The March 4 oral argument in Smith & Wesson Brands v. Estados Unidos Mexicanos appeared to go very well for S&W and not well for Mexico. Mexico's lawsuit seeks to hold America's federally-licensed firearm industry responsible for the cartel violence that plagues Mexico and to prohibit the industry from doing ordinary business in compliance with the federal Gun Control Act.
Congress enacted the Protection of Lawful Commerce in Arms Act (PLCAA) in 2005 to prohibit lawsuits against the gun industry for crimes committed by third parties. Unable to persuade legislatures to enact prohibitionist measures, the anti-gun movement began bringing such litigation in the 1980s to try and destroy the industry via time and resource-consuming lawsuits and discovery. PLCAA sought to end such abuse of the legal system.
PLCAA requires courts to dismiss any "qualified civil liability action," which means an action brought against a licensed manufacturer or seller of a "qualified product" – a firearm or ammunition – "resulting from the criminal or unlawful misuse of a qualified product by the person or a third party." 15 U.S.C. § 7903(5)(A)(iii). That excludes an action in which a manufacturer or seller "knowingly violated a State or Federal statute applicable to the sale or marketing of the product, and the violation was a proximate cause of the harm for which relief is sought."
Mexico claims that S&W and other manufacturers violated Federal criminal statutes by aiding and abetting the unlawful sale of guns and ammo by dealers to straw purchasers, who unlawfully transferred the firearms to others, who then (also unlawfully) exported them without a license from the Department of Commerce to Mexico, who transferred them to the cartels, which used them to harm others, which proximately causes harm to Mexico.
From the oral argument, it appears likely that the Supreme Court will rule narrowly in the defendants' favor on aiding and abetting liability. There seemed to be at least six or seven votes for holding that Mexico's complaint does not allege sufficient facts to trigger aiding and abetting liability for the defendant firearms manufacturers whose products are allegedly diverted to Mexican cartels by rogue gun dealers.
During the argument, Justice Barrett had the following exchange with Noel Francisco, counsel for the manufacturers:
JUSTICE BARRETT: Is there any reason for us to reach the proximate cause question if we conclude for aiding and abetting that you win?
MR. FRANCISCO: If you rule for us on aiding and abetting, that will completely dispose of the case. The reason to also address proximate cause is because it's an extraordinarily important issue that I think applies in many different contexts, which is why there's such a broad range of amici in this case that go well beyond the firearms industry. So, while you could completely resolve it on aiding and abetting, I would … urge you to address proximate cause as well.
The firearms industry is facing a wave of lawsuits in which anti-gun activists are asking courts to hold the industry responsible for the criminal misuse of its products by third parties. E.g., Lowy v. Daniel Defense, et al., No. 24-1822 (4th Cir.) (lawsuit seeking to hold fifteen members of the firearms industry liable for school shooting in Washington, D.C.); Estados Unidos Mexicanos v. Diamondback Incorporate, No. 22-472 (D. Arizona) (lawsuit filed by Mexican government against firearms dealers); City of Rochester v. Smith & Wesson Brands, Inc., No. 23-6061 (W.D.N.Y.) (lawsuit filed by City of Rochester seeking to hold more than two dozen members of firearms industry liable for city's gun violence); Cluney v. Brownells, Inc., No. 24-207 (D. Maine) (lawsuit seeking to hold members of the firearms industry liable for domestic violence incident); Mitchell v. River City Firearms, Inc., No. 24-CI-000518 (Jefferson Circuit Court, Kentucky) (lawsuit seeking to hold members of firearms industry liable for mass shooting in Louisville).
Relatively few of these cases involve questions of aiding and abetting liability under federal law. Instead, typically the plaintiffs in these cases rely on a state consumer protection law or some other state statute rather than the federal aiding and abetting statute as the basis for alleging unlawful conduct by the industry. And many of these state laws are recently-enacted statutes by the usual suspect anti-gun states seeking to circumvent PLCAA's protections. The common denominator that unites these cases is not the alleged statutory violation but the theory of causation, under which the plaintiffs claim that criminal conduct by third parties is attributable to the sellers of firearms.
The First Circuit ruled in favor of Mexico on the proximate cause issue with the following bizarre analogy:
Imagine that a U.S. company sent a mercenary unit of combat troops to attack people in Mexico City. Such an attack would directly cause Mexico itself the expense of paying soldiers to defend the city. Proximate cause would be quite clear. So, too, here, where the defendants are alleged to have armed the attackers for their continuing assaults.
This departs sharply from decisions of most other courts that have confronted this issue and black letter principles of tort law. An opinion joined by then-Judge Alito, City of Philadelphia v. Beretta USA (3d Cir. 2002) held that the causal chain "from the manufacturer to Philadelphia streets" was too "long and tortuous." With limited exceptions, a third party's criminal conduct ordinarily breaks the causal chain for purposes of proximate cause.
If not corrected, the First Circuit's reasoning will be embraced by anti-gun activists in lawsuits going forward. This decision has already created disarray on the issue of proximate cause in the lower courts, and it is certain to metastasize and spread until the Supreme Court intervenes.
As Congress recognized when it passed the PLCAA, burdening the firearms industry with lawsuits of this sort inhibits the exercise of Second Amendment rights. It also did so to ensure a robust domestic firearms industry, which is important for America's military and police officers. This is an important issue that the Court ought to decide sooner rather than later.
The Court should take this opportunity to clarify that the standard for proximate cause under PLCAA is consistent with the standard for proximate cause that the Court has used for other federal statutes, including RICO. As Chief Justice Roberts wrote in Hemi Group, LLC v. City of New York (2010), if multiple steps stand in between the conduct and the harm, then the connection becomes too "remote," "contingent," and "indirect" to satisfy basic proximate cause. This standard requires a direct connection between the defendant's conduct and the plaintiff's injury. A causal chain with multiple steps – especially intervening steps that involve criminal conduct by third parties – will not suffice.
Questioning during the oral argument exhibited the utter implausibility of Mexico's case. Justice Thomas asked Mexico counsel Catherine Stetson whether ATF prosecuted or revoked the licenses of any dealers for the alleged straw sales with which the manufacturers connived. Ms. Stetson replied that ATF doesn't have the resources to monitor every dealer. Yet based on a newspaper article, Mexico had argued that Lone Wolf Trading Co. was the epitome of the "rogue" dealer. If true, ATF would have taken action. Yet Lone Wolf remains in business today.
Mexico argues that manufacturers are on notice of dealers who conduct straw sales and that they continue to supply such dealers, which is the proximate cause of harm to Mexico. As Ms. Stetson claimed, "Trace requests from ATF and other agencies alert defendants that guns they sell to specific distributors and dealers are being recovered at crime scenes." That expressed utter ignorance of how trace requests work. A trace request begins with the manufacturer, whose name and serial number are engraved on a firearm. A manufacturer like S&W would inform ATF of the distributer to which it transferred the firearm. S&W would have no knowledge of which dealers the distributer transferred the firearm to, not to mention the reason for the trace request.
As Justices Jackson, Kagan, and Barrett all pointed out, Mexico didn't sue or even identify any specific dealers who conducted straw sales and were in the chain of proximate cause of harm to Mexico.
Not to mention that a trace request does not mean that a firearm was "recovered at a crime scene." Given Mexico's stringent firearm prohibitions, firearms are regularly seized from ordinary citizens whose "papers are not in order." Moreover, Congress has declared by law that "Law enforcement agencies may request firearms traces for any reason, and those reasons are not necessarily reported to the Federal Government. Not all firearms used in crime are traced and not all firearms traced are used in crime."
Perhaps the most ridiculous claim to show proximate cause was that the manufacturers design firearms to appeal to the cartels. As Chief Justice Roberts characterized the claim, "it [the firearm] looks like a military weapon and it has an American flag" or it "has Zapata's quote about better to die on your feet than live on your knees." Such things "are not illegal in any way" and appeal to "people who want the experience of shooting a particular type of gun because they find it more enjoyable than using a BB gun."
Ms. Stetson pushed back, claiming that the Colt "Emiliano Zapata 1911" pistol "target[ed] the Mexican market, including the cartels." In fact, Zapata was a Mexican hero who fought against successive dictatorships, and Colt's pistol with intricate engravings is something even a Gringo would be proud to own. And that's Mexico's case for Colt's marketing being the proximate cause of cartel violence?
Several Justices commented on how Mexico's version of proximate cause could destroy any number of industries. If Budweiser is on notice that extraordinary sales of beer take place in a college town, that is the proximate cause of underage drinking and the damage it causes. Makers of baseball bats and knives are aware that some of their products will be used in assaults and murders for which they are thus responsible. Those are more reasons why the Court should resolve the proximate-cause issue in this case.
Justice Jackson in particular elaborated at length that in enacting PLCAA, "Congress [was] protecting its own prerogative to be the one to regulate this industry, … and the statute itself says that … we're worried that tort suits are an attempt to use the judicial branch to circumvent the legislative branch of government." She referred to PLCAA's term "qualified civil liability action" as meaning "you can't bring in court … a civil action resulting from the criminal or unlawful misuse of a qualified product by the person of a third party."
At bottom, even if the Supreme Court could resolve this case by finding that Mexico has not stated a claim for aiding-and-abetting liability, it should also go further and find that its allegations do not suffice to establish proximate cause. That will facilitate the resolution of numerous other cases under PLCAA, which the Court will otherwise have to resolve in the future. It will also discourage frivolous suits against American industry in general based on an overly-expansive version of proximate cause.
For more on the case, see my post from 10/22/24. For background, see my 2004 Chapman Law Review article from when PLCAA was pending in Congress.
Update: As discussed above, Mexico claims that Colt engraved pistols with the name of the freedom-fighter "Zapata" in order to appeal to the cartels. The irony here, as I just learned, is that Colt did not produce the Zapata 1911s. While Colt did manufacture the pistols, they were sold to a distributor who sold them to an engraver, who engraved them with the various Mexican themes, and then sold them through dealers. Talk about "remoteness"!
