Garrett's Worldwide Enters., LLC v. United States, Case No. 14-2281-JTM

Decision Date06 March 2015
Docket NumberCase No. 14-2281-JTM
CourtU.S. District Court — District of Kansas

Plaintiffs Eric Garrett and Garrett's Worldwide Enterprises (GWE) produce and ship fireworks, a highly-regulated activity. The United States Department of Transportation Pipeline and Hazardous Materials Safety Administration (PHMSA) conducted two inspections of GWE. Alleging that the inspections were groundless actions designed to retaliate against Garrett for his criticism of the agency, the plaintiffs instituted this action against the federal government under the Federal Tort Claims Act, alleging entrapment, negligence, abuse of process, outrage, unlawful search, First Amendment violations, cruel and unusual punishment, and malicious prosecution. The plaintiffs also advance Bivensclaims against DOT agents Theodore Turner, III, Terry Pollard, and Edward Rastetter.

The government, alleging that the present civil action is simply a device to circumvent the administrative review of potential violations discovered during the inspections, has moved to dismiss the action pursuant to Fed.R.Civ.Pr. 12(b)(1) for a lack of subject matter jurisdiction. For the reasons provided herein, the court hereby grants the defendants' motion.

The Secretary of Transportation is empowered to regulate hazardous materials by the Federal Hazardous Materials Transportation Law, 49 U.S.C. § 5103(a)-(b). Federal law further authorizes the Secretary to "investigate, conduct tests, make reports, issue subpoenas, conduct hearings, require the production of records and property, take depositions, and conduct research, development, demonstration, and training activities." 49 U.S.C. § 5121(a). The Secretary has in turn delegated these authorities to the PHMSA and its Administrator. 49 C.F.R. §§ 1.96, 1.97.

PHMSA has promulgated rules governing the transportation of fireworks. See 49 C.F.R. subtitle B, chapter I. These regulations include the prohibition of shipping fireworks without authorization, 49 C.F.R. § 173.51, or in a manner inconsistent with the agency's regulations for the packaging, transportation, and storage of fireworks. 49 C.F.R. § 171.1. PHMSA is authorized to inspect parties engaged in shipments. 49 C.F.R. §§ 107.305, § 107.709(d)(5).

The regulations further authorize administrative enforcement actions. Such actions are typically preceded by a Notice of Probable Violation (NOPV), which identifies thefactual and legal bases for a violation and sets forth a proposed civil penalty. The recipient of an NOPV can challenge these findings by either pursuing informal adjudication, or seeking a formal hearing before an administrative law judge. 49 C.F.R. §§ 107.317, 107.319.

Under an informal adjudication, PHMSA's Office of Chief Counsel may either dismiss the Notice, or direct compliance (and may assess a civil penalty). 49 C.F.R. § 107.317(d). If a formal hearing is requested, an administrative law judge resolves the challenge. Under either proceeding, a respondent faced with an unfavorable result may appeal to the PHMSA Administrator, whose decision represents the final agency action. 49 C.F.R. § 107.325. Under 49 U.S.C. § 5127(a), a Respondent has 60 days to then seek judicial review from the District of Columbia Circuit Court of Appeals.

Following an inspection, the regulations authorize PHMSA to suspend or terminate shipment rights. 49 C.F.R. §107.713(b). If the agency seeks to suspend an appproval, it issues a notice of the proposed action and must allow the shipper an opportunity to respond. After the shipment approval holder responds, the agency may cancel the action, or proceed to modify, suspend, or terminate the approvals. 49 C.F.R. § 107.713(c)(2).

The approval holder may seek reconsideration or appeal to the Administrator. 49 C.F.R. § 107.715, 717. The holder may subsequently seek judicial review purusuant to § 5127.

GWE sells and transports fireworks, and is thus subject to PHMSA oversight. In April 2010, PHMSA conducted a fitness inspection of GWE. PHMSA later issued an NOPV and proposed $94,000 in civil penalties.

GWE contested the NOPV. On July 30, 2012, PHMSA's Chief Counsel issued an order assessing $25,000 in civil penalties, finding that GWE had offered transportation in commerce fireworks (Class 1 explosive materials) which were forbidden for transportation in commerce without PHMSA approval, thereby violating 49 C.F.R. §§ 171.2(a), 173.22, 173.54, and 173.56.

GWE subsequently appealed. On July 25, 2013, the agency's Acting Chief Safety Officer issued a Decision on Appeal, upholding the civil penalties. The agency determined that GWE's allegations of misconduct by the investigators, which occurred after the NOPV was issued, were irrelevant. The agency also found that GWE had failed to show any facts mitigating culpability or indicating it was unable to pay the penalty. GWE did not seek judicial review of this decision.

As a result of the April 2010 inspection, on July 9, 2010, PHMSA moved to suspend and terminate GWE's approvals. On September 27, 2012, the show cause action was closed without further action, and GWE was never determined to be unfit.

In October, 2011, PHMSA conducted another fitness inspection, which led to a second NOPV, with proposed civil penalties of $16,2000, issued March 21, 2013. GWE contested the Notice. The agency's Chief Counsel, issued an Order assessing reduced civil penalties of $4000 on May 12, 2014. GWE appealed from this decision on May 29, 2014.The PHMSA's Chief Safety Officer is now reviewing the second enforcement action.

On March 27, 2013, GWE and Garrett along with Dennis Garrett, Susan Garrett, and Jason Garrett, submitted a joint administrative tort claim alleging injury and damagesarising out of the second enforcement action.

On May 6, 2013, PHMSA notified plaintiffs' counsel that the administrative claim was defective because it was filed on behalf of more than one claimant. PHMSA asked counsel to submit separate claims for each claimant, and to include medical documentation to substantiate personal injuries.

Garrett subsequently submitted his individual administrative tort claim on June 13, 2013. On July 22, 2013, the agency acknowledged receiving the claim and stated that it would not take any further action on the March 27, 2013 claim. Other than Garrett, none of the parties to the March 27 claim, including GWE, ever submitted any individual administrative claim, and none filed any court action alleging that the May 6, 2013, or July 22, 2013, letters were denials of their claims.

On December 12, 2013, PHMSA denied Garrett's administrative claim for failing to present compensable claims and for failing to present medical documentation to support his claim for personal injury.

GWE and Garrett filed the present lawsuit on June 10, 2014. They amended their Complaint on September 9, 2014, to add Bivens claims against individual agency employees. Against the Department of Transportation and PHMSA, the plaintiffs allege entrapment, negligence, abuse of process, negligent and infliction of emotional distress, unlawful search, and malicious prosecution. In the First Amended Complaint, the plaintiffs allege that defendants Rastetter, Pollard, and Turner, in their individual capacities, intentionally inflicted emotional distress, engaged in malicious prosecution,abuse of process, and violatedtheir rights under the First, Fourth, Fifth, and Fourteenth Amendments to the United States Constitution. The United States is now substituted as the proper defendant for the non-constitutional claims against Rastetter, Pollard and Turner.

Conclusions of Law

The government argues that the court lacks subject matter jurisdiction over GWE's FTCA claim, because the June 13, 2013 administrative complaint was advanced only by Garrett, not the company. Second, it argues that Garrett's claim is time-barred to the extent that it seeks recovery for any events occurring before June 13, 2011. The court finds that GWE failed to adequately present its administrative claim for review, and accordingly grants the motion to dismiss the claims now brought on behalf of the company.

The first administrative complaint, filed on March 27, 2013, was brought on behalf of multiple claimants, including Eric Garrett and GWE. After the agency indicated that the claim was flawed precisely because it combined the claims of multiple parties, Garrett submitted the second administrative claim in his own name alone. The administrative claim was accompanied by a Standard Form 95 "CLAIM FOR DAMAGE, INJURY, OR DEATH," which lists as "claimant" only "ERIC GARRETT." Under "BASIS OF CLAIM," the complaint alleges that "the claimant" — i.e., Eric Garrett"seeks damages for personal injuries suffered in connection with misconduct arising from the investigation of Garrett's Worldwide Enterprises." (Dkt. 9-8, at 3 (emphasis added)).

In their response, the plaintiffs stress that use of the SF-95 form is not formallyrequired by 28 C.F.R. § 14.2. They also note that the cover letter attached to the form identifies the counsel submitting the form as attorneys for both Eric Garrett and GWE.

The court finds that, in context, the administrative complaint does not fairly suggest a claim for relief by GWE. GWE was indeed a claimant in the earlier, and abandoned, first administrative complaint. And while an SF-95 Form is an optional form of presenting an administrative complaint, the plaintiffs chose this option, and are bound to the explicit representations made within it. As noted earlier, the form expressly states that Eric Garrett is the sole claimant in the second administrative complaint, and he is seeking "personal injuries" arising from the investigation.

GWE failed to give the...

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