U.S. v. Grab Bag Distributing, No. CIVF006132OWWSMS.

CourtUnited States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
Writing for the CourtWanger
Citation189 F.Supp.2d 1072
Decision Date15 February 2002
Docket NumberNo. CIVF006132OWWSMS.
PartiesUNITED STATES of America Plaintiff, v. GRAB BAG DISTRIBUTING and Rodney G. Nickerson, Defendants.
189 F.Supp.2d 1072
UNITED STATES of America Plaintiff,
v.
GRAB BAG DISTRIBUTING and Rodney G. Nickerson, Defendants.
No. CIVF006132OWWSMS.
United States District Court, E.D. California.
February 15, 2002.

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Michael A. Hirst, Esq., United States Attorney, Sacramento, for plaintiff.

Stephen Solano, Esq., Modesto, for defendant.

MEMORANDUM DECISION AND ORDER RE: PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

WANGER, District Judge.


I. INTRODUCTION

The United States of America ("Plaintiff' or the "Government") sues defendants Grab Bag Distributing and Rodney G. Nickerson ("Defendants") for penalties and injunctive relief under the Drug Abuse Prevention and Control Act, 21 U.S.C. §§ 801-971 (the "Controlled Substances Act" or the "Act"). See Doc.13, Memorandum in Support, filed September 28, 2001, at p.1. Plaintiff moves for summary judgment on the issue of Defendants' liability. See Doc.12, Motion for Summary Judgment, filed Sept. 28, 2001. Defendants oppose the motion. See Doc.17, Memorandum in Opposition, filed Dec. 3, 2001. Oral argument was heard on January 7, 2002.

II. BACKGROUND

At times relevant to the complaint, Defendants Grab Bag Distributing and its owner Rodney Nickerson were engaged in a wholesale distribution business, and as part of that business they sold pseudoephedrine. See Doc.8, Scheduling Order, filed Nov. 13, 2000. The Government alleges that between October 1997 and April 1998, Defendants sold extraordinary quantities of pseudoephedrine, a chemical used to manufacture methamphetamine. See Doc.13 at p.2. Defendants admit selling over 31,750 bottles of pure pseudoephedrine representing a total of over 114,000,000 milligrams, or 114 kilograms, of pseudoephedrine. See Doc.17 at p.4; Doc.13 at p.2 and Exh. A ("Government's Exhibit A" or "Exhibit A"). These sales were made

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to eight small convenience stores1 in and around Modesto and Stockton, California. See id. Defendants were paid over $76,300 for these pseudoephedrine sales. See id. The amount of pseudoephedrine sold to these stores could be used to manufacture an estimated 200 pounds of methamphetamine with a street value in excess of $1,000,000. See Doc.13 at p.2. Defendants did not report these sales to the DEA. See Doc.17 at p.5:10-16. Defendants did not obtain signatures or driver's licenses from any of its purchasers. See id. at p.5:18-25. Defendants assert they obtained another form of identification from each purchaser listed in Exhibit A. See id.

Nickerson admits law enforcement officers told him as early as 1995 that large quantities of pseudoephedrine could be used to manufacture methamphetamine. See Doc.17 at p.6:7-8. Nickerson was aware since 1995 or 1996 of the need to report suspicious transactions. See id. at p.7:13-17. In 1996, well before any of the sales at issue here, Nickerson started getting calls from individuals not affiliated with any store or business who wanted to buy pseudoephedrine from him. Nickerson suspected these people did not want the product for legitimate reasons but instead might be "dirty." See id. at p.6:11-18. Nickerson continued to sell the product in 1996. His combined sales in 1995-96 were $420,000, 60-80% of which was attributable solely to the sale of pseudoephedrine. See id. at p.6:20-25.

Nickerson completed a questionnaire regarding his sales in 1997. In the letter accompanying the questionnaire, the DEA advised Nickerson that if he had any questions, he should call Diversion Investigator Ben Vinson in Sacramento. Vinson's number was listed in the letter. Nickerson never called Vinson for information on compliance with the law. See id. at p.7:19-p.8:5.

The government contends Defendants sold an "extraordinary" quantity of pseudoephedrine to the eight convenience stores mentioned in the Complaint. See Doc.13 at p.5:24-28. The Government asserts its sales were over 53 times what a convenience store would expect to purchase based on 1997 Economic Census data. See id. Defendants deny they sold an extraordinary quantity of pseudoephedrine to the stores in Exhibit A or that its sales were 53 times what a convenience store would expect to purchase. See Doc.17 at p.5:5-8.

III. LEGAL STANDARD

Summary judgment is warranted only "if 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." Fed.R.Civ.P. 56(c); see California v. Campbell, 138 F.3d 772, 780 (9th Cir.1998). The evidence must be viewed in light most favorable to the nonmoving party. See Lopez v. Smith, 203 F.3d 1122, 1131 (9th Cir.2000) (en banc).

The moving party bears the initial burden of demonstrating the absence of a genuine issue of fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).. If the moving party fails to meet this burden, "the nonmoving party has no obligation to produce anything, even if the nonmoving party would have the ultimate burden of persuasion at trial." Nissan Fire & Marine Ins.

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Co., Ltd. v. Fritz Cos., Inc., 210 F.3d 1099, 1102-03 (9th Cir.2000). However, if the nonmoving party has the burden of proof at trial, the moving party must only show "that there is an absence of evidence to support the nonmoving party's case." Celotex Corp., 477 U.S. at 325, 106 S.Ct. 2548.

Once the moving party has met its burden of proof, the nonmoving party must produce evidence on which a reasonable trier of fact could find in its favor viewing the record as a whole in light of the evidentiary burden the law places on that party. See Triton Energy Corp. v. Square D Co., 68 F.3d 1216, 1221 (9th Cir.1995). The nonmoving party cannot simply rest on its allegations without any significant probative evidence tending to support the complaint. See Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1107 (9th Cir.2000). Instead, the nonmoving party, through affidavits or other admissible evidence, "must set forth specific facts showing that there is a genuine issue for trial." Fed.R. Civ.P 56(e).

[T]he plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to the party's case, and on which that party will bear the burden of proof at trial. In such a situation, there can be "no genuine issue as to any material fact," since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial.

Celotex Corp., 477 U.S. at 322-23, 106 S.Ct. 2548.

Evidence submitted in support of, or in opposition to, a motion for summary judgment must be admissible under the standard articulated in 56(e). Properly authenticated documents can be used in a motion for summary judgment if appropriately authenticated by affidavit or declaration. See Hal Roach Studios v. Richard Feiner & Co., 896 F.2d 1542, 1550-51 (9th Cir.1989). Supporting and opposing affidavits must be made on personal knowledge, set forth such facts as would be admissible in evidence, and show that the affiant is competent to testify to the matters stated therein. See Fed.R. Civ.P. 56(e).

IV. ANALYSIS

Plaintiff argues no material facts regarding Defendants' liability are in dispute. See Doc.13 at p.1. Plaintiff argues the undisputed evidence shows Defendants committed 366 violations of the Act by failing to obtain identification from their purchasers and by failing to report suspicious sales to the Drug Enforcement Administration (the "DEA"). See id.

The Controlled Substances Act provides:

It is the duty of each regulated person who engages in a regulated transaction to identify each other party to the transaction. It is the duty of such other party to present proof of identity to the regulated person. The Attorney General shall specify by regulation the types of documents and other evidence that constitute proof of identity for purposes of this paragraph.

21 U.S.C. § 830(a)(3). "For sales to individuals or cash purchasers, the type of documents and other evidence of proof must consist of at least[:][1] a signature of the purchaser, [2] a driver's license and [3] one other form of identification." 21 C.F.R. § 1310.07(d).

The regulated person must report to the Attorney General "any regulated transaction involving an extraordinary quantity of a listed chemical, an uncommon method of payment or delivery, or any other circumstance that the regulated person believes may indicate that the listed chemical will

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be used in violation of this title." 21 U.S.C. § 830(b)(1)(A). "Each report under subparagraph (A) shall be made at the earliest practicable opportunity after the regulated person becomes aware of the circumstance involved." 21 U.S.C. § 830(b)(1).

A "regulated person" is one "who manufactures, distributes, imports, or exports a listed chemical." 21 U.S.C. § 802(38). "The term `distribute' means to deliver (other than by administering or dispensing) a controlled substance or a listed chemical." 21 U.S.C. § 802(11). To "deliver" means "the actual, constructive, or attempted transfer of a controlled substance or a listed chemical, whether or not there exists an agency relationship." 21 U.S.C. § 802(8). A "listed chemical is "any list I chemical or any list II chemical.'" 21 U.S.C. § 802(33). Pseudoephedrine is a list I chemical. See 21 U.S.C. § 802(34)(K).

A "regulated transaction" is "a distribution, receipt, sale, importation, or exportation of ... a listed chemical, or if the Attorney General establishes a threshold amount for a specific listed chemical, a threshold amount, including a cumulative threshold amount for multiple transactions ..., of a listed chemical." 21 U.S.C. § 802(39). "[T]he quantitative threshold or the cumulative amount for multiple transactions within a calendar month, to be utilized in determining whether a...

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4 practice notes
  • Advance Pharmaceutical, Inc. v. U.S., No. 02-6233.
    • United States
    • U.S. Court of Appeals — Second Circuit
    • December 3, 2004
    ...be useful in demonstrating that unreported pseudoephedrine shipments are extraordinary, see United States v. Grab Bag Distrib., 189 F.Supp.2d 1072, 1077-78 (E.D.Cal.2002), such evidence Page 392 not essential to establish a duty to report. The Controlled Substances Act does not itself defin......
  • Applications, hearings, determinations, etc.: Branex, Inc.,
    • United States
    • Federal Register February 25, 2004
    • February 25, 2004
    ...method of payment, such as cash, renders the sales of pseudoephedrine suspicious. United States v. Grab Bag Distributing, et al., 189 F. Supp. 2d 1072 (2002); United States v. Akhtar, 95 F. Supp. 2d 668 (S.D. Tex. 1999) (a defendant admitted that four ephedrine transactions were unusual bec......
  • United States v. Appalachian Reg'l Healthcare, Inc., Civil Case No. 5:16–cv–00132–JMH
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Eastern District of Kentucky
    • March 30, 2017
    ...at 253. Courts now require at least negligence for liability under 842(a)(10) to attach. See United States v. Grab Bag Distrib., 189 F.Supp.2d 1072, 1080–81.10 ARH also argued that it could not be held vicariously liable for the alleged CSA violations. Because the Court has already found th......
  • United States v. Al-Amin, Case No. 1:13-CV-13
    • United States
    • United States District Courts. 6th Circuit. Eastern District of Tennessee
    • February 23, 2016
    ...to make or keep a record under 21 U.S.C. § 842(a)(5) was assessed under a strict-liability standard. U.S. v. Grab Bag Distrib., 189 F. Supp. 2d 1072, 1080 (E.D. Cal. 2002). At that time, it was a civil violation to "refuse or fail to make, keep, or furnish any record . . . required und......
3 cases
  • Advance Pharmaceutical, Inc. v. U.S., No. 02-6233.
    • United States
    • U.S. Court of Appeals — Second Circuit
    • December 3, 2004
    ...be useful in demonstrating that unreported pseudoephedrine shipments are extraordinary, see United States v. Grab Bag Distrib., 189 F.Supp.2d 1072, 1077-78 (E.D.Cal.2002), such evidence Page 392 not essential to establish a duty to report. The Controlled Substances Act does not itself defin......
  • United States v. Appalachian Reg'l Healthcare, Inc., Civil Case No. 5:16–cv–00132–JMH
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Eastern District of Kentucky
    • March 30, 2017
    ...at 253. Courts now require at least negligence for liability under 842(a)(10) to attach. See United States v. Grab Bag Distrib., 189 F.Supp.2d 1072, 1080–81.10 ARH also argued that it could not be held vicariously liable for the alleged CSA violations. Because the Court has already found th......
  • United States v. Al-Amin, Case No. 1:13-CV-13
    • United States
    • United States District Courts. 6th Circuit. Eastern District of Tennessee
    • February 23, 2016
    ...to make or keep a record under 21 U.S.C. § 842(a)(5) was assessed under a strict-liability standard. U.S. v. Grab Bag Distrib., 189 F. Supp. 2d 1072, 1080 (E.D. Cal. 2002). At that time, it was a civil violation to "refuse or fail to make, keep, or furnish any record . . . required under th......

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