United States v. One (1) Palmetto State Armory Pa–15 Machinegun Receiver/Frame, Unknown Caliber Serial Number: LW001804

• Decision Date: 18 May 2016
• Docket Number: No. 15–2859.,15–2859.
• Citation: 822 F.3d 136
• Parties: UNITED STATES of America v. ONE (1) PALMETTO STATE ARMORY PA–15 MACHINEGUN RECEIVER/FRAME, UNKNOWN CALIBER SERIAL NUMBER: LW001804; Watson Family Gun Trust, Claimant (D.C. No. 15–cv–02202). Ryan S. Watson, Individually and as Trustee of the Watson Family Gun Trust v. Attorney General United States of America; Director Bureau of Alcohol, Tobacco, Firearms, and Explosives (D.C. No. 14–cv–06569) Ryan S. Watson, Individually and as Trustee of the Watson Family Gun Trust, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

822 F.3d 136

UNITED STATES of America

v.ONE (1) PALMETTO STATE ARMORY PA–15 MACHINEGUN RECEIVER/FRAME, UNKNOWN CALIBER SERIAL NUMBER: LW001804; Watson Family Gun Trust, Claimant (D.C. No. 15–cv–02202).

Ryan S. Watson, Individually and as Trustee of the Watson Family Gun Trust

v.Attorney General United States of America; Director Bureau of Alcohol, Tobacco, Firearms, and Explosives (D.C. No. 14–cv–06569)

Ryan S. Watson, Individually and as Trustee of the Watson Family Gun Trust, Appellant.

No. 15–2859.

United States Court of Appeals, Third Circuit.

Argued April 4, 2016.

Opinion filed: May 18, 2016.

Alan A. Beck, Esq., San Diego, CA, David R. Scott, Esq., Law Offices of J. Scott Watson, Glen Mills, PA, Stephen D. Stamboulieh, Esq. [Argued], Madison, MS, Counsel for Appellant.

Patrick Nemeroff, Esq. [Argued], Michael S. Raab, Esq., United States Department of Justice, Washington, DC, Jacqueline C. Romero, Esq., J. Alvin Stout, III, Esq., Office of United States Attorney, Philadelphia, PA, Counsel for Appellee.

Robert J. Olson, Esq., William J. Olson, Vienna, VA, Counsel for Amicus–Appellants.

Joran Eth, Esq., James R. McGuire, Esq., Morrison & Foerster, San Francisco, CA, Adam M. Regoli, Esq., Morrison & Foerster, Denver, CO, Counsel for Amicus–Appellee.

Before: AMBRO and KRAUSE, Circuit Judges, and THOMPSON,^* District Judge.

OPINION OF THE COURT

THOMPSON, District Judge.

Appellant Ryan S. Watson (“Watson”), individually and on behalf of the Watson Family Gun Trust, filed this action claiming that the de facto ban on the possession of a machine gun¹ found in 18 U.S.C. § 922(o )

is unconstitutional facially and as-applied to him under the Second Amendment to the U.S. Constitution. Alternatively, Watson argues that § 922(o ) does not apply to the Watson Family Gun Trust because it only applies to “persons” and a trust is not a “person” under the statute's definition. The District Court granted the government's motion to dismiss, explaining that under the Supreme Court's opinion in District of Columbia v. Heller, 554 U.S. 570, 128 S.Ct. 2783, 171 L.Ed.2d 637 (2008), and this Court's opinion in United States v. Marzzarella, 614 F.3d 85 (3d Cir.2010), the Second Amendment does not protect the possession of machine guns. Moreover, the Court found that a trust is not exempt from § 922(o ) because a trust is not an entity distinct from its trustees, and therefore it cannot own property. Because we agree that the Second Amendment does not protect the possession of machine guns, and because trustees, and by extension trusts, are not exempt from § 922(o ), we affirm.

I. Background

The National Firearms Act provides that prior to manufacturing a firearm, any prospective maker must apply for permission from the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). 26 U.S.C. §§ 5822

, 5841. ATF will deny the application if making or possessing the firearm would place the person applying in violation of any law. See 26 U.S.C. § 5822 ; 27 C.F.R. § 479.65. Although a machine gun qualifies as a firearm under the National Firearms Act, 26 U.S.C. § 5845(a), a separate federal law, the Gun Control Act, prohibits the private manufacture of machine guns in most instances by making it unlawful for any person “to transfer or possess a machine gun,” with narrow exceptions for certain government entities and machine guns lawfully possessed before 1986. 18 U.S.C. § 922(o ). The Gun Control Act defines a “person” as an “individual, corporation, company, association, firm, partnership, society, or joint stock company.” 18 U.S.C. § 921(a)(1).

Watson is the sole trustee of the Watson Family Gun Trust (“the Trust”). On May 23, 2014 and June 24, 2014, Watson submitted applications on behalf of the Trust for permission to make and register an M–16–style machine gun. On August 5, 2014, an ATF examiner mistakenly approved one of Watson's applications. Shortly thereafter, Watson had a machine gun manufactured pursuant to that approval. However, on or about September 10, 2014, ATF informed Watson that the approval had been a mistake and that his application had been “disapproved.” ATF explained in a letter that Watson's application was denied because he was prohibited by law from possessing a machine gun. Watson claimed to be exempt from the prohibition on possessing machine guns because he had applied on behalf of a trust, which he argued was not a “person” covered by the Gun Control Act. ATF explained that although a trust is not a “person” under the Act, a trust cannot legally make or hold property. Therefore, ATF considers the individual acting on behalf of the trust to be the proposed maker and possessor of the machine gun.

Watson received a telephone call from an ATF agent on October 10, 2014 inquiring whether a machine gun had been made pursuant to the initial application approval. The ATF agent indicated that if any machine gun had been made, the gun must be surrendered to ATF. On November 14, 2014, Watson met with an ATF agent and surrendered his machine gun under protest. That same day, he filed suit against the U.S. Attorney General and the ATF Director (collectively, “the government”), seeking declarative and injunctive relief from 18 U.S.C. § 922(o )

, 26 U.S.C. § 5801 et seq., and the implementing regulations found in 27 C.F.R. § 479.1 et seq. Watson alleged that these statutory and regulatory provisions act as a de facto ban on an entire class of arms in violation of the Commerce Clause and the Second, Ninth, and Tenth Amendments to the Constitution. Additionally, Watson alleged violations of his due process rights under the Fifth Amendment and his equal protection rights under the Fourteenth Amendment, as well as a claim for detrimental reliance based on the ATF's initial approval of his application. The government separately initiated a forfeiture action for Watson's machine gun, which was later consolidated with his challenge.

On January 16, 2015, the government moved to dismiss Watson's action for lack of standing and failure to state a claim. On July 22, 2015, the District Court ruled that Watson did have standing, but that he failed to state a claim upon which relief can be granted.² Among other holdings, the Court held that Watson failed to state a claim under the Second Amendment because the Second Amendment does not protect the possession of machine guns. He appeals that decision as well as the District Court's finding that a trust is incapable of owning a machine gun under § 922(o )

. Because these are the only issues briefed by Watson on appeal, we will not discuss the District Court's other holdings. See

Laborers' Int'l Union of N. Am., AFL–CIO v. Foster Wheeler Energy Corp., 26 F.3d 375, 398 (3d Cir.1994) (issues not briefed on appeal are waived). However, we note that all of Watson's claims against the government were dismissed.

The government's consolidated forfeiture claims are still pending, which led us to question whether the decision being appealed was a final order, and thus whether we had jurisdiction. But on August 13, 2015, the District Court issued a certification of entry of final judgment. This cured any jurisdictional defect in the case. See In re Fosamax (Alendronate Sodium) Prods. Liab. Litig. (No. II), 751 F.3d 150, 156 (3d Cir.2014)

.

II. Jurisdiction and Standard of Review

The District Court had jurisdiction under 28 U.S.C. §§ 1331

and 1346. We have jurisdiction under 28 U.S.C. § 1291. We review de novo a district court's grant of a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Foglia v. Renal Ventures Mgmt., LLC, 754 F.3d 153, 154 n. 1 (3d Cir.2014) ; Ballentine v. United States, 486 F.3d 806, 808 (3d Cir.2007). We “are required to accept as true all allegations in the complaint and all reasonable inferences that can be drawn from them after construing them in the light most favorable to the nonmovant.” Foglia, 754 F.3d at 154 n. 1 (citations omitted).

III. Discussion

As a matter of constitutional avoidance, we will first turn to Watson's argument that § 922(o ) of the Gun Control Act does not apply to a trust. See Crowell v. Benson, 285 U.S. 22, 62, 52 S.Ct. 285, 76 L.Ed. 598 (1932)

(“When the validity of an act of the Congress is drawn in question, and even if a serious doubt of constitutionality is raised, it is a cardinal principle that this Court will first ascertain whether a construction of the statute is fairly possible by which the question may be avoided.”). Watson argues that § 922(o ) of the Gun Control Act does not apply to a trust because § 922(o ) applies only to “persons” and a trust is not a “person” under the terms of the statute.

With certain narrow exceptions, the provision states that “it shall be unlawful for any person to transfer or possess a machinegun.” 18 U.S.C. § 922(o )

. The Gun Control Act defines a person as “any individual, company, association, firm, partnership, society, or joint stock company.” 18 U.S.C. § 922(a)(1). As Watson notes, a “trust” is not one of the listed entities. However, this does not mean that a trust is therefore entitled to possess a machine gun.

As the District Court stated, a trust is not an entity distinct from its trustees, nor is it capable of legal action on its own behalf. 76 Am. Jur. 2d Trusts § 3

(citing Restatement (Third) of Trusts § 2 (2003) ). Indeed, Watson himself does not dispute that he is the “individual human being” seeking to possess a gun on behalf of the Trust. He argues, however, that because trusts are not “persons” under the statute, he may act on behalf of the Trust in his capacity as a trustee without triggering the prohibition on natural persons transferring or possessing a machine gun. Appellant's Br. 55–56. But nothing in the Gun Control Act supports such a reading. Irrespective of whether Watson is a trustee, he is also a natural person and therefore prohibited from performing any of the acts forbidden of natural persons under the Gun Control Act. His inability to comply with the...