Shawano Gun & Loan Llc v. Hughes, No. 10–2927.

CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)
Writing for the CourtMURPHY, District Judge.
Citation650 F.3d 1070
PartiesSHAWANO GUN & LOAN, LLC, d/b/a Shawano Gun & Loan, Plaintiff–Appellant,v.Mary Jo HUGHES, Director of Industry Operations, Bureau of Alcohol, Tobacco, Firearms and Explosives, Defendant–Appellee.
Decision Date07 June 2011
Docket NumberNo. 10–2927.

650 F.3d 1070

SHAWANO GUN & LOAN, LLC, d/b/a Shawano Gun & Loan, Plaintiff–Appellant,
v.
Mary Jo HUGHES, Director of Industry Operations, Bureau of Alcohol, Tobacco, Firearms and Explosives, Defendant–Appellee.

No. 10–2927.

United States Court of Appeals, Seventh Circuit.

Argued Jan. 18, 2011.Decided June 7, 2011.


[650 F.3d 1072]

Raymond M. Dall'Osto (argued), Attorney, Gimbel, Reilly, Guerin & Brown, Milwaukee, WI, for Plaintiff–Appellant.Lisa T. Warwick (argued), Attorney, Office of the United States Attorney, Milwaukee, WI, for Defendant–Appellee.Before TINDER and HAMILTON, Circuit Judges, and MURPHY, District Judge.*MURPHY, District Judge.

Shawano Gun & Loan, LLC (Shawano) sells fishing equipment and firearms from its sporting goods store and pawnshop in northern Wisconsin. The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) revoked Shawano's federal license to sell firearms in December 2008 after it rejected Shawano's administrative appeal from a hearing officer's finding that Shawano willfully violated record keeping requirements of the Gun Control Act and pertinent regulations. Shawano filed suit in the district court against Mary Jo Hughes, ATF Director of Industry Operations, under 18 U.S.C. § 923(f)(3) for de novo judicial review of the administrative decision and requested an evidentiary hearing. The district court thought there was ample uncontroverted evidence that Shawano had willfully failed to comply with the record keeping requirements and granted summary judgment against Shawano without conducting an evidentiary hearing. The district court stayed enforcement of the revocation pending appeal. The question for the district court and the issue here is whether Shawano's violations are willful for purposes of the Gun Control Act. For the reasons that follow, the district court's judgment is affirmed.

I. Factual and Procedural Background

In 1998, Timothy Backes obtained a federal firearms license for his sole proprietorship, now known as Shawano and reorganized as a limited liability company

[650 F.3d 1073]

(LLC). The Gun Control Act requires firearms dealers to keep certain records. The general record keeping provisions of the Gun Control Act of 1968(GCA), 18 U.S.C. § 921 et seq., are found at 18 U.S.C. § 923(g) and its implementing regulations, 27 C.F.R. Part 478 (formerly Part 178). Firearms dealers are required to ensure that a Firearm's Transaction Record, ATF Form 4473, is completed properly to record identifying information about firearm purchasers, to prohibit transfers to persons prohibited from possessing firearms, and to facilitate the tracing of firearms involved in crimes. A prospective firearm purchaser completes Sections A and C of ATF Form 4473 to disclose certain identifying information and to answer questions from which the dealer can determine whether the firearm legally can be transferred to the prospective purchaser. The firearms dealer completes Sections B and D to provide information about the firearm being transferred, the identification documents produced by the purchaser, and the results of the requisite Brady Law National Instant Criminal Background Check System (NICS check). Section D further requires the dealer to certify that the dealer believes, based upon the information disclosed in ATF Form 4473, that it is not unlawful for the dealer to transfer the firearm to the prospective purchaser. Such unlawful transfers are outlined in 18 U.S.C. § 922 and include, among others, transactions where a dealer knows or has reasonable cause to believe that the purchaser is a convicted felon, is a fugitive, uses or is addicted to any controlled substance, has an adjudicated mental defect, is an illegal alien, or has been convicted of misdemeanor domestic violence. 18 U.S.C. § 922(d). A dealer violates the GCA if the dealer transfers a firearm based upon information in ATF Form 4473 that he knows or has reason to believe is false. See 18 U.S.C. §§ 922(m) and 924(a)(1)(A); see also 27 C.F.R. § 478.124(c).

A federal firearms dealer also must maintain separate records in bound form for the acquisition and disposition of firearms. This acquisition and disposition book identifies each firearm that a dealer takes into its inventory and that leaves the dealer's inventory and the person from whom it was acquired or to whom it was transferred. A dealer's acquisition and disposition records must be readily available for inspection. See 27 C.F.R. § 478.125(e). In January 2002, ATF granted Shawano a variance, allowing it to use a specialized computer software program called Pawnmaster to input and maintain acquisitions and dispositions of firearms, provided that Shawano printed the records at least semiannually or when requested by an ATF officer, when the system memory was purged, and upon discontinuation of the business.

In December 1999, ATF Special Operations Inspector John Moore conducted the first compliance inspection of Shawano and noted nine violations: (1) failure to ensure accurate completion of ATF Forms 4473; (2) failure to properly maintain completed ATF Forms 4473; (3) inconsistent dispositions of two firearms; (4) failure to properly maintain the acquisition and disposition book from August to December 1999, in that Shawano kept computerized records without first obtaining a computer variance; (5) failure to timely record disposition entries in at least 145 instances; (6) failure to timely record acquisition entries in at least three instances; (7) making a disposition entry when firearm was not transferred; (8) failure to record acquisition and disposition information of a Browning pistol; and (9) failure to properly record firearm model and serial numbers into the acquisition and disposition book in at least twenty-three instances.

[650 F.3d 1074]

Mr. Backes signed the ATF Report of Violations, which set forth the nine violations and the corrective action to be taken.

In June 2004, ATF Inspector Casimir Mleczko conducted a second compliance inspection, which uncovered six violations: (1) improper transfer of eleven firearms at a tavern as part of a raffle; (2) failure to provide written notification to non-licensees and to display a sign required by the Youth Handgun Safety Act; (3) seven instances of improper transfer of firearms to persons who indicated on ATF Forms 4473 that they were prohibited; (4) failure to ensure proper execution and completion of ATF Form 4473; (5) failure to maintain an accurate record of receipt and disposition; and (6) failure to make a semi-annual hard copy printout of the computerized acquisition and disposition record as required by the ATF computer variance. Inspection findings were reviewed in July 2004, and the federal firearms regulations were reviewed. Inspector Mleczko cautioned Mr. Backes, Shawano manager Scott Backes, and another employee about straw purchasers, incomplete ATF Forms 4473, and prohibited purchasers. Mr. Backes signed a second ATF Report of Violations, which noted the violations and the corrective action to be taken.

After this second compliance inspection revealed that Mr. Backes was operating his business as an LLC rather than a sole proprietorship, Mr. Backes submitted a new license application disclosing his business entity status as an LLC. In September 2005, Shawano Gun & Loan, LLC, was licensed as a dealer, including pawnbroker, in firearms other than destructive devices. Mr. Backes remains its owner.

In March 2005, ATF Director of Industry Operations John Jarowski sent Mr. Backes a letter to schedule a meeting to discuss the violations found during the second compliance inspection. The letter included a warning that any willful violation of federal firearms laws and regulations might result in revocation of the federal firearms license and that any violations, either repeat or otherwise, could be viewed as willful. Mr. Backes responded to the letter with intended corrective action, and a warning conference was held in April 2005 to discuss the violations and necessary corrective action. A follow-up letter from Director Jarowski summarized the corrective action proposed by Mr. Backes, including having a second person check each ATF Form 4473 before every transfer and having manager Scott Backes oversee and maintain the acquisition and disposition records, and again warned Mr. Backes of the possible consequence of future violations.

In March 2007, Industry Operations Inspector Mary Jo Holpit conducted a third compliance inspection. This inspection revealed seven violations, including repeat violations found during the earlier inspections: (1) unapproved use of the Pawnmaster computer program since moving the location of the business and changing its license from a sole proprietorship to an LLC; (2) inaccurate reflection of inventory in the acquisition and disposition records and failure to print the acquisition and disposition records for over nine months; (3) failure to provide the required Youth Handgun Safety Notice to purchasers; (4) Shawano's new location was less than 1000 feet from a school and within a school zone; (5) failure to obtain valid...

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20 practice notes
  • Williams v. Beemiller, Inc.
    • United States
    • New York Supreme Court Appellate Division
    • 5 Octubre 2012
    ...based upon information in ATF Form 4473 that he [or she] knows or has reason to believe is false” ( Shawano Gun & Loan, LLC v. Hughes, 650 F.3d 1070, 1073;see18 USC § 922[m] ). Further, a licensed dealer may be criminally liable for aiding and abetting a gun purchaser's making of false stat......
  • Williams v. Beemiller, Inc., 1438
    • United States
    • New York Supreme Court Appellate Division
    • 9 Febrero 2018
    ...suggests that Brown improperly sold the subject gun in Ohio to a gun trafficking ring (see e.g. Shawano Gun & Loan, LLC v. Hughes, 650 F.3d 1070, 1073 [7th Cir.2011] ; see generally 18 USC §§ 2 [a]; 922[m] ), and establishes that the gun was later used to shoot and injure plaintiff in New Y......
  • Chiapperini v. Gander Mountain Co., 14/5717
    • United States
    • United States State Supreme Court (New York)
    • 23 Diciembre 2014
    ...the actual buyer.See Williams I, 100 A.D.3d at 149–150, 952 N.Y.S.2d 333 (citing 27 C.F.R. § 478.124 ; Shawano Gun & Loan, LLC v. Hughes, 650 F.3d 1070, 1073 (7th Cir.2011) ; United States v. Nelson, 221 F.3d 1206, 1209 (11th Cir.2000) ). See also Abramski v. United States, –––U.S. ––––, 13......
  • Townson v. Garland, Civil Action 1:22-00251-KD-N
    • United States
    • United States District Courts. 11th Circuit. United States District Court of Southern District of Alabama
    • 17 Noviembre 2022
    ...Fairmont Cash Mgmt., L.L.C. v. James, 858 F.3d 356, 361-62 (5th Cir. 2017) (citations omitted). See Shawano Gun & Loan, LLC v. Hughes, 650 F.3d 1070, 1076 (7th Cir. 2011) (explaining that “de novo judicial review” under § 923(f)(3) gives district court discretion to receive additional evide......
  • Request a trial to view additional results
20 cases
  • Williams v. Beemiller, Inc.
    • United States
    • New York Supreme Court Appellate Division
    • 5 Octubre 2012
    ...based upon information in ATF Form 4473 that he [or she] knows or has reason to believe is false” ( Shawano Gun & Loan, LLC v. Hughes, 650 F.3d 1070, 1073;see18 USC § 922[m] ). Further, a licensed dealer may be criminally liable for aiding and abetting a gun purchaser's making of false stat......
  • Williams v. Beemiller, Inc., 1438
    • United States
    • New York Supreme Court Appellate Division
    • 9 Febrero 2018
    ...suggests that Brown improperly sold the subject gun in Ohio to a gun trafficking ring (see e.g. Shawano Gun & Loan, LLC v. Hughes, 650 F.3d 1070, 1073 [7th Cir.2011] ; see generally 18 USC §§ 2 [a]; 922[m] ), and establishes that the gun was later used to shoot and injure plaintiff in New Y......
  • Chiapperini v. Gander Mountain Co., 14/5717
    • United States
    • United States State Supreme Court (New York)
    • 23 Diciembre 2014
    ...the actual buyer.See Williams I, 100 A.D.3d at 149–150, 952 N.Y.S.2d 333 (citing 27 C.F.R. § 478.124 ; Shawano Gun & Loan, LLC v. Hughes, 650 F.3d 1070, 1073 (7th Cir.2011) ; United States v. Nelson, 221 F.3d 1206, 1209 (11th Cir.2000) ). See also Abramski v. United States, –––U.S. ––––, 13......
  • Townson v. Garland, Civil Action 1:22-00251-KD-N
    • United States
    • United States District Courts. 11th Circuit. United States District Court of Southern District of Alabama
    • 17 Noviembre 2022
    ...Fairmont Cash Mgmt., L.L.C. v. James, 858 F.3d 356, 361-62 (5th Cir. 2017) (citations omitted). See Shawano Gun & Loan, LLC v. Hughes, 650 F.3d 1070, 1076 (7th Cir. 2011) (explaining that “de novo judicial review” under § 923(f)(3) gives district court discretion to receive additional evide......
  • Request a trial to view additional results

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