Appendix — Technical Ordnance, Inc. v. United States

CONTENTS OF APPENDIX

Decisions and Orders Below

Decision of the Eighth Circuit (March 26, 2001) ..............++. A-1

Decision of the District Court on Defendant

Moore’s Motion to Dismiss (April 14, 1997).............ce:000+ A-20

Decision of the District Court on Defendant

Moore's Motion for Reconsideration (May 19, 1997)......... A-37

Decision of the District Court on Defendant

Moore's First Motion for Summary Judgment

FI Sa PN sacainlcectiseciciitenisiisipeciiitna iat citiicciessiccnesinti A-41

Decision of the District Court on Defendant

Moore's Second Motion for Summary Judgment

RE. aly OOO E cians tiirccvcininsecervitvetesnentinctaiipepetidciacenintonpennianses A-59

Order of the Eighth Circuit Denying Rehearing

RNR eter tae lay DO PEER ne eR TONE A-74

Text of Relevant Statutes and Regulations

Pa aes UTI sercshaieldiisianisemensbcmssiabalbnmsnsicnensiesiolesnnenuininanioitn A-75

Fae es 1 Is vivsssncensidasiadsdievitiicaihabiesinianldibavenianianinlinataiwanesibite A-76

ae aan ED coecssincnsectsldnbeiclipsinisenesdeneniiandinkenginnniaiasansia A-82

Pleadings and Other Filings Below

Plaintiffs’ First Amended Complaint (Apr. 10, 1996)......... A-84

Transcript of Motions Hearing (March 19, 1997)............. A-124

Memorandum from Trial Court Judge to Counsel

(Oct. 29, 1999)

Notice from the Clerk of the Eighth Circuit Court of

Appeals to Counsel (Dec. 29, 1999)........ccecesceeeseseeseseseeseee

Evidentiary Materials

Certificate Pertaining to Foreign Interests

(larch 1S, TOFD) ..sceccccccevesvecsseerseivecssabenonetesoonsee posvorctuesoesontn

Search Warrant Affidavit of Douglas Moore

COCR. 19, 19FZ) ..ccnccccrerevitecnsstscvnsvesisisteosetesevensstetteontmaieneiets

Criminal Case Report (Feb. 28, 1993)..........ssssesssssseseeseees

Grand Jury Testimony of Douglas Moore

GGG: 1G, TO FGD wcccncocovecovensecervsvenscoseevesvevenvecsoounpenvennsentisniiiiin

Grand Jury Testimony of Douglas Moore

GFA. 1G, TIPE) ..ccceseecoveeveversnocesyervessvqpivenssorinncsenneteeoeneperretens

SII. ccnnnnsinsinsitasiisiesiitaietaieeatadialdatiaciihs

Jury Verdict Form from the Criminal Trial

CPO TE, TOD) cccceccerorenrresevesseqrneiquercantevensimetnemnemmannienes

Statement from Jury Foreman in the Criminal Trial

SITE 7s PUNE cevcecesunscovsasnoscstcetesijutanmiciesiibceiqubiesniatintataiaiit

Affidavit of Norman Hoffman (Jan. 5, 1998)..........0:000e0

Affidavit of James Seltz (Sept. 21, 1999) ........cessesesereesees

Report of Interview (Feb. 10, 1989) ..........sssesessssesseeseeees

Letter to Technical Ordnance (Aug. 16, 1990)............+.+++

Memorandum to J. Kodedek (Oct. 31, 1991) ...cccssssssssssses

Letter to M. Trimble (Feb. 23, 1994) .........csccssssssesessrseerees

A-ii

United States Court of Appeals

John Doe 1, John Doe 2,

John Doe 3, John Doe 4,

John Doe 5, True Names

Unknown,

FOR THE EIGHTH CIRCUIT

No. 99-4334

Technical Ordnance, Inc; *

Norman H. Hoffman, .

Plaintiffs- Appellees, *

v. .

United States of America; * Appeal from the United

Douglas Moore, Special * States District Court for

Agent, The Bureau of * — the District of

Alcohol, Tobacco, and * South Dakota.

Firearms (“ATF”), U.S.

Department of the Treasury; *

Other Unknown ATF Agents *

Defendants - Appellants.

Submitted: December 13, 2000

Filed: March 26, 2001

Before McMILLIAN, FAGG, and MURPHY, Circuit Judges.

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MURPHY, Circuit Judge.

After a jury found Technical Ordnance, Inc. (Ordnance)

and Norman Hoffman, the president of Ordnance, not guilty

of criminal charges growing out of their business of

manufacturing and selling explosive materials, they sued the

United States and several agents of the Bureau of Alcohol,

Tobacco, and Firearms (ATF). Special Agent Douglas Moore

was the only identified individual defendant. The district

court denied Moore’s motion for summary judgment on the

basis of qualified immunity, and he appeals. We reverse.

—~ I.

Ordnance is a manufacturer and distributor of explosive

devices. It exports products abroad in two different ways.

The first is by export to foreign countries or foreign

companies. The second is pursuant to Department of

Defense (DOD) contracts. On March 20, 1992, Moore and

Kim Kratochvil, an ATF regulatory compliance inspector,

went to the Ordnance facility at Clear Lake, South Dakota to

investigate three accidental explosions that had occurred

there between January 16 and January 21, 1992. They also

wished to inspect explosive bunkers and inventory for which

Ordnance had received a non-compliance citation two years

earlier. ATF has jurisdiction to license and regulate the

importation, manufacture, distribution, and storage of

explosive materials in interstate and foreign commerce. See

18 U.S.C. §§ 842 and 843. Those who operate under an ATF

license must keep records and make those records and their

storage facilities available for inspection. See id. at §§ 842(f)

and 843(f). Ordnance has had an ATF license since 1989.

Prior to the inspection in March 1992, Hoffman had had

a longstanding disagreement with ATF about its jurisdiction

over Ordnance. He had told ATF agents on several occasions

that his business was over regulated and that ATF should not

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have jurisdiction over its activities. He also disagreed with

ATF concerning the scope of its regulation.

Congress has provided that companies cannot lawfully

engage in the sale of defense articles directly to foreign

entities without a license from ATF and an export license

from the State Department. See id. at § 842 (a); 22 US.C. §

2778(g)(6). ATF describes sales to foreign entities under

these licenses as “commercial sales,” and it has regulatory

jurisdiction over this type of sale. See 18 U.S.C. § 843. ATF

does not have authority, however, to regulate sales to foreign

governments when they are made under contracts with the

United States military, see id. at § 845(a)(6), and it describes

such sales as “government to government sales.” Until 1989

Ordnance ‘had exported materials to foreign governments

and related foreign businesses without an ATF license.

Ordnance used its own terminology for those sales; it called

them “foreign military sales” and denied that they were

“commercial sales” subject to ATF regulation. In 1988 ATF

informed Ordnance that these sales were “commercial” and

fell within its jurisdiction, and Ordnance obtained an ATF

license in 1989,

When Moore and Kratochvil went to the Clear Lake

facility on March 20, 1992, they met with Hoffman and John

Yuhas, the vice president of Ordnance. Hoffman objected to

the inspection; he said ATF did not have jurisdiction over the

Clear Lake plant. Hoffman stated that Ordnance was not

“currently” engaged in what he called “foreign military

sales” and was “currently” working only under DOD

contracts so ATF did not have jurisdiction over the

operations. Hoffman showed Moore a computer printout

listing the work being done at the Clear Lake facility on that

day, indicating that all of it was under DOD contract.

Hoffman told the agents that records of all DOD contracts

and foreign military sales were kept at the Ordnance facility

in St. Bonifacius, Minnesota.

Appellees claim that Hoffman told Moore that Ordnance

still did foreign military sales but that the only work that day

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was under DOD contract. Moore says that he asked

Hoffman why Ordnance had an ATF license if it only

engaged in DOD contracts, and Hoffman replied “because

they made me get one.” Appellees say they felt threatened

during this conversation because Moore asked Hoffman and

Yuhas if they realized he wore a badge, carried a gun, and

could arrest people. Eventually Hoffman discussed the

causes of the explosions with the agents and allowed

Kratochvil to inspect the facility, and Kratochvil determined

that Ordnance had remedied the problem for which it had -

been cited two years previously.

Moore suspected that Ordnance was engaged in direct

export to foreign governments and that Hoffman had lied

when he told him that Ordnance was currently working only

on projects under DOD contracts. He continued his

investigation of Ordnance after the inspection on March 20.

During his investigation, Moore received reports from

defense contract investigators which indicated that relatively

few Ordnance projects were under DOD contract. He also

received a printout from the State Department indicating

that, beginning in 1983 and as late as June 3, 1992, Ordnance

had been making sales directly to foreign governments or

companies under export licenses issued by the State

Department, rather than under military contract. Such sales

do not fall under the 18 U.S.C. § 845 (a)(6) exemption from

ATF regulatory jurisdiction (the exemption for so-called

government to government sales).

On October 19, 1992, Moore applied for a warrant to

search the Clear Lake facility. His accompanying affidavit

was also used by another ATF agent who attached _it to his

own affidavit and application for a search warrant for the St.

Bonifacius facility in Minnesota where company records

were located. Moore testified in his affidavit that Hoffman

had told the ATF agents during the March 20, 1992

inspection that:

because his operation currently involves only

Department of Defense contracts, [] ATF has no

jurisdiction and his companies [sic] activities are

exempted under Title 27, CFR, Section 55.141.

Hoffman stated that his company has discontinued

manufacturing destructive devices and is not

currently providing explosive materials to foreign

customers or governments.

Appellees’ Appendix at 372-73. Moore also included in his

affidavit information that he had uncovered showing that

Ordnance had been making sales directly to foreign

governments from January 19, 1983 through June 3, 1992. He

attached the State Department computer printout in support.

He also supplied two other documents: an ATF report from

April 17, 1990, indicating that Hoffman had told an agent

that all projects at Clear Lake were under DOD contract, and

a July 25, 1990 letter from John Yuhas to ATF saying that all

Clear Lake projects at that time were conducted under

government contracts. This evidence led Moore to believe

that Hoffman had made false statements when he claimed an

exemption for work being done at the Clear Lake facility and

Moore concluded in his affidavit that “either no records are

being maintained for the commercial transactions, . . . , or

false records are being maintained to conceal the activity and

give the appearance that the transactions are exempted

under government contract obligations.” Id. at 378.

The applications and Moore’s affidavit were presented

to two different United States magistrate judges who each

found probable cause and who issued search warrants for

both the Clear Lake, South Dakota and St. Bonifacius,

Minnesota facilities. The warrants were executed

simultaneously at both locations by ATF and DOD agents

who seized a number of documents. Appellees complain

that the agents only seized documents that were

incriminating and bypassed or refused exculpatory

documents offered by Ordnance employees.

A-5

Moore prepared a criminal case report, based in part on

the seized documents. In his case report Moore listed all

Ordnance commercial transactions from 1983 to 1992, the

corresponding records ATF had seized under the search

warrants, and an analysis of whether the records complied

with ATF regulations. He forwarded the report to federal

prosecutors who decided after reviewing it to seek an

indictment against Ordnance and Hoffman. A federal grand

jury was convened, and Moore was called to testify. He

testified that during the March 20, 1992 inspection, Hoffman

had “related at that point in time, they were not engaged in

any commercial activity, nor were they at a given point in

time engaged in any contract with foreign sales.”

Appellant's Brief at 10. In September 1993, the grand jury

returned a multi-count indictment charging Ordnance and

Hoffman with federal offenses related to licensing and record

requirements, false statements, and conspiracy.!

After Ordnance and Hoffman were acquitted in a jury

trial, they brought this action against the United States under

the Federal Tort Claims Act (FTCA), see 28 U.S.C. §§ 1346,

2671 et seq. and against Moore and other unnamed ATF

agents under Bivens v. Six Unknown-Named Agents of Fed.

Bureau of Narcotics, 403 U.S. 388 (1971). In their 43 page

complaint appellees raised many claims, including violations

of their First, Fourth, and Fifth Amendment rights,

conspiracy involving Moore and unnamed agents, negligent

1 The indictment included charges of manufacturing and dealing

explosive materials without an ATF license in violation of 18 US.C. §

842(a)(1) (for the period before 1989 when Ordnance engaged in direct

foreign sales without an ATF license), unlawful commercial distribution of

explosive materials to unauthorized persons in violation of 18 U.S.C. §

842(b), unlawful manufacture, purchase, distribution, and receipt of

explosive materials without making required records in violation of 18

US.C. § 842(f), false statements in violation of 18 U.S.C. § 1001, and

conspiracy in violation of 18 U.S.C. § 371.

2 Under the FTCA the United States may be held liable for a tort

committed by an employee acting within the scope of his office, see 28

U.S.C. § 1346(b), and such a claim is tried to the court. See id. at § 2402.

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training and supervision, abuse of process, malicious

prosecution, and infliction of emotional distress. They

sought some $60,020,000 in damages from Moore and other

unidentified ATF agents, $54,000,000 in damages from the

United States, punitive damages, an injunction prohibiting

the defendants from harassing, threatening, or otherwise

attempting to intrude upon their constitutional rights, and

attorney fees and costs.

The defendants moved to dismiss the action for failure

to state a claim and Moore moved to dismiss the claims

against him on the basis of qualified immunity. The district

court dismissed the following claims: Fifth Amendment,

abuse of process, and conspiracy by Moore. It denied

dismissal for the claims of malicious prosecution and

intentional infliction of emotional distress, and it denied

Moore’s motion for qualified immunity except on a claim

that he had illegally expanded the scope of the search. The

district court stated that Moore was not entitled to qualified

immunity on the Fourth Amendment claim arising out of his

warrant affidavit because “[a] reasonable officer would have

known there was no probability or even possibility of

criminal activity.” (9/30/98 Order at 13). Discovery

proceeded and after it was completed, Moore renewed his

motion for summary judgment on the basis of qualified

immunity. The motion was again denied. The district court

believed there was “a genuine issue for trial” on the question

of “whether or not it was objectively reasonable to assume

that either no records or inadequate records existed.”

(10/28/99 Order at 4). The court also concluded that Moore

was not entitled to qualified immunity on the First

Amendment and malicious prosecution claims.

Il.

To defeat a government official’s claim of qualified

immunity, a plaintiff must demonstrate that the official's

actions violated a statutory or constitutional right, that the

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right was clearly established at the time of the violation, and

that a reasonable official would have known that his conduct

violated that right. See Harlow v. Fitzgerald, 457 U.S. 800,

818 (1982); Sexton v. Martin, 210 F.3d 905, 909-910 (8th Cir.

2000). Qualified immunity issues should be resolved as early

as possible because one of the purposes of qualified

immunity is to protect public officials from disruptive

“broad-ranging discovery.” See Anderson v. Creighton, 483

US. 635, 646-47 n.6 (1987) (quoting Harlow, 457 US. at 817).

In some circumstances limited discovery may be required to ;

“resolve the qualified immunity question. See id. A public :

official is entitled to summary judgment in the absence of

any genuine issue of material fact. See Mitchell v. Forsyth,

472 US. 511, 526 (1985). In this case full discovery was :

permitted before the court ruled on Moore’s renewed motion

for summary judgment. Although appellees contend that

there are genuine issues of fact that must be decided by a

jury, they have not identified any material issues of fact

preventing summary judgment. The parties do draw

conflicting legal conclusions from what was said and done,

and we have jurisdiction to reach the issues of qualified

immunity. See Behrens v. Pelletier, 516 US. 299, 312-13 ey |

(1996). f

A.

Moore argues first that he is entitled to qualified

immunity on the claim that he subjected appellees to an

illegal search and seizure in violation of their Fourth

Amendment rights. Appellees claim that the Fourth

Amendment law is clear and that Moore violated it by

misstatements and omissions in his warrant affidavit. They

also attempt to raise a malicious prosecution claim based on

the Fourth Amendment, saying that he violated clearly

established law of which a reasonable officer would have

known when he caused them to be prosecuted without

A-8

probable cause. Moore denies that he violated any clearly

established law under the Fourth Amendment.

1,

To meet the requirements of the Fourth Amendment, a

search warrant must be issued by a neutral and detached

magistrate on the basis of an affidavit that states probable

cause for the search. See Johnson v. United States, 333 US.

10, 13-14 (1948). Probable cause exists if the affidavit gives a

magistrate a “substantial basis for...conclud[ing] that a search

would uncover evidence of wrongdoing.” Illinois v. Gates,

462 U.S. 213, 236 (1983) (alterations in the original, quotation

marks and citations omitted). It is not to be determined

“according to a fixed and rigid formula, but rather in the

light of the ‘totality of the circumstances’ made known to the

magistrate,” and a magistrate is allowed to draw reasonable

inferences from the evidence presented. Massachusetts v.

Upton, 466 U.S. 727, 728, 734 (1984) (per curiam).

A warrant issued on the basis of an affidavit that shows

probable cause only because it contains a deliberate or

reckless falsehood or omission violates the Fourth

Amendment See Franks v. Delaware, 438 U.S. 154, 155-56

(1978); United States v. Humphreys, 982 F.2d 254, 258 n.2 (8th

Cir. 1992). Even if a false statement or omission is included

in an affidavit, the Fourth Amendment is not violated if the

affidavit would still show probable cause after such

falsehood or omission is redacted or corrected. See Franks,

* The record does not indicate whether Ordnance and Hoffman ever

requested a Franks hearing during the criminal proceedings against them

or sought to suppress evidence obtained under the search warrants. In

order to obtain a Franks hearing, a party must first “make a substantial

preliminary showing of an intentional or reckless falsehood made in the

affidavit.” See United States v. Wajda, 810 F.2d 754, 759 (8th Cir. 1987)

(emphasis in original). This requirement is not lightly met, see id., and is

not satisfied by conclusory allegations that the affiant made reckless or

intentional misstatements. See Franks, 438 U.S. at 171.

A-9

438 U.S. at 171-72; Hunter v. Namanny, 219 F.3d 825, 829 (8th

Cir. 2000).

The appellees claim that Moore omitted evidence he

should have included, that he did not mention reports that

showed that agents had examined Ordnance records twice in

the past two years and concluded they complied with ATF

regulations. The reports appellees cite do not indicate that

ATF performed a complete inspection of all Ordnance

records or that ATF found that the records accurately

reported all commercial sales as required by regulations. The

reports do show that Ordnance did not keep records of

materials used in commercial sales separate from those for

sales under government contract and that agents were

therefore concerned about the difficulty of determining

whether Ordnance was in compliance. See Appellee’s

Appendix at 571, 572, 630-32. Even if Moore’s affidavit were

amended to show the existence of these reports, it would still

show probable cause. Any such omission was therefore not

material.

4 For example, in a report dated September 17, 1991, an ATF inspector

stated:

TEK ORD maintains computerized records for all of their

operations, including the receipt, manufacture and storage of all

explosive materials .... When taken as a whole, TEK ORD’s

records contain all of the information required by Part 55, but

the licensee does not maintain records specifically for ATF and

our inspectors encountered some difficulty in identifying and —

tracing those explosives which are subject to ATF regulation...

There is no segregation of explosives in storage based on

intended use. Without the assistance of TEK ORD personnel

the ATF Inspectors were unable to differentiate between

explosives that will ultimately be used to fill DOD contracts

(and therefore exempt from Part 55) and surplus explosives that

will be used to fill FMS contracts. TEK ORD was therefore in

the enviable position of dictating what materials, if any, are

subject to ATF regulation.

Appellee’s Appendix at 631.

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Appellees claim there was a material omission in the

affidavit because Hoffman had said Ordnance records were

stored at St. Bonifacius and the affidavit did not mention that

town or the fact that Moore had not traveled there to make

an inspection. The affidavit could not have misled a

reviewing magistrate to understand that all records were at

the Clear Lake facility, however, because Moore stated in the

affidavit that Hoffman had said that the records were kept in

Minnesota (Moore referred to the Minnesota town as

Waconia, a previous site for the records). See id, at 377.

Even if the exact wording now proposed by appellees would

have been added by Moore, there would still have been

probable cause to search the Clear Lake facility.

Probable cause requires evidence of a nexus between the

object sought and the place to be searched. See United States

v. Tellez, 217 F.3d 547, 550 (8th Cir. 2000). During Moore’s

March inspection he had seen Hoffman print out a list of

work being performed on that day at Clear Lake. He knew

that at least some records must therefore be available at that

location and through his investigation he obtained evidence

that suggested Hoffman had lied about what work was

currently being done. Based on what he learned, Moore

could have reasonably inferred that the St. Bonifacius records

would not agree with those kept in Clear Lake or that

Hoffman was lying about the location of the records, as well

as about what they contained. He was not required to go to

St. Bonifacius to examine the records before seeking a search

warrant, for once an agent has established probable cause, he

is not required to conduct a further investigation in the hope

of finding exculpatory evidence. See Forman v. Richmond

Police Dept., 104 F.3d 950, 962 (7th Cir. 1997). The omission

of the correct name of the Minnesota records site and the fact

that Moore had not himself reviewed those records was not

material.

Appellees claim Moore set out Hoffman's statements in

a manner designed to mislead a magistrate into believing

that Hoffman had lied during the March 20 inspection. They

A-11

claim that Hoffman told Moore that the company had no

foreign contracts on the day of the inspection but that it

engaged in both DOD contracts and foreign military sales.

Moore never stated in his affidavit that Hoffman claimed that

Ordnance only performed DOD contracts. The affidavit

indicates that Moore understood Hoffman to say that

Ordnance was not engaged in direct sales to foreign

governments on that day. Appellees find it significant that

on pages 2 and 3 of his affidavit Moore repeated Hoffman's

statement that Ordnance was not “currently” making direct

sales to foreign governments, but that he did not include that

word in the summary section. See Motions Hearing

Transcript 3/19/97 at 23. Counsel argued that this was

misleading because the summary is “probably the only

section that anyone read.” Id. This argument is sheer

speculation. The affidavit was only eight pages, and there is

no evidence or reason to believe that either magistrate did

not consider the whole affidavit, as required under the law.

See United States v. Anderson, 933 F.2d 612, 614 (8th Cir.

1991) (warrant affidavits are to be read “as a whole”). The

fact that the word “currently” was not repeated in the

summary does not show an intentional or reckless omission.

It would be a rare summary that included all that went

before.

If the affidavit were amended with the language

appellees suggest, to say that “Hoffman and Yuhas had

acknowledged that Technical Ordnance engaged in ‘foreign

military sales’ over which they disputed ATF’s jurisdiction

[and] that no work on such sales was in progress at the Clear

Lake plant on March 20, 1992,” Appellee’s Brief at 53, the

affidavit would still have contained probable cause that

officers of the company had lied and were not keeping_

records required by ATF regulation. The affidavit would still

have shown that Yuhas and Hoffman stated that on three

particular days (April 17 and July 25, 1990 and March 20,

1992) the Clear Lake plant was working only on United

States military projects and was exempt from ATF regulation

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when other information contradicted the assertions. Moore

pointed out that defense contract investigators had told him

that Ordnance had few DOD contracts around March 20,

1992, and documents from the State Department showed that

the Clear Lake facility had contracts directly with foreign

governments from January 19, 1983 through June 3, 1992,

totaling over $11,000,000.

The affidavit contains other facts that would cause a

reasonable law enforcement agent to be Suspicious. Between

January 16 and January 21, 1992, three explosions had

occurred at the Clear Lake facility, but none were reported to

ATF. When asked about them, Hoffman acknowledged they

had occurred, but he claimed that he was not required to

report them since only exempt DOD contracts were being

worked on at that time. During the March 20 inspection,

Hoffman initially denied ATF access to an explosives bunker

because it was marked with a DOD sticker. Moore learned

later from a defense contract investigator that Ordnance had

not been working on any classified DOD projects on March

20. Another investigator informed Moore that “during her

last compliance inspection . .. she found the company in total

noncompliance, because she found the inventory and

accountability so confusing she found it impossible to sort

out the situation.” Appellee’s Appendix at 373-74.

The appeliees attempt to parse Moore’s affidavit, looking

at individual parts in isolation. A warrant affidavit is

properly viewed as a whole, and the reviewing magistrate is

to examine its totality. See Gates, 462 US. at 230-31;

Anderson, 933 F.2d at 614 (“the affidavit cannot be attacked

paragraph by paragraph; it must be evaluated as a whole”).

It “should be read with common sense and not ina grudging,

hyper technical fashion.” Walden v. Carmack, 156 F.3d 861,

870 (8th Cir. 1998). A law enforcement official is not required

to include everything he knows about a subject in his

affidavit, whether it is material to a finding of probable cause

or not. See United States v. Ramirez, 279 F.2d 712, 716 (2d

Cir. 1960). The warrant contained evidence that Ordnance

A-13

claimed exemptions on six nonconsecutive days during a

time period in which it was engaged in a significant number

of direct foreign sales which are under ATF jurisdiction.

Investigators had found Ordnance’s recordkeeping confusing

and non-compliant, and in at least one instance an Ordnance

officer lied to agents when he claimed that a bunker

contained classified DOD materials.

ATF is granted broad authority to enter the premises of a

regulated explosives manufacturer to inspect its records and

storage facilities. Its jurisdiction did not hinge on whether

Ordnance was performing foreign military sales on the day

of the inspection. See 18 U.S.C. § 843(f) (“The Secretary may

enter during business hours the premises . . . of any licensee

or permittee, for the purpose of inspecting or examining (1)

any records or documents required to be kept by such

licensee or permittee, . . . and (2) any explosive materials kept

or stored by such licensee or permittee at such premises.”);

see also 27 C.F.R. § 55.24. Given all the evidence in the

affidavit, it was not unreasonable for Moore to infer that

Hoffman had lied in claiming exemptions on days ATF was

investigating.

Appellees have not shown any genuine issue of material

fact as to whether Moore intentionally or recklessly made

misstatements or omissions in his affidavit. Imprecision in

the affidavit may show that Moore was careless in drafting

some of the language, but careless error does not show

reckless or intentional misconduct. Neither does the fact that

Moore may have used somewhat different language in

recounting Hoffman’s statements in his grand jury testimony

than in his affidavit.5 The Fourth Amendment requires that a

5 Appellees argue that there is a material question of fact about

whether Hoffman told the agents that Ordnance was not “currently”

engaged in direct foreign sales, as Moore stated in his affidavit, or whether

Hoffman used the phrase “at that time,” as Moore testified to the grand

jury. To defeat summary judgment, appellees must show there is a

genuine dispute over facts that could affect the outcome of the lawsuit.

See Webb v. Lawrence County, 144 F.3d 1131, 1135 (8th Cir. 1998). The

word “currently” has essentially the same meaning as the phrase “at that

A-14

warrant affidavit be a “truthful factual showing of probable

cause — truthful in the sense that the information put forth is

believed or appropriately accepted by the affiant as true.”

Mueller _v. Tinkham, 162 F.3d 999, 1003 (8th Cir. 1998)

(quotation marks and citations omitted). Moore did not

attempt to search Ordnance facilities without a warrant, nor

did he rush to apply for a warrant. He began an

investigation when his suspicions were aroused as a result of

the March 20 Clear Lake visit. After some seven months, he

applied for a warrant and summarized in his affidavit what

he had learned from speaking to a number of agents and

from gathering records. Appellees have not shown that

Moore did not believe what he put in the affidavit or that

probable cause only existed because of intentional or reckless

falsehoods or omissions in his affidavit. Moore is entitled to

qualified immunity on this claim.

2.

Moore asserts that he is also entitled to qualified

immunity on the malicious prosecution claim because

appellees have not alleged that he infringed a constitutional

right. The general rule is that an action for malicious

prosecution does not state a claim of constitutional injury.

See Pace v. City of Des Moines, 201 F.3d 1050, 1055 (8th Cir.

2000). Appellees may overcome Moore's assertion of

qualified immunity only if they show that the acts on which

they base their malicious prosecution claim also violate a

constitutional provision or federal law. See Sanders v. Sears

Roebuck & Co., 984 F.2d 972, 977 (8th Cir. 1993).

The district court concluded that appellees’ malicious

prosecution claim alleged a violation of a clearly established

constitutional right under the Fourth Amendments

time.” See WessTER’s NEw WorLD DICTIONARY OF AMERICAN ENGLISH 340

(3d ed. 1988) (defining “current,” in part, as “at the present time”).

*The district court dismissed appellees’ attempt to raise their

malicious prosecution claim under the Fifth Amendment, Stating “a claim _

A-15

Appellees allege that they were forced to post bond,

summoned to appear before court, and made to answer

charges although prosecuted without probable cause. They

contend that such malicious prosecution amounted to an

illegal seizure under the Fourth Amendment, citing Albright

v. Oliver, 510 U.S. 266, 276-81 (1994). In that case, Albright

had brought a substantive due process claim charging

malicious prosecution by the detective who had initiated

criminal proceedings against him. The Court held that

Albright had not stated a claim, but suggested that he might

have been able to raise a claim of improper arrest under the

Fourth Amendment. See id, at 274-75 (plurality opinion); id.

at 281 (Kennedy, J., concurring); id. at 288-89 (Souter, J,,

concurring in.the judgment). Justice Ginsburg suggested in

dictum in her concurrence that pretrial deprivations of

liberty, such as the requirement to post bond, to attend court

proceedings, and limitations on travel might amount to a

seizure, implicating the Fourth Amendment. See id. at 276-

81. The two dissenting Justices seemed to agree. See id. at

307 (Stevens, J. and Blackmun, J., dissenting).

This circuit has never held that pretrial restrictions such

as those alleged by appellees constitute a Fourth Amendment

seizure. Appellees argue that the Third Circuit recognized

this theory in Gallo v. City of Philadelphia, 161 F.3d 217 (3d

Cir. 1998). They also cite to dicta in Murphy v. Lynn, 118

F.3d 938 (2nd Cir. 1997), cert. denied, 522 U.S. 1115 (1998)

for malicious prosecution, if it exists, must fall under the Fourth

Amendment...Plaintiff's Fifth Amendment claims must fail....Plaintiffs’

Fifth Amendments...claims against defendants Moore and the United

States are dismissed.” (4/14/97 Order at 10, 13). The appellees have not

now attempted to appeal that ruling. Although they cite a list of

procedural due process cases, they have not pointed to specific authority

which shows the district court erred.

7 They also rely on Gerstein v. Pugh, 420 U.S. 103, 111 (1975), which

held that an arrestee may be subjected to extended detention only after a

judicial determination of probable cause. Appellees were never jailed, and

Gerstein does not support their Fourth Amendment theory in this case.

A-16

~

(obligation to appear in court and curtailment of travel could

constitute a seizure). But see Britton v. Maloney, 196 F.3d 24,

28-30 (Ist Cir. 1999), cert. denied, 120 S.Ct. 2198 (2000). We

cannot say that the Albright dictum amounts to a statement

of clearly established law. Moreover, since Moore’s conduct

took place prior to the 1994 decision in Albright, it could not

have violated any clearly established constitutional right.

Moore is entitled to qualified immunity on this claim.

B.

Moore argues that he is also entitled to qualified

immunity on the claim that he violated appellees’ First

Amendment rights by initiating criminal proceedings against

them. Appellees claim his actions were in retaliation for their

belief that ATF should not have jurisdiction over their

business. The district court denied qualified immunity to

Moore on this claim with the comment that “defendants’

actions had effectively silenced plaintiffs, depriving them of

their right to freedom of speech and expression.” (4/14/97

Order at 11).

Prosecution in retaliation for the exercise of the right to

protest government policy is an impermissible intrusion

upon First Amendment rights, United States v. Catlett, 584

F.2d 864, 867 (8th Cir. 1978), but appellees cannot proceed

without a showing that Moore acted. with an improper

motive when he took steps that led to the prosecution against

them. See Crawford-El v. Britton, 523 U.S. 574, 600 (1998).

Moore asserts that appellees have not made such a showing.

To overcome Moore's defense of qualified immunity,

appellees must show that a material fact or question of law

precludes summary judgment. See Yellow Horse _ v.

Pennington County, 225 F.3d 923, 927 (8th Cir. 2000).

Because Moore’s motive is at issue, “the plaintiff[s] may not

respond simply with general attacks upon [Moore's]

credibility, but rather must identify affirmative evidence

from which a jury could find that the plaintiff[s have] carried

A-17

[their] burden of proving the pertinent motive.” Crawford-

_523 US. at 600. Appellees allege that during the March

20, 1992 inspection, Moore told Hoffman and Yuhas that he

wore a badge, carried a gun, and could arrest people; that

Ordnance received a threatening phone call from an

unidentified man after service of the complaint saying “be

real careful of what you ship”; that Moore believed that

Hoffman would object publicly to the ATF searches; that the

searches were simultaneous, unannounced, and involved 21

federal agents; and that only documents that made it appear

that Ordnance was involved in improper activities were

seized. Even taking all of appellees’ allegations as true, and

drawing all reasonable inferences in the light most favorable

to them, they do not show that Moore was motivated by

animus against them for their positions on governmental

regulation. We do not question that appellees themselves

hold a sincere belief that ATF targeted them because of their

opinion that they should be free of its regulation, but they

have not made the requisite showing that Moore’s conduct

was the result of an improper motive or in retaliation for

their beliefs in violation of the First Amendment. Moore is

entitled to qualified immunity on this claim.

Ill.

After considering the full record and the arguments the

parties raise on all of the various theories asserted in the

Bivens action against Moore, we conclude that appellees

have not made a showing that Moore violated any clearly

established constitutional right and that as a matter of law he

is entitled to qualified immunity. The order denying Moore’s

motion for summary judgment is reversed, and the case is

remanded for resolution of the remaining claims against the

United States.

A true copy.

A-18

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH

CIRCUIT.

A-19

UNITED STATES DISTRICT COURT

DISTRICT OF SOUTH DAKOTA

NORTHERN DIVISION

HRA IAEA ER

*

TECHNICAL ORDNANCE, INC. CIV 95-1039

and NORMAN H. HOFFMAN,

Plaintiffs,

ORDER

-VS-

UNITED STATES OF AMERICA; <

DOUGLAS MOORE, Special Agent, *

The Bureau of Alcohol, Tobacco, and *

Firearms (“ATF”), U.S. Department *

of the Treasury; and OTHER .

UNKNOWN ATF AGENTS ”

JOHN DOE 1, JOHN DOE 2, °

JOHN DOE 3, JOHN DOE 4, co

JOHN DOE 5, True Names Unknown, *

Defendants.

kkkkkkkkkkkh

Plaintiffs instituted this action pursuant to Bivens v. Six

Unknown Named Agents of the Federal Bureau of Narcotics,

403 U.S. 388 (1971), seeking redress for alleged violations of

plaintiffs’ constitutional rights arising out of the investigation

and prosecution of plaintiffs for unlawful manufacture,

distribution and storage of explosive materials, CR 93-10025.

Jury verdicts were rendered on February 18, 1994, acquitting

Technical Ordnance and Hoffman of all 36 counts of the

indictment in that case. Counts I and II of plaintiffs’

complaint allege that Agent Moore and the unknown agents

A-20

violated the Fourth and Fifth Amendments to the United

States Constitution and plaintiffs’ right to privacy by

conducting an unreasonable search and seizure in connection

with the investigation of those criminal charges. Count II,

which is limited to the unknown agents, also alleges they

failed to properly train and supervise the Special Agents.

Count III claims a cause of action under the Federal Tort

Claims Act for malicious Prosecution. Count IV alleges a

cause of action under the Federal Tort Claims Act for abuse

of process. Count V alleges a cause of action under the

Federal Tort Claims Act for infliction of emotional distress

upon plaintiff Hoffman.

Defendants United States and Agent Moore moved to

dismiss for failure to state a claim under the Fourth and Fifth

Amendments and on the basis of qualified immunity, Doc. 9.

While that motion was pending, plaintiffs filed an amended

complaint. Counts I, II, and III of the amended complaint

allege violations of plaintiffs’ First, Fourth, and Fifth

Amendment rights: Count IV alleges a conspiracy to deprive

plaintiffs of their civil rights in violation of 42 US.C. § 1985.

Count V alleges a claim under the Federal Tort Claims Act

for malicious prosecution. Count VI alleges a claim under

the Federal Tort Claims Act for abuse of process. Count VII

alleges a claim under the Federal Tort Claims Act for

infliction of emotional distress upon plaintiff Hoffman.

Count VIII seeks an injunction against the defendants to

prohibit the continuance of an alleged policy to “disrupt,

intimidate, harass, threaten, entrap, and otherwise attempt to

injure plaintiffs in violation of their rights to freedom of

speech and expression . . . and in violation of their rights to

be secure in their liberty and property ....”

The United States and Agent Moore filed a renewed

motion to dismiss the complaint and amended complaint,

Doc. 15. Following completion of briefing, plaintiffs, without

leave of court and in violation of local rule, filed a

supplemental memorandum. Defendants filed a motion to

strike this supplemental memorandum, Doc. 22. Also before

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the Court is the plaintiffs’ motion to toll the statute of

limitations with respect to the unknown defendants, Doc. 13.

INTRODUCTION

The district court must accept the allegations of the

amended complaint as true when considering a Rule 12(b)

motion to dismiss. Hafley v. Lohman, 90 F.3d 264, 266 (8th

Cir. 1996). Dismissal under Rule 12(b)(6) is appropriate only

when it appears beyond doubt that the plaintiffs can prove

no set of facts in support of their claim which would entitle

them to relief. Dover Elevator Co. v. Arkansas State

University, 64 F.3d 442, 445 (8th Cir. 1995).

In Bivens v. Six Unknown Named Agents of Fed. Bureau

of Narcotics, 403 U.S. 388, 392 91 S. Ct. 1999, 2002-03 29 L. Ed.

2d 619 (1971), the United States Supreme Court held that civil

damages suits could be maintained against federal officials

for constitutional violations. A Bivens action against federal

officials is almost identical to an action under 42 U.S.C. §

1983 against state officials. Christian v. Crawford, 907 F.2d

808, 810 (8th Cir. 1990). The two claims involve the same

analysis and therefore cases involving § 1983 are persuasive

in the Bivens context. See Waddell v. Forney, __ F.3d __ n. 2,

1997 W.L. 1029287 (8th Cir. 1997).

1. FOURTH AMENDMENT CLAIM

Deferularts Moore and the United States argue that

plaintiii Hoffman has no standing to assert a Fourth

Amenezment claim based upon a search of Technical

Ordnance’s facilities. The searches which are the subject of

the amended complaint were conducted at Technical

Ordnance’s facilities in St. Bonifacius, Minnesota, and Clear

Lake, South Dakota. The amended complaint avers that

Hoffman is president of Technical Ordnance. Hoffman owns

the buildings and facilities which were searched and leases

them to Technical Ordnance. Both plaintiffs have standing to

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assert a Fourth Amendment claim based upon their

ownership and control of the premises. United States v.

Gomez, 16 F.3d 254, 256 (8th Cir. 1994).

The Fourth Amendment to the United States

Constitution provides, in part, that “no Warrant shall issue,

but upon probable cause supported by Oath or

affirmation....” The Warrant Clause rests on the premise that

there will be a truthfulshowing. Franks v. Delaware, 438 US.

154, 164-165 (1978). “There is, of course, a presumption of

validity with respect to the affidavit supporting the search

warrant.” Franks v. Delaware, 438 US. at 171. In Franks v.

Delaware, petitioner sought to challenge, in connection with

his motion to suppress evidence prior to his rape trial, the

truthfulness of certain factual statements in the affidavit

supporting the search warrant for his apartment. The United

States Supreme Court held:

To mandate an evidentiary hearing, the challenger’s

attack must be more than conclusory and must be

supported by more than a mere desire to cross-

examine. There must be allegations of deliberate

falsehood or of reckless disregard for the truth, and

those allegations must be accompanied by an offer

of proof. They should point out specifically the

portion of the warrant affidavit that is claimed to be

false; and they should be accompanied by a

statement of supporting reasons. Affidavits or

sworn or otherwise reliable statements of witnesses

should be furnished, or their absence satisfactorily

explained. Allegations of negligence or innocent

mistake are insufficient. The deliberate falsity or

reckless disregard whose impeachment is permitted

today is only that of the affiant, not of any

nongovernmental informant. Finally, if these

requirements are met, and if, when material that is

the subject of the alleged falsity or reckless

disregard is set to one side, there remains sufficient

A-23

content in the warrant affidavit to support a finding

of probable cause, no hearing is required. On the

other hand, if the remaining content is insufficient,

the defendant is entitled, under the Fourth and

Fourteenth Amendments, to his hearing.

Franks v. Delaware, 438 U.S. at 171-172. This language was

recited in the context of the issue as to whether a criminal

defendantmay challenge the veracity of a sworn statement

made in an affidavit supporting the warrant; it thus set forth

the standard for obtaining an evidentiary hearing. Franks v.

Delaware, 438 U.S. at 155. The Franks standard “also defines

the scope of qualified immunity in civil rights actions.”

Branch v. Tunnell, 937 F.2d 1382, 1387 (9th Cir. 1991) (Branch

I) (quoting Rivera v. United States, 928 F.2d 592, 604 (2nd Cir.

1991)). The Franks standard of pleading applies to the issue

of qualified immunity in a civil Bivens action and in civil

rights actions. Hervey v. Estes, 65 F.3d 784, 788 (9th Cir.

1995).

The United States Court of Appeals for the Eighth

Circuit has held that, in a civil case, “a substantial

preliminary showing of dishonesty. is necessary to obtain

even an evidentiary hearing in an attempt to impeach a

warrant application which on its face reveals probable

cause.” Myers v. Morris, 810 F.2d 1447, 1457 (8th Cir. 1987).

“Mere unfounded and unsupported allegations that the

warrant was not based on probable cause, but rather upon

false statements, and deception are not sufficient to subject

officials to the cost and burdens of trial.” Id., quoting

Fullman_v. Graddick, 739 F.2d 553, 562 (11th Cir. 1984).

Branch I articulated a heightened pleading standard

which requires plaintiffs to satisfy three requirements:

“[P]laintiff's complaint must contain nonconclusory

allegations that the defendant knowingly included

false statements in the affidavit or did so with

reckless disregard. That is, he must

A-24

he oe

[1]. “point out specifically the portion of the

warrant affidavit that is claimed to be false”

and

[2]. allege some facts tending to show that the

defendant was aware or should have been

aware of the falsity of those statements [and]...

[3]. allege that the false statements were “necessary

to the finding of probable cause.”

Branch 1, 928 F.2d at 1387 (citations omitted); Branch v.

Tunnell, 14 F.3d 449, 454 (9th Cir. 1994) (Branch II).

Although plaintiffs must meet a heightened pleading

standard on their Fourth Amendment claim, the standard is a

low one. Branch I, 937 F.2d at 1387.

[The standard] serves the limited purpose of

enabling the district court to dismiss

“insubstantial” suits prior to discovery and

allowing the defendant to prepare an

appropriate response. It should be

distinguished from the standard at summary

judgment, where a plaintiff alleging judicial

deception “must make a substantial showing of

deliberate falsehood or reckless disregard for

truth” and “establish that, but for the

dishonesty, the challenged action would not

have occurred.”

Branch I, 937 F.2d at 1287-1388, quoting Snell v. Tunnell, 920

F.2d 673, 698 (10th Cir. 1990).

Plaintiffs have clearly met the Branch I heightened

pleading standard to survive a motion to dismiss. The

complaint and the amended complaint both set forth that

particular statements in the affidavit in support of the search

warrant were allegedly “knowingly and/or intentionally

false” and demonstrated the facts upon which they rely to

show Agent Moore knew the affidavits were false. Plaintiffs

A-25

further allege these false statements were necessary to

procure a judicial finding of probable cause to obtain a search

warrant.

“Government officials performing discretionary

functions are generally shielded from liability for civil

damages unless their conduct violates ‘clearly established

[federal] statutory or constitutional rights of which a

reasonable person would have known.” George v. City of

St. Louis, 26 F.3d 55, 57 (8th Cir. 1994), quoting Harlow v.

Fitzgerald, 457 U.S. 800, 818, 102 S. Ct. 2727, 2738, 73 L. Ed.

2d 396 (1982). An official is entitled to qualified immunity if

the court determines the “official's action was objectively

legally reasonable in light of the legal rules that were clearly

established at the time the action occurred.” George v. City

of St. Louis, 26 F.3d at 57. “In the context of a police officer

obtaining a warrant, immunity will be lost only where the

warrant application is so lacking in indicia of probable cause

as to render official belief in its existence unreasonable.” Id.

“If an officer submitted an affidavit that contained

statements he knew to be false or would have known were

false had he not recklessly disregarded the truth and no

accurate information sufficient to constitute probable cause

attended the false statements . . . he cannot be said to have

acted in an objectively reasonable manner.” Branch _ v.

Tunnell, 937 F.2d 1382, 1387 (9th Cir. 1991), quoting Olson v.

Tyler, 771 F.3d 277, 281 (7th Cir. 1985).

There is no question that the law in this regard is clearly

established. George v. City of St. Louis, 26 F.3d at 57. In

George, the issue before the Court was whether the

defendants’ actions in relying upon information from a

confidential informant to support a warrant application were

“objectively legally reasonable under the standard

established in [Malley v. Briggs, 475 U.S. 335, 344-345, 106 S.

Ct. 3034, 3038, 97 L. Ed.2d 271 (1986) (“In the context of a

police officer obtaining a warrant, immunity will be lost only

where the warrant application is so lacking in indicia of

probable cause as to render official belief in its existence

A-26

me nr nn een ee ee TT ee ee

unreasonable.”)].” George v. City of Louis, 26 F.3d at 57.

Here, defendants do not contend at this stage that the

statements in the warrant application were objectively

reasonable but instead jump to the heart of Franks and

contend that notwithstanding the challenged statements, the

remaining allegations are sufficient to establish probable

cause.

The United States Court of Appeals for the Eighth

Circuit has held that “qualified immunity is an affirmative

defense, “which will be upheld on a 12(b)(6) motion only

when the immunity is established on the face of the

complaint.” Hafley v. Lohman, 90 F.3d at 266 (quoting

Weaver v. Clarke, 45 F.3d 1253, 1255 (8th Cir. 1995)). The

evidence must be viewed in a light most favorable to the

nonmoving party. George v. City of St. Louis, 26 F.2d at 57.

The court is not required to treat a motion to dismiss as a

motion for summary judgment when it considers an exhibit

introduced as part of the motion attacking the complaint

where that exhibit is referred to in the plaintiffs’ complaint.

Sheppard v. Texas Department of Transportation, 158 F.R.D.

992, 595 (E.D. Tex. 1994). “When plaintiff fails to introduce a

pertinent document as part of his pleading, defendant may

introduce the exhibit as part of his motion attacking the

pleading.” Vizenor v. Babbitt, 927 F. Supp. 1193, 1198 (D.

Min. 1996). However, the exhibit must not only be referred

to by the complaint, “it must be integral and central to the

plaintiff[s’] claim.” Sheppard v. Texas De artment_ of

Transportation, 158 F.R.D. at 596. The basis of plaintiffs’

claims is that search warrants were illegally obtained which

resulted in a criminal prosecution, both of which violated

plaintiffs’ federal and state law rights. The amended

complaint quotes portions of the search warrants in support

of plaintiffs’ claims. Defendants attached copies of the search

warrants and probable cause affidavits to their brief in

support of their motion to dismiss. These matters are

Properly considered in determining whether plaintiffs’

complaint states a claim upon which relief may be granted

A-27

and whether defendant Moore is entitled to qualified

immunity.

The affidavit plaintiffs complain about was made by

ATF Special Agent Douglas C. Moore on October 19, 1992, in

support of a search warrant for the Clear Lake; South Dakota,

facility. The amended complaint does not make any

reference to the affidavit by Special Agent David Gottschalk

in support of a search warrant at the St. Bonifacius,

Minnesota, facility.

The affidavit alleges that plaintiffs were in violation of

18 U.S.C. § 1001 (which, in the context of this case, makes it a

crime, in any matter within the jurisdiction of the executive

branch of the United States government, to knowingly and

willfully falsify, conceal or cover up by any trick, scheme, or

device a material fact, or make any false, fictitious or

fraudulent statements or representations) and states that

Hoffman and Yuhas (a company employee) “stated that the

company was not engaged in any commercial sales or

transactions of explosives, specifically sales to foreign

customers or governments. Hoffman states that he was only

involved in U.S. Department of Defense government

contracts and therefore exempt from ATF jurisdiction and

record keeping.” The amended complaint claims that these

statements in the affidavit were intentionally made falsely

and that defendants admitted at plaintiffs’ criminal trial that

plaintiffs did tell defendants that Technical Ordnance was

involved in foreign military sales.

The clear implication of page three of the affidavit is that

Hoffman had falsely portrayed matters and that Hoffman

was claiming that his entire operation fell under the purview

of the DOD exemption.

The affidavit also alleges that plaintiffs were in violation

of 18 U.S.C. § 842(f) (referring to a licensee or permittee who

manufactures, imports, purchases, distributes, or receives

explosive materials which licensee or permittee fails to make

records) and states that “[o]n April 17, 1990, during an ATF

Compliance Inspection of Technical Ordnance, Inc. Clear

A-28

that plaintiffs did tell defendants that Technical Ordnance

was involved in foreign military sales.

Plaintiffs have met the heightened pleading standard set

forth in Franks. The Moore affidavit contains eight

typewritten pages of substantive statements. If the Court

were to delete from the affidavit each statement which the

plaintiffs claim is false and add to it the exculpatory

information plaintiffs claim was known by Agent Moore but

wrongly omitted, it is not clear that “there remains sufficient

content in the warrant affidavit to support a finding of

probable cause.” Franks, supra. Defendant Moore’s

qualified immunity defense is not sufficiently established at

this juncture.

Plaintiffs also claim that defendants suppressed

exculpatory evidence and that defendants’ actions amounted

to malicious prosecution in violation of plaintiffs’ Fourth

Amendment rights. The Supreme Court in Albright _v.

Oliver, infra, held that a malicious prosecution claim, if it

exists at all, is based upon the Fourth Amendment. The

Supreme Court did point out that “there is an embarrassing

diversity of judicial opinion” on the “extent to which a claim

of malicious prosecution is actionable under § 1983.”

Albright v. Oliver, 510 US. 266, 271, n. 4, 114 S. Ct. 807, 811,

127 L. Ed. 2d 114 (1994). Neither party has cited an Eighth

Circuit opinion on the availability of a Bivens action under

this theory.

The United States Court of Appeals for the Second

Circuit held that “[t}he Fourth Amendment right implicated

in a malicious prosecution action is the right to be free of

unreasonable seizure of the person—i.e., the right to be free of

A-29

unreasonable or unwarranted restraints on personal liberty.”

Singer v. Fulton County Sheriff, 63 F.3d 110, 116 (2nd Cir.

1995). “A plaintiff asserting a Fourth Amendment malicious

prosecution claim under § 1983 must therefore show some

deprivation of liberty consistent with the concept of

‘seizure.’” Id; Whiting v. Taylor, 85 F.3d 581, 584 (11th Cir.

1996). “In respect of pleading, Albright requires nothing

more.” Singer v. Fulton County Sheriff, 63 F.3d at 116.

Plaintiffs’ amended complaint satisfies this requirement.

Defendant Moore has not presented a sufficient claim for

qualified immunity as it relates to allegations concerning his

conduct after execution of the search warrants.

Plaintiffs claim the ATF unlawfully expanded the search

to items not described in the affidavits. Generally, when a

search is conducted pursuant to a warrant, only those items

described in the warrant may be seized. United States v.

Robbins, 21 F.3d 297, 300 (8th Cir. 1994). The amended

complaint alleges that the ATF agents searched record-

keeping files which did not contain any evidence of illegal

activity and which were not the type of records targeted by

the search warrant. The search warrants allowed the search

of:

Books, records, receipts, invoices, notes, contracts,

ledgers and other papers relating to the

transportation, ordering, purchasing, sale, transfer,

export, and manufacture of explosive materials,

explosive devices, explosive activated tools or

devices and military explosive devices, detonators,

fuses, etc.”

Plaintiffs allege the search was unlawfully expanded in that

the following items were seized:

(i) Transactions that occurred prior to the time that

Technical Ordnance acquired its ATF license in

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1989, for which all applicable statutes of limitation

had expired;

(ii) Transactions that involved third-party brokers or

other entities that did not themselves have an ATF

license; and

(iii) Transactions that involved incomplete records

or records containing typographical errors.

None of the above items are, on their face, outside the scope

of the language of the warrants. A reasonable officer could

have believed that the search as conducted was authorized

by the warrants and therefore defendant Moore is entitled to

qualified immunity on this claim.

2. FIFTH AMENDMENT CLAIMS

Plaintiffs claim generally that all the actions set forth in

their complaint violate their Fifth Amendment rights. The

allegations with respect to search and seizure must be

maintained under the Fourth Amendment and not the more

general Fifth Amendment. Albright v. Oliver, 510 U.S. 266,

274, 114 S. Ct. 807, 813, 127 L. Ed. 2d 114 (1994). Plaintiffs

claim the allegations of malicious prosecution and

Suppression of exculpatory evidence violate their Fifth

Amendment Rights. They cite cases which have held that

entrapment, suppression of evidence and other outrageous

conduct violates the Fifth Amendment's substantive due

process protection. However, those cases concern the

consequences of those actions in the context of a criminal

prosecution and do not provide the basis for a civil action.

Not every infringement of an interest protected at

common law rises to a deprivation of a constitutionally

protected liberty interest. Albright v. Oliver, 975 F.2d 343,

346 (7th Cir. 1992), aff'd 510 U.S. 266, 114 S. Ct. 807, 127 L. Ed.

2d (1994). “Being the object of a criminal investigation,

whether rightly or wrongly, is just one of the burdens to

which every citizen is exposed.” Kaylor v. Fields, 661 F.2d

A-3i

_ Se

1177, 1181 (8th Cir. 1981). The United States Supreme Court

held in Albright v. Oliver that a claim for malicious

prosecution, if it exists, must fall under the Fourth

Amendment. Albright v. Oliver, 510 U.S. at 266, 114 S. Ct. at

807. Plaintiffs’ Fifth Amendment claims must fail.

3. FIRST AMENDMENT CLAIMS

Plaintiffs claim that the wrongful conduct described in

their complaint was perpetrated against them because of

their political or philosophical beliefs and was therefore in

violation of their first amendment rights. The United States

Court of Appeals for the Ninth Circuit has held that the

victim of governmental action “designed to retaliate against

and chill political expression” is entitled to sue the

responsible officers. Mendocino Environmental Center _v.

Mendocino County, 14 F.3d 457, 464 (9th Cir. 1994).

A plaintiff “may not recover merely on the basis of a

speculative ‘chill’ due to generalized and legitimate

law enforcement initiatives.” However, where a

plaintiff “alleges discrete acts of police surveillance

and intimidation directed solely at silencing” her or

him, a civil rights claim will lie. The defendant's

intent is an element of the claim.

Mendocino, 14 F.3d at 464 (quoting Gibson v. United States,

781 F.2d 1334, 1338 (9th Cir. 1986). The heightened standard

of Branch II applies with respect to the allegations of intent,

id. requiring plaintiffs to “state in their complaint

nonconclusory allegations setting forth evidence of unlawful

intent.” Mendocino, 14 F.3d at 461.

Plaintiffs allege in the amended complaint that their

philosophical view that private enterprises are unduly

burdened with excessive and duplicative regulation by

multiple government agencies with no apparent jurisdiction

over the activities of plaintiff Technical Ordnance was a

A-32

substantial factor leading up to the “intimidation,

harassment, indictments, and seizures of the persons of

plaintiffs,” and that defendants’ actions effectively silenced

plaintiffs, depriving them of their right to freedom of speech

and expression. Plaintiffs have met the burden of pleading

their First Amendment claim as required by Mendocino.

4. CONSPIRACY

Plaintiffs claim defendants conspired to deprive them of

“the equal protection of the laws, their clearly established

Constitutional rights to be free to express themselves, to be

free from unreasonable seizures of their persons and to be

free from denial of liberty and property without due process

of law as guaranteed by the First, Fourth and Fifth

Amendments, and to deny them of their rights to a fair trial

by jury under the Sixth Amendment to the United States

Constitution.” Plaintiffs claim defendants therefore violated

42 U.S.C. § 1985. In order to state a cause of action under 42

U.S.C. § 1985, plaintiffs “must allege some class-based

discriminatory motive on the part of the conspirators.”

Kaylor v. Fields, 661 F.2d at 1184. Plaintiffs have failed to so

allege and this claim must therefore be dismissed.

5. FEDERAL TORT CLAIMS: MALICIOUS

PROSECUTION, ABUSE OF PROCESS, INFLICTION

OF EMOTIONAL DISTRESS

Plaintiffs allege common law tort actions which they

seek to bring under the Federal Tort Claims Act. “Where the

United States authorizes suit under the FT CA, its liability is

determined by the law of the place where the act or omission

occurred to the same extent as a private defendant.”

Donham v. United State, 536 F.2d 756, 769 (8th Cir. 1976).

In order to sustain an action under South Dakota law for

malicious prosecution, plaintiffs must allege:

on

1. the commencement or continuance of an original

criminal or civil judicial proceeding;

2. its legal causation by the present defendant against

plaintiff, who was defendant in the original

proceeding;

3. its bona fide termination in favor of the present

plaintiff;

4. the absence of probable cause for such proceeding;

5. the presence of malice; and

6. damages conforming to legal standards resulting to

plaintiff.

Meissner v. All Dakota Ins. Assoc., Inc., 515 N.W.2d 198, 200

(S.D. 1994). Plaintiffs have sufficiently alleged each of these

elements in their amended complaint. Defendant Moore has

not asserted he is entitled to absolute prosecutorial

immunity. He is not shielded by qualified immunity as to

this claim on the record before the Court.

In order to sustain an action under South Dakota law for

abuse of process, the plaintiffs must allege the improper use

of process after it has been issued. Meissner v. All Dakota

Inc. Assoc., Inc., 515 N.W.2d at 205. Plaintiffs’ amended

complaint contains allegations that defendant Moore

procured indictments against plaintiffs in bad faith and for a

purpose of harassing, retaliating, and interfering with

plaintiffs’ First Amendment and other rights. However,

there is no allegation that once indictments were procured,

the criminal prosecutions were pursued for some purpose

other than for which they were intended.

Abuse of process differs from malicious prosecution

in that the gist of the tort is not commencing an

action or causing process to issue without

justification, but misusing, or misapplying process

justified in itself for an end other than that which it

was designed to accomplish. The purpose for which

the process is used, once it is issued, is the only

thing of importance.

A-34

Meissner v. All Dakota Inc. Assoc. Inc. 515 N.W.2d at 205,

quoting Keeton, Pr and Keeton on the Law of Torts §

121, at 897. Plaintiffs have failed to state a claim for abuse of

process.

In order to sustain an action under South Dakota law for

ction of emotional distress, plaintiff Hoffman must

allege:

1. an act by defendant amounting to extreme and

outrageous conduct;

2. intent’on the part of the defendant to cause plaintiff

severe emotional distress (intentional infliction of

emotional distress) or reckless conduct which constitutes

a deliberate disregard of a high degree of probability

that emotional distress will follow (negligent infliction of

emotional distress;

3. the defendant's conduct was the cause in fact of

plaintiff's injuries; and

4. the plaintiff suffered an extreme disabling emotional

response to defendant's conduct.

Nelson v. Web Water Dev. Assoc., Inc. 507 N.W.2d 691, 698

(S.D. 1993); Kjerstad v. Ravellette Publications, Inc., 517

N.W.2d 419, 428-429 (S.D. 1994). Hoffman alleges in the

amended complaint that defendants intentionally and with

malice engaged in outrageous conduct which caused him to

suffer extreme emotional distress and physical illness. The

amended complaint is marginally sufficient, giving plaintiff

Hoffman the benefit of all reasonable inferences.

6. TOLLING THE STATUTE OF LIMIT ATIONS

Plaintiffs, in | 5 of their amended complaint, Doc. 13,

seek an order tolling all applicable statutes of limitation as to

the unknown defendants. Plaintiffs have failed, in violation

of local rule, to cite any authority in support of this motion.

Whether an amendment of a pleading relates back to the date

of the original pleading is governed by Fed. R. Civ. P. 15(c).

—_

A-35

This matter is more properly considered at the time, if any,

that a motion to add parties or to amend is filed. The motion

is premature, would call for an advisory opinion and should

be denied.

ORDER

Now, therefore,

IT IS ORDERED:

(1) Defendants’ motion to dismiss, Doc. 9, and renewed

motion to dismiss, Doc. 15, are granted in part. Plaintiffs’

Fifth Amendment, Conspiracy, and abuse of process claims

against defendants Moore and the United States are

dismissed. Defendants are entitled to qualified immunity on

plaintiffs’ Fourth Amendment claim that the search was

unlawfully expanded beyond the warrant.

(2) Defendants’ motion to strike, Doc. 22, is granted.

(3) Plaintiffs’ motion to toll the statute of limitations,

Doc. 13, is denied.

Dated this 14th day of April, 1997.

BY THE COURT:

Ls/

CHARLES B. KORNMANN

US. District Judge

ATTEST:

JOSEPH HAAS, Clerk

BY: s/ Vicky Leinhaul

DEPUTY

(Seal)

A-36

UNITED STATES DISTRICT COURT

DISTRICT OF SOUTH DAKOTA

SELENE REE RRKEREREREREKRK IRR KK A I A Abba

TECHNICAL ORDNANCE, INC.

and NORMAN H. HOFFMAN,

CIV 95-1039

Plaintiffs,

ORDER

-VS-

UNITED STATES OF AMERICA;

DOUGLAS MOORE, Special Agent,

The Bureau of Alcohol, Tobacco, and

Firearms (“ATF”), U.S. Department

of the Treasury; and OTHER

UNKNOWN ATF AGENTS

JOHN DOE 1, JOHN DOE 2,

JOHN DOE 3, JOHN DOE 4,

JOHN DOE 5, True Names Unknown,

Defendants.

* * #@© *#© © &@ 8&8 #& # + + + + + * © & & + *

Defendant Moore (“Moore”) has moved the Court,

purportedly pursuant to Rule 59%e) of the Federal Rules of

Civil Procedure, to reconsider the Order (Doc. # 28 ) dated

April 14, 1997. The Court will decide the motion without

further oral argument.

Moore claims the Court erred in failing to rule as to

whether his search warrant affidavit, excluding the alleged

deliberate falsehoods, would still have supported a finding

of probable cause, thus granting him qualified immunity. He

represents to the Court that this is the law in the Eighth

A-37

Circuit, namely that this examination should be conducted in

a deliberate falsehood case, and cites Bagby v. Brondhaver,

98 F.3d 1096 (8th Cir. 1996). This is a clear misrepresentation

and counsel for Moore should submit an explanation in

writing to the Court as to this. Bagby “does not involve a

deliberate falsehood claim.” Id. at 1099. No one could

misread or misinterpret the concise language of the_Bagby

opinion. “We express no view as to whether a defendant

whose affidavit contained a deliberate falsehood should be

entitled to qualified immunity if a corrected affidavit would

still provide probable cause. A more stringent rule may be

appropriate when a liar seeks the benefit of this defense.” Id.

at 1099, n2. Not only does Bagby not stand for the

proposition claimed by Moore; it stands for the opposite, at

least by implication. This Court does express the view and

so holds that an affidavit containing deliberate falsehoods is

not entitled to qualified immunity. A more stringent rule is

appropriate when a claimed liar seeks the benefit of this

defense. This is especially appropriate when the falsehoods

are alleged to be material. As claimed in this case, they are

material.

Counsel for Moore continue to appear not to understand

the differences and the implications thereof when

considering a motion attacking a complaint as distinguished

from a motion for summary judgment.

Moore claims on page 7 of his memorandum that the

Court refused to dismiss the malicious prosecution claim

based on the Fourth Amendment, claiming that the Court

erroneously relied upon a 1995 decision, Singer v. Fulton

County Sheriff, 63 F. 3d 110 (2nd Cir. 1995), a case that was

decided a short time before the Technical Ordnance trial

began. Moore argues that it -was not earlier objectively

unreasonable to make intentionally false statements to obtain

a search warrant. This is an argument devoid of any merit.

Many cases are cited in the earlier Order to the effect that the

law was clearly established long before Moore’s actions.

Important liberty interests are implicated by the alleged

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actions of Moore. Again, we are dealing with allegations in a

pleading and nothing more. The law in South Dakota was

clearly established as to what the implications are as to

malicious prosecution. The primary discussion of the

malicious prosecution cause of action is found at pages 11

and 12 of the Court's earlier Order, this claim arising under

the Federal Tort Claims Act. The absence of probable cause

is one of the elements which must be established by the

plaintiffs in connection with such cause of action. In that

sense, the Fourth Amendment tests would be applicable.

Moore makes much ado about little since plaintiffs clearly

State a cause of action for malicious prosecution, whether

under the Fourth Amendment or the Federal Tort Claims Act

applying South Dakota law.

Moore alleges that the allegations in the complaint are

conclusory. They are anything but conclusory.

In addition to denying the motion on the merits, the

Court will deny the motion to reconsider because it is

procedurally improper. The Federal Rules of Civil Procedure

do not allow a “motion to reconsider.” Humphreys v. Roche

Biomedical Laboratories, Inc., 990 F.2d 1078, 1081 (8th Cir.

1993); and In re Trout, 984 F.2d 977, 978 (8th Cir. 1993)

(warning counsel that the Federal Rules of Civil Procedure

do not provide for a motion for reconsideration and directing

counsel to properly designate a motion under the rule

authorizing the motion). It is clear that Moore has failed to

foliow existing law in this Circuit.

Counsel for Moore designated the motion as being made

pursuant to Fed. R. Civ. P. 59(e). In his brief, Moore does not

explain how this rule would allow the Court to grant the

relief that Moore seeks in his motion. A trial was not

conducted in this case and, therefore, Rule 59%e) is not

applicable to this case. Reconsideration of a judgment

following its entry “is an extraordinary remedy which

should be used sparingly.” 11 Wright, Miller & Kane, Federal

Practice and Procedure: Civil 2d § 2810.1, at 124 (1995). A

motion pursuant to Rule 59(e) may be granted upon four

A-39

basic grounds: (1) to correct manifest errors of law or fact, (2)

newly discovered evidence, (3) to prevent manifest injustice,

and (4) an intervening change in controlling law. Id. at 124-

27. In addition, a motion made pursuant to Rule 59(e) is not

to be used to relitigate matters already considered and

decided by the court._Id. at 127. Moore’s motion to

reconsider does not meet any of these grounds. Rather,

Moore reasserts the same arguments he advanced to the

Court when the Court was considering the original motion.

The defendant is simply asking the Court to review and

reverse its prior decision. Rule 59(e) is not to be used for

such purposes. If this practice is permitted, litigation will

never end. The next step will be_to file a motion to

reconsider a reconsideration, ad infinitum.

ORDER

Now, therefore,

IT IS ORDERED that defendant Moore’s motion for

reconsideration, Doc. 29, is denied on the merits and because

‘of procedural violations.

Dated this 16th day of May, 1997.

BY THE COURT:

/s/

CHARLES B. KORNMANN

US. District Judge

ATTEST:

JOSEPH HAAS, Clerk

BY: s/ Kristin A. Bucky

DEPUTY

(Seal)

A-40

UNITED STATES DISTRICT COURT

DISTRICT OF SOUTH DAKOTA

NORTHERN DIVISION

Taek ikih cite cet itkcek

TECHNICAL ORDNANCE, INC.

and NORMAN H. HOFFMAN,

CIV 95-1039

Plaintiffs,

ORDER

-VS-

UNITED STATES OF AMERICA;

DOUGLAS MOORE, Special Agent,

The Bureau of Alcohol, Tobacco, and

Firearms (“ATF”), U.S. Department

of the Treasury; and OTHER

UNKNOWN ATF AGENTS

JOHN DOE 1, JOHN DOE 2,

JOHN DOE 3, JOHN DOE 4,

JOHN DOE‘5, True Names Unknown,

Defendants.

+ + + #* * © &@ © + + + *+ * &© #8 B »& * *

BACKGROUND

Technical Ordnance, Inc. (“Technical Ordnance”) and

Norman Hoffman (“Hoffman”), its stockholder-owner and

president, instituted this action pursuant to Bivens v. Six

Unknown Named Agents of the Federal Bureau of Narcotics,

403 U.S. 388 (1971), seeking redress for alleged violations of

plaintiffs’ constitutional rights arising out of the application

for and execution of a search warrant and the subsequent

criminal prosecution of plaintiffs for the unlawful

A-41

manufacture, distribution and storage of explosive materials,

CR 93-10025. Jury verdicts were rendered on February 18,

1994, acquitting Technical Ordnance and Hoffman of all 36

counts of the indictment in that case. The jury members

unanimously, in conjunction with their verdicts, sent a

written statement to the judge, expressing their opinions that

these prosecutions should never have been brought.

Counts I, II, and III of the amended complaint allege

violations of plaintiffs’ First, Fourth, and Fifth Amendment

rights. Count IV alleges a conspiracy to deprive plaintiffs of

their civil rights in violation of 42 U.S.C. § 1985. Count V

alleges a claim under the Federal Tort Claims Act for

malicious prosecution. Count VI alleges a claim under the

Federal Tort Claims Act for abuse of process, Count VII

alleges a claim under the Federal Tort Claims Act for

infliction of emotional distress upon Hoffman. Count VIII

seeks an injunction against the defendants to prohibit the

continuance of an alleged policy to “disrupt, intimidate,

harass, threaten, entrap, and otherwise attempt to injure

plaintiffs in violation of their rights-to freedom of speech and

expression . . . and in violation of their rights to be secure in

their liberty and property...

Defendants United States and “or Moore (“Moore”)

moved to dismiss for failure to state a claim under the Fourth

and Fifth Amendments and on the basis of qualified

immunity. That motion was granted in part, dismissing

plaintiffs’ Fifth Amendment conspiracy and abuse of process

claims against Moore and the United States. The defendants

were also granted qualified immunity on plaintiffs’ Fourth

Amendment claim that the search was unlawfully expanded

beyond the warrant. This Court characterized the malicious

prosecution claim as arising under the Fourth Amendment

and allowed the claim to proceed.

Defendants have now filed a motion for summary

judgment, claiming there is no genuine issue of material fact

as to whether the search warrant was supported by probable

cause and again interposing the defense of official immunity.

A-42

Left to be decided in the defendant's motion for summary

judgment are the Fourth Amendment violations asserting

prosecution of plaintiffs not supported by probable cause.

Within the Fourth Amendment claim is also the malicious

Prosecution claim. Also at issue is the assertion of First

Amendment violations by Moore, alleging that Moore took

actions in retaliation for plaintiffs’ expression of opposition

to the jurisdiction of the Bureau of Alcohol, Tobacco and

Firearms (“ATF”).

FACTS

In evaluating a motion for summary judgment, the

Court must view the evidence in the light most favorable to

the nonmoving party and accept as true the nonmoving

party's account of the facts where there are material

inconsistencies. Guite v. Wright, 147 F.3d 747, 749 (8th Cir.

1998). With that in mind, the Court finds the following facts.

Technical Ordnance is a Minnesota corporation with

manufacturing facilities in St. Bonifacius, Minnesota, as well

as in Clear Lake, South Dakota. Technical Ordnance

manufactures propellant actuated devices (“PADs”)! and

explosive devices. It sells these products to the United States

Title 18, Chapter 40, 18 U.S.C. §§ 841-848, regulates the

importation, manufacture, distribution and storage of

explosive materials. Section 847 Provides authority to

promulgate rules to carry out the Provisions of Chapter 40.

' Any tool or special mechanized device or gas generator system

which is actuated by a propellant or which releases and directs work

through a propellant charge. 27 C.F.R. 55.11.

A-43

The Secretary has delegated rule-making authority under

Section 847 to the ATF. Pursuant to § 842(f), licensees must

maintain certain records as required by the Secretary of the

‘Treasury. The specific record keeping requirements are

promulgated in 27 C.F.R. § 55.121 et seq. 18 U.S.C. § 843(f)

requires licensees to submit to inspection of their records and

their storage facilities. Section 845 sets forth various

exceptions to the license and inspection requirements.

Specific exemptions are contained in 27 C.F.R § 55.141,

which exempts from the record keeping requirements, “[t]he

manufacture under the regulation of the military department

of the United States of explosive materials for, or their

distribution to or storage or possession by, the military or

naval services or other agencies of the United States.” 27

C.F.R. § 55.141(5). The ATF takes the position that sales to

the United States Department of Defense (“DoD”) and sales

to foreign governments through the DoD, referred to by the

ATF as “foreign military sales,” do not fall within the

purview of the license and record keeping requirements of

Chapter 40, but that direct sales to foreign governments or

foreign entities, which the ATF calls “commercial sales,” are

not exempt. The ATF further contends that, notwithstanding

the record keeping exemption, only agencies of the United

States are exempt from the inspection of storage facilities.

The Court found no case interpreting the ATF’s regulations

regarding exemptions and record keeping. Construction of a

statute or regulation by the agency charged with

administration thereof is not to be overruled except for

weighty reasons. Doe v. Department of Transp., 412 F.2d 674,

678 (8th Cir. 1969).

Hoffman and Technical Ordnance disagreed with the

ATF’s legal position that certain so-called foreign military

sales fell within the ATF’s jurisdiction. In plaintiffs’ view,

foreign military sales are not within ATF jurisdiction.

Plaintiffs define foreign military sales as sales to foreign

governments or foreign countries, whether sold directly,

through the DoD, or through the U.S. Department of State.

A-44

They took and continue to take the legal position that sales to

foreign governments or to foreign companies, whether or not

contracted through the DoD, do not constitute “commercial

sales” and are therefore exempt from ATF jurisdiction. For

the purposes of this motion, the court finds that the ATF

knew exactly how plaintiffs defined foreign military sales

and commercial sales.

Throughout the course of Technical Ordnance’s

business, it has had frequent contacts with the ATF. The

record includes a February 14, 1989, Technical Ordnance

letter to the ATF. That letter sets forth their (Technical

Ordnance and the ATF) apparent common understanding

that Technical Ordnance does need an ATF license to

manufacture explosive materials that are not manufactured

pursuant to a United States government contract and does

need an ATF license to manufacture and ship explosives for

foreign military sales. Hoffman contends in his declaration

that the ATF informed T. ical Ordnance that all foreign

military sales involving PADs did not require an ATF license.

He cites the February 14, 1989, letter in support of that

contention. That letter, however, is devoid of any mention of

PADs. Despite Hoffman’s disagreement with the ATF, at the

insistence of the ATF, Technical Ordnance obtained an ATF

license in 1989,

A compliance inspection was conducted on April 17,

1990, at the Clear Lake facility. During that inspection, John

Yuhas, Technical Ordnance’s then vice president, told the

ATF inspector that all devices manufactured at the Clear

Lake facility are transferred under contract to the DoD and

that no devices manufactured at the Clear Lake facility are

transferred to any non-governmental or foreign military

concern. During that inspection, Hoffman claimed that

Technical Ordnance was exempt from ATF jurisdiction

concerning the storage of explosives because all its business

was on contract through the DoD. The inspector advised

Hoffman that the exemption under 18 U.S.C. § 845 did not

apply to Technical Ordnance and that, under 18 U.S.C. §

A-45

843(f}, Technical Ordnance was required to submit to

inspection of its storage facilities. Some storage violations

were noted.

On May 17, 1990. based upon representations from

Technical Ordnance that all explosive devices manufactured

at the Clear Lake facility were manufactured under contract

with the DoD, the ATF determined that all explosive devices

manufactured at that facility were exempt from ATF record

keeping requirements.

On July 25, 1990, Yuhas wrote to the ATF inspector and

again reiterated that all Technical Ordnance’s contracts “are

U.S. Government” and stated that Technical Ordnance does

not conduct commercial sales but does conduct foreign

military sales. On August 7, 1990, the ATF again advised

Yuhas that the exemption in 18 U.S.C. § 845 does not apply to

Technical Ordnance, even if it is storing only DoD contracted

explosives.

On March 20, 1992, Moore and an ATF inspector, agent

Kratochvil, inspected Technical Ordnance’s facility at Clear

Lake, South Dakota. The ATF was investigating three

accidental explosions that had occurred there on January 16,

20, and 21, 1992, resulting in injuries to Technical Ordnance

employees. According to Moore’s affidavit in support of the

search warrant, Technical Ordnance reported these

explosions to the Defense Contracts Management

Administration Office (DCMAO) Safety Officer on January

22, 1992, although according to the DCMAO they should

have been reported within three hours of the explosion.

None of these accidental explosions were reported by

Technical Ordnance to the ATF. Moore was told that

Technical Ordnance had contacted an ATF inspector and was

told that because of the DoD exemption, no report to the ATF

was necessary.

The purpose of the March 20, 1992, inspection also

included a follow-up compliance inspection. One of

Technical Ordnance’s bunkers contained materials that had

been part of a DoD Classified Program involving

A-46

components of the sidewinder missile. The bunker which

contained missile components was sealed with a DoD sticker

Kratochvil.

Agents Moore and Kratochvil asked Hoffman whether

Technical Ordnance engaged in commercial activity.

Commercial activity, as defined by the defendants, includes

sales directly to foreign governments, ie. not contracted

through the DoD. Commercial activity as so defined,

according to ATF, is not exempt from ATF jurisdiction and

ATF record keeping requirements. Hoffman told the agents

that Technical Ordnance engages in DoD contracts and

foreign military sales, but that Technical Ordnance, based

upon a Technical Ordnance computer printout, currently was

working on only DoD contracts at the Clear Lake facility.

Hoffman apparently was referring to jobs being worked on at

the Clear Lake facility that day.

Based upon Moore’s testimony at plaintiffs’ criminal

trial, Moore knew that plaintiffs defined sales to a foreign

government or a foreign company with a Department of

State export license “as foreign military sales, although the

ATF would define those transactions as commercial sales.

The ATF defines foreign military sales (exempt from ATF

record keeping requirements) as limited to sales to foreign

governments through tire DoD.

The compliance inspection was apparently completed on

March 20, 1992, with the exception of the bunker marked

Kratochvil that the records of all DoD contracts and foreign

military sales were kept at the St. Bonifacius facility. It is a

curious fact that no inspection was made or even attempted

by ATF of these records. With the knowledge that the records

A-47

were in Minnesota, Moore sought a search warrant for

records at Clear Lake as well as for the St. Bonifacius facility.

Moore subsequently conducted an investigation which

showed that as of March 24, 1992, Technical Ordnance had a

minimum of DoD contract work and that the majority of its

business involved foreign and commercial sales, as defined

by ATF. Agent Moore also learned that the DoD classified

program in which Technical Ordnance had been involved

had terminated in December, 1991. Moore knew that

Technical Ordnance was involved in what ATF called

“commercial sales” to foreign countries, after having

obtained Department of State export licenses for those sales.

Moore concluded that these sales were not exempt foreign

military sales and were subject to ATF jurisdiction. Moore

received information that Technical Ordnance had exported

over $7,000,000 in shipments to twelve different foreign

countries between February 20, 1992, and March 4, 1992.

Technical Ordnance had obtained export permits from the

Department of State, and ATF claims that such permits

would not have been required if the sales were “foreign

military sales” exempt from ATF jurisdiction.

i On or about October 20, 1992, the ATF obtained search

warrants for the premises of Technical Ordnance located in

St. Bonifacius, Minnesota, and Clear Lake, South Dakota.

Only the Clear Lake affidavit is challenged here, although the

affidavit in support of the application for the St. Bonifacius

search warrant was substantially similar to the affidavit

challenged here. The affidavit in support of the search

warrant claimed that violations of 18 U.S.C. § 1001 (false

statements) had occurred because, according to Moore,

Hoffman had “stated that the company was not engaged in

any commercial sales or transactions of explosives,

specifically sales to foreign customers or governments.

Hoffman stated that he was only involved in US.

Department of Defense government contracts and therefore

exempt from ATF jurisdiction and record keeping” while

U.S. Customs Service and U.S. State Department documents

SPONSE MALT TARDY ASTER EA RY REE ARAN ORES AAGERO ER

ARS DETER Hey

A-48

ante

showed commercial exports by Technical Ordnance from

January 19, 1983 through June 3, 1992. The affidavit also

claimed that violations of 18 U.S.C. § 842(f) (failure to

maintain records) had occurred. This last statement is a

statement with no foundation, given the fact that Moore and

ATF had apparently not gone to Minnesota to attempt to see

what records Technical Ordnance had. For all they knew, all

the records were in Minnesota and sufficient to satisfy the

requirements of any federal agency. Moore knew he could

not truthfully make such a statement. None of this was

disclosed to the Magistrate. Moore based his allegation on

his claim that “Hoffman stated he was only involved in U.S.

Department of Defense government contracts and therefore

exempt from ATF jurisdiction and record keeping” and that

based upon commercial export records, Technical Ordnance

was “making false statements and claiming an exemption for

all activities relating to the manufacture and sale of explosive

materials; either no records are being maintained for the

commercial transactions, which are required by law and fall

within the regulation and jurisdiction of ATF, or false records

are being maintained to conceal the activity and give the

appearance that the transactions are exempted undef

government contract obligations.”

Plaintiffs claim that their Fourth Amendment rights

were violated because agent. Moore falsely stated in the

affidavit that Hoffman claimed to engage in only DoD

contracts when in fact Hoffman told Moore that Technical

Ordnance also engages in foreign military sales with the

Technical Ordnance definition of such phrase which

definition was known to Moore and to ATF. Plaintiffs claim

their First Amendment rights were violated when Moore and

the ATF obtained and executed an invalid search warrant

and prosecuted plaintiffs in retaliation for plaintiffs’

expression of opposition to the jurisdiction and regulation by

the ATF. Defendants assert that the warrant application was

supported by probable cause and even if it was not, Moore is

entitled to qualified immunity.

A-49

DECISION

Plaintiffs instituted this action pursuant to Bivens v. Six

Unknown Named Agents of Fed. Bureau of Narcotics, supra.

In Bivens, the United States Supreme Court held that civil

damages suits could be maintained against federal officials

for constitutional violations. Bivens, 403 U.S. at 392, 91 S.Ct.

at 2002-03. A Bivens action against federal officials is almost

identical to an action under 42 U.S.C. § 1983 against state

officials. Christian v. Crawford, 907 F.2d 808, 810 (8% Cir.

1990). The two claims involve the same analysis and

therefore cases involving § 1983 are persuasive in the Bivens

context. See Waddell v. Forney, 108 F.3d 889, 890 n. 2 (8th

Cir. 1997). The Court must grant a motion for summary

judgment if there are no genuine issues of material fact for

trial and if the moving party is entitled to judgment as a

matter of law. Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett,

477 US. 317, 322, 106 S. Ct. 2548, 2552, 91 L. Ed. 2d 265(1986).

The United States Supreme Court has held that:

The plain language of Rule 56(c) mandates the entry

of summary judgment. . against a party who fails to

make a showing sufficient to establish the existence

of an element essential to that party’s case, and on

which that party will bear the burden of proof at

trial. In such a situation, there can be “no genuine

issue as to any material fact,” since a complete

failure of proof concerning an essential element of

the non-moving party’s case necessarily renders all

other facts immaterial. a

Celotex Corp. v. Catrett, 477 U.S. 317, 322-323, 106 S. Ct. 2548,

2552 (1986). The party asking for summary judgment

“always bears the initial responsibility of informing the

district court of the basis for its motion, and identifying those

portions of the ‘pleadings, depositions, answers to

A-50

interrogatories, and admissions on file, together with the

affidavits, if any,’ which it believes demonstrate the absence

of a genuine issue of material fact” Id. at 323, 106 S. Ct. at

2552. “A material fact dispute is genuine if the evidence is

sufficient to allow a reasonable jury to return a verdict for the

non-moving party.” Landon v. Northwest Airlines, Inc., 72

F.3d 620, 634 (8th Cir. 1995). If the non-movant's response

consists of nothing more than conclusory allegations, the

court must enter summary judgment for the movant.

Peppers v. Coates, 887 F.2d 1493, 1498 (11% Cir. 1989).

Plaintiffs contend that the defendants’ failure to set forth

a Statement of Material Facts as required by D.S.D. LR 56.1

Should result in denial of their motion for summary

judgment. The Court takes a dim view of counsel's failure to

follow clearly established procedural rules. Nonetheless, in

light of defendant's apology to the Court and the fact that the

declaration in support of the motion separately sets forth the

facts, the motion will be considered,

Plaintiffs also contend that they cannot defend the

motion for summary judgment due to the lack of discovery

conducted herein. They therefore seek, pursuant to Fed. R.

Civ. P. 56(f), to have the motion denied and a scheduling

order entered. The primary purpose of summary judgment

on the grounds of qualified immunity is “to protect

governmental officials from both the burdens of trial and

discovery.” Lovelace v. Delo, 47 F.3d 286, 287 (8th Cir. 1995).

Both parties submitted affidavits and trial testimony as to

what took place during the March 20, 1992, inspection and as

to what Moore and Hoffman knew on that date and on the

date of the search. Plaintiffs have not, however, been able to

depose Moore or Kratochvil. They have not had access to

ATF records as to plaintiffs. John Yuhas, a vice president of

Technical Ordnance who had dealings with ATF, is deceased.

Limited discovery is sometimes appropriate to seek to

uncover additional evidence sufficient to create a genuine

issue as to whether the defendants in fact violated clearly

established law. Johnson v. Boreani, 947 F.2d 67, 70 (8% Cir.

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1991), (quoting from Mitchell v. Forsyth, 472 U.S. 511, 526,

105 S. Ct. 2606, 2815, 86 L. Ed, 2d 411 (1985)). Even with the

lack of even limited discovery, the court is able to resolve the

summary judgment motion. Were the court unable to do so,

the motion would be denied to permit plaintiffs to conduct

the limited discovery discussed above.

The dispute arises over statements made and omitted by

Moore in obtaining a search warrant for the Clear Lake

facility. Moore intentionally misrepresented the facts when

he told the Magistrate that Hoffmann, as president and

stockholder-owner of Technical Ordnance, had told Moore

that Technical Ordnance was involved in DoD work only.

Moore failed to tell the Magistrate the definitions that he

knew were being used by plaintiffs. He failed to tell the

Magistrate the facts as to what he knew about the records

being in Minnesota and the fact that ATF made no effort to

go and see what was there. The issue, for purposes of the

qualified immunity claim, is whether, in the absence of all

this information, there would still have been probable cause

for the search warrant.

“Whether a given set of facts entitles the defendant to

qualified immunity is a question of law,” Creighton v.

Anderson, 922 F.2d 443, 446 (8th Cir. 1990). However, if

there is a dispute over facts that might affect the outcome of

the suit under the law of qualified immunity, there can be no

summary judgment. See Anderson v. Liberty Lobby, Inc., 477

US. 242, 248, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986). As

held in George v. City of St. Louis, “[iJn the context of a

police officer obtaining a warrant, immunity will be lost only

where the warrant application is so lacking in the indicia of

probable cause as to render official belief in its existence

unreasonable.” 26 F.3d 55, 57 (8th Cir. 1994), citing Malley v.

Briggs, 475 U.S. 335, 344-45, 106 S. Ct. 1092, 1097-98, 89 L. Ed.

2d 271 (1986). “The issue is not whether the affidavit actually

establishes probable cause, but rather whether the officer had

an objectively reasonable belief that it established probable

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cause.” Thompson v. Reuting, 968 F.2d 756, 760 (8th Cir.

1992).

In resolving the qualified immunity defense in the

summary judgment context, there are four steps that need to

be considered by the court:

“First, the court must determine whether the

plaintiff has alleged the violation of a constitutional

right. Second, the court must determine whether-

the right was “clearly established” at the time of the

alleged violation. Third, if the constitutional right

was clearly established, the court must determine

whether there are material facts in dispute

regarding the objective reasonableness of the

defendant's conduct in light of the law and the facts

known to the defendant at the time. Lastly, if the

facts are undisputed, and the defendant could be

found to inave acted reasonably if the conduct is

viewed objectively, then summary judgment must

be granted for the defendant.”

Doran v. Condon, 5 F.Supp.2d 1067, 1072 (D. Neb. 1998)

(quoting Cross v. City of Des Moines, 965 F.2d 629, 631-33 (8th

Cir. 1992 )). In a § 1983 action, when the defendant raises

qualified immunity as a defense, the burden shifts to the

plaintiff to establish that the defendant violated clearly

established constitutional rights. Guffey v. Wyatt, 18 F.3d

869, 871 (10th Cir. 1994). According to Creighton _v.

Anderson, once the plaintiff has demonstrated that the law

governing the plaintiffs rights was clearly established at the

time of the defendant's acts, the defendant has the burden of

proof with respect to all other elements of the qualified

immunity defense. 922 F.2d at 447.

Plaintiffs have alleged a violation of their Fourth

Amendment rights. “The law was clearly established that

the presentation of an affidavit for a search warrant that

contains materially false statements of omissions, knowingly

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or recklessly made in conscious disregard of the truth,

violates the Fourth Amendment, when, if the affidavit is

corrected to rectify the incorrect statements of omissions, no

probable cause exists and a search warrant is issued because

of the incorrect affidavit. Franks v. Delaware, 438 U.S. 154,

98 S.Ct. 2674, 57 L.Ed. 2d 667 (1978).” Doran, at 1072-73. The

burden thus shifts to the defendants to show that there are

no material facts in dispute regarding Moore’s conduct in

light of the law and the facts known to Moore at the time he

signed the affidavit in support of the search warrant and that

Moore acted reasonably if his conduct is viewed objectively.

In Franks v. Delaware,

the Supreme Court held that the Fourth

Amendment is violated when a search warrant is

issued upon an affidavit containing a falsehood if

three things are established: (1) a statement is

included in an affidavit for search warrant which

was in fact false; (2) either (a) the statement was

deliberately made with knowledge of its falsity, or

(b) the statement was made with reckless disregard

of the truth; and, (3) the false statement was

material—that is, without the false statement the

affidavit fails to establish probable cause for the

issuance of the warrant.

Jones v. United States, 878 F. Supp. 1290, 1293 (D. Neb. 1995),

citing Franks v. Delaware, 438 U.S. 154, 155-56, 98 S.Ct. 2674,

2676- 77, 57 L. Ed.2d 667 (1978).

In determining whether any of these elements exist,

the court applies the following five caveats: 1) a

negligent or innocent mistake is not enough; 2) a

statement may be untrue because it is literally false,

or because it contains omissions that render the

statements false when viewed from the perspective

of the judge who reviewed the search-warrant

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affidavit; 3) law enforcement officers cannot be

expected to put everything they knc 1 a search

warrant affidavit, and thus an omission .s actionable

only if it is designed to mislead or is made with

reckless disregard of whether it would mislead; 4) it

is normally not enough to prove reckless disregard

from omitted information alone; 5) even a deliberate

lie or reckless disregard for the truth is not enough if

considering the false statement, the search warrant

affidavit as corrected would still have supported the

existence of probable cause.

[ones v. United States, 878 F. Supp. at 1293-94.

Certain facts are not genuinely in dispute on the present

record. Moore knew that plaintiffs objected to ATF

jurisdiction and the inspectiou and record keeping

requirements that went with that jurisdiction, but that

Technical Ordnance had nonetheless obtained an ATF license

for its activities. On the day of the March 1992 inspection,

Technical Ordnance was working on only DoD contract

work. Hoffman told Moore, however, that Technical

Ordnance does engage in both DoD contract work and

foreign military sales. Moore knew that plaintiffs included in

their definition of foreign military sales transactions which

the ATF deems commercial sales. Notwithstanding

plaintiffs’ position, the inspection and explosion

investigation was allowed to proceed that day, with the

exception of the inspection of the bunker marked classified.

When Moore inquired about record keeping, Hoffman

advised Moore that the records were kept at the St.

Bonifacius facility. Following the March inspection, Moore

obtained information that substantiated the ATF’s position

that Technical Ordnance engaged in non-exempt commercial

transactions which did come under the claimed jurisdiction

and record keeping requirements of the ATF. Moore did not

even attempt to inspect the- St. Bonifacius facility to

determine if Technical Ordnance was nonetheless keeping

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the appropriate records. Thus, Moore had no information at

all upon which to base the assertion in his affidavit in

support of the search warrant that “either no records are

being maintained...or false records are being maintained....”

He presented false information to the magistrate. Moore also

did not have any reasonable basis to believe that Hoffman

had made a false statement. On the day of the inspection, he

knew that Technical Ordnance was working on only DoD

contracts. Hoffman told Moore, however, that Technical

Ordnance manufactured and sold products both to fulfill

DoD contracts and foreign military sales, which Moore knew

included what ATF considered non-exempt commercial

sales.

On the record before the Court, several statements

included in the affidavit for search warrant were in fact false

and material facts tending to show that probable cause was

lacking were intentionally omitted. These statements were

deliberately made with knowledge of their falsehood and

incompleteness. The false and misleading statements were

material in that if the affidavit had not contained false

statements and had contained the omitted information, the

affidavit fails to establish probable cause for the issuance of

the warrant.

Where the warrant application is so lacking in indicia of

probable cause as to render official belief in its existence

unreasonable, the shield of immunity will be lost. Malley v.

Briggs, 475 U.S. 335, 344, 106 S. Ct. 1092, 1098, 89 L. Ed. 2d

271 (1986). In Illinois v. Gates, the Supreme Court held that

probable cause requires only the probability of criminal

activity, not a prima facie showing, 462 U.S. 213, 235, 103 S.

Ct. 2317, 2330, 76 L. Ed. 2d 527 (1983). In the context of a

qualified immunity defense, where a motion for summary

judgment has been filed by the defense, the relevant question

becomes “the objective (albeit fact-specific) question of

whether a reasonable [defendant] could have believed (the

challenged conduct) to be lawful, in light of clearly

established law and the information the [defendant]

A-56

possessed.” v. Crei 483 U.S. 635, 641, 107 S.

Ct. 3034, 3040, 97 L. Ed. 2d 523 (1987). The question for

qualified immunity purposes is not “whether the judge was

correct in assessing the question of probable cause, but

whether the officers could have objectively believed that

probable cause existed.” Kohl v. Casson, 5 F.3d 1141, 1146-47

(8" Cir. 1993). Viewing the totality of the affidavit by Moore,

and the information he possessed at the time he executed the

affidavit, no reasonable person under the same

circumstances could have felt there was probable cause to

believe that a crime was being committed. Moore knew that

plaintiffs included in their definition of “foreign military

sales” transactions which the ATF deemed commercial.

Therefore, Moore knew that plaintiffs were not claiming

Technical Ordnance was not engaging in these transactions.

Although plaintiffs took the position that Technical

Ordnance was therefore exempt from ATF inspection and

record keeping, the inspection was allowed to continue.

Moore had no evidence that Technical Ordnance was not

keeping the appropriate records.

A reasonable officer would have known there was no

probability or even the possibility of criminal activity. A

reasonable officer would have known that the dispute and

the argument over definitions should have been dealt with in

some administrative manner, not in the context of

accusations of criminal activity, with search warrants

involving two places of business. There was no emergency

or any danger of records being destroyed. If Moore believed,

although without any foundation therefor, that no sufficient

records existed, the fact of “no records” was not going to

change while the ATF proceeded administratively or in the

context of a declaratory judgment lawsuit. Citizens are

allowed to differ with federal officials as to what the law is

without being subjected to what transpired in this case.

Agent Moore is not entitled to qualified immunity from

damages for his actions arising out of the presentment of the

affidavit in support of the search warrant.

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All other claims in the amended complaint that remain

are derivative of the Fourth Amendment claim. Liability for

malicious prosecution and prosecution in an attempt to chill

First Amendment rights depend upon the ultimate finding of

whether there was probable cause for the search warrant, an

issue that must be decided after discovery and trial. The

motion for summary judgment as it pertains to those issues is

therefore denied. |

Pursuant to D.S.D. LR 7.1, the motion for summary

judgment will be decided without oral argument. Jetton v.

McDonnell Douglas Corp., 121 F.3d 423, 426-427 (8th Cir.

1997). Plaintiffs’ request for oral argument, Doc. 45, has been

considered and is denied.

ORDER

Now, therefore, ‘i

IT IS ORDERED that the motion for summary judgment,

Doc. 38, should be and is denied.

Dated this 30th day of September, 1998.

BY THE COURT:

/s/

CHARLES B. KORNMANN

USS. District Judge

ATTEST:

JOSEPH HAAS, Clerk

BY: s/Gineen L. Madsen

DEPUTY

(SEAL)

A-58

UNITED STATES DISTRICT COURT

DISTRICT OF SOUTH DAKOTA

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TECHNICAL ORDNANCE, INC.

and NORMAN H. HOFFMAN,

Plaintiffs,

-VS-

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UNITED STATES OF AMERICA; .

DOUGLAS MOORE, Special Agent, *

The Bureau of Alcohol, Tobacco, and *

Firearms (“ATF”), U.S. Department *

of the Treasury; and OTHER s

UNKNOWN ATE AGENTS "

JOHN DOE 1, JOHN DOE 2, .

JOHN DOE 3, JOHN DOE 4, °

JOHN DOE 5, .

True Names Unknown, °

Defendants.

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OEE RLEREREN EERE KK RAK KKK KK cz I

Plaintiffs instituted this action pursuant to Bivens v. Six

Unknown Named Agents of the Federal Bureau of Narcotics

403 U.S. 388 (1971), and the Federal Tort Claims Act, 28

U.S.C. § 1346, seeking redress for alleged violations of

plaintiffs’ constitutional rights arising out of the procurement

of search warrants, the investigation, and the prosecution of

plaintiffs for unlawful manufacture, distribution and storage

A-59

of explosive materials, CR 93-10025. Jury verdicts were

rendered on February 18, 1994, acquitting Technical

Ordnance and Hoffman of all 36 counts of the indictment in

that case.

Counts I, II, and Ill of plaintiffs’ amended complaint

allege violations of plaintiffs’ First, Fourth, and Fifth

Amendment rights. Count IV alleges a conspiracy to deprive

plaintiffs of their civil rights in violation of 42 U.S.C. § 1985.

Count V alleges a claim under the Federal Tort Claims Act

for malicious prosecution. Count VI alleges a claim under

the Federal Tort Claims Act for abuse of process. Count VII

alleges a claim under the Federal Tort Claims Act for what is

presumed to be intentional infliction of emotional distress

upon plaintiff Hoffman. Count VIII seeks an injunction

against the defendants to prohibit the continuance of an

alleged policy to “disrupt, intimidate, harass, threaten,

entrap, and otherwise attempt to injure plaintiffs in violation

of their rights to freedom of speech and expression . . . and in

violation of their rights to be secure in their liberty and

property... .”

This is the third time this matter has come before the

Court on a dispositive motion. Defendants previously filed a

motion to dismiss for failure to state a claim and to assert a

defense of qualified immunity. This Court granted the

motion to dismiss only as to plaintiff's Fifth Amendment,

conspiracy and abuse of process claims and granted

defendant Moore qualified immunity on plaintiffs’ Fourth

Amendment claim that the search was unlawfully expanded

beyond the warrant.

Following the denial of a motion to reconsider (made in

violation of the Federal Rules of Civil Procedure which rules

do not allow for a motion to reconsider or a motion to

reconsider the denial of a motion to reconsider, ad

infinitum), defendants appealed but subsequently withdrew

the appeal and instead sought summary judgment, asserting

there was no genuine issue of material fact that the search

warrant affidavit was supported by probable cause and again

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interposing the defense of official immunity. That motion for

summary judgment was denied because the facts, viewed in

the light most favorable to the plaintiffs, showed that the

warrant application was so lacking in indicia of probable

cause as to render official belief in its existence unreasonable

and, therefore, agent Moore was not entitled to qualified

immunity from damages for his actions arising out of the

presentment of the affidavit in support of the search w urrant.

Defendants have now filed two Separate motions for

summary judgment. Moore contends in his motion that,

following discovery, there now exists no genuine issue of

material fact in the record that agent Moore’s affidavit

“contained no false statements or material misleading

Omissions and that a law enforcement officer could

reasonably believe - as SA Moore did - that probable cause

existed for a search warrant.” Moore further contends that

the law in the Eighth Circuit does not clearly establish

“malicious prosecution” as a constitutional injury actionable

under Bivens. Finally, Moore contends plaintiffs have failed

to identify any retaliatory motive to support their malicious

and retaliatory prosecution claims. The United States

contends in its motions that the plaintiffs’ federal tort claim

for malicious prosecution is barred by sovereign immunity

because the Federal Tort Claims Act waiver of immunity is

limited to acts of investigative law enforcement officers and

does not extend to the Assistant United States Attorneys who

prosecuted plaintiffs. Even if Moore was responsible for

plaintiffs’ prosecution, the United States argues, he is

shielded from liability under the Federal Tort Claims Act by

the discretionary exception doctrine. The United States

argues that even if Moore is not shielded by the discretionary

exception doctrine, plaintiffs have failed to show that the

Prosecution was without probable cause or was motivated by

malice. The United States also contends that plaintiffs have

failed to establish the tort of intentional infliction of

emotional distress.

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Defendants filed a motion under Fed. R. Civ. P. 35 for a

mental examination of Hoffman by Dr. David Bean.

Defendants contend Hoffman put his mental state in issue

when he made a claim for emotional distress damages.

Defendants filed a motion to strike plaintiffs’ statement

of material facts in resistance to defendants’ motions for

summary judgment and the declaration in support thereof.

Defendants contend these items are replete with arguments,

legal conclusions, hearsay, statements made without

personal knowledge, and statements that are unadorned by

citations to the evidentiary record.

Two days prior to the motions hearing, plaintiffs filed a

motion to compel the production of the ATF investigative

report regarding the administrative claims filed by Technical

Ordnance and Hoffman. In response to a request for such

document in an interrogatory, defendants asserted that those

documents were privileged. Plaintiffs alternatively seek in

camerainspection of the documents to determine the validity

of the claim of privilege. Defendants have submitted

documents to the Court for in camerareview and have filed

their opposition (Doc. 103) to the motion to compel

production of the ATF report, the defendants objecting to

plaintiffs seeing such report. Such documents are now under

in camerareview by the Court.

Although the parties were orally advised on the record

at oral argument that this case was finally going to trial,

defendants have now filed what they caption as a request for

ruling (Doc. 110), a creature unknown to the common law or

the Federal Rules of Civil Procedure. In the alternative,

defendants have moved to sever and postpone the trial on

the Bivens claims. This is despite the fact that this is the

oldest case on the docket of this Court and the Court has

recently been required to report this case as pending more

than three years.

Plaintiffs filed on October 22, 1999, a “notice of recent

decision” (Doc. 108), attaching a copy of a case decided by the

United States Court of Appeals for the Eighth Circuit on

A-62

a aaa

March 29, 1999. Such action was unnecessary, given the fact

that this Court reads each and every decision decided in the

Eighth Circuit, including the case cited. Defendants filed a

motion to strike such filing by plaintiffs (Doc. 111). This

Court has no intention of prohibiting counsel in any case

from submitting any additional authority missed during the

briefing schedule. The filing made by plaintiffs is, in any

event, harmless and causes no prejudice to defendants since

the Court was well aware of such “recent” decision.

DECISION

I. Probable Cause.

The Court need not repeat here the standards for

summary judgment which have been set out in previous

orders. The record has not changed substantially. The

plaintiffs have set forth in response to the motions for

summary judgment sufficient facts which, if established at

trial, would show that Moore knew that, at the time of the

compliance inspection, Hoffmann objected to ATF’s

jurisdiction and oversight. Despite his objections, Hoffmann

had procured for Technical Ordnance the necessary ATF

license as he was required by law to do. Since, despite his

objections, Hoffmann complied with the law, there exists a

genuine issue for trial whether or not it was objectively

reasonable to assume that either no records or inadequate

records existed, as alleged in the warrant application. Moore

was told that the records were in Minnesota but neither he

nor any other government agent went to Minnesota to see

what was there. During the inspection, Hoffmann and the

inspectors looked at current printouts of Technical

Ordnance’s jobs in progress which showed only exempt

projects were being worked on at that time. Thus,

Hoffmann’s statement that Technical Ordnance is

“currently” working on only DoD contracts was not

inaccurate and Moore knew that. A reasonable trier of fact

A-63

could conclude that Moore's affidavit was not based upon

probable cause and was knowingly false. The motion for

summary judgment should be denied as it relates to

plaintiffs’ Fourth Amendment claim.

II. Malicious Prosecution.

A. Existence of Claim.

The United States Supreme Court held in Albright v

Oliver, 510 U.S. 266 (1994), that a constitutional claim of

malicious prosecution must be grounded on an explicit

constitutional provision, not on the generalized notion of

substantive due process. The threshold of a constitutional

malicious prosecution claim is “some deprivation of liberty

consistent with the concept of ‘seizure.’” Singer v. Fulton

County Sheriff, 63 F.3d 110 (2nd Cir. 1995). The Third Circuit

has held that post-indictment restrictions consisting of the

need to post bond, forced attendance at court proceedings,

weekly contacts with pretrial services officials, and limits on

out-of-state travel are enough to satisfy the “seizure”

element. Gallo v. Philadelphia, 161 F.3d 217, 222 (3d Cir.

1998). Albright noted that as long as a defendant is bound to

appear in court and answer criminal charges, a “seizure” of

the person under the Fourth Amendment exists. Albright v.

Oliver, 510 U.S. at 277-278. The record is sufficient to show a

claimed Constitutional deprivation.

Moore contends that plaintiffs have not shown a clearly

established constitutional right to support a malicious

prosecution claim. The D.C. Circuit held in 1995 that “it has

not been clearly established that malicious prosecution

violates any constitutional or statutory right” Moore v.

Valder, 65 F.3d 189, 195 (D.C. Cir. 1995). Agent Moore

misunderstands. What plaintiffs must show is a clearly

established constitutional right, which they have done. It

was Clearly established at the time of Moore’s conduct that

lying in an affidavit in support of an application for a search

A-64

warrant constitutes an illegal seizure without probable cause.

Plaintiffs have a clearly established constitutional right to be

free from Fourth Amendment seizures, absent probable

cause. The exact nature of the cause of action, whether it be

under the Federal Tort Claims Act, a Bivens action, or

whatever need not be clearly established at the time of the

offense. That Moore’s alleged conduct was wrongful was

clearly established. There exists a cause of action for such

wrongful conduct and that cause of action is malicious

prosecution.

B. Moore's Responsibility.

Moore and the United States contend that since Moore

was not personally responsible for the decision to indict and

prosecute, he cannot be held personally responsible. Moore

cites several cases in support of his claim, including Albright

v Oliver, supra and Ames v. United States, 600 F.2d 183 (8th

Cir. 1979). However, Ames recognized that a “specific

allegation, such as the presentation of false evidence or the

withholding of evidence” may nullify the general rule that

“the grand jury indictment breaks any chain of causation

linking the employees’ activities to the institution of criminal

proceedings, thus insulating the F.BI. and Justice

Department employees from tort liability.” Ames v. United

States, 600 F.2d at 185; Jones v. City of Chicago, 856 F.2d 985,

994 (7th Cir. 1988) (“(A] prosecutor’s decision to charge, a

grand jury’s decision to indict, a prosecutor's decision not to

drop charges but to proceed to trial—-none of these decisions

will shield a police officer who deliberately supplied

misleading information that influenced the decision.” );

Smiddy v. Varney, 665 F.2d 261, 266-67 (9th Cir. 1981). A law

enforcement officer who knowingly gives false and

misleading information to a prosecutor or grand jury, or

knowingly omits exculpatory information, is liable for the

ensuing prosecution without probable cause. See Barlow v.

Ground, 943 F.2d 1132, 1136-37 (9th Cir. 1991); Robinson v.

A-65

Maruffi, 895 F.2d 649, 655-56 (10th Cir. 1990). Although the

- cited actions were commenced under § 1983, the United

States Court of Appeals for the Eighth Circuit has previously

noted that a Bivens action is almost identical to an action

under 42 U.S.C. § 1983 against state officials. Christian v.

Crawford, 907 F.2d 808, 810 (8th Cir. 1990), and since the two

claims involve the same analysis, cases involving § 1983 are

persuasive in the Bivens context. Waddell v. Forney, 108

F.2d 889, 890 n. 2, (8th Cir. 1997). See alsoMoore v. Valder, 65

F.3d 189, 192 (D.C. Cir. 1995) (The law of immunity in a

Bivens claim mirrors that in a § 1983 claim and we look to

those decisions for guidance.). Agent Moore’s alleged

knowingly false or misleading statements in his affidavit, to

the prosecutor and to the grand jury, may subject him to

liability for the ensuing prosecution.

C. Discretionary Function Exception.

The United States contends in its brief that it cannot be

held liable under the Federal Tort Claims Act for any action

on Moore’s part to bring about the prosecution of the

plaintiffs, the United States relying on the “discretionary

functions” exception to the FTCA, 28 U.S.C. § 2680(a). The

FTCA is a waiver of sovereign immunity, limited in part by

the discretionary function exception. Sabow v. United States,

93 F.3d 1445, 1451 (9th Cir. 1996). The discretionary function

exception bars claims “based upon the exercise or

performance or the failure to exercise or perform a

discretionary function or duty on the part of a federal agency

or an employee of the Government, whether or not the

discretion involved be abused.” 28 U.S.C. § 2680(a). “The

United States bears the ultimate burden of proving the

applicability of the discretionary function exception... .”

Autery v. United States, 992 F.2d 1523, 1526 (11th Cir. 1993);

Prescott _v. United States, 973 F.2d 696, 702 (9th Cir. 1992);

Carlyle v. United States, 674 F.2d 554, 556 (6th Cir. 1982);

Stewart v. United States, 199 F.2d 517, 520 (7th Cir. 1952).

A-66

The United States Supreme Court has developed a two

part test to determine whether a government employee's acts

fall within the discretionary function exception:

In examining the nature of the challenged

conduct, a court must first consider whether the

action is a matter of choice for the acting employee.

This inquiry is mandated by the language of the

exception; conduct cannot be discretionary unless it

involves an element of judgment or choice. See

Dalehite v.United States,346 US. 15, 34, 73 S.Ct. 956,

967, 97 L.Ed. 1427 (1953) (stating that the exception

protects “the discretion of the executive or the

administrator to act according to one’s judgment of

the best course”). Thus, the discretionary function

exception will not apply when a federal statute,

regulation, or policy specifically prescribes a course

of action for an employee to follow. In this event,

the employee has no rightful option but to adhere to

the directive. And if the employee's conduct cannot

appropriately be the product of judgment or choice,

then there is no discretion in the conduct for the

discretionary function exception to protect. Cf.

Westfall v. Erwip484 U.S. 292, 296-297, 108 S.Ct. 580,

~——, 98 L.Ed.2d 619 (1988) (recognizing that conduct

that is not the product of independent judgment will

be unaffected by threat of liability).

Moreover, assuming the challenged conduct

involves an element of judgment, a court must

determine whether that judgment is of the kind that

the discretionary function exception was designed

to shield. The basis for the discretionary function

exception was Congress’ desire to “prevent judicial

‘second-guessing’ of legislative and administrative

decisions grounded in social, economic, and

political policy through the medium of an action in

tort.” United States v. Varig Airlinegupra, at 814,

A-67

104 S.Ct., at 2764-2765. The exception, properly

construed, therefore protects only governmental

actions and decisions based on considerations of

public policy. See Dalehite v. United Statesupra, at

36, 73 S.Ct. at 968 (“Where there is room for policy

judgment and decision there is discretion”). In sum,

the discretionary function exception insulates the

Government from liability if the action challenged in

the case involves the permissible exercise of policy

judgment.

Berkovitz_ v. United States, 486 U.S. 531, 536-37, 108 S.Ct.

1954, 1958-59, 100 L.Ed.2d 531 (1988). The United States

contends that a government employee’s conduct in

presenting evidence to a grand jury or in conducting a

criminal prosecution falls within the ambit of the

discretionary function exception, barring any tort claim

arising from that conduct. The United States Court of

Appeals for the Ninth Circuit has rejected this contention,

holding that although “the decision whether or not to

prosecute a given individual is a discretionary function for

which the United States is immune from liability,” the

conduct of the agent “in implementing that decision,

however, including the nature of his testimony before the

grand jury, is not immune as a discretionary function.”

Wright v. United States, 719 F.2d 1032, 1035 (9th Cir. 1983).

In any event, presenting false testimony to the grand jury

and presenting false or misleading information to the

prosecutor or withholding material information falls outside

the discretionary function exception. Ames, supra

III. Retaliatory Prosecution.

Moore argues that plaintiffs’ retaliatory prosecution

claim cannot go forward since plaintiff, in addition to

meeting the elements of such a claim, “must put forward

specific, nonconclusory factual allegations’ (sic) that establish

A-68

improper motive Causing cognizable injury.” Crawford-El v.

Britton, 118 S.Ct. 1584, 1596 (1988). Plaintiffs have set forth

specific factual allegations on page 21 of their brief in

response to Moore’s motion for summary judgment, which

ATF. It is for the jury to decide whether the search warrant

applications and the ensuing prosecution so lacked probable

cause as to raise more than an inference that Moore acted in

retaliation.

IV. Intentional Infliction of Emotional Distress.

Motion for Rule 35 Examination.

Plaintiffs allege in their amended complaint that

defendant Moore and others intentionally and willfully

caused Hoffman extreme emotional distress. Although not

captioned so, this is a claim for intentional infliction of

emotional distress. The South Dakota Supreme Court has

held:

That recovery can be had for mental pain, though no

physical injury results, when the following elements

are present: the act causing the anguish was done

intentionally, the act was unreasonable, and the

actor should have recognized it as likely to result in

emotional distress. It has also been said of this tort

that “there is liability for conduct exceeding all

bounds usually tolerated by decent society, of a

nature which is especially calculated to cause, and

does cause, mental distress of a very serious kind.”

Groseth International v. Tenneco, 440 N.W.2d 276, 289 (S.D.

1989) (citations omitted).

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Defendants contend that, in his deposition, Hoffman

conceded that he did not suffer extreme and disabling

emotional distress. Hoffman contends that the severity of his

distress can only be evaluated after hearing testimony from

his wife and co-workers. He did not proffer those person's

affidavits in resistance to the motion for summary judgment.

Hoffman contends that under South Dakota law, “stress,

humiliation or mental anguish are enough to present a case

to the jury on a claim for intentional infliction of emotional

distress. Hayes v. Northern Hills General Hosp., 590 N.W.2d

234, 252 (S.D. 1999).

It should be noted that the defendants seek a Rule 35

mental examination in order to establish the causal

relationship, if any, between any psychological affliction

suffered by Hoffman and defendants’ alleged conduct.

Hoffman cites cases holding that claims for mental anguish

damages do not justify a Rule 35 examination. Hoffman

asserts he is only seeking damages for emotional distress,

mental anguish, embarrassment, humiliation, and damage to

reputation resulting from Moore’s wrongful conduct.

Plaintiff contends that he is not currently treating for any

psychological condition and that he is not seeking damages

for a specific psychological condition. He does not intend to

offer any expert testimony relating to these damages.

Defendants respond that Hoffman’s contentions in

resistance to the motion for a Rule 35 mental examination are

tantamount to an admission that he cannot establish such a

claim. The motion for a Rule 35 mental examination should -

be denied. It is highly unlikely, given the evidence provided

to the Court on Summary Judgment, that any claim of mental

damages will go to the jury. In any case of physical injury it

is necessary to establish by expert medical opinion the

causation between the alleged tort and the damages. The

same must be true for mental injury which is even more

subjective. Absent expert testimony that the mental injury

was, based upon reasonable medical probability or certainty,

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i

proximately caused by the claimed actions of a defendant, or

defendants, the claim should not go before the jury.

V. Motion to Strike.

Defendants moved to strike plaintiffs’ second statement

of facts, which was filed as Doc. 91, contending the statement

is in the nature of a brief in that it contains extensive

argument. One of the primary factual issues presented by

plaintiffs’ claims is Moore’s motivation. Subjective

motivation would be difficult to show absent a thorough

revelation of the background and facts concerning Moore's

contacts with the plaintiffs and without drawing some

inferences in the statement of facts. Although plaintiffs have

not complied with the spirit of D.S.D. LR 96.1(c), the Court

hesitates to criticize the plaintiffs for being too thorough.

This Court is not inclined to strike Doc. 91. To the extent it

contains argument, the Court disregards such argument.

VI. Motion to Compel.

As set forth during the hearing, the Court grants the

motion to compel only to the extent it seeks an in camera

inspection of the requested documents. Defendants have

already submitted to the Court in camera those records

contained in plaintiffs’ request which defendants contend are

privileged and, in a separate submission to plaintiffs, those

portions of the records as to which there is no claim of

privilege.

VII. Motion for a Ruling.

The so-called request for a hearing (Doc. 110) should be

denied as moot and not warranted, given the repeated

motions filed by defendants and the case load of the Court.

Counsel are not required to remind the Court of pending

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motions. The motion to sever or delay trial should also be

denied.

VIII. Motion to Strike.

For the reasons previously stated, this motion should be

“denied.

ORDER

Based upon the foregoing

IT IS ORDERED:

1. Defendant Moore’s motion for summary judgment,

Doc. 76, is denied.

2. Defendant United States’ motion for summary

judgment, Doc. 78, is denied.

3. Defendants’ motion for Rule 35 examination, Doc.

67, is denied.

4. Defendants’ motion to strike, Doc. 94, is denied.

5. Plaintiffs’ motion to compel, Doc. 95, is denied.

Plaintiffs motion for an in camerainspection, Doc. 95, is

granted.

6. Defendants’ request for a ruling or, in the

alternative, for a stay of trial (Doc. 110) is denied.

7. Defendants’ motion to strike (Doc. 111) is denied.

8. Defendants’ motion for leave to have officials

participate by telephone in the mediation session (Doc.

105) is denied as moot, the mediation session having

been already conducted and having been unsuccessful.

Dated this 28% day of October, 1999.

BY THE COURT:

ls/

CHARLES B. KORNMANN

US. District Judge

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ATTEST:

JOSEPH HAAS, Clerk

BY: s/Gineen L. Madsen

DEPUTY

(SEAL)

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UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

No. 99-4334

Technical Ordnance, Inc., *

et al., .

Appellees, .

* Order Denying Petition for

v. * Rehearing and for Rehearing

* En Banc

United States of America, *

et al., '

Appellants. *

The petition for rehearing en banc is denied. Chief

Judge Wollman would grant.

The petition for rehearing 7m the panel is also denied.

(5128-010199)

August 15, 2001

Order Entered at the Direction of the Court:

s/ Michael E. Gans

Clerk, U.S. Court of Appeals, Eighth Circuit

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18 U.S.C. § 1001. Statements or entries generally

(a) Except as otherwise provided in this section,

whoever, in any matter within the jurisdiction of the

executive, legislative, or judicial branch of the Government of

the United States, knowingly and willfully —

(1) falsifies, conceals, or covers up by any trick,

scheme, or device a material fact;

(2) makes any materially false, fictitious, or

fraudulent statement or representation; or

(3) makes or uses any false writing or document

knowing the same to contain any materially false,

fictitious, or fraudulent statement or entry;

shall be fined under this title or imprisoned not more than 5

years, or both

(b) Subsection (a) does not apply to a party to a judicial

proceeding, or that Party's counsel, for statements,

representations, writings or documents submitted by such

party or counsel to a judge or magistrate in that proceeding.

(c) With respect to any matter within the jurisdiction of

the legislative branch, subsection (a) shall apply only to—

(1) administrative matters, including a claim for

payment, a matter related to the procurement of

property or services, personnel or employment practices,

Or support services, or a document required by law, rule,

or regulation to be submitted to the Congress or any

office or officer within the legislative branch; or

(2) any investigation or review, conducted

pursuant to the authority of any committee,

subcommittee, commission or office of the Congress,

consistent with applicable rules of the House or Senate.

A-75

en

18 U.S.C. § 842. Unlawful acts

(a) It shall be unlawful for any person—

(1) to engage in the business of importing,

manufacturing, or dealing in explosive materials without

a license issued under this chapter;

(2) knowingly to withhold information or to make

any false or fictitious oral or written statement or to

furnish or exhibit any false, fictitious, or misrepresented

identification, intended or likely to deceive for the

purpose of obtaining explosive materials, or a license,

permit, exemption, or relief from disability under the

provisions of this chapter; and

(3) other than a licensee or permittee knowingly —

(A) to transport, ship, cause to be transported,

or receive in interstate or foreign commerce any

explosive materials, except that a person who

lawfully purchases explosive materials from a

licensee in a State contiguous to the State in which

the purchaser resides may ship, transport, or cause

to be transported such explosive materials to the

State in which he resides and may receive such

explosive materials in the State in which he resides,

if such transportation, shipment, or receipt is

permitted by the law of the State in which he

resides; or |

(B) to distribute explosive materials to any

person (other than a licensee or permittee) who the

distributor knows or has reasonable cause to believe

does not reside in the State in which the distributor

resides.

(b) It shall be unlawful for any licensee knowingly to

distribute any explosive materials to any person except —

(1) a licensee;

(2) a permittee; or

(3) a resident of the State where distribution is

made and in which the licensee is licensed to do business

A-76

ooo

\

or a State contiguous thereto if permitted by the law of

the State of the purchaser's residence.

(c) It shall be unlawful for any licensee to distribute

explosive materials to any person who the licensee has

reason to believe intends to transport such explosive

materials into a State where the purchase, possession, or use

of explosive materials is prohibited or which does not permit

its residents to transport or ship explosive materials into it or

to receive explc_ive materials in it.

(d) It shall be unlawful for any person knowingly to

distribute explosive materials to any individual who:

(1) is under twenty-one years of age;

(2) has been convicted in any court of a crime

punishable by imprisonment for a term exceeding one

year;

(3) is under indictment for a crime punishable by

imprisonment for a term exceeding one year;

(4) is a fugitive from justice;

(5) is an unlawful user of or addicted to any

controlled substance (as defined in section 102 of the

. Controlled Substances Act (21 U.S.C. 802)); or

(6) has been adjudicated a mental defective.

(e) It shall be unlawful for any licensee knowingly to

distribute any explosive materials to any person in any State

where the purchase, possession, or use by such person of

such explosive materials would be in violation of any State

law or any published ordinance applicable at the place of

distribution.

(f) It shall be unlawful for any licensee or permittee

willfully to manufacture, import, purchase, distribute, or

receive explosive materials without making such records as

the Secretary may by regulation require, including, but not

limited to, a statement of intended use, the name, date, place

of birth, social security number or taxpayer identification

number, and place of residence of any natural person to

whom explosive materials are distributed. If explosive

materials are distributed to a corporation or other business

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entity, such records shall include the identity and principal

and local places of business and the name, date, place of

birth, and place of residence of the natural person acting as

agent of the corporation or other business entity in arranging

the distribution.

(g) It shall be unlawful for any licensee or permittee

knowingly to make any false entry in any record which he is

required to keep pursuant to this section or regulations

promulgated under section 847 of this title.

(h) It shall be unlawful for any person to receive,

possess, transport, ship, conceal, store, barter, sell, dispose of,

or pledge or accept as security for a loan, any stolen

explosive materials which are moving as, which are part of,

which constitute, or which have been shipped or transported

in, interstate or foreign commerce, either before or after such

materials were stolen, knowing or having reasonable cause to

believe that the explosive materials were stolen.

(i) It shall be unlawful for any person—

(1) who is under indictment for, or who has been

convicted in any court of, a crime punishable by

imprisonment for a term exceeding one year;

(2) who is a fugitive from justice;

(3) who is an unlawful user of or addicted to any

controlled substance (as defined in section 102 of the

Controlled Substances Act (21 U.S.C. 802)); or

(4) who has been adjudicated as a mental defective

or who has been committed to a mental institution;

to ship or transport any explosive in interstate or foreign

commerce or to receive or possess any explosive which has

been shipped or transported in interstate or foreign

commerce.

(j) It shall be unlawful for any person to store any

explosive material in a manner not in conformity with

regulations promulgated by the Secretary. In promulgating

such regulations, the Secretary shall take into consideration

the class, type, and quantity of explosive materials to be

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stored, as well as the standards of safety and security

recognized in the explosives industry.

(k) It shall be unlawful for any person who has

knowledge of the theft or loss of any explosive materials

from his stock, to fail to report such theft or loss within

twenty-four hours of discovery thereof, to the Secretary and

to appropriate local authorities.

(I) It shall be unlawful for any person to manufacture

any plastic explosive that does not contain a detection agent.

(m)(1) It shall be unlawful for any person to import or

bring into the United States, or export from the United States,

any plastic explosive that does not contain a detection agent.

(2) This subsection does not apply to the

importation or bringing into the United States, or the

exportation from the United States, of any plastic

explosive that was imported or brought into, or

manufactured in the United States prior to the date of

enactment of this subsection by or on behalf of any

agency of the United States performing military or police

functions (including any military reserve component) or

_ by or on behalf of the National Guard of any State, not

later than 15 years after the date of entry into force of the

Convention on the Marking of Plastic Explosives, with

respect to the United States.

(n)(1) It shall be unlawful for any person to ship,

transport, transfer, receive, or possess any plastic explosive

that does not contain a detection agent.

(2) This subsection does not apply to—

(A) the shipment, transportation, transfer,

receipt, or possession of any plastic explosive that

was imported or brought into, or manufactured in

the United States prior to the date of enactment of

this subsection by any person during the period

beginning on that date and ending 3 years after that

date of enactment; or

(B) the shipment, transportation, transfer,

receipt, or possession of any plastic explosive that

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was imported or brought into, or manufactured in

the United States prior to the date of enactment of

this subsection by or on behalf of any agency of the

United States performing a military or police

function (including any military reserve component)

or by or on behalf of the National Guard of any

State, not later than 15 years after the date of entry

into force of the Convention on the Marking of

Plastic Explosives, with respect to the United States.

(0) It shall be unlawful for any person, other than an

agency of the United States (including any military reserve

component) or the National Guard of any State, possessing

any plastic explosive on the date of enactment of this

subsection, to fail to report to the Secretary within 120 days

after such date of enactment the quantity of such explosives

possessed, the manufacturer or importer, any marks of

identification on such explosives, and such other information

as the Secretary may prescribe by regulation.

(p) Distribution of information relating to explosives,

destructive devices, and weapons of mass destruction. —

(1) Definitions. —In this subsection —

(A) the term “destructive device” has the same

meaning as in section 921(a)(4);

(B) the term “explosive” has the same meaning

as in section 844(j); and

(C) the term “weapon of mass destriiction” has

the same meaning as in section 2332a(c)(2).

(2) Prohibition.—It shall be unlawful for any

person —

(A) to teach or demonstrate the making or use

of an explosive, a destructive device, or a weapon of

mass destruction, or to distribute by any means

information pertaining to, in whole or in part, the

manufacture or use of an explosive, destructive

device, or weapon of mass destruction, with the

intent that the teaching, demonstration, or

information be used for, or in furtherance of, an

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activity that constitutes a Federal crime of violence;

or

(B) to teach or demonstrate to any person the

making or use of an explosive, a destructive device,

or a weapon of mass destruction, or to distribute to

any person, by any means, information pertaining

to, in whole or in part, the manufacture or use of an

explosive, destructive device, or weapon of mass

destruction, knowing that such person intends to

use the teaching, demonstration, or information for,

or in furtherance of, an activity that constitutes a

Federal crime of violence.

27 C.F.R. § 55.141 Exemptions

(a) General. Except for the provisions of §§ 55.180 and

55.181, this part does not apply to:

(1) Any aspect of the transportation of explosive

materials via railroad, water, highway, or air which is

regulated by the U.S. Department of Transportation and its

agencies, and which pertains to safety.

(2) The use of explosive materials in medicines and

medicinal agents in the forms prescribed by the official

United States Pharmacopeia or the National Formulary.

“The United States Pharmacopeia and The National

Formulary, “ USP and NF Compendia, are available from

the United States Pharmacopeia Convention, Inc., 12601

Twinbrook Parkway, Rockville, Maryland 20852.

(3) The transportation, shipment, receipt, or

importation of explosive materials for delivery to any

agency of the United States or to any State or its political

subdivision.

(4) Small arms ammunition and components of small

arms ammunition.

(5) The manufacture under the regulation of the

military department of the United States of explosive

materials for, or their distribution to or storage or

possession by, the military or naval services or other

agencies of the United States.

(6) Arsenals, navy yards, depots, or other

establishments owned by, or operated by or on behalf of,

the United States.

(7) The importation, distribution, and storage of

fireworks classified as UN0336, UN0337, UN0431, or

UN0432 explosives by the US. Department of

Transportation at 49 CFR 172.101 and generally known as

“consumer fireworks” or “articles pyrotechnic. “

(8) Gasoline, fertilizers, propellant actuated devices,

or propellant actuated industrial tools manufactured,

imported, or distributed for their intended purposes.

A-82

(9) Industrial and laboratory chemicals which are

intended for use as reagents and which are packaged and

shipped pursuant to US. Department of Transportation

regulations, 49 CFR Parts 100 to 177, which do not require

explosives hazard warning labels.

(b) Black powder. Except for the provisions applicable

to persons required to be licensed under subpart D, this part

does not apply with respect to commercially manufactured

black powder in quantities not to exceed 50 pounds,

percussion caps, safety and pyrotechnic fuses, quills, quick

and slow matches, and friction primers, if the black powder

is intended to be used solely for sporting, recreational, or

cultural purposes in antique firearms, as defined in 18 U.S.C.

921(a)(16) or antique devices, as exempted from the term

“destructive devices” in 18 U.S.C. 921 (a)(4).

A-83

UNITED STATES DISTRICT COURT

DISTRICT OF SOUTH DAKOTA

TECHNICAL ORDNANCE, INC.,

a Minnesota corporation, and

NORMAN H. HOFFMAN,

individually,

Civil No. 95-1039

Plaintiffs,

v. FIRST AMENDED

COMPLAINT FOR

DOUGLAS MOORE, a special DAMAGES AND

agent of the Bureau of Alcohol, EQUITABLE RELIEF,

Tobacco, and Firearms (“ATF”), AND DEMAND FOR

U.S. Department of the Treasury; JURY TRIAL

JOHN DOE I through JOHN DOE V,

UNKNOWN NAMED AGENTS OF

THE ATF, and/or other officials of

the United States Government, or

other person or persons unknown to

plaintiffs at the time of filing this

Complaint, whose conduct has

individually, or in concert with others,

deprived plaintiffs of their Constitutional

rights; and the UNITED STATES OF

AMERICA.

Defendants.

For their Complaint against the above named

defendants, plaintiffs TECHNICAL ORDNANCE, INC. and

NORMAN H. HOFFMAN state and allege as follows:

A-84

THE PARTIES

1. Plaintiff TECHNICAL ORDNANCE, _ INC.

(“Technical Ordnance”) is a Minnesota corporation with a

principal place of business located at 9200 Nike Road, St.

Bonifacius, Minnesota, and a manufacturing facility located

in Clear Lake, South Dakota. Plaintiff Technical Ordnance

may be served with process in matters pertaining to this civil

action by serving the undersigned attorneys for plaintiffs.

Plaintiff Technical Ordnance manufactures propellant

actuated devices (“PADs”) and other products. As a United

States citizen, plaintiff Technical Ordnance is entitled to all

the rights, privileges and immunities under the laws and

Constitution of the United States as any other citizen.

2. Plaintiff NORMAN H. HOFFMAN (“Hoffman”) is

an individual citizen of the United States of America,

residing in the State of Minnesota. Plaintiff Hoffman is the

President of Technical Ordnance. He may be served with

process in matters pertaining to this civil action by serving

the undersigned attorneys for plaintiffs. As a natural born

citizen of the United States, plaintiff Hoffman is entitled to all

the rights, privileges and immunities under the laws and

Constitution of the United States as any other citizen.

3. Defendant UNITED STATES OF AMERICA is a

party hereto based on the conduct and activities of federal

officials and employees within the Bureau of Alcohol,

Tobacco and Firearms of the United States Department of the

Treasury (“the ATF’), and/or other Officials of the United

States Government, or other person or persons unknown to

plaintiffs at the time of filing this complaint, whose conduct

has individually, or in concert with others, deprived

plaintiffs of their Constitutional rights.

4. Defendant DOUGLAS MOORE (“Moore”) at all

times material herein was a federal law enforcement officer

employed by the ATF as a special agent and assigned to this

matter as Case Agent, and is sued in his capacity as such, and

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in his individual capacity. At all times relevant hereto,

defendant Moore was stationed in Sioux Falls, South Dakota.

5. Defendants JOHN DOE I, JOHN DOE II, JOHN

DOE III, JOHN DOE IV, and JOHN DOE V are unknown to

the plaintiffs at the time of the filing of this Complaint and

therefore cannot be named in their true names or capacities.

At all times relevant hereto these persons either participated

in the conduct forming the basis of this action, or were

employed by the ATF and/or other bureaus or agencies of

the United States Government as supervisors and/or

managers, who consented to and authorized the raids and

prosecution in question, and who were responsible for

training and supervising defendant Moore and other

unknown agents, officials, or employees of the ATF. The

identities of these persons cannot be ascertained by due

diligence at the time of the filing of this Complaint as this

information is being treated as confidential by the

Department of the Treasury and the ATF. The ATF has

conducted an investigation into the events surrounding the

matters alleged herein and the part played by federal officers

and agents. Plaintiffs cooperated in that investigation and

have been waiting for the report for additional information.

Plaintiffs will seek leave of this Court to amend this

Complaint to insert the true names and capacities of these

individuals designated by the use of the word “Doe” as the

same become known upon the release of the federal

investigatory report and during the course of discovery in

this action. Plaintiffs seek an order tolling any and all

applicable statutes of limitation in this matter until a

reasonable time after the United States releases the report of

the investigation, in order for plaintiffs to make proper

amendments to this Complaint.

JURISDICTION AND VENUE

6. This civil action is brought to recover damages and

equitable relief against defendants for violations of the First,

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Fourth, Fifth, and Sixth Amendments to the United States

Constitution and for other violations of state and federal law

while the defendants were acting under color of federal law.

This Court has jurisdiction, pursuant to the decision of the

Supreme Court of the United States in Bivens v. Six

Unknown Named Agents of the Federal Bureau of Narcotics

403 U.S. 388 (1971), to grant redress for violations of the

Constitutional rights of citizens committed by federal agents

and officers acting in such capacity. In addition, plaintiffs

invoke the pendent jurisdiction of this Court over related or

ancillary predicate state law claims.

7. The jurisdiction of this Court is founded upon (i) 28

U.S.C. §§ 1331 et. seq., as this civil action arises under the

Constitution of the United States; (ii) § 1332(a)(1), because the

amount in controversy exceeds $50,000.00 and is between

citizens of different states; and (iii) 42 U.S.C. § 1985(3). The

defendants have committed or caused to be committed

tortious acts within the State of South Dakota and are thus

subject to the jurisdiction of this Court by virtue of South

Dakota Codified Laws § 15-7-2(2)(1986).

- 8. Venue is proper in this district pursuant to 28 U.S.C.

§ 1391(b) as a substantial part of all incidents and occurrences

alleged herein happened in South Dakota.

FEDERAL TORT CLAIMS

9. Plaintiffs have filed Federal Tort Claims Act claims

against defendant the United States of America pursuant to

28 US.C. §§ 1346(b), 2671 et. seg., and 2680 (h).

GENERAL ALLEGATIONS

10. Throughout the course of its business, plaintiff

Technical Ordnance informed various government agencies,

including the ATF, that plaintiff Technical Ordnance was

involved in (i) Department of Defense (“DoD”) contracts; and

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(ii) foreign military sales, both directly and through export

brokers licensed by the U.S. Department of State.

11. During March 1992, defendant Moore and another

ATF agent inspected plaintiff Technical Ordnance’s facility at

Clear Lake, South Dakota. During the inspection, defendant

Moore unreasonably took offense to certain requirements

that plaintiff Technical Ordnance sought to impose upon

him, including without limitation: (1) requiring Moore to

sign plaintiff Technical Ordnance’s visitors’ register; (ii)

requiring Moore to wear a security badge; and (iii) requiring

Moore to wear proper non-static, safety footwear, before

venturing into plaintiff Technical Ordnance’s facilities. These

measures are required by rules and regulations promulgated

by the DoD which plaintiffs Technical Ordnance, Hoffman,

and all visitors to plaintiff Technical Ordnance’s premises are

legally required to follow.

12. During this inspection, defendant Moore refused to

sign plaintiff Technical Ordnance’s register, refused to wear

any security badge, and refused to wear the proper non-

static, safety footwear in the explosives bunkers at plaintiff

Technical Ordnance.

13. During this inspection, personnel of plaintiff

Technical Ordnance stated to the ATF agents that plaintiff

Technical Ordnance worked on DoD contracts and foreign

military sales at the Clear Lake facility, and that at the time of

the inspection all jobs currently being conducted at Clear

Lake involved DoD contracts. Plaintiff Technical Ordnance

showed the ATF agents a listing of the current DoD contracts

at the Clear Lake facility. )

14. During the search, plaintiff Technical Ordnance also

informed the ATF agents that records of all DoD contracts

and foreign military sales were kept at the company’s St.

Bonifacius facility. Following the inspection at Clear Lake,

the ATF agents failed to follow up and go to the St.

Bonifacius facility to review any records.

15. During the inspection, Plaintiff Norman H. Hoffman

expressed his particular concern over the ATF’s harassing

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refusal to comply with DoD mandated safety regulations

while on the premises of plaintiff Technical Ordnance.

Plaintiff Hoffman also expressed to the ATF agents his

deeply held philosophy that private enterprises are unduly

burdened with excessive and duplicative regulatory

oversight by multiple government agencies with conflicting

regulations and overlapping jurisdictions.

16. Defendant Moore unreasonably inferred from these

statements that plaintiffs were attempting to avoid their legal

obligations.

The ATF’s Retaliatory Campaign of Intimidation and

Harassment

17. Defendant Moore conspired, confederated,

combined, and agreed with defendants JOHN DOE I through

JOHN DOE V to set out to intimidate, harass, and injure

plaintiffs Technical Ordnance and Hoffman in retaliation for

their refusal deferentially to acquiesce to the ATF’s

unwarranted intrusions into plaintiff Technical Ordnance’s

business. The conduct of defendant Moore and other ATF

officials was at all times unlawful, in violation of federal and

South Dakota law and the policies and procedures pursuant

to which agents of the United States are required to act.

18. In a continuing series of attempts to intimidate and

harass plaintiffs, defendant Moore made such comments to

personnel of plaintiff Technical Ordnance as: (i) “Do you

realize that I wear a badge?”; (ii) “Do you know that I carry a

gun?"; and (iii) “Do you understand that I can arrest

people?”

The ATF’s Fraudulent Procurement of Probable Cause

Findings

19. Defendant Moore and other defendants acted

negligently and/or intentionally, wrongfully, willfully,

wantonly, recklessly, indifferently, and without legal

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justification, when said agents raided plaintiff Technical

Ordnance’s facilities, in that the Affidavits utilized to procure

the search warrants were based entirely upon knowingly

and/or intentionally false statements, or said Affidavits were

based upon statements made with a reckless disregard for

their truth or falsity.

20. By way of example a

This text is long and has been trimmed here. Open the source document for the complete record.