MEW SPORTING GOODS, LLC v. Johansen

Filing 37

MEMORANDUM OPINION AND ORDER GRANTING RESPONDENTS MOTION FOR SUMMARY JUDGMENT DKT. NO. 16 , DENYING PETITIONERS MOTION FOR SUMMARY JUDGMENT DKT. NO. 11 ,AND DISMISSING THE PETITION WITH PREJUDICE. Signed by District Judge Irene M. Keeley on 1/21/2014. (Copy counsel of record via CM/ECF)(jmm)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA

MEW SPORTING GOODS, LLC.,
Petitioner,
v.

//

CIVIL ACTION NO. 1:13CV10
(Judge Keeley)

DAVID D. JOHANSEN, Director of
Industry Operating Louisville
Field Division Bureau of Alcohol,
Tobacco, Firearms & Explosives,
Respondent.

MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 16], DENYING
PETITIONER’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 11],
AND DISMISSING THE PETITION WITH PREJUDICE
Before the Court is the motion for summary judgment (dkt. no.
11) filed by the petitioner, MEW Sporting Goods, LLC (“MEW”), and
the motion to dismiss or, in the alternative, for summary judgment
(dkt.

no.

16)

(“Johansen”).

filed

by

the

respondent,

David

D.

Johansen

For the reasons that follow, the Court GRANTS

Johansen’s motion, DENIES MEW’s motion, and DISMISSES the petition
WITH PREJUDICE.
I. BACKGROUND
On December 5, 2012, the Bureau of Alcohol, Tobacco, Firearms
and Explosives (“ATF”) sent MEW a final notice of denial regarding
its application for a federal firearms license (“FFL”).
Notice of Denial 4, July 1, 2013, Dkt. No. 15-3.

See Final
The events

MEW SPORTING GOODS V. JOHANSEN, ET AL.

1:13CV10

MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
leading up to that denial are discussed below and provide critical
context.
Teresa Walsh (formerly, Teresa Snyder) (“Mrs. Walsh”) operated
a

gun

sales

business, TGS

Sporting

Goods

revocation of her FFL on April 3, 2006.1
July 1, 2013, Dkt. No. 15-7.

(“TGS”),

until

the

See Notice of Denial 3,

Mrs. Walsh subsequently married Mark

Walsh (“Mr. Walsh”), and, in March 2008, the couple formed three
businesses,

including

Mountaineer

Country

Ice

Cream,

LLC,

Mountaineer Country Rentals, LLC, and Mountaineer Gun Sales, LLC
(“Mountaineer”).

See id.

Although both Mr. and Mrs. Walsh were

listed as members and organizers of the ice cream and rental
companies, Mr. Walsh was the sole member of the gun sales business.
See id.

After forming Mountaineer, Mr. Walsh applied and was

approved for an FFL, which he used to purchase and sell guns
through Mountaineer for approximately two and a half years.

See

Final Notice of Denial 13, July 1, 2013, Dkt. No. 15-7.
1

The revocation of Mrs. Walsh’s FFL was based on (i) failure to
properly maintain firearms acquisition and disposition records, (ii)
failure to property maintain ATF Form 4473, firearms transaction records,
(iii) failure to have transferees fill out a new ATF Form 4473 after the
30-day time limitation expired, (iv) failure to file ATF Form 3310.4,
report of multiple sale or other disposition of pistols or revolvers, (v)
failure to maintain required business records, and (vi) failure to be
present on premises during business hours. See Final Notice 8-12, July
1, 2013, Dkt. No. 15-8.

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MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
In 2011, the ATF received a telephone call from a Mountaineer
employee regarding certain bookkeeping improprieties.
Mem. in Supp. 2, July 1, 2013, Dkt. No. 17.

See Resp.’s

In response, the

agency conducted an on-site investigation that lasted from March
22, 2011 through April 5, 2011.

See id.

As a result of that

investigation, the ATF issued a Notice of Revocation on June 16,
2011.

See id. at 4.

In accordance with 18 U.S.C. § 923(f)(2), Mr.

Walsh promptly requested an administrative hearing, which the ATF
scheduled for September 27, 2011.

See id.

However, on September

23, 2011, Mr. Walsh withdrew his request for the hearing.

See id.

Accordingly, the ATF canceled the hearing and issued a Final Notice
of Revocation on November 3, 2011, for the following reasons:
The inspection disclosed that Teresa Walsh (formerly
Teresa Snyder) is an owner and responsible person of
Mountaineer Gun, yet was intentionally not listed as such
by Mountaineer Gun on its application, ATF Form 7, as is
required. By intentionally failing to list Teresa Walsh
as an owner and responsible person on ATF Form 7,
Mountaineer Gun willfully failed to disclose material
information on the application. . . . Mark Walsh, her
husband, applied for the Mountaineer Gun license at her
urging in 2008.
At the time he was aware she had a
Federal firearms license revoked.
See Final Notice at 13-15, Dkt. No. 15-7.

According to the ATF,

Mr. Walsh’s

on

failure

to

list

Mrs. Walsh

Mountaineer’s

FFL

application provided a sufficient basis to revoke the application
3

MEW SPORTING GOODS V. JOHANSEN, ET AL.

1:13CV10

MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
under 27 C.F.R. § 478.47(b)(4), 18 U.S.C. §§ 923(d)(1)(C), and
(d)(1)(D).

See id. at 14.

On December 14, 2011, Mountaineer petitioned this Court to
review the ATF’s revocation.

See Mountaineer Gun Sales, LLC v.

Bureau of Alcohol, Tobacco, Firearms & Explosives, No. 1:11CV200,
2012 WL 194079, at *1 (N.D.W. Va., Jan. 23, 2012).
a

motion

to

stay

the

revocation

of

its

alternative, for a preliminary injunction.

license

It also filed
or,

See id. at 4.

in

the

For its

part, the ATF filed a motion to dismiss the petition for lack of
subject-matter jurisdiction.

See id.

On January 23, 2012, the

Court entered a memorandum opinion and order granting the ATF’s
motion to dismiss and denying Mountaineer’s motion for a stay or
preliminary injunction.

See id.

Although the Court based its

dismissal on Mountaineer’s failure to exhaust its administrative
remedies, for purposes of the motion for preliminary injunction,
the Court also addressed whether Mountaineer would have been likely
to succeed on the merits.

See id. at *4.

It agreed with the ATF’s

findings that “Mountaineer was using Mark Walsh as a strawman
applicant, and that Teresa Walsh played a significant role in the
business.”

Id. at *6.

The Court further explained that the “ATF

likely did not err in concluding that Mountaineer’s failure to
4

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1:13CV10

MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
disclose Teresa Walsh as a ‘responsible person’ was a willful
violation of § 923(d)(1)(D).”

Id.

On January 31, 2012, eight days after the Court’s decision,
Mr. Walsh formed MEW, identifying himself as the sole member.
Pet. 1-2, Jan. 23, 2013, Dkt. No. 1.

See

Like Mountaineer, MEW is in

the business of purchasing and selling firearms and requires an FFL
in order to operate.

On February 13, 2012, Mr. Walsh submitted an

FFL application on behalf of MEW.
No. 15-7.

See App. 7, July 1, 2013, Dkt.

On June 8, 2012, the ATF denied the application on the

basis of Mr. Walsh’s alleged “prior willful violation of the Gun
Control Act.” See Notice of Denial 1-2, July 1, 2013, Dkt. No. 157; see also 18 U.S.C. § 923(e).

Several days after receiving the

notice of denial, Mr. Walsh requested an administrative hearing in
accordance with 18 U.S.C. § 923(e)(2). See Letter 6, July 1, 2013,
Dkt. No. 15-7.

A hearing occurred on October 18, 2012, in

Bridgeport,

Virginia,

West

during

which

interviews

with

ATF

Inspector Gary Malaskovitz (“Inspector Malaskovitz”), the lead
investigator of Mountaineer, and Mr. Walsh were taken.

See Hrg.

Tr., July 1, 2013, Dkt. Nos. 15-4, 15-5.
On December 5, 2012, the ATF issued a Final Notice of Denial
to

MEW,

which

included

five

pages
5

of

findings

of

fact

and

MEW SPORTING GOODS V. JOHANSEN, ET AL.

1:13CV10

MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
conclusions of law.

See Final Notice at 4-9, Dkt. No. 22-1.

In

that Final Notice, the ATF concluded that Mr. Walsh had willfully
failed to disclose material information on the Mountaineer FFL
application, that MEW is a successor-in-interest to Mountaineer,
and therefore Mountaineer’s willful violation was attributable to
MEW.

See id. at 5.

The ATF’s decision also restated the evidence

purporting to demonstrate that Mrs. Walsh was a responsible person
at Mountaineer.

See id. at 6-7.

On behalf of MEW, on January 23, 2013, Mr. Walsh petitioned
for

review

of

the

ATF’s

denial

of

MEW’s

FFL

application.

Thereafter, on June 19, 2013, MEW filed a motion for summary
judgment, in which it argued that (1) there is no statutory basis
for denial of an FFL application based on failure to disclose a
responsible person, and (2) that, in any event, the evidence is
undisputed

that

Mountaineer.
No. 11-1.

Mrs.

Walsh

was

not

a

responsible

person

at

See Pet.’s Mem. in Supp. 2-12, June 19, 2013, Dkt.

On August 15, 2013, Johansen filed a response brief,

countering that (1) collateral estoppel precludes judicial review,
(2) the ATF’s decisions in Mountaineer and in this case were
proper, and (3) Mr. Walsh’s newly formed entity, MEW, did not sever
his prior liability at Mountaineer. See Respondent’s Mem. at 1-13,
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MEW SPORTING GOODS V. JOHANSEN, ET AL.

1:13CV10

MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
Dkt. No. 24.

MEW filed a reply on September 3, 2013, restating its

original arguments and countering those of Johansen.

See Pet.’s

Reply Br. 2-3, Sept. 3, 2013, Dkt. No. 26.
On July 1, 2013, Johansen filed a motion to dismiss or, in the
alternative, for summary judgment, in which he argues that (1) the
ATF has the statutory authority to deny an FFL application for an
applicant’s past willful failure to disclose material information,
(2) Casanova Guns, Inc. v. Connally, 454 F.2d 1320 (7th Cir. 1972)
imputes a willful violation of the Gun Control Act (“GCA”) from a
corporate entity to its successor-in-interest, and (3) collateral
estoppel bars relitigation concerning Mrs. Walsh’s status as a
responsible person.

See Resp.’s Mem. in Supp. at 9-14, Dkt. No.

17.
In its response, MEW contends (1) the ATF lacks the statutory
authority to request information about responsible persons on the
FFL application; (2) the undisputed facts establish that Mrs. Walsh
was not a responsible person for Mountaineer; (3) Casanova Guns is
distinguishable from this case; and (4) collateral estoppel cannot
be applied.

See Pet.’s Resp. Br. 1-22, Aug. 15, 2013, Dkt. No. 23.

In his reply brief, Johansen argued for the first time that,
because the ATF’s decision with respect to MEW was based on its
7

MEW SPORTING GOODS V. JOHANSEN, ET AL.

1:13CV10

MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
previous final decision with respect to Mountaineer, MEW is not
entitled to judicial review.

See Resp.’s Reply Br. 6-7, Sept. 3,

2013, Dkt. No. 25.
On November 21, 2013, the Court held a hearing on the parties’
motions, at which counsel for Johansen withdrew his collateral
estoppel

argument.

The

Court

therefore

determined

that

the

remaining issues pending for review included (1) whether the ATF
has

the

statutory

authority

to

request

information

regarding

responsible persons on an FFL application, (2) the precedential
effect, if any, of the decision in Casanova Guns on this case, (3)
whether the ATF’s prior decision with respect to Mountaineer
precludes judicial review in this case,2 and (4) whether the
material facts in the case are undisputed.

At the behest of

counsel for MEW, the Court also permitted supplemental briefing by
both parties
relevant

on

statutes

the
of

interplay
the

between

GCA.

2

The

Casanova
parties

Guns

and

completed

the

their

As mentioned, this issue was first raised by Johansen in his reply
brief.
Although “[t]he ordinary rule in federal courts is that an
argument raised for the first time in a reply brief or memorandum will
not be considered,” Clawson v. FedEx Ground Package Sys., Inc., 451 F.
Supp. 2d 731, 734 (D. Md. 2006), because the Court ordered supplemental
briefing, MEW had the opportunity to, and did, address the argument.
Thus, the issue is properly before the Court and will be discussed.

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MEW SPORTING GOODS V. JOHANSEN, ET AL.

1:13CV10

MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
supplemental briefing on December 13, 2013, and the motions are now
ripe for review.
II. DISCUSSION
A. The ATF’s Statutory Authority and “Responsible Persons”
In its opening brief, MEW argues that the issue of whether
Mrs. Walsh was a responsible person at Mountaineer is irrelevant
because, in any event, the ATF acted outside the scope of its
statutory authority by requiring Mountaineer to list responsible
persons on its FFL application.

In response, Johansen argues that

the ATF is well within its statutory authority to require the
disclosure of responsible persons.
Contrary to MEW’s argument, the ATF’s statutory authority to
promulgate application requirements is clear. Congress specifically
delegated

to

the

Attorney

General

the

decision

information to include on the FFL application.

as

to

what

See 18 U.S.C.

§ 923(a) (“The application shall be in such form and contain only
that information necessary to determine eligibility for licensing
as the Attorney General shall by regulation prescribe.”).

The

Attorney General, in turn, delegated his authority to the ATF. See
28 C.F.R. § 0.130(a)(1).

Acting under such authority, the ATF

determined that FFL applicants must disclose responsible persons,
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MEW SPORTING GOODS V. JOHANSEN, ET AL.

1:13CV10

MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
including,

“[i]n

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, policies,
and practices of the corporation, partnership, or association,
insofar as

they

pertain

to

firearms.”

See

FFL

Application,

Instruction 10, Dkt. No. 15-8.
In a related argument, MEW also asserts that, as a matter of
statutory interpretation, Mrs. Walsh does not meet the ATF’s
definition

of

a

“responsible

person,”

and

excluded on Mountaineer’s FFL application.
argument,

MEW points

out

that

the

thus

properly

In support of this

ATF’s definition

directly from 18 U.S.C. § 923(d)(1)(B).
nearly identical.

was

is taken

Indeed, the language is

As a prerequisite to approval of an FFL, §

923(d)(1)(B) requires that
the 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) is not
prohibited from transporting, shipping, or receiving
firearms or ammunition in interstate or foreign commerce
under section 922(g) and (n) of this chapter.
(emphasis added).

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MEW SPORTING GOODS V. JOHANSEN, ET AL.

1:13CV10

MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
Subsection (B) is one of seven subsections requiring certain
conditions of “the applicant.” However, subsection (B) is the only
one of the seven to qualify “the applicant” with the parenthetical
noted above.

Under MEW’s theory, “responsible person,” as that

term is defined by the ATF, cannot include anyone who falls under
any of the other six subsections, and instead is solely a person
within the purview of subsection (B).

According to MEW, because

Mrs. Walsh was not prohibited from transacting firearms under
§§ 922(g) or (n), she was not a responsible person and therefore
was properly excludable from Mountaineer’s FFL application.
In considering MEW’s argument, several principles of statutory
interpretation are helpful. As MEW correctly notes, “where Congress
includes particular language in one section of a statute but omits
it in another section of the same Act, it is generally presumed
that Congress acts intentionally and purposely in the disparate
inclusion or exclusion.”

United States v. Wong Kim Bo, 472 F.2d

720, 722 (5th Cir. 1972).

MEW applies the maxim of expressium

facit cessare tacitum to § 923(d)(1) of the GCA to argue that
Congress’s

inclusion

demonstrates

its

of

intent

the
to

parenthetical
limit

the

business applicants to that subsection.
11

in

subsection

potential

liability

(B)
of

MEW SPORTING GOODS V. JOHANSEN, ET AL.

1:13CV10

MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
Although MEW’s interpretation of § 923(d)(1) is not entirely
implausible, it fails to account for two other important canons of
statutory construction.

Under the principle of noscitur a sociis,

“statutory language cannot be construed in a vacuum,” but rather
“words of a statute must be read in their context and with a view
to their place in the overall statutory scheme.” Davis v. Michigan
Dept. of Treasury, 489 U.S. 803, 809 (1989); see also F.D.A. v.
Brown

&

Williamson

Tobacco

Corp.,

529

U.S.

120,

133

(2000)

(internal quotation marks and citation omitted) (“A court must
therefore interpret the statute as a symmetrical and coherent
regulatory scheme.”); F.T.C. v. Mandel Brothers, Inc., 359 U.S.
385, 389 (1959) (stating that courts must try “to fit, if possible,
all parts [of a statute] into an harmonious whole”).

Further,

statutes should be read in pari materia because “identical words
used in different parts of the same act are intended to have the
same meaning.”

Atlantic Cleaners & Dyers v. United States, 286

U.S. 427, 433 (1932) (quoted by Gustafson v. Alloyd Co., 513 U.S.
561, 570 (1995)); see also Erlenbaugh v. United States, 409 U.S.
239, 243 (1972) (“[A] legislative body generally uses a particular
word with a consistent meaning in a given context.”).

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MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
Pursuant

to

these

principles,

“[a]n

equally

reasonable

construction of Section 923(d)(1) is that Congress defined the term
‘applicant’

by

including

the

parenthetical

language

in

the

statute’s first mention of ‘applicant’ which addressed the issue of
corporate entities, and thereafter intended to rely upon the same
meaning for the defined term.”

XVP Sports, LLC v. Bangs, No.

2:11CV379, 2012 WL 4329263, at *8 (E.D. Va., Mar. 21, 2012).
Moreover, the XVP Sports construction better fits into the overall
statutory and regulatory scheme. When it enacted the GCA, “Congress
did not intend merely to restrict interstate sales but sought
broadly to keep firearms away from the persons Congress classified
as potentially irresponsible and dangerous.”

Barrett v. United

States, 423 U.S. 212, 218 (1976) (emphasis added).
Based on this analysis, MEW’s arguments that the ATF lacks the
statutory

authority

to

require

the

disclosure

of

responsible

persons, and that the term responsible persons, as defined by the
ATF, excludes all persons not within the meaning of subsection (B)
fail. This conclusion is consistent with the Court’s earlier
opinion in Mountaineer, where it confronted the precise argument
raised here.

See Mountaineer, 2012 WL 194079, at *7 n.3.

C. Casanova Guns
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1:13CV10

MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
Assuming that Mrs. Walsh was a responsible person and that
failure to disclose responsible persons on the application is a
proper

basis

for

denial,

it

follows

that

the

applicant

for

Mountaineer violated §§ 923(d)(1)(C), (d)(1)(D), and 27 C.F.R. §
478.47(b)(4) by failing to disclose her. Whether the applicant was
Mr. Walsh or the entity itself, however, is a question that must be
addressed prior to discussing the principle set forth in Casanova
Guns.
As already discussed, the same word used within the same
statute is interpreted to have a single meaning. Atlantic Cleaners,
286 U.S. at 433.
the

seven

corporate

Thus, the term “applicant,” as used in each of

subsections
entity

on

of

whose

§

923(d)(1),
behalf

its

individual who signs the application.

must
agent

mean

either

applies,

or

the
the

It is clear that Congress

intended to assign the latter definition to the term “applicant.”
First, subsection (A) requires the applicant to be at least
twenty-one years old.

It is inconceivable that Congress premised

the approval of a corporation’s FFL application on a corporate
existence of twenty-one years.

In any event, were that Congress’s

intent, MEW’s application would be properly denied.

Second, the

parenthetical qualifier in subsection (B) explicitly contemplates
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MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
“any individual” applying on behalf of the corporation.

See

Ritchie Grocer Co. v. Aetna Cas. & Sur. Co., 426 F.2d 499, 500 (8th
Cir. 1970) (internal quotation marks and citation omitted) (“A
corporation must necessarily act through agents . . . .”).

Here,

Mr. Walsh was the individual who applied on behalf of Mountaineer
and MEW.

Therefore, for purposes of § 923(d)(1), he is “the

applicant,” and assuming arguendo that Mrs. Walsh was a responsible
person, he, not Mountaineer, is a willful violator of the GCA.
The question thus is whether Mr. Walsh can ever sever his
prior violation of the GCA to once again become eligible for an
FFL.

It is on this issue that Casanova Guns provides helpful

guidance. There, the Seventh Circuit reviewed the district court’s
decision upholding the ATF’s denial of Casanova Guns, Inc.’s
(“Casanova Guns”) FFL application.

See Casanova Guns, 454 F.2d at

1321. The ATF, and later the district court, determined that
Casanova Guns was a corporate successor-in-interest to Casanova’s,
Inc. (“Casanova’s”), an entity ineligible for an FFL under §
923(d)(1)(B) due to a prior felony conviction (possession of
unregistered firearms).
identical

to

“investigation

that

of

Id. at 1322.
the

district

has established

The ATF’s finding, nearly
court,

that the
15

explained

applicant’s

that

employer,

MEW SPORTING GOODS V. JOHANSEN, ET AL.

1:13CV10

MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
Casanova Guns, Inc., is a corporate successor in interest directly
related to a corporation, Casanova’s, Inc., which is a convicted
felon.”

Id.

The ATF also found that Casanova Guns’ business

operations were “substantially similar” to those of Casanova’s, and
that officers of Casanova Guns also had been responsible for the
operations of Casanova’s.
The

Seventh

grounds:

(1)

See id.

Circuit

Casanova

affirmed

Guns

was

the
a

district

court

on

successor-in-interest

two
to

Casanova’s; and (2) the intent behind the formation of Casanova
Guns was to circumvent the GCA.

See id. at 1322-23.

With respect

to whether Casanova Guns was a successor-in-interest to Casanova’s,
the circuit court found that the facts overwhelmingly established
the unity of interest between the two entities.

For thirty-nine

years, Clarence Casanova had been the majority shareholder of
Casanova’s.
Clarence’s

See id. at 1322.
son,

John

After Casanova’s lost its FFL,

Casanova,

president and sole shareholder.

formed

Casanova

Guns

as

its

See id. Other family members, who

were former employees of Casanova’s, became officers and directors
of Casanova Guns.

See id.

Casanova Guns subsequently purchased

the entire inventory of Casanova’s and sold the firearms out of the
same building, which it leased from Casanova’s.
16

Id.

MEW SPORTING GOODS V. JOHANSEN, ET AL.

1:13CV10

MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
In determining that the purpose of Casanova Guns was to
circumvent the GCA, the Seventh Circuit first laid out the “well
settled” legal principle that “the fiction of a corporate entity
must be disregarded whenever it has been adopted or used to
circumvent the provisions of a statute.”

Id.

It then went on to

explain:
It is apparent from the record that a substantial purpose
for the incorporation of Casanova Guns was the
circumvention of the statute restricting issuance of
firearms licenses to convicted felons. Casanova Guns was
formed after Casanova’s was under federal indictment.
Indeed, the testimony of John Casanova at the
administrative hearing is a reluctant admission that the
second corporation was formed to insure the continuation
of the gun business.
Id. at 1323.
Here, although the facts are not quite as overwhelming in
demonstrating the unity of interest between the two companies, they
are sufficient to support a finding that MEW is a successor-ininterest

to

Mountaineer.

Mr.

Walsh

was

the

sole

member

and

president of Mountaineer, and likewise is the sole member and
president of MEW. Mark Anthony Walsh (who apparently is Mr. Walsh’s
son)

was

an

employee

of

Mountaineer

and,

according

to

the

application, intends to manage MEW. Both businesses operate out of
the same building premises at 657-59 Point Marion Road, Morgantown,
17

MEW SPORTING GOODS V. JOHANSEN, ET AL.

1:13CV10

MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
West Virginia, which were and are leased from Mountaineer Country
Rentals, LLC, whose members include both Mr. and Mrs. Walsh.
Based on these facts, MEW undoubtedly is a successor-ininterest to Mountaineer. Moreover, the purpose underlying Mr.
Walsh’s formation of MEW was to circumvent the GCA.

He formed MEW

just eight days after this Court dismissed Mountaineer’s petition.
His reason for doing so was self-evident – that he needed a
business other than Mountaineer through which to sell his firearms.
There simply can be no other purpose behind the decision to form
the new company other than to circumvent § 923(d)(1)(C).

Accord

XVP Sports, 2012 WL 4329263, at *9; Virlow, LLC v. Bureau of
Alcohol, Tobacco, Firearms & Explosives, No. 1:06CV375, 2008 WL
835828, at *9 (W.D. Mich., Mar. 28, 2008).
MEW

contends

that

Casanova

Guns

is

inapplicable

or,

alternatively, distinguishable from the case at bar. It reads
Casanova Guns to apply only when the denial of an FFL is based on
§ 923(d)(1)(B), contending it does not apply when, as here, the
denial is based on subsections (C) and (D).

According to MEW, in

Casanova Guns, the Seventh Circuit relied on the parenthetical
language of subsection (B) regarding corporations for its holding
when it stated that “the express language of the licensing act . .
18

MEW SPORTING GOODS V. JOHANSEN, ET AL.

1:13CV10

MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
. prohibits the issuance of a license to a convicted felon or to a
corporation, partnership or association over which a convicted
felon exercises or could exercise control.”

Casanova Guns, 454

F.2d at 1322.
Indeed, the Seventh Circuit did use the parenthetical language
as a bridge to impute the liability of the predecessor corporation
to

the

successor

corporation.

But

nothing

in

its

reasoning

foreclosed similar use with regard to the other subsections of
§ 923(d)(1).

Moreover, as this Court has already determined, the

word “applicant”

within

the

statute

is

a defined

term

whose

definition includes the parenthetical language of subsection (B).
MEW also takes issue with the legal principle cited by the
court in Casanova Guns that “the fiction of a corporate entity must
be disregarded whenever it has been adopted or used to circumvent
the provisions of a statute.”

Id.

It rebuts that principle by

explaining that, in fact, corporate forms are ordinarily observed
for purposes of insulating shareholders from personal liability,
suing

and

being

sued

as

a

corporate

entity,

and

taxing

and

regulating.
MEW’s

argument

fails

to

recognize

that

such

legitimate

purposes are pursued by companies in accordance with other laws,
19

MEW SPORTING GOODS V. JOHANSEN, ET AL.

1:13CV10

MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
while, here, Mr. Walsh formed MEW purposely to avoid a particular
law.

As one court has noted, “[w]e are hard pressed to believe

that Congress would have intended such an easy workaround to such
a complex, pervasive regulatory scheme.”

United States v. King,

735 F.3d 1098, 1105 (9th Cir. 2013).
Finally, MEW argues that, even if Mr. Walsh’s liability does
attach to MEW, the egregious facts supporting the circuit court’s
holding

in

Casanova

Guns

are

not

present

in

this

case.

Specifically, it points out that Casanova’s had been convicted of
a felony and adjudged a violator of the GCA. In contrast, no court
has ever held that Mr. Walsh violated the GCA; according to MEW,
that fact rebuts the presumption that he formed MEW simply to
circumvent the statute.
Contrary to MEW’s argument, the presence of a court judgment
was not determinative in Casanova Guns. MEW speculates that, had
Casanova’s been deemed ineligible for an FFL by the ATF rather than
by court order, Casanova Guns would never have been formed.

Such

conjecture is not supported by the facts in the case, however.
Indeed, it is more reasonable to assume that Clarence and John
Casanova would have formed Casanova Guns, and that the Seventh
Circuit would have found an attempted circumvention of the GCA,
20

MEW SPORTING GOODS V. JOHANSEN, ET AL.

1:13CV10

MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
irrespective of the difference between the judgment of a court or
agency.
MEW also distinguishes Casanova Guns on the basis that MEW is
not yet operational; thus, a court cannot yet determine whether MEW
is a strawman entity. That distinction, however, is immaterial. In
Virlow, the court had no trouble concluding that the purpose behind
the successor company was to circumvent the GCA, even though it was
not operational at the time of the decision.
835828, at *9.

Virlow, 2008 WL

Similarly, in XVP Sports, the court found that the

formation of the successor company was a “transparent attempt to
circumvent the provisions of a statute,” despite XVP’s inability to
sell guns without a license.

XVP Sports, 2012 WL 4329263, at *9.

In cases such as the one at bar, the successor company will
necessarily be non-operational at the time of the court’s decision.
Casanova Guns was an aberration only because the successor company
was formed after indictment but before the conviction on which the
ATF’s subsequent denial was based. In any event, MEW’s argument has
no bearing on the conclusion that Mr. Walsh formed it to circumvent
the GCA.
D. The Preclusive Effect of the ATF’s First Revocation

21

MEW SPORTING GOODS V. JOHANSEN, ET AL.

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MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
Before

reviewing

the

record

under

the

summary

judgment

standard, there is one more issue to address: Does the ATF’s
decision in Mountaineer preclude the relitigation of Mrs. Walsh’s
status as a responsible person? Because this question focuses on
the preclusive effect of an agency decision rather than a court
decision, the traditional elements of collateral estoppel are
supplanted by the fairness requirements of United States v. Utah
Constr. & Mining Co., 384 U.S. 394, 422 (1966).
Construction,

administrative

estoppel

applies

Under Utah
“[w]hen

an

administrative agency is acting in a judicial capacity and resolved
disputed issues of fact properly before it which the parties have
had an adequate opportunity to litigate.”

Id.; see also Hall v.

Marion Sch. Dist. No. 2, 31 F.3d 183, 191 (4th Cir. 1994) (dividing
the test into three elements).
Here, the ATF appears to have satisfied the Utah Construction
test. First, administrative estoppel applies even though the ATF’s
revocation of Mountaineer’s FFL was quasi-judicial in nature. See
F.T.C.

v.

Texaco,

Inc.,

555

F.2d

862,

930

(D.C.

Cir.

1977)

(interpreting the “judicial capacity” requirement to include quasijudicial actions); see also 73 C.J.S. Judicial or Quasi-Judicial
Character § 16 (2013) (explaining the difference). Second, the ATF
22

MEW SPORTING GOODS V. JOHANSEN, ET AL.

1:13CV10

MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
made factual findings regarding issues properly before it.
C.F.R. § 478.73.

See 27

Third, even though Mountaineer failed to do so,

it had the opportunity to fully litigate the ATF’s factual findings
at an administrative hearing.

See 18 U.S.C. § 923(f)(2); see also

Kremer v. Chem. Constr. Corp., 456 U.S. 461, 485 (1982) (holding
that a party’s failure to avail itself of statutory remedial
procedures does not render inadequate the party’s opportunity to
litigate); Herrera v. Churchill McGee, LLC, 680 F.3d 539, 549 (6th
Cir. 2012) (rejecting the proposition that an actual hearing is a
prerequisite to administrative preclusion).
Based on its findings and Mountaineer’s withdrawal of its
request for a hearing, the ATF issued a Final Notice of Revocation.
Notably, it could have subsequently invoked that revocation as a
basis for denying MEW’s FFL application. But Johansen never raised
the

issue

of

administrative

estoppel,

either

prior

to

the

administrative hearing, or as an affirmative defense in his answer
to the complaint, or in his dispositive motion, or in his response
to

MEW’s

dispositive

administrative

motion.

estoppel

In

until

fact,
almost

Johansen
a

year

never

raised

after

the

administrative hearing and nearly eight months after the complaint
was filed.

He first argued it in his reply brief filed on
23

MEW SPORTING GOODS V. JOHANSEN, ET AL.

1:13CV10

MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
September 3, 2013, in which he devoted only ten lines of his
argument to the defense.
Although

MEW

had

an

opportunity

to

respond

through

supplemental briefing, Johansen’s delayed reliance on the defense
is

surprising.

significant

Moreover,

costs

and

MEW

spent

and

an

Mr.

Walsh

extraordinary

have
amount

incurred
of

time

litigating the case up to this point. Therefore, disposing of it
now on late-filed grounds of administrative estoppel would work a
serious injustice. Therefore, the Court finds that Johansen has
waived the affirmative defense of administrative estoppel.

See

Arizona v. California, 530 U.S. 392, 410 (2000) (disapproving of a
party raising a preclusion defense well after its first opportunity
to do so); Georgia Pac. Consumer Prods., LP v. Von Drehle Corp.,
710 F.3d 527, 533 (4th Cir. 2013) (holding that a party may waive
a

preclusion

defense

by

“waiting

too long

to

assert

[it]”);

Peterson v. Air Line Pilots Ass’n, Int’l, 759 F.2d 1161, 1164 (4th
Cir. 1985) (holding that the defendant waived its affirmative
defense based on fairness considerations); see also Davignon v.
Clemmey, 322 F.3d 1, 15 (1st Cir. 2003) (finding an abuse of
discretion where the district court permitted the defendant to
raise a

preclusion

defense

“at
24

the

eleventh

hour”);

Kane

v.

MEW SPORTING GOODS V. JOHANSEN, ET AL.

1:13CV10

MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
Heckler,

776

F.2d

1130,

1132

(3d

Cir.

1985)

(“[W]here

the

administrative process . . . reviews the entire record in the new
proceeding and reaches a decision on the merits, the agency has
effectively reopened the prior claims and waived application of res
judicata.”).
E. Summary Judgment
The Court now turns to the administrative record to determine
if any genuine factual dispute exists as to whether Mrs. Walsh was
a responsible person at Mountaineer.

Under 18 U.S.C. § 923(f)(3),

review of the ATF’s denial or revocation of an FFL is de novo.

In

its review, the court “may consider any evidence submitted by the
parties

to

the

proceeding

whether

or

not

such

considered at the [administrative] hearing . . . .”

evidence

was

§ 923(f)(3).

In light of such additional evidence, as well as the administrative
record, it may accord the agency’s findings and conclusions as much
or as little deference as it deems appropriate.

XVP Sports, 2012

WL 4329263, at *4. Furthermore, on petition for review, the narrow
issue is whether the ATF was authorized to deny or revoke the FFL
based on a single violation of the GCA.

See § 923(f)(3); see also

American Arms Int’l v. Herbert, 563 F.3d 78, 86 (4th Cir. 2009).

25

MEW SPORTING GOODS V. JOHANSEN, ET AL.

1:13CV10

MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
The de novo standard prescribed by § 923(f)(3) does not
vitiate the standard otherwise applicable to motions for summary
judgment filed pursuant to Rule 56 of the Federal Rules of Civil
Procedure. Summary judgment is appropriate where the “depositions,
documents,

electronically

declarations,

stipulations

stored
.

.

information,
.,

affidavits

admissions,

or

interrogatory

answers, or other materials” show that “there is no genuine dispute
as to any material fact and the movant is entitled to judgment as
a matter of law.”

Fed. R. Civ. P. 56(c)(1)(A), (a).

When ruling

on a motion for summary judgment, the Court reviews all the
evidence “in the light most favorable” to the nonmoving party.
Providence Square Assocs., L.L.C. v. G.D.F., Inc., 211 F.3d 846,
850 (4th Cir. 2000).
determining

the

truth

It must avoid weighing the evidence or
and

limit

its

inquiry

solely

to

a

determination of whether genuine issues of triable fact exist.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).
Here, Johansen, the moving party, bears the initial burden of
informing the Court of the basis for the motion and of establishing
the non-existence of genuine issues of fact.
Catrett, 477 U.S. 317, 323 (1986).

Celotex Corp. v.

Once he has made the necessary

showing, MEW “must set forth specific facts showing that there is
26

MEW SPORTING GOODS V. JOHANSEN, ET AL.

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MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
a genuine issue for trial.”

Anderson, 477 U.S. at 256 (internal

quotation marks and citation omitted).

The “mere existence of a

scintilla of evidence” favoring the nonmoving party will not
prevent the entry of summary judgment; the evidence must be such
that a rational trier of fact could reasonably find for the
nonmoving party.

Id. at 248–52.

On petition for review of an agency action, “an administrative
record is a duly authenticated record that enjoys a presumption of
verity.” American Arms Int’l, 563 F.3d at 86 n.12 (citing Langston
v. Johnson, 478 F.2d 915, 917-18 (D.C. Cir. 1973)). Thus, an agency
relying on the administrative record has satisfied its initial
burden of demonstrating the lack of a material factual dispute. Id.
Johansen therefore has met his initial burden on summary judgment.3
If Mrs. Walsh was a responsible person, as alleged by Johansen
and the ATF, then Mr. Walsh clearly violated the GCA by failing to

3

MEW argues that Johansen’s motion does not meet the requirements
of Fed. R. Civ. P. 56(c)(1) because it does not cite to particular facts.
However, in his six pages of facts, Johansen is clearly referring to the
administrative record. He acknowledges this in footnote 2 and, on the
same page, cites to hearing exhibits 1,2, and 4. Moreover, as explained
above, in an appeal of agency action, district courts are permitted to
base summary judgment on the administrative record. American Arms Int’l,
563 F.3d at 86 n.12 (citing Langston v. Johnson, 478 F.2d 915, 917-18
(D.C. Cir. 1973)).

27

MEW SPORTING GOODS V. JOHANSEN, ET AL.

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MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
list her on the Mountaineer application. Viewed in such light, his
application for MEW was properly denied by the ATF.

Therefore,

this case turns entirely on whether Mrs. Walsh was a responsible
person.

In determining that she was a responsible person, the ATF

relied on ten findings in its Final Notice of Revocation to
Mountaineer.
First,

They include:
that

Mrs.

Walsh’s FFL

was

revoked

when

she sold

firearms out of TGS Sporting Goods. This fact is undisputed. The
record includes the ATF’s Final Notice of Revocation sent to TGS on
January 23, 2006, with an effective revocation date of February 10,
2006.

(Dkt. No. 15-8 at 7).

Second, that Mrs. Walsh had urged Mr. Walsh to apply for an
FFL on

behalf

of

Mountaineer,

and

that 91%

of

Mountaineer’s

inventory consisted of former TGS inventory. The agency further
found that Mr. Walsh lied to Inspector Malaskovitz regarding his
knowledge of his wife’s prior revocation.
testified

that

he

had

the

idea

“to

get

Although Mr. Walsh
things

going”

with

Mountaineer (dkt. no. 15-5 at 9), he never refuted the ATF’s
finding that his wife urged him to apply for Mountaineer’s FFL.
Regarding the inventory, Mr. Walsh openly admitted that “379
firearms [] were transferred to Mountaineer from TGS.”
28

(Dkt. Nos.

MEW SPORTING GOODS V. JOHANSEN, ET AL.

1:13CV10

MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
11-7 at 2, 15-5 at 12, 11-4). There is, however, contradictory
evidence in the record regarding the ATF’s assertion that Mr. Walsh
lied to Inspector Malaskovitz; Mr. Walsh testified he did not
recall making a false statement.

(Dkt. No. 15-5 at 34-35).

Third, that Mr. Walsh exaggerated his involvement in the sale
of firearms during the inspection, as evidenced by his full time
job with a different company and the firearm sale/transfer forms,
none of which include his name.

When asked during the hearing

whether he completed the forms, Mr. Walsh admitted that he did not;
rather, his wife did.

(Dkt. No. 15-5 at 11, 21).

He further

admitted that, because of his full-time job, he was not present at
Mountaineer during the weekdays between 9:00 a.m. and 4:00 p.m.,
and he conceded that gun sales took place while he was not there.
(Dkt. No. 15-5 at 15, 22-23).

Even though Mr. Walsh stated that he

sold the firearms during evenings and weekends, when, he contended,
most of the sales took place, he acknowledged that Mrs. Walsh had
sold firearms on at least “one or two occasions.”

(Dkt. No. 15-5

at 23).
Fourth, that Mr. Walsh admitted that his wife ran the firearms
business. Although there is no such express admission, Mr. Walsh
nevertheless

admitted

that

Mrs.
29

Walsh

placed

the

orders

for

MEW SPORTING GOODS V. JOHANSEN, ET AL.

1:13CV10

MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
inventory with wholesalers, helped tag and log the firearms, showed
guns to customers, called in sales to the FBI, filled out the
firearm

transaction

forms,

disposition recordbook.

and

completed

the

acquisition

and

(Dkt. No. 15-5 at 11-12, 20-22).

Fifth, that Mr. Walsh intentionally omitted his wife’s name
from Mountaineer’s FFL application. MEW does not dispute this.
When asked why his wife’s name did not appear on the application,
Mr. Walsh responded “for the fact that she wasn’t able to be
involved in sales of guns.”

(Dkt. No. 15-5 at 10).

Whether or not

this was done surreptitiously, as the ATF suggests, can only be
determined based on the other facts of the case.
Sixth, that Mrs. Walsh ran the firearms business.

As already

noted in the ATF’s fourth finding, although Mr. Walsh denies that
his wife ran the firearms business, he has admitted that she
performed most of the functions necessary for its operation.
Seventh,

that

Peggy

White

(“Ms.

White”),

a

Mountaineer

employee, told Inspector Malaskovitz that he should speak to Mrs.
Walsh regarding firearms because Mrs. Walsh was the “owner.”4

MEW

has not denied that Ms. White made this statement; in fact, Mr.

4

Under the Federal Rules of Evidence, this statement is not
hearsay. See F.R.E. 801(d)(2)(D).

30

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MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
Walsh stated he was not surprised to hear Ms. White had done so.
(Dkt. No. 15-5 at 40).
Eighth, that Ms. White was not the manager of the firearms
business,

as

Mrs.

Walsh

had

identified

her

to

Inspector

Malaskovitz. It is undisputed that “Peggy White was not the gun
manager.”

(Dkt. 11-2 at 2).

Ninth, that Mrs. Walsh could hire employees, had signing
authority on Mountaineer’s checking account, and signed employee
paychecks. MEW admitted that “both Mark Walsh and Teresa Walsh had
signing authority for employee paychecks.” (Dkt. No. 11-2 at 2).
However, Mr. Walsh contests the ATF’s assertion that his wife could
hire employees. (Dkt. No. 15-5 at 18-19). Nevertheless, he has
admitted that his wife acted as the human resources department of
the business, because she “does the payroll and deal[s] with the
custom –- or the employees.”
Tenth,

that

Sherri

(Dkt. No. 15-5 at 36).

Flint

(“Ms.

Flint”),

a

Mountaineer

employee, lied to Inspector Malaskovitz about Mrs. Walsh’s role in
the gun business when she told him that Mrs. Walsh had nothing to
do with it.

MEW has not denied that Ms. Flint made such a

statement to Inspector Malaskovitz. Moreover, it has admitted that
Mrs. Walsh was quite involved in the gun business, even though she
31

MEW SPORTING GOODS V. JOHANSEN, ET AL.

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MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
did not hold the title of gun manager.

Therefore, the ATF

correctly found that Ms. Flint’s statement was false.
In sum, the ATF based its denial of MEW’s application on the
following undisputed facts:

(1) Mrs. Walsh’s FFL was revoked when

she was operating TGS Sporting Goods; (2) Mr. Walsh knew about the
revocation and, at his wife’s urging, opened Mountaineer, applied
for an FFL while intentionally omitting her name, and purchased the
majority of Mountaineer’s firearm inventory from her; (3) Upon
inspection of Mountaineer, Ms. White, who was not the gun manager,
told Inspector Malaskovitz to speak to Mrs. Walsh regarding the
firearms and referred to Mrs. Walsh as the “owner”; (4) Ms. Flint,
a Mountaineer employee, lied to Inspector Malaskovitz when she told
him that Mrs. Walsh had nothing to do with the firearms business;
(5) Mr. Walsh exaggerated his role in the firearms business during
the inspection. In fact, he worked a full time job and was not in
the store between 9:00 a.m. and 4:00 p.m. on weekdays; (6) Mrs.
Walsh completed almost all the firearm sales forms due to her
husband’s absence during the workweek; (7) Even though Mr. Walsh
explained that most firearm sales took place during the hours when
he

was

in

the

store,

he

acknowledged

that

other

employees,

including his wife, sold firearms on occasion; and (8) Mr. Walsh
32

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MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
admitted that

his

wife

placed

the

orders for

inventory

with

wholesalers, helped tag and log the firearms, showed guns to
customers, called in sales to the FBI, filled out the firearm
transaction

forms,

completed

the

acquisition

and

disposition

recordbook, had authority to draw on the business’s checking
account, including drafting payroll checks, and acted as the human
resources department.
These undisputed facts are sufficient to establish that Mrs.
Walsh was a responsible person at Mountaineer.

By definition, a

responsible person is “any individual possessing, directly or
indirectly, the power to direct or cause the direction of the
management, policies, and practices” of the firearms business.
Although it is uncertain whether Mrs. Walsh actually handed the
guns to customers upon sale, she admittedly performed almost every
other function of the business. Although Mr. Walsh argues that he
maintained the final word on many of the company’s major decisions,
that does not diminish the role played by his wife, who performed
the essential duties of the business without her husband between
9:00 a.m. and 4:00 p.m. five days per week.
III. CONCLUSION

33

MEW SPORTING GOODS V. JOHANSEN, ET AL.

1:13CV10

MEMORANDUM OPINION AND ORDER GRANTING RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT, DENYING PETITIONER’S
MOTION FOR SUMMARY JUDGMENT, AND DISMISSING
THE PETITION WITH PREJUDICE
Because Mrs. Walsh performed key functions for much of the
week, and because the other Mountaineer employees viewed her as the
manager, she clearly had the power to direct the policies and
practices

of

Mountaineer’s

responsible person.

firearm

business

and

thus

was

a

Mr. Walsh admitted that he intentionally

omitted her name from the FFL application because of her prior
revocation.

By so doing, he became a willful violator of the GCA

under 18 U.S.C. §§ 923(d)(1)(C) and (d)(1)(D).

Therefore, when he

applied for an FFL on behalf of MEW, the ATF properly denied his
application pursuant to 27 C.F.R. § 478.47(b)(4).
For these reasons, the Court GRANTS Johansen’s motion for
summary judgment, DENIES MEW’s motion for summary judgment, and
DISMISSES the petition WITH PREJUDICE.
It is so ORDERED.
The Court directs the Clerk to transmit copies of this Order
to counsel of record.
DATED: January 21, 2014.
/s/ Irene M. Keeley
IRENE M. KEELEY
UNITED STATES DISTRICT JUDGE

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