Court Opinion

ID: 2998880
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:48:17.605527+00
Date Added: 2024-06-11T12:45:29.374919
License: Public Domain

In the
 United States Court of Appeals
               For the Seventh Circuit
                          ____________

No. 05-2800
ARTICLE II GUN SHOP, INC., d/b/a GUN WORLD
                                               Plaintiff-Appellant,
                                 v.

ALBERTO GONZALES,
                                              Defendant-Appellee.
                          ____________
            Appeal from the United States District Court
       for the Northern District of Illinois, Eastern Division.
          No. 03 C 4598—Matthew F. Kennelly, Judge.
                          ____________
   ARGUED JANUARY 11, 2006—DECIDED MARCH 20, 2006
                    ____________

 Before FLAUM, Chief Judge, and EASTERBROOK and
MANION, Circuit Judges.
  FLAUM, Chief Judge. Article II Gun Shop, Inc., doing
business as Gun World (“Gun World”) had its federal license
to sell firearms revoked by the Bureau of Alcohol, Tobacco,
and Firearms (“ATF”), based on allegations that Gun World
willfully violated several reporting requirements of the Gun
Control Act of 1968, 18 U.S.C. § 921 et seq. (“Act”). Gun
World challenged ATF’s revocation decision in federal
district court, pursuant to 18 U.S.C. § 923(f)(3). The
government filed a motion for summary judgment, which
the district court granted. Gun World appeals. For the
following reasons, we affirm the opinion of the district
court.
2                                                No. 05-2800

                      I. Background
  Gun World has been a federally licensed firearms dealer
since 1978. Barry Soskin (“Soskin”) is Gun World’s corpo-
rate president, secretary, treasurer, and sole director and
stockholder. He has held these positions since the store
opened in 1978.
  ATF inspected Gun World in 1981, 1998, and 2000 for
compliance with the Gun Control Act and its implement-
ing regulations. After each inspection, ATF cited Gun World
with violations of the Act, including violations of the Act’s
recordkeeping requirements. The Act requires a firearms
dealer to fill out a “Form 4473” (“Form”) whenever a firearm
is sold. See 27 C.F.R. § 478.124(c)(2). The Form is used to
record identifying information about gun purchasers and
the firearms they purchase, which allows firearms to be
traced and prevents transfer to persons prohibited from
possessing firearms. See id. The 1981 inspection report
showed that Gun World failed to properly complete 30
Forms. The 1998 inspection report showed that Gun World
failed to properly complete 34 Forms and failed to properly
maintain an acquisition and disposition book. See 27 C.F.R.
§ 425(e). The inspector who conducted the 1998 inspection
discussed the violations with Soskin and the corrective
actions Gun World would need to take.
  The 2000 inspection report documented more viola-
tions: two separate straw sales; at least fifteen occasions on
which Gun World knowingly and willfully failed to obtain
and record information required on the Forms; at least
forty-nine occasions on which Gun World knowingly and
willfully transferred firearms to legal aliens without
obtaining required documentation; and at least fourteen
occasions on which Gun World knowingly and willfully
failed to record sales or dispositions of firearms in the
acquisition and disposition book within seven days of a
transfer.
No. 05-2800                                                  3

  On May 18, 2000, ATF’s Chicago Area Supervisor,
Nicholas Scouffas, warned Gun World that ATF was
contemplating revoking Gun World’s licence. On May 31,
2000, Gun World was given an opportunity to conference
with ATF and present evidence in support of its position
that its license should not be revoked. At the conference,
Gun World promised to take corrective actions to prevent
further violations. According to the government, however,
Gun World continued to violate the Act after the May 31
conference.
   On July 22, 2002, ATF issued Gun World a notice that its
license was being revoked. The revocation was based on the
2000 inspection report and the store’s history of violations.
Gun World requested a hearing to review the revocation,
pursuant to 18 U.S.C. § 923(f)(2). The hearing took place on
January 29 and 30, 2003. The hearing officer sent ATF a
report summarizing the evidence introduced at the hearing
and his findings of fact, conclusions and recommendations.
Richard Alexander (“Alexander”), ATF’s Chicago Field
Division Director of Industry Operations, concluded from
the hearing officer’s report that Gun World had willfully
violated the Gun Control Act. On May 5, 2003, ATF issued
a final notice of revocation to Gun World.
   Gun World filed a petition with the district court, seeking
de novo review of ATF’s decision. See 18 U.S.C. § 923(f)(3).
ATF filed a motion for partial summary judgment. ATF
sought summary judgment based on ATF’s finding that Gun
World knowingly and willfully failed to complete fifteen
Forms, in violation of 18 U.S.C. § 922(m). The district court
“disregard[ed] the other violations for which Gun World was
cited during the 2000 inspection and . . . decide[d] whether
the Form 4473 violations alone authorized ATF to revoke
Gun World’s license.” Gun World did not deny that the
fifteen violations occurred, but only that they were “willful.”
  Alexander, the ATF director who approved the revocation
of Gun World’s license, signed a declaration on February 24,
4                                               No. 05-2800

2005, stating that he would have revoked Gun World’s
license based solely on the Form 4473 violations. Alexan-
der’s declaration was based on the record of the proceedings
before the ATF, the hearing officer’s report, the evidence
considered by the hearing officer, and the initial and final
notices of revocation.
  The district court granted ATF’s motion for summary
judgment, and Gun World appeals.

                      II. Discussion
  Gun World raises three issues on appeal. First, Gun
World argues that the district court erred by admitting into
evidence ATF’s 1981 and 1998 inspection reports, because
the reports were not certified or sworn copies, as required
by Federal Rule of Civil Procedure 56(e). Second, Gun
World maintains that the district court should not have
considered the 1981 ATF inspection report, because there is
a five-year statute of limitations for any for-
feiture proceeding. Third, Gun World argues that its
violations of the Gun Control Act were not “willful,” because
Gun World did not act with the intent to disobey or disre-
gard the law. We are not persuaded by these arguments.

A. The 1981 and 1998 ATF Inspection Reports.
  The district court based its decision in part on copies of
1981 and 1998 ATF inspection reports. The reports were
attached as exhibits to the affidavit of Thomas Karmgard
(“Karmgard”), an ATF attorney. Gun World argues that the
district court should not have looked to these reports to
evaluate the willfulness of the violations committed in 2000,
because the reports were not “sworn or certified copies,” as
required by Federal Rule of Civil Procedure 56(e). Federal
Rule of Civil Procedure 56(e) requires that, in cases involv-
ing summary judgment, “[s]worn or certified copies of all
No. 05-2800                                                  5

papers or parts thereof referred to in an affidavit shall be
attached thereto or served therewith.” According to Gun
World, “because the [1981 and 1998 inspection] reports
themselves are not sworn or certified copies, they are not
available to support a motion for summary judgment,”
regardless of whether they were sufficiently authenticated
pursuant to Federal Rule of Evidence 901(b)(1).
  In response, the government maintains that the re-
ports need not be sworn or certified copies, because ATF did
not revoke Gun World’s license based on these reports;
instead, it based the revocation on the 2000 report, as
Alexander stated in his declaration. Additionally, the
government maintains that even if the reports should not
have been admitted, the error was harmless because Soskin
admitted under oath that Gun World had been cited by ATF
in 1981 and 1998 for violations of the Act.
  The district court found that the reports were admissible,
and that Karmgard’s personal knowledge of the matters
underlying the reports was unnecessary to lay a foundation
for their admissibility. Instead, Karmgard’s affidavit
authenticates the reports as records of ATF. See FED. R.
EVID. 901(b)(1). The district court also pointed out that Gun
World does not dispute that the reports attached to the
affidavit are accurate copies of the originals.
   The district court properly considered the reports. The
government submitted Karmgard’s sworn affidavit in
support of its motion for summary judgment. The affi-
davit authenticated the reports by establishing that
they are public reports, kept in a public office, where
reports of that type are kept. See FED. R. EVID. 901(b)(1)(7)
(“Public records or reports. Evidence that a writing autho-
rized by law to be recorded or filed and in fact recorded or
filed in a public office, or a purported public record, report,
statement, or data compilation, in any form, is from the
public office where items of this nature are kept.”).
6                                             No. 05-2800

Karmgard, as an agent of ATF, was competent to make such
a statement. He swore to the authenticity of the documents
attached to his affidavit, including the 1981 and 1998
reports. It was not necessary that he swear to personal
knowledge of facts contained in the reports. Public records
and reports are admissible as an exception to the hearsay
rule, once their authenticity is established. See FED. R.
EVID. 803(8).
  Gun World emphasizes that there is a distinction between
a document’s authenticity and its admissibility, and argues
that while the reports were properly authenticated, they
still are not admissible. Gun World is correct that a docu-
ment is not admissible simply because it has been authenti-
cated. “To be admissible, documents must be authenticated
by and attached to an affidavit that meets the requirements
of Rule 56(e) and the affiant must be a person through
whom the exhibits could be admitted into evidence.” Scott
v. Edinburg, 346 F.3d 752, 760 n.7 (7th Cir. 2003) (quoting
10A Charles Alan Wright et al., Federal Practice & Proce-
dure § 2722, at 379-80 & 382-84 (1998)). Those require-
ments have been met in this case: the reports were authen-
ticated by Karmgard’s affidavit; the reports were attached
to his affidavit, which met the requirements of Rule 56(e);
and Karmgard is a person through whom the reports could
be admitted into evidence, because he is an agent of ATF
and is knowledgeable about ATF’s recordkeeping system.
Thus, the district court did not err by considering the
reports.

B. Statute of Limitations
  Gun World also argues that consideration of the 1981
ATF report is barred by the 5-year statute of limitations
contained in 28 U.S.C. § 2462, which provides that “a
proceeding for the enforcement of any . . . forfeiture,
No. 05-2800                                                7

pecuniary or otherwise, shall not be entertained unless
commenced within five years from the date when the
claim first accrued.” Gun World claims that § 2462 ap-
plies to administrative proceedings as well as judicial
proceedings. Additionally, Gun World maintains that the
revocation of its license amounted to a “proceeding for the
enforcement” of a forfeiture. Gun World concludes that “[a]s
Gun World cannot be punished for acts/omissions in 1981,
the grant of summary judgment was improper to the extent
it was based upon the 1981 acts/omissions.”
  The government responds that although “ATF could
not revoke Gun World’s license because of” the 1981 report,
“ATF and the district court were free to consider the 1981
report of violations as evidence that Gun World knew of its
obligations to correctly complete Forms 4473 for the guns it
sold.” According to the government, “[s]tatutes of limitation
put time limits on when actions may be brought; they are
not evidentiary rules that blind courts from consideration
of relevant facts.”
   We, like the district court below, agree with the gov-
ernment. The revocation of Gun World’s license was
based on its violations of the Act in 2000. The “claim first
accrued” in 2000, when ATF made its 2000 report. The
action was commenced within five years of this time. The
fact that Gun World was also cited in 1981 and 1998 is
simply evidence that Gun World had knowledge of the Act’s
requirements; Gun World admits as much. There
is a distinction between acts that are prosecuted and
acts that would be barred by the statute of limitations
but are admissible to show that an act being prosecuted
actually occurred. Cf. United States v. Barnes, 230 F.3d 311,
315 (7th Cir. 2000) (“Relevant pre-limitations evidence is
admissible to show the existence of a scheme to complete an
illicit transaction.”); United States v. Wellman, 830 F.2d
1453, 1464 (7th Cir. 1987) (fact that mail fraud scheme and
acts committed in furtherance of it may have extended over
8                                                No. 05-2800

a period of time that was in part barred by the statute of
limitations did not preclude evidence of those acts from
being admitted to show that mailings occurring within the
statutory period were in furtherance of a scheme to de-
fraud).

C. Willfulness
   Gun World’s final argument is that the district court
erred by determining that Gun World’s violations of the
Gun Control Act were willful. The parties disagree as to the
meaning of “willfully” as used in 18 U.S.C. § 923(e). Gun
World argues that willfulness requires a “bad purpose to
disobey or to disregard the law.” According to Gun World,
ATF must show that Gun World’s acts were more than
“inadvertent error or technical mistakes.” Gun World
maintains that its de minimis number of violations in
light of its sales volume (in 2000, 12 of 880 Forms contained
errors) demonstrates that it did not act willfully. Finally,
Gun World maintains that the errors on its Forms were not
“material” because, in some cases, omitted information
could be found on other documents, or, in other cases, Gun
World employees knew the gun buyers and how they would
respond to skipped questions.
   According to the government, Gun World acted willfully
if it “purposefully disregarded or was plainly indifferent to”
the law. The government emphasizes that nothing in the
Gun Control Act, its implementing regulations, or the case
law interpreting the Act creates an exception to revocation
for de minimis violations of the Act. Additionally, the
government notes that Soskin and other Gun World
employees admitted that they knew that Forms 4473
needed to be filled out completely and that ATF considered
these documents critical to enforcement of the Act.
  Contrary to Gun World’s position, ATF is not required
to show that a gun vendor acted with a “bad purpose or evil
No. 05-2800                                                 9

motive before a license may be revoked or a renewal
application denied.” Stein’s, Inc. v. Blumenthal, 649 F.2d
463, 467 (7th Cir. 1980). Instead, ATF must “prove that the
petitioner knew of his legal obligation and purposefully
disregarded or was plainly indifferent to the recordkeep-
ing requirements.” Id. (internal citation omitted).
  According to Gun World, the Supreme Court implicitly
overruled Stein’s in Bryan v. United States, 524 U.S. 184
(1998). Gun World argues that Bryan eliminated the
“plain indifference standard” and held that willfulness
requires a “bad purpose to disobey or to disregard the law.”
Gun World is incorrect. In Bryan, the defendant had been
convicted of conspiring to sell firearms without a license
and engaging in the sale of firearms without a license,
in violation of provisions of the Gun Control Act that
contained a willfulness requirement. See 18 U.S.C.
§§ 922(a)(1) and 924. The defendant claimed that he had no
knowledge of the Act’s requirements, so that his violations
could not be willful. The Court held that the defendant’s
bad purpose was sufficient to satisfy the willfulness require-
ment under the facts of that case, where the defendant had
used straw purchases, filed off guns’ serial numbers, and
sold guns on the black market. Bryan, 524 U.S. at 189, 194-
96.
  The Bryan Court recognized that this Court in Stein’s
“stated that willfulness in § 923(d)(1) is satisfied by a
disregard of a known legal obligation.” Id. at 196-97. The
Court found that while cases like Stein’s “support the notion
that disregard of a known legal obligation is sufficient to
establish a willful violation, they in no way stand for the
proposition that it is required.” Id. at 197-98. The Bryan
Court did not hold that a showing of “bad purpose” is
required before ATF can revoke the license of a gun dealer
who violates the Act despite knowledge of its requirements.
Id. Rather, the Court simply held that a bad purpose may
be sufficient to demonstrate purposeful disregard for or
10                                              No. 05-2800

plain indifference to the law, where there is no evidence a
party was aware of the requirements of the law. In this
case, it is clear that Gun World was aware of its obligations
under the Act.
   Additionally, we reject Gun World’s argument that
its mistakes were inadvertent and de minimis. The record
shows that Soskin was aware that the Act does not
allow any de minimis number of violations, and he was
obviously aware of the Act’s requirements after being
cited for numerous violations in the past. See Stein’s, 649
F.2d at 468 (“Evidence of repeated violations with knowl-
edge of the law’s requirements has been held sufficient
to establish willfulness.” (citing Lewin v. Blumenthal,
590 F.2d 268 (8th Cir. 1979)). Even after Gun World was
warned in 2000 that its license could be revoked based
on its violations, Gun World continued violating the Act. Cf.
Breit & Johnson Sporting Goods, Inc. v. Ashcroft, 320 F.
Supp. 2d 671, 678-80 (N.D. Ill. 2004) (firearms dealer’s
repeated violations of the Gun Control Act’s recordkeep-
ing requirements, even after two ATF warning conferences,
sufficient to establish “willfulness”). Gun World tries to
explain why each of its violations was immaterial—either
because the information sought on a Form could be found on
another form or because it could be discovered by talking to
Gun World employees. These explanations are irrelevant.
The revocation provision applies regardless of whether a
firearms dealer’s failure to comply with the Act actually
results in illegal possession or usage of a firearm or an
inability to track a firearm that has been sold.

                     III. Conclusion
  For the foregoing reasons, we AFFIRM the opinion of the
district court.
No. 05-2800                                                11

  MANION, Circuit Judge, dissenting. Because I con-
clude that the government is not entitled to summary
judgment, I respectfully dissent. The central question here
is whether Gun World’s recordkeeping violations were
willful under 18 U.S.C. § 923(e). I agree with the court that
this question is governed by Stein’s, Inc., v. Blumenthal, 649
F.2d 463, 467 (7th Cir. 1980). Thus, to show willfulness and
succeed in revoking Gun World’s dealer license, the govern-
ment must “prove that [Gun World] knew of [its] legal
obligation and purposefully disregarded or was plainly
indifferent to the recordkeeping requirements.” Id. (internal
quotation omitted). Gun World has taken the first half of
the willfulness test, i.e., knowledge, off the table; it con-
ceded that it knew of its duty to fully complete the govern-
ment’s firearm transaction forms. It is also important to
note that the government and this court regard the 1981
and 1998 reports simply as evidence of Gun World’s knowl-
edge of the Act’s requirements. This dispute therefore turns
on whether Gun World acted with purposeful disregard or
plain indifference when it left a small number of boxes
blank on 12 of the 880 forms it filled out between January
1999 and February 2000.
   The government’s evidence on this crucial point, viewed
in a light most favorable to Gun World, as it must be in this
situation, fails to show that the government is entitled to
summary judgment. See United States v. Rode Corp., 996
F.2d 174, 178 (7th Cir. 1993); Fed. R. Civ. P. 56(c). The
evidence supporting the government’s summary judgment
motion is confined to a few spaces left blank on 12 forms.
During the period in question, Gun World was responsible
for some 51,240 pieces of information on the 880 forms, and
it omitted 19 of those pieces. On its face, that appears to be
a very positive compliance ratio: 51,221 out of 51,240
(99.96%). Gun World’s substantial compliance on the 12
forms in question and total compliance on the rest is a
strong indicator that Gun World was not disregarding or
12                                                No. 05-2800

being indifferent to its obligations. If, with the 12 forms, the
government had submitted an affidavit from an informant,
for example, attesting to the fact that Gun World left a box
blank at the informant’s request, then the summary
judgment would be appropriate. Here, however, there are
only the forms themselves, and, in a light most favorable to
Gun World, these 12 substantially-completed forms upon
which the government seeks to revoke Gun World’s license,
do not prove, for summary judgment purposes, that
Gun World purposefully disregarded or was plainly indiffer-
ent to the recordkeeping requirements. One willful violation
could put them out of business, but several inadvertent ones
should not.
  To bolster its case, the government cites its 1981 and
1998 inspection reports, contending that the past violations
recounted therein and the corresponding warnings establish
Gun World’s knowledge of its recordkeeping obligations.
However, Gun World does not dispute the knowledge prong
of the willfulness test, and the admission of those reports
was only to evidence knowledge. In any event, these past
violations as well as later Gun World lapses (i.e., after
February 2000) raised by the government do not conclu-
sively show that the 12 violations for which the government
seeks to revoke Gun World’s license were triggered by
purposeful disregard or plain indifference. A rational trier
of fact could find, that despite other shortcomings, the 12
violations were caused by something less than purposeful
disregard or plain indifference, such as a genuine mistake
that, despite all diligence, slipped through undetected. Cf.
Groh v. Ramirez, 540 U.S. 551, 556 (2004) (Kennedy, J.,
dissenting) (“Every lawyer and every judge can recite
examples of documents that they wrote, checked, and
doublechecked, but that still contained glaring errors.”).
  The entire willfulness inquiry of § 923(e) illustrates
that this is not a strict liability situation, and, thus, cases
built upon nothing more than repeated omissions should not
No. 05-2800                                               13

automatically result in revocation at the summary judg-
ment stage. Here, the evidence and all reasonable infer-
ences therefrom, viewed in a light most favorable to Gun
World, do not prove that Gun World purpose-
fully disregarded or was plainly indifferent to the
recordkeeping requirements. It is a factual question to be
resolve at a trial/evidentiary hearing in accordance with
18 U.S.C. § 923(f)(3). See Stein’s, 649 F.2d at 466 (explain-
ing when a “trial de novo” is appropriate). I would thus
reverse the grant of summary judgment.
   I should note that apparently this case began with much
more than has been funneled into this appeal. As the
court mentions, the 2000 inspection report detailed a
number of violations, including two straw sales, not at issue
here. These are significant accusations which may explain
why the ATF engaged in such an extensive investigation.
But all of these charges were effectively dropped, leaving a
case involving 19 blank spaces on 880 forms. The ATF
director by declaration assured the court that he would
have revoked Gun World’s license solely on these 19 Form
4473 violations. There may be good reasons to revoke the
license that Gun World has held for over 25 years, but
because the Form 4473 violations are the only basis for
revocation, the government must present actual evidence of
willfulness, or else the trier of fact should decide.
14                                        No. 05-2800

A true Copy:
      Teste:

                    ________________________________
                    Clerk of the United States Court of
                      Appeals for the Seventh Circuit

               USCA-02-C-0072—3-20-06