Court Opinion

ID: 4355861
Source: CourtListenerOpinion
Date Created: 2019-01-03 18:00:15.695705+00
Date Added: 2024-06-11T11:38:40.955826
License: Public Domain

PRECEDENTIAL

        UNITED STATES COURT OF APPEALS
             FOR THE THIRD CIRCUIT
                  _____________

                       No. 17-3718
                      _____________

JOHN F. SIMPSON, t/a Warrior Ridge Trading; t/a LCT Pro Shop

                             v.

  ATTORNEY GENERAL UNITED STATES OF AMERICA;
DIRECTOR, BUREAU OF ALCOHOL, TOBACCO, FIREARMS
 & EXPLOSIVES; DIRECTOR OF INDUSTRY OPERATIONS,
    BUREAU OF ALCOHOL, TOBACCO, FIREARMS &
      EXPLOSIVES; UNITED STATES OF AMERICA

                      John F. Simpson,
                                 Appellant

                      _____________

      On Appeal from the United States District Court
          for the Middle District of Pennsylvania
       District Judge: Honorable John E. Jones, III
              (D.C. Civil No. 1-15-mc-00297)
                     ______________

                 Argued October 30, 2018
                    ______________
    Before: CHAGARES, JORDAN, and VANASKIE, Circuit
                         Judges

                (Opinion Filed: January 3, 2019)

Adam J. Kraut
Joshua Prince       [ARGUED]
Prince Law Offices
646 Lenape Road
Bechtelsville, PA 19505
       Counsel for Appellant

David J. Freed
United States Attorney
Carlo D. Marchioli [ARGUED]
Kate L. Mershimer
Office of United States Attorney
228 Walnut Street, P.O. Box 11754
220 Federal Building and Courthouse
Harrisburg, PA 17108

Jeffrey A. Cohen
ATF Associate Chief Counsel
John Kevin White
ATF Division Counsel
601 Walnut Street, Suite 1000E
Philadelphia, PA 19106
       Counsel for Appellees


 The Honorable Judge Vanaskie transmitted the opinion to the
Clerk for filing prior to retiring from the bench on January 1, 2019.
Due to the intervening holiday, the opinion has been entered on the
docket by the Clerk this day.

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                     ________________

                         OPINION
                     ________________

VANASKIE, Circuit Judge.

       Appellant John Simpson appeals the District Court’s
order granting summary judgment for Appellees and affirming
the Bureau of Alcohol, Tobacco, Firearms & Explosives’
(“ATF”) revocation of his federal firearms licenses (“FFLs”).
After an annual compliance investigation, the ATF determined
that Simpson had committed over 400 willful violations of the
Gun Control Act of 1968, 18 U.S.C. § 921 et seq. (“GCA”),
and therefore revoked his FFLs pursuant to 18 U.S.C. § 923(e)
and 27 C.F.R. § 478.73. After an administrative hearing, the
ATF affirmed its revocation decision and Simpson filed a
petition for judicial review under 18 U.S.C. § 923(f)(3). The
District Court, adopting a Magistrate Judge’s report and
recommendation, granted summary judgment in favor of the
ATF. For the following reasons, we will affirm.

        Simpson’s appeal presents us with the question of what
standard to apply to determine whether a violation of the GCA
was willful, an issue we have not yet addressed in a
precedential opinion. In a non-precedential opinion, we found
persuasive the willfulness standard used by seven other
circuits: knowledge of a legal obligation and purposeful
disregard or plain indifference to it. Taylor v. Hughes, 548 F.
App’x 822, 824 (3d Cir. 2013) (citing Borchardt Rifle Corp. v.
Cook, 684 F.3d 1037, 1042 n.9 (10th Cir. 2012) (listing cases)).
Agreeing with the unanimous view of all the Courts of Appeals
to have addressed this issue, we now hold in this precedential

                               3
opinion that this willfulness standard applies to violations of
the GCA. Because it is clear that Simpson knew of and was
plainly indifferent to his obligations by committing hundreds
of GCA violations, we will affirm the District Court’s ruling.

                              I.

        Simpson applied for a dealer’s FFL in 2010, which
prompted an ATF interview. During the interview, ATF
representatives discussed Simpson’s legal responsibilities and
obligations as a firearms dealer, covering topics such as
acquisition and disposition (“A&D”) recordkeeping, sales to
law enforcement, out-of-state gun sales, prohibited sales,
consignment of firearms, and personal firearms. At the end of
the meeting, Simpson signed an Acknowledgement of Federal
Firearms Regulations, certifying that he understood his
responsibility to learn and follow all laws and regulations
governing his FFL. Simpson subsequently received an FFL
and opened a firearms store, Warrior Ridge Trading

        In 2011, Simpson attended a seminar for FFL holders,
where ATF officials discussed federal firearms regulations and
showed sample Firearms Transaction Records. In 2012, after
consulting with the ATF about his desire to assemble AR-15
rifles, Simpson applied for an additional FFL to manufacture
firearms. ATF officials met with him and discussed the legal
responsibilities associated with a manufacturer’s license,
including the duty to mark all manufactured firearms and to
keep a separate manufacturing A&D book. Simpson again
signed an acknowledgement form certifying that he understood
his legal obligations under his additional FFL.

      In February 2014, Simpson applied to relocate his FFLs
because he planned to move his firearms store to another

                              4
location. An ATF Industry Operations Inspector (“IOI”) met
with him and discussed his application. Simpson once again
signed a form acknowledging that he understood his
responsibilities and obligations under the GCA.

       In April 2014, ATF conducted a compliance inspection
of Simpson’s FFLs pursuant to 18 U.S.C. § 923(g)(1)(C). ]
According to IOI Susan Whitman, this inspection “was the
worst [she] ever conducted,” and, based upon her report, the
ATF decided to revoke Simpson’s FFLs. (App. I 7). Simpson
requested a review of the revocation decision pursuant to 18
U.S.C. § 923(f)(2) and 27 C.F.R. § 478.74. After a hearing,
ATF Director of Industry Operations (“DIO”) Juan Orellana
found that Simpson had committed over 400 willful violations
of the GCA. As summarized by the Magistrate Judge, these
violations include:

             [S]elling or delivering multiple
             firearms without having completed
             Firearm Transaction Records,
             ATF Forms 4473, and without
             Simpson making the required
             entries in his [A&D] Book;
             transferring firearms without
             conducting background checks;
             dealing firearms at the Alexandria
             Sportsman’s Club and in West
             Virginia without obtaining a
             license to do so; selling or
             delivering     firearms,    firearm
             frames, or firearm receivers in
             seven instances to individuals who
             did not live in Pennsylvania;
             incorrectly identifying in multiple

                             5
             instances the firearms that had
             been transferred; failing to identify
             and mark 14 firearms that he
             manufactured, and failing to make
             the required records for those
             manufactured firearms; failing to
             record the disposition of five
             firearms to other licensees; failing
             to record the record of disposition
             of 30 firearms to non-licensees;
             failing on over 70 occasions to
             record required information in his
             A&D        Book;       failing     in
             approximately 200 instances to
             record information on ATF Forms
             4473; failing to appropriately sign
             and date ATF Form 4473 in dozens
             of cases to indicate that he did not
             have reasonable cause to believe
             that a transferee was disqualified
             from receiving a firearm; and
             failing to submit an Annual
             Firearms Manufacturing and
             Exportation Report (ATF Form
             5300.11) in 2012 and 2013.

(App. I 7-8; see also App. II 137-98). As such, the ATF issued
final revocation notices to Simpson.

       Simpson then filed a petition for judicial review and
moved for an emergency stay of the revocation of his FFLs.
The District Court denied his motion, finding that Simpson was
unlikely to “succe[ed] on the merits, given the numerosity and
types of violations,” and because the court was not “persuaded

                              6
by [Simpson’s] contention that he was inadequately trained by
[the ATF].” (App. 9). The case was then referred to a
Magistrate Judge for pretrial management. Upon completion
of discovery, the parties filed cross-motions for summary
judgment.

       Addressing the cross-motions in a Report and
Recommendation, the Magistrate Judge concluded that the
ATF was authorized to revoke Simpson’s FFLs because he had
willfully committed over 400 violations of the GCA. (App. I
33-34).     The District Court adopted the report and
recommendation in its entirety, and thus granted summary
judgment for the ATF and affirmed its revocation of Simpson’s
FFLs. Simpson’s timely appeal followed.

                              II.

        The District Court had jurisdiction to review the ATF’s
revocation decision under 18 U.S.C. § 923(f), 5 U.S.C. § 702,
and 28 U.S.C. § 1331. We have appellate jurisdiction pursuant
to 28 U.S.C. § 1291. We exercise de novo review over the
District Court’s grant of summary judgment. See, e.g., Kelly
v. Borough of Carlisle, 622 F.3d 248, 253 (3d Cir. 2010). A
grant of summary judgment is warranted “if the movant shows
that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a). Further, an administrative record “enjoys a
presumption of veracity” at summary judgment. Am. Arms
Int’l v. Herbert, 563 F.3d 78, 86 n.12 (4th Cir. 2009) (citation
omitted).

                               7
                              III.

        Under the GCA, the ATF may revoke an FFL if the
license holder willfully violated any provision of the GCA or
any rule or regulation prescribed under the GCA. 18 U.S.C.
§ 923(e); see also 27 C.F.R. § 478.73. “A single willful
violation [of the GCA] authorizes the ATF to revoke the
violator’s FFL, regardless of how severe . . . .” Fairmont Cash
Mgmt., L.L.C. v. James, 858 F.3d 356, 362 (5th Cir. 2017).
Thus, in the GCA context, our review of the District Court’s
grant of summary judgment requires us to determine whether
there was no genuine dispute as to any material fact
establishing even one willful violation of the GCA. See Am.
Arms, 563 F.3d at 86 (noting that “a single uncontested
violation suffices to uphold” summary judgment for the ATF
(citing Armalite, Inc. v. Lambert, 544 F.3d 644, 649 (6th Cir.
2008))).

       Eight other Courts of Appeals have held that a violation
of the GCA is willful where the licensee knew of his legal
obligation and purposefully disregarded or was plainly
indifferent to the requirements. See Borchardt Rifle, 684 F.3d
at 1042; Fairmont Cash Mgmt., 858 F.3d at 362; Armalite, 544
F.3d at 647; RSM, Inc. v. Herbert, 466 F.3d 316, 317 (4th Cir.
2006); Article II Gun Shop, Inc. v. Gonzales, 441 F.3d 492, 497
(7th Cir. 2006); Willingham Sports, Inc. v. ATF, 415 F.3d 1274,
1277 (11th Cir. 2005); Perri v. ATF, 637 F.2d 1332, 1336 (9th
Cir. 1981); Lewin v. Blumenthal, 590 F.2d 268, 269 (8th Cir.
1979). We find this definition of willfulness to be appropriate.
Indeed, this standard mirrors the willfulness standard we have
applied in the parallel context of ATF revocations of fireworks
and explosives licenses for violations of federal explosives
laws. See Vineland Fireworks Co. v. ATF, 544 F.3d 509, 517–
19 (upholding the ATF’s interpretation of willful because it

                               8
was reasonable).1 In Vineland, we upheld that willfulness
“do[es] not require a bad purpose,” or an intent to disobey the
law, but rather willfulness can be established by a mere
“violation of the regulations with knowledge of their
requirements.” Id. Moreover, both parties in this case agree
with this willfulness standard. Accordingly, we now join our
sister circuits in holding that a violation of the GCA is willful
where the licensee: (1) knew of his legal obligation under the
GCA, and (2) either purposefully disregarded or was plainly
indifferent to GCA requirements.

       Here, Simpson has been charged with willfully
violating the GCA over 400 times. He contends that he did not
fully understand his obligations and that any violations he
committed were not willful, but due to mistake or ignorance.
We disagree, as the record indicates that Simpson was well
apprised of his duties under the GCA but continually violated
GCA recordkeeping, manufacturing, and sales requirements.

       1
          In Vineland, we deferred to the ATF’s interpretation
of willfulness under federal explosives law because we found
it reasonable. See Vineland, 544 F.3d at 518 n.17. Our review
of explosives licensing decisions is governed only by 5 U.S.C.
§ 706, so we apply Chevron deference to reasonable agency
decisions. See 18 U.S.C. § 843(e)(2); see also Chevron,
U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837
(1984). In contrast, the GCA explicitly tasks courts with
conducting de novo review of ATF licensing denials or
revocations. See 18 U.S.C. § 923(f)(3). As such, we review
district court decisions regarding ATF firearms licensing de
novo. See, e.g., Willingham Sports, 415 F.3d at 1275-76.

                               9
                             A.

       The record shows that Simpson was informed of his
obligations as an FFL licensee. For example, Simpson met
with ATF officials three times about his FFLs and, at the
conclusion of each meeting, he signed a form acknowledging
that he discussed various regulatory topics with the ATF. In
addition, Simpson attended an ATF seminar for FFL holders
where he learned more about his obligations under the GCA.

       The record also demonstrates that Simpson often
complied with GCA requirements. On numerous occasions,
Simpson lawfully sold firearms and fully completed the A&D
recordkeeping required under the GCA. Also, he applied to
relocate his FFL, demonstrating that he knew that he was only
allowed to sell firearms from his approved FFL location. His
full compliance with GCA requirements in some instances
belies his assertion that he did not understand those
requirements.

        Further, some of Simpson’s actions illustrate that he
understood the GCA regulatory scheme quite well. For
example, he sometimes transferred firearms from his FFL
inventory to his personal collection, thereby taking advantage
of a statutory loophole that allowed him to later sell the
firearms at gun shows without conducting background checks.
Such action is inconsistent with that of a person who does not
understand the GCA regulatory scheme. Accordingly, we find
that no reasonable fact-finder could disagree that Simpson
knew and understood his GCA obligations as an FFL licensee.

                             10
                              B.

       In this case, the ATF has alleged that Simpson was
plainly indifferent to the GCA’s requirements. We must
therefore determine what constitutes plain indifference under
the willfulness standard we have adopted.

        Plain indifference is demonstrated by “a lack of concern
for [GCA] regulations. . . .” Am. Arms Int’l, 563 F.3d at 87. A
lack of concern may be shown by circumstantial evidence—
such as repeated violations or a large quantity of violations.
See, e.g., Borchardt Rifle, 684 F.3d at 1043–44; Am. Arms
Int’l, 563 F.3d at 87; On Target Sporting Goods, Inc. v. Att’y
Gen., 472 F.3d 572, 575 (8th Cir. 2007); RSM, Inc., 466 F.3d
at 322; Willingham Sports, 415 F.3d at 1277.

      The ATF charged Simpson with willfully violating a
long list of separate provisions of the GCA under his
manufacturer’s FFL, including, inter alia:

       (a) selling firearms without completing Form 4473s;
       (b) selling or delivering firearms without recording the
           disposition in his A&D book;
       (c) transferring      firearms   without     conducting
           background checks;
       (d) dealing firearms outside of his FFL premises;
       (e) selling or delivering firearms to non-Pennsylvania
           residents;
       (f) transferring      firearms    and    misidentifying
           corresponding A&D entries;
       (g) failing to identify and mark manufactured firearms;
       (h) failing to record the manufacture of firearms in his
           A&D book;

                              11
       (i) failing to record dispositions of firearms to FFL
           holders and non-licensees;
       (j) failing to complete all fields of Form 4473s; and
       (k) failing to sign and date Form 4473s.

(See App. I 8). Additionally, the ATF charged Simpson with
willfully violating another series of provisions of the GCA
under his dealer’s FFL. These include, inter alia:

       (a) selling firearms without completing Form 4473s;
       (b) selling or delivering firearms without recording the
           disposition in his A&D book;
       (c) transferring     firearms      without    conducting
           background checks;
       (d) selling firearms in West Virginia;
       (e) selling or delivering firearms to non-Pennsylvania
           residents
       (f) purchasing firearms without recording the purchases
           in his A&D book;
       (g) failing to complete all fields of Form 4473s; and
       (h) failing to sign and date Form 4473s.

Id.

       Simpson contends that all of these violations either were
mere mistakes or were due to his “fundamental
misunderstanding as to the importance” of GCA recordkeeping
requirements. (Appellant’s Br. 35). However, in view of the
fact that Simpson received training on his obligations and
explicitly acknowledged that he understood his GCA
obligations, the sheer number and continuing nature of the
violations clearly demonstrate Simpson’s plain indifference to
the GCA’s requirements.

                              12
        While there is no dispute that Simpson violated the
GCA on numerous occasions, there is also evidence of other
firearms transactions in which Simpson fully complied with
GCA requirements by completing, signing, and dating Form
4473s, recording the dispositions in his A&D book, and
conducting background checks. This inconsistent conduct
suggests both that Simpson knew of his obligations and was
indifferent to complying with them. Moreover, there is
evidence of blatant GCA violations. For example, Simpson
routinely transferred receivers to out-of-state residents—in
clear violation of the GCA—but falsely recorded the transfers
as rifle sales in his A&D book, making these transactions
appear lawful. Such behavior is indicative of Simpson’s lack
of concern for his GCA obligations as an FFL holder.

       In sum, the record sufficiently shows that Simpson had
knowledge of his FFL obligations, yet acted plainly
indifferently to them, thus willfully violating the GCA.
Accordingly, we find that the ATF was authorized to revoke
Simpson’s FFLs.

                            IV.

       For the foregoing reasons we will affirm the District
Court’s grant of summary judgment in favor of the ATF,
affirming its revocation of Simpson’s FFLs.

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