Executive Summary
Introduction
On March 10, 1995, the United States House of Representatives passed H.R. 956, the “Common Sense Product Liability and Legal Reform Act.” The deceptively named bill embodies the product liability restrictions of the Republican “Contract with America.” On May 10, 1995, the Senate passed its version of product liability “reform” legislation, S. 565, the erroneously titled “Product Liability Fairness Act.” Although the bills differ in details the House legislation is much broader in scope, applying to all civil actions, not just product liability cases both are designed to restrict the ability of consumers injured by defective products to receive adequate compensation and to hold accountable negligent and reckless corporations.
Despite the fact that firearms kill nearly twice as many Americans as all household consumer products combined, no federal agency has the necessary authority to ensure that guns do not explode, or unintentionally discharge when they are dropped or bumped. This is unique. For example, the federal Consumer Product Safety Commission (CPSC) exists to make sure that consumers are not killed or injured by common household and recreational products. The agency tries to ensure that toasters don’t explode, toys don’t come apart, coffee makers don’t catch fire, and that the myriad of consumer products within its jurisdiction are safe. Yet for firearms and ammunition the tort system is the only check on safety.
Although the federal Bureau of Alcohol, Tobacco and Firearms (ATF) licenses manufacturers, dealers, and importers, it has no general safety authority, e.g. the power to set safety standards or institute recalls. ATF’s limited jurisdiction over gun manufacturers, importers, and dealers does not include basic health and safety standards. Currently, the civil justice system is the only mechanism available to protect consumers from defect-related death and injury and to ensure that guns that are sold are safe and free from defects in design or manufacture.
The tort system is important to efforts to reduce firearms violence from two perspectives. First, to address the problem of unintentional fatal and non-fatal injuries associated with defectively designed and manufactured firearms and ammunition. Second, to hold accountable sellers and manufacturers who knowingly market and sell their products to such obviously high-risk individuals as criminals and minors. Traditional product liability lawsuits have been of tremendous importance in regulating the safety of firearms and ammunition and compensating consumers who suffer injury or death caused by a manufacturer’s or dealer’s negligence.
Because of firearms’ unique exemption from safety regulation, the House and Senate tort restriction bills would have a magnified negative impact on firearms safety and the victims of gun violence. In recent years, some of the greatest gains in efforts to reduce firearm-related death and injury have occurred not through legislation, but litigation. Courts have helped deter the manufacture, sale, and use of unsafe firearms and have issued landmark rulings in cases involving assault weapon manufacturers, gun show promoters, and firearm retailers. Many of these gains could be jeopardized if the proposals contained in the House and Senate bills become law. There would be disastrous effects on the already feeble incentives for firearms and ammunition safety and significant benefits would accrue to the firearms industry.
Lawyers, Guns, and Money examines the detrimental impact that the tort restriction proposals passed by the House and Senate would have on firearms and ammunition safety and on efforts to reduce firearms violence through the civil justice system. It also documents the role played by the firearms industry and pro- gun interests in lobbying for tort restrictions. The study demonstrates that the supporters of tort restrictions include the manufacturers and sellers of some of the country’s most dangerous and deadly products.
The full 74-page study is divided into three sections. Section One details the involvement of the firearms industry and pro-gun lobbying organizations in efforts on Capitol Hill to enact tort restrictions. Section Two examines specific components of the House and Senate bills and the benefits they would offer firearm manufacturers. Section Three is the study’s conclusion. The full study also contains seven appendices containing many of the articles and documents referred to in the text.
Section One: The Involvement of the Gun Lobby in Lobbying for Tort Restrictions
The Role of the Industry
Considering the unique health and safety function performed by the civil justice system with respect to firearms and ammunition, it is not surprising that the firearms industry is actively backing limits on civil liability.
Sturm, Ruger & Company, Colt, and other major firearm manufacturers have been long-time members of several organizations pushing for liability restrictions, such as the Product Liability Coordinating Committee (PLCC). The American Shooting Sports Council (ASSC), one of the gun industry’s leading trade associations, is a member of the American Tort Reform Association (ATRA), a coalition of large corporations and insurance companies working to weaken the civil justice system on both the state and federal levels.
The American Shooting Sports Council was formed in response to the 1989 federal ban on the importation of foreign-made assault rifles. ASSC Executive Director Richard Feldman was formerly executive director of Product Liability- Sports (PLS), the political arm of the Sporting Goods Manufacturers Association (SGMA). An SGMA pamphlet describes PLS as “dedicated to reforming the tort liability laws which adversely affect the American sports industry.” ASSC counts among its members: assault weapon manufacturers Intratec and Calico; Saturday Night Special handgun manufacturers Bryco and Lorcin; and mainstream manufacturers such as Smith and Wesson. According to Gun Week, Victor Schwartz who is affiliated with both the Product Liability Coordinating Committee and the American Tort Reform Association and is probably the most visible lobbyist for tort restrictions accepted an invitation by the ASSC to address its 1995 annual Congressional lobbying day or “Fly-In” to talk about pending product liability legislation.
Other ATRA members include the Sporting Arms and Ammunition Manufacturers Association (SAAMI), and Sturm, Ruger & Company, manufacturer of the Old Model single action revolver. The Old Model single action has been the subject of hundreds of product liability lawsuits. Stephen L. Sanetti, Sturm, Ruger & Company’s vice president and general counsel, serves as a member of the board of directors of the Product Liability Advisory Council, Inc. Sanetti serves along with executives from major pharmaceutical, automobile, and other large manufacturers.
Bob Delfay executive director of both SAAMI and its larger sister trade organization, the National Shooting Sports Foundation (NSSF) has identified as particularly problematic for the industry suits alleging that gun manufacturers should be held strictly liable for injuries caused to innocent parties when manufacturers knowingly design and market their products for criminal use. Such cases have already been filed against the manufacturers of the firearms used in the 1993 Long Island Railroad massacre and in the 1993 shooting at the San Francisco law firm of Pettit and Martin.
Moreover, the gun press members of which derive substantial income from firearms industry advertising keeps its readers abreast of the latest developments in the battle over tort restrictions and encourages political activism in support of measures to limit the liability of the firearms industry. For example, an April 1995 Gun Week article entitled “Are You Speaking With Congress?” urged the pro-gun community to make its concerns heard on Capitol Hill and listed product liability as one of the “issues of special interest to gun owners and those concerned with their firearms rights.” Most recently, Robert Hausman, wrote in the January 1996 issue of Guns and Ammo magazine that “[t]he main benefit to the firearms industry would be the cap on punitive damages….”
The Role of the National Rifle Association
Although the National Rifle Association of America (NRA) insists that it represents the interests of firearm consumers and not those of the industry, it has joined with gun manufacturers and industry trade associations in support of legislative measures restricting liability even though many gun owners are injured by defectively designed firearms each year.
In a July 1995 interview in Guns and Ammo magazine, NRA Executive Vice President Wayne LaPierre was asked, “What’s the NRA looking at in the area of tort reform concerning firearms liability? This is important because this is obviously restrictive on the part of the manufacturer and these costs are passed on to the consumer.”[1] LaPierre responded, “We are part of the coalition that is pursuing legislation…. The industry is certainly carrying the brunt of the issue, but we’re lending support.”
According to Senate staff, during consideration of S. 565 this Congress, the NRA sought a Senate sponsor for an amendment that would have established a complete defense in any product liability action where the plaintiff’s harm was the result of criminal misuse of the product. The effect of the amendment would have been to shield manufacturers and dealers from liability in a wide variety of cases.
Section Two: Specific Benefits Tort Restrictions Would Offer the Firearms Industry
Because the manufacture of firearms and ammunition is virtually unregulated, the civil justice system provides an essential safety check on the firearms industry. As a result, the firearms industry would benefit greatly from limitations on the tort system.
This section details some of the specific ways in which the product liability provisions passed by the House and Senate would weaken consumer protection from unreasonably dangerous firearms, reduce compensation for injured gun owners and victims of firearms violence, hinder efforts to keep guns out of the hands of criminals and youth, and provide significant economic benefits to the firearms industry at the expense of our nation’s health and safety.
Punitive Damages
The bills would radically alter the law regarding punitive damages. Punitive damages are intended to punish and deter outrageous corporate conduct. Punitive damages also help to dissuade manufacturers from making a conscious choice to market a product despite knowledge of an unacceptable risk. They also encourage adequate testing and safety evaluation of a product.
Large punitive damage verdicts often receive attention from the press and the public. However, the facts demonstrate that large verdicts are rendered infrequently and are often reduced in the post-trial process. The most authoritative study on punitive damages ever conducted, Michael Rustad’s Demystifying Punitive Damages in Product Liability Cases: A Survey of a Quarter Century of Trial Verdicts, analyzed damages in state and federal courts from 1965 to 1990 and found that only 355 had been made in product liability cases. The study identified only 24 verdicts that included punitive damages in the category of “recreational products,” the category encompassing firearms.
Under the proposed changes in tort law, the deterrent and punishment functions of punitive damages would be weakened in several crucial ways.
Heightened Standard of Proof
The bills would raise substantially the standard of proof for punitive damages. Victims of dangerous firearms would have to show by “clear and convincing evidence” that the harm suffered was the result of conduct that was carried out with a “conscious, flagrant indifference” to the safety of others. Currently, many states allow punitive damages to be awarded under a less prohibitive, but still strict, standard. A heightened standard could allow culpable gun manufacturers to go unpunished. [For examples please see Collins v. Remington on page 14 and Johnson v. Colt on page 15 of the full study.]
Cap on Punitive Damages
The Senate bill contains an overall cap on punitive damages of two times compensatory damages or $250,000, whichever is greater. In an attempt to assuage concerns about the harshness of an absolute cap on punitive damages, the Senate included an “additur” provision that allows judges to increase punitive damages to amounts greater than the cap. However, such judicial “additur” provisions have been held to be unconstitutional for use in the federal courts by the United States Supreme Court. In addition, some state courts have held that “additur” violates their state constitutions.
By tying the amount of punitive damages to compensation, the cap would prevent culpable manufacturers from being adequately punished simply because the plaintiff suffered relatively little economic and non-economic harm. This rule also ignores the well-established principle that the purpose of punitive damages is punishment and deterrence, not compensation, and therefore the amount of such an award should be determined by more than just consideration of the nature and extent of the plaintiff’s loss. [For an example please see Lewy v. Remington Arms on page 17 of the full study.]
The Small Business Cap and How it Would Protect
Saturday Night Special Manufacturers
One of the main provisions of the Senate bill would place a special cap on punitive damages for small businesses. The bill would limit the amount of punitive damages that could be awarded against corporations with less than 25 employees without consideration of the entity’s sales, assets, or profits. Punitive damages assessed against such companies would be limited to the lesser of two times compensatory damages or $250,000 in other words, an absolute cap of $250,000.
In the spring of 1995 the Violence Policy Center conducted an informal telephone survey to determine which gun manufacturers had employment levels that might allow them to benefit from the “small business” cap. The survey revealed that some of the top handgun manufacturers in the United States might be protected by the limitations on damages intended to protect “small businesses.”[2]
The following six manufacturers make the majority of cheap, concealable, low-quality handguns commonly known as “Saturday Night Specials” produced in the United States. Many of the handguns made by these domestic companies could not be imported into the United States because they fail to meet the minimum design and safety standards required of imports by the Bureau of Alcohol, Tobacco and Firearms (ATF). However, since these standards do not apply to domestically manufactured handguns, once again, the tort system provides the only regulation of these domestic manufacturers.
Five of the six companies belong to a group of California handgun manufacturers known as the “Ring of Fire.”[3] Furthermore, two models of handguns manufactured by these companies represent two of the top three firearms traced to crime by ATF in 1994. The six companies are:
- American Derringer Corp., Waco, Texas. American Derringer reported 10 employees or less. It manufactured 8,571[4] handguns in 1992, the last year for which figures are available.
- Bryco Arms, Inc., Costa Mesa, California. The number of people employed by Bryco was reported to fluctuate between 20 and 30. It manufactured 251,633 handguns in 1993. Bryco was the third top producer of handguns in 1993.
- Davis Industries, Chino, California. Davis reported 20 to 22 employees. It manufactured 178,271 handguns in 1993. Product liability cases are pending against the company for injuries related to accidental discharge and exploding barrels. Davis was the fifth largest producer of handguns in 1993 according to production data.
- Lorcin Engineering Co., Inc., Mira Loma, California. Lorcin was engaged in lay-offs at the time of the survey and reported 26 employees. It manufactured 341,243 handguns in 1993, making it the number one pistol manufacturer in the nation. Product liability lawsuits are pending against Lorcin for accidental discharge and point- of-sale negligence.
- Phoenix Arms, Ontario, California. Phoenix reported between 20 and 30 employees. It manufactured 99,621 handguns in 1993. Phoenix was the seventh top producer of handguns in 1993.
- Sundance Industries, Valencia, California. Sundance reported five employees. It manufactured 22,118 handguns in 1993.
These companies represent a small sampling of gun manufacturers that may benefit from the small business cap on punitive damages contained in the Senate- passed liability bill. According to the 1992 U.S. Census of Manufacturers, there were 184 small arms manufacturers in the United States and only 60 had 20 or more employees. In other words, 67 percent of small arms manufacturers stand to benefit from the special treatment afforded small businesses under the cap on punitive damages.
Joint and Several Liability
Both bills would abolish joint liability for so-called non-economic damages e.g. pain and suffering, loss of a child holding a defendant responsible only for its comparative share of the loss. Under current law, the victim is fully compensated by making the guilty defendants pay.
Limitations on joint and several liability could be particularly devastating for victims of gun violence in cases in which a manufacturer or dealer as well as the shooter are held liable. Often the shooter is incarcerated or has very limited economic resources. Only the manufacturer or dealer can make any meaningful contribution toward compensating the victim. [For an example please see Pavlides v. Niles Gun Show on page 24 of the full study.]
Product Seller Liability
One of the least discussed and potentially most dangerous provisions in the House and Senate bills are those limiting the liability of product sellers, distributors, and importers. The product seller provisions of both bills would drastically change the law applying to gun dealers, wholesalers, and importers.
Defective Sales
Historically, vendors who knowingly sell firearms to dangerous buyers can be held liable for any consequences caused by the sale. Under the product seller sections of the pending bills however, gun dealers might only be liable for selling a bad product not for making a bad sale. Application of the bills would not be limited to traditional “product liability” suits that allege some product defect. The definition of “product liability action” is set forth as “a civil action brought on any theory for harm caused by a product.” [italics added] This language makes it clear that the legislation would apply to cases brought by victims injured by firearms as a result of the negligent or unlawful sale of that firearm e.g., where a gun dealer knowingly sells a firearm to a minor, felon, or mental incompetent. The bills would, to slightly different degrees, limit the liability of sellers to instances in which the seller failed to exercise reasonable care with respect to the product. This means that in many instances gun dealers would escape liability for selling firearms and ammunition to obviously high-risk individuals such as felons or mental incompetents. If enacted, this provision would turn longstanding legal tradition on its head. [For an example please see Farley v. Guns Unlimited on page 27 of the full study.]
On this issue, the Senate bill is slightly less restrictive than the House bill since the Senate bill specifically excludes the theory of “negligent entrustment.” The Senate language, however, may be inadequate to protect victims seeking recovery on the related theory of negligence per se in which the defendant is automatically liable because a plaintiff demonstrates that the defendant violated a criminal law. The fact that the Senate specifically excluded the theory of negligent entrustment could be interpreted by courts as an indication that other theories were intended to be affected by the bill. This could have the effect of negating a growing body of case law recognizing violations of the federal Gun Control Act of 1968 as sufficient to prove negligence per se under state law.
Strict Seller Liability
The bills virtually absolve product sellers from strict liability liability assessed solely on the basis that a product is defective. [For an example please see DiFrancesco v. Excam, Inc. on page 30 of the full study.]
Statute of Repose
The House-passed legislation contains a “statute of repose” which bars product liability suits for products more than 15 years old. This provision would be particularly harmful in the case of firearms which are designed to, and in fact do, have a useful life far in excess of 15 years. To arbitrarily cut off the liability of firearm manufacturers would leave gun owners unprotected against latent manufacturing or design defects that may not become manifest for decades.
Under current law, in some states consumers can recover for injuries caused by an older firearm when the victim can prove that the injuries resulted from a defect in the design or manufacture of the gun that was present when the firearm was purchased. The best example of the fairness of allowing consumers to recover for injuries caused by old guns is Sturm, Ruger & Company’s Old Model single action revolver. More than 600 people, including children, have been killed or injured by accidental discharges from Old Models. The revolvers were manufactured from 1953 until 1972, after which the design of the gun was modified to include a transfer bar safety. However, by the time the gun was redesigned, 1.5 million revolvers were in the hands of consumers. Nevertheless, it was 10 years before Sturm, Ruger took any action to remedy the hazard presented by the Old Models. In 1982 the company offered to retrofit Old Models with a transfer bar safety, but by the beginning of 1993, only 130,573 had been retrofitted. The company still distributes flyers telling owners of Old Model revolvers, “Ruger wants to give you, and install FREE, a unique new improvement.” In its 1994 catalog, Ruger touted a “FREE Single-Action Revolver Safety Offer.” The offer says that the safety conversion “can help prevent accidental discharges caused by a drop or blow to the hammer if the user has failed to take the basic safety precaution of keeping the hammer down on an empty chamber. That’s very important!” Despite Ruger’s knowledge of the defect in the design of the Old Model, the company still refuses to issue a recall of the guns.
Section Three: Conclusion
The firearms industry manufactures one of the most dangerous and deadly consumer products on the market today and yet remains exempt from the health and safety standards applied to virtually all other industries that manufacture and sell consumer products. The changes in our nation’s civil justice system contained in the House and Senate bills would demolish any incentives for gun manufacturers and sellers to make defect-free products and ensure that the weapons end up in the hands of legal buyers. These anti-consumer proposals are supported by the National Rifle Association and such firearms industry trade associations as the American Shooting Sports Council despite the likelihood that implementation of these proposals will increase the number of gun owners, hunters, and bystanders injured each year by unintentional discharges. Specifically, the proposed changes would:
- Severely reduce the incentives for manufacturers to take steps to ensure that guns and ammunition are free from defects in design or manufacture by severely diminishing the amount of punitive damages that may be awarded against corporations which recklessly or wilfully cause injury.
- Significantly reduce the liability of gun dealers by eliminating strict liability for product sellers.
- Institute an absolute cap of $250,000 on punitive damages against manufacturers with fewer than 25 full-time employees. This provision would protect several of the top pistol manufacturers in the country.
- Completely eliminate liability of manufacturers for guns that are more than 15 years old. This would cut off the liability for many dangerous, defective firearms including the Sturm, Ruger Old Model single-action revolver, a revolver manufactured between 1953 and 1972 that has killed or injured hundreds of victims and continues to cause injury.
The courts have played an increasingly important role in efforts to reduce firearm-related death and injury. Much of this progress, however, will come to a screeching halt if the bills passed by the House and Senate become law. The firearms industry already enjoys a special exemption from regulation. Common sense dictates that the civil justice system’s regulatory and compensatory functions must remain potent.
Endnotes
- Empirical data demonstrates that costs attributable to product liability that are passed on to consumers are actually negligible. According to a 1995 study conducted by the Consumer Federation of America, product liability insurance costs American consumers only 26 cents out of every $100 purchase.
- Some companies are included where the number of employees fluctuates or is slightly above the cap. It is not unreasonable to assume that some of these companies would lay off workers to take advantage of the 25-employee threshold.
- The term “Ring of Fire” comes from the 1994 study Ring of Fire: The Handgun Makers of Southern California by Garen Wintermute, MD, MPH of the Violence Prevention Research Program at the University of Southern California, Davis. Wintermute explains, “Americans are familiar with the use of the term ‘Ring of Fire’ to describe the chain of volcanoes that rings the Pacific Ocean. We have borrowed the term here to describe the chain of handgun manufacturers that rings the Los Angeles metropolitan area.”
- All production figures are taken from the most recent Bureau of Alcohol, Tobacco and Firearms production reports available at the time of writing.
Primary author for this study was Violence Policy Center Director of Federal Policy Kristen Rand. Additional contributions were made by Public Citizen President Joan Claybrook and Public Citizen Staff Attorney Joseph Belluck. Primary researchers for the study were Janet Corry, Susan Glick, and Theresa Kim. The study was edited by Josh Sugarmann.
The Violence Policy Center is a national non-profit educational foundation that conducts research on violence in America and works to develop violence-reduction policies and proposals. The Center examines the role of firearms in America, conducts research on firearms violence, and explores new ways to decrease firearm-related death and injury.
Public Citizen is a nonpartisan organization that fights for government and corporate accountability, consumer rights in the marketplace, safe products, a healthy environment, fair trade, and clean and safe energy sources through lobbying, research, public outreach, and litigation.
