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Garrett's Worldwide Enterprises, LLC v. United States

United States District Court, District of Kansas

March 6, 2015

Garrett’s Worldwide Enterprises, LLC, and Eric Garrett,, Plaintiffs,
v.
United States of America, Department of Transportation, Pipeline and Hazardous Materials Safety Administration, Theodore Turner, III, Terry Pollard, and Edward Rastetter, Defendants.

MEMORANDUM AND ORDER

J. THOMAS MARTEN, JUDGE.

Plaintiffs Eric Garrett and Garrett's Worldwide Enterprises (GWE) produce and ship fireworks, a highly-regulated activity. The United States Department of Transportation Pipeline and Hazardous Materials Safety Administration (PHMSA) conducted two inspections of GWE. Alleging that the inspections were groundless actions designed to retaliate against Garrett for his criticism of the agency, the plaintiffs instituted this action against the federal government under the Federal Tort Claims Act, alleging entrapment, negligence, abuse of process, outrage, unlawful search, First Amendment violations, cruel and unusual punishment, and malicious prosecution. The plaintiffs also advance Bivens claims against DOT agents Theodore Turner, III, Terry Pollard, and Edward Rastetter.

The government, alleging that the present civil action is simply a device to circumvent the administrative review of potential violations discovered during the inspections, has moved to dismiss the action pursuant to Fed.R.Civ.Pr. 12(b)(1) for a lack of subject matter jurisdiction. For the reasons provided herein, the court hereby grants the defendants' motion.

The Secretary of Transportation is empowered to regulate hazardous materials by the Federal Hazardous Materials Transportation Law, 49 U.S.C. § 5103(a)-(b). Federal law further authorizes the Secretary to "investigate, conduct tests, make reports, issue subpoenas, conduct hearings, require the production of records and property, take depositions, and conduct research, development, demonstration, and training activities." 49 U.S.C. § 5121(a). The Secretary has in turn delegated these authorities to the PHMSA and its Administrator. 49 C.F.R. §§ 1.96, 1.97.

PHMSA has promulgated rules governing the transportation of fireworks. See 49 C.F.R. subtitle B, chapter I. These regulations include the prohibition of shipping fireworks without authorization, 49 C.F.R. § 173.51, or in a manner inconsistent with the agency's regulations for the packaging, transportation, and storage of fireworks. 49 C.F.R. § 171.1. PHMSA is authorized to inspect parties engaged in shipments. 49 C.F.R. §§ 107.305, § 107.709(d)(5).

The regulations further authorize administrative enforcement actions. Such actions are typically preceded by a Notice of Probable Violation (NOPV), which identifies the factual and legal bases for a violation and sets forth a proposed civil penalty. The recipient of an NOPV can challenge these findings by either pursuing informal adjudication, or seeking a formal hearing before an administrative law judge. 49 C.F.R. §§ 107.317, 107.319.

Under an informal adjudication, PHMSA's Office of Chief Counsel may either dismiss the Notice, or direct compliance (and may assess a civil penalty). 49 C.F.R. § 107.317(d). If a formal hearing is requested, an administrative law judge resolves the challenge. Under either proceeding, a respondent faced with an unfavorable result may appeal to the PHMSA Administrator, whose decision represents the final agency action. 49 C.F.R. § 107.325. Under 49 U.S.C. § 5127(a), a Respondent has 60 days to then seek judicial review from the District of Columbia Circuit Court of Appeals.

Following an inspection, the regulations authorize PHMSA to suspend or terminate shipment rights. 49 C.F.R. §107.713(b). If the agency seeks to suspend an appproval, it issues a notice of the proposed action and must allow the shipper an opportunity to respond. After the shipment approval holder responds, the agency may cancel the action, or proceed to modify, suspend, or terminate the approvals. 49 C.F.R. § 107.713(c)(2).

The approval holder may seek reconsideration or appeal to the Administrator. 49 C.F.R. § 107.715, 717. The holder may subsequently seek judicial review purusuant to § 5127.

GWE sells and transports fireworks, and is thus subject to PHMSA oversight. In April 2010, PHMSA conducted a fitness inspection of GWE. PHMSA later issued an NOPV and proposed $94, 000 in civil penalties.

GWE contested the NOPV. On July 30, 2012, PHMSA's Chief Counsel issued an order assessing $25, 000 in civil penalties, finding that GWE had offered transportation in commerce fireworks (Class 1 explosive materials) which were forbidden for transportation in commerce without PHMSA approval, thereby violating 49 C.F.R. §§ 171.2(a), 173.22, 173.54, and 173.56.

GWE subsequently appealed. On July 25, 2013, the agency's Acting Chief Safety Officer issued a Decision on Appeal, upholding the civil penalties. The agency determined that GWE's allegations of misconduct by the investigators, which occurred after the NOPV was issued, were irrelevant. The agency also found that GWE had failed to show any facts mitigating culpability or indicating it was unable to pay the penalty. GWE did not seek judicial review of this decision.

As a result of the April 2010 inspection, on July 9, 2010, PHMSA moved to suspend and terminate GWE's approvals. On September 27, 2012, the show cause action was closed without further action, and GWE was never determined to be unfit.

In October, 2011, PHMSA conducted another fitness inspection, which led to a second NOPV, with proposed civil penalties of $16, 2000, issued March 21, 2013. GWE contested the Notice. The agency's Chief Counsel, issued an Order assessing reduced civil penalties of $4000 on May 12, 2014. GWE appealed from this decision on May 29, 2014.The PHMSA's Chief Safety Officer is now reviewing the second enforcement action.

On March 27, 2013, GWE and Garrett along with Dennis Garrett, Susan Garrett, and Jason Garrett, submitted a joint administrative tort claim alleging injury and damages arising out of the second enforcement action.

On May 6, 2013, PHMSA notified plaintiffs' counsel that the administrative claim was defective because it was filed on behalf of more than one claimant. PHMSA asked counsel to submit separate claims for each claimant, and to ...


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