by Jerold E. Levine

The New York Court of Appeals on April 26 fired at and may have fatally wounded plaintiffs in the New York City federal court action Hamilton v. Accu-Tek. (See related news story on Page 1.)

The lawsuit, filed in federal District Court in January 1995, and based upon New York tort liability law, sought to hold numerous gun manufacturers liable for injuries inflicted by third parties. The federal trial, presided over by federal Judge Jack Weinstein, ended with a divided jury finding liability against three of the 25 manufacturer defendants.

But upon appeal of the jury verdict, the federal 2nd Circuit Court of Appeals “certified” two critical legal questions to the New York Court of Appeals. The Court of Appeals now has answered both questions in favor of the manufacturers.

Certification is used where a federal court needs clarification about state law issues that relate to a federal action. In this case, the 2nd Circuit likely doubted the validity of Weinstein’s interpretation and application of New York liability law, and sought certification from the state’s highest court before reaching its own.

The questions certified to the Court of Appeals were: “1.) Whether the defendants owed plaintiffs a duty to exercise reasonable care in the marketing and distribution of the handguns they manufacture?, and, 2.) Whether liability in this case may be apportioned on a market share basis, and if so, how?”

In permitting the federal trial to proceed, and in refusing to dismiss the case against the defendants, Weinstein effectively answered both these questions “yes,” because he found that the manufacturers did owe a duty of care to the plaintiffs, and that their liability could be apportioned among them according to their share of the handgun market. But the state Court of Appeals effectively gutted Weinstein’s interpretation of New York law in its April 26 decision.

Duty of Care Claim
The plaintiff’s lawyers argued to the Court of Appeals that the handgun manufacturers had a duty of care over the distribution of their guns based upon: 1.) their ability to control marketing and distribution; 2.) their general knowledge that many guns enter into the illegal market; 3.) New York’s strict gun control policies, and 4.) the unique lethal nature of the products.

The defendants argued that they owed no duty of care to the general public to protect it against the criminal acquisition and misuse of guns by persons beyond the control of the manufacturers, and that imposition of such a duty subjected them to limitless liability.

The Court of Appeals agreed.

The Court stated, “The District Court imposed a duty on gun manufacturers ‘to take reasonable steps available at the point of sale to primary distributors to reduce the possibility that these instruments will fall into the hands of those likely to misuse them.’ We have been cautious, however, in extending liability to defendants for their failure to control the conduct of others. . . .[T]his judicial resistance to the expansion of duty grows out of practical concerns both about potentially limitless liability and about the unfairness of imposing liability for the acts of another.

“. . .The pool of possible plaintiffs is very large—potentially, any of the thousands of victims of gun violence. Further, the connection between defendants, the criminal wrongdoers and plaintiffs is remote. . . . Such broad liability, potentially encompassing all gunshot crime victims, should not be imposed without a more tangible showing that the defendants were a direct link in the casual chain that resulted in the plaintiffs’ injuries, and that the defendants were realistically in a position to prevent the wrongs.”

Arguments Rejected
Two additional plaintiff arguments related to duty of care were swept away by the Court of Appeals. The plaintiffs argued that the manufacturers had a special ability to detect and guard against the risks associated with their products [this relates to the plaintiff’s “negligent marketing” claim], and further that liability should attach because the products are lethal or hazardous [this regards the plaintiff’s claim attempting to bring gunmakers within the reach of strict liability law, which is imposed upon manufacturers of ultrahazardous materials].

The Court of Appeals rejected both arguments, noting, “[N]one of plaintiffs’ proof demonstrated that a change in marketing would likely have prevented their injuries. . . . [and] The cases involving . . . hazardous materials, relied upon by plaintiffs, do not support the imposition of a duty of care in marketing handguns. The manufacturer’s duty in each case was based either on a products liability theory—that is, the product was defective because of the failure to include a safety feature—or on a failure to warn. . . . Here, defendants’ products are concededly not defective—if anything, the problem is that they work too well. Nor have plaintiffs asserted a defective warnings claim. . . .”

The plaintiffs also argued that a more general duty of care arose, again, from the defendants’ ability to reduce the risk of illegal gun trafficking through control of the marketing and distribution of their products.

The Court of Appeals stated, “The District Court accepted this proposition and posited a series of structural changes in defendants’ marketing and distribution regimes that might ‘reduce the risk of criminal misuse by insuring that the first sale was by a responsible merchant to a responsible buyer.’ . . . Those changes, and others proposed . . . would have the unavoidable effect of eliminating a significant number of lawful sales to ‘responsible’ buyers by ‘responsible’ federal firearms licensees (FFLs) who would be cut out of the distribution chain under the suggested ‘reforms.’ ”

No Evidence
Examples of such structural changes noted by the District Court were limiting the volume of sales in states with weak gun controls, restricting distribution entirely to established retail stores, franchising retail outlets, and barring distribution to dealers who sell at unregulated gun shows. The Court of Appeals, citing testimony from the plaintiffs’ own law enforcement experts, found these proposed structural changes to be unrealistic.

The Court of Appeals stated, “Plaintiffs . . . presented no evidence . . . showing any statistically significant relationship between particular classes of dealers and crime guns [emphasis in original]. . . .[I]mposing such a general duty of care would create not only an indeterminate class of plaintiffs but also an indeterminate class of defendants whose liability might have little relationship to the benefits of controlling illegal guns.”

The plaintiffs argued also that the gunmakers had a duty of care created by the doctrine of negligent entrustment. This occurs where a supplier becomes liable for damages when the supplier entrusts an instrument into the hands of someone who misuses the instrument.

To this argument the Court of Appeals responded, “The tort of negligent entrustment is based on the degree of knowledge the supplier . . . has or should have concerning the entrustee’s propensity to use . . . in an improper or dangerous fashion. . . .Of course, without the requisite knowledge, the tort . . . does not lie. . . .

“The negligent entrustment doctrine might well support the extension of a duty to manufacturers to avoid selling to certain distributors in circumstances where the manufacturer knows or has reason to know those distributors are engaging in substantial sales of guns into the gun-trafficking market on a consistent basis. Here, however, plaintiffs did not present such evidence.

Trace Data Issue
The Court did not accept the plaintiffs’ further assertions that handgun manufacturers could review crime gun trace data from the Bureau of Alcohol, Tobacco and Firearms (ATF) to ascertain which retail dealers were involved in illicit activities. The Court found that “manufacturers may be generally unaware of traces for which they are contacted, they are not told the purpose of the trace, nor are they informed of the results. The ATF does not disclose any subsequently acquired retailer or purchaser information to the manufacturer.

“Moreover, manufacturers are not in a position to acquire such information on their own. Indeed, plaintiffs’ law enforcement experts agreed that manufacturers should not make any attempt to investigate illegal gun trafficking on their own since such attempts could disrupt pending criminal investigations and endanger the lives of undercover officers. . . . Federal law already has implemented a statutory and regulatory scheme to ensure seller ‘responsibility’ through licensing requirements and buyer ‘responsibility’ through background checks.”

Market Share Theory
Market share liability is an exception to the rule in negligence cases that a plaintiff prove that it was the defendant’s action or omission which caused harm. In Hamilton, the plaintiffs asserted that where the gun used could not be found, all manufacturers of that caliber of gun should be liable according to their respective share of the market.

Market share theory liability has been applied by courts, and in New York most significantly in the Eli Lilly & Co. “DES” drug cases. However, the Court of Appeals did not agree that the theory applied in this case. And while the Court did not need to reach this argument—having already decided that the defendants had no duty of care to the plaintiffs—the Court opined that “because of its particularly significant role in this case, it seems prudent to answer the second question.”

The Court stated, “In Hymowitz (v. Eli Lilly & Co.), we held that plaintiffs injured by the drug DES were not required to prove which defendant manufactured the drug that injured them but instead, every manufacturer would be held responsible for every plaintiff’s injury based on its share of the DES market. [This] . . . was necessary . . . DES was a fungible product and identification of the actual manufacturer that caused the injury to a particular plaintiff was impossible. The Court carefully noted that the DES situation was unique.”

In Hymowitz, the manufacturers acted to produce an identical, generic product, the injuries were far removed from the time the drug was ingested, and the New York legislature had a clear policy of permitting the otherwise time-barred claims—because of the statute of limitations—to be litigated.

Regarding the present case, the Court of Appeals found, “. . .Circumstances here are markedly different. . . .guns are not identical, fungible products . . . it is often possible to identify the caliber and manufacturer of the handgun that caused injury to a particular plaintiff. . . .[The] plaintiffs have never asserted that the manufacturers’ marketing techniques were uniform. Each manufacturer engaged in different marketing activities that allegedly contributed to the illegal handgun market in different ways and to different extents.

“Plaintiffs made no attempt to establish the relative fault of each manufacturer, but instead sought to hold them all liable based simply on market share. . . .We recognize the difficulty in proving precisely which manufacturer caused any particular plaintiff’s injuries since crime guns are often not recovered. Inability to locate evidence, however, does not alone justify the extraordinary step of applying market share liability. . . . Notably, courts in New York and other jurisdictions have refused to extend the market share theory where products were not fungible and differing degrees of risk were created.”

The Court added a footnote, stating that even if the market share theory were to apply here, Weinstein improperly calculated the market share of each of the three defendants found liable at trial. Weinstein applied liability based upon the total market share of each of the three defendants. Instead, he should have applied only that percentage of liability that resulted from the risk of injury through negligent marketing; a much smaller amount.

The Court of Appeals ended its decision with the following: “This case challenges us to rethink traditional notions of duty, liability and causation. Tort law is ever changing; it is a reflection of the complexity and vitality of daily life. Although plaintiffs have presented us with a novel theory—negligent marketing of a potentially lethal yet legal product, based upon the acts not of one manufacturer, but of an industry—we are unconvinced that, on the record before us, the duty plaintiffs wish to impose is either reasonable or circumscribed. Nor does the market share theory of liability accurately measure defendants’ conduct. Whether, in a different case, a duty may arise remains a question for the future.”

Weinstein Reversed
As noted, the Court’s decision is a death-blow to the plaintiffs’ case, for having found that New York law will not support the plaintiffs’ claims (and essentially that Weinstein ruled in error on very substantial legal issues). The 2nd Circuit Court is unlikely to uphold the trial verdict under New York law. Thus, yet again, Weinstein’s notorious efforts in aid of the anti-gun movement have been reversed, though at great expense to lawful gun manufacturers.

Certainly, in this case the Court of Appeals was not willing to balance the traditional interests considered—reasonable expectations of parties and society generally, claim proliferation, the likelihood of unlimited or insurer-like liability, disproportionate risk and reparation allocation, and public policies affecting expansion or limitation of new channels of liability. But as the court referenced, whether a different case will bring a different result remains an open question.

The court obviously wanted to entertain the issues raised, as can be seen from the court taking the unusual step of deciding upon the market share theory even though a ruling on that theory was not necessary. Perhaps the court was attending to the matter now, before the issue arises again, attempting to dissuade potential plaintiffs from bringing similar actions.

Whatever the future may hold, it can be said today that the nation’s premiere—and more that a little socially liberal—state high court has ruled decisively against the present crop of negligent marketing and market share liability theories being used against gun manufacturers.