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CAMDEN CTY. BD. OF CHOSEN FREEH. v. BERETTA U.S.A.

December 5, 2000

CAMDEN COUNTY BOARD OF CHOSEN FREEHOLDERS, PLAINTIFF,
V.
BERETTA U.S.A. CORP., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Simandle, District Judge:

  OPINION

TABLE OF CONTENTS

I. INTRODUCTION ........................................................... 248
II. BACKGROUND ............................................................. 249 A. Procedural History .................................................. 249 B. Factual Allegations in the Second Amended Complaint ................. 250
III. DISCUSSION ............................................................. 252 A. Motion to Dismiss Standard .......................................... 252 B. Whether New Jersey's Products Liability Act Subsumes and Requires Dismissal of Plaintiff's Claims .................................... 253 C. Constitutional Law Issues ........................................... 253 D. Whether the Second Amended Complaint Improperly Aggregates Claims ... 255 E. Negligence Claims: Standing and Proximate Cause ..................... 255 1. Injury in Fact ................................................... 256 2. Whether the County's Alleged Injuries Are Caused by or Fairly Attributable to the Challenged Action of the Defendants ......... 256 a. Factor One: Causal Connection ................................. 259 b. Factor Two: Specific Intent to Harm ........................... 259 c. Factor Three: The Nature of the County's Injury ............... 259 d. Factor Four: Directness/Indirectness of Injury ................ 261 e. Factor Five: Highly Speculative Damages ....................... 263 f. Factor Six: Avoiding Trial Complexity ......................... 263 g. Summary of Proximate Cause .................................... 264 F. Public Nuisance Claim ............................................... 264 1. Whether the County Has the Power to Sue in its Public Capacity to Abate a Public Nuisance ........ 265 2. Whether the Plaintiff's Public Nuisance Claim Should Be Dismissed Because it Requests Relief That Includes Governmental Costs ..... 265 3. Analysis ......... 266
V. CONCLUSION ............................................................. 267

I. INTRODUCTION

In this noteworthy case, the governing body of Camden County, New Jersey (the "County" or "Camden County") has taken aim against various firearms manufacturers (collectively the "defendants"), claiming that their wrongful conduct in marketing and distributing handguns has facilitated the creation of a criminal market for handguns within County borders. As described in its detailed 40-page Second Amended Complaint, the County seeks injunctive and monetary relief in compensation for harm suffered by the County due to the defendants' allegedly reckless and negligent handgun marketing and distribution policies and practices, and due to the defendants' alleged creation of a public nuisance in Camden County that has endangered public safety, health and peace.

The principal issues to be decided are: (1) whether Camden County's complaint in this case is sufficient to allege that the County's injuries (that is, the increased costs of governmental functions due to law enforcement related to illegal use of handguns) are caused by or fairly attributable to the alleged negligence of these manufacturers in their marketing and distribution of legal firearms; and (2) whether Camden County's complaint states a cognizable claim under New Jersey law that these manufacturers control or participate to a substantial extent in the creation of a public nuisance (that is, the criminal market for illegal handguns) within the county. This case, and therefore this Opinion, is not about conduct of local handgun distributors or local retailers who actually sell to the public, nor does Camden County allege that the manufacturers' marketing practices violate federal or state statutes. Further, the Court does not determine whether the defendants are doing all that they reasonably can or should do to diminish the risks that their handguns end up in the hands or criminals.

As discussed in detail below, the Court finds that the County lacks constitutional standing to assert its negligence claims because its injury — increased governmental costs — is too attenuated from the distribution policies of the manufacturers, and the negligence-based claims therefore fail to allege that the County's expenditures are caused by or fairly attributable to the manufacturers' negligence. Second, the Court further finds that, under New Jersey law, Camden County generally has the legal authority to seek to abate a public nuisance and to receive compensation for the remedy of a public nuisance, but that these manufacturers, who distribute lawful handguns in compliance with existing federal and state statutes, may not be held liable for creating or maintaining the public nuisance of which Camden County complains.

Having considered the parties' submissions, and having twice heard extensive oral argument on these submissions, and for reasons discussed herein, the defendants' motion to dismiss will be granted.

II. BACKGROUND

A. Procedural History

B. Factual Allegations in the Second Amended Complaint

In its Second Amended Complaint (SAC), plaintiff alleges that Camden County has suffered immense hardship as a direct result of the defendants' reckless and negligent misconduct in the manufacture, distribution, sale, marketing and design of their firearms. (SAC ¶ 1.) The defendants are manufacturers of handguns who are not engaged in direct sales; instead, they sell the handguns to licensed distributors, who then sell to licensed retailers, who then sell to the purchaser. None of these transactions is claimed to violate existing statutes or regulations, and the County does not contest that these sales involve lawful firearms transactions. Instead, the County maintains that a substantial portion of the handgun market consists of "multiple sales" — one person legally buying two or more handguns at the same time or over a period of time. (Id. ¶ 18.) According to the County, the next step is generally that this multiple purchaser will re-sell the gun to someone else, often someone barred from purchasing a handgun directly.

The County also alleges that a large percentage of persons involved in multiple handgun purchases are allegedly engaging in "straw purchases" where the buyer is really buying for a third party who may be prohibited from buying a gun by state or federal law. (Id. ¶ 21.) Under the system of multiple purchases allegedly facilitated by defendants' loose control over the nation's licensed firearm distributors, most guns end up Camden County as the result of the defendants' allegedly reckless manner distribution.*fn4

The County claims that, beyond simply placing their goods into the stream of commerce, the defendants actually facilitate the criminal market for handguns. The defendants allegedly produce, market and distribute substantially more handguns than they reasonably expect to sell to law-abiding purchasers; they allegedly continually use distribution channels that they know yield criminal and underage end users in Camden County; they allegedly do not monitor or supervise their distributors with respect to multiple purchases; and they fail to adopt even minimal practices or procedures that would eliminate or lessen the criminal market for handguns. (Id. ¶¶ 14-15.)

Plaintiff alleges that the BATF gun trace process provides defendants with actual notice that their guns are being used in the commission of crimes, and that these BATF data identify which gun distributors sell an inordinate percentage of crime guns. Under the BATF trace process, plaintiff explains, each time a gun is recovered as part of a criminal investigation, the BATF informs the manufacturer of that gun the model and serial number of the gun used in the commission of a crime. The County maintains that the manufacturer knows, through its own records, the particular distributor through whom that gun was first distributed.*fn5

Plaintiff asserts that the defendants' failure to react to gun trace data by taking steps to prevent guns from reaching criminals is reckless and negligent. The County further claims that as a result of defendants' reckless and/or negligent conduct, it has incurred a myriad of significant and substantial governmental costs associated with the illegal and/or improper possession and use of firearms within the County. Among the County agencies cited as incurring additional costs due to handgun violence are the offices of the Camden County Prosecutor, Sheriff, Medical Examiner, and Park Police, the County Correctional Facility, and the Camden County courts. (Id. ¶ 2.) Significantly, the County does not claim it has suffered direct damage to its property or harm to its personnel as a result of defendants' conduct.

As relief, the County seeks (1) compensation for the cost of abating the public nuisance allegedly created by defendants' conduct, (2) injunctive relief forcing defendants to change their marketing and distribution practices, (3) compensatory damages for defendants' negligence, and (4) punitive damages based on defendants' allegedly intentional and reckless conduct. (Id. at Demand, p. 40.)

III. DISCUSSION

A. Motion to Dismiss Standard

The defendants have moved to dismiss the Second Amended Complaint pursuant to Rule 12(b)(6), Fed.R.Civ.P. A motion to dismiss under Rule 12(b)(6) for failure to state a claim upon which relief can be granted does not attack the merits of the case, but merely tests the legal sufficiency of the Complaint. See Nami v. Fauver, 82 F.3d 63, 65 (3d Cir. 1996). When considering a Rule 12(b)(6) motion, the reviewing court must accept as true all well-pleaded allegations in the Complaint and view them in the light most favorable to the plaintiff. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974); Jordan v. Fox, Rothschild, O'Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir. 1994); Palladino Ex Rel U.S. v. VNA of Southern New Jersey, Inc., 68 F. Supp.2d 455 (D.N.J. 1999).

In considering the motion, a district court must also accept as true any and all reasonable inferences derived from those facts. See Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 (3d Cir. 1994); Schrob v. Catterson, 948 F.2d 1402, 1405 (3d Cir. 1991). A court may not dismiss the Complaint "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). Therefore, in deciding a motion to dismiss, a court should look to the face of the complaint and decide whether, taking all of the allegations of fact as true and construing them in a light most favorable to plaintiff as non-movant, the complaint's allegations state valid legal claims. See Markowitz v. Northeast Land Co., 906 F.2d 100, 103 (3d Cir. 1990).

In this case, the defendants argue that plaintiff's complaint should be dismissed because the County's claims are substantively deficient and are precluded by several defenses. Among the defenses defendants raise are (1) that New Jersey Product Liability law subsumes plaintiff's claims, (2) that the relief requested in the Second Amended Complaint violates the commerce and due process clauses of the federal constitution, (3) that plaintiff's complaint improperly aggregates claims, (4) that plaintiff's claims are derived from harm to third parties, namely, Camden County residents, and therefore are too remote to warrant recovery, and (5) that a municipality cannot recover the costs of municipal services. The Court will first address the proffered NJPLA, Commerce Clause, and aggregation defenses in Parts III.B, C, & D, below, and will then address the remoteness defense within the rubric of standing in relation to the County's negligence-based claims in Part III.E, below. The Court will then address the municipal cost recovery issue in the context of plaintiff's public nuisance claim in Part III.F, below.

B. Whether New Jersey's Products Liability Act Subsumes and Requires Dismissal of Plaintiff's Claims

The Court first addresses defendants' argument that plaintiff's claims of negligence fall within the New Jersey Products Liability Act (NJPLA), N.J.S.A. 2A:58C-1, et seq., which is "the sole basis for relief under New Jersey law available to consumers injured by a defective product." Port Auth. v. Arcadian Corp., 189 F.3d 305, 313 (3d Cir. 1999) (quoting Repola v. Morbark Indus., Inc., 934 F.2d 483, 492 (3d Cir. 1991)).

This argument misinterprets plaintiff's claims. Rather than alleging that the defendant firearms manufacturers and distributors make and sell defective products, the County claims that, if anything, these products work too well. It is because of the deadly efficiency of firearms that the County seeks to prevent defendants from irresponsibly marketing and distributing their wares, not because of any defect or malfunction. The principal negligence issue in this case is whether defendants ignored data showing that some distributors and retailers routinely sold guns in a chain of transactions leading to criminals, or in a manner that facilitates the criminal market for handguns. The negligence based claims in this case are thus distinguishable from Arcadian, 189 F.3d at 313, which dealt with preemption by the NJPLA of the Port Authority's negligence claims against a fertilizer manufacturer based on the premise that the defendant negligently formulated its product in such a way that it could easily be converted into explosives. Id. at 309. In contrast to this case, Arcadian did not involve allegations of negligent marketing, negligent entrustment or public nuisance based on a pattern of repeated misconduct. Because the plaintiff's claims here do not amount to an allegation that the defendants' products were defective, the NJPLA does not preempt the County's claims in this case.

C. Constitutional Law Issues

Defendants also argue that the relief sought by the County is an attempt to regulate a lawful national industry and that commerce in several states would be negatively affected should plaintiff prevail in this suit. Because of its potential effect upon national commerce, defendants argue, plaintiff's suit here is barred by the dormant commerce clause of the federal constitution. U.S. Const. Art. I, § 8.

The affirmative grant to Congress of authority to regulate interstate commerce encompasses an "implied [or "dormant"] limitation on the power of the States to interfere with or impose burdens on interstate commerce." Healy v. Beer Inst., 491 U.S. 324, 326 n. 1, 109 S.Ct. 2491, 105 L.Ed.2d 275 (1989). The dormant commerce clause limits the authority of the States to enact laws that regulate "commerce that takes place wholly outside of the State's borders, whether or not the commerce has effects within the state." Id. at 336, 109 S.Ct. 2491 (quoting Edgar v. MITE Corp., 457 U.S. 624, 642-43, 102 S.Ct. 2629, 73 L.Ed.2d 269 (1982)).

The Supreme Court has articulated two distinct tests to evaluate whether state legislation unconstitutionally regulates interstate commerce. When a state statute "directly regulates or discriminates against interstate commerce, or when its effect is to favor in-state economic interests over out-of-state interests," it is subject to strict judicial scrutiny. Brown-Forman Distillers Corp. v. New York State Liquor Auth., 476 U.S. 573, 578-79, 106 S.Ct. 2080, 90 L.Ed.2d 552 (1986). See also Instructional Sys., Inc. v. Computer Curriculum Corp., 35 F.3d 813, 824 (3d Cir. 1994). Alternatively, when a statute only indirectly affects interstate commerce and regulates evenhandedly, a determination must be made as to whether the State's interest is "legitimate and whether the burden on interstate commerce clearly exceeds the local benefits." Brown-Forman, 476 U.S. at 578-79, 106 S.Ct. 2080.

As construed by the Third Circuit, these two tests actually translate to three separate levels of scrutiny in dormant commerce clause cases:

(1) state actions that purposefully or arbitrarily discriminate against interstate commerce or undermine uniformity in areas of particular federal importance are given heightened scrutiny; (2) legislation in areas of peculiarly strong state interest is subject to very deferential review; and (3) the remaining cases are governed by a balancing rule, under which state law is invalid only if the ...

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