    [House Hearing, 107 Congress]
    [From the U.S. Government Publishing Office]

                 THE PROTECTION OF LAWFUL COMMERCE IN ARMS ACT

    =======================================================================

                                    HEARING

                                   before the

                                SUBCOMMITTEE ON
                    COMMERCE, TRADE, AND CONSUMER PROTECTION

                                     of the

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                          ONE HUNDRED SEVENTH CONGRESS

                                 SECOND SESSION

                                       on

                                   H.R. 2037

                                   __________

                                 APRIL 18, 2002

                                   __________

                               Serial No. 107-94

                                   __________

          Printed for the use of the Committee on Energy and Commerce

     Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                     house

                                   __________

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                                WASHINGTON : 2002
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                        COMMITTEE ON ENERGY AND COMMERCE

                   W.J. ``BILLY'' TAUZIN, Louisiana, Chairman

    MICHAEL BILIRAKIS, Florida           JOHN D. DINGELL, Michigan
    JOE BARTON, Texas                    HENRY A. WAXMAN, California
    FRED UPTON, Michigan                 EDWARD J. MARKEY, Massachusetts
    CLIFF STEARNS, Florida               RALPH M. HALL, Texas
    PAUL E. GILLMOR, Ohio                RICK BOUCHER, Virginia
    JAMES C. GREENWOOD, Pennsylvania     EDOLPHUS TOWNS, New York
    CHRISTOPHER COX, California          FRANK PALLONE, Jr., New Jersey
    NATHAN DEAL, Georgia                 SHERROD BROWN, Ohio
    RICHARD BURR, North Carolina         BART GORDON, Tennessee
    ED WHITFIELD, Kentucky               PETER DEUTSCH, Florida
    GREG GANSKE, Iowa                    BOBBY L. RUSH, Illinois
    CHARLIE NORWOOD, Georgia             ANNA G. ESHOO, California
    BARBARA CUBIN, Wyoming               BART STUPAK, Michigan
    JOHN SHIMKUS, Illinois               ELIOT L. ENGEL, New York
    HEATHER WILSON, New Mexico           TOM SAWYER, Ohio
    JOHN B. SHADEGG, Arizona             ALBERT R. WYNN, Maryland
    CHARLES ``CHIP'' PICKERING,          GENE GREEN, Texas
    Mississippi                          KAREN McCARTHY, Missouri
    VITO FOSSELLA, New York              TED STRICKLAND, Ohio
    ROY BLUNT, Missouri                  DIANA DeGETTE, Colorado
    TOM DAVIS, Virginia                  THOMAS M. BARRETT, Wisconsin
    ED BRYANT, Tennessee                 BILL LUTHER, Minnesota
    ROBERT L. EHRLICH, Jr., Maryland     LOIS CAPPS, California
    STEVE BUYER, Indiana                 MICHAEL F. DOYLE, Pennsylvania
    GEORGE RADANOVICH, California        CHRISTOPHER JOHN, Louisiana
    CHARLES F. BASS, New Hampshire       JANE HARMAN, California
    JOSEPH R. PITTS, Pennsylvania
    MARY BONO, California
    GREG WALDEN, Oregon
    LEE TERRY, Nebraska
    ERNIE FLETCHER, Kentucky

                      David V. Marventano, Staff Director

                       James D. Barnette, General Counsel

          Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

                                     ______

            Subcommittee on Commerce, Trade, and Consumer Protection

                        CLIFF STEARNS, Florida, Chairman

    FRED UPTON, Michigan                 EDOLPHUS TOWNS, New York
    NATHAN DEAL, Georgia                 DIANA DeGETTE, Colorado
      Vice Chairman                      LOIS CAPPS, California
    ED WHITFIELD, Kentucky               MICHAEL F. DOYLE, Pennsylvania
    BARBARA CUBIN, Wyoming               CHRISTOPHER JOHN, Louisiana
    JOHN SHIMKUS, Illinois               JANE HARMAN, California
    JOHN B. SHADEGG, Arizona             HENRY A. WAXMAN, California
    ED BRYANT, Tennessee                 EDWARD J. MARKEY, Massachusetts
    GEORGE RADANOVICH, California        BART GORDON, Tennessee
    CHARLES F. BASS, New Hampshire       PETER DEUTSCH, Florida
    JOSEPH R. PITTS, Pennsylvania        BOBBY L. RUSH, Illinois
    MARY BONO, California                ANNA G. ESHOO, California
    GREG WALDEN, Oregon                  JOHN D. DINGELL, Michigan,
    LEE TERRY, Nebraska                    (Ex Officio)
    ERNIE FLETCHER, Kentucky
    W.J. ``BILLY'' TAUZIN, Louisiana
      (Ex Officio)

                                      (ii)

                                C O N T E N T S

                                   __________
                                                                       Page

    Testimony of:
    Barnes, Elisa, Vice President and General Counsel, Law Offices of
      Elisa Barnes...................................................    62
    Burnett, H. Sterling, Senior Fellow, National Center for Policy
      Analysis.......................................................    58
    Keane, Lawrence G., Vice President and General Counsel, National
      Shooting Sports Foundation.....................................    67
    Rand, M. Kristen, Legislative Director, Violence Policy Center...    74
    Reh, Jeff, General Counsel, Beretta USA Corporation..............    79

                                     (iii)

                 THE PROTECTION OF LAWFUL COMMERCE IN ARMS ACT

                                  ----------

                            THURSDAY, APRIL 18, 2002

                  House of Representatives,
                  Committee on Energy and Commerce,
                           Subcommittee on Commerce, Trade,
                                       and Consumer Protection,
                                                        Washington, DC.
        The subcommittee met, pursuant to notice, at 9:30 a.m., in
    room 2322, Rayburn House Office Building, Hon. Cliff Stearns
    (chairman) presiding.
        Members present: Representatives Stearns, Upton, Deal,
    Shimkus, Bryant, Bass, Walden, Terry, Fletcher, Tauzin (ex
    officio), Towns, DeGette, John, and Waxman.
        Staff present: Kelly Zerzan, majority counsel; Brendan
    Williams, legislative clerk; Jonathan J. Cordone, minority
    counsel; and Bruce M. Gwinn, minority professional staff.
        Mr. Stearns. Good morning. The Subcommittee on Commerce,
    Trade, and Consumer Protection will come to order. Today we are
    holding a legislative hearing on H.R. 2037, the Protection of
    Lawful Commerce in Arms Act, a bill which I introduced, along
    with my good friend, Chris John of Louisiana, currently has 221
    co-sponsors.
        The bill addresses the growing problem of nuisance lawsuits
    filed with the intention of driving the firearms industry out
    of business by attempting to hold manufacturers and dealers
    liable for the criminal acts of third-parties who are totally
    beyond their control.
        My colleagues' 26 States, including my home State of
    Florida, Louisiana, and Virginia, have passed legislation
    prohibiting these types of suits. H.R. 2037 is designed to
    mirror what the States have done on a national level.
        For the past several years, over 30 cities and counties, as
    well as individuals across the country, have sued the gun
    industry, and targeted the firearms and ammunition industries,
    for the damages and injuries resulting from guns used during
    the criminal acts of third parties.
        These suits are different from other lawsuits against an
    industry. The cities and counties are not representing specific
    victims, nor are they claiming specific damage against city
    property.
        Instead, they are suing because they happen to dislike a
    product that a company produces and markets legally. This is
    not right, just as suing a car manufacturer for drunk driving
    accidents, or suing a fast food company because its hamburgers
    have too many calories.
        Creative legal theory does not make good public policy.
    What these suits represent are blatant attempts to regulate an
    industry, an issue that clearly raises separation of powers
    questions in this subcommittee. That is, that Congress makes
    the laws and the judiciary interprets the laws.
        In fact, I raised these constitutional concerns regarding
    these lawsuits in 1999, when a gun manufacturer, Smith &
    Wesson, was forced into signing an agreement in regards to the
    design and distribution of its products under pressure from all
    these types of suits.
        Interesting enough, the cities were supposed to drop their
    suits if Smith & Wesson signed the deal, but the majority of
    them did not. Despite the cities desire to continue these
    suits, ultimately they have proven unsuccessful.
        Time and time again the courts have ruled that it is the
    place of the State Legislatures and Congress to regulate
    industry. For example, in dismissing the Cincinnati case
    against a gun manufacturer, the courts found that the
    complaint, ``an improper attempt to have this court substitute
    its judgment for that of the legislature, which this court is
    neither inclined nor empowered to do.'' Another example is in
    Gary, Indiana, the court characterized the suit as an attempt
    to create, ``judge made gun laws.''
        In Miami, the court states, ``The judiciary is not
    empowered to enact regulatory measures in the guise of
    injunctive relief. The power to legislate belongs not to the
    judicial branch of the government, but to the legislative
    branch.''
        And finally my colleagues in the city of Boston dropped its
    suit against gun manufacturers, citing the efforts that the
    industry has put forth to reduce firearm accidents and criminal
    violence.
        In addition, the city states in its motion to dismiss,
    acknowledges that, ``The members of the industry and firearms'
    trade associations are genuinely concerned with and are
    committed to the safe, legal, and responsible sale and use of
    their products.''
        One may question a need for this legislation given the fact
    that the plaintiffs are losing. The fact is that these types of
    cases are still being pursued as I speak.
        Jersey City, New Jersey, filed suit against a gun
    manufacturer last month. Despite the lack of societal benefits
    of these suits, the costs can range in the millions for the
    cities, the industry, and obviously ultimately the taxpayer.
        One would think that these cities would put this money to
    better use serving the general populations that they tax. H.R.
    2037 is designed to prevent these types of frivolous lawsuits
    that seek nothing more than the bankruptcy of an industry that
    makes a legal product doing legal commerce.
        Dave Koppel, an adjunct professor at the New York
    University Law School stated, ``The cities don't even have to
    win in court. All they have to do is keep suing.'' Therefore,
    26 States have recognized this fact, and as I mentioned
    earlier, have passed legislation accordingly.
        And I would like to point out to my colleagues, our
    witnesses, and the public, that it is the purpose of a
    legislative hearing to receive expert testimony from witnesses
    involved in the issue, ask questions, and get valuable input
    regarding the legislation.
        In reading some of the opening statements today, I am aware
    of the concerns regarding cases like Kitchen versus K-Mart, a
    case from the Florida Supreme Court, in which the plaintiff,
    Ms. Kitchen, was paralyzed after being shot by an ex-boyfriend
    with a .22 caliber rifle he purchased after consuming a case of
    beer and a fifth of whiskey.
        The case ultimately went to the Florida Supreme Court, and
    was decided in favor of Ms. Kitchen. Now, the action of selling
    a firearm to a clearly intoxicated and inebriated individual,
    who then goes out and injuries or kills another person with
    that firearm, or similar actions involving what to term as a
    negative entrustment, that is, the intrusting of a dangerous
    article to one who is incompetent to use it safely, should not
    be protected and is not protected under this bill.
        So, my colleagues, the goal of this legislation is to cease
    the attempts at regulation through lawsuits that achieve
    nothing except the blatant interference and a company's
    constitution right to sell and market a legal product, and a
    constitution duty of the Congress to regulate the commerce of
    such product.
        So I look forward to the testimony from our witnesses
    today, and I welcome all of them. And I would like to put in
    the record a list of some 35 lawsuits that have been dismissed
    because of the courts saying they were nuisance suits, and it
    gives the claim and the lawsuit preemption and the status.
        And so these are the lawsuits that have been litigated, and
    I want to make that part of the record, and by unanimous
    consent so order.
        And with that, I welcome the opening statement of the
    distinguished member from New York, Mr. Towns.
        [The prepared statement of Hon. Cliff Stearns follows:]

      Prepared Statement of Hon. Cliff Stearns, Chairman, Subcommittee on
                    Commerce, Trade, and Consumer Protection

        Today, we are holding a legislative hearing on H.R. 2037, the
    Protection of Lawful Commerce in Arms Act. The bill, which I introduced
    along with my good friend Chris John of Louisiana, currently has 221
    cosponsors. The bill addresses the growing problem of junk lawsuits
    filed with the intention of driving the firearms industry out of
    business by attempting to hold manufacturers and dealers liable for the
    criminal acts of third parties who are totally beyond their control. 26
    states, including Florida, Louisiana, and Virginia, have passed
    legislation prohibiting these types of suits. HR 2037 is designed to
    mirror what the states have done on a national level.
        Over the past several years, over 30 cities and counties, as well
    as individuals, across the country have sued the gun industry, targeted
    the firearms and ammunition industries for the damages and injuries
    resulting from guns used during the criminal acts of third parties.
    These suits are different from other lawsuits against an industry--the
    cities and counties are not representing specific victims, nor are they
    claiming specific damage against city property. Instead, they are suing
    because they happen to dislike a product that a company produces and
    markets legally. This is as absurd as suing a car manufacturer for
    drunk driving accidents, or suing a fast food company because its
    burgers have too many calories. Creative legal theory does not make
    good public policy.
        What these suits represent are blatant attempts to regulate an
    industry--an issue that clearly raises ``Separation of Powers''
    questions in this subcommittee . . . that is the Congress makes the
    laws . . . the Judiciary interprets the laws. In fact, I raised these
    constitutional concerns regarding these lawsuits in 1999 when gun
    manufacturer Smith and Wesson was coerced into signing an agreement in
    regards to the design and distribution of its products under pressure
    of these suits. Interestingly enough, the cities were supposed to drop
    their suits if Smith and Wesson signed the deal--the majority of them
    did not.
        Despite the cities' desire to continue these suits, ultimately,
    they have proven unsuccessful. Time and time again, the courts have
    ruled that it is the place of the state legislatures and Congress to
    regulate industry. For example, in dismissing the Cincinnati case
    against gun manufacturers, the court found the complaint ``an improper
    attempt to have this Court substitute its judgment for that of the
    legislature, which this Court is neither inclined nor empowered to
    do.''
        In Gary, Indiana, the court characterized the suit as an attempt to
    create ``judge made gun laws.'' In Miami, the court stated ``. . . the
    judiciary is not empowered to `enact' regulatory measures in the guise
    of injunctive relief. The power to legislate belongs not to the
    judicial branch of the government but to the legislative branch.''
        Finally, the City of Boston, dropped its suit against gun
    manufacturers citing the efforts the industry has put forth to reduce
    firearms accidents and criminal violence. In addition, the City states
    in its motion to dismiss acknowledges that ``the members of the
    industry and firearms trade associations are genuinely concerned with
    and are committed to, the safe, legal, and responsible sale and use of
    their products.''
        One may question the need for this legislation given the fact that
    the plaintiffs are losing. The fact is, these types of cases are still
    being pursued. Jersey City, New Jersey filed suit against gun
    manufacturers just last month. Despite the lack of societal benefits of
    these suits, the costs can range in the millions for the cities, the
    industry, and ultimately, the taxpayer. One would think that these
    cities would put this money to better use serving the general
    population.
        HR 2037 is designed to prevent these types of frivolous lawsuits
    that seek nothing more than the bankruptcy of an industry that makes a
    legal product. Dave Kopel, an adjunct professor at the New York
    University Law School stated ``The cities don't even have to win in
    court . . . all they have to do is keep suing.'' 26 states have
    recognized this fact and passed legislation accordingly.
        Now, I would like to point out to my colleagues, our witnesses, and
    the public, that it is the purpose of a legislative hearing to received
    expert testimony from witnesses involved in the issue, ask questions,
    and get valuable input regarding the legislation. In reading today's
    testimony, I am aware of the concerns regarding cases like Kitchen v.
    K-Mart, a case in Florida, in which the plaintiff, Ms. Kitchen was
    paralyzed after being shot by her ex-boyfriend with a .22 caliber rifle
    he purchased after consuming a fifth of whiskey and a case of beer.
    This case ultimately went to the Florida Supreme Court and was decided
    in favor of Ms. Kitchen.
        The actions of selling a firearm to a clearly intoxicated
    individual who then injures or kills another person with that firearm,
    or similar actions involving what can be termed as negligent
    entrustment (the entrusting of a dangerous article to one who is
    incompetent to use it safely) should not be protected and will not be
    protected under this bill.
        The goal of this legislation is to cease the attempts at regulation
    through lawsuit that achieve nothing except the blatant interference in
    a company's Constitutional right to sell and market a legal product,
    and the Constitutional duty of the Congress to regulate the commerce of
    such product.
        I look forward to the testimony and insight our witnesses will
    bring before the Subcommittee today.

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        Mr. Towns. Thank you very much, Chairman Stearns. And let
    me start off by thanking the witnesses, especially Ms. Barnes,
    who represented among others my constituent, Freddie Hamilton,
    from Brooklyn.
        Let me say up front, Mr. Chairman, that the only thing I
    like about this legislation in question today is its author,
    Mr. Stearns, who I think is an outstanding member of this
    Congress.
        Other than that, there is nothing else I like about it, and
    I want to make that very clear. In America, we have consumer
    protection laws for a reason. Businesses have a right to profit
    as much as possible, but sometimes dollar signs get in the way
    of doing what is right by the consumers.
        When goods or services cause harm to consumers through
    negligence, they must be held responsible. Now, there are two
    ways we can handle these issues.
        We can either hold the board or the company, or all of
    those criminally or civilly responsible, and if proven guilty,
    they can serve jail time for what has occurred, or go to court
    with a chance that financial penalties could be awarded to
    victims.
        I have two examples of why this legislation isn't fair, not
    only to consumers, but also to the largest corporations in the
    world. If a person sells alcohol to a child, they could have
    their business shut down by the authorities, and if that child
    dies or causes harm to another person, then the said
    establishment will most certainly be held liable for civil, and
    maybe even criminal, penalties.
        So why should gun shows not be held liable for selling guns
    illegally? Well, under H.R. 2037, the most you might get from
    the gun show promoter is a flower arrangement at your son or
    daughter's funeral, and that is wrong.
        Another scenario as to what would happen if this
    legislation becomes law is as follows. Say an every day law
    abiding citizen argues with his girlfriend, and he goes out and
    gets drunk, and decides he needs a gun.
        Instead of just blowing off steam in his stupor, he goes
    home and shoots his girlfriend or wife. Well, guess what. Under
    H.R. 2037, other than locking up this man for attempted murder,
    that young lady has no recourse except against this domestic
    offender, and never mind the negligence of the gun dealer.
        Well, I have a deep respect for the laws of our land and
    agree that existing gun laws do need to be more strictly
    enforced. I do have a problem with this notion that the gun
    industry is somehow better than other industries who must stand
    by all their products, and are better than the medical doctor
    that provides health care, and works under the pressure of
    malpractice on an every day basis.
        A few years ago, this subcommittee under Chairman Tauzin,
    and Mr. Markey from Massachusetts discussed giving rental car
    companies a similar legal exemption from liability.
        It was defeated in full committee because it makes no sense
    to play favorites with the law, which I think happens too much
    as it is in our society. And we here in the Congress need not
    to encourage additional judicial precedence.
        I look forward to the debate today on this issue, and hope
    that the committee members will do what is right, and that is
    to oppose this legislation. This is, after all, the Consumer
    Protection Subcommittee, and not the corporation protection
    committee, and we should not forget that, and that is our
    responsibility.
        Finally, Mr. Chairman, I would like to ask to submit
    testimony by two groups who were not able to testify today, and
    that is the American Bar Association, and the Brady Campaign. I
    would like to submit testimony on their behalf.
        Mr. Stearns. Sure. By unanimous consent, so ordered.
        [The statements referred to follow:]

    Prepared Statement of David J. Pasternak, on Behalf of the American Bar
                                  Association

        Mr. Chairman and Members of the Subcommittee: I am David J.
    Pasternak, an attorney practicing law in Los Angeles, California with
    the firm of Pasternak, Pasternak & Patton, A Law Corporation. I am a
    past President of the Los Angeles Bar Association and currently serve
    as the Chair of the American Bar Association's Special Committee on Gun
    Violence. I submit this statement at the request of the President of
    the American Bar Association, Robert E. Hirshon of Portland, Maine, to
    voice the Association's strong opposition to H.R.2037 and to similar
    legislation to enact special immunity for the firearms industry from
    ordinary civil liability.
        The American Bar Association, the world's largest, voluntary
    professional organization with more than 400,000 members, is the
    national representative of the legal profession, serving the public and
    the profession by promoting justice, professional excellence and
    respect for the law.
        The ABA is strongly opposed to H.R.2037, legislation introduced on
    May 25, 2001, by Representative Cliff Stearns (R-FL) as ``the
    Protection of Lawful Commerce in Arms Act,'' a bill ``to amend the Act
    establishing the Department of Commerce to protect manufacturers and
    sellers in the firearms and ammunition industry from restrictions on
    interstate or foreign commerce.'' H.R.2037 would provide that any
    action for ``civil damages or equitable relief'' become a prohibited
    ``restriction on interstate or foreign commerce'' when such action is
    brought against a firearms manufacturer or seller unless it derives
    from a breach of contract or warranty or ``improper functioning of a
    firearm or ammunition product, when used as intended, due to a defect
    in design or manufacture.''
        H.R.2037 would legislate federal preemption of state common law and
    statutorily authorized actions nationwide brought by any party based on
    claims of negligence or nuisance, and create a narrow federal product
    liability standard that would immunize the firearms industry from all
    but a most narrow group of product liability claims.
        H.R.2037 is similar in design to state legislation enacted in 20
    states in the last three years creating a special immunity for the
    firearms industry from claims brought by governmental bodies and to
    five states' enactment of legislation creating a broad immunity for the
    firearms industry from any tort claims, including those brought by
    individuals, based on negligence or nuisance theory.
        Based on concerns about such legislation, the ABA House of
    Delegates, our policy-making body, overwhelmingly approved a
    recommendation in opposition to legislative proposals such as those
    contained in H.R.2037 in August 2001. It provides as follows:
        RESOLVED, that the American Bar Association opposes federal, state
    or territorial legislation to create special legal immunity for the
    firearms industry from civil tort liability.
        The ABA believes that legislative proposals that would have the
    effect of precluding individual citizens, consumers or other parties
    injured by firearms, from pursuing claims for civil liability in the
    nation's civil courts are unwarranted legislative interventions into
    what is properly the role of the courts. H.R.2037, and similar
    proposals, would enact sweeping protections for this particular
    industry from ordinary civil actions, actions that have an historical
    basis in our civil courts that has existed throughout our nation's
    history.
        H.R.2037 would mandate new and unwarranted federal legislative
    ``solutions'' to issues that should properly be decided on a case-by-
    case factual basis in our nation's courts, and would further create the
    bad precedent that individual industries could obtain a legislative
    ``opt-out'' from our civil justice system, by gaining immunity from
    that system by lobbying in Congress. It would surely follow that if
    Congress could determine that civil claims against gun manufacturers or
    sellers are impermissible restraints on interstate commerce, then why
    should not individual civil actions against other industries be
    stripped from the jurisdiction of state and federal courts on the same
    basis. That result, and such a legislating philosophy, would lead to a
    mish-mash of protectionist laws that could not be relied upon to
    protect the rights of individuals citizens to seek redress in our
    courts for harm they have suffered. We believe legislating such
    immunity would violate the most basic commitments of our Constitution
    and our system of laws to providing equal justice to all under the law.

                                   BACKGROUND

        Roughly 30,000 people are killed every year with firearms, more
    than one every 20 minutes, making firearms second only to motor
    vehicles as the most frequent cause of injury death in the United
    States. Since 1965 more than one million people have been shot and
    killed in domestic gun incidents, more than all Americans killed in all
    foreign wars combined during the twentieth century. In 1998, 64,000
    people were treated in hospital emergency rooms for nonfatal firearm
    injuries. Medical costs associated with hospital care for gun injury
    have been conservatively estimated at $1-$2 billion per year, most of
    which is at taxpayer expense.
        Gun injury and death has been the subject of civil claims for
    decades. In an article published June 24, 1993 entitled ``Wild West
    Legacy: Ruger Gun Often Fires if Dropped, but Firm Sees No Need for
    Recall--Company Settles Hundreds of Claims, Maintaining The Revolvers
    Are Safe,'' the Wall Street Journal documented 40 years of deaths and
    injuries in incidents with a Ruger revolver that frequently fired when
    accidentally dropped due to a design problem. Hundreds of cases were
    settled, but because neither the federal Bureau of Alcohol, Tobacco and
    Firearms nor the Consumer Product Safety Commission had authority over
    firearm defects and design, the gun was never recalled.
        On October 30, 1998, New Orleans filed a suit against the gun
    industry based on claims that the gun industry designed and marketed
    handguns that lack basic safety features that would prevent shootings
    by children, teenagers and other unauthorized users. Over the next
    three years, an additional 33 cities and counties and the State of New
    York have filed suits against the gun industry, alleging a range of
    claims based on negligence, nuisance and product liability theory. A
    significant number of suits brought by individual plaintiffs are based
    on similar allegations and theories of liability. While the gun
    industry has successfully had some cases dismissed, many courts have
    found that cases before them present cognizable claims, and that the
    plaintiffs are entitled to discovery and, ultimately, a trial on the
    merits. In response, the gun industry has vigorously pursued
    legislation to immunize itself from these and most claims of civil tort
    liability.
        Legislation to immunize the firearms industry from civil litigation
    on a state-by-state basis has been introduced in almost every state
    legislature in the past three years. To date, 25 states have passed
    legislation shielding gun manufacturers and dealers from civil
    liability.
        H.R.2037 and similar legislation is premised on claims that, if
    applied to other industries, would block almost all suits by any
    claimant seeking damages for tortious behavior. The proposed federal
    legislation, as is argued by the gun lobby, would merely preclude any
    gun manufacturer liability unless the firearm fails to work. According
    to this argument, it is only when a gun will not shoot straight that a
    gun owner would have an actionable claim against a gun manufacturer.
    This core premise contained in H.R.2037 as the basis for legislating
    immunity from suit is a misleading stereotype about the issue at stake
    and is in fact at odds with basic principles of American tort law.
    Longstanding product liability principles have provided that a product
    can be defective in design regardless of whether it malfunctions. A
    leading, well-known example is provided by the litigation against the
    Ford Motor Co. resulting in its being held liable for fires caused by
    the placement of its Pinto fuel tank. While the fuel tank did not cause
    the car to malfunction, its placement created an unreasonable risk that
    passengers would be incinerated after a collision. Similarly, if gun
    manufacturers fail to install safety devices to prevent gun accidents
    then the guns may be unreasonably dangerous even if they fire bullets
    properly.
        Second, the proposed legislation incorporates limitations on
    actions because the gun industry and the bill sponsors maintain that
    gun manufacturers and sellers cannot be liable in tort law because the
    product involved is legal. This claim confuses criminal liability,
    which applies only to illegal conduct, with civil tort liability, which
    does not. Most civil tort law is concerned with the actions of parties
    whose actions are legal but nevertheless expose others to an
    unreasonable risk of harm. In the famous Ford Pinto case, the placement
    of the gas tank was not in violation of any statute, but it created a
    hazard such that Ford was held liable.
        Third, this legislation is premised on the faulty principle that
    the gun industry cannot be held liable when its products are misused by
    others. This notion is contradicted by innumerable examples relating to
    other industries. If this were the state of the law, our courts could
    never have held auto manufacturers liable for selling cars without seat
    belts and other safety features because most car accidents are caused
    by driver error.
        To illustrate how the proposed federal legislation would impact
    recent litigation, and noting that the proponents of this report have
    no knowledge of the facts of these cases or the worthiness of the
    claims they are based on, the following are a list of recent or pending
    cases that raise claims that presumably could not have been brought if
    broad immunity legislation was in place:

     Kitchen v. K-Mart, 697 So. 2d 1200 (Fla. 1997): A Florida
            woman, Deborah Kitchen, was rendered a quadriplegic when her
            ex-boyfriend shot her. A gun dealer sold the gun to the ex-
            boyfriend even though he was so intoxicated that he could not
            fill out the federal form without assistance. The intoxicated
            boyfriend shot Kitchen within hours of the sale. A Florida
            jury--and the Supreme Court of Florida--found that the dealer's
            negligence was a cause of the shooting, and should pay damages
            to Kitchen.
     Merrill v. Navegar, 89 Cal. Rptr. 2d 146, 161-85 (Ct. App.
            1999), review granted (Cal. 2000): A gun maker marketed
            military assault weapons to the public even though they had no
            apparent civilian utility, and through print advertising
            solicited a claimed-criminal market by, for example, boasting
            of the gun's ``excellent resistance to fingerprints.'' One of
            its customers used the gun to slaughter eight men and women,
            and injure six more, in a San Francisco law office. The
            California Court of Appeals found that the gun maker's
            negligence could be a legal cause of the shooting.
     Pavlides v. Niles Gun Show, 93 Ohio App. 46 (1994): A Canton
            man, Greg Pavlides, was rendered a paraplegic when he was shot
            by teenagers who were able to obtain their guns because a gun
            show's negligence enabled them to stroll about the show, pick
            up guns that were lying around on tables, totally unsecured,
            and walk away with them. A jury--and the Ohio Court of
            Appeals--agreed that the gun show's negligence was a cause of
            the shooting, and should pay damages to Mr. Pavlides.
     Hooper v. Wal-Mart, Civ.-98-C-1496-NE (N.D. Ala. 1998): Wal-
            Mart sold a shotgun to James Michael White, even though he was
            under a domestic violence restraining order and was therefore
            prohibited from buying a firearm under federal law, and he
            truthfully filled out his purchase form stating that he was
            under a court order. Within two weeks of buying the shotgun,
            Mr. White used it to murder his estranged wife and her brother.
            The victims' families sued, and Wal-Mart agreed in settlement
            to pay $16 million to the 2-year old and 5-year old daughters
            of the slain Mrs. White. Even though Wal-Mart's conduct was
            illegal, it would be immune from suit at least under one of the
            federal bills.
     White v. Smith & Wesson, 97 F.Supp.2d 816 (N.D. Ohio 2000):
            The City of Cleveland sought damages and injunctive relief on
            the grounds that gun makers negligently sold guns without
            taking reasonable steps to prevent criminals and kids from
            obtaining them, and failed to implement reasonable life-saving
            safety devices and warnings. An Ohio federal district judge
            held that the gun makers could be liable under Ohio negligence,
            nuisance, and product liability law.
     Boston v. Smith & Wesson Corp., 2000 WL 1473568 (Mass. Super.
            2000): The City of Boston brought a similar case against gun
            makers and sellers, seeking damages and injunctive relief to
            abate the public nuisance caused by the gun industry's
            negligent design and sale of guns. A state trial court denied
            defendants' motion to dismiss, and the Court of Appeal refused
            to grant an interlocutory appeal of that decision.
     People, et. al. v. Arcadia Machine & Tool, Inc., No. 303 753,
            BC 210 894, BC 210 784 (Sup. Ct. Cal., County of San Diego
            2000): Twelve California cities and counties, including Los
            Angeles, San Francisco, and Sacramento, sued gun makers and
            sellers for violations of California's Businesses and
            Professions Code and creating a nuisance. The state trial court
            denied defendants' motion to dismiss.
     Other examples: Sting operations in Chicago, Gary, and Detroit
            found that many gun dealers apparently sell to ``straw
            purchasers,'' despite knowing that the gun is intended for a
            felon. Not only is this apparently actionable negligent conduct
            by the dealers, but it is claimed that distributors and
            manufacturers negligently continue to supply these dealers even
            after learning of their irresponsible practices. Under immunity
            bills, victims of this misconduct would be left without a civil
            remedy.

                                   CONCLUSION

        Should those who make and sell guns be given a special exemption
    from common law principles of negligence, nuisance and product
    liability that apply to manufacturers and sellers of all other
    products? Should persons who believe that they have been injured as a
    result of tortuous conduct by the gun industry be deprived of their
    rights to have the courts determine whether the law entitles them to
    compensation? Or should legislatures prohibit the courts from
    determining whether allegedly negligent gun sellers and manufacturers
    should be liable under the common law?
        The gun industry's legislative clout has prevented laws regulating
    much of its conduct, and made guns the only consumer product (other
    than tobacco) exempt from federal safety oversight. Thus, unlike other
    products, guns cannot be recalled by the federal government when they
    are unreasonably dangerous or lack feasible safety devices. Of course,
    the fact that the gun industry has been able to prevent the enactment
    of legislation and regulation that governs all other consumer products
    in the United States does not exempt it from liability under common law
    principles of negligence, nuisance, or product liability. If anything,
    the existing lack of federal regulation makes the role of civil suits
    all the more fundamental to a system that is devoted to achieving
    individual justice and makes it more necessary for Congress to be
    vigilant in this area to maintaining sound public policy and laws that
    encourage the industry to behave responsibly and with regard to public
    safety.
        The American Bar Association has long supported the principle that
    more accountability--not less--is needed with respect to the legal
    duties of firearm manufacturers, gun dealers, parents and individuals
    regarding their respective roles in how firearms are used and misused
    in our society. Dating back to 1965, the ABA has repeatedly and
    steadfastly called for tougher law enforcement in the area of gun
    crimes, regulating gun dealers, gun sales and possession and aspects of
    individual ownership of guns. The ABA has also advocated holding the
    gun industry to the same regulatory safety standards that protect the
    public in regard to all other manufactured products. In August 1994,
    the ABA House of Delegates called for Congress to amend the federal
    Consumer Product Safety Act to bring an end to the unique status of
    firearms as the only consumer product manufactured and sold in the
    United States not subject to federal health or safety regulation. The
    ABA has also long opposed federal preemption of state product liability
    laws and has an even longer history of opposing federal ``court-
    stripping'' proposals to legislatively limit jurisdiction of the courts
    on controversial subject matter.
        We urge the Subcommittee to reject H.R.2037 in favor of its
    consideration of the historic, traditional role of the courts. This
    fundamental role of the courts--in making case-by-case determinations
    of whether individual civil tort claims are properly brought--is at the
    heart of our civil justice system. There should be uniform agreement
    that it is up to the courts to determine whether the gun industry or
    any other industry is liable under applicable state common law within
    the context of a given set of facts. There is no legitimate reason why
    this industry should be exempt from the same common law principles that
    govern all other industries and their practices, through negligence,
    nuisance, and product liability law. Nor is there a legitimate reason
    why innocent persons injured as a result of tortious conduct by gun
    manufacturers and sellers should be denied their opportunity to seek
    redress in the courts, simply because they were injured by a
    negligently-designed or negligently-sold gun, rather than, say, a
    negligently-designed toaster oven, lawnmower, or automobile. Raw
    political power exercised to create special laws for a particular
    industry makes for unsound public policy and bad precedent for the
    future. The Subcommittee should strongly disfavor H.R.2037 or similar
    proposals seeking special immunity from our civil laws in the name of
    interstate commerce.
        Thank you for your consideration of our views.
                                     ______

    Prepared Statement of Michael D. Barnes, President, Brady Campaign and
                      Brady Center to Prevent Gun Violence

        Chairman Stearns, Ranking Member Towns, Members of the
    Subcommittee, thank you for giving me this opportunity to submit
    testimony on H.R. 2037, legislation designed to give the gun industry
    special legal protection.
        As most of you know, the Brady Campaign and Brady Center to Prevent
    Gun Violence are the largest organizations dedicated to creating an
    America free from gun violence, where all Americans are safe. In
    October of last year, the Brady organizations merged with the Million
    Mom March, which has about 150 chapters in communities across the
    nation. We are nonprofit, nonpartisan organizations and many of our
    members are victims of gun violence and the families of gun violence
    victims. The Brady Center's Legal Action Project provides pro bono
    legal assistance to many individual victims of gun violence as well as
    to 26 of the 33 city and county governments that have brought lawsuits
    against the gun industry.
        We strongly oppose H.R. 2037, the legislative proposal pending
    before this Subcommittee. This bill is a misguided, unjust attempt to
    provide special legal protection for the gun industry at the expense of
    innocent Americans who have been harmed by the dangerous and
    irresponsible actions of firearm manufacturers and sellers. There are
    many other religious, health, education, and community organizations
    that oppose this legislation, including: American Federation of
    Teachers; Children's Defense Fund; League of Women Voters of the United
    States; National Association for the Advancement of Colored People;
    National Association of School Psychologists; National Education
    Association; National League of Cities; Physicians for Social
    Responsibility; Presbyterian Church USA; and Unitarian Universalist
    Association
        There are millions of moms, educators, religious leaders, and other
    citizens who are represented by or are a part of the Million Mom March,
    the NAACP, the Presbyterian Church, the National Education Association,
    and these other organizations. These citizens are under no illusions
    about what this bill is: it is special interest legislation at its
    worst, a bill that would sacrifice fundamental rights of ordinary
    citizens to satisfy the demands of a powerful, well-funded lobby. At
    the behest of the National Rifle Association and the gun industry, this
    bill would carve out special exemptions and protections for companies
    that make and sell deadly firearms in an irresponsible manner. This
    bill would enable gun companies to continue to engage in dangerous
    business practices that result in unnecessary, preventable deaths and
    injuries to children and other innocent victims, without cost to the
    wrongdoers and without compensation for the victims. It would immunize
    an irresponsible industry that is already grossly under-regulated. In
    short, this bill would be a perversion of the basic principles that
    underlie our justice system.
        Make no mistake, companies that make and sell guns responsibly have
    no need for this bill, for judges and juries will weed out frivolous
    cases against them just as they do with every other product or
    enterprise. The only companies that need the special protections of
    this bill are those gun dealers who profit from the criminal gun market
    by irresponsibly supplying guns to gun traffickers, who market guns to
    criminals,1 or those manufacturers who refuse to incorporate
    life-saving safety devices, and who would otherwise be liable to
    victims under common law principles of negligence, nuisance, and
    products liability that apply to all other products.
    ---------------------------------------------------------------------------
        \1\ For example, Navegar advertised its Tec-9 assault weapon as
    having ``excellent resistance to fingerprints,'' clearly marketing to
    those with criminal purposes (Attachment 1).
    ---------------------------------------------------------------------------
        This bill flies in the face of numerous basic American principles
    and freedoms. It slams the courthouse doors shut to victims of gun
    industry negligence and defective design, denying citizens their right
    of access to the courts. It federalizes state common law--as to
    firearms--dictating from Washington what laws state courts must apply.
    It disrespects the judicial branch of government, inaccurately
    suggesting that courts are unable to weed out frivolous suits from
    well-founded ones. It treats different businesses and citizens in
    grossly disparate ways, giving special privileges to one industry
    simply because of its political clout.
        This bill says to citizens, if you get injured because a child
    started a fire with a cigarette lighter that was not childproofed, you
    may have your day in court and seek to have the manufacturer held
    responsible. If, however, you get injured because a child fired a gun
    that was not childproofed, you are barred from the courthouse. If you
    get hit by a car where a bartender sold too much alcohol to the driver,
    you may sue the bar. If, instead, a visibly intoxicated person walks
    into a gun store, buys a gun, and then shoots an innocent person, the
    dealer is immunized. The dealer is also immunized if he sold 200
    Saturday Night Specials to a gang member or gun trafficker who then
    supplied a gun to a killer. There is no logic or rational basis for
    this discrimination. It is nothing more than a payoff to a powerful
    special interest, plain and simple.
        A basic principle of our tort system is to deter socially dangerous
    conduct by providing incentives to behave in ways that do not injure
    others and to compensate innocent victims. It would be misguided to
    exempt any industry from these principles, but to deny victims of gun
    industry wrongdoing their day in court is particularly ill advised.
    Guns are already exempt from federal safety oversight under the
    Consumer Product Safety Act. In fact, guns are the only consumer
    product (other than tobacco), that the Consumer Product Safety
    Commission (``CPSC'') cannot order to be recalled when they are made
    unsafe or lack feasible, life-saving safety features. Thus, the only
    incentive for gun makers to safely design their products is
    litigation--and this bill would eviscerate that incentive.
        By comparison, the CPSC ordered a recall of a type of playpen
    because it resulted in 8 deaths in 15 years. In 15 years in America,
    guns have resulted in over 21,000 unintentional gun deaths, with over
    7,000 teens and other children killed in unintentional shootings, and
    many more who have been injured. Many of these shootings would have
    been prevented if feasible safety devices had been implemented in the
    guns. Over ten years ago a Government Accounting Office report found
    just two safety devices (a loading indicator and a childproof trigger
    safety) would prevent one-third of gun accidents--and the report did
    not even consider the effect of safety devices that are now the most
    promising life-savers, such as ``childproof'' guns that can not be
    fired by unauthorized users.2 Yet the gun industry has
    generally refused to implement these feasible, life-saving safety
    devices. In fact, gun makers do not even include childproofing devices
    that were used over a century ago (such as Smith & Wesson's ``lemon
    squeezer'').
    ---------------------------------------------------------------------------
        \2\ Accidental Shootings: Many Deaths and Injuries Caused By
    Firearms Could Be Prevented (GAO Report to the Chairman, Subcommittee
    on Antitrust, Monopolies, and Business Rights, Committee On the
    Judiciary March 1991).
    ---------------------------------------------------------------------------
        The gun industry needs more incentives to behave responsibly, not
    less.
        Not only do gun makers sell unsafe products, but they also sell
    them in an unsafe manner that arms criminals, kids, and gun
    traffickers. For years the Bureau of Alcohol, Tobacco and Firearms
    (``ATF'') has documented that criminals obtain guns through straw
    purchases, multiple sales, gun shows, theft, and corrupt dealers, but
    gun makers and distributors have done next to nothing to prevent their
    guns from being obtained and trafficked in these ways. In fact, it is
    the policy of most gun makers to supply gun dealers with all the guns
    they desire, even if those dealers have sold hundreds of crime guns,
    are known to sell irresponsibly to traffickers, or even if they are
    under indictment. For example, when dealers in suburban Chicago and
    Wayne County, Michigan were recently indicted after being videotaped
    selling guns to obvious straw purchasers, all manufacturers except for
    Smith & Wesson continued to supply them. Both ATF and the Department of
    Justice have asked gun makers to monitor their distribution systems to
    stop supplying the criminal market, but they have refused.3
    Every financial incentive encourages them to maximize sales, regardless
    of who those guns are intended for. Only litigation can alter those
    dangerous incentives.
    ---------------------------------------------------------------------------
        \3\ Commerce in Firearms Press Release (ATF February 2000); Gun
    Violence Reduction: National Integrated Firearms Violence Reduction
    Strategy (DOJ 2001).
    ---------------------------------------------------------------------------
        Lawsuits against gun makers are beginning to change the industry's
    intransigent refusal to make and sell their products more safely.
    Before our lawsuits, gun makers dismissed calls to childproof guns as
    unworkable and impractical. As a result of the suits, several gun
    makers--including Taurus, Glock, and Smith & Wesson--now include
    internal locks as part of their guns, enabling gun owners to easily
    lock up their guns from children, while keeping them readily accessible
    for authorized, responsible adults.4 Remington finally
    recalled a defectively designed rifle--after over 1,500 complaints and
    several lawsuits. None of these safety changes would have been made if
    gun companies were immunized from litigation. Smith & Wesson also
    decided to radically alter the way it designed and sold guns, agreeing
    to implement numerous safety devices and to monitor its distribution
    system.5 But this was only done as a settlement of lawsuits
    that would have been outlawed by H.R. 2037.
    ---------------------------------------------------------------------------
        \4\ For example, Glock recently announced that it was selling a gun
    with a built-in, key-operated lock, even though it had resisted
    implementing safety devices into its guns for decades (Attachment 2).
        \5\ Smith & Wesson Settlement (Attachment 3).
    ---------------------------------------------------------------------------
        In our view, the sponsors of this legislation are asking the wrong
    question. The question is not how do we protect the gun industry from
    lawsuits, the question is how do we protect innocent Americans from gun
    violence, which would be greatly reduced if the gun industry took
    modest, sensible steps to make guns safer and help prevent criminals
    and children from getting guns.
        Let me tell you about just a few of the gun violence victims who
    have exercised their rights and used our legal system to hold the gun
    industry accountable. These are a few of the victims who would be
    denied some small measure of justice if H.R. 2037 were the law of the
    land. I say small measure of justice, because even when a victim or her
    family is successful in court, our legal system cannot adequately
    compensate a family that has lost a loved one, or a victim who must
    spend the rest of his or her life dependent on medical care, or
    confined to a wheelchair, or needing help with even the most basic of
    life's tasks.
        Consider the case of Deborah Kitchen, a resident of Florida, who
    was rendered a quadriplegic when she was shot by her ex-boyfriend.
    Deborah was driving home one night when suddenly her ex-boyfriend
    rammed her car, forced her off the road, and shot her at the base of
    her neck. Of course, the ex-boyfriend was responsible for the shooting,
    but when you learn more you realize that there were others to blame. It
    turns out that prior to shooting Deborah, the ex-boyfriend had been
    drinking, consuming a fifth of whiskey and a case of beer. At about
    8:30 the night of the shooting, he left a bar where he had been
    drinking and went to a local K-Mart store where he purchased a rifle
    and a box of bullets. The gun dealer sold the gun even though the
    boyfriend was too drunk to fill out the federal form, so the clerk had
    to assist him. The intoxicated boyfriend shot Ms. Kitchen within hours
    of the gun sale. The gun dealer argued that it should not be liable
    because its conduct was legal--the same argument made by proponents of
    H.R. 2037. However, a Florida jury--and the Supreme Court of Florida,
    by a 7-0 vote--rejected this view, and agreed that the dealer's conduct
    was still negligent, and since that negligence was a cause of the
    shooting, the dealer should pay damages to Kitchen.6
    Clearly, this was no frivolous lawsuit, but if H.R. 2037 were law,
    Deborah Kitchen would never have been able to hold the gun seller
    responsible for his blatant disregard for safety.
    ---------------------------------------------------------------------------
        \6\ Kitchen v. K-Mart, 697 So. 2d 1200 (Fla. 1997) (Attachment 4).
    ---------------------------------------------------------------------------
        Another example is the case of Greg Pavlides. Greg, a resident of
    Canton, Ohio, was rendered a paraplegic when he was shot by teenagers
    who were able to obtain their guns because of the negligence of the
    organizers of a gun show. The teens were able to stroll around the
    show, pick up guns that were lying around on tables, totally unsecured,
    and walk away with them. A jury--and the Ohio Court of Appeals--agreed
    that the gun show's negligence was a cause of the shooting, and should
    pay damages to Mr. Pavlides.7 Once again, this was not a
    ``frivolous'' or ``reckless'' lawsuit, and the people and the courts of
    Ohio found that the gun show company shared in the responsibility for
    the shooting. But if H.R. 2037 were law, Greg Pavlides would not have
    received justice.
    ---------------------------------------------------------------------------
        \7\ Pavlides v. Niles Gun Show, 93 Ohio App. 46 (1994) (Attachment
    5).
    ---------------------------------------------------------------------------
        Other examples are proceeding in courts around the country
    today.8 For example, one case arises from the events of July
    4th weekend of 1999, when a white supremacist named Benjamin Smith went
    on a terrorist shooting spree, targeting minorities. In the course of
    three days he shot six Orthodox Jews in Chicago, shot and killed an
    African-American (former basketball coach of Northwestern University
    Ricky Byrdsong) who was walking with his two children in Skokie,
    Illinois, shot other African-Americans in Springfield and Decatur,
    Illinois, shot an Asian-American student at the University of Illinois,
    and shot and killed a Korean graduate student at the University of
    Indiana, who was walking to church. Smith was prohibited from buying
    guns, but was able to obtain his weapon through negligent gun sellers
    that enabled a licensed dealer, Old Prairie Trading Post, to sell more
    than 70 guns to a gun trafficker in less than two years, even though it
    was obvious that the purchaser was a criminal gun trafficker. The
    trafficker resold the guns in the criminal market, including to Smith.
    Ricky Brydsong's widow and other victims have sued Old Prairie and
    others under Illinois common law principles. A judge in Chicago
    recently rejected the bulk of the gun companies' attempts to dismiss
    the case.9 Under H.R. 2037, those victims would be shut out
    of court, and Old Prairie would be specially protected from common law
    duties of care.
    ---------------------------------------------------------------------------
        \8\ The theories of many of these cases are addressed in Gunning
    for Justice, by Allen Rostron (Attachment 6) and Litigating Against Gun
    Manufacturers, by Jonathan E. Lowy (Attachment 7).
        \9\ Anderson v. Bryco, No. 00 L-007476 (April 10, 2002).
    ---------------------------------------------------------------------------
        Other courts have recognized that litigation against the gun
    industry--of the sort that would be banned by H.R. 2037--is far from
    frivolous. The Court of Appeals of New Mexico recently held that a gun
    manufacturer could be liable for an accidental shooting by a 15-year
    old that could have been prevented by a safety device--a magazine
    disconnect. The Court stated that: ``The fact that handguns are meant
    to fire projectiles which can cause great harm is to our view all the
    more reason to allow the tort system to assess whether the product is
    reasonably designed to prevent or help avoid unintended albeit careless
    firings such as occurred here.'' 10
    ---------------------------------------------------------------------------
        \10\ Smith v. Bryco, 33 P.3d 638, 645 (N.M. App. 2001), cert.
    denied, 34 P.3d 610 (N.M. 2001) (Attachment 8).
    ---------------------------------------------------------------------------
        In a case brought by several victims, including the family of a
    police officer who was shot and killed with a negligently sold gun, the
    Appellate Court of Illinois held that gun makers and sellers can be
    liable to victims under public nuisance law for distributing guns in a
    manner that, although lawful, unreasonably supplied and maintained the
    criminal gun market.11
    ---------------------------------------------------------------------------
        \11\ Young v. Bryco, 765 N.E.2d 1 (Ill. App. 1st Dist. 2001),
    rehearing denied (March 18, 2002) (Attachment 9).
    ---------------------------------------------------------------------------
        It is not just individual gun violence victims who would be hurt by
    H.R. 2037. In recent years, a number of communities have also exercised
    their legal rights and tried to hold the gun industry responsible for
    the carnage and bloodshed caused by guns. Cities and counties around
    the country have recognized that it is unjust for taxpayers and
    communities to bear all costs resulting from the gun companies' refusal
    to use reasonable care in their design and sale of guns, while those
    same companies profit from every sale, however dangerous they may be.
    Thirty-three government entities have filed suit against the gun
    industry, including New York State, Los Angeles, San Francisco, St.
    Louis, New York City, Wilmington, and Jersey City. Twenty-two of the
    thirty-three entities still have suits pending, making clear that these
    suits are not ``frivolous'' or ``reckless,'' as the gun industry likes
    to say.12
    ---------------------------------------------------------------------------
        \12\ The theories behind the governmental litigation are discussed
    in The Case Against The Gun Industry, by Brian J. Siebel (Attachment
    10).
    ---------------------------------------------------------------------------
        The documents and testimony obtained in discovery in these cases
    will convince any judge or jury that the gun industry's conduct over
    the years has been outrageous and will support finding that gun
    companies are liable, under longstanding common law principles, for
    substantially contributing to gun violence in communities around the
    nation. The gun industry, of course, knows more than anyone how
    unreasonably they have conducted their business, and how irresponsible
    they will look to jurors and judges. It is for this very reason that
    they are seeking immunity in the courts. They hope that the public will
    never know how they have acted to protect sales intended for the
    criminal gun market, and how they refused, for no good reason, to
    include life-saving safety features into their guns. By shutting the
    courthouse doors to victims, H.R. 2037 will help the gun industry keep
    their dirty little secrets.
        Litigation against the gun industry can effectively and efficiently
    make our citizens and communities safer, by encouraging gun makers and
    gun sellers to become a part of the solution to gun violence, rather
    than part of the problem. Preserving the right of victims to seek
    justice in the courts also enables innocent victims and families to
    receive compensation for injuries from those who wrongfully caused
    those injuries. However, even if some members disagree, they should not
    support this bill. For even if some members may not like lawsuits
    against the gun industry, or may tend to favor gun makers in such suits
    if they sat on a jury, those opinions do not support depriving a class
    of citizens their right to a day in court.
        In all of the cases brought against the gun industry, state court
    judges have applied the facts before them to the laws of their states--
    whether in Florida, Ohio, New Mexico, Illinois, or elsewhere. In some
    cases judges have decided in favor of victims, in others they have
    decided in favor of gun makers and gun sellers. But in all of these
    cases the state courts are doing what they are supposed to do. If H.R.
    2037 becomes law, the federal government will be usurping the jobs of
    these state judges, and dictating from Washington what the common law
    shall be with respect to firearms. The notion that the common law of
    every state can be radically altered by a special interest bill in
    Washington should disturb even those members who support the gun lobby,
    but profess to a belief in federalism and an independent judiciary.
        This body should allow the judiciary to adjudicate suits. This body
    should recognize that the gun industry is one of the least deserving
    for the dangerous, special protections provided by this misguided
    special interest bill. This body should protect the right of victims to
    have their day in court, rather than protect a powerful special
    interest lobby. This Subcommittee, and the House of Representatives as
    a whole, should reject H.R. 2037.
        Members, I thank you for your time and consideration.

        Mr. Towns. And on that note, I yield back.
        [The prepared statement of Hon. Edolphus ``Ed'' Towns
    follows:]

     Prepared Statement of Hon. Edolphus ``Ed'' Towns, a Representative in
                      Congress from the State of New York

        Thank you Mr. Chairman, and let me start off today by thanking the
    witnesses, especially Ms. Elisa Barnes, who represented among others,
    my constituent, Ms. Freddie Hamilton from Brooklyn. Let me also add
    that the only thing I like about the legislation in question today is
    its AUTHOR, Mr. Stearns!
        In America, we have consumer protection laws for a reason--
    Businesses have a right to profit as much as possible but sometimes
    dollar signs get in the way of doing what is right by the consumer.
    When goods or services cause harm to consumers through negligence or
    what have you, they must be held responsible.
        Now there are two ways, we can handle these issues; we can either
    A) hold the board of the company or owners criminally or civilly
    responsible and if proven guilty they can serve jail time for what has
    occurred OR B) Go to court with the chance that financial penalties
    could be awarded to victims. I would find it interesting which some of
    the board members would choose.
        I have two examples of why this legislation is unfair not only to
    consumers, but also to the largest corporations in the world. If a
    person sells alcohol to a child, they could have their business shut
    down by the authorities and if that child dies or causes harm to
    another person, then said establishment will most certainly be held
    liable for civil and maybe even criminal penalties.
        So why should gun shows not be held liable for selling guns
    illegally? Well under H.R. 2037, the most you might get from the gun
    show promoter is a flower arrangement at your son or daughter's
    funeral.
        Another scenario as to what would happen if this legislation
    becomes law is as follows: Say an everyday, law-abiding citizen argues
    with his girlfriend. He goes out, gets drunk, and decides he needs a
    gun. Instead of just blowing off steam in his stupor, he goes home and
    shoots his girlfriend. Well guess what, under H.R. 2037, other than
    locking up this man for attempted murder, that young lady has no
    recourse except against this domestic offender--never mind the
    negligence of the gun dealer.
        By the way . . . this is NOT a fictitious story. It happened under
    Kitchen versus K-Mart. K-Mart actually sold a gun to a man who had
    consumed one-fifth of whiskey AND a case of beer! Now under H.R. 2037,
    those types of vendors would be immune from any sort of legal action by
    the woman who was rendered a quadriplegic from this tragedy.
        My point is simple . . . there is NO other industry in America--and
    I defy anyone to point one out to me--that is immune from liability for
    its commercial dealings.
        While I have a deep respect for the laws of our land and agree that
    existing gun laws do need to be more strictly enforced. I do however
    have a problem with this notion that the gun industry is somehow better
    than other industries who must stand by all their products or better
    than the medical doctor that provides healthcare and works under the
    pressure of mal-practice on an everyday basis.
        A few years ago, this subcommittee under Chairman Tauzin and Mr.
    Markey discussed giving Rental Car Companies a similar legal exemption
    from liability. It was defeated in Full Committee because it makes no
    sense to play favorites with the law--which I think happens too much as
    it is in our society, and we here in Congress need not encourage
    additional judicial prejudice.
        I look forward to the debate today on this issue and hope that the
    committee members will do what is right--and that is oppose this
    legislation--This is after all the CONSUMER protection subcommittee,
    not the CORPORATION protection subcommittee.
        Finally Mr. Chairman I would like to ask to submit testimony by two
    groups who were not able to testify today. Thank you.

        Mr. Stearns. And I thank the gentleman. We have the
    distinguished chairman of the full committee, Mr. Tauzin, is
    recognized.
        Chairman Tauzin. Thank you, Mr. Chairman. Let me first say
    that the only thing that I like about the last statement that I
    heard, is the author, and the fellow who delivered it, my good
    friend, Mr. Towns.
        After that, well, what a lousy statement, Ed. But kidding
    aside, what we are talking about is not lawsuits filed by
    individuals for compensation for damages. We are not talking
    about restricting individuals and their rights to collect
    damages for legitimate suits brought for wrongful death, or
    injury, or anything else.
        We are talking about a very special kind of lawsuit, and a
    very special tactic now used by those who oppose the lawful
    sale and use of firearms in a country. Since 1998, over 30
    municipalities have engaged in a practice of suing
    manufacturers of firearms in our country, and none of them have
    succeeded.
        Not a single one has won a case, and those cases are not
    about specific victims, because municipalities are not specific
    victims of any injury, or any damage, or any loss of life.
        They are not claiming any specific damage against city
    property. These are lawsuits arguing about the societal effects
    of firearms. These are political lawsuits, and they are not
    designed to win necessarily.
        The attorneys who bring these cases have boasted that their
    purpose is not necessarily to get a win in the courtroom,
    although I am sure that every lawyer likes to win a case.
        They boasted that their attacks would bleed the thinly
    capitalized firearm industry into submission in our country,
    and that is what this is all about. These are political
    lawsuits brought for political purposes, without claiming
    damages to any specific victims or city property, but are just
    designed to bleed the industry to death.
        Now, we had a similar case of that, Ed. We had a similar
    case, if you will remember, before our committee last session
    regarding pharmaceutical--I mean, devices, medical devices that
    were critical to save young people's lives.
        If you will recall in those lawsuits, the same thing was
    happening. Dow Chemical reported that all the lawsuits brought
    against the medical materials that they were selling to these
    companies to build these devices, not a single one of them won.
        They never lost a single lawsuit, but the costs of
    defending the lawsuits had brought them to the point where 94
    percent of the materials sold to industries for the purpose of
    building shocks for kids' heads, and titanium leg devices to
    keep them walking and dancing, 94 percent of that would be shut
    down because of bleeding lawsuits.
        And not because they had a good case in court, and that is
    an abuse by our judicial system. If you want to make social
    policy in this country, this is the place to do it. If you want
    to argue about whether firearms or good or bad, or we should
    try to repeal the Second Amendment of the Constitution, this is
    the place to do it, and not in a courtroom.
        And so this bill is designed to say that. Now, my State of
    Louisiana was the first one to tackle this, because one of my
    cities, New Orleans, was the first to bring one of these
    lawsuits.
        And the legislature in Louisiana reacted by passing a law
    to preclude these kind of lawsuits against the industry by any
    Louisiana municipality, and 25 other States have now joined.
        Boston even realized that the lawsuit process was not a
    good one, and it is withdrawing their lawsuit. By the way, I
    have a document regarding the Boston lawsuit, and I would ask
    permission, Mr. Chairman, at this time to file into the record.
        Mr. Stearns. By unanimous consent, it is so ordered.
        [The information referred to follows:]

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        Chairman Tauzin. But the bottom line is that as soon as
    Boston got through, a New Jersey municipality files another
    lawsuit. And this is going to go on forever according to the
    plaintiffs, not to win cases, but simply to bleed the industry,
    because they realize it is a thinly capitalized industry in
    America.
        Now, again, whether you like firearms or not, whether you
    are a hunter or a sportsman who enjoys his firearms, or whether
    you believe that firearms are critical for the protection of
    yourself and your family--and as even Rosie O'Donnell even
    admitted while she was haranguing against firearm laws, she at
    the same time had to hire a bodyguard, who carried a weapon to
    protect her.
        And the other day, she was on television admitting that she
    was reacting emotionally, and that she was not thinking in
    effect of how critical it was for her bodyguard to be armed.
        And whether or not you like that notion, and whether or not
    you think firearm policy in America is good, or that the Second
    Amendment is valuable or not. My point is that using the
    judicial system improperly to try to affect social policy by
    simply bankrupting companies is wrong when it happens to the
    chemical industry that is trying to help young children prepare
    their lives, and it is wrong when it is designed to accomplish
    social policy to try to outlaw a product that is lawful in our
    society today.
        If you want to make those arguments, make them here, but
    this bill is critical, and it is necessary, and I am proud to
    say that my State led the way in trying to ban these lawsuits,
    and I hope that Congress follows suit. Thank you, Mr. Chairman.
        [The prepared statement of Hon. W.J. ``Billy'' Tauzin
    follows:]

      Prepared Statement of W.J. ``Billy'' Tauzin, Chairman, Committee on
                              Energy and Commerce

        Thank you, Mr. Chairman, for calling this hearing on H.R. 2037, the
    ``Protection of the Lawful Commerce in Arms Act.'' This bill aims to
    curb the municipal lawsuits that have plagued the firearms industry--
    and have cost taxpayers dearly.
        Since 1998, municipalities have unleashed a barrage of litigation,
    using a mixture of novel legal theories, against the gun industry to
    impose liability on manufacturers and sellers for the criminal acts of
    the people who cause shooting injuries. This approach has consistently
    failed to hit the mark.
        To date, none of the municipal lawsuits against the firearms
    industry have been successful. Meanwhile, cities, counties and
    taxpayers are paying the price. Millions upon millions of dollars have
    been spent on these lawsuits--with nothing to show for it.
        Cities and counties are slowly beginning to realize that these
    lawsuits are not in the best interests of their citizens. Just three
    weeks ago, Boston voluntarily dismissed its lawsuit against the gun
    industry, and I would like to include this dismissal document into the
    hearing record. After lengthy and expensive discovery, Boston officials
    concluded that the ``goals [of the City and the Industry] can be best
    achieved through mutual cooperation and communication, rather than
    through litigation, which is expensive to both the Industry and tax-
    payers, time-consuming and distracting in a time of national crisis.''
        However, just a day after Boston voluntarily dismissed its lawsuit,
    Jersey City, New Jersey filed one against the firearms industry, which
    just proves how necessary H.R. 2037 is.
        While the firearms industry has been remarkably successful thus far
    in defending these suits, the real goal of the litigants goes far
    beyond a ``win'' in the courtroom. Litigators have boasted that their
    attacks would bleed the thinly capitalized firearms industry into
    submission.
        Proponents of these lawsuits point to the gun industry suits as
    proof that the so-called ``public good doesn't have to be held hostage
    to the legislative stalemate.'' They believe that ``the courtroom
    offers a new avenue to regulate firearms without action from
    Congress.'' Fortunately, the judges who have heard these cases
    disagree.
        The phrases ``legislative stalemate'' and ``partisan gridlock'' are
    pejorative terms for the workings of democracy. Under our country's
    Constitution, the creator of policy and the maker of law is the
    legislative branch, not the judiciary.
        Indeed, many state legislatures are taking the job into their own
    hands. The first city to file suit against the firearms industry was in
    my home state of Louisiana--the City of New Orleans. Following the
    filing of the suit, the Louisiana state legislature passed a law to
    preclude these suits against the gun industry by any Louisiana
    municipality. To date, twenty-five (25) other states have enacted
    similar legislation to protect hard-earned taxpayer dollars that could,
    and should, be better spent to hire more police, fix crumbling roads,
    and educate our children.
        Now it is time for the U.S. Congress to get involved. I am a
    cosponsor of H.R. 2037, along with over 200 of my colleagues in the
    House, and I firmly believe in the need for this legislation to protect
    legal manufacturers and sellers in the firearms industry from lawsuits
    designed to put them out of business. As this legislation moves
    forward, however, I believe we can continue to work on this bill, as it
    may need a bit more work to ensure that it is not too broadly drafted
    to preclude any legitimate and meritorious lawsuits. Therefore, I look
    forward to working with the Chairman of the Subcommittee, Mr. Stearns,
    to make any changes that are necessary.
        Thank you again, Mr. Chairman, for holding this important hearing
    and I look forward to hearing from our witnesses.

        Mr. Stearns. I thank the distinguished chairman. I just
    would like to clarify that this bill is not intended to cover
    blatant negligent, entrustment lawsuits, such as the Kitchen
    versus K-Mart case.
        In addition, H.R. 2037 is designed to cover those engaged
    in a business, and is not designed to cover private collectors
    or hobbyists. And with that, the gentlelady from Colorado.
        Ms. DeGette. Thank you, Mr. Chairman, and I must say that I
    do agree with you and the chairman of the full committee in one
    respect, which is that I think we need to look at the hard
    facts of this issue and that we should not be looking at making
    social policy through lawsuits.
        On the other hand, I find it difficult to understand why
    Congress would provide an abnormally broad liability exception
    to one industry and deny a legitimate legal course of action to
    the public where there are real issues.
        And I will talk about that in a moment. This bill protects
    the gun industry from product liability lawsuits, except for in
    the most restricted cases. The bill denies the rights of
    individuals to bring civil suits against gun manufacturers and
    dealers in all cases, except breach of contract or warranty, or
    injuries resulting from product failure when the gun was used
    as intended.
        These are specific and special protections for the gun
    industry, and the gun industry only, and with all due respect,
    Mr. Chairman, in the Kitchen versus K-Mart fact situation, when
    you brought it up, I read the bill, and then I talked to the
    staff, and then we talked to the majority staff.
        And I understand that it is your intention only to--not to
    restrict those types of lawsuits, but in truth, this bill as
    drafted restricts exactly those types of lawsuits.
        So I would request if that is not your intention, Mr.
    Chairman, let's sit down and work after the hearing today to
    redraft this legislation to achieve its original intention,
    because this bill as written will preclude any of those
    negligence lawsuits which are important for consumers to be
    able to bring.
        And I will add that no other industry has such broad and
    encompassing protections against civil lawsuits, and in fact,
    civil lawsuits have been brought successfully against other
    industries legitimately for personal injuries resulting from
    unintended use of products.
        Let's talk about the Ford Pinto, for example. Ford was sued
    because the Pinto would explode in a ball of flames when the
    car collided with other objects. Now, a collision is certainly
    not an action for which the car was created, because the auto
    industry does not have protections like those that would be
    given to the gun industry if H.R. 2037 passes.
        Liability suits were brought against the manufacturer of
    the Pinto and cars are much safer today. Other similar lawsuits
    were brought against the cigarette lighter industry when their
    products were used by children, as unintended by the
    manufacturer by the way, and they burned the children.
        The lighter companies were found liable by the courts and
    now today anybody who has tried to use a lighter knows that
    they have safety features designed to protect children from
    unintended uses.
        In the testimony today, and in the opening statements by my
    colleagues, we have heard claims that H.R. 2037 is an
    altruistic attempt to relieve the judiciary of a heavy caseload
    burden of frivolous lawsuits.
        And I will say that as we all agree, only 33 lawsuits have
    been filed against gun manufacturers and dealers by cities,
    States, and counties. And I hardly think as someone who
    practiced in the Federal Courts for 15 years, that 33 cases
    amounts to flooding the judiciary with lawsuits.
        I will also add that I have had a long time, very, very
    deeply held view that if people are filing frivolous lawsuits,
    the courts should sanction them by awarding attorneys fees
    against the people who are bringing frivolous lawsuits.
        And I don't care if that is handgun control, or if it is
    the National Rifle Association, or any other social group. If
    they are bringing a frivolous lawsuit, sanctions should be
    awarded, and that is the kind of thing that will stop frivolous
    lawsuits.
        I will also say that talking about a social agenda, I think
    there is a social agenda the other direction behind this bill,
    because it seems to me there is a desire to insulate the gun
    industry from any responsibility for the safety of society.
        The claim will be made that the lawsuits cost the gun
    industry so much money that they can't carry out research and
    development to identify gun safety technology. But at present
    the industry fails to adopt the use of existing gun safety
    devices, like safety locks, which are readily available and
    cheap today.
        So I think there may be a social agenda here, but I don't
    think it is through civil lawsuits aimed at the gun industry.
    And finally, you will be relieved, Mr. Chairman, H.R. 2037
    raises a question of legal theory.
        I believe that this bill will ultimately harm our judicial
    system and the public because what it does for the first time
    is restrict a particular course of legal action that should be
    available for use.
        Until we are able to see the future, simply denying a
    course of legal action because no cases of a particular type
    have been successful,is problematic and short-sighted. And I
    will talk about a different arena, where people for many, many
    years filed civil rights lawsuits saying that the Plessy versus
    Ferguson, separate but equal, doctrine was unconstitutional.
        For many years, courts struck that down, but finally in
    Brown versus Board of Education, it was adopted, and it is
    commonly believed in the land today that schools should be open
    and equal for everybody.
        Now, I am not saying that this is going to happen with
    these suits, but what I am saying is that you can't simply
    restrict and deny people a course of action because with 33
    lawsuits it has not been successful.
        In short, I think that there are ways that we can stop
    frivolous lawsuits, but I think completely eliminating causes
    of action against manufacturers and sellers is far too broad a
    restriction, and I would urge us to seriously consider that as
    we move forward, Mr. Chairman.
        Mr. Stearns. I thank the gentlelady, and I would welcome
    her input and her support that she mentioned earlier in her
    opening statement. And I would just point out as a non-lawyer
    that 35 lawsuits seems like a lot to me. The gentleman from
    Tennessee.
        Mr. Bryant. Thank you, Mr. Chairman. I want to take a
    little bit of an opposite position that we just heard, but I
    want to commend you for your leadership in producing this bill,
    and I am proud to be an original co-sponsor of H.R. 2037, the
    Protection of Lawful Commerce in Arms Act.
        As our full committee chairman, Mr. Tauzin, indicated in
    his statement, which I would like to adopt fully for myself,
    that there is a political agenda involved, and which started
    back in the 1980's.
        And I believe that a political agenda which improperly
    attempts to use the court system to put a lawful and legal
    industry out of business, and in effect trying to circumvent
    the legislative branch, this Congress by--or State legislative
    branches, by taking this political agenda to keep the right to
    bear arms out carry it to the judicial branch to seek that
    redress.
        There have been a number of cases and 30 to 35 cases,
    whatever that number might be, is a large number, especially
    when you look at, and as Mr. Tauzin mentioned, the fact that
    many of these companies are not able to consistently, and
    certainly over 30-something lawsuits, or at least some number
    of those lawsuits, filed against one of them, are not able to
    bear the extremely high cost of litigation involved.
        As someone, too, who practiced civil law on the defense
    side, representing people who were sued, and companies who were
    sued, I know in Federal Court that cases can go on for years.
        Some not very meritorious quite frankly. Nonetheless, they
    are involved, and through discovery, and difficulty in getting
    motions to dismiss granted at an early stage in the case.
        And I think we all know who have been involved in
    litigation that it is quite an expensive project, even when you
    have insurance. The cases over the years, these types of cases,
    have not met with success, and to blanketly say they are
    frivolous, I am not sure that is appropriate, but they are
    designed, I think, improperly to bring pressure again on our
    legal industry.
        And I have seen this occur in the past in other lawful
    industries, where when you don't get success in legislation,
    you attempt to regulate, or you attempt to tax, or in this
    case, litigate people out of business. And I think that is
    behind most of these lawsuits.
        And that concerns me. In addition to practicing civil law,
    I was a United States Attorney for a number of years, or 2
    years in fact, and while I was there I saw real gun control in
    effect.
        And that was where the Federal authorities worked with
    State authorities to take those criminals who used guns, and
    put them in jail away from law abiding society, and that is
    what we should do here, I believe.
        Now we have operating in our Federal system with some of
    the U.S. Attorneys a project Exile that does the same thing,
    focusing on removing those people out of our society who use
    guns illegally, and I believe that is the primary way that we
    ought to work.
        Efforts to pass laws that have restricted gun ownership
    among lawful owners of guns have failed, and so here we are in
    this hearing today talking about another effort to effect,
    deprive, somehow regulate, the way that lawful owners can own
    and bear arms.
        These lawsuits, I believe, are improper. I think of things
    like automobiles, and people who use them when they are drunk
    and hurt people, and yet there is no requirement that I know of
    on the automobile industry to make that automobile safe from
    people who operate while under the influence of alcohol or
    drugs by some sort of system that would not allow them to start
    that automobile.
        There may be some testing going on, and I don't know, but
    certainly that is not a requirement on automobiles that are on
    the highway today. And I know of no litigation asking that.
        I think of the owner of the home who sometimes if you have
    a teenage child, and you are out of town, and they have kids
    over, and if you have alcohol perhaps locked up somewhere, and
    they can get into it, and get drunk, and go out, and have an
    accident.
        And certainly the homeowner may be liable there, but I have
    never seen the liquor industry sued over that situation. So I
    think certainly the courts agree that we are in new theories of
    law here, and these lawsuits are in my view with this political
    agenda are outrageous.
        I think that we ought to take some steps in Congress to
    shield against these types of lawsuits, whether it is the gun
    industry or other industries out there, and I think this bill
    does just that.
        It creates a system by which the Secretary of Commerce
    compiles a list of manufacturers, and sellers, and associations
    that represent groups like this, and they are protected from in
    effect these junk lawsuits that are filed.
        There are grounds that are open there for the normal suits
    that one would expect for a breach of warranty, or a beach of
    contract, physical or property damages, and physical injuries
    resulting from the failure of guns to function as they should
    function.
        In effect, a product liability case based on defective
    design or manufacture. Again, traditional areas of the law that
    should be protected, and I, too, like our chairman on this
    committee, if this bill can indeed be improved in some way and
    made better, that we are open to that.
        But I certainly at this point feel that it is the best bill
    out there and I intend to support it. I believe that it is
    right, and again I thank the chairman today for holding this
    hearing so that indeed we can learn more about this, and
    perhaps be better educated about it. Thank you.
        Mr. Stearns. I thank the gentleman. The gentleman from
    California, Mr. Waxman.
        Mr. Waxman. Thank you very much, Mr. Chairman. The bill
    that we are considering today, H.R. 2037, is special interest
    legislation of the worst kind. It would grant extensive
    immunity from liability to gun manufacturers and gun dealers.
        Under current law, gun manufacturers and gun dealers must
    act responsibly. Like other businesses and individuals, if they
    act negligently, or if they blatantly disregard the obvious
    consequences of their actions, they may be held liable.
        The proposed bill would eviscerate this protection. The
    bill says to gun manufacturers and gun dealers: go ahead and
    ignore common sense; disregard the consequences of your action,
    and we will let you off the hook; you are no longer responsible
    for our actions.
        This special exemption will endanger our citizens and
    almost certainly cost lives. The premise of this legislation is
    that our Nation's gun control laws are adequate to protect
    public safety, but they are not. They are swiss cheese.
        A case in point, Mr. Chairman, I am releasing today the
    results of an undercover investigation by the General
    Accounting Office into fake dealer licenses. This GAO
    investigation demonstrates how easy it is to forge a dealer
    license.
        GAO agents used an ordinary home computer, with off-the-
    shelf software, to print out a fake dealer license. They then
    used this license to buy a gun from another dealer over the
    phone.
        Because the GAO agents used a fake dealer license, they
    were able to avoid the criminal background check that applies
    when guns are sold to individuals, and there was no limit to
    the number of guns they could have bought.
        This GAO report demonstrates conclusively that we cannot
    rely on our gun laws to keep guns out of the hands of
    criminals. We also need to hold dealers responsible for
    exercising common sense and good judgment.
        Consider the case of Sean Twomey, and Southern Ohio Guns,
    which is highlighted in the materials that I am releasing. In
    the largest gun trafficking case in history of the San
    Francisco Bay Area, Mr. Twomey altered a dealer's license using
    an Adobe Photo Shop Software Program.
        In less than a year, Southern Ohio Guns sold him 1,187
    guns, delivering them directly to his apartment. Mr. Twomey
    then sold these guns to criminals, minors, and other
    individuals not entitled to possess them.
        During this whole process, the dealer never asked questions
    or raised any objections. The sales person who sold all of
    these guns to Mr. Twomey was interviewed by a local public
    television station and here is what she said.
        ``He could have bought a thousand a day. I wouldn't have
    cared. I would have sold it right to him. I didn't think
    anything of it.''
        To date, more than 100 of these guns have been recovered in
    crimes, including two homicides, two armed robberies, multiple
    narcotic cases, and an attempted assault on a police officer.
        And according to the Oakland Police Department, the full
    impact of this case has not yet been realized, and they expect
    to continue recovering these guns for many years to come.
        Now, if this legislation passes, irresponsible dealers like
    Southern Ohio Guns will be exempt from all civil liability,
    regardless of how many lives they endanger. This makes
    absolutely no sense.
        When we are dealing with a product as dangerous as guns, we
    need to hold dealers to high standards, and not reward them for
    negligence and reckless indifference. Mr. Chairman, the General
    Accounting Office study that I am releasing today paints a
    chilling picture.
        And I would like to submit it for the record, along with a
    letter that I sent today to the Secretary of the Treasury,
    transmitting the results of the GAO investigation, and
    providing additional details regarding the Twomey case.
        Mr. Stearns. By unanimous consent, it is so ordered.
        [The information referred to follows:]

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        Mr. Waxman. Mr. Chairman, that concludes my statement. But
    I would like to make a point of order.
        Mr. Stearns. Point of order I recognize.
        Mr. Waxman. Under the rules the only cameras that are
    permitted at a hearing are from accredited representatives of
    the press. And I understand that the camera that is now filming
    this hearing is owned and controlled by the National Rifle
    Association.
        The reason that the rules were written as they were was to
    make sure that we didn't have partisan games played by any
    video made of a hearing. So, if I am correct, and this camera
    is not from an accredited representative of the press, I would
    make a point of order that the camera should not be permitted
    to film the hearing.
        Mr. Stearns. Mr. Waxman, I think this group of individuals
    is accredited, and we have had consumer groups come in here
    when you were chairing a committee, and they recorded it. So we
    have had lots of cameras in here.
        Mr. Waxman. Mr. Chairman, you don't know that to be the
    case, and I don't believe that is the case, but the issue is,
    right now, is this an accredited member of the press? And that
    is not something amorphous.
        There is an accredited list of the press and I would like
    to see the credentials of the person who is filming this
    hearing.
        Mr. Stearns. Well, Mr. Waxman, the Chair's position is that
    he is an accredited member of the press, and that he has the
    right to----
        Mr. Waxman. May I inquire what the accreditation is?
        Mr. Stearns. Well, I have already ruled, Mr. Waxman, that
    he is an accredited member of the press, and he is----
        Mr. Waxman. Well, on what basis, Mr. Chairman?
        Mr. Towns. Mr. Chairman----
        Mr. Waxman. On what basis do you make that--if you are
    right, I will certainly back off my point of order. Just to say
    so doesn't make it so.
        Mr. Stearns. No, I understand, but just with the experience
    that I have had, we have had lots of groups in here--consumer
    groups--and we have allowed them to record. So that is----
        Mr. Waxman. The violations in the past that may have
    occurred don't justify a violation of the rules now. It is
    whether the rules are being enforced now.
        Mr. Stearns. We will be glad to show you his credentials.
    WETA-TV, Freelance, Radio-T.V., expires April 30, 2002. So it
    looks like----
        Mr. Towns. No, that is not the question. The question is
    whether this camera, is this the National Rifle Association?
    That is the question, rather than the credentials.
        I mean, the question is who is he--is this the National
    Rifle Association's camera, and that is the issue. I mean, what
    identification you have in your pocket, I mean, that is another
    issue.
        Mr. Stearns. Well, I think the identification in his pocket
    shows that he is accredited press, and so I think under that
    assumption that he is entitled to record.
        Mr. Towns. I have a drivers license that says New York
    State in my pocket. I am not here representing New York State.
    I am here as a member of the U.S. Congress. So the fact that he
    can pull something out of his pocket doesn't satisfy me.
        The question that I have, and which I want answered before
    the gentleman would yield from California, is whether or not he
    is filming for the National Rifle Association. That is the real
    question here.
        Mr. Waxman. May we ask of the gentleman who is filming for
    whom he is working today?
        Mr. Stearns. The Chair is in control here, and the position
    that I have taken is that he is part of the press, and he is
    entitled to record this hearing. So that is my position. If you
    want to overrule the Chair, you are welcome to try.
        Mr. Waxman. Well, Mr. Chairman, I am going to appeal the
    decision of the Chair.
        Mr. Stearns. Okay.
        Mr. Waxman. And I would like to have pending that an
    opportunity for us to get the facts, because if you are right,
    I will withdraw my point of order, but if you are wrong, then
    the rules ought to be enforced.
        Mr. Stearns. Well, I am telling you what I think at this
    moment as Chair, that he has presented his credentials, and we
    have looked at the credentials, and I have decided that he is
    entitled to continue recording, and so that is my position as
    the chairman.
        And you are welcome to appeal, but I would urge you let's
    continue on, because you and I both know that in other hearings
    that you have chaired that there has been lots of consumer
    groups.
        Now, you are welcome to complain about it, and I accept
    your complaint, but I think that we want to get on to the
    witnesses, and so I think under the circumstances that my
    position would be that he has shown his credentials, and we
    accept them, and we will continue on.
        So I urge my colleague to consider that in this light, and
    we just move forward.
        Mr. Waxman. Mr. Chairman, if I could be recognized.
        Mr. Stearns. Sure. I recognize you.
        Mr. Waxman. I, too, was a chairman, and it is not pleasant
    to have a ruling challenged.
        Mr. Stearns. Sure.
        Mr. Waxman. And I won't challenge your ruling, but I would
    like to state very clearly for the members that if this man has
    been hired by the National Rifle Association, just as anybody
    who is hired from the Democratic Party, should not be allowed
    to come in here and film.
        I don't think we ought to allow this, and I think the rules
    don't permit it, and I would hope that the chairman would check
    this out and not permit it in the future, and even take at some
    point--and check it out for today, but certainly for the
    future.
        I don't think that any of us would want games played by
    people who are not legitimately covering a hearing for the
    press, and to take a picture of a member, and then distort it,
    and have it on a 30 second commercial.
        Mr. Stearns. No, I understand.
        Mr. Waxman. Because that is exactly--because I believe that
    the NRA is clearly a partisan political organization when it
    comes to the campaigns for the Congress of the United States.
        Mr. Stearns. Well, I appreciate you allowing us to continue
    here. We have worked hard to get C-SPAN here, and we tried to
    get ABC here, and we tried to get national attention here,
    because we knew that this would be something that both sides
    would have positive comments on, and that your side might have.
        So I wanted them aired. So I can assure you that we are not
    trying to do anything under the table. But with that, let me
    just recognize the----
        Mr. Waxman. I withdraw my appeal.
        Mr. Stearns. Thank you.
        Ms. DeGette. Mr. Chairman, may I just add for the record
    that I have just been informed that the majority staff said
    that this man was working for the NRA. So I hope that we would
    check that out.
        And I agree with you and Mr. Waxman. I don't think any
    outside group should be in here filming, and from my
    perspective, with the Congressional campaigns approaching in
    the fall, I do think it is inappropriate if outside groups,
    particularly groups active in political campaigns, come in here
    and film us without our knowledge.
        And I hope that we can work together to resolve that,
    because I am deeply offended by it, and I would like to have
    someone from your staff check that out right now, and if it is
    true, to ask this gentleman to leave if he is not filming for a
    legitimate news organization.
        And I accede to the Chair, because you are the one making
    the ruling, but I do think it is offensive, just as much as if
    hand gun control would come in and be filming the members who
    are in favor of this bill in order to air commercials against
    them in the fall, and I think that would be inappropriate, too.
        Mr. Stearns. Let me also just clarify that the bill that we
    are talking about is not protecting people who are acting
    illegally. So with that, let me recognize Mr. Bass from New
    Hampshire for his opening statement.
        Mr. Bass. And I thank the chairman for bringing this bill
    up. I think it is a great bill, and I am an original co-
    sponsor. And I am also interested and appreciative of the fact
    that the panel is a balanced panel, and it appears to me that
    both sides are going to be presented by the people testifying
    here today and I think that's great.
        I also hope that as the hearing progresses that we will be
    able to focus on the point of whether lawsuits, such as those
    that have been described by people talking before me,
    constitute a restraint on interstate trade of a lawful product.
        For me, people in my State and district feel directly the
    impact of this restraint, and I believe it ought to be stopped
    by Congress. SigArms USA, from Exeter, New Hampshire, and
    Sturm, Ruger & Co., from Newport, are industry leaders.
        They are gun manufacturers and industry leaders in
    promoting the responsible and lawful use of their products, and
    each of these concerns have spent millions of dollars on safety
    instruction for users, and both were industry pioneers in
    providing locking devices for every civilian firearm purchased.
        Nevertheless, in the last 5 or so years both have been
    named in countless, baseless lawsuits that have cost these New
    Hampshire companies, parenthetically with hundreds of my
    constituents as employees, countless thousands of dollars.
        And I am sure that each of these hardworking employees
    would like to know why they should lose out on better pay, job
    security, more benefits, and future growth, so that members of
    the trial bar have a chance, or more than one chance, in
    punishing these responsible manufacturers for actions for which
    they bear no direct responsibility.
        Again, Mr. Chairman, I would like to associate--well, not
    again. Mr. Chairman, I would like to associate myself with the
    comments of those of Mr. Tauzin, the chairman, and Mr. Bryant,
    and others in support of this legislation. I appreciate you
    holding the hearing and I yield back.
        Mr. Stearns. I thank the gentleman from New Hampshire. Mr.
    Fletcher, the gentleman from Kentucky.
        Mr. Fletcher. Thank you, Mr. Chair. Let me just say that I
    support this legislation, and I did want to point out one thing
    in the remarks by the gentlelady there that compared this to
    the Pinto suit.
        And I think there is obviously false logic in that
    comparison, because if a gun actually explodes in an
    individual's face, whether it be a police officer or someone
    else using it, the manufacturer is still held liable, just like
    Ford Motor Company with the Pinto.
        We are talking about is Ford Motor Company in a Pinto
    liable if somebody runs over an innocent bystander, and clearly
    that is not the case. So I think that she has used to promote
    her opposition against this bill is clearly false.
        And I think we need to understand that this bill holds
    manufacturers liable. This actually is just to reduce these
    lawsuits that are there to promote a political agenda that
    cannot be done through electing officials and through the
    constitutional way of building political support within the
    system and the legislature here in the Capital, and across this
    country.
        So I would encourage that as we hear these folks testifying
    on it that we make sure that we are using the proper logic when
    we are comparing these to other suits that have been effective
    in this country. Thank you, Mr. Chairman.
        Mr. DeGette. Will the gentleman yield?
        Mr. Fletcher. I think you will have plenty of time to
    comment on that.
        Mr. Stearns. The Chair recognizes the gentleman from
    Georgia, Mr. Deal, for an opening statement.
        Mr. Deal. Thank you, Mr. Chairman. I suppose it would be
    appropriate for me to say at the outset that I am a firm
    believer in both the First Amendment dealing with the press,
    and the Second Amendment, the right to keep and bear arms.
        I have expressed to the chairman and to members of the
    committee, and staff in particular, some concerns that I have
    about the legislation, however. I think it is regrettable that
    we are in a state of affairs in our country where we have to
    state the obvious through the legislation at the highest levels
    of our government in order to avoid frivolous lawsuits.
        I quite frankly would much prefer that the judicial branch
    exercise its power to impose costs and impose those kinds of
    sanctions that they have under the Federal rules for frivolous
    lawsuits as a sufficient deterrent to their being brought.
        However, for whatever the reason, that appears not to be
    the facts of the matter as they exist in this country today.
    And that, of course, is why I think this particular piece of
    legislation is in front of us.
        However, when you attempt to legislatively state the
    obvious, always the danger is that you may not state all of
    what is obvious. I took latin in college, and I didn't remember
    very much of it, and I took legislation courses in law school,
    and I didn't remember much of that.
        But I remember one latin phrase, and it is one that comes
    back to haunt us many, many times, and that is--and especially
    in legislation like this, where you attempt to enumerate
    things, and here we are talking about a list, and that is the
    old latin expression is applicable in the interpretation of
    legislative action, inclusio unius exclusio alterius; the
    inclusion of one is the exclusion of all others.
        My concern is that if we try to put a list out, and you
    just don't happen to be on the list, does the negative of that
    apply to you. That is, those who are on the list get the
    protection.
        You might have been entitled to that protection, but you
    are just not on the list, and does that imply a negative, and I
    think that is a danger that we have anytime that we draft
    legislation of this type.
        And I would be particularly interested in hearing any
    comments that might be available on that. I would also
    specifically, and we may not have a change to delve into it
    here, but I would ask that particular attention be paid to a
    section of the bill that deals in the definitional portion
    under Subsection (5)(b)(i).
        And it relates to the question of physical injuries that
    may result from defects in design or manufacture. Perhaps that
    wording is appropriate, and it appears to me to be a little bit
    convoluted.
        And I think that if that could be clarified, perhaps, or
    make sure that it is appropriately worded, I think that would
    cause me to have some concern about it, because I don't think
    that any of us want to create a situation where we are
    precluding liability of injury resulting from defects in design
    or manufacture.
        And I think that is the way that this language is intended
    to read, and I would just like to be sure that it says what I
    think it is intended to say. Thank you, Mr. Chairman, and I
    yield back.
        Mr. Stearns. I thank the gentleman, and as I pointed out
    earlier in my opening statement, this is a legislative hearing,
    and as you know, every bill goes through a process of
    amendments and changes, and so we welcome the comments of the
    distinguished gentleman from Georgia.
        And just as we welcomed the comments of the distinguished
    lady from Colorado and her comments. With that----
        Mr. Towns. Will you yield for a moment?
        Mr. Stearns. Yes.
        Mr. Towns. I see another cameraman and I would like to have
    this checked out.
        Mr. Stearns. Well, I think at this point that we have
    decided that we are allowing the cameras here, and the decision
    has been made. I am sure that there will be in the audience
    people with cameras, and so I don't know if I am going to stop
    the hearing because of a camera in the audience.
        Mr. Towns. No, I asked the question because of his
    credentials. I think it is important to know who he is.
        Mr. Stearns. Well, we could certainly look at the
    credentials. Would the staff be kind enough just to check the
    credentials. I believe it is NBC, but we want to confirm for my
    good colleague from New York. And I think it is NBC of New
    York.
        Mr. Deal. I would just point out that they are both on the
    left.
        Mr. Stearns. It is NBC.
        Mr. Towns. I hear the expression, and which I do agree
    with, with freedom of the press, but a set-up of the press is
    different.
        Mr. Stearns. Well, I appreciate your comments. Now let's
    continue with the opening statements. Mr. John is recognized
    for his opening statement.
        Mr. John. Thank you, Mr. Stearns. I appreciate the chairman
    taking the time and putting this bill on the schedule, and
    having this legislative hearing on H.R. 2037.
        I believe the proliferation of lawsuits by municipalities
    across the country against lawful gun manufacturers is a very
    legitimate issue that this committee should address, because of
    its impact on lawful interstate commerce.
        I make no apologies of my support for the American gun
    industry. I value my constitutional right as an American to own
    a firearm for sporting purposes or for self-defense. But I also
    share the concerns of many of my constituents that numerous
    lawsuits that have been filed over the past several years are
    aimed at litigating this industry to death.
        As a result this legal process could consume millions of
    dollars that would otherwise be available to promote gun safety
    through research and development or public awareness.
        The firearms industry has a vested commitment to the safe,
    legal, and responsible sale and the use of their products.
        Manufacturers, in cooperation with distributors, retailers,
    and governmental agencies, spend millions of dollars each year
    on preventive safety design and educational programs designed
    for the proper use of firearms.
        Municipal lawsuits that attempt to hold the firearms
    industry responsible or criminal behavior performed through the
    use of its products does not deter crime. Rather, it takes
    money from more beneficial programs and safety measures.
        In my home State of Louisiana, the first in a series of
    municipal firearms litigation was filed in 1998 by the city of
    New Orleans against 15 gun manufacturers, four pawn shops, one
    retailer, and three trade associations.
        In response to their action the legislature enacted a
    statute that prohibits such frivolous suits. Since then, 25
    additional States have followed suit and adopted similar laws.
        While I commend those States who have taken action to
    prevent further abuse, this national campaign against the
    firearm industry is not only a State issue, but it directly
    affects legitimate interstate commerce on a level that can only
    be effectively dealt with through Federal legislation.
        As many of our Nation's courts have decided, these lawsuits
    result in bad public policy and heavy legal costs that hamper
    our Nation's gun manufacturers, distributors, and retailers.
        In an industry that results in over $61 billion annually to
    our national economy, as well as hundreds of thousands of jobs,
    we cannot afford to unnecessarily hinder legal, responsible
    commerce through frivolous lawsuits, whether it is gun
    manufacturers or other commerce that is presented in this
    country, especially in light of the struggles that our national
    economy has been working through the last several months.
        Now is the time to support our Nation's industries, rather
    than inflicting additional hardship on them. Mr. Chairman, I am
    sure that there are some changes that can be made to H.R. 2037
    to address reasonable concerns by some of our witnesses today.
        I look forward to working with you on this issue so that
    lawful commerce involving firearms is not threatened by
    frivolous lawsuits. I yield back the balance of my time and
    thank the chairman.
        Mr. Stearns. I thank the gentleman, and I think his co-
    sponsorship on this bill. The gentleman from Nebraska, Mr.
    Terry, is recognized.
        Mr. Terry. Mr. Chairman, thank you for holding this
    meeting, but I am anxious to hear from the witnesses, and so I
    yield.
        Mr. Stearns. The gentleman yields. The gentleman from
    Illinois, Mr. Shimkus.
        Mr. Shimkus. Thank you, Mr. Chairman. Two initial comments
    first before the statements. I am interested in following
    through on the committee rules systems. I respect my
    colleagues, but just to make sure that we clarify that.
        But I would tend to agree with my colleague from Georgia
    that the First Amendment should be pretty well protected, and
    that should be the same. But if there is a clarification issue
    on the rules, we should make sure that we vent that out.
        But I am a strong supporter of this legislation, and I want
    to thank you for the hearing. This is an important piece of
    legislation designed to protect legitimate gun manufacturers
    from the filing of frivolous lawsuits.
        And although these lawsuits have been unsuccessful to date,
    they still cost gun manufacturers incredible amounts of money
    in legal fees that is threatening the solvency of the industry.
        This is the exact intent of the lawsuits. I strongly
    believe that this is a flagrant abuse of our judicial system
    and it needs to stop. Those that do illegal acts with guns
    should be punished severely.
        However, the gun manufacturers who supply guns to our law
    enforcement should not be held accountable for third-parties
    who use their products to commit crimes. This sets a very bad
    precedent.
        One thing that I want to make to make clear is that this
    bill does not protect manufacturers from selling guns
    illegally, or being held accountable for defects in their
    product.
        H.R. 2037 merely protects them from the barrage of
    frivolous lawsuits that have been intentionally unleased on the
    industry as part of an agenda to put them out of existence.
        I look forward to hearing from the witnesses today. I think
    it is a very balanced panel. It is a tribute to you, Mr.
    Chairman, and I thank you, and I yield back the balance of my
    time.
        Mr. Stearns. I thank the gentleman, and the Chair
    recognizes the gentleman from Oregon, Mr. Walden.
        Mr. Walden. I appreciate this hearing and your work on this
    legislation, and I am actually tied up in another hearing on
    Yucca Mountain at this very time, and so I will yield back my
    time and get to the witnesses.
        Mr. Stearns. I thank the gentleman.
        [Additional statements submitted for the record follow:]

        Prepared Statement of Hon. Joseph R. Pitts, a Representative in
                    Congress from the State of Pennsylvania

        Mr. Chairman, no one can deny that gun violence is a serious
    problem in our nation, but blaming gun manufacturers is not the way to
    prevent gun violence.
        Those who commit violent crimes should be punished to the full
    extent of the law.
        But, it makes no sense to encourage frivolous lawsuits against the
    firearms industry as a method of trying to reduce gun violence.
        The Gun Control Act of 1968 already prohibits mail-order sales and
    the interstate sales of firearms, prohibits the transfer of firearms to
    minors, limits access to ``new'' assault weapons, and sets penalties
    and licensing requirements for manufacturers, importers, and dealers.
        We do not need more gun control laws or costly lawsuits designed to
    further the gun control agenda.
        What we do need is the enforcement of stiff penalties for those who
    commit violent crimes.
        Over the past several years, numerous lawsuits have been filed
    against the firearm industry in an attempt to recover damages from the
    ``societal effects of firearms.''
        These lawsuits are a thinly veiled attempt by some cities and
    counties to try to intimidate gun manufacturers and run them out of
    business.
        No one disputes the fact that we need to strengthen community-based
    violence prevention efforts, but lawsuits are not the answer.
        H.R. 2037 would amend current law so that gun manufacturers could
    not be punished in civil court for carrying out the legal enterprise of
    selling or transporting firearms.
        Mr. Chairman, I am an original cosponsor of H.R. 2037 because I
    believe that H.R. 2037 will protect the firearms industry from junk
    lawsuits and focus the attention of our courts on the prosecution of
    violent criminals, not the persecution of gun manufacturers.
                                     ______

        Prepared Statement of Hon. John D. Dingell, a Representative in
                      Congress from the State of Michigan

        I want to thank Chairman Stearns for holding this important hearing
    this morning.
        The question before us today is indeed an interesting one: whether
    to shield firearms manufacturers from lawsuits that arise from the
    criminal misuse of their products. I happen to think we should, which
    is why I am a cosponsor of the Protection of Lawful Commerce in Arms
    Act.
        To date, two-dozen lawsuits have been initiated against the
    firearms industry by municipalities and states. The basis for these
    suits is the curious notion that the manufacturers of these lawful and
    non-defective products should be held financially responsible for the
    criminal misuse of their products. The ability to sue manufacturers for
    a breach of contract or product defect is specifically preserved in
    this proposed legislation.
        I would submit that when criminals commit crimes with guns, the
    criminals are to blame, not the law-abiding firearms manufacturer.
        These lawsuits are something that firearms manufacturers, state
    legislatures, and the courts have been grappling with since 1998. Thus
    far, 27 states have passed legislation prohibiting municipalities from
    initiating these lawsuits, including my home state of Michigan. The
    courts have also spoken on this subject, dismissing the majority of
    these lawsuits in whole or in part.
        Thank you again, Mr. Chairman, for holding this hearing. I welcome
    our witnesses and am eager to learn their views on whether a Federal
    preemption of these lawsuits is necessary.

        Mr. Stearns. Now we will move to our panel, and I welcome
    Mr. Jeff Reh, General Counsel of the Beretta USA Corporation;
    and Ms. Kristen Rand, Legislative Director for the Violence
    Policy Center; and Mr. Lawrence Keane, Vice President and
    General Counsel, National Shooting Sports Foundation; Ms. Elisa
    Barnes, Law Offices of Elisa Barnes; and Dr. H. Sterling
    Burnett, Senior Fellow of the National Center for Policy
    Analysis.
        And I welcome all of you and thank you for your patience
    while we had our opening statements, and we will go from left
    to right for your opening statements. And the general process
    is that we give you 5 minutes.

       STATEMENTS OF H. STERLING BURNETT, SENIOR FELLOW, NATIONAL
     CENTER FOR POLICY ANALYSIS; ELISA BARNES, VICE PRESIDENT AND
       GENERAL COUNSEL, LAW OFFICES OF ELISA BARNES; LAWRENCE G.
     KEANE, VICE PRESIDENT AND GENERAL COUNSEL, NATIONAL SHOOTING
       SPORTS FOUNDATION; M. KRISTEN RAND, LEGISLATIVE DIRECTOR,
    VIOLENCE POLICY CENTER; AND JEFF REH, GENERAL COUNSEL, BERETTA
                            USA CORPORATION

        Mr. Burnett. Chairman Stearns, and distinguished members of
    the committee, thank you for the opportunity to testify
    concerning the merits of H.R. 2037 today. I am H. Sterling
    Burnett, and I work for the National Center for Policy
    Analysis, a non-partisan, non-profit research institute, based
    in Dallas, that promotes private sector solutions to policy
    problems.
        I worked on firearms issues in general for a little over 6
    years, and I have published a great deal concerning the
    lawsuits, including, ``Suing Gun Manufacturers: Hazardous to
    Our Health,'' which appeared in the Texas Review of Law and
    Politics.
        And I would like to offer this law review as supplement to
    my written record.
        Mr. Stearns. By unanimous consent, it is so ordered.
        [Available at: Texas Review of Law & Politics Spring, 2001,
    5 Tex. Rev. Law. & Pol. 433]
        Mr. Burnett. Rather than examine the merits of the lawsuits
    as my study does, I wish to address today why H.R. 2037 is an
    appropriate response to the threat of municipal lawsuits aimed
    at the maker, and propose a couple of revisions that I would
    argue would make the bill a little bit better.
        The U.S. does not have a peer-free market economy with
    respect to consumer goods. As part of the political process,
    legislatures control, limit, or prohibit access to some
    products, such as tobacco, guns, and prescription drugs.
        It is a delicate balancing act to give free people access
    to certain products while maximizing public safety.
        These lawsuits are an attempt to circumvent the will of the
    majority as expressed through the legislature, with
    determinations of the judiciary.
        Several mayors and district attorneys have admitted as much
    upon filing the suits by stating that the lawsuits are not
    really about money, but rather about changing the way that the
    firearm industry does business.
        Shaping an industry's business practices is regulation,
    pure and simple. By protecting lawful gun manufacturers from
    frivolous lawsuits, legislators are defending the democratic
    process.
        In addition, each Federal legislator swears to uphold the
    Constitution of the United States, and this bill is a step in
    satisfying that pledge.
        How so? As numerous witnesses have put forward already, the
    industry is a small industry. Two manufacturers have already
    been driven out of business in-part due to the cost of these
    lawsuits.
        Each company that is driven out leaves fewer and fewer
    companies to fight these lawsuits, and they must pick up a
    larger and larger share. If this happens, and if this
    continues, the right to bear arms becomes academic.
        No firearms, if well-maintained, have long product life
    spans. Every gun in regular use will wear out over time. With
    no new guns on the market, the right to keep and bear arms will
    become a right in name only. Even if some gun manufacturers
    remain, the prices for firearms will be so high that owning
    guns will be a right reserved for the relatively wealthy.
        Ending this municipal attempt at judicial extortion would
    also reemphasize Congress, and Congress alone was delegated the
    power to regulate interstate commerce. Make no mistake, this is
    about interstate commerce.
        While the majority of the Nation's States have shown the
    wisdom and foresight to ban these lawsuits within their
    borders, other States have not so acted accordingly. A
    substantial judgment against the industry in one State would
    have the effect of regulating or ending the firearms
    manufacturing and sales in States with such a ban.
        When commercial regulations, whether created by the
    legislature or de novo by the courts, in one State
    significantly affects commerce in other States, Congress has
    legitimate oversight authority.
        Furthermore, though it is not the intention of 2037, it
    would have the additional benefit of helping municipalities be
    fiscally responsible. To date, millions of public dollars have
    been spent, and there is no telling how many more infants might
    have been immunized and how many more mothers might have
    received pre-natal treatment, or how many more gun crime
    prosecutions they could have pursued had scarce public funds
    not been diverted to this suspect legislation.
        It would be interesting to research how many of the cities
    filing suits against the gun industry have simultaneously
    requested increased Federal funding for government services,
    such as policing, after-school programs, drug interdiction, and
    prevention, and public health care, since this is supposedly a
    public health lawsuit.
        Before closing, I would just like to suggest a couple of--I
    think one that would solve Mr. Deal's problem. First, rather
    than having each licensed gun manufacturer, wholesaler or
    retailer, contact the Secretary of Commerce to be placed on the
    list of protected businesses, it would seem more efficient in
    this day of computers, more secure for the Bureau of Alcohol,
    Tobacco, and Firearms, to send a list of licensed firearms
    manufacturers, wholesalers, and retailers, to the Secretary of
    Commerce.
        This list could be easily updated as firearms licenses are
    added or deleted. This would cut down on paperwork for the
    business sector, and should ensure that only licensed business
    are given immunity from litigation, and remove the need for the
    Commerce Department to check on the legitimacy of the claim for
    loss of immunity, and coming straight from the ATF.
        Now, whether responsibility for notifying Commerce remains
    at present with firearms businesses, or as I would suggest with
    the ATF--I'm sorry, I have run out of time. Thank you, sir.
        [The prepared statement of H. Sterling Burnett follows:]

      Prepared Statement of H. Sterling Burnett, Senior Fellow, National
                           Center for Policy Analysis

        Chairman Sterns, distinguished members of the committee, thank you
    for the opportunity to testify concerning the merits of H.R. 2037
    today. I am H. Sterling Burnett. I work for the National Center for
    Policy Analysis (NCPA), a non-partisan, non-profit research institute
    based in Dallas that promotes innovative private sector solutions to
    public policy problems. In my capacity as Senior Fellow with the NCPA,
    I have worked on firearms issues in general, and the municipal lawsuits
    against firearms manufacturers, wholesalers and retailers in particular
    for more than five years. One example of my work on this issue is,
    ``Suing Gun Manufacturers: Hazardous To Our Health'' which details the
    significant public policy and legal problems with the lawsuits
    currently being pursued by approximately 30 cities and counties against
    the firearms industry. This paper appears in the Spring 2001 Texas
    Review of Law & Politics. I offer this law review article as a written
    supplement to my testimony here today.
        Rather than examine the merits of the lawsuits, as my study does, I
    wish to address today why H.R. 2037 is an appropriate response to the
    threat that municipal lawsuits aimed at gun makers pose, and propose a
    couple of revisions that I would argue would improve the bill.
        Gun control activists, mayors and trial lawyers complain that
    legislation banning gun lawsuits usurps local authority and threatens
    public safety. Quite the opposite is true: if H.R. 2037 becomes law,
    the public will owe the legislature a debt of gratitude since the bill
    defends democracy, the economy and the public from harm.
        The U. S. does not have a pure free-market economy with respect to
    consumer goods. As part of the political process, legislatures control,
    limit or prohibit access to some products, such as tobacco, guns and
    prescription drugs. It's a delicate balancing act to give a free people
    access to certain products while maximizing public safety.
        These lawsuits are an attempt to circumvent the will of the
    majority as expressed through the legislature with the determinations
    of the judiciary. Several of the mayors and district attorney's have
    admitted as much upon filing their suits by stating that the lawsuits
    are not really about money but rather about changing the way the
    firearm industry does business. Shaping an industry's business
    practices is regulation pure and simple.
        Fortunately, so far both federal and state courts have been nearly
    unanimous in holding that courts shouldn't legislate gun policy. As one
    federal court ruled: ``It is the province of legislative or authorized
    administrative bodies, and not the judicial branch, to advance through
    democratic channels polices that would directly or indirectly either 1)
    ban some classes of handguns or 2) transform firearm enterprises into
    insurers against misuse of their products. Frustration at the failure
    of legislatures to enact laws sufficient to curb handgun injuries is
    not adequate reason to engage the judicial forum in efforts to
    implement a broad policy change.''
        Lawsuit proponents, unable to convince democratically elected
    legislators that removing guns from the hands of law abiding citizens
    will reduce crime, are attempting to use the courts to impose their
    views on a skeptical public. By protecting lawful gun makers from
    frivolous lawsuits, legislators are defending the democratic process.
        In addition, each federal legislator swears to uphold the
    Constitution of the United States--this bill is a step in satisfying
    that pledge. How so? The firearms industry is relatively small with
    sales of approximately $2 billion dollars for the 1999 fiscal year.
    This translated to only $200 million dollars in profit for the entire
    industry. To put that in perspective, that is less than some major
    companies like G.M., Exxon or Phillip Morris makes in a week. These
    lawsuits have already helped push two companies into bankruptcy. With
    each company's failure, the remaining companies must divert more of
    their limited resources to fight the lawsuits. One large judgement,
    such as the $400 million sought in the city of Chicago's lawsuit, could
    bankrupt the entire industry. If this happens, the ``the right to keep
    and bear arms,'' becomes academic. Though firearms, if well maintained,
    have long product lifespans, every gun in regular use will wear out
    over time. With no new guns on the market, the right to keep and bear
    arms will become a right in name only. Even if some gun manufacturers
    remain, the prices for firearms will be so high that owning guns will
    be a right reserved, in fact if not in principle, for the relatively
    wealthy.
        Ending this municipal attempt at judicial extortion would also
    reemphasize that Congress, and Congress alone was delegated the power
    to regulate interstate commerce. Make no mistake, this is about
    interstate commerce. While a majority of the nation's states have shown
    the wisdom and foresight to ban these lawsuits within their borders,
    other states have not so acted. Accordingly, a substantial judgement
    against the firearm industry in a state that lacks a law prohibiting
    lawsuits against the firearm industry, would have the effect of
    regulating or ending firearms manufacturing and sales in states with
    such a ban. When commercial regulations, whether created by the
    legislature or created de novo in the courts, in one state
    significantly affect commerce in other states, Congress has legitimate
    oversight authority in the situation.
        Furthermore, though not its intention, H.R. 2037 would have the
    additional benefit of helping the municipalities involved to be
    fiscally responsible. While, the cities and counties involved have
    supposedly pursued their claims in the cause of ``public health,'' and
    ``public safety,'' these lawsuits have been a waste of public funds. To
    date millions of public dollars have been spent. There is no telling
    how many more infants might have been immunized, how many more mothers
    might have received prenatal treatment, or how many more gun crime
    prosecutions could have been pursued, had scarce public funds not been
    diverted to highly suspect civil litigation against the gun industry.
    It would be interesting to research how many of the cities filing suits
    against the gun industry have simultaneously requested increased
    federal funding for government services, such as, policing, after-
    school programs, drug interdiction and prevention, public health care,
    etc.
        Moreover, what kind of message do such lawsuits send? If gun makers
    are blamed when their products are misused, what products are safe?
    Knives, cars and many household products are used each year to commit
    crimes. And accidents involving automobiles, ladders and swimming pools
    cost the public millions of dollars annually. Should the manufacturers
    of these products compensate the public for the costs incurred when
    criminals misuse them or when people drown or die in automobile
    accidents or falls? If this is the new product liability standard, then
    we will have to forego the benefits these products provide. Some
    companies would be unable to survive the lawsuits, others might simply
    move overseas to countries that still hold individuals, rather than
    inanimate objects, responsible when they take criminal, stupid or
    negligent actions.
        If the mayors were really concerned about public safety, they would
    be encouraging gun ownership. Citizens use guns in self-defense between
    800,000 and 3.6 million times annually. This exceeds the total number
    of firearm crimes--483,000 reported in 1996. I have calculated that the
    net economic benefits from defensive gun uses range from between $1
    billion to nearly $39 billion annually.
        The fact is that the best defense against violence is an armed
    response. For example, women under attack are 2.5 times less likely to
    suffer serious injury if they defend themselves with a gun rather than
    responding with other weapons or by offering no resistance. In
    addition, persons defending themselves with guns during an assault were
    injured only 12 percent of the time, compared to 25 percent for those
    using other weapons and 27 percent for those offering no resistance.
    Firearms are the safest, most effective way to protect oneself against
    criminals--which is why police carry guns rather than going unarmed or
    carrying knives.
        Ironically, by preventing these suits, H.R. 2037 would be doing
    mayors a favor. The lawsuits will not reduce crime, poverty, or
    homelessness, improve the schools, or fill pot holes. Guns are not the
    cause of our cities' ills, they are just scapegoats for the mayors'
    inability to check crime. If the suits result in a decline in lawful
    gun ownership, crime and unemployment would likely increase as citizens
    are left defenseless against criminal violence and industries flee to
    friendlier and safer business environments.
        Before closing, I would like to modestly suggest a few
    modifications to H.R. 2037 that would help it more efficiently in meet
    its goal.
        In this information age, it would seem that the U.S. government,
    like so many state governments have, should enter the age of one stop
    shopping. In this regard, rather than having each licensed gun
    manufacturer, wholesaler and retailer contact the Secretary of Commerce
    to be placed on the list of protected businesses, it would seem more
    efficient and more secure, for the Bureau of Alcohol, Tobacco and
    Firearms (BATF) to send its list of licensed firearms brokers,
    manufacturers, wholesalers and retailers to the Secretary of Commerce.
    This list could be easily updated as firearms licensees are added or
    deleted. This would cut down on paperwork for the business sector,
    should ensure that only licensed business are given immunity from
    litigation, and remove the need for the Commerce department to check on
    the legitimacy of a claim for lawsuit immunity.
        Whether the responsibility for notifying the Secretary of Commerce
    remains, as at present, with the firearms businesses or, as I have
    suggested, with the BATF, language should be included in the law
    limiting the amount of time the Secretary is allowed before listing an
    immune business. Without actual language specifying how long the
    Secretary has to list licensed dealers (14 days, 30 days, etc.), an
    administration, less sympathetic to the plight of gun owners and the
    gun industry than the present administration might be slow in updating
    the list--leaving unlisted businesses open to suits in the meantime. I
    propose that the language go farther and hold the department and the
    Secretary himself/herself fiscally liable for any court costs or
    damages incurred by a licensed party in the gun trade during the time
    between the responsible party notifies the Secretary of Commerce of
    their immune status and the Secretary listing such status.
        In addition, under section 13, (c) (3), I would change the language
    of (a) to read ``as a result of harm caused by criminal, other unlawful
    misuse, suicide or negligence of such a firearm or ammunition product
    by any other person.'' I would argue that there is no more excuse for
    holding licensed firearms businesses, operating within the bounds of
    the law, responsible for negligent or suicidal firearms use than for
    criminal misuse. While this may seem common sense, I would argue that,
    absent actual legislative language forbidding such suits, trial lawyers
    and gun control organizations might try to convince citizens, local,
    state and the federal government that this is a loophole in the law
    which they can exploit.
        Finally, though this is beyond the scope of this particular piece
    of legislation, I would draft similar legislation that would provide
    similar liability protection for all legal product. Suits such as these
    are a threat to any product which might conceivably cause harm through
    criminal misuse and as such, pose a threat to our current standard of
    well-being, continued innovation and economic progress.
        Thank you for your time and attention. I remain, of course,
    available for questions.

        Mr. Stearns. I thank the gentleman. Ms. Barnes. We have a
    vote, but we will hopefully get through your opening statement,
    and then we will take a recess and come back.

                        STATEMENT OF ELISA BARNES

        Ms. Barnes. Thank you. Mr. Chairman and honorable members
    of the committee, my name is Elisa Barnes, and I am a small
    private practice lawyer in Manhattan, and I did have the honor
    to represent Mr. Towns' client, Freddie Hamilton.
        Thank you for giving me the opportunity to speak to you
    today as a lawyer who has actually litigated the kind of case
    that this legislation seeks to eliminate. I have represented
    victims and their families in lawsuits against members of the
    gun industry for a number of years.
        And these cases seek and sought to hold manufacturers,
    importers, distributors, and dealers, accountable for their
    failures to adhere to a duty of due care in the way that they
    market, distribute, and sell their products.
        We have not and never have even intimated to seek a ban on
    the production, the discontinuance of a product line, of an
    entire line of products or the imposition even of stricter
    liability standards.
        We have only asserted from beginning to end that gun makers
    and sellers, like the makers and sellers of all other products
    in America, should be held to a simple negligence standard.
        That is, to be required to act as reasonably prudent
    persons or corporations would under similar circumstances. The
    bill under consideration, however, however, seeks to exempt
    members of the gun industry and their trade associations from
    this type of civil negligence liability.
        These common law standards that this bill seeks to exempt
    the industry from are only principles of common moral decency
    that have been enshrined in our legal system, and these common
    principles require essentially that you pay for what you break
    or what you take.
        Hand-in-hand with the statutory law, the common law
    provides a flexible system of compensation for those unjustly
    harmed by the conduct of another and the deterrence of future
    wrongdoing by the threat of money damages.
        The negligence and the public nuisance cases targeted here
    involved the marketing, and distribution, and sale of
    underground market handguns. I ask this committee as it
    deliberates the merits of this litigation, I ask you to take
    into consideration certain facts that were adduced during
    several years of litigation and research on this issue.
        First, there are millions of these underground market guns
    in circulation, and these guns are predominantly the ones that
    are used in crime. I used the term underground market guns to
    refer to those guns acquired outside of legal channels by
    persons who could not get them legally.
        These guns are not covered by the requisite permits or
    licenses of a jurisdiction like New York, which has strict
    requirements regarding who may possess a gun. The criminal use
    of these underground market guns was first presented in
    litigation by our statisticians and economists based on Bureau
    of Alcohol, Tobacco, and Firearms data base.
        It was further documented by a number of law enforcement
    experts, including the highest level of BATF experts, and
    officials, who described how these guns were acquired on street
    corners, out of the trunks of cars, and traded for guns.
        Second, I would like you to consider that handguns used in
    crime constitute a substantial market segment for this
    industry. Our estimates are conservative, and we say, and we
    have demonstrated that almost one-quarter of the production of
    this industry goes into crime.
        And it goes into crime fairly quickly. Guns moved into
    criminal hands nationally, 40 percent of the guns recovered in
    crimes nationally were last sold at retail within 3 years.
    Those numbers are much higher for New York and other major
    metropolitan cities.
        The only market segment that is higher than the criminal
    market is the personal protection market, and that accounts for
    approximately 32 percent of handgun production. Third, these
    guns reach juveniles, criminals, and other unauthorized persons
    by a few, very well documented, means. Straw purchases,
    multiple sales, sales by kitchen table dealers.
        Until the commencement of lawsuits, the members of this
    industry who have long known what the problem is, were free to
    take a hear-no-evil, see-no-evil, approach to their businesses.
        And I would refer the committee to a document that was put
    out by the Sporting Arms and Ammunition Manufacturers
    Institute, SAAMI, which is the old trade association, in which
    in 1994, recognized the problem of unethical dealers, and the
    problem that unethical dealers posed to the Nation.
        However, that this pledge by SAAMI did was no more than
    create a public relations presentation to the Members of the
    Congressional Sportsmen's Caucus, in which the industry falsely
    assured Congress that the industry would police itself.
        The truth of the matter is that it only came out during
    civil litigation that not only did the executive director and
    all of the members of the industry not know or could not define
    what a legitimate retailer was, but they had never taken any
    steps to police their activities, or do anything else.
        But what has the litigation done? The litigation I would
    argue to you has brought about some safety----
        Mr. Stearns. Ms. Barnes, I just need you to sum up. We are
    going to have to go vote.
        Ms. Barnes. Oh, I'm terribly sorry. This legislation
    protects the worst violators of the industry. They protect the
    ones that carry no insurance, and who rampantly and
    consistently sell guns to criminals.
        This legislation would eradicate the many salutatory
    benefits that we have achieved through litigation, and would
    provide a safe harbor for the irresponsible.
        [The prepared statement of Elisa Barnes follows:]

    Prepared Statement of Elisa Barnes, Vice President and General Counsel,
                          law Offices of Elisa Barnes

        Mr. Chairman and Honorable Members of the Committee: Thank you for
    giving me the opportunity to speak to you as a lawyer who has actually
    litigated the type of case this bill seeks to eliminate. I have
    represented victims and their families in lawsuits against members of
    the gun industry for a number of years. These cases seek to hold gun
    makers, importers, distributors and sellers accountable for their
    failures to adhere to a duty of due care in the way that they market,
    distribute advertise and sell guns. We have not sought a ban on gun
    production, the discontinuance of a product or a line of products or
    even the imposition of stricter liability standards. We have only
    asserted that a gun maker and seller, like the makers and sellers of
    other products, should be held to a negligence standard, that is, to be
    required to act as a reasonably prudent person or corporation would
    under similar circumstances.
        The bill under consideration seeks to exempt members of the gun
    industry and their trade associations from this type of civil
    negligence liability. Whether it will actually accomplish its goal if
    passed seems doubtful but the apparent intent of the legislation is to
    shield one industry from established common law requirements applicable
    to all other businesses. These common law standards are only principles
    of common moral decency enshrined in our legal system that require
    essentially, that ``you pay for what you break or take.'' Hand in hand
    with the statutory law, the common law provides a flexible system of
    compensation for those unjustly harmed by the conduct of another and
    deterrence of future wrongdoing by the threat of money damages.
        The negligence and public nuisance cases targeted here involve the
    marketing, distribution and sale of underground market guns. As this
    Committee deliberates the merits of this legislation, I ask that you
    take into consideration certain facts adduced during several years of
    litigation and research on this issue.
        First, there are millions of these underground market guns in
    circulation and these guns are predominately the ones used in crime. I
    use the term ``underground market'' to refer to guns acquired outside
    of legal channels by persons who could not get them legally. These guns
    are not covered by the requisite permits or licenses of a jurisdiction
    like New York, for instance, which has strict requirements about who
    may possess a gun. The criminal use of these underground market guns
    was first presented in litigation by our statisticians and economists
    based on the Bureau of Alcohol Tobacco and Firearms database of guns
    recovered in crime. It was further documented by law enforcement
    experts, including high level BATF officials, who described how these
    guns are acquired: on street corners, out of the trunks of cars, traded
    for drugs.
        Second, handguns used in crimes constitute a substantial market
    segment for the gun industry. In Hamilton v. Accu-tek, 62 F. Supp.2d
    802 (E.D.N.Y. 1999) judgment vacated, 264 F. 3d 21 (2d Cir. 2001), one
    of the earliest negligent distribution cases and the only one in which
    a jury found gun makers responsible for the injuries suffered by one of
    the plaintiffs, we found that almost one fourth of the industry's
    handgun production ends up in criminal hands.1 Most of those
    guns went into criminal hands quickly: forty percent of guns recovered
    in crimes nationwide were last sold at retail within three years
    2 and in New York, fifty one percent of guns recovered in
    crime were last sold at retail within 3 years.3 The only
    market segment larger than the criminal market is the personal
    protection market, accounting for 32.3 percent of handgun
    production.4
    ---------------------------------------------------------------------------
        \1\ From the expert analysis of Lucy Allen, National Economic
    Research Associates, based on U.S. Department of Treasury, Bureau of
    Alcohol Tobacco & Firearms (BATF) Consolidated Annual Firearms
    Manufacturing Reports, BATF Trace Data, U.S. Department of Justice
    Statistics National Crime Survey and National Crime Victim Survey,
    Survey of Prison Inmates, and Armed Criminals in America: A Survey of
    Incarcerated Felons, Wright and Rossi.
        \2\ Department of Treasury, BATF Firearms Trace Data 1989-1997
        \3\ Id.
        \4\ Lucy Allen, NERA, found that the Illegal Market (Violent
    Criminals) accounts for between 15 and 30% of the industry's
    production, 22. 5% is the midpoint between 15% and 30%. The market
    segments for other uses [personal protection 32.3%; target shooting,
    16.4%; home security, 12.7%; law enforcement,6.2%; hunting, 4.5%] were
    derived from Market Intelligence from NDL, Scout Statistical Tabular
    Analysis Report--Handguns Oct. 1994-Sept. 1995.
    ---------------------------------------------------------------------------
        Third, these guns reach juveniles, criminals, and other
    unauthorized persons by a few well-documented means: straw
    purchases,5 multiple sales,6 sales by kitchen
    table and gun show dealers.7 The members of the industry
    know exactly what the problem is, who the problematic outlets for their
    products are and how these outlets operate. Until the commencement of
    the various negligence and nuisance actions, however, the members of
    the industry have had no incentive to take the practicable steps
    necessary to alter their distribution and sales system to prevent or
    drastically reduce the flow of guns to unauthorized persons. They were
    free to pursue a ``hear no evil, see no evil'' approach to their
    businesses.
    ---------------------------------------------------------------------------
        \5\ A straw purchase is one made by a ``straw'' person with a clean
    records and in-state residence for a prohibited buyer.
        \6\ These are sales of more than one gun to the same person by the
    same dealer within a five day period. Ms. Allen's analysis confirmed
    the work of other researchers that if multiple sales were eliminated
    crime gun flows would drop nationwide by forty-three percent. See also,
    Knox and Weil, Effects of Limiting Handgun Purchases on Interstate
    Transfer of Firearms, JAMA, June 12, 1996.
        \7\ That is persons licensed by BATF who operate without a bona
    fide place of business. According to the testimony of Steven Higgins,
    Former Director of BATF, these informal businesses are difficult, if
    not impossible for BATF to regulate and the lack of investment by the
    operators in their business (as demonstrated by lack of a store,
    employees, insurance, security, inventory) make it doubly difficult.)
    See also Commerce in Firearms in the U.S., Dept. of Treasury BATF,
    February 2000.
    ---------------------------------------------------------------------------
        Take for example, the 1994 publication entitled A Responsible
    Approach to Handgun Ownership by the Sporting Arms and Ammunition
    Manufacturers Institute, the oldest industry trade association, in
    which the industry's most established and profitable gun companies
    pledge[d] to sell [their] products to only legitimate retail firearms
    dealers.
        We believe that by limiting sales to legitimate retail outlets,
    product features and safe operating procedures can be properly
    demonstrated and explained by knowledgeable salespeople. In addition,
    we feel such action would result in fewer of our products ending up in
    the hands of unethical dealers.
        Sounds good and I am certain that it sounded good to members of the
    Congressional Sportsmen's Caucus to whom this pamphlet was directed,
    who were told, in essence, that the industry would police itself. When
    asked what this ``pledge'' meant at depositions in the Hamilton case,
    neither the SAAMI Executive Director who drafted the document nor the
    heads of the companies participating in SAAMI could define a
    ``legitimate retail dealer'' other than to say that it was one who had
    the mandatory federal firearms license. Moreover, all conceded that
    there was no action taken by anyone at SAAMI or its members to follow
    through on the ``pledge'' to ensure that members dealt only with
    legitimate dealers and to keep guns out of the hands of unethical
    dealers. Basically, the response from the gun makers was that, despite
    the public relations communication, the promise to supervise their
    distribution channels, to keep guns out of the hands of the unethical
    dealers, was not part of their job.
        As the litigation progressed and other cases were brought, some
    companies started to implement some safety mechanisms, including:
    distribution requirements between manufacturers and distributors which
    called for the elimination of sales to dealers operating without a
    storefront, sales training in identifying and preventing straw
    purchases, restrictions on selling to gun shows, establishing
    authorized dealerships with storefront dealers that allow for closer
    control of dealers. Instead of the hollow ``pledge'', SAAMI and its
    sister organization the National Shooting Sports Foundation now provide
    a videotape presentation on how to recognize and prevent straw
    purchases.
        We have found that some companies in this industry have done well
    financially while working to implement safer distribution systems.
    Other companies have tried to take safety measures. However, as we saw
    after the proposed Smith & Wesson settlement, one or two companies
    cannot make significant distributional safety changes without suffering
    serious competitive harm. The companies that have tried to act
    responsibly or more responsibly are the ones that will be competitively
    harmed by the legislation proposed here. The exemption provided by this
    legislation will provide a safe haven to the most flagrant violators of
    community standards of decency and accountability. The cost of doing
    business is much less for one willing to operate recklessly without any
    regard for the harm caused than it is for the company that tries to act
    responsibly by implementing systems to prevent its distribution channel
    partners from selling to gun traffickers and criminals. The companies
    that will benefit from this legislation are the ones which carry less
    product liability insurance for their 250,000 per year unit production
    than I have on my car, who dump their guns into the same retail outlets
    that account for hundreds of crime gun traces each year, who thumb
    their noses at both the ATF and the courts by operating with multiple
    licenses and a variety of under capitalized corporations to shield the
    owners from liability. Are these the interests this Committee wants to
    protect?
        Litigation based on harm suffered as a result of the actions of
    those manufacturers and importers which consistently market and sell
    substantial numbers of crime guns is necessary to compensate the
    innocent, punish the wrongdoer and deter future wrongdoing. Analyses of
    the BATF firearms trace database, the compilation of records of guns
    recovered and traced in connection with crimes from 1989 to the
    present, discloses that year after year the same entities send large
    and, we believe, disproportionate numbers of guns into criminal hands.
    Many of the so called Saturday-Night Special manufacturers routinely
    make the short list of manufacturers whose guns are most frequently
    recovered in crimes while the number of guns they produce on an annual
    basis is far lower than the production of the larger gun makers. Many
    of these guns are extremely inexpensive, sold without any distribution
    constraints to anyone who can pay and advertised as easily concealable.
        Surely, this Committee would not deny access to the courts and the
    possibility of redress for those shot with guns made, distributed and
    sold by the companies which have consistently sold guns into the
    criminal market? These guns would not be accessible to the shooters but
    for the negligence of certain companies. Would this Committee take away
    the right of access to the courts to the family of the 22 year old
    young woman working at the Wendy's fast food restaurant while saving
    money to pay for her college education who was tragically and
    senselessly shot by two men with a negligently distributed gun that
    ranked in the top ten crime guns and which passed through distributors
    and a dealer that have sold thousands of guns to criminals over the
    last five years? The innocent and the responsible will suffer by virtue
    of this legislation; only the irresponsible stand to gain by it.
        The civil justice system develops relevant evidence in order to
    resolve competing claims. For hundreds of years it has effectively
    accommodated the needs of commercial enterprises with the demands of
    safety. No reason has been offered to justify its suspension for this
    industry.

        Mr. Stearns. I thank you, Ms. Barnes, and we are going to
    take a recess with your indulgence, and we have a general vote,
    and then we will be right back. We are in temporary recess.
        [Brief recess.]
        Mr. Stearns. The subcommittee will come to order. The
    ranking member is on his way I am told, and so we will proceed,
    and we want to thank the witnesses for their patience here, and
    we will start with Mr. Keane and your opening statement now.

                     STATEMENT OF LAWRENCE G. KEANE

        Mr. Keane. Chairman Stearns, and distinguished members of
    the subcommittee, my name is Lawrence Keane, and I am vice
    president and general counsel to the National Shooting Sports
    Foundation.
        The National Shooting Sports Foundation appreciates the
    opportunity to appear before the subcommittee this morning to
    offer testimony in support of the Protection of Lawful Commerce
    in Arms Act, H.R. 2037, which is an important piece of common
    sense legislation.
        Formed in 1961, the National Shooting Sports Foundation,
    with approximately 1,900 members, is the major trade
    association for the firearms and recreational shooting sports
    industry.
        The National Shooting Sports Foundation manages a variety
    of programs designed to promote a better understanding of, and
    more active participation in the shooting sports.
        The National Shooting Sports Foundation's programs and
    initiatives reflect the firearms industry genuine and
    longstanding commitment to fostering firearms safety and
    education, and further reducing the illegal acquisition and
    criminal misuse of firearms.
        Our members are engaged in the interstate and foreign
    commerce of firearms and ammunition products, a lawful and
    highly regulated activity. Beginning in 1998, a group of
    approximately 40 urban politicians aligned with contingency fee
    trial lawyers and anti-gun activists have flooded our Nation's
    courts with lawsuits against federally licensed firearms
    manufacturers, wholesale distributors, retailers, and the
    industry's trade association.
        On March 28 of this year, the city of Jersey City, New
    Jersey, became the most recent city to file suit. Additional
    suits are threatened, and there are a growing number of
    private, non-municipal suits against the industry.
        As the costs have recognized, these suits are an improper
    attempt to use litigation to regulate the design, manufacture,
    marketing, distribution, and sale of firearms, thereby
    circumventing the State legislatures and Congress.
        In dismissing the New Orlean's case, the Louisiana Supreme
    Court commented that local suits seeking to regulate the
    industry threatened the public safety and welfare because they
    will result in half-hazard and inconsistent rules in various
    jurisdictions.
        Unfortunately, winning on the merits is not necessary in
    order for these local politicians to impose their will. Their
    policy judgments can be implemented throughout the Nation if
    the cohesive effect resulting from the staggering financial
    costs to defend these suits forces the industry into a Hobson's
    choice of either capitulation or bankruptcy.
        At the time that he filed his suit, Chicago Mayor Richard
    Dailey said, ``We are going to hit them where it hurts. In
    their bank accounts.''
        Andrew Cuomo, then Housing and Urban Development Secretary,
    threatened firearms manufacturers with, ``death by a thousand
    cuts.'' The collective industry-wide costs to defend these ill-
    conceived and politically motivated suits has been truly
    staggering.
        The exact figures are not available because the defendants
    are still after all competitors, and each considers the amounts
    of its defense costs to be confidential business information.
        However, based on discussions with insurance industry
    executives, manufacturers' corporate counsel, cost estimates
    appearing in various publications, and the National Shooting
    Sports Foundation own experience, I believe a conservative
    estimate for the total industry-wide cost of defense to date
    easily exceeds $50 million.
        The cost has been borne almost exclusively by the companies
    themselves, and with few exceptions, insurance carriers have
    denied coverage. As a result of these suits, there have been
    large, across the board, price increases for consumers.
        In addition, firearms industry members have experienced
    dramatic premium increases when renewing their insurance
    policies. Insurance policies now almost invariably exclude
    coverage for municipal suits.
        Many of these suits allege that the industry's products are
    defectively designed. While this allegation is patently untrue,
    these suits have ironically forced companies to scale back
    research and development to further improve the overall safety
    and design of their products.
        These suits have been an unnecessary distraction to our
    Nation's firearms manufacturers, whose time and attention would
    be better spent supplying law enforcement and our armed forces
    with the equipment that they need to protect America and to
    combat global terrorism.
        Of the 24 municipal suits that have been filed to date, 10
    have been dismissed by the courts, with six of those cases
    having been fully and finally adjudicated. Every appellate
    court in the Nation who decides a municipal firearms case has
    ruled in favor of the industry, and ordered the cases
    dismissed, including three State Supreme Courts, and the United
    States Supreme Court denied certiorari of New Orleans' appeal.
    And seven cases remain on appeal.
        On March 27 of this year the city of Boston, after
    completing 18 months of comprehensive, exhaustive discovery,
    became the first municipality to voluntarily dismiss its case
    against the industry.
        Its case was replete with allegations defamatory to the
    industry of the kind that we have heard here this morning. In
    dismissing its case voluntarily, Boston acknowledged that it
    had learned through the litigation that the firearms industry
    has a genuine and longstanding commitment to further reducing
    accidents, and cooperating with law enforcement in their
    efforts to combat the criminal misuse of firearms, and
    promoting the safe and responsible distribution of firearms.
        Boston now believes that the best way to achieve the shared
    goals is through cooperation and communication with industry,
    rather than expensive, time consuming, and distracting
    litigation.
        The National Shooting Sports Foundation urges you to vote
    in favor of the Protection of Lawful Commerce in Arms Act, and
    I thank you for your time and attention, and would be happy to
    try to answer any questions the subcommittee might have.
        [The prepared statement of Lawrence G. Keane follows:]

       Prepared Statement of Lawrence G. Keane, Vice President & General
               Counsel, National Shooting Sports Foundation, Inc.

        Chairman Stearns and distinguished members of the Subcommittee, my
    name is Lawrence G. Keane. I am the vice president and general counsel
    to the National Shooting Sports Foundation, Inc. (``NSSF'''). The
    National Shootings Sports Foundation appreciates the opportunity to
    appear before the Subcommittee to offer testimony in support of the
    ``Protection of Lawful Commerce in Arms Act.'' (H.R. 2037), which is an
    important piece of common sense legislation.
        Formed in 1961, the National Shooting Sports Foundation, with
    approximately 1,900 members, is the major trade association for the
    firearms and recreational shooting sports industry. The NSSF manages a
    variety of programs designed to promote a better understanding of, and
    a more active participation in, the shooting sports. The NSSF's
    programs and initiatives reflect the firearms industry's genuine and
    longstanding commitment to fostering firearm safety and education and
    further reducing the illegal acquisition and criminal misuse of
    firearms. Our members are engaged in the interstate and foreign
    commerce of firearm and ammunition products, a lawful and highly
    regulated activity.
        Beginning in 1998, a group of approximately forty urban
    politicians, aligned with contingency-fee trial lawyers and anti-gun
    activists, have flooded our nations courts with lawsuits against
    federally licensed firearms manufacturers, wholesale distributors and
    retailers. On March 28, 2002 the City of Jersey City, New Jersey became
    the most recent city to file suit. Additional suits are threatened, and
    there are a growing number of private (non-municipal) suits against the
    industry.
        As the courts have recognized, these suits are an improper attempt
    to use litigation to regulate the design, manufacturer, marketing,
    distribution and sale of firearms, thereby circumventing state
    legislatures and Congress. In dismissing the New Orleans' case, the
    Louisiana Supreme Court commented on local suits threatened the public
    safety and welfare because they will result in haphazard and
    inconsistent rules.
        Winning on the merits is not necessary in order for these
    politicians to impose their will. Their policy judgments can be
    implemented throughout the nation if the coercive effect resulting from
    the staggering financial cost to defend these suits forces the industry
    into a Hobson's choice of either capitulation or bankruptcy. At the
    time he filed his suit, Chicago Mayor Richard Dailey said, ``We're
    going to hit them where it hurts--in their bank accounts . . .'' Andrew
    Cuomo, then Housing and Urban Development Secretary, threatened
    firearms manufacturers with ``death by a thousand cuts.''
        The collective industry-wide cost to defend these ill-conceived,
    politically motivated suits, has been truly staggering. Exact figures
    are not available because the defendants are still competitors and
    their defense costs is considered confidential business information.
    However, based on discussions with insurance industry executives,
    manufacturers' corporate counsel, cost estimates in various
    publications, and NSSF's own experiences, I believe a conservative
    estimate for the total, industry-wide, cost of defense to date exceeds
    $50 million dollars.
        This cost has been borne almost exclusively by the companies
    themselves. With few exceptions, insurance carriers have denied
    coverage. This has resulted in large, across-the-board, price increases
    for consumers. Many of these suits allege that industry's products are
    defectively designed. While this allegation is patently untrue, these
    suits have ironically forced companies to scale back research and
    development to further improve the overall safety and design of their
    products.
        As a result of these suits, firearms industry members have
    experienced dramatic premium increases when renewing their insurance
    policies. Renewed policies almost invariably exclude coverage for the
    municipal suits.
        These suits have been an unnecessary distraction to our nation's
    firearms manufacturers whose time and attention would be better-spent
    supplying law enforcement and our armed forces with the equipment they
    need to protect America and combat global terrorism.
        Of the twenty-four municipal suits that have been filed to date,
    ten have been dismissed by the courts, with six of those cases being
    fully and finally adjudicated. Every appellate court in the nation to
    decide a municipal firearms case has ruled in favor of the industry and
    ordered the cases dismissed, including three state supreme courts and
    the United States Supreme Court denied certiorari of New Orleans'
    appeal. Seven cases are currently on appeal.
        On March 27, 2002 the City of Boston, after completing 18 months of
    comprehensive discovery, became the first municipality to voluntarily
    dismiss its case against the industry. In dismissing its case, Boston
    acknowledged it had learned the firearms industry has a genuine and
    longstanding commitment to further reducing firearms accidents;
    cooperating with law enforcement in their efforts to combat the
    criminal misuse of firearms; and promoting the safe and responsible
    distribution of firearms. Boston now believes the best way to achieve
    these shared goals is through cooperation and communication, rather
    than through expensive, time-consuming and distracting litigation.
        The National Shootings Sports Foundation urges you to vote in favor
    of the Protection of Lawful Commerce in Arms Act (H.R. 2037).
      Selected Quotations from the Municipal Firearms Litigation Decisions

                                    ATLANTA

    Preemption:
        ``The practical effect of the preemption doctrine is to preclude
    all other local or special laws on the same subject. That the City has
    filed a law suit rather than passing an ordinance does not make this
    any less usurpation of State power. The City may not do indirectly what
    it cannot do directly.''
    Presiding Judge Andrews, Court of Appeals of Georgia, Sturm, Ruger
     & Company, Inc. et al. v. City of Atlanta, 2002 WL 215619, 4 (Ga.
                                                    App. Feb.13, 2002).

                                     BOSTON

    Remoteness/Proximate Cause:
        ``Proof of causal relationship between a defendant's action and a
    plaintiff's injury is essential in every tort `because the consequences
    of an act go endlessly forward in time and its causes stretch back to
    the dawn of human history,' the concept of proximate causation was
    developed to limit the liability of the wrongdoer to only those harms
    with a reasonable connection to the wrongdoer's actions.''
    Justice Hinkle, Superior Court of Massachusetts, City of Boston v.
    Smith & Wesson Corp, 2000 WL 147 3568, 3 (Mass. Super. Ct. July 13,
                                                                 2000).

                                   BRIDGEPORT

    Standing:
        ``Standing is the legal right to set judicial machinery in motion.
    One cannot rightfully invoke the jurisdiction of the court unless he
    has, in an individual or representative capacity, some real interest in
    the cause of action, or a legal or equitable right, title or interest
    in the subject matter of the controversy. (citations omitted). Thus, to
    state these basic propositions another way, if injuries claimed by the
    plaintiff are remote, indirect or derivative with respect to the
    defendant's conduct, the plaintiff is not the proper party to assert
    them and lacks standing to do so.''
       Justice David M. Borden, Supreme Court of Connecticut, Ganim v.
         Smith and Wesson Corp., et al., 780 A.2d 98, 119 (Conn. 2001).
    Remoteness/Proximate Cause:
        ``It cannot be denied that factors other than the defendants'
    manufacture, advertisement, distribution and retail sales of guns
    contribute in significant measure to the various harms claimed by the
    plaintiffs. The scourge of illegal drugs, poverty, illiteracy,
    inadequacies in the public educational system, the birth rates of
    unmarried teenagers, the disintegration of family relationships, the
    decades long trend of the middle class moving from city to suburb, the
    decades long movement of industry from the northeast `rust belt' to the
    south and southwest, the swings of the national and state economies,
    the upward track of health costs generally, both at the state and
    national level, unemployment, and even the construction of the national
    interstate highway system. . .'' Id. at 124.

                                 CAMDEN COUNTY

    Public Nuisance:
        ``public nuisance law does not sweep so broadly as to impose
    liability on manufacturers of a legal product, who follow relevant
    regulations, and who do not control or participate in irresponsible
    secondary and tertiary acts that are more directly responsible for the
    end harm.''
      District Judge Jerome B. Simandle, Camden County Board of Chosen
     Freeholders v. Beretta U.S.A. Corp., et al., 123 F. Supp. 2d 245,
                                                     267 (D.N.J. 2000).
        ``[I]f public nuisance law were permitted to encompass product
    liability, nuisance law `would become a monster that would devour in
    one gulp the entire law of tort.' If defective products are not a
    public nuisance as a matter of law, then the non-defective, lawful
    products at issue in this case cannot be a nuisance without straining
    the law to absurdity . . . to extend public nuisance law to embrace the
    manufacture of handguns would be unprecedented under New Jersey state
    law and unprecedented nationwide for an appellate court.''
         Per Curiam, U.S. Court of Appeals for the 3rd Circuit, Camden
    County Board of Chosen Freeholders v. Beretta U.S.A. Corp., et al.,
                                      273--F.3d 536, 540 (3d Cir. 2001)

                                  CINNCINNATI

    Failure to State Cause of Action:
        ``Using a shotgun approach in its complaint, the city has made its
    broad assertions without alleging a direct injury caused by a
    particular firearm model or its manufacturer. We hold that the city's
    attempts to stand in the shoes of its citizens and to recover municipal
    costs must fail.''
      Judge Winkler, Court of Appeals of Ohio, First District Hamilton
    County, Cincinnati v. Beretta U.S.A. Corp. et al., 2000 WL 1133078,
                                            2 (Ohio App. 1 Dist. 2000).
    Public Nuisance:
        ``In this case, the city has alleged that the defendants
    intentionally and recklessly marketed, distributed, and sold guns that
    they knew would be possessed and used illegally. An activity that is
    authorized by law cannot be a public nuisance or absolute nuisance.
    `This is especially true where a comprehensive set of legislative acts
    or administrative regulations governing the details of a particular
    kind of conduct exist.' '' Id. at 6. ``In sum, the city has no claim
    for public or absolute nuisance arising from the defendants' heavily
    regulated distribution of firearms, because `what the law sanctions
    cannot be aid to be a public nuisance.' '' Id. at 7
    Strict Liability (Failure to Warn):
        ``The Court finds as a matter of law that the risks associated with
    the use of a firearm are open and obvious and matters of common
    knowledge.''
          Judge Ruehlman, Court of Common Pleas of Ohio, Cincinnati v.
         Beretta U.S.A. Corp. et al., 1999 WL 809838, 1 (Ohio Com. Pl.
                                                                 1999).
    Judicial Activism:
        ``In the view of this Court, the City's complaint is an improper
    attempt to have this Court substitute its judgment for that of the
    legislature, which this Court is neither inclined nor empowered to
    do.'' Id. at 1.
    Remoteness:
        ``The claims of the City are premised on injuries which have
    occurred to its citizens, and as such are barred by the doctrine of
    remoteness. It is well established that a plaintiff may not recover
    derivative damages for injuries to remote third parties, as the City is
    attempting to do here.'' Id. at 3.

                             DETROIT & WAYNE COUNTY

    Duty:
        ``A review of the pleadings leads to the conclusion that the actual
    duty advanced by Plaintiffs is essentially one of crime prevention . .
    . Crime prevention, however, is simply not a cognizable legal duty owed
    by these Defendants to these Plaintiffs.''
    Judge Jeanne Stempien, Archer v. Arms Technology, No. 99-912658-NZ
    (Wayne Co. Cir. Ct. May 16, 2000) and McNamara v. Arms Technology,
                    No. 99-912662-NZ (Wayne Co. Cir. Ct. May 16, 2000).

                                      GARY

    Subject Matter Jurisdiction/Judicial Activism:
        ``In substance, the City and its Mayor opt to engage in efforts at
    arbitrary social reform by invoking the process of the Judicial Branch
    of Government, where apparently the City perceives, but fails to
    allege, irreversible failures in the appropriate Legislative Branch(s)
    of Government--The City should not be permitted to invoke the
    jurisdiction of this Court to overlay or supplement existing civil and
    criminal `gun' statutes and processes (either state and federal) by
    means of a series of judicial fiats which, when taken together, would
    only create a body of `judge made gun laws'.''
       Special Judge James J. Richards, Lake Superior Court, County of
         Lake, City of Gary v. Smith & Wesson, 2001 WL 333111, 3 (Ind.
                                             Super. Ct. Jan. 12, 2001).
    Public Nuisance:
        ``[A] legislative body cannot authorize conduct on one hand, and
    seek to punish it through public nuisance actions on the other,
    particularly where a comprehensive regulatory scheme already governs
    the challenged conduct.'' Id. at 4.

                               MIAMI-DADE COUNTY

    Recovery of Municipal Costs Provided by Public Services:
        ``The Court concludes that the County's claim for damages, based on
    the costs to provide 911, police, fire and emergency services
    effectively seeks reimbursement for expenditures made in the
    performance of governmental functions. Costs of such services are not,
    without express legislative authorization, recoverable by governmental
    entities.
             Judge Amy N. Dean, Florida Circuit Court, Penelas v. Arms
    Technology, Inc., 1999 WL 1204353, 1 (Fla. Cir. Ct. Dec. 13, 1999).
    Preemption:
        ``While the County claims that lawsuits cannot be regulatory and
    that only regulations can `regulate,' the U.S. Supreme Court has made
    clear that lawsuits seeking compensatory damages or injunctive relief,
    or both, are a form of regulation that can infringe on preempted
    activity'.'' Id. at 2 referring to BMW of North Am., Inc. v Gore, 517
    U.S. 559 (1996).
    Judicial Activism:
        ``The County's request that the trial court use its injunctive
    powers to mandate redesign of firearms and declare that the appellees'
    business methods create a public nuisance, is an attempt to regulate
    firearms and ammunition through the medium of the judiciary . . . The
    County's frustration cannot be alleviated through litigation as the
    judiciary is not empowered to `enact' regulatory measures in the guise
    of injunctive relief. The power to legislate belongs not to the
    judicial branch of government but to the legislative branch.
       Judge J.J. Fletcher, District Court of Appeal of Florida, Third
    District, Penelas v. Arms Technology, Inc., 2001 WL 120529, 2; 778
                   So.2d 1042, 1045 (Fla. App. 3rd Dist. Feb 14, 2001).

                                  NEW ORLEANS

    Preemption:
        ``Clearly, state regulation of the lawful design, manufacture,
    marketing, or sale of firearms and ammunition is of vital interest to
    the citizens of Louisiana. Equally clear is the fact that consistent,
    exclusive statewide regulation of the firearms industry tends in a
    great degree to preserve the pubic safety and welfare. A scheme
    allowing several municipalities to file suits effectively attempting to
    regulate the firearms industry in different ways and in different
    degrees could conceivably threaten the public safety and welfare by
    resulting in haphazard and inconsistent rules governing firearms in
    Louisiana. Moreover, this court has consistently recognized that the
    legislature's authority to regulate different aspects of the firearms
    industry constitutes a legitimate exercise of police power.''
        Justice Kimball, Supreme Court of Louisiana, Morial v. Smith &
                  Wesson, Corp., 2001 WL 316267, 9 (La. April 3, 2001).

                                 NEW YORK STATE

    Nuisance:
        ``Certainly, liability for common law nuisance rests on whether the
    defendant's conduct resulted in the existence of the nuisance, i.e.,
    whether the defendant contributed to the creation or maintenance of the
    nuisance. However, a line must eventually be drawn since there will be
    many instances in which a party may have contributed in some remote way
    and yet it is inappropriate to subject that party to tort liability. In
    other words, at some point, a party is simply too far removed from the
    nuisance to be held responsible for it.''
    Judge Louis B. York, Supreme Court of the State of New York, People
     of The State of New York v. Sturm, Ruger & Co., Inc., et al., No.
           402586/00, slip op. at 22 (Sup. Ct. New York Aug. 10, 2001).
                                  philadelphia
        ``Plaintiffs have advanced a novel approach to an old theory by
    targeting the gun manufacturers. Unfortunately, this was a theory in
    search of a case, and the defendants are out of range.''
        Judge Berle M. Schiller, United States District Court, Eastern
      District of Pennsylvania, City of Philadelphia v. Beretta U.S.A.
                   Corp., 2000 WL 1871712, 23 (E.D. Pa. Dec. 20, 2000).
    Statutory Restrictions:
        ``That the City cannot do by act of the city Council it now seeks
    to accomplish with a lawsuit. The United States Supreme Court has
    recognized that the judicial process can be viewed as the extension of
    a government's regulatory power. As the court explained, `[s]tate power
    may be exercised as much by a jury's application of a state rule of law
    in a civil suit,' as by regulation or ordinance. (citations omitted).
    Similarly, the City's instant action seeks to control the gun industry
    by litigation, an end the City could not accomplish by passing an
    ordinance.'' Id. at 4.
    Duty:
        ``[N]o legal duty exists upon these defendants to protect citizens
    from the deliberate and unlawful use of their products.'' Id. at 14.
    Remoteness:
        In its analysis the district court examined the route a gun takes
    from the manufacturer to Philadelphia streets. (citations omitted).
    First, the defendant manufacturers sell guns to licensees; second, the
    licenses (sic) sell the guns to dealers; third, the dealer sells it to
    a lawful purchaser acting as a straw buyer; forth, the straw buyer
    transfers the weapon to a criminal or a youth; fifth, the transferee
    uses the gun to commit a crime; and finally, demand on the City's or
    the organizational plaintiffs' resources is increased.
        Plaintiffs try to shorten the causal chain by arguing that the
    'thriving illegal market . . . injures [them], even before any guns
    acquired in the illegal market are actually used in the commission of a
    crime. This statement, however, does not reduce the links that separate
    a manufacturer's sale of a gun to a licensee and the gun's arrival in
    the illegal market through a distribution scheme that is not only
    lawful, but also prescribed by statute with respect to the
    manufacturer's conduct.
          Circuit Judge Greenburg, U.S. Court of Appeals for the Third
        Circuit, City of Philadelphia v. Beretta U.S.A. Corp., 2002 WL
                                      29740, 4 (3d Cir. Jan. 11, 2002).

                                   WILMINGTON

    Duty:
        ``Concerning the alleged duty of care to prevent firearms from
    `landing in the hands of [criminals],' a duty like that might apply to
    retailers. The Court sees no duty on the manufacturers' part that goes
    beyond their duties with respect to design and manufacture. The Court
    cannot imagine that a weapon can be designed that operates for law
    abiding people, but not for criminals.''
     Judge Silverman, Delaware Superior Court, Sills v. Smith & Wesson
       Corp., C.A. No. 99C-09-283-PSS, 20 (Del. Sup. Ct. Dec. 1, 2000).

        Mr. Stearns. I thank the gentleman, and Ms. Rand, your
    opening statement, please.

                      STATEMENT OF M. KRISTEN RAND

        Ms. Rand. Thank you, Mr. Chairman, and members of the
    subcommittee. My name is Kristen Rand, and I am the Legislative
    Director for the Violence Policy Center. The Violence Policy
    Center is a research and policy development organization.
        We focus exclusively on the gun industry and gun policy. I
    would like to begin my remarks by pointing out that guns, along
    with tobacco, are the only unregulated consumer product
    manufactured in America.
        And just as an example, this teddy bear, which we purchased
    from Smith & Wesson, as you can see has a cute little Smith &
    Wesson tee-shirt, but this teddy bear is regulated by the
    Consumer Product Safety Commission for a variety of hazards
    that it might present to children, including small parts,
    flammability, hazardous materials.
        But guns that Smith & Wesson makes are not regulated. There
    is no Federal agency with the authority to regulate the design,
    manufacture, and to a large extent the distribution of firearms
    in America.
        So that leaves the tort system as the only method of
    regulation for the gun industry, and I think that Elisa's
    comments speak very clearly and concisely about the function of
    the tort system.
        It is entirely appropriate that any member of the firearms
    industry be held accountable for its negligent conduct, whether
    or not that conduct complies with the absolute letter of the
    law.
        And that is actually the main thrust of some of our major
    concerns with this legislation. That because if a manufacturer
    or dealer acts in technical compliance with the law, and are on
    the list maintained by the Secretary of Commerce, they are
    protected from liability if their guns are used by a third-
    person to kill or injure.
        And, Mr. Chairman, I would respectfully disagree that the
    bill would not impact cases like the Kitchen case. The way the
    bill is currently drafted, it would definitely protect someone
    who goes into a store visibly intoxicated, and buys a gun, and
    injures a third-person.
        And particularly in the Kitchen case, there was no State
    law that would prevent that sale, and there is no Federal
    prohibitive category that covers the visibly intoxicated. So
    that case would clearly fall under the protection of this bill.
        Likewise, we have concerns that the definition of
    manufacturer and dealer in the bill are overly broad. Because
    it requires that dealers or manufacturers only be licensed to
    the extent required by law, it would in fact allow
    manufacturers who manufacture guns at home for their own use,
    and who are not required to be licensed as manufacturers under
    Federal law, it would protect those people, people making kit
    guns at home who may be making occasional sales.
        Likewise, it would protect hobbyist gun sellers, who often
    market their guns at gun shows, bragging that they don't have
    to conduct a background check. In fact, I have a photo here
    from a Seattle area gun show.
        This is a private seller, and it says, ``Private
    Collection, No Wait, No Phone Call.'' But these hobbyists are
    specifically excluded from the licensing requirements of
    Federal law, and they would clearly be protected under this
    bill.
        I am encouraged by some of the comments from the committee
    members that there is a willingness to deal with some of these
    problems, and we think that is important, but the bigger
    picture is going back to the point of an unregulated industry.
        The plaintiffs have to have a wide berth in litigation when
    you are dealing with an unregulated industry, because that is
    the only check on the conduct of that industry. So we think
    that these lawsuits brought by cities, even though the Violence
    Policy Center has actually be critical of some of the
    particular aspects of that litigation, it is entirely
    appropriate, and it is the function of the tort system to
    change with society, and to address problems that aren't
    specifically addressed by statute.
        And for those reasons, we strongly oppose H.R. 2037, but we
    thank you for hearing our comments.
        [The prepared statement of M. Kristen Rand follows:]

     Prepared Statement of M. Kristen Rand, Legislative Director, Violence
                                 Policy Center

                                  INTRODUCTION

        Good morning Mr. Chairman and members of the Committee. I am
    Kristen Rand, legislative director for the Violence Policy Center
    (VPC). The VPC is a national non-profit organization that conducts
    research and policy development aimed at reducing gun-related violence.
    The VPC has conducted numerous studies regarding the impact that tort
    reform would have on the firearms industry and hence on gun violence-
    prevention efforts.
        As you know, 33 lawsuits have been filed by city, county, and state
    officials against various gun manufacturers, distributors, dealers, and
    trade associations. From the moment these suits were filed, the gun
    industry has poured tremendous resources into shielding themselves from
    ever having to step into a courtroom to defend themselves and their
    products. In state legislature after state legislature, the industry--
    aided by the National Rifle Association--has pushed legislation to
    insulate itself from suits. These efforts have been very successful.
    More than 20 states have enacted sweeping immunity legislation
    preventing cities from filing cases.
        The Violence Policy Center has expressed concerns about some
    aspects of the lawsuits filed by cities against the gun industry. The
    VPC has expressed concern that some of the suits make overly broad
    allegations against the gun industry. As a close observer of the
    industry, the VPC knows that the industry is not a monolith, and cannot
    be treated as such. The VPC believes that the conduct of each player in
    the industry must be judged independently. At the same time, when
    appropriate, the industry should be required to defend its conduct in a
    courtroom, rather than hide behind special interest legislation that
    exempts the gun industry from the rules by which all other product
    manufacturers must play.
        The merits of any individual lawsuit are not what we are here today
    to discuss. We are here to analyze H.R. 2037, the ``Protection of
    Lawful Commerce in Arms Act,'' legislation that would make sweeping
    changes in state tort law; changes designed specifically to benefit the
    gun industry. The ``Protection of Lawful Commerce in Arms Act,'' would
    make it virtually impossible to bring lawsuits against the gun industry
    in circumstances in which the industry's conduct contributes to
    criminal gun violence if the conduct of the industry is in technical
    compliance with the law. This is a dangerous proposal. Plaintiffs
    pursuing actions against the gun industry should be allowed a wide
    berth since the firearms industry is already exempt from federal health
    and safety regulation.
           guns--and tobacco--the last unregulated consumer products
        Aside from the tobacco industry, the firearms industry is America's
    last unregulated consumer product manufacturer. Unlike virtually every
    other consumer product--from toys to automobiles--firearms and
    ammunition are subject to no federal safety oversight, and commerce in
    guns is subject to only modest restrictions. Therefore, the civil
    justice system serves as the only ``regulation'' of the conduct of the
    gun industry. Litigation is the only mechanism available to consumers
    and victims of firearms violence to hold the gun industry accountable
    when it acts negligently or recklessly. Weakening the rights of
    consumers and public officials to sue the gun industry deprives
    citizens of the sole tool currently available to hold the gun industry
    accountable for the products it sells, a product that kills nearly
    30,000 Americans every year. To put this number in context, that is the
    equivalent of five fully loaded 747 jumbo jets crashing every month.
    Despite this death toll, no federal agency has the authority to
    regulate the design and manufacture of firearms.1
    ---------------------------------------------------------------------------
        \1\ Firearms and ammunition are specifically exempt from the
    jurisdiction of the Consumer Product Safety Commission, see 15 USC
    Sec. 2052(a)(1)(E).
    ---------------------------------------------------------------------------
        Taking into account the unregulated status of the gun industry, any
    weakening of tort law that currently applies to the industry is
    unwarranted. H.R. 2037 would make it virtually impossible to bring
    lawsuits against the gun industry in circumstances in which the
    industry's conduct contributes to criminal gun violence so long as the
    conduct of the industry is in technical compliance with the law. The
    restrictions contained in H.R. 2037 are intended to reach lawsuits like
    those brought by the 33 cities, counties, and states. The suits target
    the design, marketing, and distribution practices of the firearms
    industry in an effort to hold the industry accountable for the
    allegedly resulting gun violence. Like the tobacco suits filed by state
    attorneys general, many of these lawsuits against the gun industry
    argue novel, untested legal theories. The suits attempt to define the
    parameters regarding the liability of the firearms industry for the gun
    violence that plagues our country. In the view of the Violence Policy
    Center, this is entirely appropriate. Law professor Carl Bogus makes
    this point forcefully in his discussion of the lawsuits filed by cities
    against the gun industry in his book Why Lawsuits are Good for America:
    Disciplined Democracy, Big Business and the Common Law, ``Flexibility
    is one of the hallmarks of tort law . . . tort law is necessarily
    elastic. It must be able to be stretched to fit new situations as
    courts deem it necessary to do so.'' 2
    ---------------------------------------------------------------------------
        \2\ Carl T. Bogus, Why Lawsuits are Good for America: Disciplined
    Democracy, Big Business and the Common Law, 199 (New York University
    Press 2001). See also Robert L. Rabin, Enabling Torts, 49 DePaul L.
    Rev. 435 (1999) (discussing how gun industry liability for negligent
    marketing and distribution practices fits into a category the author
    describes as ``enabling torts.'')
    ---------------------------------------------------------------------------
        However, the real-world effects of H.R. 2037 would reach far beyond
    these novel lawsuits and would adversely affect many lawsuits brought
    under traditional, accepted tort theories. The bill would also operate
    to protect corrupt gun dealers and negligent gun show promoters, some
    of the gun industry's worst actors. The VPC would like to use the bulk
    of our testimony to discuss these perhaps unintended consequences of
    the bill.
    definitions of ``manufacturer'' and ``dealer'' would protect those who

           MAKE GUNS AT HOME AS WELL AS GUN SHOW ``HOBBYIST'' SELLERS

        The definitions contained in section 13 of H.R. 2037 would operate
    to protect firearm and ammunition manufacturers and dealers who are
    ``licensed to engage in business'' as a manufacturer or seller ``to the
    extent required'' under title 18 of the United States Code. Title 18
    requires any person who ``devotes time, attention, and labor to
    manufacturing firearms as a regular course of trade or business with
    the principal objective of livelihood and profit through the sale or
    distribution of the firearms manufactured'' to obtain a manufacturer's
    license.3 But an individual who manufactures or assembles a
    firearm for his own personal use (or to give as a gift) is not required
    to be licensed under existing federal law. Nevertheless, such persons
    would be eligible to register with the Secretary of Commerce as a
    ``manufacturer'' under H.R. 2037 because they are ``licensed to the
    extent required'' by federal law.
    ---------------------------------------------------------------------------
        \3\ 18 USC Sec. 921(a)(21)(A).
    ---------------------------------------------------------------------------
        The potential danger of shielding do-it-yourself gun manufacturers
    is starkly demonstrated by a growing trend in firearms market: ``kit
    guns'' or ``parts sets.'' Gun publications such as Shotgun News are
    replete with advertisements for ``kit guns,'' firearms that can easily
    be assembled from parts. Parts sets are available for a wide variety of
    firearms, including handguns and assault weapons.4 Under
    H.R. 2037, entities that manufacture such parts sets as well as people
    who use such parts kits to manufacture guns at home could register with
    the Secretary of Commerce and be eligible for protection from civil
    liability.
    ---------------------------------------------------------------------------
        \4\ Although it is very difficult to determine how many of such
    ``kit guns'' have been used in crime, such a gun was used to murder a
    Millbrae, California police officer in 1998. Officer David Chetcuti was
    shot with a ``home constructed semiautomatic resembling an AR-15,''
    according to authorities investigating the killing. Sheriff's deputies
    who executed a search warrant at the suspect's home reported finding
    bomb-making materials along with parts used in the ``homemade'' weapon.
    Tyche Hendricks and Jim Herron Zamora, ``Cop killing: No Fremont tie .
    . .'' San Francisco Examiner, April 27, 1998.
    ---------------------------------------------------------------------------
        Likewise, a person ``who devotes time, attention, and labor to
    dealing in firearms as a regular course of trade or business with the
    principal objective of livelihood and profit through the repetitive
    purchase and resale of firearms,'' must obtain a dealer's license under
    current federal law. However, the federal licensing statute
    specifically excludes from the definition of ``dealer,'' any person
    ``who makes occasional sales, exchanges, or purchases of firearms for
    the enhancement of a personal collection or for a hobby, or who sells
    all or part of his personal collection of firearms.'' Anyone who falls
    within this latter exclusion for ``hobbyists'' could register with the
    Secretary of Commerce as a ``seller'' under H.R. 2037 because they are
    ``licensed to the extent required'' by federal law and be protected
    from liability.
        This makes so-called ``hobbyists'' who make occasional sales at gun
    shows eligible to qualify as ``a seller in interstate or foreign
    commerce of a firearm or ammunition product,'' under H.R. 2037. This
    would have the effect of protecting from liability private gun sellers
    who often compete with federally licensed gun dealers at gun shows by
    bragging that they do not have to conduct background checks. In fact, I
    have with me a photo taken at a gun show depicting a display of
    handguns accompanied by a handwritten sign reading, ``Private
    Collection; No Wait; No Phone Call.'' Under H.R. 2037, these
    ``hobbyist'' gun show dealers would be immune from civil liability
    resulting from the criminal use of a gun he sold so long as he takes
    the time to register as a ``seller'' with the Secretary of Commerce.

              H.R. 2037 WOULD UNDERMINE EXISTING STATE COMMON LAW

        The bill would wipe out cases utilizing the well-established legal
    theory of negligent entrustment. This theory applies where there is
    clear evidence of a negligent sale by a manufacturer or dealer, yet the
    conduct is not illegal.5
    ---------------------------------------------------------------------------
        \5\ The bill would not have the same impact on cases based on the
    similar theory of negligence per se. But it is important to note that
    negligent entrustment and negligence per se are separate and distinct
    causes of action requiring different elements of proof. Negligent
    entrustment is based in common law negligence, and proof is required
    that the seller breached a duty of care to the public to avoid sales to
    dangerous individuals because such sales could foreseeably result in
    harm to the buyer or a third party. Liability based on negligence per
    se, on the other hand, arises from the seller's failure to comply with
    specific statutory duties, e.g. the federal Gun Control Act or similar
    state law. In Knight v. Wal-Mart Stores, Inc. 889 F. Supp. 1532 (S.D.
    Ga. 1995), for example, it was determined that employees of Wal-Mart,
    by inquiring whether the purchaser of a firearm had been adjudicated
    mentally incompetent, had fulfilled their statutory duty and therefore
    could not be negligent per se. However, the court held that the same
    employees could be found liable under traditional common law principles
    of negligence.
    ---------------------------------------------------------------------------
        For example, in Deborah Kitchen v. K-Mart Corporation Thomas Knapp
    purchased a 22 caliber rifle and a box of bullets at a K-Mart after a
    day-long drinking spree. He then shot his ex-girlfriend, Deborah
    Kitchen, leaving her a quadriplegic. By his own estimate, Knapp had
    consumed a fifth of whiskey and a case of beer before driving to K-Mart
    to make the purchase. The K-Mart clerk who sold Knapp the rifle
    testified that Knapp's handwriting on the federal form required for
    firearm purchase was illegible, and that he helped Knapp fill out the
    form. Knapp had no recollection of what occurred at K-Mart. K-Mart was
    found liable in a civil suit filed by Kitchen, but the Florida Court of
    Appeals reversed the decision concluding that since ``there is no
    statutory prohibition against the sale of a firearm to a person who is
    intoxicated, the seller is not responsible to a third person for the
    improper use of the firearm.'' The Florida Supreme Court overturned the
    Court of Appeals ruling that ``an action for negligent entrustment . .
    . is consistent with Florida public policy in protecting its citizens
    from the obvious danger of the placement of a firearm in the hands of
    an intoxicated person . . .'' 6
    ---------------------------------------------------------------------------
        \6\ Kitchen v. K-Mart Corp., 697 So. 2d 1200; 1997 Fla. LEXIS 1052;
    22 Fla. L. Weekly S 435, July 17, 1997.
    ---------------------------------------------------------------------------
        The seller in this case would be eligible for protection from civil
    liability under H.R. 2037 since the conduct of the seller was
    technically in compliance with the letter of state law (federal law
    also does not prohibit the sale of a firearm to a visibly intoxicated
    individual). 7
    ---------------------------------------------------------------------------
        \7\ See 18 USC Sec. 922((d) for the list of the federal prohibited
    categories.
    ---------------------------------------------------------------------------
        In a similar case, Pavlides v. Niles Gun Show, Inc., a gun show
    promoter was held liable for the injuries inflicted by two teenagers
    who had stolen weapons from his event.8 Although several
    thefts of firearms had occurred at the promoter's shows, and the
    promoter had knowledge of the previous thefts, vendors were not
    required to secure their weapons. In January, 1992, the promoter held a
    gun show at a local civic center. Although the promoter had a policy of
    refusing admission to unsupervised minors, Jayson Troyer, age 13,
    Edward Tilley III, age 16, and a companion were able to pay the
    admission fee and enter the gun show. No one questioned them about
    their ages, or asked for identification. While they were at the show,
    several vendors offered to sell the boys firearms and ammunition. At
    one point, the boys left the show to pick up a 15-year-old friend. Upon
    returning, the three re-entered the show, gaining re-admission by
    showing the stamps on their hands. Their friend paid the admission fee
    and entered the show. Again, the boys were not questioned about their
    ages, nor asked for identification. Once inside, the boys began
    stealing firearms. According to the boys, most of the firearms were not
    secured, making the thefts easy. One boy stole a .25 pistol. Another
    took two handguns: a .22 derringer and a .38 handgun. Each time the
    boys stole a firearm, they left the show to store the gun, and again
    re-entered by showing their stamps. Later in the afternoon, a vendor
    sold one of the boys 38 caliber ammunition. After approximately two and
    one-half hours, they departed for the home of one of the boys. There,
    they inhaled gasoline fumes. They then decided to break into cars
    parked along the street. Discovering a car with keys, they took the
    car. When it began to snow, they began purposely sliding the car into
    trash cans for amusement.
    ---------------------------------------------------------------------------
        \8\ Gregg L. Pavlides v. Niles Gun Show, Inc., 112 Ohio App 3d 609,
    679 N.E. 2d 728, (1996).
    ---------------------------------------------------------------------------
        Gregg Pavlides witnessed the boys' activities from his house. He
    then got into his car and followed the boys. Another driver also began
    following the boys. Shortly thereafter, the boys lost control of the
    car and went off the road. Pavlides and the other driver stopped their
    cars and approached the boys. As Pavlides neared the car, one of the
    boys fired at him shooting him twice. One bullet punctured his lung,
    and the other lodged in his spinal cord rendering him a paraplegic. The
    Court of Appeals of Ohio affirmed the judgment in favor of the
    plaintiff awarding $750,000 in compensatory damages and $12,000 in
    punitive damages.
        H.R. 2037 would operate to protect negligent gun show promoters.
    Such promoters would fall under subsection (d)(6)'s definition of
    ``seller,'' since a gun show promoter ``otherwise is involved in
    placing a firearm or ammunition product in the stream of commerce.''
    H.R. 2037 would have protected the promoter in the Pavlides case since
    the promoter's conduct was negligent but not criminal.

       VIOLATORS OF SOME FEDERAL GUN CONTROL STATUTES WOULD BE PROTECTED

        The bill would protect conduct by manufacturers, sellers, and trade
    associations who are listed with the Secretary of Commerce and whose
    conduct is ``lawful under chapter 44 of title 18, United States Code,
    or under applicable State law.'' Chapter 44 of title 18 of the U.S.
    Code contains many of the major federal gun control laws, including the
    Gun Control Act of 1968, the federal assault weapons ban, and the Brady
    Handgun Violence Prevention Act. Other major federal firearm regulatory
    statutes are not included in title 18, however. The bill would preclude
    civil actions against manufacturers, sellers, and trade associations
    whose conduct violates these other federal statutes since the conduct
    is ``lawful'' under Chapter 44 of title 18.
        For example, the National Firearms Act (NFA), the federal law
    regulating the possession and transfer of machine guns, silencers,
    sawed-off rifles and shotguns, and ``destructive devices'' including
    grenades and rockets, is codified at Chapter 53 of title 26 (the
    Internal Revenue Code). H.R. 2037, therefore, would make it difficult
    if not impossible to bring a lawsuit against illegal machine gun
    traffickers whose conduct contributes to the death or injury of third
    parties. To obtain protection, the traffickers would merely have to
    notify the Secretary of Commerce that they qualify as a manufacturer,
    seller, or trade association as defined by the bill. Many corrupt
    dealers would not hesitate to register with the Secretary of Commerce.
    There are many documented incidents of individuals who hold federal
    firearms licenses (FFLs)--all of whom would be eligible for
    registration as ``sellers'' under the bill--trafficking in NFA weapons.
    The Department of the Treasury's June 2000 study, Following the Gun:
    Enforcing Federal Laws Against Firearms Traffickers, identified 33
    investigations of illegal trafficking of NFA weapons by Federal
    Firearms License holders. Under H.R. 2037, any innocent victims of
    these trafficked weapons would have no remedy in the courts.
        The same problems would exist with respect to other federal
    statutes such as the Arms Export Control Act, the primary federal law
    controlling the export of firearms.9
    ---------------------------------------------------------------------------
        \9\ Chapter 39, title 22 United States Code Sec. 2778 et seq.
    ---------------------------------------------------------------------------

                                   CONCLUSION

        The Violence Policy Center is opposed to any legislation
    restricting the rights of public officials, consumers, or any other
    injured party to hold the gun industry accountable for its actions and
    its products. H.R. 2037 is an unwarranted assault on the rights of
    public officials to protect their citizens from gun violence. Moreover,
    the bill would significantly undermine existing, well-established tort
    law thereby intruding in an area traditionally the prerogative of the
    states. It would also operate to protect some of the worst actors in
    the gun industry, such as unscrupulous gun dealers and negligent gun
    show promoters. The Violence Policy Center urges the Committee to
    reject this dangerous legislation.
        Thank you for considering our view.

        Mr. Stearns. I thank the gentlelady.
        Mr. Reh.

                          STATEMENT OF JEFF REH

        Mr. Reh. Thank you, Mr. Chairman. Mr. Chairman and members
    of the committee, my name is Jeff Reh, and I am General Counsel
    and a member of the board of directors for Beretta USA
    Corporation.
        Beretta USA supplies the standard sidearms to all branches
    of the U.S. Armed Forces, and is a supplier of sidearms to
    hundreds of law enforcement departments throughout the United
    States, and to civilian customers as well.
        Beginning, in 1998, a number of local politicians filed
    lawsuits against firearm manufacturers, seeking to impose their
    own restraints on firearm design and distribution. These
    restraints were not new ideas. All, or virtually all, had been
    proposed, considered, debated, and rejected by this Congress,
    or by legislatures in States across the country.
        Thwarted by their inability to convince a majority of
    legislatures at the national or State level to accept these
    restrictions, these politicians used the power of their offices
    to file lawsuits.
        The procedures by which they used the courts in this way
    was a simple one. First, they created a list of demands.
    Second, they ignored what was already being done. Many of their
    demands were already being met by a firearms industry that had
    decades before initiated safety programs and developed safety
    devices that have reduced the fatal accident rate with firearms
    to its lowest levels since 1903.
        These same manufacturers employ one of the most highly
    regulated, carefully monitored, systems for distributing a
    product in the country. Some of the demands sought by the
    plaintiffs presented design hazards about which the politicians
    appeared unaware.
        Some demands were directly contrary to distribution
    instructions that firearm manufacturers receive from law
    enforcement authorities, and instructions which are intended to
    protect ongoing police investigations and the lives of
    undercover agents.
        In some cases the plaintiffs simply demanded that they be
    put in charge of the design and distribution practices of
    individual companies. Instead of trying to find out why
    firearms are designed in a particular way, and why certain
    distribution techniques are employed, the cities and counties
    sued to impose their opinion about these matters directly on
    the manufacturers.
        This use of social issue litigation to extort compliance on
    a national scale to one person's demands circumvents the
    democratic process by using the judicial branch to advance a
    legislative agenda.
        Only Congress, which represents the viewpoints of citizens
    across the country, is authorized to balance the complex issues
    of national security, individual freedom, and personal
    protection, that underline issues like firearm ownership,
    design, and distribution.
        Only Congress is empowered to represent all of the citizens
    of the Nation on this issue. If the tactic of these lawsuits is
    allowed to succeed, recourse to the courts can make the
    legislature superfluous.
        This violates the separation of powers of the Constitution,
    and it also robs the public of their elected voice in
    government. Regrettably, cases of this type can succeed not
    just through a jury verdict, but because of the cost of
    defending against litigation.
        Most firearm manufacturers have small revenues and low
    profit margins. The tyranny of legal costs can and has driven
    firearm manufacturers into bankruptcy. Lawsuits put money in
    the pockets of lawyers rather than in the hands of factory
    workers.
        Many countries consider domestic firearm production to be a
    vital national security interest, and these lawsuits threaten
    that resource in the United States. And to advance one narrow
    point of view; these cases risk a vital industry.
        If, for example, a single judge or jurors in one city enter
    a verdict against the industry in the some of billions of
    dollars, the cost of purchasing a bond before an appeal can be
    taken could bankrupt even the most substantial company.
        Rogue juries or individual judges might see such cases as
    an opportunity to destroy firearm companies, and either
    unwittingly or without carrying, block the means by which
    Americans exercise their Second Amendment freedoms of self-
    defense and self-determination.
        Even the cities that have brought these lawsuits do not
    seem completely convinced that they are correct. The law
    enforcement departments of every city or county that has filed
    a lawsuit against the firearm industry use handguns that do not
    contain all of the design features that they seek to require.
        Most of these cities had longstanding practices of
    reselling police department firearms to the public, using the
    same distribution system that they now claim is inadequate.
    Although some of the cases have been rejected by the courts,
    many cases remain.
        The financial threat to the firearm industry continues. New
    cases can be filed at any time and represent a future threat.
    The mayor of Jersey City, New Jersey, recently filed such a
    lawsuit. But this body should not allow the mayor of Jersey
    City to decide the design of a firearm purchased by an Iowa
    farmer.
        He should not be allowed to invent his own hurdles that
    must be met before a retiree in Florida can buy a handgun for
    self-defense. He should not be allowed to imperil the source of
    firearms used by our armed forces, or by our police.
        Only Congress should determine the national rules
    concerning this important issue, and for that reason, we
    respectfully request that this body approve H.R. 2037. Thank
    you.
        [The prepared statement of Jeff Reh follows:]

     Prepared Statement of Jeff Reh, General Counsel, Beretta U.S.A. Corp.

        Chairman Stearns, Members of the Committee, my name is Jeff Reh. I
    am General Counsel and a Member of the Board of Directors for Beretta
    U.S.A. Corp. Beretta U.S.A. supplies the standard sidearm to all
    branches of the U.S. Armed Forces and is a supplier of sidearms to
    hundreds of law enforcement departments throughout the United States
    and to civilian customers as well.
        Beginning in 1998, a number of local politicians filed lawsuits
    against firearm manufacturers seeking to impose their own restraints on
    firearm design and distribution. These restraints were not new ideas.
    All or virtually all have been proposed, considered, debated and
    rejected by this Congress or by legislatures in states across the
    country.
        Thwarted by their inability to convince a majority of legislators
    at the national or state level to accept their restrictions, these
    politicians used the power of their offices to file lawsuits. The
    procedure by which they used the courts in this way was a simple one.
    First, they created a list of demands. Second, they ignored what was
    already being done. Many of their demands were already being met by a
    firearm industry that had, decades ago, initiated safety programs and
    developed safety devices that have reduced the fatal accident rate with
    firearms to its lowest level since 1903. These same manufacturers
    employ one of the most highly regulated, carefully monitored systems
    for distributing a product in the country.
        Some of the demands sought by these plaintiffs presented design
    hazards about which the politicians appeared unaware. Some demands were
    directly contrary to distribution instructions firearm manufacturers
    receive from law enforcement authorities, instructions intended to
    protect ongoing police investigations and the lives of undercover
    agents. In some cases, the plaintiffs simply demanded that they be put
    in charge of the design and distribution practices of individual
    companies. Instead of trying to find out why firearms are designed in a
    particular way and why certain distribution techniques are employed,
    the cities and counties sued to impose their opinion about these
    matters directly on the manufacturers.
        This use of social issue litigation to extort compliance, on a
    national scale, to one person's demands, circumvents the democratic
    process by using the judicial branch to advance a legislative agenda.
    Only Congress, which represents the viewpoints of citizens across the
    country, is authorized to balance the complex interests of national
    security, individual freedom and personal protection that underlie an
    issue like firearm ownership, design and distribution. Only Congress is
    empowered to represent all of the citizens of the nation on this issue.
        If the tactic of these lawsuits is allowed to succeed, recourse to
    the courts can make the legislature superfluous. This violates the
    Separation of Powers in the Constitution. It also robs the public of
    their elected voice in government.
        Regrettably, cases of this type can succeed, not just through a
    jury verdict, but because of the costs of defending against litigation.
    Most firearm manufacturers have small revenues and low profit margins.
    The tyranny of legal costs can--and has--driven firearm manufacturers
    into bankruptcy. Lawsuits put money in the pockets of lawyers rather
    than in the hands of factory workers. Many countries consider domestic
    firearm production to be a vital national security interest. These
    lawsuits threaten that resource in the United States.
        Begun to advance one narrow point of view, these cases risk a vital
    industry. If, for example, a single judge or jurors in one city, enter
    a verdict against the industry in the sum of billions of dollars, the
    cost of purchasing a bond before an appeal can be undertaken could
    bankrupt even the most substantial company. Rogue juries or individual
    judges might see such cases as an opportunity to destroy firearm
    companies and, either unwittingly or without caring, block the means by
    which Americans exercise their Second Amendment freedoms of self-
    defense and self-determination.
        Even the cities that have brought these lawsuits do not seem
    completely convinced they are correct. The law enforcement departments
    of every city or county that has filed a lawsuit against the firearm
    industry use handguns that do not contain all of the design features
    they seek to require. Most of these cities had longstanding practices
    of reselling police department firearms to the public using the same
    distribution system that they now claim is inadequate.
        Although some of these cases have been rejected by the courts, many
    cases remain. The financial threat to the firearm industry continues.
    New cases can be filed at any time and represent a future threat. The
    mayor of Jersey City, New Jersey recently filed such a lawsuit, but
    this body should not allow the mayor of Jersey City to decide the
    design of a firearm purchased by an Iowa farmer. He should not be
    allowed to invent his own hurdles that must be met before a retiree in
    Florida can buy a handgun for self-defense. He should not be allowed to
    imperil the source of firearms used by our Armed Forces or by our
    police. Only Congress should determine the national rules concerning
    this important issue and, for that reason, we respectfully request that
    this body approve H.R. 2037.

        Mr. Stearns. I thank the gentleman. Just for the record, I
    had my staff go back and investigate this inquiry that Mr.
    Waxman made, and so I want to clarify for him and the
    subcommittee members that under the rules of the committee, the
    chairman has full and complete discretion to allow any cameras
    into the hearing room, whether those cameras are credentialed
    or not.
        So rest assured that the cameras are completely allowed
    under committee rules. One of the questions--and I will start
    here--that I think we should go right to the point, and this is
    for Mr. Keane, does this bill as Ms. Barnes asserts shield one
    industry, the gun industry, from established common law
    requirements applicable to all other businesses?
        Mr. Keane. Mr. Chairman, I believe that it does not. I
    think what this bill does is rather than has been described,
    provides some sort of special protection or immunity for the
    industry, what this bill does is make sure that the playing
    field remains level, and that the firearms industry is not
    singled out through these frivolous lawsuits, and drive out of
    business.
        So I believe that it does not provide any special
    protection. Lawsuits, traditional tort lawsuits for product
    liability, breach of warranty, et cetera, are still permitted
    under the bill as it is drafted currently, and I acknowledge
    that the chairman has indicated that they would consider
    amending or revising the bill so that it speaks clearly with
    respect to that issue, and makes clear that negligent
    entrustment situations, where a seller provides a firearm to an
    obviously incompetent or intoxicated person, who then
    immediately or shortly thereafter uses the firearm to cause
    injury to somebody, that that dealer could still be sued.
        And we are not seeking any such protection of that sort of
    situation, and the bill I think is very clear on that issue.
        Mr. Stearns. Ms. Rand, if we made those changes to the bill
    would you support it?
        Ms. Barnes. Well, we would certainly be willing to review
    the changes, but as I stated earlier, I think our bigger issue
    is the fact that the gun industry already has a tremendous
    advantage. It is unregulated.
        There is no safety regulation of the gun industry, and so
    they already have a leg up on every other industry in America,
    except for the tobacco industry, which shares its unregulated
    status.
        So that we would be extremely cautious in granting any sort
    of liability immunity to this industry, and we also have very
    serious concerns about the process about anything that would
    begin the process of Federalizing tort law, which is an area of
    the law traditionally left to the States.
        And we think that that is a much more appropriate venue to
    make these decisions.
        Mr. Stearns. Mr. Reh, are they unregulated, the gun
    manufacturers?
        Mr. Reh. Well, I have an entire library in my office that
    is full of gun regulations, and I spend all my time studying
    these things, and so we certainly feel regulated, Mr. Chairman.
        Mr. Stearns. And you would state for the record that you
    are regulated?
        Mr. Reh. We absolutely are regulated, and in addition to
    various State, local, and Federal restrictions on firearm
    design, sale, and distribution, the industry itself imposes its
    own regulations.
        There is an organization, SAAMI, which sets standards for
    the industry, and which has been around since 1926. So we are
    actually one of the most heavily regulated industries in the
    country.
        Mr. Keane. Mr. Chairman, if I could just comment on that. I
    think it is important to understand that the regulations that
    are imposed by Congress through the Gun Control Act, and as
    amended in other statutes, supplemented by State and local law
    on the subject, is an extensive regulatory scheme that is
    designed to prevent firearms from falling into the hands of
    criminals, juveniles, and others that society, through the
    legislative process, has determined should not have firearms.
        So there is a regulatory scheme to prevent the criminal
    acquisition of firearms and I think everyone acknowledges that
    the criminal misuse of firearms is a problem in society, and it
    is certainly something that the industry is extremely concerned
    about, and it works cooperatively with law enforcement in a
    variety of ways to assist law enforcement in their efforts to
    combat the criminal acquisition and misuse of firearms.
        Ms. Rand. Could I just interject quickly what I mean by
    regulation. I mean a Federal agency, with the authority to take
    the basic steps that, say, a consumer product safety commission
    can take; repair, replacement, recall, bans if absolutely
    necessary, and other remedy, will suffice.
        There is no Federal agency with that sort of safety
    authority.
        Mr. Stearns. Ms. Rand, this bill as I pointed out earlier
    is--we are not protecting people who are acting illegally. We
    are just like 26 other States. We are just saying that we want
    to make sure that junk or nuisance suits don't go forward.
        Mr. Reh, let me just ask you this question. I find it
    curious that the city of Boston would voluntarily dismiss its
    case against the gun industry. Considering everything, why
    would Boston dismiss it voluntarily? Maybe you could clarify
    for us why they did it.
        Mr. Reh. Because Boston alone among the cities has seen all
    the facts relating to this issue. They have taken depositions
    of industry officials. I had the great fortune of having my
    deposition taken for 2 straight days.
        They have read millions of documents, and had access to
    confidential records of the firearm industry, and at the
    conclusion of all of that discovery, the city came to us and
    told us that they wanted to get out of the case.
        And I think it is a testimony to the facts that they have
    been able to review.
        Mr. Stearns. My time has expired, and so I will go to Mr.
    John.
        Mr. John. Well, I have just really one brief question, and
    a line of questioning for Ms. Rand. As I mentioned in my
    opening comments, 25 States have already adopted a statute very
    similar in a lot of ways to 2037, and so the policy that you
    are opposing today has already been adopted in over half of the
    States. Is that correct to say?
        Ms. Rand. Yes. I mean, that is an incontrovertible fact.
        Mr. John. Okay. In the 25 different States and the
    different legislatures that these bills were debated, did your
    organization in those States oppose these measures, all of
    them, some of them?
        Ms. Rand. The Violence Policy Center as a general rule does
    not get involved in State legislation. We did work with some
    advocates. I mean, you know, you have to take into account the
    State legislatures is really where the NRA and the gun lobby is
    most powerful.
        Mr. John. And would you agree that that is where most of
    the people in the States, and in this great country that we
    have, are closest to their elected officials?
        Ms. Rand. I am not disagreeing that the States made that
    decision. I would disagree that it was a wise decision. I think
    that providing this industry with immunity from liability at
    the State or Federal level is inappropriate when you consider
    its unregulated status.
        But the fact of the matter is that the gun lobby has
    tremendous clout in many State legislatures, and they were able
    to get this sort of legislation. I would also point out that in
    the most populated State, California, which had a bar like this
    in place, which prevented a lawsuit against an assault weapons
    manufacturer ultimately, that statute is probably going to be
    repealed by the legislature this year.
        So California has been through the process of seeing how
    these things really work in the real world. They did not like
    the outcome when it protected an assault weapon manufacturer,
    and I think they are revisiting and are likely to repeal that.
    So I think, you know, we are in the middle of a process here.
        Mr. John. You said they are probably going to repeal it.
    Can you give me some indication of what makes you say probably?
        Ms. Rand. That it is in the legislative process, and has a
    very high priority, or the top priority, for the gun control
    advocates out there, and is one of the top priorities for the
    Democrats in the State, and all indications that we have had,
    and actually we were out there last week on another issue, and
    were given every indication that the repeal bill is on its way
    to passage.
        Mr. John. Do you think that it is unusual for the Congress
    to act on a piece of legislation or take a policy position when
    over half of the States that make up the United States--do you
    believe that it is unusual for us to take on this position as a
    Federal policy since have of the States have? Is it something
    that we don't do or do?
        Ms. Rand. Well, I wouldn't say it is unusual, but I would
    say in this case that it is ill-advised since tort law is
    something that has always been left to the States. And I think
    as you pointed out that State judges are much closer to the
    people in their State.
        They should be able to make the determination about how the
    common law is interpreted and applied in their State. I mean, I
    think that system has served us very well for a very long
    period of time, and I think the idea of Federalizing tort law,
    even when you already have the States doing it, and the States
    are going it differently, too.
        If they choose to make restrictions State-by-State, I find
    that less offensive than the Federal Government stepping in and
    making one decision nationwide in an area that is traditionally
    left to the States.
        Mr. John. But it is also my understanding, and getting back
    to the California situation, that it was directed at product
    liability more. And that is an important point, not just in
    that specific area, but I think as Ms. Barnes was talking
    about, I think it is important to continue to focus on what
    this bill actually--what the intent of this bill is and what it
    actually does.
        And it deals with manufacturers, and it doesn't deal with
    other things outside of that, and I think that it is important
    as we move through the process that we continue to not talk
    about issues that don't relate to this bill, because there are
    lots of controversial issues when you start talking outside the
    intent of what we are trying to do here. I yield back the
    balance of my time.
        Ms. Barnes. If I could, and following up on that comment,
    and the comment by Chairman Stearns, this bill would protect
    the activities of the John Twomey and the Southern Ohio Gun
    incident that Mr. Waxman talked about, where thousands and
    thousands of guns were sent by a distributor to a home, to a
    residence of a person.
        And those guns later moved very quickly into crime.
    Somebody knew what was going on. Now, that bill, or this bill,
    would protect John Twomey, and would protect Southern Ohio Gun,
    and thus would not prevent the kinds of situations that are
    endemic in America.
        Mr. Stearns. Mr. Burnett.
        Mr. Burnett. If I may respond, please. Having read the
    bill, I see where it would protect perhaps Southern Ohio Guns.
    Quite frankly, a fraud was committed upon them with a fake
    license, and I don't see how you can hold a manufacturer, or a
    distributor, or a retailer responsible when a fraud is
    committed upon them.
        It is not clear to me if Mr. Twomey--and I am not as
    familiar with the case, but if Mr. Twomey was actually selling
    these guns illegally, he is not going to be on the list.
        And if you are making guns in your garage, and I have heard
    it claimed that they would be covered, well, they are not going
    to be on the list. And if you are a second-hand supposed
    dealer, and if you are a private contractor, a hobbyist who
    sells a couple of guns, your name is not going to be on the
    list.
        Accordingly, you may be protected by other laws, but this
    law does not protect you from those kinds of liability. I would
    also like to add that I have heard so much about how this
    industry is unregulated.
        A decision was made by the legislature to decide what
    industries have regulation, and what industries serve different
    kinds of regulation. I know of no other industry that--well,
    that's not true. I know a few other industries that actually
    have to be licensed by the Federal Government from the chain of
    manufacturer to the chain of sell.
        The car industry, which is very regulated under the
    Consumer Products Commission, I can go into a car dealer
    business today without Federal Government approval. If the
    legislature, whether State or Federal, decides not to undertake
    a certain kind of consumer product legislation that other--that
    lobbyists or advocacy groups would prefer, that is a decision
    that they have made, and they are the appropriate ones to make
    the decision, and not for the courts to step in and say, well,
    you should have regulated here, even though you didn't. There
    are numerous documents----
        Mr. John. If I could reclaim my time. I think you bring up
    and underscore my point exactly. I think we need to keep the
    bill in front of us and at the forefront, and not get off on
    some other issues that don't apply to this bill.
        When you unlawfully sell or in the case that you--well, I
    don't think the bill applies, and I think that is my whole
    point in case, and I yield back my time.
        Mr. Stearns. And I thank you, and the gentleman's time has
    expired. The gentleman from Georgia, Mr. Deal.
        Mr. Deal. Thank you, Mr. Chairman. I just tell you that
    this is an interesting panel. We have some interesting dynamics
    that have just come out in your comments and your discussion,
    and it is very interesting.
        The first thing that strikes me as interesting is that the
    ladies who represent a point of view that in the past would be
    a point of view that has come to Congress asking us to regulate
    things, are now asking us not to Federalize something.
        That is quite the opposite side of the coin from what we
    normally would expect your perspective to be. But it raises
    some interesting questions, and I would like to delve into it.
    And the first one is somewhat of a technical subject.
        The language of the bill as I read it simply restricts
    lawsuits against conduct that is lawful under Chapter 44 of
    Title 18, United States Code, or under applicable State law.
        That is the conduct that is not subject to what we would
    perceive as the frivolous lawsuit.
        Now, Ms. Barnes, your comments went to the issue of the
    fact that your causes of action are common law in nature, and I
    believe you described them as due care standards, the simple
    negligence standard.
        Do you take the position that saying that somebody that
    does conduct that is lawful by Federal statute or State
    statute, that that automatically precludes them from causes of
    action that relate to negligence or due care?
        Ms. Barnes. If I understand you, Mr. Deal, are you asking
    me if I read the word lawful that is in this bill as exempting
    the State--anything in violation of a State common law
    standard?
        Mr. Deal. Yes.
        Ms. Barnes. And I would say to you that that was the basis
    of which I sort of said if it passes, I am not even sure it
    would do what you want because as a litigator, that is exactly
    what you would look for and say this is clearly lawful.
        This dates back to the Domesday Act that long precedes the
    Commerce clause that this is what the common law is, and it is
    lawful, and it is sound in negligence. But I think that the
    intent here is to eliminate cases that are not product cases.
        And I think that the committee, if I could just for 1
    second, the word, nuisance cases, has been bandied about here,
    and I understand that you are probably talking about it in a
    small end sense, being bothersome cases.
        But most of the city cases do sound in something called
    public nuisance, which all of you, I'm sure, are familiar with,
    which are very old and established subsections of negligence
    law, and in some States only States and municipalities can
    bring those kinds of cases.
        And they are based on the same kind of--that if you take
    something that belongs to the public, you have to put it back.
    So I think that the bill provides too much leeway.
        Mr. Deal. Let me stop you. As I understand it then, you are
    saying basically that you could still pursue a common law
    action based on negligence because that is a cause of action
    that would not be limited by the language of this statute. Is
    that right?
        Ms. Barnes. I know from litigating against Mr. Keane for
    many years that Mr. Keane, on the first day after I filed the
    case, would stand up in court, in any court that I appeared in,
    and say this case must be dismissed because it is one of the
    exempted kinds of cases. And then we would have 3 years of
    litigation on it.
        Mr. Deal. All right. Let me go to the next unusual
    circumstance that appears to me; is that those that are saying
    that the statute is unnecessary admit that the lawsuits that
    are being filed are unsuccessful, and then the other side of
    that is, well, we don't want to Federalize this issue.
        We don't want to take it out of the hands of States to
    regulate the cause. I guess my next question would be is to Ms.
    Rand. Would you favor a Federalized cause of action, such as
    what we did in the Y2K situation, of defining the cause of
    action, setting limits on punitive damages, et cetera. Would
    that be an alternative?
        Ms. Rand. Well, we would argue that the place to start is
    regulating the gun industry and there is legislation pending in
    this body to do just that.
        Mr. Deal. No, that is not my question. That is not the
    subject of this hearing.
        Ms. Rand. Well, that is where we are.
        Mr. Deal. That is not the jurisdiction of this committee
    unfortunately.
        Ms. Rand. I think we would be opposed to legislation that
    legislates common law. I think that the development of tort law
    through the courts, and through the common law, has served us
    very well, and we are adamantly opposed, and we have in the
    past opposed any caps on punitive damages, or any other types
    of damages, because I think that those have unforeseen
    consequences.
        And I think that again the amount, the appropriate amount
    of punitive damages is an issue that is being sorted through by
    the Supreme Court and that is where it should be.
        Mr. Deal. So you would not favor anything at the Federal
    level, even the definition of a Federal cause of action?
        Ms. Barnes. We would oppose creating a Federal cause of
    action in an area that is treated----
        Mr. Deal. Even though you can't be successful on what you
    already have?
        Ms. Barnes. And I would disagree that these suits are
    unsuccessful. Some have been dismissed, and some are
    proceeding. And I would go back to the example of the tobacco
    litigation, and how many cases did tobacco litigants lose
    before they finally won one.
        This is a new area of litigation, and it is an appropriate
    area for litigation. The bad cases will fall by the wayside,
    and the good ones will succeed, and that is the way that the
    tort system works.
        And we think that putting into place some new set of rules
    and Federalizing something, all that means is that we have to
    go back to square one and the courts have to reinterpret those
    new rules.
        So in the end, we end up with a far more complicated system
    than we already have now. I don't think ultimately it would
    really even solve the problems that you are trying to get at.
        Mr. Deal. Thank you, Mr. Chairman. You have been lenient
    with the time.
        Mr. Stearns. Oh, sure.
        Mr. Deal. And if you could be more lenient, as Mr. Burnett
    has a response.
        Mr. Stearns. Sure.
        Mr. Barnett. I am not a lawyer, and so I may get blasted by
    the lawyers on the panel or the lawyers on the committee when I
    say this, but I have done a lot of research on the common law
    in relation to property and nuisance, and not just in relation
    to firearms, but property rights.
        And one of the standards of the common law is stare
    decisis; let the decision stand. And that is a principle that
    is routinely upheld, and in the firearms litigation cases that
    I have seen, both private and public that have been dismissed
    so far, one of the things that they have said is that we have
    held these hearings before, and we have looked at these, and we
    have said that the standard of law is that manufacturers are
    not responsible for the harmful uses their products are put to
    by criminals, by third-parties.
        And that is the standard. It seems to me that what these
    cases are hoping in bringing multiple cases is finding one
    judge who will say forget stare decisis, and I am really to
    make new common law.
        Well, you can do that and it has been done, and let's not
    pretend like that suddenly becomes a hundred years of history
    of common law concerning who is responsible for the unlawful
    use of a product.
        Mr. Deal. Mr. Chairman, can I make a unanimous consent,
    please?
        Mr. Stearns. Yes.
        Mr. Deal. I would like to make two of them if you don't
    mind. One is from my good friend, who is tied up, Mr. Towns, to
    submit questions to the panelists, and ask them within a
    reasonable amount of time to answer those.
        Mr. Stearns. Would 5 working days be sufficient to answer
    their questions?
        Mr. Deal. Yes.
        Mr. Stearns. Okay.
        Mr. Deal. And also for unanimous consent request for other
    members to submit their opening statements.
        Mr. Stearns. Well, that is by unanimous consent so ordered.
        Mr. Deal. Thank you, Mr. Chairman.
        Mr. Stearns. Ms. DeGette, are you ready for your questions?
        Ms. DeGette. Thank you, Mr. Chairman. I'm sorry that I had
    to leave.
        Mr. Stearns. No, that's understandable.
        Ms. DeGette. I didn't realize that Mr. Towns would have to
    leave. Ms. Barnes, I am wondering if you can tell me; Ms. Rand
    has testified that she believes that the bill goes far beyond
    the stated intent of the sponsor and others.
        I am wondering if you as a lawyer have analyzed the bill
    and have come to a similar conclusion.
        Ms. Barnes. Yes, I have, Ms. DeGette, and that is the basis
    of my remarks. That it would--and we were just discussing this
    in your absence, as to whether or not ultimately the issue--
    whether or not private lawsuits against people who are clearly
    and over a long period of time engaging in negligent conduct
    would be exempted as a basis of this bill I think seems
    doubtful.
        But it would involve years and years of litigation which
    members of the defense bar would raise this bill as a bar, and
    some judges would go along with it, and some appeals courts
    might go along with it.
        Ms. DeGette. But I think clearly it precludes many, many,
    many--virtually all private litigation based on negligent
    distribution, and that would apply not just to manufacturers,
    but also people who are selling the weapons, right?
        Ms. Barnes. Precisely right.
        Ms. DeGette. And we only have 5 minutes, and that's kay,
    but all this testimony about the gun manufacturers going out of
    business, this bill would apply to far more than just the gun
    manufacturers, correct?
        Ms. Barnes. Yes.
        Ms. DeGette. Now, I'm wondering, and I think I know the
    answer to this, but there is no Federal statute is there that
    would prevent the sale of a gun to someone who is intoxicated
    is there?
        Ms. Barnes. No.
        Ms. DeGette. Okay. Dr. Burnett, you testified that two gun
    manufacturers have been driven out of business by these
    lawsuits, correct?
        Mr. Burnett. That is not exactly correct. I said that it
    was a contributing factor in going out business.
        Ms. DeGette. How many lawsuits were there filed against
    those two manufacturers?
        Mr. Burnett. They were parties to--as far as I can tell--
    every lawsuit that was filed up to that time. They got out
    early in the game.
        Ms. DeGette. Ms. Barnes, you are shaking your head.
        Ms. Barnes. Ms. DeGette, I asked Dr. Burnett exactly that
    question. The two that he refers to are Lorcin and Davis, two
    of the most notorious. Lorcin went into bankruptcy because it
    had not purchased real insurance.
        It purchased a Ponzi scheme insurance, and it went into
    bankruptcy on a classic products liability case because it was
    forced to pay up. It was thinly capitalized, and its owner
    bought Jaguars instead of investing in its company.
        And the whole subject of the Lorcin bankruptcy had nothing
    to do with lawsuits. It had to do with--I think everyone would
    agree--nefarious corporate conduct.
        Ms. DeGette. Okay. Mr. Keane, you said that insurance rates
    have risen as a result of the lawsuits, correct?
        Mr. Keane. That's correct.
        Ms. DeGette. And do you have some kind of study or analysis
    showing that the insurance rates have risen as a result of
    these lawsuits?
        Mr. Keane. I don't have any survey. I know this from our
    own experience in going to market to acquire place policies, as
    well as in conversations with our members who are involved in
    these litigations, that insurance rates have risen
    dramatically, and they have been told by the underwriters
    directly as a result of the litigation.
        Ms. DeGette. But you also said in your testimony that the
    insurance policies exclude these kinds of lawsuits, right?
        Mr. Keane. The policies that they have obtained now
    universally, when renewing the policy, have now included an
    endorsement that excludes coverage for the municipal lawsuits.
        Ms. DeGette. Okay. So here is my confusion, and I would
    think that you guys would have an action against the insurance
    companies. How is it that the insurance companies could exclude
    coverage and then at the same time increase the cost of
    policies if they are not paying for the cost of defense or of
    any resolution of these lawsuits?
        Mr. Keane. It is a function of the insurance marketplace.
    They have denied coverage under the policies, claiming and
    arguing that the cities have not suffered any bodily injury as
    a result of the conduct alleged in the complaints.
        And therefore they say that they are not obligated under
    the insurance contract to provide coverage or to----
        Ms. DeGette. Yes, I understand exactly what you are saying
    to me.
        Mr. Keane. And at the same time when they renew the
    policies, because there is a claims loss history, and they view
    the manufacturer as a higher risk for further lawsuits, and as
    a result, they consequently raise the insurance premiums and
    also exclude coverage for the suits.
        Ms. DeGette. Are you aware of any studies that would
    indicate that the insurance rates have risen because of these
    lawsuits; yes or no?
        Mr. Keane. As I said, I am not aware of any studies, but
    from speaking to the members who are involved in this.
        Ms. DeGette. Mr. Reh.
        Mr. Reh. If you would like, I could tell you our
    experience. Our product liability insurance increased about 30
    percent in the last several years. Our exclusion increased
    1,500 percent.
        Ms. DeGette. And did they tell you why?
        Mr. Reh. Because of the lawsuits.
        Ms. DeGette. And have you had to pay out anything on the
    lawsuits?
        Mr. Reh. Yes.
        Ms. DeGette. How much?
        Mr. Reh. Millions.
        Ms. DeGette. How many millions?
        Mr. Reh. In defense costs.
        Ms. DeGette. In legal fees?
        Mr. Reh. In legal fees.
        Ms. DeGette. Have you ever had to pay out any judgments?
        Mr. Reh. Not a penny.
        Ms. DeGette. Thank you.
        Mr. Stearns. I thank the gentlelady. The gentleman from
    Michigan, Mr. Upton.
        Mr. Upton. Well, thank you, Mr. Chairman. I apologize that
    I have been absent quite some time. I had a number of fire
    fighters from my district, plus the working force bill, and of
    course we had the votes as well.
        I am going to relate two experiences that happened to me
    this last weekend and get your comments. And I have looked
    through your testimony, but again I am sorry that I was not
    here for it as you delivered it.
        This last weekend, I was at my local grocery store and I
    bought a 12-pack of Budweiser, and I was carded. And next week
    I turn 49, and this particular store cards me all the time, and
    it feels good.
        But in any case, the laws work, and she even noted that I
    had a new I.D., because it is my birthday, and so the old one
    expired. But the beer companies, they follow the rules and they
    make a legal product, and the State manages the system, and
    they card people who don't look as if they are 21 or 25, or
    whatever.
        And as a consequence, they don't have to put up with some
    of the--I mean, they produce a legal product, and the State
    enforces the law. I went trap shooting on Sunday, and a lot of
    sun, and no alcohol, and they have specific rules, and it has
    marvelous acreage in my district.
        And they again, they are concerned about liability, but the
    gun manufacturer shouldn't have--if the rules are followed, it
    is a legal product, and what this legislation intends to do is
    to protect folks like Mr. Reh from spending millions of dollars
    producing a legal product.
        And your anticipation as you sell those products in fact is
    that the laws are enforced, and they are followed, and it is
    somebody else in both of these cases, that the States are
    responsible for enforcing those laws, right?
        Mr. Reh. Yes, sir, that's correct.
        Mr. Upton. And to me it seems like there is more than just
    a decent parallel, and when you relate the experiences of this
    past week with what we are trying to do to protect a legal
    product from being manufactured; is that not right? Is that a
    good parallel, a good example of using a different product?
        Ms. Barnes. I think it is not at all a good parallel.
        Mr. Upton. I mean, would we expect someone to sue Budweiser
    because if they didn't card me, and if my son, who is 12 years
    old, walks in or something like that?
        Ms. Barnes. Mr. Upton, New York State and New York City has
    the oldest and probably one of the most comprehensive, except
    for the one that exists in the District, gun law in the
    country.
        Some people have even ascribed it to the beginning of the
    NRA.
        Mr. Upton. Well, Michigan has a good gun law. I mean, we
    have background checks, and it works, and we have invested in
    the technology to make sure that in fact it is rather
    instantaneous, and people know, and I have experienced it as
    well, and it works.
        Ms. Barnes. And what we have found in New York, and found
    in the State of New Jersey as well, is that we have millions
    and millions of unlicensed, illegal guns that come from
    primarily in our case the southeastern States, and in other
    States, it acts differently.
        But that the State of New York has obviously no
    jurisdiction over what is going on in the great State of
    Virginia, Georgia, Florida, South Carolina, or North Carolina.
        So the reach of New York State does not extend there, and
    the only thing that New York State has to protect the welfare
    of its citizens is its tort law, which hand-in-hand works with
    its statutory law.
        So the tort law has taken a step to determine if the
    conduct of those sellers in Georgia, who are putting out a
    number of guns into the hands of traffickers who get on I-95
    and drive them into New York, where they are sold on the
    streets, whether or not that is a good thing to happen.
        Mr. Upton. Is that the gun manufacturers' fault?
        Ms. Barnes. Yes, it is.
        Mr. Upton. That the laws are different in the other States?
        Ms. Barnes. No, it is the gun manufacturers' fault for
    selling disproportionate numbers of guns, more than the
    legitimate markets in those States will bear, to outlets and
    vehicles that they know by direct evidence sell guns to
    traffickers.
        Mr. Upton. Well, is there not a case going on in Chicago
    right now, and not in New York?
        Ms. Barnes. Yes, there are a number of cases. There are
    several cases in Chicago.
        Mr. Upton. And does Illinois not have a similar gun law as
    other States in the midwest?
        Ms. Barnes. I'm sorry, I don't--you mean as opposed to
    Indiana?
        Mr. Upton. Well, let's take a look at Michigan. Michigan
    has good laws that have been on the books for a long time, and
    we have invested in the right people and the right laws to make
    sure that in fact they work.
        I mean, should the city of Detroit, or the city of Lansing,
    or the city of Kalamazoo, all of a sudden----
        Ms. Barnes. It is their right under the common law to
    protect the welfare of the people of the city of Detroit, and
    that is a right that is recognized prior to the establishment
    of the city or the State of Michigan.
        And that is part of the job of the fathers and mothers of
    the city of Detroit.
        Mr. Upton. And the job is being performed well in the State
    of Michigan, and because of that, manufacturers, whether it be
    Beretta or anybody else, shouldn't have to necessarily spend
    millions of dollars trying to defend themselves against a law
    that works.
        Mr. Burnett. If I could compose an analogy. The argument is
    that excessive numbers of guns, more than could enter the legal
    market, are sold in certain States, and the manufacturers
    knowingly do this.
        Now, I can't speak for every State, and I know Texas well,
    and there are a lot of guns in Texas. Some people own multiple
    guns in Texas. It is not clear that where you would say----
        Mr. Upton. Well, there is not a law against owning a gun or
    guns.
        Mr. Burnett. No, there is not, and it is not clear to me
    how you can say excessive amounts of guns. But we can look at,
    since you drew the analogy to the alcohol industry, we have
    large celebrations in Texas every spring break on the Gulf
    Coast--Padre Island.
        I take it that many of the people drinking on Padre Island
    are under age during that time. Now, you might say that
    excessive amounts of alcohol are sold in Padre Island and in
    Galveston, Texas, during these weeks, and certainly Budweiser
    and Coors Light, and the other manufacturers know that not only
    is their beer being sold to illegal people.
        So shouldn't they be held responsible for the illegal
    conduct of these minors, even though the States are checking
    ID's? Some people have fake Ids, and some people may not check
    Ids as they should.
        But that is the analogy, and it seems to me in fairness to
    Representative Towns, I do agree with one thing that he said.
    It is not clear to me that we should just be exempting the
    firearms industry. I know that is what this bill is about, and
    I have tailored my comments concerning this bill to that.
        But I think that any lawful product ought to be exempt from
    lawsuits for the unlawful use of that product to commit harm,
    even if that harm imposes some costs upon the public, because
    the public has decided to ensure people against harm.
        And so I would like to see a broader bill. I think that
    John Hostetler had one at one time that would have made it for
    all products; that if negligent parties, stupid people, people
    who don't operate a Cadillac properly, and drive into a school
    ground, I don't think GM should be held responsible, or
    Budweiser should be held responsible because some people are
    going to break the law, and their products are used to break
    the law.
        Ms. DeGette. Mr. Chairman, I would ask for unanimous
    consent if the gentleman could be granted 30 seconds and yield
    to me?
        Mr. Upton. Actually, I need to get back to this mark-up,
    and so I yield.
        Mr. Stearns. Unanimous consent is granted for an additional
    30 seconds. Do you yield to the gentlelady from Colorado?
        Mr. Upton. Absolutely.
        Ms. DeGette. The only thing I would like to clarify is the
    way the bill is drafted, and the chairman and I were actually
    talking about this during the break, is if the liquor store
    fails to check--I mean, they check your ID every time, but
    remember back to those fuzzy days of your youth, and I am sure
    that you never did try to buy beer before you were 21.
        But let's say you had, and a liquor store had negligently
    sold beer to a minor without checking their ID, and that minor
    got drunk and went out, and injured someone. Under many State
    laws, you could sue the liquor store owner for negligent
    selling the beer to the minor, in violation of State law.
        And what this bill does is that it not only gives immunity
    to the manufacturers, but it would also give immunity to the
    person that sold the gun negligently, and that is the problem
    that I have with this legislation.
        Mr. Upton. But to use the beer analogy, Budweiser, when
    they drop it off at Hardings friendly market, the rules are--
    and they have got them posted and everything else, and they
    obviously do a very good job.
        Now, someone might come up with a fake I.D. that works
    pretty well, or maybe they have someone who looks older than
    me, but yet in fact they are under 21.
        Ms. DeGette. Well, you would have to prove negligence, and
    what this bill does for guns and guns alone is----
        Mr. Upton. But laws are already in place, because if in
    fact this store doesn't check or they sell to someone
    illegally, it is the store that is at fault, and not the
    manufacturer of the product.
        Ms. DeGette. Right. But under this bill for stores that
    sell guns, they are also going to be immune, and that is a
    problem with the way that the bill is drafted. So we can work
    on fixing the bill.
        Mr. Upton. They may look at a friendly DeGette amendment,
    and look at that if this bill moves.
        Ms. DeGette. I am surprised that you would think that any
    DeGette amendment would be friendly.
        Mr. Upton. It depends on how friendly it is.
        Mr. Stearns. Okay. I want to thank the members for staying,
    and I want to thank the witnesses for staying. I would just
    mention again that this bill's intent is not protecting people
    who act illegally, and we would certainly entertain amendments
    from either side to improve it.
        And that is the whole purpose of our hearing this morning,
    and I want to thank the witnesses for staying when we went to
    vote. We appreciate your patience and your testimony, and the
    committee is adjourned.
        [Whereupon, at 12:14 p.m., the subcommittee was adjourned.]