Wednesday, September 01, 2021

When to Hold Businesses Accountable for the Bad Acts of their Customers?

 by Michael C. Dorf

My latest Verdict column discusses a lawsuit by Mexico against various U.S. firearms manufacturers and sellers. As I explain there, Mexico raises tort claims under Connecticut and Massachusetts law, but its main obstacle will be a federal statute, the Protection of Lawful Commerce in Arms Act (PLCAA), which shields U.S. firearms manufacturers from most lawsuits claiming that they are responsible for harms caused by criminals using their weapons. I discuss Mexico's two main arguments (at which the complaint merely gestures, because it falls to the defendants to raise PLCAA as a defense): (1) that the defendants' conduct puts the lawsuit within an exception to PLCAA; and that even if not (2) PLCAA doesn't apply to litigation seeking redress for harms occurring outside the U.S.

My column expresses sympathy for Mexico but doubts about the likelihood that it will prevail. After all, as I observe at the end, PLCAA is "a deplorable gift from Congress to the U.S. firearms industry and gun lobby," so it shouldn't be all that surprising that it produces a deplorable result.

Although any reasonably informed observer understands the politics that gave rise to PLCAA, here I want to explore the policy intuition it purports to implement. The basic idea is that criminals who use firearms for illicit purposes should be held accountable for their crimes but firearms manufacturers producing products that are lawful for law-abiding citizens should not be so liable. The intuition has little proper application to a case like this, but might it be valid in other contexts?

Suppose Jimbo goes to a hardware store and purchases an ordinary hammer and an ordinary pair of pliers. Nothing about Jimbo's appearance indicates anything other than that he intends to undertake some home repairs. However, Jimbo is a burglar. He uses the tools he purchases at the hardware store to break into his neighbors' homes while they are out and then steals their valuables. Jimbo is eventually apprehended, arrested, tried, convicted, and sentenced. Unfortunately, however, Jimbo is a drug addict who used the proceeds from selling the stolen items to an unknown fence to purchase drugs. He is judgment-proof. Can the owners of the burglarized homes sue to recover their losses from the hardware store?

Almost certainly not. In my version of the facts, the salespeople at the hardware store did not know or have reason to suspect that Jimbo was planning to use the tools he purchased for illegal purposes. Liability for the hardware store makes no more sense than liability for the sellers of Jimbo's shoes or his car.

To be sure, the fact that the tools Jimbo purchased are generally used for legal and benign purposes shouldn't necessarily shield a seller. For a comparison, consider that nearly all fertilizer sold is used to make soil more fertile, but it is well known that some fertilizers can be used as a component of a powerful bomb. Suppose Joe enters a store that sells fertilizer (among other things). Joe is wearing a t-shirt that has a picture of Timothy McVeigh and the motto "Death to Tyrants." He asks the salesman, who is also the store's owner, for two tons of ammonium nitrate. The owner asks where Joe's farm is so he can deliver the fertilizer. Joe answers "I don't have a farm. I'm using it off-label if you know what I mean. Just load it into the rental van in the parking lot." The owner now knows or at least should know that there is a reasonable likelihood that Joe is using the fertilizer to make a bomb. It would be fair to make the store and its owner civilly or possibly even criminally liable (under a suitably specific statute).

To my mind, the firearms companies sued by Mexico present an even easier case for liability. They not only had reason to know; they not only knew; they intended for their products to be resold in an illegal market--that is, to be abused and cause harm. That was an essential aspect of their marketing strategy.

We can see that the law has no difficulty assigning responsibility in such cases by examining the lawsuits that pushed Purdue Pharma into bankruptcy. They were based on (credible) allegations that Purdue pushed sales of its opioids to volumes that were sustainable only if abused. Similar principles of liability would apply to the firearms manufacturers were it not for PLCAA.

That, in short, is why I characterized PLCAA as a gift to the firearms industry. Although the law's supporters promoted it as protecting firearms makers and sellers from lawsuits that unfairly tarred them with the bad acts of downstream third-party criminals, in fact PLCAA gives to firearms makers and sellers a special exemption that commercial actors generally do not enjoy when they aim to profit from illicit use of their products.

Of course, there will be hard cases, ones that fall between Jimbo (no notice of illicit intent and thus no good grounds for liability) and Joe (clear notice). We can articulate various principles that we might apply to decide where to draw the line. How common is the illicit use? Does the commercial actor take reasonable precautions to prevent misuse or abuse of its products? Etc.

My main point for today is that on general principles, rather than under the special shield erected by PLCAA, liability for the gun makers and sellers should be extremely easy to establish. The case against them is stronger than the case--Joe--at the extremely strong end of the spectrum in our hypotheticals.