Webber v. Armslist LLC
| Docket Number | 21-3198,21-3207 |
| Decision Date | 12 June 2023 |
| Parties | Richard WEBBER, as Special Administrator of the Estate of Sara J. Schmidt, Plaintiff-Appellant, v. ARMSLIST LLC and Jonathan Gibbon, Defendants-Appellees. Erin Bauer and Estate of Paul Bauer, Plaintiffs-Appellants, v. Armslist LLC and Jonathan Gibbon, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Seventh Circuit |
70 F.4th 945
Richard WEBBER, as Special Administrator of the Estate of Sara J. Schmidt, Plaintiff-Appellant,
v.
ARMSLIST LLC and Jonathan Gibbon, Defendants-Appellees.
Erin Bauer and Estate of Paul Bauer, Plaintiffs-Appellants,
v.
Armslist LLC and Jonathan Gibbon, Defendants-Appellees.
No. 21-3198
No. 21-3207
United States Court of Appeals, Seventh Circuit
Argued September 13, 2022
Decided June 12, 2023
Appeal from the United States District Court for the Eastern District of Wisconsin. No. 1:20-cv-01526-WCG — William C. Griesbach, Judge., No. 2:20-cv-00215-PP — Pamela Pepper, Chief Judge.
John D. Kimball, Attorney, Blank Rome LLP, New York, NY, Jon Lowy, Attorney, Global Action on Gun Violence, Washington, DC, for Plaintiffs-Appellants.
Timothy L. Moore, Attorney, Law Offices of Timothy L. Moore, San Francisco, CA, Brian A. Sutherland, Attorney, Reed Smith LLP, San Francisco, CA, for Defendants-Appellees.
Leonard A. Nelson, Attorney, Matthew C. Brown, American Medical Association, Office of the General Counsel, Chicago, IL, for Amici Curiae American Medical Association, Wisconsin Medical Society, Inc. in No. 21-3198.
Before Flaum, Brennan, and Scudder, Circuit Judges.
Brennan, Circuit Judge.
In these cases, we consider whether a website that hosts advertisements for the sale and purchase of firearms can be held liable under Wisconsin law for the deaths of two shooting victims. The circumstances giving rise to the complaints at issue are grave and the allegations are serious.
Erin Bauer and Richard Webber are the legal representatives and family members of two individuals killed using guns that had been listed on armslist.com, an online firearms marketplace. Bauer and Webber each sued Armslist LLC and its member manager, Jonathan Gibbon, in separate diversity actions, alleging negligence and other Wisconsin state law claims. The plaintiffs assert that the defendants designed the website to encourage and assist individuals in circumventing federal and state law regulating firearms. The defendants argue that the plaintiffs have failed to state a claim upon which relief can be granted because publishing third-party offers to sell firearms does not establish tort or other liability under Wisconsin law.
The district court dismissed the negligence claim in both cases, concluding that the plaintiffs failed to plausibly allege the website's design caused the deaths. The remaining claims were also dismissed, and in Bauer, Gibbon was dismissed from the lawsuit for lack of personal jurisdiction. Bauer seeks reversal of Gibbon's dismissal, and Armslist LLC challenges the exercise of personal jurisdiction over Gibbon in Webber. At the heart of these appeals, Bauer and Webber also challenge the dismissal of their claims under Federal Rule of Civil Procedure 12(b)(6). The defendants ask us to affirm the dismissal of the plaintiffs' claims, either on the merits under Wisconsin law or as preempted by the Communications Decency Act (CDA), 47 U.S.C. § 230. The CDA precludes a website from being "treated" as the "publisher or speaker of any information provided by another information content provider." § 230(c)(1). We agree with the defendants that the district court lacked personal jurisdiction
over Gibbon. We also affirm the district court's dismissal of the plaintiffs' negligence and other state law claims against Armslist LLC. Because we affirm on the state law claims, we decline to rule on the preemption issue.
We first describe the factual and procedural background of the cases. Then we address the exercise of personal jurisdiction over Gibbon, followed by the question of preemption by the CDA. Next, we review the plaintiffs' negligence claim, as well as their other state law claims. Finally, we consider the plaintiffs' requests to amend their complaints.1
Under federal law, only licensed gun dealers may "engage in the business of importing, manufacturing, or dealing in firearms, or importing or manufacturing ammunition." 18 U.S.C. § 923(a); see also § 922(a)(1).2 Among other requirements, licensed dealers must contact the national instant criminal background check system prior to completing a transfer, verify the identity of any purchaser, and maintain records of importation, production, shipment, receipt, sale, or other disposition. § 922(t)(1); § 923(g)(1)(A); 27 C.F.R. § 478.124.
Under Wisconsin law, a firearms dealer, defined as "any person engaged in the business of importing, manufacturing or dealing in firearms and having a license as an importer, manufacturer or dealer issued by the federal government," is subject to similar requirements. WIS. STAT. § 175.35(1)(ar), (2). Private sellers may also sell firearms in Wisconsin consistent with state and federal law. See 18 U.S.C. §§ 921(a)(21)(C), 923(a); Daniel v. Armslist, LLC, 386 Wis.2d 449, 926 N.W.2d 710, 722 (2019). A private seller is not engaged in the business of selling firearms as defined under federal and state law and therefore is not subject to the same requirements as firearms dealers. § 921(a)(21)(C); § 923(a); § 175.35(1)(ar), (2).
A. Factual
Armslist.com is an online marketplace for firearms. Defendants Armslist, LLC, a Pennsylvania limited liability company, and Jonathan Gibbon, a Pennsylvania resident, are the operator and member manager of armslist.com.3 Armslist LLC is not engaged in the business of selling firearms. Rather, its website hosts "for sale" and "want to buy" ads posted by users.
Plaintiff Erin Bauer is the widow and executor of the estate of Paul Bauer and resides in Illinois. Thomas Caldwell, a private seller from Wisconsin, listed a Glock 26 9mm handgun for sale on armslist.com.
That gun was purchased by Ron Jones from Milwaukee in 2017. According to Bauer's complaint, Jones resold that Glock handgun "into the broader criminal market where it ultimately was obtained" by Shomari Legghette. Legghette used the gun to shoot and kill Chicago Police Commander Paul Bauer on February 13, 2018, in downtown Chicago.
Plaintiff Richard Webber is the special administrator of the estate of his deceased daughter, Sara Schmidt, of Harrison, Wisconsin. She was the victim of domestic violence by her estranged husband, Robert Schmidt, who was arrested. A court prohibited him from possessing any firearms, but he purchased a gun on January 8, 2018 from a private party, Brock Verstagen, through armslist.com. Schmidt used the handgun to kill Sara and himself the next day.
Webber sued Armslist LLC and Gibbon under diversity jurisdiction, alleging negligence and six other causes of action.4 Bauer sued the same defendants, making the same claims and adding causes of action for aiding and abetting tortious conduct as well as loss of consortium.
The plaintiffs level serious accusations against the defendants. They allege that armslist.com allows individuals to engage in the business of selling firearms without a license and to circumvent federal and state law governing firearms dealers, including avoiding background checks. The defendants purportedly accomplished this through design and content features. Among these are choosing to label purchases and sales as private party transactions by default. The plaintiffs also claim that armslist.com allows users to filter listings to identify private party sellers. This "filter function" allegedly facilitates the private sale of firearms without background checks to individuals prohibited from possessing firearms.
The plaintiffs also contend the defendants provided certain assurances that enabled both buyers and sellers to operate anonymously, including that:
• "ARMSLIST DOES NOT become involved in transactions between parties and does not certify, investigate, or in any way guarantee the legal capacity of any party to transact";
• "ARMSLIST can not and will not be a party in transactions. It is the sole responsibility of the buyer and seller to conduct safe and legal transactions";
• "You can perform all of the major functions without creating an account"; and
• Armslist will not contact a seller on behalf of a user or provide a user with information about another user but can provide this information to law enforcement during due process of law.
In addition to contending that the website's design is flawed, Bauer and Webber allege that Armslist LLC and Gibbon should have implemented certain design features, adopted by other online firearm marketplaces, to prevent illegal transactions. These include requiring evidence of the legality of the transactions, background checks and transaction records, delivery through federal firearms licensees, and a waiting period. They also include taking certain actions with respect to high volume sellers, allowing users to flag illegal conduct, and providing updated information on firearms laws.
B. Procedural
These two diversity cases proceeded before different district judges. Gibbon sought dismissal for lack of personal jurisdiction in both cases. In each case, both defendants moved under Federal Rule of Civil Procedure 12(b)(6) to dismiss the complaints for failure to state a claim.
In Bauer, the plaintiffs amended their complaint twice before the defendants moved to dismiss for lack of personal jurisdiction and failure to state a claim. The district court held a hearing at which it granted Gibbon's motion to dismiss for lack of personal jurisdiction. At the hearing, counsel in Bauer asked whether they could amend their complaint to remedy the personal jurisdiction issues. The court responded affirmatively but advised the plaintiffs to wait to do so until after the court had ruled on Armslist LLC's motion to dismiss. After the hearing, the court granted Armslist LLC's motion to dismiss for failure to state a claim and entered judgment dismissing the case. The court ruled that Bauer sufficiently alleged duty, breach, and damages, but not causation.
Webber moved to transfer his case to federal court in Pennsylvania. But the...
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