After Supreme Court ruling, gun makers face legal dangers they aren't prepared for

The U.S. Supreme Court last week allowed a lawsuit against Remington Arms by families of victims in the Sandy Hook Elementary shooting to go forward, despite a federal law that on its face seemed to block the suit.

That raises a challenging question for the manufacturer of the XM15-E2S weapon that gunman Adam Lanza used to kill 20 children and six adults in Newtown, Conn., back in 2012. Should Remington now fight the case in state court, arguing to a judge and jury that it shouldn't be held liable under state and federal law? Or should it settle the case and hope that other states don't follow Connecticut in interpreting federal law to allow for such lawsuits?

In one sense, the dilemma is familiar for any corporate defendant faced with high-profile litigation and the potential for substantial financial liability. The conventional thing is for the corporate defendant to make the case go away by settling it. That's usually thought to reduce bad publicity: Litigation stretches out over time, whereas a settlement is a one-time event.

Also, the damages that a jury might assess are outside the control of the defendant. So sound financial planning usually favors a settlement, which is a known quantity that the defendant can negotiate.

What makes the Sandy Hook case potentially different from the arms manufacturer's perspective is the theory of legal liability that the Connecticut Supreme Court allowed and that the U.S. Supreme Court declined to review. It rests on a slender thread. A federal law, the Protection of Lawful Commerce in Arms Act (PLCAA) of 2005, was designed to protect gunmakers from state or federal lawsuits for violence committed with their weapons. Nearly every court to have applied the PLCAA has blocked lawsuits by victims. The Connecticut court in the Sandy Hook case, however, found what it said was a narrow exception.

If Remington settles, that might encourage similar suits in other states, where other courts might follow Connecticut's lead. Remington might then have to settle with them, too. The result could be a fresh round of litigation risk for the industry.

If, however, Remington lets the case go forward, it might conceivably win on the merits, which would discourage future suits. Even if it loses, it sends the message that it won't settle, and indeed is willing to appeal all the way to the U.S. Supreme Court. It remains entirely possible that, under the right circumstances, the justices might agree to hear a future case on the meaning of the PLCAA.

Courts have typically understood this exception to refer to laws that are specifically targeted at the sale or marketing of guns — not laws that generally regulate the sale and marketing of all kinds of products. You can see why: If a plaintiff could sue a gun manufacturer for illegal marketing or sales generally, then the PLCAA would not in fact offer very much liability protection to the arms manufacturers. And no one disputes that Congress's (highly questionable) purpose in passing the PLCAA was to give the manufacturers a safe harbor.

The Connecticut Supreme Court held, 4-3, that the predicate exception of the PLCAA allowed the Sandy Hook victims' families to sue the gun manufacturer for violating the Connecticut Unfair Trade Practices Act, which applies not specifically to guns but to anything marketed or sold in Connecticut. In particular, the families have alleged that Bushmaster (since acquired by Remington) marketed the XM15-E2S to civilians like Lanza "to carry out offensive, military style combat operations against their perceived enemies."

Connecticut law doesn't allow advertisements that encourage violence or criminality. If Bushmaster really marketed its semi-automatic rifle in this way, it certainly violated Connecticut law. The Connecticut Supreme Court said that this violation would allow the suit to go forward, notwithstanding the federal PLCAA. This was the decision the U.S. Supreme Court declined to review.

When the Supreme Court doesn't accept a case, that doesn't mean it agrees with the result below. It may think that there isn't yet enough disagreement among lower courts to warrant its efforts. In some cases, the justices may simply want to avoid getting involved. It seems possible that the justices wouldn't want to rule on a high-profile gun case in June 2020, with the presidential election season in full gear.

It follows that, if other state supreme courts were to adopt the Connecticut Supreme Court's reasoning, the justices might then take a case in which they rule the approach unlawful. In theory, that could even happen while the Sandy Hook litigation was continuing, provided that Remington doesn't settle it quickly and that the suit drags on. Such a result in another case would also block the Sandy Hook litigation.