Smith & Wesson Corp. v. City of Gary

Rule of Law:

The Protection of Lawful Commerce in Arms Act (PLCAA) does not bar public nuisance claims against firearm manufacturers and sellers when the claims allege the defendants knowingly violated a state or federal statute applicable to the sale or marketing of firearms, thereby falling within the PLCAA's "predicate exception."

Facts:

• In September 1999, the City of Gary filed an action against various handgun manufacturers, a wholesaler, and retailers.
• The City alleged that some dealers, including Cash America, Ameri-Pawn, and Blythe's Sporting Goods, knowingly sold handguns to illegal buyers through "straw purchases," with some of these practices being the subject of a Gary police department "sting" operation.
• The City also alleged other dealer practices contributed to illegal purchases, such as failing background checks, selling multiple guns to one person, and intentionally diverting guns to illegal purchasers.
• The City claimed the manufacturers and distributors knew about these illegal retail sales, knew that a small percentage of dealers accounted for a large portion of illegally obtained handguns, and had the ability to change the distribution system but intentionally failed to do so.
• These practices generated substantial additional costs and harm for the City, including increased crime, public resource expenditure, and a significant number of handgun murders (70 in 1997, 54 in 1998) and crime guns recovered (2,136 from 1997-2000).
• The City's complaint included claims for public nuisance, negligence in gun distribution, and negligent design, seeking compensatory and punitive damages and injunctive relief.

Procedural Posture:

• In September 1999, the City of Gary filed an action in state trial court against handgun manufacturers, a wholesaler, and retailers, alleging public nuisance, negligence in distribution, and negligent design.
• The state trial court granted a motion by all defendants to dismiss all counts for failure to state a claim.
• The City of Gary appealed the trial court's dismissal to the Court of Appeals of Indiana.
• The Court of Appeals of Indiana affirmed the dismissal of the negligence count for all defendants and affirmed the dismissal of the public nuisance claim for manufacturers and distributors, but reversed for dealers regarding "straw purchases."
• The Indiana Supreme Court granted transfer and reversed the dismissal of the City's public nuisance claim against the Manufacturers, and also held that the City could proceed on its negligence and negligent design claims.
• In 2005, the United States Congress passed the Protection of Lawful Commerce in Arms Act (PLCAA).
• Shortly after the PLCAA's enactment, the Manufacturers moved in the state trial court to dismiss the City's complaint or, in the alternative, for judgment on the pleadings, arguing the PLCAA barred the claims.
• The United States of America intervened in the state trial court for the limited purpose of defending the PLCAA's constitutionality.
• The state trial court denied the Manufacturers' motion to dismiss and motion for judgment on the pleadings, finding the PLCAA unconstitutional and implying its applicability without directly addressing it.
• The Manufacturers brought an interlocutory appeal from the trial court’s denial of their motion to dismiss or, in the alternative, motion for judgment on the pleadings to the Court of Appeals of Indiana.