Appeals court says Gary’s lawsuit against gun makers can proceed

A unanimous appeals court panel on Thursday revived the city of Gary’s lawsuit against 10 handgun manufacturers, enabling the municipality to survive the Indiana General Assembly’s attempt to derail the legal action by amending state law in 2015.

Gary alleged the gun makers knew of illegal sales of handguns, including to illegal buyers through intermediaries in so-called straw purchases. However, the manufacturers, according to the city, intentionally failed to change their distribution systems to prevent these unlawful sales.

Gary asserted the unlawfully purchased guns have contributed to crime, which draws on public resources and harms victims. From 1997 through 2000, 2,136 handguns used in crimes were recovered, of which 764 were sold through dealers who were defendants in the original complaint the city filed in Aug. 30, 1999.

The northwest Indiana municipality asserted claims for public nuisance, negligent distribution and marketing, and negligent design.

After the city filed an amended complaint in January 2001, the defendants won their motion to dismiss. However, the Indiana Supreme Court reversed and remanded for further proceedings. While the motion was working through the court, the Indiana Legislature passed an amendment to the state’s Immunity Statue, Indiana Code section 34-12-3-3.

The new provision, signed by then-Gov. Mike Pence, made the ban on pursuing legal action against firearms or ammunition manufacturers retroactive to Aug. 26, 1999, four days before Gary filed its original complaint.

In January 2018, the Lake Superior Court dismissed the complaint, finding the manufacturers were entitled to immunity under the Immunity Statute because there was no allegation that their “sales practices violated any specific statute, regulation or ordinance related directly to the sale of firearms.”

The Indiana Court of Appeals reversed, in part, finding the Immunity Statute does not bar all of the city’s claims. Specifically, the three-member appellate panel noted, the law does not provide immunity for the “unlawful design, manufacture, marketing, or sale of a firearm.”

“The City’s amended complaint sufficiently alleges that the City is suing the Manufacturers for their role in the alleged violation of laws governing handgun sales, for which the City may be entitled to damages, injunctive relief, or abatement of a nuisance,” Judge Terry Crone wrote for the court.

Consequently, the Court of Appeals allowed the city’s claims for public nuisance and negligence in distribution of guns to move forward.

The manufacturers separately argued the Immunity Statute bars relief for any claims of negligent, as opposed to unlawful, conduct on their part.

But again, the Court of Appeals was convinced by the city’s assertion that all of its claims involve unlawful conduct because manufacturers “failed to prevent or limit straw purchases; to prohibit or restrict sales to kitchen table and/or corrupt dealers; to prevent multiple purchases of their handguns; [or] to prevent diversion of their handguns at gun shows.” To the extent the city’s claims implicate unlawful conduct by the manufacturers, they are not barred by the Immunity Statute.

But the Court of Appeals did block the city’s claim of negligent design because the amended complaint did not allege unlawful conduct.

“The complaint also alleges that the Manufacturers ‘design(ed) handguns which they knew or should have known did not have adequate safety devices,’ and negligently designed, manufactured, distributed, and/or sold handguns with ‘inadequate, incomplete, or nonexistent warnings regarding the risks of harm of the product(,’)” Crone wrote, citing the appellant’s brief. “The complaint further alleges that the Manufacturers and other defendants ‘knowingly and intentionally acted in concert with each other, have tacitly agreed or cooperated, and/or colluded to wrongfully adhere to industry-wide standards or customs’ regarding various handgun design features. The complaint does not allege, however, that any of the foregoing conduct is unlawful.”