Smith & Wesson Corp. v. City of Gary
| Decision Date | 29 October 2007 |
| Docket Number | No. 45A05-0612-CV-754.,45A05-0612-CV-754. |
| Citation | 875 N.E.2d 422 |
| Parties | SMITH & WESSON CORP., et al., Appellants-Defendants, and United States of America, Appellant-Intervenor, v. CITY OF GARY, Indiana, by its Mayor, Rudy Clay, Appellee-Plaintiff. |
| Court | Indiana Appellate Court |
Hardy & Bacon, Kansas City, MO, Attorneys for Smith & Wesson Corp.
John W. Mead, Mead Mead & Clark, Salem, IN, Michael C. Hewitt, Bruinsma & Hewitt, Costa Mesa, CA, Attorneys for B.L. Jennings, Inc. and Bryco Arms Corporation.
David C. Jensen, John M. McCrum, Eichhorn & Eichhorn, Hammond, IN, Lawrence S. Greenwald, Larry Fletcher-Hill, Catherine A. Bledsoe, Gordon Feinblatt Rothman Hoffberger & Hollander, Baltimore, MD, Attorneys for Beretta U.S.A. Corp.
Richard A. Mayer, Spangler Jennings & Dougherty, Merrillville, IN, William M. Griffin, III, Jonann E. Chiles, Karen S. Halbert, Friday Eldredge & Clark, Little Rock, AR, Attorneys for BrowningArms Company.
Richard A. Mayer, Ketaki Sircar, Spangler Jennings & Dougherty, Merrillville, IN, John F. Renzulli, Scott C. Allan, Renzulli Law Firm, New York, NY, Attorneys for Glock, Inc. and Beemiller, Inc. d/b/a Hi-Point firearms i/s/h/a Hi-Point Firearms Corp.
John W. Mead, Mead Mead & Clark, Salem, IN, Michael I. Branisa, Michael J. Zomcik, Branisa & Zomcik, Houston, TX, Attorneys for Phoenix Arms.
Renee J. Mortimer, Hinshaw & Culbertson, Schererville, IN, Timothy A. Bumann, Budd Larner, Atlanta, GA, Attorneys for Taurus International Manufacturing, Inc.
Joseph S. Reid, Hammond, IN, Peter D. Keisler, Mark B. Stern, Michael S. Raab, Isaac J. Lidsky, Washington, D.C., Attorneys for Intervenor-Appellant United States of America.
Lukas I. Cohen, W. Anthony Walker, Gary, IN, Dennis A. Henigan, Brian J. Siebel, Washington, D.C., Attorneys for Appellee.
Smith & Wesson, et al. ("Manufacturers"),1 bring this interlocutory appeal from the trial court's denial of their motion to dismiss or, in the alternative, motion for judgment on the pleadings in the action brought by the City of Gary, Indiana ("City"). The Manufacturers raise two issues, which we restate as:
I. Whether the Protection of Lawful Commerce in Arms Act ("PLCAA"), 15 U.S.C. §§ 7901-7903, bars the City's nuisance claims; and
II. Whether the PLCAA violates the Due Process Clause, separation of powers principles, and the Tenth Amendment.
Because we conclude that the PLCAA does not bar the City's claims, we need not address the constitutional issues. We affirm.2
The relevant facts as stated by the Indiana Supreme Court in the first appeal in this case follow:
In September 1999, the City filed this action in state court against a number of participants at various stages in the manufacture and distribution of handguns. After an amended complaint disposed of some defendants, the remaining named defendants are eleven manufacturers, one wholesaler, and five retailers. The City has also named multiple John Doe defendants in all three categories.
The complaint alleges that manufacturers of handguns typically sell to "distributors" who resell at wholesale to "dealers" who in turn sell at retail to the general public. Some categories of persons are prohibited by law from purchasing guns, and all dealer-defendants are alleged to have knowingly sold to illegal buyers through intermediaries in "straw purchases". Specifically, three dealers, Cash America, Ameri-Pawn, and Blythe's Sporting Goods, are alleged to have engaged in straw purchases that were the subject of a "sting" operation conducted by the Gary police department against suspected violators of the gun distribution laws. The police employed a variety of techniques in these operations. In general, an undercover officer first told a dealer's salesperson that he could not lawfully purchase a gun, for example, because he had no license or had been convicted of a felony, and a second undercover officer then made a purchase with the clerk's knowledge that the gun would be given to the first. Some other practices of dealers are also alleged to generate illegal purchases. These include failure by some dealers to obtain the required information for background checks required by federal law, sales of a number of guns to the same person, and intentional "diversion" of guns by some dealers to illegal purchasers.
The City alleges that the manufacturers know of these illegal retail sales of handguns, and know that a small percentage of dealers, including the dealer-defendants here, account for a large portion of illegally obtained handguns. The City alleges the manufacturers and distributors have the ability to change the distribution system to prevent these unlawful sales but have intentionally failed to do so.
The City alleges that these and other practices generate substantial additional cost to the public in general and the City in particular. Possession of unlawfully purchased guns is claimed to contribute to crime that requires expenditure of public resources in addition to the obvious harm to the victims. The complaint alleges that seventy murders with handguns took place in Gary in 1997, and another fifty-four in 1998. From 1997 through 2000, 2,136 handguns used in crimes were recovered. Of these, 764 were sold through dealers who are defendants in this suit. The City also asserts that harm is suffered by the City at the time of the sale of an illegal handgun because these unlawful sales generate additional requirements to investigate and prosecute the violations of law.
In addition to challenging the distribution practice of the defendants, the City also alleges negligent design of the handguns by the manufacturers that contributes to these injuries. Finally, the City alleges that the manufacturers engage in deceptive advertising of their product by asserting that a gun in the home offers additional safety for the occupants when in fact the contrary is the case.
Count I of the complaint alleges that these facts support a claim for public nuisance. Count II asserts a claim for negligence in distribution of guns and Count III presents a claim for their negligent design. All Counts request compensatory and punitive damages and injunctive relief. The trial court granted a motion by all defendants to dismiss both counts for failure to state a claim. The City appealed and the Court of Appeals affirmed the dismissal of the negligence count as to all defendants. Dismissal of the claim for public nuisance was affirmed as to the manufacturers and distributors, but the Court of Appeals concluded that the complaint stated a claim for public nuisance as to the dealers to the extent it alleged that they engaged in "straw purchases." City of Gary v. Smith & Wesson Corp., 776 N.E.2d 368, 389 (Ind.Ct.App.2002).
City of Gary ex rel. King v. Smith & Wesson Corp., 801 N.E.2d 1222, 1227-1229 (Ind.2003).
The Indiana Supreme Court granted transfer. Id. The court addressed the City's public nuisance claim and the City's allegations that the Manufacturers knowingly participated in a distribution system that unnecessarily and sometimes even intentionally provided guns to criminals, juveniles, and others who may not lawfully purchase them. Id. at 1231. The court held that unlawful conduct was not a requirement of a public nuisance claim and that "generally, gun regulatory laws leave room for the defendants to be in compliance with those regulations while still acting unreasonably and creating a public nuisance." Id. at 1232-1233, 1235. The court referred to "Indiana Code sections 35-47-2.5-1 through 15, dealing with the sale of handguns" and held that "[s]ome of the activity alleged in the complaint presumably violates those regulatory statutes, either directly in the case of the dealers or as knowing accomplices in the case of the other defendants." Id. at 1234-1235. The court concluded its analysis of the City's public nuisance claim as follows:
In sum, the City alleges that all defendants intentionally and willingly supply the demand for illegal purchase of handguns. The City alleges that the dealer-defendants have participated in straw purchases and other unlawful retail transactions, and that manufacturers and distributors have intentionally ignored these unlawful transactions. The result is a large number of handguns in the hands of persons who present a substantial danger to public safety in the City of Gary. I.C. §§ 35-47-2.5-14, -15. Taken as true, these allegations are sufficient to allege an unreasonable chain of distribution of handguns sufficient to give rise to a public nuisance generated by all defendants.
Id. at 1241. As a result, the court reversed the dismissal of the City's count of public nuisance against the Manufacturers. Id. at 1249. The court also held that the City could proceed on its negligence and negligent design claims. Id.
In 2005, the United States Congress passed the PLCAA, and it was signed into law. See 15 U.S.C. §§ 7901-7903. The findings and purposes of the PLCAA follow:
(a) Findings
Congress finds the following:
(1) The Second Amendment to the United States Constitution provides that the right of the people to keep and bear arms shall not be infringed.
(2) The Second Amendment to the United States Constitution protects the rights of individuals, including those who are not members of a militia or engaged in military service or training, to keep and bear arms.
(3) Lawsuits have been commenced against manufacturers, distributors, dealers, and importers of firearms...
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