Gossard v. Bangs

Filing 37

MEMORANDUM OPINION. Signed by Judge Theodore D. Chuang on 6/30/2016. (bus, Deputy Clerk)

UNITED STATES DISTRICT COURT
DISTRICT OF MARYLAND

BRYON GOSSARD,
d/b/a Gilbert Indoor Range, LLC,
Petitioner,
v.
Civil Action No. TDC-15-0850
MICHAEL FRONCZAK,
Director of Industry Operations, Us. Bureau
of Alcohol, Tobacco, Firearms and Explosives,
Respondent.

MEMORANDUM OPINION
The Gun Control Act of 1968, ("GCA"), Pub. L. No. 90-618, 82 Stat. 1213 (1968),
requires any individual seeking to engage in the business of selling firearms to first obtain a
Federal Firearms License ("FFL") from the United States Bureau of Alcohol, Tobacco, Firearms
and Explosives ("ATF").

18 U.S.C. ~ 923(a) (2012). Petitioner Bryon Gossard challenges the

denial of his FFL application by Respondent Michael Fronczak, Director of Industry Operations
for ATF's Baltimore Field Division.l
Judgment.

Pending before the Court is ATF's Motion for Summary

The Court held a hearing on the Motion on June 17, 2016. For the reasons set forth

below, the Motion is GRANTED.

Fronczak's predecessor, Gary Bangs, made the decision to deny Gossard's application.
Pursuant to Federal Rule of Civil Procedure 25(d), Fronczak was automatically substituted as the
Respondent in this litigation upon assuming Bangs's position.

BACKGROUND
The following facts are presented in the light most favorable to Gossard, the nonmoving
party:
I.

Gilbert's ATF History
On June 8, 2012, Gossard applied for an FFL that would permit him to sell firearms at

Gilbert Indoor Range (the "Range"),
Rockville, Maryland.

a shooting range located at 14690 Rothgeb Drive,

At the time, Gossard worked at the Range.

The Range is owned by

Charles R. Gilbert, a former FFL holder whose GCA violations cost him the ability to sell
firearms. ATF denied the application, in part, because of Gossard's relationship with Gilbert, so
an overview of Gilbert's history with ATF is in order.
In 2003, Gilbert owned two business entities with FFLs, American Arms International
("AAI") and Gilbert Indoor Range, LLC ("GIR LLC").
GCA violations dating back to 1984.

Gilbert's businesses had a history of

.

A 2003 inspection by ATF revealed that Gilbert's

businesses had lost track of several hundred firearms and committed hundreds of recordkeeping
violations.

Based on these violations, in 2006, ATF revoked AAI's FFL and denied GIR LLC's

FFL renewal application.

ATF's decision was upheld by the United States District Court for the

District of Maryland in 2008, American Arms Int'l v. Herbert, No. CIV. DKC 2006-2468, 2008
WL 8098466 at *7 (D. Md. Feb. 19, 2008), at which point the revocation and denial went into
effect and Gilbert was no longer a licensed firearms dealer. The United States Court of Appeals
for the Fourth Circuit affirmed the district court's decision in 2009.

American Arms Int'l v.

Herbert, 563 F.3d 78,87 (4th Cir. 2009).
While Gilbert's challenge was pending, he worked to change zoning restrictions that
prevented him from selling firearms at the Range.

2

Those restrictions meant that only the

paperwork for firearms transactions could be completed at the Range. The physical transfer of
the weapon had to occur offsite.

In 2006, the Montgomery County Board of Appeals granted

Gilbert's petition for a special exception that enabled him to sell firearms at the Range to its
members.

In 2007, the Board of Appeals expanded the special exception to allow four

businesses, including GIR LLC, to sell firearms at the Range.

By that point, however, Gilbert

was in the process of losing his FFLs, which would prevent him from taking advantage of the
zoning exception.

According to ATF, Gilbert sought to avoid that costly consequence

by

orchestrating several straw applications for FFLs. Between 2005 and 2007, Gilbert's business
associate, John Bradley, and two employees, Jeffrey Freeze and Brian Penko, submitted FFL
applications to sell guns at the Range. Bradley and Freeze withdrew their applications, and ATF
denied Penko's application for omitting material information-specifically,

not listing Gilbert as

a person with the power to influence Penko's business.
After these applications
revocation of his businesses'

came to naught and Gilbert lost his legal challenge to the

FFLs, Gilbert applied for an FFL in his own name in 2008.

In

,

2009, ATF denied that application, finding that his businesses'

GCA violations should be

imputed to him and that Gilbert himself violated the GCA by selling firearms after his
businesses' FFLs had been revoked.

In 2011, the district court upheld that decision.

Bangs, 813 F. Supp. 2d 669, 676-78 (D. Md. 2011).

Gilbert v.

The Fourth Circuit affirmed on June 6,

2012. Gilbert v. Bangs, 481 F. App'x 52, 55 (4th Cir. 2012).
II.

GIR LLC's Federal Firearms License Application
Two days later, on June 8, 2012, Gossard became the third Range employee to apply for

an FFL to sell guns at the Range. Gossard applied for an FFL on behalf of GIR LLC. About two
months earlier, on April 12, 2012, he had purchased the right to use the name "Gilbert Indoor

3

Range LLC" from Gilbert for one dollar.

The FFL application required Gossard to list all

"responsible persons" at GIR LLC. AR Ex. G-26, Gossard's Application at 3. The application's
instructions defined a responsible person as "any individual possessing, directly or indirectly, the
power to direct or cause the direction of the management,

policies, and practices of the

corporation, partnership, or association, insofar as they pertain to firearms."

AR Ex. G-28, FFL

Application Instructions at 1. Gossard identified himself as the only responsible person for GIR
LLC. In response to another application question, Gossard stated that he was not an unlawful
user of marijuana.
ATF Industry Operations Investigator Gretchen Arlington was assigned to investigate
Gossard's application.

Arlington sought out details on how Gossard planned to operate GIR

LLC, including by interviewing and requesting information from Gossard. At one point during
the inquiry, Gossard forwarded to Gilbert an email from Gossard's attorney advising Gossard on
how to respond to an ATF request for additional information about Gossard's application.

On

November 16, 2012, Arlington told Gossard that it "appeared likely" that the license "might be
issued."

Hearing Transcript

at 321-22.

That same day, two of Gossard's

prospective

competitors, Andrew Raymond and Theodore Sabate, contacted ATF to accuse Gossard of being
a straw applicant for Gilbert and a marijuana user.

The accusation of marijuana use was

corroborated by Greg Miller, a former Range employee, who signed an affidavit claiming that he
had smoked marijuana with Gossard at the Range on numerous occasions.
Arlington's

investigation revealed that Gossard intended to run his business out of a

portion of the Range's firearms vault.

He executed a one-year lease with Burgundy Park

Associates, LLC, a business controlled by Gilbert, which owns the building in which the Range
is located.

The lease could be terminated without cause upon 30 days' notice by either party.

4

The lease entitled Gilbert to rent for the business a small desk in the vault, the immediate square
footage around it, and a lockable wall display cabinet for $2,200 per month, provided that he
obtained an FFL. There was no partition or divider between this space and the remainder of the
vault.

There was no separate security system for this space; it was covered by the security

system for the Range, which was controlled by Gilbert. Because he used the vault to store his
personal firearms as well as guns available for rent by members of the Range, Gilbert had full
access to the GIR LLC space, with the possible exception of the lockable cabinet. Gossard told
Arlington that he planned to buy some of Gilbert's personal firearms for resale.

He stated,

however, that Gilbert would have no role in the FFL business.
For start-up capital, Gossard deposited approximately

$1,000 into a bank account he

opened on behalf of GIR LLC. Gossard had no plans to purchase business insurance. According
to Gossard, his plan was to order a firearm only after a customer put down a deposit, then collect
the balance upon delivery. Under this model, Gossard would still need to have business funds to
pay the full price of firearms up front. When interviewed by Arlington, Gossard was unfamiliar
with the typical price markup on firearms.
Gossard did not plan to pay himself a salary and instead would remain an employee of
the Range.

He would not hire any employees of his own, but he planned to have Range

employees assist with the business when he was not available, such as by receiving shipments,
taking phone calls, and speaking to customers. Firearms sales would occur only when the Range
was open and only for a portion of its operating hours, between 5:00 p.m. and 9:00 p.m., Monday
through Friday.
During her interviews with Gossard, Arlington explained to Gossard the meaning of the
term "responsible person" and the need to list all responsible persons on the application.

5

She

expressedconcems
his application.

about Gilbert's involvement and gave Gossard ample opportunity to amend
Gossard did amend his application on one occasion, but he never changed his

answer to the question about responsible persons.

III.

Procedural History
On August 26, 2013, ATF issued a Notice of Denial of Application for License to

Gossard on the grounds that he had not disclosed Gilbert as a responsible person and because of
his unlawful drug use.
Gossard requested a hearing, which was held on May 13 and September 25,2014.

ATF

called three witnesses. ATF Industry Operations Intelligence Specialist Lisa Reid testified about
Gilbert's GCA violations and the previous applications for FFLs at the Range.

Sabate testified

that on one occasion Gossard entered Sabate's gun shop smelling of marijuana.

Finally,

Arlington testified about her investigation into Gossard's application and her conclusioiJ. that
Gossard should have listed Gilbert as a responsible person. Greg Miller, the former Range
employee who claimed to have smoked marijuana with Gossard, did not testify.

He told ATF

that Gossard had threatened him, an allegation Gossard denies.
On January 20, 2015, ATF issued a Final Notice denying Gossard's application because
he did not list Gilbert as a responsible person in his application and because he is an unlawful
marijuana user.
On March 24, 2015, Gossard filed a Petition in this Court challenging ATF's denial of his
FFL application.

On December 22,2015, ATF filed the administrative record and a Motion for

Summary Judgment.
non-substantive

On December 29,2015, Gossard submitted an Amended Petition, making

changes to his initial Petition.

Opposition to the Motion.

On January 29, 2016, Gossard submitted an

The Opposition attached a declaration from Gossard as well as a

6

verified complaint from a separate action pending before this Court also challenging the denial of
Gossard's application?

On February 16,2016, ATF filed a Reply memorandum.

DISCUSSION
I.

Legal Standard
When ATF denies an FFL application, the applicant may request a hearing.

~ 923(t)(2).

18 U.S.C.

If the agency maintains its position after the hearing, the applicant may petition the

district court "for a de novo judicial review of such denial." Id. ~ 923(t)(3); Prino v. Simon, 606
F.2d 449, 451 (4th Cir. 1979). In conducting this review, the court reviews the administrative
record, which "enjoys a presumption of verity." American Arms Int'l v. Herbert, 563 F.3d 78,86
n.l2 (4th Cir. 2009). The court may also consider "any evidence submitted by the parties to the
proceeding whether or not such evidence was considered at the hearing."

18 U.S.C. ~ 923(t)(3);

American Arms Int'l, 563 F.3d at 86 n.12. The court may hold an evidentiary hearing but only if
a good reason to do so appears in the administrative record or is presented by the petitioner.
,
DiMartino v. Buckley, 19 F. App'x 114, 115 (4th Cir. 2001); Stein's Inc. v. Blumenthal, 649 F.2d
463,466 (7th Cir. 1980).
Summary judgment is appropriate when, viewing the facts on the record in the light most
favorable to the nonmoving party, there is no genuine issue as to any material fact regarding the
denial of the petitioner's

application.

American Arms Int'l, 563 F.3d at 82. If ATF relied on

more than one reason for denying the application, disputes of material fact regarding some
reasons do not preclude summary judgment so long as there are independent and undisputed
grounds for denial.

See id. at 86 (holding that factual disputes regarding some of the GCA

On April 5, 2016, the Court stayed that separate action, Gilbert v. us. Bureau of Alc;ohol,
Tobacco, Firearms and Explosives, Civ. No. TDC-15-2127, pending the Court's ruling on this
Motion.

2

7

violations that ATF relied upon to justify an FFL revocation did not prevent the district court
from granting summary judgment because even "a single uncontested

violation suffices to

uphold the ATF's revocation decision").
In conducting the de novo review, the court is tasked with determining whether ATF was
authorized to deny the application.

18 U.S.C. ~ 923(f)(3); MEW Sporting Goods, LLC v.

Johansen, 992 F. Supp. 2d 665,677 (N.D. W. Va. 2014). Although the ultimate decision on the
law and facts remains with the trial judge, the court may give ATF's findings "such weight as it
believes they deserve in light of the evidence." Stein's, Inc., 649 F.2d at 467. The court can find
that ATF was authorized to deny the application if "the trial court concludes in its own judgment
that the evidence supporting the decision is 'substantial.'"
II.

Id.; Gilbert, 813 F. Supp. 2d at 673.

Request for Discovery
Gossard argues that the Court should not grant summary judgment before he has the

opportunity for discovery.

Although a party may move for summary judgment

before the

commencement of discovery, see Fed. R. Civ. P. 56(b), summary judgment is generally denied
when the nonmoving party 'has not had the opportunity to discover information that is essential
to his opposition.'''

Pisano v. Strach, 743 F.3d 927,931

(4th Cir; 2015) (quoting Ingle ex reI.

Estate of Ingle v. Yelton, 439 F.3d 191, 195 (4th Cir. 2006)).

Under such circumstances, the

proper procedure is for the nonmoving party to file an affidavit pursuant to Federal Rule of Civil
Procedure 56(d) explaining why, "for specified reasons," the party needs discovery to oppose the
summary judgment motion. Fed. R. Civ. P. 56(d); Harrods Ltd. v. Sixty Internet Domain Names,
302 F.3d 214,244

(4th Cir. 2002). Although the nonmoving party's failure to file a Rule 56(d)

affidavit is a sufficient reason to refuse to defer ruling on a pre-discovery motion for summary
judgment, the Court may still consider a request for discovery presented in the nonmovant's

8

memorandum
Nevertheless,

of law opposing

summary judgment.

Harrods Ltd,

302 F.3d at 244-45.

a court may deny a request for discovery pursuant to Rule 56(d) "when the

information sought would not by itself create a genuine issue of material fact" sufficient to
preclude summary judgment.

Pisano, 743 F.3d at 931. Moreover, in the present posture, a de

novo review of an ATF determination, the court may, but is not required to, consider additional
evidence beyond the administrative record, see 18 U.S.C.

9 923(f)(3),

and should do so only for

good reason, see DiMartino, 19 F. App'x at 115; Stein's Inc., 649 F.2d at 466.
Although Gossard did not file a Rule 56(d) affidavit, he set out in his OppositiOll four
reasons for seeking discovery.
and Theodore
communications
testimony

First, he argues that he should be allowed to depose Greg Miller

Sabate and to request any documents
with these individuals.

in ATF's

possession

regarding

its

Gossard seeks to rebut Miller's affidavit and Sabate's

alleging that Gossard is a marijuana user.

Although evidence undermining

the

statements of Miller and Sabate might create a genuine issue of material fact as to whether
Gossard is a marijuana user, there is no need to obtain such evidence because, as discussed
below, the Court 'finds that Gossard's failure to list Gilbert as a responsible person authorized
ATF to deny his application, regardless of whether or not Gossard unlawfully uses marijuana.
Next, Gossard seeks the opportunity to question Arlington, either at a deposition or an
evidentiary hearing.
explore Arlington's

At oral argument, Gossard's counsel stated that such inquiry is needed to
role in obtaining the affidavit from Miller and in allegedly fast-tracking

approval of certain permits for Sabate's firearms company.

The former reason relates to

Gossard's alleged marijuana use, which the Court need not address in ruling on this Motion,
while the latter reason is not relevant to ATF's authority to deny Gossard's application.

9

Thus,

Gossard has not provided a valid basis to require a deposition of Arlington, whom his counsel
already cross-examined at the ATF hearing.
Gossard also claims that he "requires discovery to rebut the allegations of the straw man
theory and to obtain discovery involving the various individuals identified by Respondent as
previous attempt[s) by Gilbert to circumvent the GCA." Pet'r's Opp'n Mot. Summ. J. ("Opp'n")
at 9. Gossard does not contest that Bradley, Freeze, and Penko applied for FFLs at the Range.
ATF offered those applications into evidence at the hearing, and Gos~ard's counsel had the
opportunity to cross-examine an ATF investigator about them.
ATF's

conclusion

that these were

straw applications

Although Gossard objects to

that obscured

Gilbert's

intended

involvement in the applicants' businesses, the issue before the Court on the pending Mot,ion is
narrow: whether Gossard's failure to list Gilbert as a responsible person authorized ATF to deny
his FFL application.

In resolving that question, the Court need not and does not rely on the

earlier FFL applications.

Thus, there is no need for such discovery.

Finally, Gossard contends that he should be able to probe ATF's

internal policies

regarding review of applications in which GCA violators serve as landlords for applicants.
Gossard asserts that if ATF failed to follow its internal procedures in reviewing his application,
its denial was "arbitrary and capricious agency action."

Opp'n at 12-13. He argues that "the

principles and law" articulated in INS v. Yang, 519 U.S. 26 (1995), and Morton v. Ruiz, 415 U.S.
199 (1974), entitle him to discovery. Id. at 12. Here, the GCA directs the Court to conduct a de
novo review to determine if the agency was authorized to deny the application.
~ 923(f)(3).

18 U.S.C.

The Administrative Procedure Act and the arbitrary and capricious standard that

applies to APA challenges have no applicability to this case.

See 5 U.S.C. ~ 704 (2012)

("Agency action made reviewable by statute and final agency action for which there is no other

10

adequate remedy in a court are subject to judicial review."); Bowen v. Massachusetts,

487 U.S.

879, 903 (1988) ("Congress did not intend the general grant of review in the APA to duplicate
existing procedures for review of agency action."); El Rio Santa Cruz Neighborhood Health Ctr.,
Inc. v. Us. Dep't of Health & Human Servs., 396 F.3d 1265, 1270 (D.C. Cir. 2005) ("[W]here a
statute affords an opportunity for de novo district-court review, the court has held that APA
review was precluded .... ").
Yang and Ruiz are not to the contrary.

Neither addresses the scope of ATF's statutory

authority under the GCA. Yang, 579 U.S. at 32; Ruiz, 415 U.S. at 235.

Consequently, evidence

of ATF's internal policies would not create a genuine issue of material fact.
Hughes, 548 F. App'x 822, 825 (3d Cir. 2013) (rejecting petitioner's

See Taylor v.

request for discovery

regarding ATF's internal policies in an FFL revocation case and finding that the APA, Yang, and
Ruiz did not apply to require a review of ATF internal policies); Weaver v. Harris, 486 F. App'x
503, 505-06 (5th Cir. 2012) (rejecting petitioner's request for discovery regarding ATF's internal
policies because they were irrelevant to the court's review of the revocation decision).
Consequently,

Gossard's request for discovery is denied?

Court also declines to hold an evidentiary hearing.

For the same reasons, the

The record is fully developed as to the

relationship between Gossard and Gilbert and provides a sufficient basis for determining whether
Gossard should have listed Gilbert as a responsible person on his FFL application.
III.

Denial of the FFL Application
ATF, exercising

authority delegated by Congress,

approval process for FFLs. 18 U.S.C.

9 923(a);

28 C.F.R.

administers

9 0.130(a)(I)

the application

and

(2015). ATF requires an

3
The Opposition also requests that this case be consolidated with Gilbert v. Us. Bureau of
Alcohol, Tobacco, Firearms & Explosives, Civ. No. TDC-15-2127, and Gilbert v. LeDoux, Civ.
No. RWT-15-2586. Gossard has not filed a motion to consolidate, so the request is not properly
before the Court.

11

FFL applicant to list all of the prospective firearms business's "responsible persons," defined as
"any individual possessing, directly or indirectly, the power to direct or cause the direction of the
management, policies, and practices of the corporation, partnership, or association, insofar as
they pertain to firearms.,,4

AR Ex. G-28, FFL Application Instructions at 1.

The willful
I

omission of a responsible person from an FFL application is grounds for denial.
~ 923(d)(l)(D);

18 U.S.C

27 C.F.R. ~ 478.47(b)(4) (2016); id. ~ 478.71; MEW Sporting Goods, LLC, 992

F. Supp. 2d at 678.

Compliance with such ATF requirements is necessary to "ensure that

persons entitled to have guns may have them, and that persons not entitled to have guns are
denied them." RSM, Inc. v. Herbert, 466 F.3d 316,324 (4th Cir. 2006).
The definition of a responsible person has four components.

First, because it includes

any individual "possessing" the power to direct an applicant's business, an individual qualifies as
a responsible person even if she does not intend to act on that power.
intervention is enough.

The capacity for

Second, the person's control can be direct or indirect.

Third, that

direction must extend to the "management, policies, and practices" of the applicant's business.
See United States v. 1,922 Assorted Firearms & 229,553 Rounds of Assorted Ammunition, 330 F.
Supp. 635, 638 & n.2 (E.D. Mo. 1971) (holding that the license holder's clerk, who could access
the firearms store and make sales without the license holder present, was not a responsible
person because he had no control over the management, policies, and practices of the business).
Fourth, the management, policies, and practices subject to direction must pertain to firearms, as
opposed to other parts of the business unrelated to guns. See Office of Enforcement Programs

4 This definition closely tracks language in 18 U.S.C. ~ 923, which allows ATF to deny the FFL
application of an applicant, "including, in the case of a corporation, partnership, or association,
any individual possessing, directly or indirectly, the power to direct or cause the direction of the
management and policies of the corporation, partnership, or association," who is "prohibited
from transporting, shipping, or receiving firearms or ammunition in interstate or foreign
commerce." 18 U.S.C. ~ 923(d)(l)(B).
12

and Services, ATF, E-Pub. 5320.8, National Firearms Act Handbook ~ 5.1.3.3 (2009) (noting
that "individuals only having duties related to administration or personnel" are not responsible
persons).
Although each application must be examined on its own terms, case law suggests several
factors that are often relevant when determining if an individual is a responsible person in an
FFL applicant's

business.

The most direct evidence would consist of facts showing that the

individual actually makes decisions for the applicant's firearms business.
Goods, LLC, 992 F. Supp. 2d at 679-80 (holding that the applicant's

See MEW SpQYting

wife was a responsible

person because she handled the day-to-day operations of the gun sales business while the
applicant worked a different full-time job). Such evidence is more likely to playa role in license
revocations

than license denials because, in the latter, the FFL business has yet to begin

operating.
In the case of a denial of an initial license application, if an applicant obtains an FFL
business from an individual whose GCA violations disqualify him from continuing to operate it,
the fact that the transfer occurred shortly after the disqualification and was not an arms-length
transaction can indicate that the applicant's business will not operate independently of the former
owner.

See Casanova Guns, Inc. v. Connally, 454 F.2d 1320, 1322-23 (7th Cir. '1972)

(concluding that after Casanova's,

Inc. was indicted for firearms violations and was therefore

ineligible to have an FFL, a separate business headed by the son of Casanova's owner and selling
firearms out of the same facility was established for the "substantial purpose" of circumventing
the restrictions

on Casanova's);

Virlow LLC v. Bureau of Alcohol,

Tobacco, Firearms

&

Explosives, NO.1 :06-CV -375, 2008 WL 835828, at *4-7 (W.D. Mich. Mar. 28, 2008) (finding
that an applicant's mother was a "responsible person" where the mother was unable to renew her

13

business's FFL then transferred the firearms portion of the business to the applicant).

The fact

that the applicant plans to acquire an initial inventory of firearms from such an owner further
suggests an ability to direct. See Casanova Guns, 454 F.2d at 1322-23 (considering the fact that
Casanova Guns purchased the firearms inventory of predecessor

Casanova's,

Inc. with an

unsecured promissory note); XVP Sports, LLC v. Bangs, No. 2:11CV379, 2012 WL 4329258, at
*5 (E.D. Va. Sept. 17, 2012) (considering the fact that the FFL applicant's

"entire beginning

inventory of firearms" consisted of the prior owner's guns sold on consignment in concluding
that the prior owner was a "responsible person").
Moreover, an individual who will pay the salary of the FFL applicant and others who
will work for the business could exercise direction and control over the applicant. See Casanova
Guns, 454 F.2d at 1322-23 (considering the fact that the original business both paid the salary of
the owner of the new business and provided employees to help with the new business as needed);
XVP Sports, 2012 WL 4329258, at *5 (holding that an individual could indirectly influence the
applicant's

business in part because he paid the applicant's

salary and the salaries of the

employees that would work for the applicant). A non-applicant's control over the physical space
in which the FFL business operates, including the security system, is another potential means of
leverage. See Casanova Guns, 454 F.2d at 1323 (considering the fact that the new business was
dependent on the old business for providing utilities); Nat'l Lending Grp., L.L.c. v. Mukasey,
,
No. CV 07-0024-PHX-PGRET,

2008 WL 5329888, at *5, 11 (D. Ariz. Dec. 19, 2008)

(considering an individual's responsibility for the security system of the FFL business and access
to its firearms as factors contributing to that individual's status as a responsible person). Finally,
if an individual exerts some influence over the FFL application process, that could also suggest
future involvement in the business's operations.

14

See Virlow LLC, 2008 WL 835828, at *6-7

(holding that an applicant's

mother was a responsible person in part because she actively

advocated for approval of the FFL application, used the terms "we" and "our" in correspondence
advocating for the FFL license, and paid for the application and the legal challenge to its denial).
Here, although Gossard told ATF that Gilbert would have no role in the firearms
business, a position with which ATF disagrees, the Court does not need to assess the credibility
of Gossard's claim.

The Court need only determine whether Gilbert could direct GIR LLC's

operations pertaining to firearms, not whether he would actually do so. Upon consideration of
the factors described above, the undisputed evidence shows that, at a minimum, Gilbert could
indirectly control the management, policies, and practices of GIR LLC.
First, Gossard's application was submitted only two days after the Fourth Circuit issued
an opinion ending Gilbert's bid to reacquire an FFL. The arrangement was anything but arm's
length. See Virlow LLC, 2008 WL 835828, at *7. Gossard, then a current employee of Gilbert at
the Range, paid only one dollar for the right to use the name "Gilbert Indoor Range LLC," and,
by extension, the right to operate under the zoning exception obtained by Gilbert.

Gilbert had

previously sold the same rights to John Bradley, a business associate, for $1,000. Gossard made
no attempt to negotiate the terms of the lease. Tellingly, during the FFL application process,
Gossard kept Gilbert in the loop, forwarding

him email correspondence

relating

to his

application. See id. at * 6-7. These facts support the inference that Gossard was a stra~ applicant
for Gilbert, such that GIR LLC would not operate independently from Gilbert.
Second, the facts indicate that Gossard was not in a position to operate the business
I

independently

from Gilbert.

Gossard had no business plan, no business insurance, and no

knowledge of the appropriate markups for firearms.

Gossard only put about $1,000 into GIR

LLC, and he had no inventory of firearms. See Virlow LLC, 2008 WL 835828, at *7 (noting that

15

"it is readily apparent" that the FFL applicant and her husband did not have "any financial
resources of their own"). Not surprisingly, Gossard told Arlington that he planned to sell some
of Gilbert's personal firearms collection through GIR LLC. See Casanova Guns, 454 Fi2d at

1322-23; XVP Sports, LLC, 2012 WL 4329258, at *5.' Even under his concept of only
purchasing

firearms upon receiving a deposit from the buyer, the $1,000 appeared to be

insufficient given that he would have to put down the full price for each firearm in order to
acquire it. At the same time, Gossard was immediately responsible for $2,200 per month in rent,
which represented more than 60 percent of his monthly salary. These facts strongly suggest that
Gilbert would have had to play an active role in the management, policies, and operations of GIR
LLC.
Third, Gilbert had the ability to direct GIR LLC's practices because he effectively had
financial control of Gossard and GIR LLC. Gilbert was Gossard's employer at the Range, which
provided his only regular source of income at the time of the FFL application.

See Casanova

Guns, 454 F.2d at 1322-23; XVP Sports, LLC, 2012 WL 4329258, at *5. Even after GIR LLC
began selling firearms, Gilbert would still be paying Gossard's salary.

Gilbert also paid the

salaries of all other Range employees, some of whom Gossard stated he would enlist to assist
with the business when he was unavailable.

Notably, Gilbert also had control over GIR LLC's

customer base, because under the zoning restriction, GIR LLC could only sell firearms to those
with Range membership, which was under Gilbert's control.
Fourth, Gilbert controlled the premises where GIR LLC would operate. GIR LLC did not
have separately demarcated space at the Range. Rather, the business was to be operated from a
desk in the Range's vault, to which Gilbert had unfettered access.
including the security system, were controlled by Gilbert.

16

All building operations,

See Casanova Guns, 454 F:2d at

1323; Nat'l Lending Grp., L.L.c., 2008 WL 5329888, at *5, 11. Most importantly, Gossard had
the ability to exert short-term control over GIR LLC through the lease, which he could terminate
for any reason with only 30 days' notice. Because the zoning restrictions limited GIR LLC to
sales at the Range, such termination would have been fatal to the business.
In XVP Sports, after a firearms business called SSDI had its FFL revoked, XVP was
formed as a new business, owned by the wife of SSDI's owner and operated by a company
president, to sell firearms out of the same location. 2012 WL 4329258 at *1. The court found
that SSDI's owner, the original FFL holder, was nevertheless a "responsible person" for XVP
because he had paid the FFL application fee, continued to pay the salary of XVP's president,
paid SSDI employees who also worked for XVP, owned the building, leased space to XVP
without always requiring rent payments, and was going to have XVP sell his personal firearms
on consignment.

Id. at *5. Likewise, the GIR LLC FFL application was submitted in the

immediate aftermath of restrictions on Gilbert; Gossard, as the owner of GIR LLC, was closely
associated with Gilbert as an employee and started the business through a less than arm's length
transaction; Gilbert was going to pay Gossard's salary and would pay Range employee~ who
would assist Gossard; Gossard was planning to operate under a lease out of the same facility
where Gilbert previously sold firearms, without any demarcated business area; and he was
planning to use Gilbert's

personal firearms as initial inventory.

Taking all of these facts

together, the Court finds that ATF was authorized to conclude that Gilbert had the power to
control GIR LLC's management, policies, and operations relating to firearms such that he was a
responsible person who should have been reported in Gossard's FFL application. See id.
There was also substantial evidence that Gossard's failure to list Gilbert as a responsible
person was "willful" as that term is used in the GCA. See 18 U.S.C.

17

S 923(d)(I)(D).

"(M]alice

or improper motive is not necessary to establish willfulness."

American Arms Int'l, 563 F.3d at

83.

to "known legal obligations"

A '''deliberate

disregard" of, or "plain indifference"

sufficient to constitute "willfulness."

is

Id. at 84 (quoting RSM, Inc., 466 F.3d at 321). Arlington

met with Gossard to explain the requirement to list responsible persons on the FFL application.
She expressed ATF's
opportunities

concerns with Gilbert's

to amend his application.

role in GIR LLC.

She gave him multiple

Gossard did not express any confusion

with the

requirements but still did not amend his application to add Gilbert as a responsible person.
,
Because Gossard was aware of both the facts that rendered Gilbert a responsible person and his
legal obligation to list responsible persons on his application, his omission of Gilbert from the
FFL application was willful.

See id. at 85 (holding that willfulness may be inferred "where a

licensee receives official warning that his actions violate the GCA and his record of compliance
does not change").

Consequently, the Court finds that ATF was authorized to deny Gossard's

FFL application because he willfully omitted material information from that application.
Gossard's arguments to the contrary are unavailing.

Gossard contends that ATF cannot

deny his application simply because his prospective landlord has a history of GCA violations.
Gossard's application was denied, however, not because Gilbert was his landlord, but because
Gossard made a material omission.

As discussed above, Gilbert's ability to control GIR LLC

extended well beyond his status as the landlord, to include paying Gossard's salary and those of
others who would assist with the business.
Gossard also contends that ATF unfairly attributed Gilbert's GCA violations to Gossard.
ATF does take the position in its brief that the GCA violations of a responsible person can be
imputed to the applicant.

The Court does not need to resolve this disagreement because there

was substantial evidence that Gilbert was a responsible person, and Gossard failed to list him on

18

his FFL application.
omissions.

The GCA expressly authorizes ATF to deny applications for such material

18 U.S.C. 9923(d)(l)(D).

Finally, Gossard claims that he stopped working for Gilbert in 2015 and that he would be
willing to sell firearms from a location other than the Range. While these developments might
be relevant to ATF's consideration of a future application, the Court must determine whether
ATF was authorized to deny the application Gossard actually submitted.
the facts at the time ATF made its decision.

To do so, it evaluates

Subsequent developments are irrelevant to the

agency's statutory authority to deny an application.

Vir/ow LLC, 2008 WL 835828, at *6. The

undisputed facts provide substantial evidence to show that Gilbert qualified as a responsible
person at the time that ATF rejected Gossard's application.
The Court's determination that ATF was authorized to deny Gossard's application for the
willful omission of material information does not mean that ATF can necessarily deny any FFL
application to sell firearms at the Range while Gilbert owns the property.

ATF disclaimed that

position at the hearing on this Motion. A truly independent individual or business, entering into
an arm's length transaction, with clearly demarcated space under its exclusive control, may well
qualify for an FFL. The Court trusts that ATF will give full and fair consideration to any future
FFL applications relating to this facility that may be submitted by Gossard or others.
CONCLUSION
For the foregoing reasons, the Motion for Summary Judgment is GRANTED.

A separate
"

Order shall issue.

"""""--

Date: June 30, 2016

s;-=~

THEODORE D. ,e1Iu~G
United States Di~dge

19