Montana Shooting Sports Associ v. Eric Holder, Jr.

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

MONTANA SHOOTING SPORTS No. 10-36094

ASSOCIATION; SECOND AMENDMENT

FOUNDATION, INC.; GARY MARBUT, D.C. No.

Plaintiffs-Appellants, 9:09-cv-00147-

DWM

and

STATE OF MONTANA, OPINION

Intervenor,

v.

ERIC H. HOLDER, JR., Attorney

General,

Defendant-Appellee.

Appeal from the United States District Court

for the District of Montana

Donald W. Molloy, District Judge, Presiding

Argued and Submitted

March 4, 2013—Portland, Oregon

Filed August 23, 2013

Before: A. Wallace Tashima, Richard R. Clifton,

and Carlos T. Bea, Circuit Judges.

2 MONT. SHOOTING SPORTS ASS’N V. HOLDER

Opinion by Judge Clifton;

Partial Concurrence and Partial Dissent by Judge Bea

SUMMARY*

Civil Rights

The panel affirmed the district court’s dismissal, for

failure to state a claim, of an action brought by Gary Marbut,

the Montana Shooting Sports Association, and the Second

Amendment Foundation challenging federal firearms

regulations.

Plaintiff Marbut sought to manufacture firearms under

the Montana Firearms Freedom Act (MFFA), state legislation

that declared that the manufacture and sale of certain firearms

within the state was beyond the scope of Congress’s

commerce power. The panel first held that Marbut had

standing on account of economic injury. The panel then held

that the complaint failed to state a claim in light of Gonzales

v. Raich, 545 U.S. 1 (2005), and United States v. Stewart, 451

F.3d 1071 (9th Cir. 2006), and that Congress could rationally

conclude that unlicensed firearms made in Montana would

make their way into the interstate market. The panel held that

the MFFA was necessarily preempted and invalid.

Concurring in part and dissenting in part, Jude Bea agreed

with the majority’s conclusion that Marbut was subject to

federal licensing laws. He stated that it was unnecessary for

*

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

MONT. SHOOTING SPORTS ASS’N V. HOLDER 3

the majority to hold that the MFFA was preempted by federal

law.

COUNSEL

Quentin M. Rhoades (argued), Sullivan, Tabaracci &

Rhoades, P.C., Missoula, Montana, for Plaintiffs-Appellants.

Mark R. Freeman (argued), Mark B. Stern, and Abby C.

Wright, Appellate Staff, Tony West, Assistant Attorney

General, Michael W. Cotter, United States Attorney, United

States Department of Justice, Civil Division, Washington,

D.C. for Defendant-Appellee.

Nicholas C. Dranias (argued), Goldwater Institute, Phoenix,

Arizona; Timothy C. Fox, Gough, Shanahan, Johnson &

Waterman, Helena, Montana; and Ilya Shapiro, Cato Institute,

Washington, D.C., for Amici Curiae The Goldwater Institute

and Cato Institute.

Steve Bullock, Montana Attorney General; Zach Zipfel,

Assistant Attorney General, Helena, Montana, for Amicus

Curiae State of Montana.

Joseph W. Miller, Law Offices of Joseph Miller, LLC,

Fairbanks, Alaska; Gary G. Kreep, United States Justice

Foundation, Ramona, California; Herbert W. Titus, William

J. Olson, John S. Miles, and Jeremiah L. Morgan, William J.

Olson, P.C., Vienna, Virginia, for Amici Curiae Gun Owners

of America, Inc., Gun Owners Foundation, and Virginia

Citizens Defense League.

4 MONT. SHOOTING SPORTS ASS’N V. HOLDER

John E. Bloomquist, Doney Crowley Bloomquist Payne Uda

P.C., Helena, Montana, for Amicus Curiae Weapons

Collectors Society of Montana.

Timothy Baldwin, Kalispell, Montana, for Amici Curiae

Thirty Montana Legislators.

Jonathan E. Lowy and Daniel Vice, Brady Center to Prevent

Gun Violence, Washington, D.C.; Gil N. Peles and Noemi A.

Blasutta, Proskauer Rose LLP, Los Angeles, California, for

Amici Curiae Brady Center to Prevent Gun Violence,

International Brotherhood of Police Officers, Hispanic

American Police Command Officers Association, National

Black Police Association, National Network to End Domestic

Violence, Montana Human Rights Network, and Legal

Community Against Violence.

Mark L. Shurtleff, Attorney General, Salt Lake City, Utah;

John J. Burns, Attorney General, Juneau, Alaska; Lawrence

G. Wasden, Attorney General, Boise, Idaho; Bill Schuette,

Attorney General, Lansing, Michigan; Jon Bruning, Attorney

General, Lincoln, Nebraska; Alan Wilson, Attorney General,

Columbia, South Carolina; Marty J. Jackley, Attorney

General, Pierre, South Dakota; Darrell V. McGraw, Jr.,

Attorney General, Charleston, West Virginia; Gregory A.

Phillips, Attorney General, Cheyenne, Wyoming, for Amici

Curiae States of Utah, Alaska, Idaho, Michigan, Nebraska,

South Carolina, South Dakota, West Virginia, and Wyoming.

Sharon L. Browne and Adam R. Pomeroy, Pacific Legal

Foundation, Sacramento, California, for Amicus Curiae

Pacific Legal Foundation.

MONT. SHOOTING SPORTS ASS’N V. HOLDER 5

Anthony T. Caso, John C. Eastman, Karen J. Lugo, and

David Llewellyn, Center for Constitutional Jurisprudence,

Orange, California, for Amici Curiae Center for

Constitutional Jurisprudence and Fifteen State Legislators.

OPINION

CLIFTON, Circuit Judge:

Plaintiffs Gary Marbut, the Montana Shooting Sports

Association, and the Second Amendment Foundation appeal

the dismissal of their action challenging federal firearms

regulations. Marbut wants to manufacture firearms under the

Montana Firearms Freedom Act, state legislation that

declares that the manufacture and sale of certain firearms

within the state is beyond the scope of Congress’s commerce

power. The district court dismissed the action because no

plaintiff had standing to bring the claim and, in the

alternative, because the complaint failed to state a claim in

light of Gonzales v. Raich, 545 U.S. 1 (2005), and United

States v. Stewart, 451 F.3d 1071 (9th Cir. 2006). On appeal,

we conclude that Marbut has standing to sue, but we agree

with the district court that Marbut has failed to state a claim.

Thus, we affirm the judgment.

I. Background

The Montana Legislature passed the Montana Firearms

Freedom Act (“MFFA” or “the Act”), which declares that a

firearm or ammunition “manufactured . . . in Montana and

that remains within the borders of Montana is not subject to

federal law or federal regulation, including registration, under

the authority of congress [sic] to regulate interstate

6 MONT. SHOOTING SPORTS ASS’N V. HOLDER

commerce.” Mont. Code Ann. § 30-20-104. It purports to

authorize the manufacture and sale of firearms within the

state, but imposes certain requirements for a firearm to

qualify under the Act, notably that the words “Made in

Montana” be “clearly stamped on a central metallic part.” Id.

§ 30-20-106.

Plaintiff Gary Marbut owns a business that manufactures

shooting range equipment for law enforcement agencies and

is involved in a variety of gun-related organizations and

activities, including service as the president of the Montana

Shooting Sports Association, another plaintiff. Marbut wishes

to manufacture and sell firearms and ammunition to

Montanans under the MFFA without complying with

applicable federal laws regulating firearms.

In particular, Marbut wishes to manufacture and sell a .22

caliber rifle called the “Montana Buckaroo.” Marbut has

design plans for the rifle that are ready to load into machining

equipment for production, and he has identified

manufacturers that will supply the individual component

parts. Several hundred Montanans have offered to purchase

the Montana Buckaroo at Marbut’s asking price, but such

sales are conditioned on Marbut winning this suit and not

having to comply with federal licensing requirements.

According to the complaint, these customers “do not want . . .

and will not buy” the Montana Buckaroo if manufactured by

a federal firearms licensee. Marbut has also developed

ammunition that he wants to sell under the MFFA and that a

state agency has expressed interest in purchasing.

After the passage of the MFFA, the Federal Bureau of

Alcohol, Tobacco, Firearms and Explosives (“ATF”)

distributed an “Open Letter to All Montana Federal Firearm

MONT. SHOOTING SPORTS ASS’N V. HOLDER 7

Licensees.” The letter stated that the MFFA conflicts with

federal firearms laws, and that federal law supersedes the Act

and continues to apply. Marbut subsequently sent a letter to

the ATF, asking whether he could manufacture firearms and

ammunition under the MFFA without complying with federal

statutes and without fear of criminal prosecution. In response,

an ATF special agent wrote to Marbut that “unlicensed

manufacturing of firearms of ammunition for sale . . . is a

violation of Federal law and could lead to . . . potential

criminal prosecution.”

Marbut, along with the Montana Shooting Sports

Association and the Second Amendment Foundation, filed for

declaratory and injunctive relief. The Montana Shooting

Sports Association and the Second Amendment Foundation

are non-profits dedicated to gun education and advocacy.

Plaintiffs requested a declaratory judgment that Congress has

no power to regulate the activities contemplated by the

MFFA and injunctive relief preventing the federal

government from bringing civil or criminal actions under

federal firearms law against Montana citizens acting in

compliance with the MFFA.

A federal magistrate judge recommended dismissing the

suit because plaintiffs lacked standing and, in the alternative,

because plaintiffs failed to state a claim in light of the

Commerce Clause jurisprudence of the Supreme Court and

this court. The federal district court adopted these

recommendations in full and dismissed the case. Plaintiffs

timely appealed.

8 MONT. SHOOTING SPORTS ASS’N V. HOLDER

II. Standing

Plaintiffs argue that economic injury and the threat of

criminal prosecution each provide a basis for standing. The

district court held that none of the plaintiffs had standing. We

review a motion to dismiss for lack of standing de novo,

construing the factual allegations in the complaint in favor of

the plaintiffs. Tyler v. Cuomo, 236 F.3d 1124, 1131 (9th Cir.

2000). On appeal, we conclude that Marbut has standing on

account of economic injury and do not reach his alternative

argument for standing. Neither do we reach the issue of

whether the Montana Shooting Sports Association and the

Second Amendment Foundation have organizational

standing.

To have standing, a plaintiff must suffer an injury that is

“actual or imminent” as opposed to “conjectural or

hypothetical.” Lujan v. Defenders of Wildlife, 504 U.S. 555,

560 (1992) (internal quotation marks omitted). Because

Marbut asks for injunctive relief, he must show “a very

significant possibility of future harm.” Mortensen v. Cnty. of

Sacramento, 368 F.3d 1082, 1086 (9th Cir. 2004) (quoting

Bras v. Cal. Pub. Utils. Comm’n, 59 F.3d 869, 873 (9th Cir.

1995)).

Economic injury caused by a proscriptive statute is

sufficient for standing to challenge that statute. See Nat’l

Audubon Soc’y, Inc. v. Davis, 307 F.3d 835, 855–56, opinion

amended in other respects on denial of reh’g, 312 F.3d 416

(9th Cir. 2002). In Davis, for example, plaintiff animal

trappers challenged a law prohibiting the use of certain types

of traps. 307 F.3d at 842. The trappers alleged that they

earned a living through trapping, had ceased trapping because

of the law, would continue trapping if the law were declared

MONT. SHOOTING SPORTS ASS’N V. HOLDER 9

invalid, and asked for declaratory and injunctive relief. Id. at

845, 855–56. The court concluded that the trappers had

standing to challenge the law, noting that “the trappers’

economic injury is directly traceable to the fact that [the

challenged law] explicitly forbids the trapping they would

otherwise do.” Id. at 856.

Like the plaintiffs in Davis, Marbut alleges an economic

injury resulting from laws explicitly prohibiting a business

activity that he would otherwise engage in. The magistrate

judge distinguished Davis on the basis that the trappers,

unlike Marbut, had a preexisting business that came to a halt

after the law at issue was enacted. It is true that the court in

Davis, in determining whether or not the trappers would

suffer future economic injury on account of the challenged

law, noted that the “uncontested history of using the now-

prohibited traps before the passage of [the challenged law],

and their statements that they would continue trapping if not

constrained by [that law], are enough to show they would

resume trapping if [the] ban were declared invalid.” Id. at

856. But having operated a business enterprise in the past

based on a now-prohibited activity is not a necessary

condition for standing.

Injunctive relief requires a showing of a significant

likelihood of future injury. See Mortensen, 368 F.3d at 1086.

Having engaged in a business activity in the past may make

it less speculative that a plaintiff can and would do so again

if the law were enjoined, but there is no bright line rule

requiring past operation to establish standing. Rather,

“determining ‘injury’ for Article III standing purposes is a

fact-specific inquiry.” Lujan, 504 U.S. at 606.

10 MONT. SHOOTING SPORTS ASS’N V. HOLDER

Construing Marbut’s allegations in the light most

favorable to him, we conclude that he would manufacture and

sell unlicensed firearms should we declare federal regulations

inapplicable to the Buckaroo. Marbut has not merely alleged

a vague desire to manufacture and sell unlicensed firearms if

he wins this lawsuit, but has made specific allegations

substantiating this claim. He has a background in running his

own shooting range equipment manufacturing business, has

identified suppliers for the component parts of the Buckaroo,

has design plans for the firearm ready to load into

manufacturing equipment, and has identified hundreds of

customers who have ordered the Buckaroo at his asking price.

Marbut has alleged much more than the “‘some day’

intentions . . . without any description of concrete plans” held

insufficient for standing. Lujan, 504 U.S. at 564 (holding that

a mere professed intent to visit a country was insufficient for

standing, when plaintiffs had not purchased a plane ticket or

even described when they would visit).

We are not persuaded by the government’s argument that

Marbut lacks standing because he could conduct his business

through legal means by obtaining a federal license. The

government provides no reason why we should not take

Marbut’s allegation that his customers “do not want, have not

ordered, and will not buy the ‘Montana Buckaroo’ if it is

manufactured by federal firearms licensees” as true, as we

generally must in considering a dismissal under Federal Rule

of Civil Procedure 12(b). Marbut has supported his allegation

with evidence suggesting that much of the appeal of the

Montana Buckaroo is that it is a Montana product purportedly

not subject to federal gun laws, if for no other reason than the

state pride and limited government symbolism associated

with such a product. One customer, for example, ordered ten

Buckaroos for teaching purposes and added to his order, “I

MONT. SHOOTING SPORTS ASS’N V. HOLDER 11

can’t think of a better way to teach Montana’s shooting

heritage than with a historic MFFA rifle.” Another customer,

ordering two Buckaroos, exclaimed, “I believe they would be

a collector’s item one day!”

Moreover, even if Marbut could conduct his business as

a federal licensee without losing customers, he would

nonetheless incur economic costs in complying with the

licensing requirements. Marbut alleged that he is not willing

“to pay the requisite . . . licensing fees and taxes” associated

with complying with federal licensing requirements. The

economic costs of complying with a licensing scheme can be

sufficient for standing. Ariz. Contractors Ass’n, Inc. v.

Napolitano, 526 F. Supp. 2d 968, 979 (D. Ariz. 2007)

(holding that plaintiffs had demonstrated they would sustain

economic injury if the law forced them to use E-Verify), aff’d

sub nom. Chicanos Por La Causa, Inc. v. Napolitano,

558 F.3d 856 (9th Cir. 2009), aff’d sub nom. Chamber of

Commerce v. Whiting, 131 S. Ct. 1968, 179 (2011).

Under the circumstances of this case and construing

Marbut’s allegations in the light most favorable to him, we

conclude that Marbut has alleged economic injury sufficient

for standing. Because Marbut has standing, and “the presence

in a suit of even one party with standing suffices to make a

claim justiciable,” Brown v. City of L.A., 521 F.3d 1238, 1240

n.1 (9th Cir. 2008), we need not address whether the Second

Amendment Foundation and the Montana Shooting Sports

Association satisfy the requirements for organizational

standing. See Rumsfeld v. Forum for Academic &

Institutional Rights, Inc., 547 U.S. 47, 52 n.2 (2006)

(declining to address standing of additional plaintiffs

“because the presence of one party with standing is sufficient

to satisfy Article III’s case-or-controversy requirement”).

12 MONT. SHOOTING SPORTS ASS’N V. HOLDER

III. Merits

The district court dismissed the complaint for failure to

state a claim, concluding that Congress’s commerce power

permitted it to regulate the manufacture and sale of the

Buckaroo. We review a dismissal for failure to state a claim

de novo. See Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir.

2005).

Marbut argues that the manufacture and sale of the

Buckaroo are outside the scope of the Commerce Clause, and

that federal licensing laws do not apply as a result. His

primary argument is that an expansive interpretation of the

Commerce Clause is inconsistent with dual sovereignty, and

he laments the trajectory of the Supreme Court’s Commerce

Clause jurisprudence. Marbut argues, for example, that “the

Supreme Court’s Commerce Clause jurisprudence has

improvidently altered the very form of American government,

reading out dual sovereignty, and stripping from the States all

independence of policy or action.”

Whether or not Marbut is correct in his critique of that

jurisprudence, we are not free to disregard it. To his credit,

Marbut acknowledges as much, recognizing that this court’s

“hands are tied” with respect to binding precedent.

Specifically, his opening brief states:

Appellants realize that in many respects,

as regards the arguments so far made, the

Court’s hands are tied. Appellants advocate

for the case law being overturned, and an

intermediate scrutiny test being applied. But

the relevant case law has been promulgated by

the Supreme Court, whose decision are

MONT. SHOOTING SPORTS ASS’N V. HOLDER 13

controlling. See e.g., United States v. Stewart,

451 F.3d 1071, 1076 (9th Cir. 2006). Thus,

even if the Court agrees with the reasoning,

there are few remedies the Court is able to

offer. One, however, would be to limit Raich

to its facts, and distinguish it on grounds of its

national defense implications.

Turning to the precedent from the Supreme Court and our

own court that we are bound to follow, we conclude that

Congress’s commerce power extends to the manufacture and

sale of the Buckaroo, and that Raich cannot be read as limited

to its facts, as Marbut urges.

In Gonzales v. Raich, the Court held that Congress may

regulate a commodity under the Commerce Clause, in that

case marijuana, if there exists a rational basis for concluding

that the activities at issue, taken in the aggregate,

substantially affect interstate commerce. 545 U.S. 1, 22

(2005). Congress may regulate even purely intrastate activity

“if it concludes that the failure to regulate that class of

activity would undercut the regulation of the interstate market

in that commodity.” Id. at 18. We applied this test to the

possession of firearms in United States v. Stewart, holding

that Congress could prohibit the possession of a homemade

machine gun because it could have rationally concluded that

the possession of homemade machine guns would

substantially affect the interstate market in machine guns.

451 F.3d 1071, 1077 (9th Cir. 2006); see United States v.

Henry, 688 F.3d 637, 638 (9th Cir. 2012).

Under Raich and Stewart, the regulation of the Montana

Buckaroo is within Congress’s commerce power. Marbut

intends to manufacture the Buckaroo under the Montana

14 MONT. SHOOTING SPORTS ASS’N V. HOLDER

Firearms Freedom Act, which means that he will manufacture

and sell it within the borders of Montana. See Mont. Code

Ann. § 30-20-104. But even if Marbut never sells the

Buckaroo outside of Montana, Congress could rationally

conclude that unlicensed firearms would make their way into

the interstate market. This result does not change because the

Buckaroo will bear a “Made in Montana” stamp to

distinguish it from firearms that may be sold in the interstate

market. See id. § 30-20-106. Congress might reasonably

determine that a “Made in Montana” stamp will not deter

those seeking to purchase unregistered firearms in the

interstate black market. See Stewart, 451 F.3d at 1077–78

(rejecting the argument that homemade machine guns were

“unique” and so would not affect the market for commercial

machine guns, noting that “those seeking [machine guns] care

only whether the guns work effectively”).

Plaintiffs’ efforts to distinguish Raich are not convincing.

Plaintiffs argue that Raich, which dealt with Congress’s

power to regulate marijuana under the Commerce Clause,

should be limited to the national defense concerns implicated

in the “war on drugs.” There is no language in Raich limiting

its principles to “national defense” concerns, however, and

Raich relies on Wickard v. Filburn, 317 U.S. 111 (1942),

which dealt with Congress’s power to regulate wheat. See

Raich, 545 U.S. at 16. The attempt to read into Raich a

distinction between the market for firearms and the market

for marijuana has already been rejected by our court, as

Stewart held that the principles of Raich apply to the market

for firearms.1

1

The history of Stewart, which involved homemade machine guns,

further illustrates that the Supreme Court did not view Raich as narrowly

limited to its facts. Our first decision in Stewart was filed in 2003, as

MONT. SHOOTING SPORTS ASS’N V. HOLDER 15

Finally, plaintiffs have not pursued on appeal any

argument that the individual right to bear arms recognized in

District of Columbia v. Heller, 554 U.S. 570 (2008), supports

a different result. Even if they had advanced this argument,

we have already held that Heller “has absolutely no impact on

Stewart’s Commerce Clause holding.” Henry, 688 F.3d at

642.

Congress could have rationally concluded that the

manufacture of unlicensed firearms, even if initially sold only

within the State of Montana, would in the aggregate

substantially affect the interstate market for firearms. Under

Raich and Stewart, that is enough to place the Buckaroo

within reach of the long arm of federal law. Because the

MFFA purports to dictate to the contrary, see Mont. Code

Ann. 30-20-104 (providing that conduct conforming to the

MFFA is “not subject to federal law or federal regulation”),

it is necessarily preempted and invalid. See Arizona v. Inter

Tribal Council of Ariz., Inc., 133 S. Ct. 2247, 2254 (2013)

(explaining that, to the extent a state law conflicts with

federal law, “the state law . . . ceases to be operative”

(internal quotation mark omitted)).

United States v. Stewart, 348 F.3d 1132 (9th Cir. 2003). It concluded that

Congress could not, under its Commerce Clause power, prohibit mere

possession of a homemade machine gun. The Supreme Court granted

certiorari in that case, vacated the judgment, and remanded to this court

for further consideration in light of Raich. United States v. Stewart,

545 U.S. 1112 (2005). On remand, our court issued the 2006 decision

described in the text.

16 MONT. SHOOTING SPORTS ASS’N V. HOLDER

VI. Conclusion

Though we conclude that plaintiff Gary Marbut has

standing, we affirm the dismissal of the action for failure to

state a claim.

AFFIRMED.

BEA, Circuit Judge, concurring in part and dissenting in part:

I fully agree with the majority’s conclusion that Gary

Marbut is subject to federal licensing laws. Gonzales v.

Raich, 545 U.S. 1 (2005), and United States v. Stewart,

451 F.3d 1071 (9th Cir. 2006), foreclose Marbut’s argument

that Congress does not have the authority under the

Commerce Clause to regulate the manufacture of unlicensed

firearms, even if they are manufactured and initially sold

within Montana only. Had the majority stopped there, I

would join the opinion in full. However, the majority goes a

step further and holds that the Montana Firearms Freedom

Act is “necessarily preempted” because it purports to say that

conduct conforming to the MFFA is not subject to federal

regulation.1 In my opinion, this section of the opinion is

unnecessary. Once we decide, as we did, that Marbut’s

conduct falls within the scope of federal regulation, we do not

need to pass upon the validity of the MFFA. True, Marbut

1

Specifically, the MFFA declares that a firearm or ammunition

“manufactured . . . in Montana and that remains within the borders of

Montana is not subject to federal law or federal regulation, including

registration, under the authority of congress [sic] to regulate interstate

commerce.” Mont. Code Ann. § 30-20-104.

MONT. SHOOTING SPORTS ASS’N V. HOLDER 17

attempts to use the MFFA as a shield against federal

regulation. But, once we decide that Congress has authority

to regulate Marbut’s conduct, it is simply irrelevant whether

Marbut attempts to cloak himself in the MFFA.

Therefore, I respectfully dissent from the portion of the

majority’s opinion holding that the MFFA is preempted by

federal law.