Hamilton v. Beretta Corp.

Decision Date26 April 2001
Citation750 N.E.2d 1055,727 N.Y.S.2d 7,96 N.Y.2d 222
PartiesFREDDIE HAMILTON et al., Plaintiffs, and GAIL Fox et al., Respondents, v. BERETTA U.S.A. CORP. et al., Appellants, et al., Defendants.
CourtNew York Court of Appeals Court of Appeals

Gordon, Feinblatt, Rothman, Hoffberger & Hollander, L. L. C., Baltimore, Maryland (Lawrence S. Greenwald, Nancy E. Paige and Catherine A. Bledsoe of counsel), and Morgan, Melhuish, Monaghan, Arvidson, Abrutyn & Lisowski, New York City (Daniel T. Hughes and Erin A. O'Leary of counsel), for Beretta U.S.A. Corp. and another, appellants.

Budd Larner Gross Rosenbaum Greenberg & Sade, P. C. (Timothy A. Bumann, of the Georgia Bar, admitted pro hac vice, of counsel), and Budd Larner Gross Rosenbaum Greenberg & Sade, P. C., New York City (Christina Fichera Dente of counsel), for Taurus International Manufacturing, Inc., appellant.

Schulte Roth & Zabel, L. L. P., New York City (Marc E. Elovitz, Michael S. Feldberg, Tim O'Neal Lorah and Kefira R. Wilderman of counsel), McHugh & Barnes, P. C. (Elisa Barnes and Monica Connell of counsel), and Weitz & Luxenberg, P. C. (Denise M. Dunleavy of counsel), for respondents. Pepper Hamilton, L. L. P., Philadelphia, Pennsylvania, and New York City (Nina Gussack and James M. Beck of counsel), and Hugh F. Young, Jr., Reston, Virginia, for Product Liability Advisory Council, Inc., amicus curiae.

Crowell & Moring, L. L. P., Washington D.C. (Victor E. Schwartz and Mark A. Behrens of counsel), and National Chamber Litigation Center, Inc. (Robin S. Conrad of counsel), for Chamber of Commerce of the United States, amicus curiae.

Baron & Budd, P. C., Dallas, Texas (Brent M. Rosenthal, Misty A. Farris and Thomas M. Sims of counsel), Frederick M. Baron, Washington D.C., and Jeffrey R. White, for Association of Trial Lawyers of America, amicus curiae.

Legal Action Project, Washington D.C. (Rachana Bhowmik, Dennis A. Henigan, Jonathan E. Lowy, Brian J. Siebel, Allen Rostron and Leslie Klein of counsel), for Center to Prevent Handgun Violence and others, amici curiae. Simpson Thacher & Bartlett, New York City (Barry R. Ostrager, Mary Beth Forshaw and Gerald E. Hawxhurst of counsel), and Fiedelman & McGaw, Jericho (Andrew Zajac of counsel), for American Meat Institute and others, amici curiae.

Eliot Spitzer, Attorney General, Albany (Preeta D. Bansal, Michael S. Belohlavek, Daniel Smirlock, Daniel Feldman, Natalie Gomez-Velez, Sachin S. Pandya and Adam L. Aronson of counsel), for State of New York, amicus curiae. Michael D. Hess, Corporation Counsel of New York City (Gail Rubin and Eric Proshansky of counsel), for City of New York, amicus curiae.




In January 1995 plaintiffs—relatives of people killed by handguns—sued 49 handgun manufacturers in Federal court alleging negligent marketing, design defect, ultra-hazardous activity and fraud. A number of defendants jointly moved for summary judgment. The United States District Court for the Eastern District of New York (Weinstein, J.), dismissed the product liability and fraud causes of action, but retained plaintiffs' negligent marketing claim (see, Hamilton v Accu-Tek, 935 F Supp 1307, 1315). Other parties intervened, including plaintiff Stephen Fox, who was shot by a friend and permanently disabled. The gun was never found; the shooter had no recollection of how he obtained it. Other evidence, however, indicated that he had purchased the gun out of the trunk of a car from a seller who said it came from the "south." Eventually, seven plaintiffs went to trial against 25 of the manufacturers.

Plaintiffs asserted that defendants distributed their products negligently so as to create and bolster an illegal, underground market in handguns, one that furnished weapons to minors and criminals involved in the shootings that precipitated this lawsuit. Because only one of the guns was recovered, plaintiffs were permitted over defense objections to proceed on a market share theory of liability against all the manufacturers, asserting that they were severally liable for failing to implement safe marketing and distribution procedures, and that this failure sent a high volume of guns into the underground market.

After a four-week trial, the jury returned a special verdict finding 15 of the 25 defendants failed to use reasonable care in the distribution of their guns. Of those 15, nine were found to have proximately caused the deaths of the decedents of two plaintiffs, but no damages were awarded. The jury awarded damages against three defendants—American Arms, Beretta U.S.A. and Taurus International Manufacturing—upon a finding that they proximately caused the injuries suffered by Fox and his mother (in the amounts of $3.95 million and $50,000, respectively). Liability was apportioned among each of the three defendants according to their share of the national handgun market: for American Arms, 0.23% ($9,000); for Beretta, 6.03% ($241,000); and for Taurus, 6.80% ($272,000).

Defendants unsuccessfully moved for judgment as a matter of law pursuant to Federal Rules of Civil Procedure rule 50 (b). The District Court articulated several theories for imposing a duty on defendants "to take reasonable steps available at the point of * * * sale to primary distributors to reduce the possibility that these instruments will fall into the hands of those likely to misuse them" (Hamilton v Accu-Tek, 62 F Supp 2d 802, 825). The court noted that defendants, as with all manufacturers, had the unique ability to detect and guard against any foreseeable risks associated with their products, and that ability created a special "protective relationship" between the manufacturers and potential victims of gun violence (id., at 821). It further pointed out that the relationship of handgun manufacturers with their downstream distributors and retailers gave them the authority and ability to control the latter's conduct for the protection of prospective crime victims. Relying on Hymowitz v Eli Lilly & Co. (73 NY2d 487, cert denied 493 US 944), the District Court held that apportionment of liability among defendants on a market share basis was appropriate and that plaintiffs need not connect Fox's shooting to the negligence of a particular manufacturer.

On appeal, the Second Circuit certified the following questions to us:

"(1) Whether the defendants owed plaintiffs a duty to exercise reasonable care in the marketing and distribution of the handguns they manufacture?
"(2) Whether liability in this case may be apportioned on a market share basis, and if so, how?" (see, Hamilton v Beretta U.S.A. Corp., 222 F3d 36, 39).

We accepted certification (95 NY2d 878) and now answer both questions in the negative.

Parties' Arguments

Plaintiffs argue that defendant-manufacturers have a duty to exercise reasonable care in the marketing and distribution of their guns based upon four factors: (1) defendants' ability to exercise control over the marketing and distribution of their guns, (2) defendants' general knowledge that large numbers of their guns enter the illegal market and are used in crime, (3) New York's policy of strict regulation of firearms and (4) the uniquely lethal nature of defendants' products.

According to plaintiffs, handguns move into the underground market in New York through several well-known and documented means including straw purchases (a friend, relative or accomplice acts as purchaser of the weapon for another), sales at gun shows, misuse of Federal firearms licenses and sales by non-stocking dealers (i.e., those operating informal businesses without a retail storefront). Plaintiffs further assert that gun manufacturers have oversaturated markets in states with weak gun control laws (primarily in the Southeast), knowing those "excess guns" will make their way into the hands of criminals in states with stricter laws such as New York, thus "profiting" from indiscriminate sales in weak gun states. Plaintiffs contend that defendants control their distributors' conduct with respect to pricing, advertising and display, yet refuse to institute practices such as requiring distribution contracts that limit sales to stocking gun dealers, training salespeople in safe sales practices (including how to recognize straw purchasers), establishing electronic monitoring of their products, limiting the number of distributors, limiting multiple purchases and franchising their retail outlets.

Defendants counter that they do not owe a duty to members of the public to protect them from the criminal acquisition and misuse of their handguns. Defendants assert that such a duty— potentially exposing them to limitless liability—should not be imposed on them for acts and omissions of numerous and remote third parties over which they have no control. Further, they contend that, in light of the comprehensive statutory and regulatory scheme governing the distribution and sale of firearms, any fundamental changes in the industry should be left to the appropriate legislative and regulatory bodies.

The Duty Equation

The threshold question in any negligence action is: does defendant owe a legally recognized duty of care to plaintiff? Courts traditionally "fix the duty point by balancing factors, including the reasonable expectations of parties and society generally, the proliferation of claims, the likelihood of unlimited or insurer-like liability, disproportionate risk and reparation allocation, and public policies affecting the expansion or limitation of new channels of liability" (Palka v Servicemaster Mgt. Servs. Corp., 83 NY2d 579, 586; see also, Strauss v Belle Realty Co., 65 NY2d 399, 402-403). Thus, in determining whether a duty exists, "courts must be mindful of the precedential, and consequential, future effects of their rulings, and `limit the legal consequences of wrongs to a controllable degree'"...

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