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