates a statute or regulation governing the firearm industry.

In the instant matter, it is undisputed that at the time of the ammunition sale to Mr. Rains, appellant knew of its obligation under the GCA not to sell handgun ammunition to underage persons. Despite this fact, appellant maintains that it did not "willfully" violate the GCA because the sale was not done "with the bad purpose to disobey or disregard the law." Bryan v. United States, 524 U.S. 184, 190, 118 S.Ct. 1939, 141 L.Ed.2d 197 (1998). The district court rejected this argument, finding that appellant willfully violated the GCA (1) because it had knowledge of the obligation not to sell handgun ammunition to underage persons at the time of the sale to Mr. Rains, and (2) because of "repeated violations" of that obligation. We agree.

The majority of circuits, including the Sixth Circuit, have consistently held that where a licensee understands his or her legal obligations under the GCA, yet fails to abide by those obligations, his or her license can be denied or revoked on the basis that the dealer "willfully" violated the GCA. See Al's Jewelry & Loan, Inc. v. U.S. Dep't of Treasury, Bureau of Alcohol, Tobacco & Firearms, No. 95-1765, 1996 WL 683528, at *3-*4 (6th Cir. Nov.22, 1996)(denial of license affirmed upon finding petitioner willfully violated GCA because he knew of record keeping obligations yet failed to abide by them); Perri v. Dep't of Treasury, Bureau of Alcohol, Tobacco & Firearms, 637 F.2d 1332, 1336 (9th Cir.1981)("To establish grounds for revocation of a license, the government must demonstrate a willful violation of the Act. That is established when a dealer understands the requirements of the law, but knowingly fails to follow them or was indifferent to them.")(citing Lewin v. Blumenthal, 590 F.2d 268, 269 (8th Cir.1979)); Stein's Inc. v. Blumenthal, 649 F.2d 463, 467 (7th Cir.1980)("The [GCA] does not require bad purpose or evil motive before a license may be revoked or a renewal application denied. The Secretary need only prove that the petitioner knew of his legal obligation and purposefully disregarded or was plainly indifferent to the recordkeeping requirements.")(quotation marks omitted); Prino v. Simon, 606 F.2d 449, 451 (4th Cir.1979)(Under the GCA, in a civil context, "[a] conscious, intentional, deliberate, voluntary decision properly is described as willful, regardless of venal motive.") (quotation marks omitted). Furthermore, it has been recognized that a single violation of the GCA is a sufficient basis for denying an application or revoking a firearms dealer's license. Cook v. Herbert, No. 03-00042, 2004 WL 40525, at *2 (W.D.Va. Jan. 5, 2004); see also 3 Bridges, Inc. v. U.S. Dep't of Treasury, Bureau of Alcohol, Tobacco & Firearms, 216 F.Supp.2d 655, 659 (E.D.Ky.2002); DiMartino v. Buckles, 129 F.Supp.2d 824, 827 (D.Md.2001), aff'd by unpublished order, DiMartino v. Buckley, No. 01-1166, 2001 WL 1127288, at *1 (4th Cir. Sept.25, 2001).

In the present case, we do not believe the "bad purpose" standard set forth in Bryan for determining willful conduct is controlling with regard to the district court's standard defining willful violation. The Supreme Court's decision in Bryan affirmed a conviction on the basis of the defendant's "willful" violation of 18 U.S.C. § 924(a)(1), which forbids dealing in firearms without a license. In particular, the Court upheld jury instructions that read:

A person acts willfully if he acts intentionally and purposely and with the intent to do something the law forbids, that is, with the bad purpose to disobey or to disregard the law.

Id. at 190, 118 S.Ct. 1939 (emphasis added). The Court, however, cautioned that the word "willfully" has many meanings, and that "[a]s a general matter, when used in a criminal context, a `willful act' is one undertaken with a bad purpose." Id. 524 U.S. at 191, 118 S.Ct. 1939. Moreover, the Bryan opinion acknowledges that a "disregard of a known legal obligation is sufficient to establish a willful violation[.]" Id. at 197-98, 118 S.Ct. 1939.

Nevertheless, appellant relies solely upon Bryan in arguing that a revocation under the GCA requires proof of "bad intent." This particular argument is unsupported by case law in this circuit or elsewhere. To the contrary, there is a wealth of case law, previously cited, which supports the district court's reasoning that Appellant "willfully" violated section 922(b)(1) because of its undisputed knowledge of the law at the time of the ammunition sale to Aaron Rains.

C. Sufficiency of the Evidence

Appellant next claims that the district court erred in granting summary judgment because there was insufficient evidence to prove it violated 18 U.S.C. § 922(b)(1) by "knowing" or having "reasonable cause to believe" that Aaron Rains was under twenty-one years of age when it...