Pinion Enterprises, Inc. v. Ashcroft

• Decision Date: 03 June 2005
• Docket Number: No. 204CV2638JHH.,204CV2638JHH.
• Parties: PINION ENTERPRISES, INC., d/b/a the Gun Cellar, an Alabama Corporation, Plaintiff/Petitioner v. John ASHCROFT, Attorney General of the United States, United States Department of Justice and the Bureau of Alcohol, Tobacco, Firearms and Explosives, Defendants/Respondents.
• Court: U.S. District Court — Northern District of Alabama

371 F.Supp.2d 1311

PINION ENTERPRISES, INC., d/b/a the Gun Cellar, an Alabama Corporation, Plaintiff/Petitioner v. John ASHCROFT, Attorney General of the United States, United States Department of Justice and the Bureau of Alcohol, Tobacco, Firearms and Explosives, Defendants/Respondents.

No. 204CV2638JHH.

United States District Court, N.D. Alabama, Southern Division.

June 3, 2005.

G. Douglas Jones, Whatley Drake LLC, Birmingham, AL, for Pinion Enterprises, Inc. an Alabama Corporation doing business as Gun Cellar, Plaintiff.

Alice H. Martin, U.S. Attorney, U.S. Attorney's Office, Carolyn Williams Steverson, U.S. Attorney's Office, Birmingham, AL, for John Ashcroft Attorney General of the United States, U.S. Department of Justice, Bureau of Alcohol, Tobacco, Firearms and Explosives, Defendants.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

HANCOCK, Senior District Judge.

Factual Background and Procedural History

Thomas Pinion ("Petitioner"), the principal stockholder of Pinion Enterprises Inc., d/b/a "The Gun Cellar," individually held a federal firearms license for nineteen years. In 1999, Petitioner incorporated his business and was granted a federal firearms license under the name of Pinion Enterprises, Inc. (Gov.Ex. 1).¹ During the time Petitioner held a federal firearms license, he was subject to regular inspections, and on five occasions prior to the 2000 inspection, he was cited for violations similar to those at issue here.² (Tr. at 474-475).³

On April 26, 1983, Petitioner was cited for improperly recording firearms transactions into his Acquisitions and Dispositions ("A & D") book, as well as selling firearms at a location other than his place of business. (Gov. Ex. 26; see also Tr. at 487). On September 19, 1989 (Gov. Ex. 19; Tr. at 482-484); July 30, 1993 (Gov.Ex. 24); January 5, 1995 (Gov.Ex. 23); and August 5, 1999 (Gov. Ex. 16; see also Tr. at 477-478), Petitioner received similar citations regarding his failure to properly maintain records for his firearms transactions. Petitioner acknowledges each of the referenced violations and concedes that he was instructed on how to avoid similar problems in the future. (Tr. at 473-475). With regard to the 1989 violations, Petitioner received a letter and attended a conference to help him comply with federal firearms regulations. (Gov.Ex. 20). In conjunction with the 1999 inspection, Petitioner met with inspector Linda Schmoel at his store, and they discussed his violations and ways to improve compliance. (Tr. at 477-480). Around the same time period, Petitioner attended yet another compliance conference. (Gov. Ex. 17; see also Tr. at 372). Notably, pursuant to his second conference, Petitioner received a letter which admonished that "[r]epeat violations ... will be viewed as willful, and may result in revocation." (Gov.Ex. 17).

Between October 30, 2000, and November 8, 2000, Inspectors Mawhinney and Majors conducted compliance inspections at "The Gun Cellar." (Tr. at 36). The inspectors discovered that Petitioner had sixty-eight guns on his premises for repair work, which he had not properly logged into his A & D book.⁴ (Gov. Ex. 11; see also Tr. at 44-45). The inspectors also found that Petitioner failed to properly log the disposition of 187 firearms in his A & D book. (Gov. Ex. 8; see also Tr. at 48-50). Finally, the inspectors concluded that Petitioner had not properly completed ATF Forms 4473 for the disposition of eighty firearms. (Gov. Ex. 9; see also Tr. at 55).

As a result of the 2000 compliance inspection, on January 14, 2002, Harry L. McCabe, Director of Industry Operations Nashville Field Division, issued a Notice of Revocation of License. (Gov.Ex. 2). On January 24, 2002, pursuant to 18 U.S.C. 923(f)(2), Petitioner requested a hearing to review the revocation of his license. (Pet. Ex. A at 2). The hearing was held on December 3, 2002, and February 19, 2003, before Special Operations Inspector Teresa R. Cole. (Pet. Ex. A at 3). The license revocation was based upon Petitioner's willful failure to properly record the acquisition of seventy-seven firearms pursuant to §§ 922(m), 923(g), and 27 C.F.R. § 478.125(e) (Count I); Petitioner's willful failure to properly record the disposition of 187 firearms pursuant to §§ 922(m), 923(g), and 27 C.F.R. § 478.125(e) (Count II); Petitioner's willful failure to properly record transfers of firearms on ATF Forms 4473 pursuant to §§ 922(m), 923(g), and 27 C.F.R. § 478.124(c) (Count III). (Pet. Ex. A at 3).⁵

Inspector Cole prepared a memorandum containing findings of fact and recommended that Petitioner's license not be revoked because the evidence was insufficient to show that Petitioner's violations were willful. Inspector Cole found that Respondent's evidence was limited solely to the testimony of the inspectors with regard to each violation at issue. (Pet. Ex. A at 15-18). Inspector Cole noted that Petitioner presented testimony which contradicted that of the Inspectors Mawhinney and Majors, and there was no specific documentation detailing which guns were out of place or improperly logged into the A & D book. (Pet. Ex. A at 15-18).

On July 6, 2004, after reviewing Inspector Cole's memorandum, Harry McCabe, Director of Industry Operations, rejected Cole's recommendation and concluded that the evidence presented was sufficient and that Petitioner's violations were willful as defined by case law. (Pet. Ex. B "Findings of Fact and Conclusions of Law"). Accordingly, McCabe revoked Petitioner's license. Consistent with the provisions of § 923(f)(3), on September 1, 2004, Petitioner filed a Complaint in this Court requesting de novo review of the Attorney General's decision.

The Court now has before it Petitioner's brief, filed April 1, 2005, in support of his contention that the decision of the Attorney General should be overruled. In addition, the Court also has Respondents' response, filed April 27, 2005; Petitioner's reply brief, filed May 30, 2005; and the supplemental evidence offered by both parties. The Court has reviewed the briefs, the evidence and the transcript of record, and the case is now under submission.⁶

Standard of Review

Section 923(f)(3) provides that the Attorney General's decision to revoke a license to sell firearms is subject to "de novo" review in the United States district court for the appropriate district.⁷ In exercising its responsibility of de novo review, the district court "may consider any evidence submitted by the parties to the proceeding whether or not such evidence was considered," at the original hearing held pursuant to § 923(f)(2).⁸ Although the district court is free to receive new evidence and hold an evidentiary hearing, the language of the statute is permissive, and the court is not bound to do either.⁹ DiMartino, 19 Fed.Appx. at 116; Cucchiara v. Sec. of Treasury, 652 F.2d 28, 30 (9th Cir.1981); Stein's, 649 F.2d at 466; Willingham Sports Inc. v. BATF, 348 F.Supp.2d 1299, 1307 (S.D.Al.2004).

Regardless of what process the court chooses to follow, the statute only allows the district court to reverse the Attorney General's decision if it finds "the Attorney General was not authorized to ... revoke the license." § 923(f)(3) (emphasis added); see also Cisewski v. Dept. of Treasury, 773 F.Supp. 148, 150 (E.D.Wis.1991). The language of § 923(f)(3) does not call upon this Court to decide whether it would revoke the license in it's own judgment, but whether all of the evidence presented is sufficient to justify the Attorney General's revocation of the license.¹⁰

Applicable Law and Substantive Analysis

Petitioner is charged with violating §§ 922(m), 923(g) and 27 C.F.R. §§ 478.125(e), 478.124(c). Section 922(m) makes it unlawful for a licensee to knowingly make a false or incorrect entry into or improperly maintain records that he is required to keep by federal regulations. Section 923(g) overlaps § 922(m) and requires that a licensee keep all records as prescribed by federal regulations. Federal Regulation § 478.125(e) outlines the specific way in which a licensee is to record and maintain acquisitions and disposition of firearms. Section 478.124(c) provides that all over the counter transfers of firearms are to be recorded on ATF Form 4473 and outlines the process by which the forms are properly completed.

Section 923(e) authorizes the Attorney General to revoke a licensee's federal firearms license when he "willfully" violates "any provision" of the federal firearms regulations. A violation of any of these provisions may be considered willful "when a dealer understands the requirements of the law, but knowingly fails to follow them or was indifferent to them." Perri v. Dept. of Treasury, 637 F.2d 1332, 1336 (9th Cir.1981); accord Stein's, 649 F.2d at 467; Lewin v. Blumenthal, 590 F.2d 268, 269 (8th Cir.1979); Willingham, 348 F.Supp.2d at 1309. It is not necessary that a licensee act with a "bad purpose or evil motive." Stein's, 649 F.2d at 467. Evidence that a licensee repeatedly violated federal firearms regulations "after being advised of recordkeeping defects ... on prior occasions," is sufficient to show willfulness. Willingham, 348 F.Supp.2d at 1310; see also Breit & Johnson Sporting Goods, Inc. v. Ashcroft, 320 F.Supp.2d 671, 678 (N.D.Ill.2004).

Petitioner argues that the evidence introduced at the hearing regarding Count I was insufficient to prove that he willfully failed to properly record the disposition of sixty-eight firearms. To support his argument, Petitioner points to the conclusion of the hearing officer and contends that Respondent did not offer any evidence illustrating how the inspection was conducted or whether the count was accurate. In particular, Petitioner takes issue with the number of un-logged acquisitions. Citing to the Hearing Officer Cole's Report, Petitioner claims in his brief to have presented "uncontroverted testimony ... that the acquisition of all firearms had been appropriately logged." (See Pet. Ex. A at 16).

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