Cuti v. Garland

633 F.Supp.3d 97

Anthony J. CUTI, Plaintiff, v. Merrick GARLAND, in his official capacity as Attorney General of the United States et al.,¹ Defendants.

Civil Action No. 19-3455 (RDM)

United States District Court, District of Columbia

Signed September 29, 2022

Jacqueline Zee DerOvanesian, Pro Hac Vice, Stumphauzer Foslid Sloman Ross & Kolaya, PLLC, Miami, FL, Erica L. Perdomo, Quinn Emanuel Urquhart & Sullivan, LLP, Miami, FL, for Plaintiff.

Daniel Riess, U.S. Department of Justice, Civil Division, Washington, DC, for Defendants.

MEMORANDUM OPINION AND ORDER

RANDOLPH D. MOSS, United States District Judge

Plaintiff Anthony J. Cuti was convicted in 2010 of securities fraud, conspiracy to commit securities fraud, and making false filings with the Securities and Exchange Commission and was sentenced to thirty-six months incarceration. That conviction matters for present purposes because, under the Gun Control Act of 1968 it is unlawful for anyone who has been convicted of a crime punishable by imprisonment for a term exceeding one year to possess a firearm or ammunition, 18 U.S.C. § 922(g)(1), and it is unlawful for any person to sell a firearm or ammunition to any such person, id. § 922(d)(1). Under the so-called "business practices exception," however, those prohibitions do not apply to federal or state convictions for "offenses pertaining to antitrust violations, unfair trade practices, restraints of trade, or other similar offenses relating to the regulation of business practices." Id. § 921(a)(20)(A).

In Cuti's view, his convictions fall within this exception. The government takes a contrary view and has informed Cuti that he may not lawfully obtain a firearm. According to Cuti, moreover, three shooting clubs in New Jersey have denied his requests to borrow firearms "because of his federal felony record." Dkt. 19 at 7 (2d Am. Compl. ¶ 32). He brings this action seeking, among other things, a declaration that his convictions fall within the business practices exception. Id. at 9 (2d Am. Compl.). The government, in turn, moves to dismiss for failure to state a claim, arguing that the exception does not apply. Dkt. 23.

Because the Court concludes that Cuti's convictions fall within the business practices exception, the Court will DENY the government's motion.

I. BACKGROUND

A. Statutory Background

The Gun Control Act of 1968, Pub. L. No. 90-618, 82 Stat. 1213 (the "Act"), as amended, prohibits "any person . . . who has been convicted in any court of[ ] a crime punishable by imprisonment for a term exceeding one year" from "possess[ing] . . . any firearm or ammunition." 18 U.S.C. § 922(g)(1). Another provision of the Act makes it "unlawful for any person to sell . . . any firearm or ammunition to any person" who "has been convicted in any court of[ ] a crime punishable by imprisonment for a term exceeding one year." Id. § 922(d)(1). The statute includes a carve-out from those prohibitions, however, for individuals convicted of "certain commercial-type crimes." S. Rep. No. 90-1097, at 112-13 (1968). Under that provision—the "business practices exception"—"[t]he term 'crime punishable by imprisonment for a term exceeding one year' does not include . . . any Federal or State offenses pertaining to antitrust violations, unfair trade practices, restraints of trade, or other similar offenses related to the regulation of business practices." 18 U.S.C. § 921(a)(20)(A).

B. Factual and Procedural Background

Because the government moves to dismiss for failure to state a claim, the Court accepts the following factual allegations, which are contained in Cuti's second amended complaint, as true. See Harasek v. Nat'l R.R. Passenger Corp., 334 F. Supp. 3d 309, 310 (D.D.C. 2018). To the extent the complaint contains legal conclusions, however, the Court does not accept those allegations as true. See Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

In 2010, Cuti was convicted of conspiracy to commit securities fraud in violation of 18 U.S.C. § 371; securities fraud in violation of 15 U.S.C. § 78j(b); and making false filings with the Securities and Exchange Commission in violation of 15 U.S.C. §§ 78m(a) and 78o(d). Dkt. 19 at 3 (2d Am. Compl. ¶ 14). Cuti was sentenced to thirty-six months of incarceration and to a period of supervised release, id. at 4 (2d Am. Compl. ¶ 16); he completed his term of supervised release in 2016 and "has never been charged with another crime," id. at 4 (2d Am. Compl. ¶ 17). He asserts that "[t]he securities offense[s] of which [he] was convicted fall within § 921(a)(20)(A)'s exception for offenses related to the regulation of business practices similar to the listed offenses." Id. at 9 (2d Am. Compl. ¶ 4).

Although Cuti alleges that he is a resident of the State of Florida, he does not seek to possess a firearm there, id. at 2 (2d Am. Compl. ¶¶ 7, 9)—presumably because, independent of the federal Gun Control Act, Florida law prohibits him from possessing a firearm based on his status as convicted felon, Fla. Stat. Ann. § 790.23(1)(c). Instead, he alleges that "he spends three-to-four months of the year in New Jersey, staying in the Saddle River, New Jersey home of his adult daughter." Dkt. 19 at 2 (2d Am. Compl. ¶ 8). Cuti further alleges that he "intends to continue his regular travel to New Jersey, where state and local laws do not prohibit him from purchasing and/or possessing firearms for hunting and target shooting." Id. (2d Am. Compl. ¶ 9).

"Prior to his conviction, and for most of his adult life, [Cuti] was an avid target shooter and hunter," id. at 7 (2d Am. Compl. ¶ 31), and he would like to continue that avocation during his annual stays in New Jersey, id. at 8 (2d Am. Compl. ¶ 33). His 2010 felony convictions, however, have stood in the way. In particular, he maintains that "[s]ince the termination of his supervised release, [his] request to rent or borrow firearms from private [target shooting or hunting] clubs in New Jersey have been denied based on his federal felony record, which consists solely of the securities offenses." Id. at 7 (2d Am. Compl. ¶ 32). Cuti alleges that as recently as last April, "three shooting clubs" located in New Jersey "denied [his] requests to rent or borrow firearms 'because of his federal felony record.' " Id.

In support of this allegation, Cuti attaches to his complaint an email from "a licensed attorney in New Jersey," who explains that he was "engaged by . . . Cuti to investigate the possibility of [Cuti] shooting at various licensed ranges and bird hunting facilities located in New Jersey after disclosing to each location that . . . Cuti is a non-violent federal felon." Dkt. 19-3 at 1. Cuti's attorney reports that he "contacted three locations advertised online as target and/or bird hunting facilities . . . and spoke either to management or ownership," and, "[i]n each case[,] they clearly stated that they would refuse . . . Cuti access to their guns as well as access to their premises to shoot because of his federal felony record." Id.

Cuti also attaches to his complaint an email from an Assistant United States Attorney in the Southern District of Florida, sent to another lawyer working Cuti's behalf. Dkt. 19-2 at 1. That email reports that the Bureau of Alcohol, Tobacco, Firearms and Explosives ("ATF") "believes that . . . Cuti's convictions do not come within the exception in 18 U.S.C. § 921(a)(20), and" that he is therefore ineligible "to lawfully acquire a firearm in the State of Florida," id.—and, presumably, elsewhere in the United States.

Based on all of this, Cuti avers that "[a]s a sole and exclusive result of his status as a felon" convicted of securities law violations, he has been "prohibited from possessing a firearm in New Jersey." Dkt. 19 at 8 (2d Am. Compl. ¶ 34). He therefore maintains that he is "suffering, currently and on a continuing basis, the injury of being unable to exercise his Second Amendment right to possess firearms, which [he] would obtain and possess from private shooting clubs in New Jersey and other states where such possession is not prohibited by state or local law, but for Defendants' interpretation and enforcement of §§ 921(20)(A), 922(g)(1), and 922(d)(1) of Title 18." Id. (2d Am. Compl. ¶ 36).

This is not the first chapter in this litigation. The government previously moved to dismiss Cuti's first amended complaint for lack of Article III standing. Dkt. 12-1 at 1. The Court agreed that the complaint failed adequately to allege standing and, accordingly, dismissed the complaint without prejudice. Dkt. 18 at 32. In response, Cuti filed his second amended complaint, Dkt. 19, which the government has again moved to dismiss, Dkt. 23. This time, however, the government does not challenge Cuti's standing and, instead, argues that Cuti's "claim fails as a matter of law" because his 2010 conviction does not fall within the business practices exception. Dkt. 24-1 at 3.

II. ANALYSIS

A. Standing

As an initial matter, the Court addresses Cuti's Article III standing to bring this action. Although the government no longer contests Cuti's standing, this Court has "an independent obligation to assure [itself] of [its] jurisdiction," Waterkeeper All., Inc. v. Regan, 41 F.4th 654, 659 (D.C. Cir. 2022), and Cuti's standing to bring this action is far from self-evident. He does not allege, for example, that the federal government has threatened him with criminal prosecution or that it has directly impeded his ability to rent or borrow a firearm from a club located in New Jersey by, for example, requiring the clubs to certify that they do not rent or lend firearms to individuals who fall within the § 922(g)(1) prohibition.

To establish standing, Cuti must allege (1) "an injury in fact" which is "concrete and particularized" and "actual or imminent, not conjectural or hypothetical"; (2) "a causal connection between the injury and the conduct complained of"; and (3) that the injury likely would be "redressed by a...