Unitеd States of America, Plaintiff-Appellee, v. Shelton Wholesale, Inc., a Missouri corporation, doing business as Shelton Fireworks, Inc., doing business as Polaris Fireworks; Polaris Fireworks, Inc., a Missouri corporation; Gregory P. Shelton, Defendants-Appellants.
Nos. 99-1450, 01-1599
United States Court of Appeals, Eighth Circuit
Submitted: Sept. 10, 2001. Filed: Jan. 23, 2002.
Greg SHELTON, Shelton Wholesale, Inc., National Fireworks Association, Inc., Plaintiffs-Appellants, v. CONSUMER PRODUCTS SAFETY COMMISSION; United States; Ann Brown, Chairman, U.S. Consumer Product Safety Commission; Eric B. Ault, Director, Central Regional Center, U.S. Consumer Product Safety Division, Defendants-Appellees.
Drake Cutini, Justice Dept., Washington, DC, argued, for defendants-appellees.
Before: MCMILLIAN, BEAM and HANSEN, Circuit Judges.
MCMILLIAN, Circuit Judge.
Shelton Wholesale, Inc., and Polaris Fireworks, Inc., (together, the “corporate parties“) arе Missouri businesses that import and distribute fireworks from Hong Kong, and Gregory Shelton is president and owner of both corporate parties. Gregory Shelton and the corporate parties (collectively, “the Shelton parties“) appeal from two final orders granting summary judgment, a final bench verdict, and a bench ruling in favor of the United States and the Consumer Product Safety Commission (“CPSC“) (together, the “Government“), entered in the United States District Court for the Western District of Missouri1 in two related cases. United States v. Shelton Wholesale, Inc., No. 96-6131-CV-SJ-6 (W.D.Mo. filed Oct. 2, 1996) (“the Fine Case“); Shelton v. Consumer Products Safety Comm‘n., No. 97-6021-CV-SJ-6 (W.D.Mo. filed Feb. 14, 1997) (“the NFA Case“). For reversal in both cases, the Shelton parties argue that the district court (1) erred in holding that the CPSC did not exceed its jurisdiction because the Federal Hazardous Substances Act (“FHSA“) does not extend to common fireworks, (2) erred in holding that the CPSC did not violate the Shelton parties’ due process rights by destroying the Shelton parties’ fireworks without providing an opportunity for a full administrative hearing, (3) abused its discretion in admitting into evidence laboratory test reports offered by the Government under the business exception to the hearsay rule, and (4) abused its discretion in denying a jury trial to the corporate parties. For the reasons discussed below, we affirm the orders of the district court.
The district court had jurisdiction pursuant to
I. Factual and Procedural Background
In the Fine Case, the United States sought civil penalties and injunctive relief against the Shelton parties for violations of the FHSA,
On February 14, 1997, the Shelton parties and a nonprofit trade association, National Fireworks Association, Ltd. (“NFA“), filed suit in the NFA Case against the CPSC seeking a declaratory judgment that the CPSC (1) hаd no jurisdiction over common fireworks, (2) had denied the Shelton parties’ due process rights, and (3) had improperly tested the fireworks.
On April 28, 1998, after noting that the parties incorporated into their briefs in the Fine Case many of the same arguments raised in the NFA Case, the district court ruled on summary judgment in both cases that the FHSA extends to common fireworks and that the Shelton parties’ due process rights had not been violated. See United States v. Shelton Wholesale, Inc., No. 96-6131-CV-SJ-6/97-6021-CV-SJ-4-6, 1998 WL 251273, at *1, 3 n. 7 (W.D.Mo. Apr. 28, 1998) (Shelton I) (granting partial summary judgment in Fine Case and NFA Case, reserving questions of fact for trial). The district court noted that the uncontroverted evidence showed that the CPSC had selected nineteen samples representing various fireworks products for testing from twelve shipments imported by the Shеlton parties from Hong Kong to a United States Customs Port. See id. at *1. All of the fireworks products were common fireworks (e.g. toy paper caps, cone fountains, cylinder fountains, whistles without report, and sparklers), and were intended only to be used outdoors. See id. at *4. The CPSC transported the samples to its laboratory to conduct performance tests to determine whether the fireworks products were safe for consumers based on the standards outlined in the fireworks regulations. See id. at *2. When the samples of all of the nineteen fireworks products failed at least one (and in some cases more than one) of the performance tests conducted, the CPSC determined that each of the fireworks products was a banned hazardous substance under the FHSA. See id. at *3, 4.
On May 1, 1998, the district court ruled that the corporate parties were not entitled to a jury trial because the corporate parties did not make a timely demand for a jury trial, but that a separate jury trial for Gregory Shelton, who had timely invoked his right to a jury, was appropriate. See United States v. Shelton Wholesale, Inc., No. 96-6131-CV-SJ-6/97-6021-CV-SJ-4-6 (May 1, 1998) (order denying jury trial to corporate parties).
At the bench trial, the Government called CPSC Director of Laboratory Sciences Warren Porter to introduce the laboratory test results for each of the nineteen products. Porter testified on direct examination that the CPSC always uses the following procedures when it tests fireworks: First, each fireworks performance test is conducted by a chemist and a technician, who contemporaneously record the
The evidence further showed that each time the CPSC determined that one of the Shelton parties’ fireworks products violated the fireworks regulations, the CPSC informed the Shelton parties by sending a letter of advice (“LOA“), itemizing the violations and explaining the procedures for submitting contrary evidence or views. See id. at *3-4. With respect to the first seven products, the CPSC sent LOAs to Polaris Fireworks, Inc., addressed to Gregory Shelton, that stated “[i]f you disagree with our decision regarding these banned fireworks devices, you may submit your views as to why you disagree with our conclusion. You should submit any information that you wish to offer into evidence within 10 days of your receipt of this letter.”
For products eight through nineteen, the LOAs were accompanied by a copy of the CPSC‘s Regulated Products Handbook and referred to the relevant chapter therein describing what importers and distributors should do if they disagreed with the CPSC‘s conclusions. Chapter Two of the Regulated Products Handbook explains:
In response to the LOA, you may submit to the [CPSC] staff evidence and arguments that the product is not violative, not covered by a specific regulation, or should not be refused admission into the U.S. . . . Such evidence may consist of:
- results of tests indicating the product complies with the applicable regulation;
- marketing data indicating the product is not intended for the population group protected by the regulation;
- any other type of information.
Each LOA specified the individual to whom any responses should be directed, and included that individual‘s address and telephone number. In total, the Shelton parties submitted one letter challenging the CPSC‘s finding with respect to two of the nineteen products for which they received LOAs. See Shelton I, 1998 WL 251273, at *9.
On January 6, 1999, at the conclusion of the bench trial, the district court issued a joint memorandum and order, ruling in both cases that the fireworks products in question were banned hazardous substances under the FHSA and that the Shelton parties’ due process rights had not been violated. See United States v. Shelton, 34 F.Supp.2d 1147, 1167 (W.D.Mo. 1999) (entering judgment in favor of Government and against corporate parties; rejecting corporate parties’ renewed due process claims and attacks on precision of CPSC testing methods) (Shelton II).
In the Fine Case, the district court assessed a $100,000 fine against Shelton Wholesale, Inc., for knowingly importing as many as ten of the nineteen products at issue in violation of the FHSA. See id. at 1166-67. The district court reasoned that
On September 21, 1999, the district court held that there were no material facts in dispute and granted summary judgment in fаvor of the Government against Gregory Shelton based on its earlier ruling that the Shelton parties had violated the FHSA. See United States v. Shelton Wholesale, Inc., No. 96-6131-CV-SJ-6, 1999 WL 825483, at *1 (W.D.Mo. Sept.21, 1999) (Shelton III) (granting summary judgment against Gregory Shelton because no genuine issue remained as to whether Shelton parties violated FHSA; noting no additional legal or factual defenses, and no challenges to previous summary judgment motions or evidence presented at corporate parties’ trial). The district court also enjoined Gregory Shelton from knowingly or recklessly importing products in violation of the FHSA. See id. The Shelton parties timely filed notices of appeal in the Fine Case and the NFA Case pursuant to
II. Interpretation of the FHSA
The Shelton parties argue that the district court erred in holding that the FHSA confers to the CPSC jurisdiction over adequately labeled common fireworks. The Shelton parties and the NFA argue that common fireworks are exempted from the reach of the CPSC.3
Because this question requires the legal interpretation of a statute, we review this issue de novo. See Ragsdale v. Wolverine Worldwide, Inc., 218 F.3d 933, 936 (8th Cir.2000) (Ragsdale); Boles Trucking, Inc. v. United States, 77 F.3d 236, 242 n. 3 (8th Cir.1996). When interpreting a statute, this Court first analyzes whether congressional intent is clear from the plain meaning of the statute. See Chevron U.S.A. v. Natural Res. Def. Council, 467 U.S. 837, 842, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984) (Chevron); Ragsdale, 218 F.3d at 936. If the intent is clear, that is the end of the inquiry. See Chevron, 467 U.S. at 842-43, 104 S.Ct. 2778. If congressional intent is not clear, this Court defers to the agency construction of the statute, provided that the construction is reasonable. See FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 132, 120 S.Ct. 1291, 146 L.Ed.2d 121 (2000) (holding that federal agency charged with administering statute is accorded deference in interpreting statute “because of the agency‘s greater familiarity with the ever-changing facts and circumstances surrounding the subjects regulated“); Chevron, 467 U.S. at 843, 104 S.Ct. 2778; Ragsdale, 218 F.3d at 936. “The court need not conclude that the agency construction was the only one it permissibly could have adopted to uphold the construction, or even the reading the court would have reached if the question initially had arisen in a judicial proceeding.” Chevron, 467 U.S. at 843 n. 11, 104 S.Ct. 2778; see also Wittler v. Chater, 59 F.3d 95, 97 (8th Cir.1995) (affirming agency‘s interpretation of statute because it reflected “a plausible construction of the plain language of the statute“). We hold that the district court
The FHSA provides in pertinent part that:
[t]he term “banned hazardous substance” means (A) any toy, or other article intended for use by children, which is a hazardous substance, or which bears or contains a hazardous substance in such manner as to be susceptible of access by a child to whom such toy or other article is entrusted; or (B) any hazardous substance intended, or packaged in a form suitable, for use in the household, which the [CPSC] by regulation classifies as a “banned hazardous substance” on the basis of a finding that, notwithstanding such cautionary labeling as is or may be required under this Act for that substance, the degree or nature of the hazard involved in the presence or use of suсh substance in households is such that the objective of the protection of the public health and safety can be adequately served only by keeping such substance, when so intended or packaged, out of the channels of interstate commerce: Provided, That the [CPSC], by regulation . . . (ii) shall exempt from clause (A), and provide for the labeling of, common fireworks . . . to the extent that [it] determines that such articles can be adequately labeled to protect the purchasers and users thereof.
Clause B does not provide a list of banned products. Instead, the clause requires the CPSC to develop rules governing the banning of hazardous substances,
[u]nder the authority of section 2(q)(1)(B) of the [FHSA], the [CPSC] declares as banned hazardous substances the following articles because they possess such a degree or nature of hazard that adequate cautionary labeling cannot be written and the public health and safety can be served only by keeping such articles out of interstate commerce: . . . (9) All fireworks devices, other than firecrackers, including kits and components intended to produce such fireworks, not otherwise banned under the act, that do not comply with the applicable requirements of part 1507 of this chapter . . .
When all of the Shelton parties’ nineteen tested products failed the minimum performance standards set forth by the regulations, the CPSC determined that the fireworks in question could not be made safe for use in the household by the general public regardless of whether the products had cautionary labeling. These are the types of circumstances for which Clause B—not Clause A—was intended. The plain reading of the statute leaves no other plausible interpretation. Hence, we
III. Due Process Claim
The Shеlton parties next argue that the district court erred in ruling that their due process rights were not violated. The Shelton parties and the NFA accordingly request that this Court reverse the district court‘s ruling in the Fine Case that the Shelton parties violated the FHSA. We review the Shelton parties’ claim that they were denied due process de novo because it is a constitutional claim, requiring legal interpretation. See McNary v. Haitian Refugee Ctr., Inc., 498 U.S. 479, 111 S.Ct. 888, 112 L.Ed.2d 1005 (1991).
The Shelton parties argue that the CPSC should have provided a full administrative hearing before destroying the fireworks it determined were banned hazardous substances. As an initial matter, the Supreme Court has held that due process does not always require a full administrative hearing. See Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 105 S.Ct. 1487, 84 L.Ed.2d 494 (1985) (holding that due process requirements vary, that generally something less than full evidentiary hearing is sufficient, and that essential requirements of due process are notice and opportunity for response); United States v. Florida East Coast Ry. Co., 410 U.S. 224, 241, 93 S.Ct. 810, 35 L.Ed.2d 223 (1973) (holding that “hearing” under the Administrative Procedure Act requires that parties have fair notice of what agency intends to do and that parties have opportunity to comment; but “hearing” does not require oral testimony, cross-examination, or oral argument). The Shelton parties concede that the FHSA itself does not specify that the hearing must be a full administrative hearing.5
Citing
Subsection (a) of
The regulation next requires that “[t]he notice shall specify a place and a period of time during which the owner or consignee shall have an opportunity to introduce testimony.”
The regulation continues: “[u]pon timely request, giving reasonable grounds therefor, such time and place may be changed.”
Finally, the regulation provides that “[s]uch testimony shall be confined to matters relevant to the admissibility of the hazardous substance, and may be introduced orally or in writing.”
IV. Admissibility into Evidence of Laboratory Reports
The Sheltоn parties argue that the district court erred in admitting the CPSC laboratory test reports into evidence under the business records exception, and that the laboratory reports were the only evidence offered to prove that the nineteen fireworks were banned hazardous substances.8
We review a trial court‘s evidentiary rulings under the abuse of discretion standard, see General Elec. Co. v. Joiner, 522 U.S. 136, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997), affording the district court substantial deference. See Sphere Drake Ins. PLC v. Trisko, 226 F.3d 951, 954 (8th Cir.2000). For the reasons discussed below, we hold that the district court did not abuse its discretion in admitting the laboratory reports into evidence as business records.
As an initial matter, laboratory test reports constitute business records and therefore are admissible subject to the requirements of
The business records exception applies, and the records are deemed admissible, unless problems of untrustworthiness appear. See
The Shelton parties failed to challenge the trustworthiness of the information contained in the laboratory reports, or to suggest that the information was recorded inaccurately or thаt the CPSC does not test fireworks regularly. Although the Shelton parties argue that some of the laboratory technicians who tested the Shelton parties’ fireworks had less experience than others, this contention is irrelevant to the question of whether the records were kept in the regular course of business at the CPSC. The testimony of the Shelton parties’ expert, Dr. Schnieder, opining that the tests themselves did not actually prove that the fireworks were hazardous, goes to the weight of the reports, not their admissibility. See Firemen‘s Fund Ins. Co. υ. Thien, 63 F.3d 754, 757-58 (8th Cir.1995) (finding no abuse of discretion when dis-
V. Denial of Jury Trial
The corporate parties argue that the district court abused its discretion in denying their demand for a jury trial. The corporate parties ask that this Court reverse and remand to the district court for a new trial by jury. A district court‘s denial of a jury trial is reviewed for an abuse of discretion. See Spear v. Dayton‘s, 771 F.2d 1140, 1144 (8th Cir.1985).
The corporate parties argue that they demanded a jury trial within ten days from the service of the “last pleading directed to such issue,” which they argue fulfills the requirements of
Upon motion, a district court has the discretion under
VI. Conclusion
We hold that the FHSA extends to cоmmon fireworks and confers jurisdiction to the CPSC, that the Shelton parties’ due process rights had not been violated because they had notice and opportunity for response, that the laboratory test reports were properly admitted into evidence under the business exception to the hearsay rule, and that the corporate parties waived their right to a jury trial because they did not file a timely demand. Accordingly, we affirm the orders of the district court in Shelton I and Shelton II.
MCMILLIAN
CIRCUIT JUDGE
Notes
United States v. Focht, 882 F.2d 55, 61 n. 15 (3d Cir.1989) (emphasis added). Similarly, the CPSC determined in the present case that the Shelton parties’ products were dangerous enough to constitute a threat to the general population, not just to children, and accordingly proceeded under Clause B.This court previously has noted the likely combination of children and fireworks. See Suchomajcz v. Hummel Chem. Co., 524 F.2d 19, 26 (3d Cir.1975). Furthermore, the statute itself treats fireworks as toys. See
15 U.S.C. § 1261(q)(1) (1982) (exempting from thе § 1261(q)(1)(A) ban any common fireworks to the extent the Secretary deems adequate labels can be devised). It should be noted, however, that the Secretary promulgated the bans on fireworks pursuant to15 U.S.C. § 1261(q)(1)(B) , not pursuant to (q)(1)(A). See16 C.F.R. § 1500.17(a) (1988) . Therefore, they ban fireworks that have been deemed a threat to society at large. Id. Any focus upon children is misplaced.
The Shelton parties’ next argument, suggesting that Clause B‘s reference to households means that it applies only to products used indoors and not outdoors, is also without merit because the FHSA makes no such distinсtion. Indeed,
[h]azardous substances intended, or packaged in a form suitable, for use in the household means any hazardous substance, whether or not packaged, that under any customary or reasonably foreseeable condition of purchase, storage, or use may be brought into or around a house, apartment, or other place where people dwell, or in or around any related building or shed including, but not limited to, a garage, carport, barn, or storage shed . . . Size of unit or container is not the only index of whether the article is suitable for use in or around the household; the test shall be whether under any reasonably foreseeable condition of рurchase, storage, or use the article may be found in or around a dwelling.
Delivery of samples to [CPSC]; examination; refusal of admission. The Secretary of the Treasury shall deliver to the [CPSC], upon [its] request, samples of hazardous substances which are being imported or offered for import into the United States, giving notice thereof to the owner or consignee, who may appear before the [CPSC] and have the right to introduce testimony. If it appears from the examination of such samples or otherwise that such hazardous substance is a misbranded hazardous substance or banned hazardous substance or in violation of section 4(f) [
15 U.S.C. § 1263(f) ], then such hazardous substance shall be refused admission, except as provided in subsection (b) of this section. The Secretary of the Treasury shall cause the destruction of any such hazardous substance refused admission unless such hazardous substance is exported, under regulations prescribed by the Secretary of the Treasury, within ninety days of the date of notice of such refusal or within such additional time as may be permitted pursuant to such regulations.
[r]egulation by Commission of consumer products in accordance with other provisions of law. A risk of injury which is associated with a consumer product and which could be eliminated or reduced to a sufficient extent by action under the Federal Hazardous Substances Act . . . may be regulated under this Act only if the Commission by rule finds that it is in the public interest to regulate such risk of injury under this Act . . . .
A memorandum, report, record, or data compilation, in any form, of acts, еvents, conditions, opinions, or diagnoses, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the memorandum, report, record or data compilation, all as shown by the testimony of the custodian or other qualified witness, or by certification that complies with
Rule 902(11) ,Rule 902(12) , or a statute permitting certification, unless the source of information or the method or circumstances of preparation indicate lack of trustworthiness. The term “business” as used in this paragraph includes business, institution, association, profession, occupation, and calling of every kind, whether or not conducted for profit.