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DCV Imports, LLC v. Bureau of Alcohol, Tobacco, Firearms and Explosives

United States District Court, C.D. Illinois

February 28, 2017

DCV IMPORTS, LLC, Plaintiff,
BUREAU OF ALCOHOL, TOBACCO, FIREARMS, AND EXPLOSIVES, and THOMAS E. ARNOLD, Director, Industry Operations, Chicago Field Division Defendants.


          James E. Shadid Chief United States District Judge

         This matter is now before the Court on Plaintiff's Motion [3] for Temporary Restraining Order and Preliminary Injunction and Defendants' Motion [13] to Dismiss. For the reasons set forth below, this action is DISMISSED for lack of jurisdiction.


         DCV Imports, LLC (“DCV”) is a fireworks importer and distributor located in Lincoln, Illinois. In 2004, DCV was issued a federal explosives license (“FEL”) to import high explosives by the Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”). FEL licenses are valid for three years and may be renewed upon the same conditions and restrictions as the original license. 18 U.S.C. § 843(a). In 2004, 2008, and 2010, AT F agents conducted compliance inspections at DCV, but did not find any regulatory violations. See 27 C.F.R. § 555.24. However, during an unannounced inspection in September 2013, ATF discovered 73 instances in which DCV's daily summary of magazine transaction records did not reflect the actual quantities of explosive material in the magazine.[1] The net explosive weight attributed to this discrepancy was approximately 870 pounds. Based on the above violations, the Director of Industry Operations (“DIO”) for the Chicago division of the ATF notified DCV in May 2014 that it would not renew DCV's explosive license. Specifically, ATF charged DCV will willfully failing to comply with the recordkeeping requirements of 27 C.F.R. § 555.127.[2]

         DCV appealed the denial of its renewal application to an administrative law judge, see 18 U.S.C. § 843(e)(2), who agreed with the agency that DCV's recordkeeping violations were willful and recommended that the agency confirm the decision not to renew DCV's license. In April 2015, the DIO of the Chicago Field Division issued an order confirming the denial of DCV's application and provided DCV with a final notice denying the renewal application. DCV then petitioned for review by ATF's Acting Director, who after briefing and oral argument affirmed the ALJ's decision and the DIO's denial order. Finally, DCV petitioned the Seventh Circuit Court of Appeals for review of the ATF Director's order. See 18 U.S.C. § 843; DCV Imports, LLC v. Bureau of Alcohol, Tobacco, Firearms and Explosives, 838 F.3d 914 (7th Cir. 2016). On October 4, 2016, the Seventh Circuit concluded that substantial evidence supported the Director's decision and denied the petition. Id. at 915. DCV subsequently filed a petition for rehearing, which was denied on November 23, 2016. On February 9, 2017, DCV filed in the Supreme Court an application to extend the time to file a petition for a writ of certiorari from February 21, 2017 to April 22, 2017. On February 14, 2017, Justice Kagan granted the application. See DCV Imports, LLC, v. Bureau of Alcohol, Tobacco, Firearms and Explosives, App. No. 16A811 (Feb. 14, 2017) (Kagan, J., in chambers).

         During the pendency of the administrative and judicial review proceedings, the DIO issued a series of unrestricted Letters of Authorization (“LOAs”) to DCV allowing it to continue operating under its expired license. See 27 C.F.R. § 555.83.[3] However, on November 22, 2016, the DIO issued DCV a restricted LOA limiting DCV operations to the winding down of its business. A second restricted LOA was issued to DCV in December 2016, and on January 9, 2017, the ATF issued a notice informing DCV that no further LOAs would issue after the current LOA expired on January 31, 2017.

         DCV brought this action on the day the final LOA was set to expire. In their Complaint and by way of motion, DCV sought a temporary restraining order, preliminary and permanent injunction, writ of mandate, and declaratory judgment. Docs. 1, 3. Each of DCV's requests essentially seek the same relief-compelling the ATF to issue it unrestricted LOAs while it seeks review in the Supreme Court. On February 3, 2017, DCV withdrew their request for a temporary restraining order after reaching an agreement with the DIO to extend the restricted LOA until this Court's ruling on the preliminary injunction, or February 28, 2017, whichever occurs earlier. Doc. 8. The United States responded to the remaining requests for relief in DCV's Motion. Doc. 15. It also moved to dismiss the Complaint for failure to state a claim, Doc. 13, and DCV responded, Doc. 16. This Order follows.

         Legal Standard

         A preliminary injunction is “an extraordinary remedy never awarded as of right.” Winter v. Natural Resources Defense Council, Inc., 555. U.S. 7, 24 (2008). To determine whether a preliminary injunction is warranted, district judges engage in a two-phase analysis. Girl Scouts of Manitou Council, Inc. v. Girl Scouts of U.S. of Am., Inc., 549 F.3d 1079, 1085-86 (7th Cir. 2008). In the “threshold phase” the party seeking the injunction must satisfy three requirements. Id. at 1086. “First, that absent a preliminary injunction, it will suffer irreparable harm in the interim period prior to final resolution of its claims. Second, that traditional legal remedies would be inadequate. And third, that its claim has some likelihood of succeeding on the merits.” Id. (internal citations omitted). If the movant fails to demonstrate any one of the three threshold requirements, the injunction must be denied. Id. If, however, the movant satisfies the initial threshold, it proceeds to the balancing phase of the analysis. Id.

         In the balancing phase, the court attempts to minimize the cost of potential error by balancing the “nature and degree of the plaintiff's injury, the likelihood of prevailing at trial, the possible injury to the defendant if the injunction is granted, and the wild card that is the ‘public interest.” Id. (citing Lawson Prods., Inc. v. Avnet, Inc., 782 F.2d 1429, 1433 (7th Cir. 1986), Abbott Labs v. Mead Johnson & Co., 971 F.2d 6, 12 (7th Cir. 1992), Roland Mach. Co. v. Dresser Indus., Inc., 749 F.2d 380, 387 (7th Cir. 1986)). In doing so, the courts weigh the irreparable harm that the movant would endure without the injunction against any irreparable harm the nonmovant would suffer if the injunction were granted. Girl Scouts, 549 F.3d at 1086. “In so doing, the court employs a sliding scale approach: the more likely the plaintiff is to win, the less heavily need the balance of harms weigh in his favor; the less likely he is to win, the more need it weigh in his favor.” Id. (internal citations omitted).

         A complaint should not be dismissed unless it appears from the pleadings that the plaintiff could prove no set of facts in support of her claim which would entitle her to relief. See Conley v. Gibson, 355 U.S. 41 (1957); Gould v. Artisoft, Inc., 1 F.3d 544, 548 (7th Cir. 1993). Rather, a complaint should be construed broadly and liberally in conformity with the mandate in the Federal Rules of Civil Procedure 8(e). More recently, the Supreme Court has phrased this standard as requiring a showing sufficient “to raise a right to relief beyond a speculative level.” Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1965 (2007). The claim for relief must be “plausible on its face.” Id.; Ashcroft v. Iqbal, 129 S.Ct. 1937, 1953 (2009). For purposes of a motion to dismiss, the complaint is construed in the light most favorable to the plaintiff; its well-pleaded factual allegations are taken as true, and all reasonably-drawn inferences are drawn in favor of the plaintiff. See Albright v. Oliver, 510 U.S. 266, 268 (1994); Hishon v. King & Spalding, 467 U.S. 69 (1984).


         Judicial review of the ATF's decision to revoke or not renew a federal explosives license or permit is provided by statute:

(d) The Attorney General may revoke any license or permit issued under this section if in the opinion of the Attorney General the holder thereof has violated any provision of this chapter or any rule or regulation prescribed by the Attorney General under this chapter, or has become ineligible to acquire explosive materials under section 842(d). The Secretary's ...

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