AKINS v. USA

Filing 9

Published Opinion and Order granting 5 Motion to Dismiss. The Clerk is directed to dismiss Plaintiff's complaint with prejudice. Signed by Judge Thomas C. Wheeler. (pn)

A K I N S v. USA

Doc. 9

In the United States Court of Federal Claims
N o . 08-136C (F ile d : July 24, 2008) ***************************************** * * W IL L IA M AKINS, * * Plaintiff, * * v. * * T H E UNITED STATES, * * Defendant. * * ***************************************** * J o h n R. Monroe, Roswell, Georgia, for Plaintiff. M ich a e l N. O'Connell, with whom were Gregory G. Katsas, Acting Assistant Attorney G e n e ra l, Jeanne E. Davidson, Director, and Mark A. Melnick, Assistant Director, United S ta te s Department of Justice, Commercial Litigation Branch, Civil Division, Washington, D .C ., and Melissa Anderson, ATF Office of Chief Counsel, Of Counsel, for Defendant. O P I N I O N AND ORDER W H E E L E R , Judge. I n this Fifth Amendment takings case, Plaintiff William Akins seeks just c o m p e n s a t io n for damages resulting from a Bureau of Alcohol, Tobacco, Firearms and E x p lo s iv e s ("ATF") ruling that classifies Plaintiff's invention, the "Akins Accelerator," as a machine gun, and prohibits Plaintiff from selling this device to anyone other than law e n f o r c e m e n t agencies. The case is before the Court on Defendant's motion to dismiss for f a ilu re to state a claim upon which relief can be granted, pursuant to Rule 12(b)(6) of the C o u rt of Federal Claims ("RCFC"). For the reasons stated below, the Court grants D e f e n d a n t' s motion to dismiss.

F if th Amendment Taking Claim; P a te n te d Device Classified As M a c h in e Gun; Exercise of Police P o w e r; Motion to Dismiss Under R C F C 12(b)(6).

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B a c k g ro u n d 1 O n August 15, 2000, the United States Patent and Trademark Office issued Patent No. 6 ,1 0 1 ,9 1 8 ("the `918 patent") to Plaintiff for a device that became known as the "Akins A c c ele ra to r." Comp. ¶ 6. According to the patent, the purpose of the Akins Accelerator was " to increase the cyclic rate at which the trigger of a semi-automatic firearm can be actuated to discharge the weapon." Comp. Ex. A. On March 31, 2002, Plaintiff submitted patent drawings of the Akins Accelerator to A T F for classification under the National Firearms Act, 26 U.S.C. § 5801, et. seq. Comp. ¶ 7, Ex. B. In particular, Plaintiff inquired whether ATF would consider the Akins A c c ele ra to r to be a machine gun as defined by 26 U.S.C. § 5845(b). Id. At the time, Plaintiff d id not have any prototypes available for ATF to test. Comp. Ex. B. ATF requested a s a m p le of the device, and on November 17, 2003, sent a letter to Plaintiff's business a ss o c ia te , Thomas Bowers, stating that "the submitted stock assembly does not constitute a m a c h in e g u n as defined in the NFA." Comp. ¶¶ 10-15, Ex. E. ATF confirmed its November 1 7 , 2003 ruling in a January 29, 2004 letter to Mr. Bowers. Comp. Ex. G. Relying on A T F ' s classification, Plaintiff and Mr. Bowers began producing and distributing the Akins A c c ele ra to rs through Plaintiff's predecessor in interest, the Akins Group, Incorporated. C o m p . ¶ 23. O n November 22, 2006, more than three years after ATF's initial classification, R icha rd Vasquez, Assistant Chief of ATF's Firearms Technology Branch, sent a letter to Mr. B o w e rs stating that ATF had "recently received a request from an individual to examine a d e v ice referred to as an "`Akins Accelerator.'" Comp. Ex. H at 1. As a result of this request, A T F tested the Akins Accelerator and determined that it was a machine gun under the N atio n al Firearms Act, as well as the Gun Control Act of 1968. Comp. ¶ 24, Ex. H at 1-2 (citing 18 U.S.C. §§ 921(a)(23), 922(o); 26 U.S.C. § 5485(b)). Mr. Vasquez noted ATF's e a rlier classification and stated that "[t]o the extent that the determination in this letter is in c o n sis te n t with the letters dated November 17, 2003, and January 29, 2004, they are hereby o v e rru le d ." Comp. Ex. H at 3. Three weeks later, on December 13, 2006, ATF issued a g e n e ric ruling describing the Akins Accelerator and declaring it to be a machine gun. Comp. ¶ 26. On September 24, 2007, ATF denied Plaintiff's motion for reconsideration stating "the d e v ic e should remain classified as a machine gun . . . ." Comp. ¶ 30.

The facts set forth in this opinion do not constitute findings of fact by the Court. The facts cited are either undisputed, or are taken from Plaintiff's complaint and accompanying exhibits, and are presumed to be true for the purpose of deciding Defendant's motion to dismiss. See Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1965 (2007). -2-

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O n January 19, 2007, ATF required the Akins Group and Plaintiff to remove recoil s p r in g s from all Akins Accelerators and surrender them to ATF, thereby rendering the d e v ice s non-functional and without value. Comp. ¶¶ 33-34. The Akins Group assigned all rig h ts and interests in claims it may have against the Government to Plaintiff on February 18, 2 0 0 8 . Comp. ¶ 36. Plaintiff filed a three-count complaint in this Court on March 6, 2008, alleging both r e g u la to r y and physical takings as well as due process violations. Plaintiff requested just co m p en satio n for property taken, and a declaratory judgment that ATF's ruling was arbitrary a n d capricious, or, in the alternative, that 18 U.S.C. § 922(o) is unconstitutional. On May 2, 2 0 0 8 , Defendant filed a motion to dismiss Plaintiff's claims pursuant to RCFC 12(b)(1) and 1 2 (b )(6 ). Specifically, Defendant argued that this Court lacks jurisdiction to (1) hear P la in tif f 's due process claim, (2) conduct Administrative Procedures Act ("APA") review o f ATF's ruling, (3) declare 18 U.S.C. § 922(o) unconstitutional, or (4) issue the requested d e c la ra to ry and injunctive relief. In response, Plaintiff withdrew his due process claim and re q u e st for declaratory and injunctive relief. Pl.'s Resp. at 2.2 Thus, only Plaintiff's physical a n d regulatory takings claims remain before the Court. This Court has jurisdiction to hear a claim for just compensation pursuant to the Takings Clause of the Fifth Amendment. See e .g ., Overview Books, LLC v. United States, 72 Fed. Cl. 37, 41 (2006) ("A claim for c o m p e n s a tio n pursuant to the Takings Clause of the Fifth Amendment constitutes a m o n e y-m a n d a tin g provision sufficient to invoke the jurisdiction of this court."). Discussion A . Standards for Decision " [ A ] complaint should be dismissed under RCFC 12(b)(6) `when the facts asserted b y the claimant do not entitle him to a legal remedy.'" Steward v. United States, 80 Fed. Cl. 5 4 0 , 542-43 (2008) (quoting Lindsay v. United States, 295 F.3d 1252, 1257 (Fed. Cir. 2 0 0 2 )). When considering a motion to dismiss under Rule 12(b)(6), the Court "must accept a s true all the factual allegations in the complaint, and [the Court] must indulge all reasonable in f e re n c es in favor of the non-movant." Sommers Oil Co. v. United States, 241 F.3d 1375, 1 3 7 8 (Fed. Cir. 2001) (citations omitted); see also Huntleigh USA Corp. v. United States, 63

Plaintiff apparently has filed a separate action in Federal district court challenging the ATF's designation of the Akins Accelerator as a machine gun. Akins v. United States, No. 08CV-00988T-26TGW (M.D.Fla.). For the purposes of a takings claim, this Court must assume that the underlying agency action was lawful. Acadia Tech., Inc. v. United States, 458 F.3d 1327, 1331 (Fed. Cir. 2006); Rith Energy, Inc. v. United States, 270 F.3d 1347, 1352-53 (Fed. Cir. 2001) (on petition for rehearing). -3-

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F e d . Cl. 440, 443 (2005). The Court, however, is not required to "accept inferences drawn b y plaintiffs if such inferences are unsupported by the facts set out in the complaint. Nor m u s t the court accept legal conclusions cast in the form of factual allegations." Kowal v. M C I Communications Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994) (citing Papasan v. Allain, 4 7 8 U.S. 265, 286 (1986)). While the complaint need not contain detailed factual allegations, "a plaintiff's obligation to provide the `grounds' of his `entitle[ment] to relief' requires more th a n labels and conclusions, and a formulaic recitation of the elements of a cause of action w ill not do . . . ." Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1964-65 (2007) (citations o m i tt e d ) . U n d e r RCFC 12(b), when matters outside the pleadings are presented and not ex clud ed by the Court, the motion to dismiss shall be treated as a motion for summary ju d g m e n t under RCFC 56, and the parties shall be given reasonable opportunity to present m a te ria ls pertinent to the motion. Where, however, the Court relies only on undisputed d o c u m e n ts attached as exhibits to the Complaint, the Court may proceed without converting th e motion to dismiss to one for summary judgment. See American Contractors Indem. Co. v . United States, 81 Fed. Cl. 682, 688 (2008). In this case, Plaintiff attached eleven exhibits to the Complaint containing the abstract to the `918 patent, and correspondence between the A k in s Group and ATF. Defendant does not dispute the validity of any of Plaintiff's attached e x h ib its , and the Court will consider them for the purposes of Defendant's motion without c o n v e rtin g it to a motion for summary judgment. B . Takings Analysis T h e Takings Clause of the Fifth Amendment provides that "nor shall private property b e taken for public use without just compensation." U.S. Const. amend. V. "[T]he g o v e rn m e n t may `take' private property either by physical invasion or by regulation." A m e ric a n Pelagic Fishing Co., L.P. v. United States, 379 F.3d 1363, 1371 (Fed. Cir. 2004) (c itin g Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1014-15 (1992)). In this case, Plaintiff a lle g e d both a physical and regulatory taking. First, Plaintiff asserted that ATF "required A k in s Group, Inc. to remove recoil springs from all Akins Accelerators in inventory and su rren d er them to [ATF]." Comp. ¶¶ 33, 41. Second, Plaintiff contended that ATF's D e c e m b e r 13, 2006 ruling resulted in a regulatory taking. Comp. ¶¶ 26, 40. The Takings Clause "does not entitle all aggrieved owners to recompense, only those w h o s e property has been `taken for a public use.'" Amerisource Corp. v. United States, 525 F .3 d 1149, 1152 (Fed. Cir. 2008). "Property seized and retained pursuant to the police power is not taken for a `public use' in the context of the Takings Clause." Id. at 1153 (applying th e police power doctrine in the context of an alleged physical taking); see also Rith Energy, In c . v. United States, 270 F.3d 1347 (Fed. Cir. 2001) (on petition for rehearing) (applying -4-

th e police power doctrine in the context of an alleged regulatory taking); Seay v. United S tates, 61 Fed. Cl. 32, 35 (2004). T h e police power doctrine may apply where the government acts in order "to protect th e general health, safety and welfare of its citizens." Amerisource Corp. v. United States, 7 5 Fed. Cl. 743, 747 (2007), aff'd, 525 F.3d 1149 (Fed. Cir. 2008); see also Acadia Tech., In c . v. United States, 65 Fed. Cl. 425, 429 (2005) (holding that if property "is taken to p re v e n t public harm, the government action may be an exercise of police power."), aff'd, 458 F .3 d 1327 (Fed. Cir. 2006). As the United States Supreme Court explained long ago: A prohibition simply upon the use of property for purposes that are d e c l a re d , by valid legislation, to be injurious to the health, morals, o r safety of the community, cannot, in any just sense, be deemed a ta k in g or an appropriation of property for the public benefit. Such leg isla tio n does not disturb the owner in the control or use of his p ro p e rty for lawful purposes, nor restrict his right to dispose of it, b u t is only a declaration by the state that its use by any one, for c e rta in forbidden purposes, is prejudicial to the public interests. Mugler v. Kansas, 123 U.S. 623, 668-69 (1887) (holding that a State law prohibiting the m a n u f a c tu re and sale of intoxicating liquors except for limited purposes did not constitute a compensable taking). In addition to a prohibition on the sale of intoxicating liquors, e x a m p le s of the exercise of police power resulting in a non-compensable government taking in c lu d e : seizing pharmaceuticals to enforce criminal laws against a third party, Amerisource C o rp ., 525 F.3d at 1150-51; seizing goods suspected of bearing counterfeit marks, Acadia T e c h , 458 F.3d at 1332 (describing the Customs seizure as "a classic example of the g o v ern m en t's exercise of the police power to condemn contraband or noxious goods . . . ."); a n d revoking a mining permit to prevent harmful runoff to surrounding communities, Rith E n e rg y, 270 F.3d at 1352. C o n g ress has granted ATF the authority to investigate criminal and regulatory v io la tio n s of Federal firearms laws. 28 U.S.C. § 599A(b)(1). One of the Federal firearms la w s that ATF is authorized to enforce is 18 U.S.C. § 922(o), which states that "it shall be u n la w f u l for any person to transfer or possess a machinegun." 18 U.S.C. § 922(o) (e sta b lish in g limited exceptions that do not apply in this case). A person who knowingly v io la te s § 922(o) shall be fined, imprisoned not more than ten years, or both. 18 U.S.C. § 9 2 4 (a )(2 ). The record shows that ATF was acting under this authority when it classified the A k i n s Accelerator as a machine gun, ordered Plaintiff to register or surrender the devices, a n d prohibited Plaintiff from selling them to anyone other than law enforcement agencies. S ee Comp. Ex. H (citing 18 U.S.C. §§ 921(a)(23), 922(o); 26 U.S.C. § 5485(b)). As ATF -5-

w a s acting pursuant to the police power conferred on it by Congress, Plaintiff's complaint f a ils to state a compensable takings claim under the Fifth Amendment. See Amerisource C o rp ., 525 F.3d at 1154 ("so long as the government's exercise of authority was pursuant to s o m e power other than eminent domain, then the plaintiff has failed to state a claim for c o m p e n s a tio n under the Fifth Amendment.") (citing Bennis v. Michigan, 516 U.S. 442, 453 (19 9 6 )). In addition to being barred under the police power doctrine, the Court agrees with D e f e n d a n t that Plaintiff's regulatory takings claim fails because his expectancy interest in m a n u f a c tu rin g and selling Akins Accelerators to the general public is not protected property u n d e r the Fifth Amendment. Under Bowen v. Public Agencies Opposed to Social Security E n tra p m e n t, 477 U.S. 41 (1986), "enforceable rights sufficient to support a taking claim a g a in s t the United States cannot arise in an area voluntarily entered into and one which, from th e start, is subject to pervasive Government control." Mitchell Arms, Inc. v. United States, 2 6 Cl. Ct. 1, 5 (1992), aff'd, 7 F.3d 212 (Fed. Cir. 1993); cf. Lucas, 505 U.S. at 1027-28 (" [ I]n the case of personal property, by reason of the State's traditionally high degree of c o n tro l over commercial dealings, he ought to be aware of the possibility that new regulation m ig h t even render his property economically worthless . . . ."). "[G]overnment regulation ­ by definition ­ involves the adjustment of rights for the public good. Often this adjustment cu rtails some potential for the use or economic exploitation of private property. To require c o m p e n sa tio n in all such circumstances would effectively compel the government to regulate b y purchase." Andrus v. Allard, 444 U.S. 51, 65 (1979) (emphasis in original) (holding that C o n g ress's prohibition on the sale of preexisting eagle feathers did not constitute a taking). In Mitchell Arms, the plaintiff, a federally-licensed firearms importer, alleged that A T F ' s suspension and revocation of import permits constituted a compensable taking under th e Fifth Amendment. Mitchell Arms, 7 F.3d at 215. The Federal Circuit held that the p lain tiff 's expectation interest in selling firearms in the United States was not property p ro te c te d by the Fifth Amendment because the plaintiff "voluntarily entered the firearms im p o rt business, thereby knowingly placing itself in the governmentally controlled arena of f ire a rm s importation of the Gun Control Act . . . ." Id. at 216. Like the plaintiff in Mitchell Arms, Plaintiff here voluntarily entered an area subject to pervasive federal regulation ­ the manufacture and sale of firearms. According to the a b stra c t of the `918 patent, Plaintiff designed and manufactured an assembly that increased th e rate at which semi-automatic weapons are discharged. See Comp. Ex. A (describing the A k i n s Accelerator as "[a]n accelerating assembly effectively to increase the cyclic rate at w h ich the trigger of a semi-automatic firearm can be actuated to discharge the weapon."). P la in tif f 's knowledge of the potential for federal regulation of his invention is evidenced by h is initial March 31, 2002 letter to ATF in which he describes the Akins Accelerator and asks -6-

" w o u ld B.A.T.F. consider the installed combination to be a machine gun according to N.F.A f e d era l law?" Comp. Ex. B. Consequently, Plaintiff's expectation interest in manufacturing a n d distributing Akins Accelerators to the public free from Federal regulation is not a p ro p e rty interest protected by the Fifth Amendment. Conclusion B a se d upon the foregoing, Defendant's motion to dismiss under RCFC 12(b)(6) is G R A N T E D . The Clerk is directed to dismiss Plaintiff's complaint with prejudice. IT IS SO ORDERED. s / T h o m a s C. Wheeler THOMAS C. WHEELER Judge

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