On January 22, 2024, the United States Court of Appeals for the First Circuit remanded a case from the United States District Court for the District of Massachusetts in which the government of Mexico brought a suit against seven U.S. gun manufacturers and one gun distributor. The case, Estados Unidos Mexicanos v. Smith & Wesson Brands, Inc., involves claims under the Protection of Lawful Commerce in Arms Act (PLCAA, Pub. Law 109-92), which places specific limitations on the kinds of lawsuits that can be brought against firearm manufacturers in the United States. Specifically, the law “prohibits civil liability actions from being brought against manufacturers, distributors, or importers of firearms or ammunition for damages, injunctive or other relief resulting from the misuse of their products by others.” The appellate court generally agreed that the PLCAA limits claims that can be brought by a foreign government but explained that common law claims by Mexico could potentially move forward. (Decision at 4.) The case involves numerous nonprevailing arguments and issues (focusing on the concept of extraterritoriality). The present article, however, primarily discusses the issue remanded back to the District Court (exceptions to the PLCAA).
The extraterritorial arguments in the case deal with the concept that “[c]ourts presume that federal statutes ‘apply only within the territorial jurisdiction of the United States.’” (Decision at 10–11.) In this instance, the Mexican government argued that due to extraterritoriality, the PLCAA did not apply whatsoever in this case. The court disagreed, explaining that the PLCCA was domestic in nature and insulates companies against both foreign and domestic plaintiffs. (Decision at 30–31.)
Exceptions to the PLCAA
The appellate court explained that the PLCAA was designed to protect “lawful” commerce in arms and that it “contains various exceptions to ensure that it does not insulate firearm companies against lawsuits resulting from their unlawful behavior.” (Decision at 31.) Mexico argued that this lawsuit satisfied the “predicate exception,” which allows a case to move forward when conduct by the defendant was unlawful (i.e., in violation of another statute) and the unlawful conduct was a proximate cause of the injury or harm. (Decision at 31.) The defendants put forth three arguments about this exception: there was no violation of a statute; there was not an adequate pleading related to those statutes; and there was not an adequate allegation of proximate cause. (Decision at 31.)
The court first determined that there did not need to be an explicit violation of a statute to satisfy the exception, instead stating that a common law claim is sufficient. (Decision at 32–33.) The court relied on statutory construction rules to explain this part of the decision. Essentially, other exceptions had specific statutory causes of action, while the predicate exception did not. The court explained that “it is generally presumed that Congress acts intentionally” regarding the omission of language included elsewhere in the statute. (Decision at 33.) The court further explained that a common law claim could satisfy the exception so long as the defendant had knowingly violated a predicate statute and the violation proximately caused the injury. (Decision at 36–37.)
Next, the court turned to arguments that the defendants knowingly violated predicate criminal statutes by “deliberately facilitating” gun sales in Mexico, thus aiding and abetting violations of U.S. federal and state statutes, and by selling unlawful “machineguns.” (Decision at 37–38.) The defendants argued that the complaint should be dismissed because it failed to allege facts plausibly supporting the plaintiff’s claim that the defendants aided and abetted unlawful sales of guns. (Decision at 38.)
The court disagreed with the defendants, finding that there was an adequate factual allegation that they aided and abetted the sale of firearms in violation of U.S. federal and state laws. (Decision at 38.) Aiding and abetting liability requires that the assistance provided to the wrongdoer be both knowing and substantial. (Decision at 39.) The court explained that the Mexican position prevails here because the gun companies were made aware by the U.S. government that certain sales were directly related to cartels’ criminal activities. (Decision at 39–40.) The court disagreed with Mexico regarding the “machinegun” argument because none of the firearms at issue were considered “machineguns” as defined by the U.S. government.
The final prong of the exception was the proximate cause requirement. The court stated that “[p]roximate cause is commonly understood as a function of the foreseeability of the harm.” (Decision at 49.) The court then restated Mexico’s argument for proximate cause: that defendants aid and abet the trafficking of guns to cartels and the Mexican government has incurred significant costs to counteract the arms strength of the cartels. (Decision at 50.) The defendants argued that there were significantly more steps to the causality chain, but the court rejected that argument, explaining that simply creating a longer chain of causation does not disconnect the act and the injury. (Decision at 50–51.)
The defendants then argued that the introduction of third-party actors (here, the cartels) breaks up the proximate cause chain. The court countered that an intervening criminal act by a third party does not necessarily break the chain of causation. (Decision at 52–53.) The defendants also made arguments related to the injury portion of the analysis, arguing that the injuries to the Mexican government are actually injuries to individual victims of cartel violence, which should halt the proximate cause analysis. The court disagreed, stating that a derivative cost would support a proximate cause analysis. (Decision at 55–56.) However, the court also recognized that other courts have disagreed on this issue. The court relied upon proximate cause reasoning adopted by a Massachusetts state trial court, which aligns with the reasoning of cases from Ohio, New Jersey, and California. (Decision at 54–56.)
The appellate court concluded that Mexico had adequately alleged proximate causation, satisfying the predicate exception. However, the court also noted that it had ruled on the basis of facts in the complaint construed favorably toward Mexico (which is the standard when evaluating a motion to dismiss a complaint), and that the Mexican government would need to support the claims with evidence at the trial court level. (Decision at 60.)
Louis Myers, Law Library of Congress
February 12, 2024
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