United States of America v. Action Security, Inc. et al

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
UNITED STATES OF AMERICA,
Plaintiff,
vs.
ACTION SECURITY, INC., and
SCOTT HENKE,
Defendants.
Case No. 3:19-cv-00134-JMK-KFR
ORDER GRANTING IN PART AND
DENYING IN PART
RECONSIDERATION
At Docket 99, Defendants Action Security, Inc. (“Action Security”), and
Scott Henke (collectively “Defendants”) move for reconsideration of the Court’s Order
Adopting the Report and Recommendation. As explained below, Defendants’ Motion for
Reconsideration is GRANTED IN PART AND DENIED IN PART.
Reconsideration requires “showing of . . . manifest error of the law or fact;
discovery of new material facts not previously available; or intervening change in the
law.”1 	Reconsideration is “an extraordinary remedy, to be used sparingly and in the
interests of finality and conservation of judicial resources.”2 “[A] party must show more
than a disagreement with the Court’s decision, and recapitulation of the cases and
1 D. Alaska Loc. Civ. R. 7.3(h)(1).
2 Carroll v. Nakatani, 342 F.3d 934, 945 (9th Cir. 2003) (quotations omitted).
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United States v. Action Security, Inc., et al. 	Case No. 3:19-cv-00134-JMK
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arguments considered by the court before rendering its original decision fails to carry the
moving party’s burden.”3 	Additionally, the three circumstances enumerated in Local
Rule 7.3(h)(1) “are the sole grounds for granting a motion for reconsideration; such a
motion ‘may not be used to raise arguments or present evidence for the first time when
they could reasonably have been raised earlier in the litigation.’”4
Defendants seek reconsideration of the Court’s Order on two bases. 	First,
they argue that evidence that accompanies their motion demonstrates that they have
withheld and paid payroll taxes since May 2022.5 In their view, this evidence contradicts
the Court’s finding to the contrary and its conclusion that a permanent injunction is
necessary to ensure that Defendants do not violate federal tax law in the future.6 Further,
in a footnote, they insist that requiring Mr. Henke post notice of the Court’s injunction at
his business that includes language that indicates his defiance of Court orders and refusal
to pay taxes is improperly punitive.7
As discussed, a motion for reconsideration “may not be used to raise
arguments or present evidence for the first time when they could reasonably have been
raised earlier in the litigation.”8 Defendants acknowledge in their motion that the evidence
supporting Mr. Henke’s withholding and payment of payroll taxes in May 2022 was not
3 Blakney v. Prasad, No. 3:18-cv-00098-TMB, 2019 WL 3253961, at *1 (D. Alaska
July 19, 2019) (internal quotations and citations omitted).
4 Id. (quoting Carroll, 342 F.3d at 945).
5 Docket 99 at 1–2.
6 Id. at 2.
7 Id. at 3 n.3.
8 Carroll, 342 F.3d at 945.
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United States v. Action Security, Inc., et al. 	Case No. 3:19-cv-00134-JMK
Order Granting in Part and Denying in Part Reconsideration 	Page 3
previously 	provided 	to 	the 	Court.9 	Magistrate 	Judge 	Reardon’s 	Report 	and
Recommendation clearly identified Defendants’ tax avoidance as one of multiple factors
supporting an injunction.10 Defendants had ample notice and opportunity to demonstrate
Mr. Henke’s compliance with appropriate evidence in their objections. 	Accordingly,
Defendants reasonably could have presented this evidence earlier in this action and
reconsideration is not appropriate.
Furthermore, the Court’s conclusion that Defendants are likely to violate
federal law in the future did not rely solely on its finding that they had not withheld and
paid 	payroll 	taxes 	in 	May 	2022. 	Indeed, 	the 	Court 	noted 	that 	the 	Report 	and
Recommendation included “evidence that demonstrates a likelihood of future violations,
including Defendants’ nearly $2 million in unpaid taxes, their past conduct of knowingly
and continuous violating federal tax law (despite numerous warnings), their refusal to
comply with this Court’s orders, and their refusal to acknowledge the illegality of their
conduct.”11 Even if the Court considered Defendants’ compliance with federal law in May
2022, the evidence overwhelmingly supports the Court’s conclusion that Defendants are
likely to violate the law in the future and a permanent injunction is required.
With respect to Defendants’ argument that the language of the injunction is
improperly punitive, the Court concludes that a portion of the language included in the
9 Docket 99 at 2 n.1. N.B. Defendants’ footnote includes a typographical error. However,
given the context, the Court understands Defendants to indicate that they had not previously
provided this evidence.
10 Docket 91 at 39–41.
11 Docket 97 at 8–9.
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injunction is unnecessary. The Court notes that Defendants waived this argument as they
failed to raise the issue in their Objections to the Report and Recommendation, which
specified the language of the injunction.12 Moreover, defendants routinely are required to
post copies of injunctions at their places of business, even though those injunctions include
findings that they have violated the law or court orders.13 	Nonetheless, requiring
Defendants to post a copy of the injunction as well as a second, duplicative notice that
contains specific language is unnecessary. 	Therefore, the Court will enter an amended
injunction and require that Defendants post only a copy of the amended injunction at their
place of business.
IT IS SO ORDERED this 17th day of April, 2024, at Anchorage, Alaska.
/s/ Joshua M. Kindred
JOSHUA M. KINDRED
United States District Judge
12 See Docket 91 at 48.
13 See, e.g., United States v. Williams, No. 219CV1736JFWPLAX, 2019 WL 3837958
(C.D. Cal. July 23, 2019); United States v. Rubio, No. C21-1054-JCC, 2021 WL 4556327 (W.D.
Wash. Sept. 2, 2021); United States v. Schiff, 379 F.3d 621, 625 (9th Cir. 2004).
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