City of Gary v. Smith & Wesson Corp.
126 N.E.3d 813 (2019)
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Rule of Law:
A statute granting immunity to firearm manufacturers for damages arising from the lawful sale of their products does not bar claims alleging that the manufacturers engaged in their own unlawful conduct, such as knowingly facilitating illegal sales through their distribution channels or engaging in criminally deceptive advertising.
Facts:
- The City of Gary alleged that handgun manufacturers sell their products through a distribution system where they know a small percentage of dealers account for a large portion of illegally obtained handguns.
- Gary alleged these dealers knowingly sell handguns to illegal buyers through intermediaries in 'straw purchases' and other unlawful practices.
- Gary asserted that the manufacturers and distributors have the ability to change their distribution systems to prevent these unlawful sales but have intentionally failed to do so.
- The City alleged that from 1997 through 2000, 2,136 handguns used in crimes were recovered, with 764 of them having been sold by defendant dealers.
- Gary also alleged that manufacturers engage in deceptive advertising by falsely claiming that possessing a handgun in the home increases safety, when they know or should know studies indicate the contrary.
- Finally, the City alleged the manufacturers negligently designed handguns without adequate safety devices, which posed unreasonable risks of harm.
Procedural Posture:
- In August 1999, the City of Gary sued handgun manufacturers and others in an Indiana trial court.
- The trial court granted the defendants' initial motion to dismiss for failure to state a claim.
- The City filed an amended complaint in January 2001, which the trial court also dismissed.
- On appeal, the Indiana Court of Appeals affirmed in part and reversed in part.
- The Indiana Supreme Court granted transfer, reversed the trial court's dismissal, and remanded the case for proceedings on all counts in a decision known as 'Gary 1'.
- Following remand, the Manufacturers moved to dismiss based on the federal Protection of Lawful Commerce in Arms Act (PLCAA), which the trial court denied.
- The Manufacturers appealed, and the Indiana Court of Appeals affirmed the denial in 'Gary 2', holding the City's claims fell within the PLCAA's 'predicate exception'.
- In 2015, the Indiana legislature amended the state's Immunity Statute, making it retroactive to before the City filed its original complaint.
- The Manufacturers filed a motion for judgment on the pleadings, arguing the amended statute and the PLCAA barred the suit.
- The trial court granted the Manufacturers' motion for judgment on the pleadings but denied their request for attorney's fees.
- The City of Gary appealed the judgment to the Indiana Court of Appeals, and the Manufacturers cross-appealed the denial of fees.
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Issue:
Does Indiana's firearm manufacturer Immunity Statute, as retroactively amended in 2015, bar a city's public nuisance and negligence claims against handgun manufacturers that are based on allegations of the manufacturers' own unlawful conduct?
Opinions:
Majority - Crone, Judge.
No. The Indiana Immunity Statute does not bar claims against firearm manufacturers that are based on allegations of the manufacturers' own unlawful conduct. The statute's plain language provides immunity for actions related to the lawful design, manufacture, marketing, or sale of firearms, which implicitly means it does not provide immunity for unlawful conduct. The City's public nuisance claim (Count I) survives because it alleges the Manufacturers were knowing accomplices to dealers who violated state and federal handgun sales regulations. The negligent distribution and marketing claim (Count II) survives to the extent it is based on allegations of unlawful, deceptive advertising that could violate Indiana's criminal deception statute. However, the negligent design claim (Count III) is barred because it alleges only negligence and fails to allege that the design itself was unlawful.
Analysis:
This decision clarifies that Indiana's firearm immunity statute is not an absolute bar to litigation against manufacturers. It establishes a critical distinction between claims based on a manufacturer's lawful conduct (which are barred) and those based on its own unlawful acts (which are not). By allowing claims rooted in accomplice liability for illegal sales or violations of consumer protection laws to proceed, the court preserves a pathway for plaintiffs to hold manufacturers accountable for their specific business practices. This precedent signals to future litigants that to overcome the immunity defense, their complaints must be carefully pleaded to allege specific violations of state or federal statutes by the manufacturers themselves, rather than just general negligence or harm caused by third parties.
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