United States of America v. Worldwide Industrial Enterprises, Inc.
Filing
18
ORDER denying 13 Motion to Dismiss For the reasons set forth herein, the Court denies the defendant's motion to dismiss the complaint as time-barred. Ordered by Judge Joseph F. Bianco on 12/7/2016. (Hammond, Daniel)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
_____________________
No 16-CV-2255 (JFB) (SIL)
_____________________
UNITED STATES OF AMERICA,
Plaintiff,
VERSUS
WORLDWIDE INDUSTRIAL ENTERPRISES, INC.
Defendant.
___________________
MEMORANDUM AND ORDER
December 7, 2016
___________________
JOSEPH F. BIANCO, District Judge:
The United States of America (the
“government”) brought this action against
defendant Worldwide Industrial Enterprises,
Inc. (“Worldwide”) to enforce a monetary
forfeiture order issued by the Federal
Communications Commission (“FCC”) on
January 27, 2015. Worldwide filed a motion
to dismiss the complaint, arguing that it is
time-barred because the violations underlying the forfeiture order occurred over five
years before the complaint was filed. See 28
U.S.C. § 2462. For the reasons set forth
below, the Court denies Worldwide’s motion
to dismiss the complaint.
I. BACKGROUND
A. Facts
For purposes of this motion to dismiss,
the Court has taken the facts described below
from
the
government’s
complaint
(“Compl.”), filed with the Court on May 5,
2016. These facts are not findings of fact by
the Court but rather are assumed to be true for
the purpose of deciding this motion and are
construed in a light most favorable to the
government, the non-moving party. See
LaFaro v. N.Y. Cardiothoracic Group, 570
F.3d 471, 475 (2d Cir. 2009).
On November 9, 2009, the FCC issued a
citation to Worldwide for a violation of
Section 227 of the Communications Act, 47
U.S.C. § 227, for using a telephone facsimile
(“fax”) machine to send unsolicited
advertisements based on complaints it had
received from fourteen consumers. (Compl.
¶¶ 16–17.) The citation warned Worldwide
that such violations could result in monetary
forfeitures, but Worldwide did not respond.
(Id. at ¶¶ 18, 23.)
After receiving the citation, Worldwide
continued to send unsolicited advertisements
to at least seventeen additional consumers
II. STANDARD OF REVIEW
between February 10, 2010 and April 27,
2010. (Id. at ¶ 24.) These consumers filed
complaints with the FCC, and the FCC issued
a Notice of Apparent Liability for Forfeiture
(“NAL”) on April 7, 2011. (Id. at ¶¶ 25, 27.)
The NAL notified Worldwide that the FCC
had found it to be apparently liable for a
forfeiture under Section 503(b)(5) of the
Communications Act for a total amount of
$87,500. (Id. at ¶¶ 27, 28, 30). It also
directed Worldwide to either pay the amount
or file a written statement seeking reduction
or cancellation of the proposed forfeiture
within thirty days. (Id. at ¶ 31.) Worldwide
filed a written opposition to the proposed
forfeiture within this timeframe, challenging
the reliability and veracity of the complaints
and indicating that it could not pay the
proposed amount. (Id. at ¶ 34.)
The Court treats a motion to dismiss on
the grounds that an action is barred by the
statute of limitations as a motion to dismiss
for failure to state a claim upon which relief
can be granted pursuant to Federal Rule of
Civil Procedure 12(b)(6). See Ghartey v. St.
John’s Queens Hospital, 869 F.2d 160, 162
(2d Cir. 1989). In reviewing a motion to
dismiss under Rule 12(b)(6), a court must
accept the factual allegations set forth in the
complaint as true, and draw all reasonable
inferences in favor of the plaintiff. See Cleveland v. Caplaw Enter., 448
F.3d 518, 521 (2d Cir. 2006); Nechis v.
Oxford Health Plans, Inc., 421 F.3d 96, 100
(2d Cir. 2005). As the Supreme Court has
stated, “[t]o survive a motion to dismiss, a
complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.’” Ashcroft
v.
Iqbal,
556
U.S.
662,
678
(2009) (quoting Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007)).
Furthermore, “[o]nce a claim has been stated
adequately, it may be supported by showing
any set of facts consistent with the allegations
in the complaint.” Twombly, 550 U.S. at 563.
The Court does not, therefore, require
“heightened fact pleading of specifics, but
only enough facts to state a claim for relief
that is plausible on its face.” Id. Further, in
reviewing a motion to dismiss, “the district
court is normally required to look only to the
allegations
on
the
face
of
the
complaint.” Roth v. Jennings, 489 F.3d 499,
509 (2d Cir. 2007).
On January 27, 2015, the FCC issued a
Forfeiture Order against Worldwide in the
amount of $87,500 for the violations outlined
in the NAL dated April 7, 2011. (Id. at ¶ 35.)
The Order indicated that the FCC found
Worldwide’s arguments in response to the
NAL unpersuasive and had determined that
the consumer complaints were sufficiently
reliable to establish a violation of Section 227
of the Communications Act. (Id. at ¶ 36.)
The Order directed Worldwide to pay the
amount within fifteen days, but, despite
receiving the order, Worldwide never paid.
(Id. at ¶¶ 39, 41, 42.)
B. Procedural History
The government commenced this action
on May 5, 2016 under Section 503(b) of the
Communications Act, 47 U.S.C. § 503(b), to
enforce the monetary forfeiture penalty. (See
ECF No. 1; Compl. ¶ 49.) Worldwide filed a
motion to dismiss the complaint as timebarred on August 12, 2016, briefing was
completed on October 20, 2016, and the
Court heard oral argument on November 16,
2016. (ECF Nos. 13–15, 17.)
III. DISCUSSION
Worldwide argues that the government’s
action to enforce the Forfeiture Order is timebarred because the violations underlying the
Order occurred more than five years before
the government brought this action. The
government counters that the applicable
2
§ 503(b)(4). When a violation occurs, the
FCC must first “issue[] a notice of apparent
liability, in writing, with respect to [the
alleged violator].” Id. § 503(b)(4)(A). The
NAL must be issued within one year of the
violation. 47 U.S.C. § 503(b)(6)(B). Next, it
must grant the alleged violator “an
opportunity to show, in writing, within such
reasonable period of time as the Commission
prescribes by rule or regulation, why no such
forfeiture penalty should be imposed.” Id.
§ 503(b)(4)(C). This showing must be made
within thirty days and “shall include a
detailed factual statement and such
documentation and affidavits as may be
pertinent.” 47 C.F.R. § 1.80(f)(3). Once it
receives such a response, “the Commission,
upon considering all relevant information
available to it, will issue an order canceling
or reducing the proposed forfeiture or
requiring that it be paid in full and stating the
date by which the forfeiture must be paid.”
Id. § 1.80(f)(4). If the alleged violator still
fails to pay the penalty, the FCC refers the
case to the Department of Justice for
enforcement of the penalty in the courts. Id.
§ 1.80(f)(5); 47 U.S.C. § 503(b)(4); see also
47 U.S.C. § 504(a).
statute of limitations did not begin to run until
the FCC issued the Order in 2015, and, thus,
the action is not time-barred. As set forth
below, the Court agrees with the government.
A. Statutory Framework
Analysis of the statute of limitations issue
first requires a summary of the statutory
framework for the imposition and enforcement of penalties under the Communications
Act. Under Section 503(b) of the Act, the
FCC may impose monetary forfeitures for
violations of the Act or the agency’s rules.
The Act outlines two processes the FCC may
employ to carry out this function. See 47
U.S.C. § 503(b)(3)–(4). First, “[a]t the
discretion of the Commission, a forfeiture
penalty may be determined against a
person . . . after notice and an opportunity for
a hearing before the Commission or an
administrative
law
judge.”
Id.
§ 503(b)(3)(A). Determinations made in this
manner are subject to review by the court of
appeals pursuant to 47 U.S.C. § 402. 47
U.S.C. § 503(b)(3)(A). If a person does not
pay the penalty after the FCC’s determination
“has become a final and unappealable order,”
the FCC can refer the matter to the Attorney
General, who can then bring an enforcement
action. Id. § 503(b)(3)(B). In such an action,
“the validity and appropriateness of the final
order imposing the forfeiture penalty shall
not be subject to review.” Id. The FCC rules,
however, provide that the FCC should
employ this method of penalty assessment
“only when a hearing is being held for some
reason other than the assessment of a
forfeiture (such as, to determine whether a
renewal application should be granted) and a
forfeiture is to be considered as an alternative
or in addition to any other Commission
action.” 47 C.F.R. § 1.80(g).
Here, the FCC utilized the second method
to assess the penalty. The violations occurred
between February 10 and April 27, 2010.
The FCC issued the NAL on April 7, 2011,
received a response within thirty days
thereafter, and issued the Forfeiture Order on
January 27, 2015.
B. Statute of Limitations
The parties agree that 28 U.S.C. § 2462
provides the applicable statute of limitations
for the Communications Act. Therefore, the
question before the Court is whether a claim
“accrues” under Section 2462 at the time the
FCC issues the forfeiture order pursuant to 47
U.S.C. § 503(b)(4) or at the time of the
violation underlying such an order.
The second method for assessing
penalties under the Communications Act
involves a three-step process. See 47 U.S.C.
3
meaning of the words.” United States v.
Rowland, 826 F.3d 100, 108 (2d Cir. 2016)
(quoting United States v. Dauray, 215 F.3d
257, 260 (2d Cir. 2000)); see, e.g. Sullivan v.
Hudson, 490 U.S. 877, 894 (1989) (citing
Black’s Law Dictionary for the plain
meaning of the phrase “civil action”); United
States v. Davis, 648 F.3d 84, 89 (2d Cir.
2011) (citing Black’s Law Dictionary for the
plain meaning of the phrase “contrary to
law”); United States v. Cohen, 260 F.3d 68,
73 (2d Cir. 2001) (citing Black’s Law
Dictionary and Webster’s 3d New
International Dictionary for the plain
meaning of the term “legal”).
This is a question of statutory
interpretation. When interpreting a statute,
a court should always turn first to one,
cardinal canon before all others. [The
Supreme Court has] stated time and
again that courts must presume that a
legislature says in a statute what it
means and means in a statute what it
says there. When the words of a
statute are unambiguous, then, this
first canon is also the last: judicial
inquiry is complete.
Connecticut Nat’l Bank v. Germain, 503 U.S.
249, 253–54 (1992) (citations omitted); see
also Estate of Pew v. Cardarelli, 527 F.3d 25,
30 (2d Cir. 2008) (“We first look to the
statute’s plain meaning; if the language is
unambiguous, we will not look farther.”);
Green v. City of N.Y., 465 F.3d 65, 78 (2d Cir.
2006) (“Statutory analysis begins with the
text and its plain meaning, if it has one. Only
if an attempt to discern the plain meaning
fails because the statute is ambiguous, do we
resort to canons of construction. If both the
plain language and the canons of construction
fail to resolve the ambiguity, we turn to the
legislative history.” (citations omitted)); Lee
v. Bankers Trust Co., 166 F.3d 540, 544 (2d
Cir. 1999) (“It is axiomatic that the plain
meaning of a statute controls its
interpretation, and that judicial review must
end at the statute’s unambiguous terms.
Legislative history and other tools of
interpretation may be relied upon only if the
terms of the statute are ambiguous.”
(citations omitted)).
Under Section 2462, “an action, suit or
proceeding for the enforcement of any civil
fine, penalty, or forfeiture, pecuniary or
otherwise, shall not be entertained unless
commenced within five years from the date
when the claim first accrued.” The Second
Circuit has not addressed the meaning of the
term “accrued” under this statute, but other
circuit courts have done so. In United States
v. Meyer, 808 F.2d 912, 913–16 (1st Cir.
1987), for example, the First Circuit
construed the term in the context of the
Export Administration Act (“EAA”), another
statute to which Section 2462’s limitations
period applies. Id. at 914. The court
observed, “[T]he standard definition of the
concept of accrual is to the effect that ‘[a]
cause of action “accrues” when a suit may be
maintained thereon.’” Id. (quoting Black’s
Law Dictionary 19 (5th ed. 1979)). Applying
this definition to an action to enforce a
penalty under the EAA, the court reasoned
that “no suit to recover a civil penalty can be
mounted under the EAA unless and until the
penalty has first been assessed administratively.” Id. This interpretation, the court
continued, “accord[ed] with the obvious
proposition that a claim for ‘enforcement’ of
an administrative penalty cannot possibly
‘accrue’ until there is a penalty to be
enforced.” Id. The definition of the term
To ascertain a statute’s “plain meaning,”
a court must “look to the particular statutory
language at issue, as well as the language and
design of the statute as a whole.” K Mart
Corp. v. Cartier, Inc., 486 U.S. 281, 291
(1988). Alongside the statutory context, a
court may also consult dictionaries to
determine the “ordinary, common-sense
4
The statute of limitations at 28 U.S.C.
§ 2462 does not begin to run until
“the date when the claim first
accrued.” In the context of the Coal
Act the district court claim accrues
only after the administrative proceeding has ended, a penalty has been
assessed, and the violator has failed to
pay the penalty. The Coal Act states
specifically that the Secretary shall
file a petition for enforcement of the
order assessing the civil penalty only
if the person against whom the
penalty was assessed fails to pay it
within the time prescribed in the
order. 30 U.S.C. § 819(a)(4)
Obviously an administrative agency
order must exist before the Secretary
can file a district court action to
enforce it.
“enforcement” bolstered this proposition
because
that
“noun
by definition
(‘compulsion . . . forcible urging . . . the
compelling of the fulfillment’) presupposes
the existence of an actual penalty to be
enforced.” Id. at 915 (quoting Webster’s
Third New International Dictionary 751
(1981) (omissions in original)).
Beyond Section 2462 itself, the court also
pointed to the statutory language of the EAA,
which provided that “in the event of the
failure of any person to pay a penalty
imposed pursuant to [the antiboycott
provisions of the EAA], a civil action for the
recovery thereof may . . . be brought in the
name of the United States.” Id. at 914
(quoting 50 U.S.C. App. § 2410(f) (1982)
(alterations and omissions in original)). The
court read this language as requiring “the
Department [to] refrain from initiating a civil
suit until the appropriate administrative
authority has imposed a sanction which the
respondent has thereafter refused to satisfy.”
Id.
Id.; see also 3M Co. v. Browner, 17 F.3d
1453, 1457 n.8 (D.C. Cir. 1994) (agreeing
that, “with respect to an action in the district
court to collect a penalty previously imposed
administratively, the collection claim accrues
under § 2462 ‘after the administrative
proceeding has ended, a penalty has been
assessed, and the violator has failed to pay the
penalty’” (quoting Old Ben Coal, 676 F.2d at
261)).
Based on these provisions, the court
concluded that, by Section 2462’s plain
language and the plain language of the EAA,
the statute of limitations to enforce a penalty
under the EAA did not begin to run until the
administrative penalty had been imposed. Id.
Likewise, in SEC v. Mohn, 465 F.3d 647,
653–54 (6th Cir. 2006), the Sixth Circuit
cited the Black’s Law definition of “accrue”
in concluding that the limitations period on
an enforcement action by the Securities
Exchange Commission (“SEC”) began to run
at the time the order was issued because,
before then, “[t]he SEC simply had no order
to enforce.” 465 F.3d at 654.
Other circuit courts have reached the
same conclusion based on the plain language
of Section 2462 in connection with different
statutes. In U.S. Department of Labor v. Old
Ben Coal Co., 676 F.2d 259, 261 (7th Cir.
1982), the Seventh Circuit reversed a district
court’s holding that an enforcement action
was time-barred because the underlying
violation occurred more than five years
before the government filed the action. The
court reasoned that “[a] statute of limitations
cannot begin to run until there is a right to
bring an action.” Id. at 261. It elaborated:
Finally, in United States v. GodboutBandal, 232 F.3d 637, 639 (8th Cir. 2000),
the Eighth Circuit expressly adopted the First
Circuit’s plain language reasoning in Meyer
while applying Section 2462 to an
5
enforcement action under the Change in
Bank Control Act, 12 U.S.C. § 1818(i). 232
F.3d at 640. It further reasoned that the text
of Section 1818 reinforced this conclusion
because it did “not allow the government to
begin a collection proceeding until the
defendant ‘fails to pay an assessment after
any penalty imposed under this paragraph has
become final.’” Id. (quoting 12 U.S.C.
§ 1818(i)(2)(I)(i)); see also SEC v. Pinchas,
421 F. Supp. 2d 781, 783–84 (S.D.N.Y.
2006); United States v. Great American Veal,
Inc., 998 F. Supp. 416, 423–24 (D. N.J.
1998); United States v. McCune, 763 F. Supp.
916, 918 (S.D. Ohio 1989); United States v.
Sacks, 2011 WL 6883740, at *4 (W.D. Wash.
Dec. 28, 2011).
however, not based on the plain language of
the statute, but rather on the decisional law
that arose under Section 2462’s predecessors.
Id. (“A review of these cases clearly
demonstrates that the date of the underlying
violation has been accepted without question
as the date when the claim first accrued, and,
therefore, as the date on which the statute
began to run.”). 2 It also relied on the
legislative history of the EAA and
“[p]ractical considerations” about the
possibility of the government prolonging the
administrative proceedings. Id.
The only circuit court to adopt the
position advocated by Worldwide—that the
limitations period begins to run at the time of
the underlying violation—is the Fifth Circuit.
See United States v. Core Laboratories, Inc.,
759 F.2d 480, 482 (5th Cir. 1985). 1 It did so,
In Meyer, the First Circuit expressly
rejected the Core Laboratories holding. See
808 F.2d at 913 (“[W]e find the Fifth
Circuit’s reasoning—the core of Core, as it
were—to be unconvincing.”). The Meyer
court took issue with Core’s partial reliance
on legislative history, given the rule that
“courts should be extremely hesitant to
search for ways to interpose their own
notions of Congress’s intent” when the
1
2
Worldwide argues that the D.C. Circuit adopted its
interpretation of Section 2462 as applied to the
Communications Act in Action for Children’s
Television v. Federal Communications Commission,
59 F.3d 1249, 1254 (D.C. Cir. 1995). The Court
disagrees. In Action for Children’s Television, the
petitioners argued that the FCC’s process for assessing
forfeitures for the broadcast of indecent programming
lacked appropriate safeguards—such as prompt
judicial review—and thus compelled “broadcasters to
conform with potentially unconstitutional restrictions
upon their speech.” Id. at 1252. In addressing this
question, the court “assume[d] that the general fiveyear period of limitations on forfeiture proceedings . . . would effectively prevent the Government from filing a civil action more than five years
after the indecent material was aired.” Id. at 1254.
The court specifically noted that “the issue has never
been litigated,” and, given its complete lack of
analysis on that issue, the court appears to have
adopted this assumption only to assess the petitioners’
First Amendment argument. Id. Therefore, the Court
concludes that Action for Children’s Television did not
adopt Worldwide’s position on the question presented
here.
Specifically, the court cited the following cases:
United States v. Athlone Industries, Inc., 746 F.2d 977,
982 n.1 (3d Cir. 1984); Western Pacific Fisheries, Inc.
v. S.S. President Grant, 730 F.2d 1280, 1287 (9th Cir.
1984); United States v. Ancorp National Services, Inc.,
516 F.2d 198, 200 n.5 (2d Cir. 1975); United States v.
Witherspoon, 211 F.2d 858, 861 (6th Cir. 1954); Smith
v. United States, 143 F.2d 228, 229 (9th Cir. 1944);
Lancashire Shipping Co. v. Durning, 98 F.2d 751, 753
(2d Cir. 1938); Durning v. McDonnell, 86 F.2d 91, 92–
93 (2d Cir. 1937); The Ng Ka Py Cases, 24 F.2d 772,
774 (9th Cir. 1928); United States v. Advance Machine
Co., 547 F. Supp. 1085, 1091 (D. Minn. 1982); United
States v. C & R Trucking Co., 537 F. Supp. 1080, 1083
(N.D. W. Va. 1982); United States v. Firestone Tire &
Rubber Co., 518 F. Supp. 1021, 1037 (N.D. Ohio
1981); FTC v. Lukens Steel Co., 454 F. Supp. 1182,
1185 n.2 (D.D.C. 1978); United States v. Appling, 239
F. Supp. 185, 194–95 (S.D. Tex. 1965); United States
v. Fraser, 156 F. Supp. 144, 147 (D. Mont. 1957);
United States v. Wilson, 133 F. Supp. 882, 883 (N.D.
Cal. 1955); United States v. One Dark Bay Horse, 130
Fed. 240, 241 (D. Vt. 1904).
6
situations where prosecutorial determinations, rather than adjudicatory administrative proceedings, constituted the precondition
to suit.” Id. (finding that Athlone Industries,
746 F.2d 977, Advance Machine, 547 F.
Supp. 1085, Ancorp, 516 F.2d 198, and
Lukens Steel, 454 F. Supp. 1182 fell into this
category).
Because such administrative
decisions “are not in any sense adjudicative . . . [but] comprise nothing more or
less than decisions to bring suit,” they
differed markedly from the EAA’s process
for imposing a sanction and thus were of little
value on the statute of limitations question.
Id. The court distinguished the remaining
cases on more fact-specific grounds. Id. at
921 (distinguishing Durning, 86 F.2d 91,
because, there, “more than five years had
elapsed since the assessment of the
administrative penalty,” and C & R Trucking,
537 F. Supp. 1080, because the government
brought the enforcement suit “within five
years next following both the commission of
the infractions and the ensuing imposition of
penalties”).
“language of the statute seems clear and
unambiguous.” Id. at 915 (citing Yates v.
United States, 354 U.S. 298, 305,
(1957); Browder v. United States, 312 U.S.
335, 338 (1941)); see also Lee, 166 F.3d at
544 (“Legislative history and other tools of
interpretation may be relied upon only if the
terms of the statute are ambiguous.”).
Indeed, having “found that 28 U.S.C.
§ 2462 is susceptible to but a single
reasonable reading,” the court characterized
the Fifth Circuit’s “reliance on congressional
source materials” as “both inappropriate and
ill-advised.” Meyer, 808 F.2d at 905.
As for the decisional law, the First Circuit
concluded that Core’s holding was at odds
with “the Supreme Court’s seminal treatment
of virtually this precise issue in Crown Coat
Front Co. v. United States, 386 U.S. 503
(1967).” Id. at 916. In Crown Coat, the
Supreme Court construed 28 U.S.C.
§ 2401(a), which mirrored Section 2462 by
providing that certain civil actions “shall be
barred unless the complaint is filed within six
years after the right of action first accrues.”
Crown Coat, 386 U.S. at 507 (quoting 28
U.S.C. § 2401(a)). The plaintiff had brought
a claim more than six years after the
underlying events but within six years of the
final administrative decision on the claim. Id.
at 508. The Court held that the plaintiff’s
“right to bring a civil action first accrue[d]
when the [agency] finally ruled on its claim.”
Id. at 522.
Finally, the First Circuit contrasted the
Fifth Circuit’s concerns over the government
prolonging cases with its own concerns that,
under the Core rule, “the Department would
have a total of five years from the date of a
statutory violation within which to uncover
the infraction, conduct the necessary
investigation, issue a charging letter, and
wend its way through the (often lengthy)
administrative process.” Id. at 919. An
alleged violator could thus easily delay the
administrative process long enough to have
any enforcement action barred by the statute
of limitations. Id. The court deemed it
“implausible that Congress intended to
endow private litigants with so powerful an
incentive for procrastination.” Id. at 920.
The Meyer court also deemed the cases
cited by the Fifth Circuit to be “off the mark.”
808 F.2d at 920. It first determined that the
majority of those cases “involve situations
bereft of the key ingredient shared by Crown
Coat and by the EAA: the necessity for
allowing an administrative proceeding to run
its course as a precondition to the
commencement of suit.” Id.; see also id. at
920 n.8 (collecting cases that fell within this
category). The next group of cases “involved
The Court finds the majority view of
Section 2462 to be more persuasive and
applicable to the Communications Act than
7
penalty,” but only after issuing an NAL and
giving the alleged violator an opportunity to
challenge it. 27 U.S.C. § 503(b)(4). It further
provides that a “forfeiture penalty determined
under [Section 503(b)(4)] shall be
recoverable pursuant to Section 504(a).” Id.
(emphasis added); see also 27 U.S.C. § 504(a)
(“The forfeitures provided for in this chapter
. . . shall be recoverable . . . in a civil suit in
the name of the United States.”). Put
differently, the “forfeiture penalty” is not
“recoverable” until it has been “determined”
by the FCC.
the Fifth Circuit’s. Black’s Law Dictionary
presently defines the term “accrue” as “[t]o
come into existence as an enforceable claim
or right” (10th ed. 2014), a definition that
mirrors those cited in Meyer and Mohn. See
Meyer, 808 F.2d at 914; Mohn, 465 F.3d at
654. Thus, Section 2462 could also be read
as follows: “an action, suit or proceeding for
the enforcement of any civil fine, penalty, or
forfeiture, pecuniary or otherwise, shall not
be entertained unless commenced within five
years from the date when the claim first
[came into existence as an enforceable claim
or right].” As the First, Sixth, and Seventh
Circuits have noted, however, a claim to
enforce a penalty does not come into
existence until there is an actual penalty to
enforce. See Meyer, 808 F.2d at 914 (“[N]o
suit to recover a civil penalty can be mounted
. . . unless and until the penalty has first been
assessed administratively.”); Mohn, 465 F.3d
at 654 (“The SEC simply had no order to
enforce until it issued the . . . order affirming
the NASD sanctions.”); Old Ben Coal, 676
F.2d at 261 (“Obviously an administrative
agency order must exist before the Secretary
can file a district court action to enforce it.”).
Indeed, the term “enforcement” in Section
2462 “presupposes the existence of an actual
penalty to be enforced.” Meyer, 808 F.2d at
914. Therefore, by the plain meaning of the
terms “accrue” and “enforcement,” Section
2462’s limitations period begins to run on the
FCC’s action to enforce a penalty when the
FCC initially imposes a forfeiture penalty.
See Gabelli v. S.E.C., 133 S. Ct. 1216, 1220
(2013) (“Thus the standard rule is that a claim
accrues when the plaintiff has a complete and
present cause of action.” (citations omitted)
(emphasis added)).
The FCC procedural rules confirm this
interpretation of the Communications Act by
providing that, “[i]f the forfeiture is not paid,
the case will be referred to the Department of
Justice for collection under section 504(a) of
the Communications Act.”
47 C.F.R.
§ 1.80(f)(5). The rule’s language closely
resembles the language of the EAA in Meyer,
and that of the Bank Control Act in GodboutBandal. See Meyer, 808 F.2d at 914 (“[I]n
the event of the failure of any person to pay a
penalty . . . a civil action for the recovery
thereof may . . . be brought in the name of
the United States.” (quoting 50 U.S.C. App.
§ 2410(f))); Godbout-Bandal, 232 F.3d at 639
(government could not bring suit until a
defendant “fails to pay an assessment after
any penalty imposed under this paragraph has
become final” (quoting 12 U.S.C.
§ 1818(i)(2)(I)(i))); see also Old Ben Coal,
676 F.2d at 261 (“The Coal Act states
specifically that the Secretary shall file a
petition for enforcement of the order
assessing the civil penalty only if the person
against whom the penalty was assessed fails
to pay it within the time prescribed in the
order.”). The Communications Act thus
“strongly suggests—indeed, requires—that
the [FCC] refrain from initiating a civil suit
until the appropriate administrative authority
has imposed a sanction which the [alleged
violator] has thereafter refused to satisfy.”
Meyer, 808 F.2d at 914. As such, the
Furthermore, like in Meyer, GodboutBandal, and Old Ben Coal, this reading of
Section 2462 comports with the provisions of
the underlying statute, the Communications
Act. Specifically, Section 503(b)(4) authorizes the FCC to impose a “forfeiture
8
Meyer, the court did not decide the
limitations issue based on the adjudicatory
nature of the EAA proceeding but on “[t]he
phraseology of 28 U.S.C. § 2462, its juxtaposition and interrelationship with the mechanics of statutes like the EAA, the betterreasoned caselaw, and policy concerns (to the
extent appropriate).” Id. at 922. Importantly,
the first factor the court analyzed—the plain
language—appears to have been the most
crucial, as the following analysis simply
showed that the court’s “reading of the plain
language of the statute [did] not stand
unassisted.” Id. at 916; see also GodboutBandal, 232 F.3d at 639–40 (“Because the
[Meyer] court found the language of the
relevant statutes to be unambiguous, it
rejected any resort to statutory construction
to aid in interpretation.”). In addition,
besides the Fifth Circuit, the other circuits
that have addressed this issue have focused
on the language of the statute, not on the
nature of the administrative proceedings. See
Old Ben Coal, 676 F.2d at 261; Mohn, 465
F.3d at 653–54; Godbout-Bandal, 232 F.3d at
639. Furthermore, even had the First Circuit
relied heavily on the adjudicatory nature of
the proceedings, such reliance was not
necessary after it concluded that the statutory
language was “susceptible to but a single
reasonable reading,” id. at 915, because the
Supreme Court has made clear that where
“the words of the statute are unambiguous,
the judicial inquiry is complete.” Desert
Palace, Inc. v. Costa, 539 U.S. 90, 98 (2003);
see also Germain, 503 U.S. at 253–54;
Cardarelli, 527 F.3d at 30.
language of the underlying statute and rules
reinforces the Court’s reading of Section
2462.
Overall, the plain language of Section
2462 proves dispositive on the issue. Like
the First Circuit, the Court finds the language
of Section 2462 to be “clear and unambiguous . . . susceptible to but a single
reasonable reading,” Meyer, 808 F.2d at 915,
and the language of the Communications Act
reinforces this reading. The Court, therefore,
holds that the limitations period begins to run
on issuance of the forfeiture order, not on the
occurrence of the underlying violation.
Worldwide argues that the dispositive
criteria in Meyer was not the plain language
of the statute, but rather the type of
administrative procedure at issue.
In
particular, it contends that the procedure in
Meyer was adjudicatory in nature and thus
served as the basis for the holding that
Section 2462’s limitations period should be
measured from the date of the administrative
assessment of the penalty. Here, by contrast,
Worldwide asserts that the procedure is
closer to a prosecutorial determination
without adjudicatory protections, and,
consequently, the limitations period should
run from the date of the violation. For
support, Worldwide highlights Meyer’s
efforts to distinguish the cases relied upon by
the Fifth Circuit that “involved situations
where prosecutorial determinations, rather
than
adjudicatory
administrative
proceedings, constituted the precondition to
suit.”
Meyer, 808 F.2d at 920.
As
Worldwide points out, the First Circuit
observed that “the limitations period on
[such] wholly administrative action runs
from the time of the underlying violation
rather than from the government’s decision to
prosecute the charge.” Id.
The First Circuit’s comment about the
limitations period for prosecutorial decisions,
meanwhile, came while it was distinguishing
four cases on which the Fifth Circuit relied.
See Meyer, 808 F.2d at 920. Those cases,
however, are importantly distinguishable in
other respects. In both Athlone and Advance,
the administrative agency never assessed
civil penalties, see Athlone, 746 F.2d at 980
Worldwide’s reliance on the nature of the
administrative proceeding is misplaced. In
9
(noting that case arose “out of the
Commission’s unsuccessful attempts to also
impose civil penalties administratively”
(emphasis added)); Advance, 547 F. Supp. at
1088 (defendants bring civil suit to stop
agency from issuing civil penalty before
penalty became final), so the issue addressed
in those cases was not whether the statute of
limitations began to run at the time of a
penalty or the time of the violation but
whether the imposition of “the civil penalties
in the first instance was time barred,” Great
Am. Veal, Inc., 998 F. Supp. at 422
(describing the issue in Athlone). This differs
from the issue here where a penalty has been
assessed but not enforced. 3 Ancorp and
Lukens Steel, meanwhile, do not address the
issue in any detail but instead state summarily
in footnotes that Section 2462 barred
recovery for violations that occurred over
five years before the filing of the action.
Ancorp, 516 F.2d at 201 n.5; Lukens Steel,
454 F. Supp. at 1185 n.2. Ancorp does not
cite any supportive case law for this
statement, and Lukens Steel only cites
Ancorp. Ancorp, 516 F.2d at 201 n.5; Lukens
Steel, 454 F. Supp. at 1185 n.2. Most
importantly, none of these cases analyzed the
plain meaning of Section 2462. See Athlone,
746 F.2d at 982 n.1 (focusing on underlying
statute); Advance, 547 F. Supp. at 1089–90
(same); Ancorp, 516 F.2d at 201 n.5
(summary treatment of issue); Lukens Steel,
454 F. Supp. at 1185 n.2 (same).
The Court has reviewed the remaining
cases cited by the Fifth Circuit and agrees
with the First Circuit that they are “off the
mark” for the reasons described in Meyer,
808 F.2d at 920. Furthermore, the Court
declines to follow the Fifth Circuit’s example
in consulting legislative history because it is
impermissible to do so where, as here, the
meaning of the statutory language is
unambiguous. See Green, 465 F.3d at 78.
3
For similar reasons, the Court disagrees with
Worldwide’s argument that Gabelli, 133 S. Ct. at
1221, supports the Fifth Circuit’s rule. Gabelli
concerned a statute that did not require an agency to
assess a forfeiture before the government could file
suit. See id. at 1219 (“The Securities and Exchange
Commission is authorized to bring enforcement
actions against investment advisers who violate the
Act . . . . As part of such enforcement actions,
the SEC may seek civil penalties.” (citing 15 U.S.C.
§ 80b–9(d), (e), (f)) (emphasis added))); see also 15
U.S.C. § 80b–9. Instead, the statute authorized the
SEC to “bring an action . . . to seek . . . a civil penalty”
when a person violated the securities laws but vested
the “jurisdiction to impose” the penalty in the district
court, not the SEC. 15 U.S.C. § 80b-9(e)(1). Although
the Supreme Court held that Section 2462’s limitations
period began at the time of the underlying offense with
respect to that statute, the only issue was whether the
government’s right of action to file suit seeking a
penalty (rather than enforcing a preexisting one)
accrued at the time of the offense or when the
government discovered the offense. Here, by contrast,
the government cannot file suit until it has a forfeiture
order to enforce, so the reasoning and holding of
Gabelli do not apply.
Finally, while consideration of the
“practical consequences of the suggested
interpretations” is permissible alongside a
plain meaning approach, Cmty. Health Care
Ass’n of N.Y. v. Shah, 770 F.3d 129, 151 (2d
Cir. 2014), the practical consequences here
do not disqualify the Court’s reading of the
statute.
Echoing the Fifth Circuit,
Worldwide contends that because “[t]he
progress of administrative proceedings is
largely within the control of the Government
. . . [a] limitations period that began to run
only after the government concluded its
administrative proceedings would thus
amount in practice to little or none.” Core
Laboratories, 759 F.2d at 482, 483. The
Court finds this concern to be overblown for
two reasons. First, the Communications Act
requires the FCC to take action within one
year of the violation by issuing the NAL. See
47 U.S.C. § 503(b)(6)(B) (“No forfeiture
penalty shall be determined or imposed
against any person under this subsection
if . . . the violation charged occurred more
10
have considerable incentive to employ the
available procedures to work delay”);
Godbout-Bandal, 232 F.3d at 640 (“A
violator should not be able to escape paying
a penalty by dragging his feet through the administrative penalty-assessment process.”).
than 1 year prior to the date of issuance of the
required notice or notice of apparent
liability.”). Second, the government has little
incentive to delay, as the consequences of
delay (such as stale evidence) will usually
harm the government, which bears the burden
of proof, more than the defendant. See
Meyer, 808 F.2d at 922 (“The government, if
it suspects that a wrong has been committed,
has no discernible incentive to delay
institution and prosecution of administrative
charges. Ordinarily, any such footdragging
would tend to reduce the Department’s
chances of proving its case and collecting
monetary sanctions.”).
In sum, the Court finds the majority view
on this issue more persuasive than the Fifth
Circuit’s. Consequently, the Court holds
that, under the plain meaning of Section
2462, the limitations period for Section
503(b)(4) of the Communications Act begins
at the time the forfeiture order is issued, not
when the underlying violation occurs.
***
The Fifth Circuit’s rule, moreover, also
bears risks of negative practical consequences by encouraging delay on the part of
an alleged violator. An alleged violator could
introduce complex questions of fact that
require time-consuming investigations by the
FCC before it can decide whether to impose
a civil penalty. See 47 C.F.R. § 1.80(f)(3). If
the FCC issues an order, the alleged violator
can then petition for review and then again
for reconsideration. Id. §§ 1.115, 1.106. The
alleged violator could also seek an
administrative stay of the forfeiture order
pending resolution of the petitions for review
and reconsideration. Id. § 1.102(b)(3). If the
limitations period began to run at the time of
the underlying violation, the FCC may need
to bring an enforcement action while the
petition for review or reconsideration is
pending, even though such a petition could
moot the case.
Thus, the practical
consequences of the Fifth Circuit’s rule
militate in favor of the First Circuit’s. See
Hall v. EarthLink Network, Inc., 396 F.3d
500, 505 (2d Cir. 2005) (“Statutes should be
interpreted to avoid . . . unreasonable results
whenever possible.” (quoting American
Tobacco Co. v. Patterson, 456 U.S. 63, 71
(1982)); see also Meyer, 808 F.2d at 919
(rejecting Fifth Circuit rule in part because,
under it, “[a] suspected violator would . . .
For the reasons outlined above, the Court
denies Worldwide’s motion to dismiss the
complaint as time-barred.
SO ORDERED.
______________________
JOSEPH F. BIANCO
United States District Judge
Dated: December 7, 2016
Central Islip, NY
***
The government is represented by Mary M.
Dickman and Jolie Apicella, Assistant United
States Attorneys, on behalf of Robert L.
Capers, United States Attorney, Eastern
District of New York, 271 Cadman Plaza
East, Brooklyn, New York 11201. Defendant
is represented by Scott B. Fisher, Jaspan
Schlesinger LLP, 300 Garden City Plaza,
Garden City, New York 11530.
11
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