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James v. Arms Technology

March 11, 2003

MAYOR SHARPE JAMES AND THE CITY OF NEWARK, NEW JERSEY, PLAINTIFFS-RESPONDENTS,
v.
ARMS TECHNOLOGY, INCORPORATED; B.L. JENNINGS, INC.; BERETTA U.S.A.; BROWNING ARMS CO.; BRYCO ARMS; COLT'S MANUFACTURING CO.; GLOCK, INC.; H & R; HECKLER & KOCH, INC.; INTERNATIONAL ARMAMENT CORP. (D/B/A "INTERARMS INDUSTRIES, INC."); MKS SUPPLY, INC. (D/B/A "HI-POINT FIREARMS"); PHOENIX ARMS; SIGARMS, INC.; SMITH & WESSON CORP.; STURM, RUGER & COMPANY, INC.; TAURUS INTERNATIONAL MANUFACTURING, DEFENDANTS-APPELLANTS, AND ARCADIA MACHINE & TOOL; CARL WALTHER; CHARTER ARMS, INC.; DAVIS INDUSTRIES; FORJAS TAURUS, S.A.; FULL METAL JACKET, INC.; GLOCK GMBH; HECKLER & KOCH, GMBH; LORCIN ENGINEERING CO.,INC.; NAVEGAR, INC. (D/B/A "INTRATEC"); FABBRICA D'ARMI PIETRO BERETTA S.P.A.; SUNDANCE INDUSTRIES; NATIONAL SHOOTING SPORTS FOUNDATION, INC.; SPORTING ARMS AND AMMUNITION MANUFACTURERS INSTITUTE, INC.; NAVY ARMS COMPANY, INC.; RAY'S SPORTING GOODS, DEFENDANTS.
MAYOR SHARPE JAMES AND THE CITY OF NEWARK, PLAINTIFFS-RESPONDENTS,
v.
RAY'S SPORTING GOODS, DEFENDANT-APPELLANT, AND ARCADIA MACHINE & TOOL; ARMS TECHNOLOGY, INCORPORATED; B.L. JENNINGS, INC.; BERETTA U.S.A.; BROWNING ARMS CO; BRYCO ARMS; CARL WALTHER; CHARTER ARMS, INC.; COLT'S MANUFACTURING CO.; DAVIS INDUSTRIES; FORJAS TAURUS, S.A.; FULL METAL JACKET,INC.; GLOCK, INC.; GLOCK GMBH; H&R; HECKLER & KOCH, INC.; HECKLER & KOCH, GMBH; INTERNATIONAL ARMAMENT CORP. (D/B/A "INTERARMS INDUSTRIES, INC."); LORCIN ENGINEERING CO., INC.; MKS SUPPLY, INC. (D/B/A "HI-POINT FIREARMS"); NAVEGAR, INC. (D/B/A "INTRATEC"); PHOENIX ARMS; FABBRICA D'ARMI PIETRO BERETTA S.P.A.; SIGARMS, INC.; SMITH & WESSON CORP.; STURM, RUGER & COMPANY, INC.; SUNDANCE INDUSTRIES, INC.; TAURUS INTERNATIONAL MANUFACTURING, INC.; NATIONAL SHOOTING SPORTS FOUNDATION, INC.; SPORTING ARMS AND AMMUNITION MANUFACTURERS INSTITUTE, INC.; NAVY ARMS COMPANY, DEFENDANTS.
MAYOR SHARPE JAMES AND THE CITY OF NEWARK, PLAINTIFFS-RESPONDENTS,
v.
NAVY ARMS COMPANY, INC., DEFENDANT-APPELLANT, AND ARCADIA MACHINE & TOOL; ARMS TECHNOLOGY, INCORPORATED; B.L. JENNINGS, INC.; BERETTA U.S.A.; BROWNING ARMS CO.; BRYCO ARMS; CARL WALTHER; CHARTER ARMS, INC.; COLT'S MANUFACTURING CO.; DAVIS INDUSTRIES; FORJAS TAURUS, S.A.; FULL METAL JACKET, INC.; GLOCK, INC.; GLOCK GMBH; H & R; HECKLER & KOCH, INC.; HECKLER & KOCH, GMBH; INTERNATIONAL ARMAMENT CORP. (D/B/A "INTERARMS INDUSTRIES, INC."); LORCIN ENGINEERING CO., INC.; MKS SUPPLY, INC. (D/B/A "HI-POINT FIREARMS"); NAVEGAR, INC. (D/B/A "INTRATEC"); PHOENIX ARMS; FABBRICA D'ARMI PIETRO BERETTA S.P.A.; SIGARMS, INC.; SMITH & WESSON CORP.; STURM RUGER & COMPANY, INC.; SUNDANCE INDUSTRIES, INC.; TAURUS INTERNATIONAL MANUFACTURING, INC.; NATIONAL SHOOTING SPORTS FOUNDATION, INC.; SPORTING ARMS AND AMMUNITION MANUFACTURERS INSTITUTE, INC.; RAY'S SPORTING GOODS, DEFENDANTS.



On appeal from the Superior Court of New Jersey, Law Division, Essex County, ESX-L-6059-99. Counsel appearances in A-3098-01T3:

Before Judges Havey, A.A. Rodríguez and Payne

The opinion of the court was delivered by: Havey, P.J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued December 9, 2002

Since 1995, over thirty cities and counties have filed law suits in other jurisdictions against gun manufacturers seeking to recover the cost of governmental services associated with gun violence. *fn1 Many of the cases have been dismissed on the pleadings on the bases, among others, that: (1) the public entity lacked standing; (2) its alleged damages were too remote to satisfy the proximate cause element; and (3) the gun manufacturers' conduct did not constitute a public nuisance. *fn2 In others, courts have addressed each of these issues, denied the motions to dismiss and permitted the case to go forward beyond the pleading stage. *fn3 This is the first such case filed in a New Jersey state court. In the complaint, plaintiffs Mayor Sharpe James and the City of Newark (hereinafter referred to collectively as the City) name twenty-eight gun manufacturers, two trade associations and two distributors or retailers as party defendants. The complaint is in nine counts, advancing the following causes of action: defective and negligent design by defendant-manufacturers (count one); defendant-manufacturers' failure to include safety devices (count two); all defendants' failure to provide adequate warnings that guns were unreasonably dangerous (count three); negligent marketing and distribution by all defendants (count four); defendant-trade associations' negligence in failing to develop safer guns (count five); all defendants' creation of a public nuisance (count six); unjust enrichment of all defendants (count seven); punitive damages (count eight); and all defendants' liability under the New Jersey Products Liability Act, N.J.S.A. 2A:58C-1 to -11 (count nine). Seventeen of the gun manufacturers and a distributor/ retailer, defendant Navy Arms Company, Inc., moved to dismiss the complaint for failure to state a claim. R. 4:6-2(e). The two trade associations, defendants National Shooting Sports Foundation, Inc. and Sporting Arms and Ammunition Manufacturing Institute, Inc., filed a separate motion to dismiss for lack of personal jurisdiction and for failure to state a claim. *fn4 R. 4:6-2(b) and -2(e). By order dated January 8, 2002, Judge Minuskin dismissed the counts sounding in strict liability and unjust enrichment (counts one, two, three, seven and nine). However, he denied the motion as to the City's negligence, public nuisance and punitive damage claims (counts four, five, six and eight).

By leave granted, sixteen of the twenty-eight gun manufacturers and two distributors/retailers have appealed from the order denying their motion to dismiss. The City has not cross-appealed dismissal of the strict liability and unjust enrichment counts.

We affirm. At this posture of the case we are not concerned with the City's ability to prove the facts alleged in its complaint. Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989). Our role is to decide whether, indulgently read, "'the fundament of a cause of action may be gleaned'" from the pleadings, ibid. (quoting Di Cristofaro v. Laurel Grove Mem. Park, 43 N.J. Super. 244, 252 (App. Div. 1957)), giving the City the benefit of all reasonable factual inferences that the allegations support. F.G. v. MacDonell, 150 N.J. 550, 556 (1997). Applying that standard, we agree with the trial judge that the City should be permitted to go forward with its claims of negligence, public nuisance and punitive damages. We reject defendants' arguments that, based on the pleadings, the City's alleged damages are too remote from defendants' conduct to satisfy the proximate cause requirement as a matter of law. We also reject their argument that the City's pleadings do not set forth a cognizable claim of public nuisance.

I.

We first set forth the allegations in the complaint supporting the City's claim of negligence against defendants. It charges defendants with encouraging an alleged illegal gun market, which foreseeably has fueled crime in Newark and caused the City to expend significant government funds on "police protection, overtime, emergency services, coroner and morgue services, pension benefits, health care, social services and other necessary facilities and services . . . due to . . . the . . . distribution, promotion and sale of guns." In the portion of the complaint labeled "FACTUAL ALLEGATIONS," the City states:

86. For many years, Defendants knew or should have known that by distributing firearms without adequate supervision and regulation they were creating, maintaining, or supplying the unlawful market in firearms.

87. For many years, Defendants knew or should have known that they were producing and selling substantially more firearms than could be justified by the legitimate gun market, and that a substantial portion of their guns would end up in the hands of criminals and other irresponsible persons. The City adds:

Defendants knew or should have known that: (a) they were producing, selling and distributing handguns in the United States without adequate or reasonable supervision, regulations, restraints or limitation, 10

(b) they were producing, selling and distributing handguns in the United States with the knowledge that many of their guns could not be expected to be lawfully acquired, possessed and used by responsible persons, and would come into the possession of criminals and other irresponsible persons;

(c) they were distributing, promoting, advertising, and marketing handguns in a manner such that it was reasonably foreseeable that handguns would be acquired by unauthorized and irresponsible persons, and/or that they would be used and/or stored irresponsibly;

(d) the production, marketing, and distribution of handguns, without such adequate or reasonable supervision, regulation, restraints, or limitations, created, maintained, with the foreseeable result being that this would supply the unlawful market in handguns;

. . . . (f) a substantial portion of the handguns they produced, sold and distributed ended up in criminal hands, and were used for criminal purposes;

(g) as a result of the foregoing, many people would be killed and injured with handguns, and others, including the City, would suffer damages as a result.

As to the City's public nuisance claim, it alleges that:

134. Defendants intentionally and recklessly design, market, distribute and sell firearms to persons whom Defendants should know will bring those firearms into Newark, causing these firearms to be possessed and used in Newark illegally, which results in increased crime, injury and death to Newark citizens, as well as a higher level of fear to the residents of Newark. This conduct therefore creates an unreasonable interference with the exercise of the common rights of the health, safety and welfare to the citizens of Newark.

140. Defendants' conduct in designing, marketing, distributing and selling firearms to persons whom Defendants' know will cause those firearms to end up in Newark is of a constant and continuing nature.

141. Defendants' conduct constitutes a nuisance as thousands of the firearms produced by Defendants will be illegally trafficked into Newark, illegally possessed and illegally used in Newark and will remain illegally in the hands of persons until the illegal possession of these firearms is detected.

142. The Defendants know that their actions interfere with the citizens of Newark's public health, safety and welfare and the public's right to be free from unnecessary danger.

144. The Defendants' conduct is a direct and proximate cause of violence, injury, and death to Newark residents as well as an unreasonable interference with the safety, health and welfare of the citizens of Newark as well as the public's right to be free from danger.

145. Defendants' conduct, if not stopped, will continue to pose an interference to the health, safety and welfare of the citizens of Newark.

146. The actions and inactions of the Defendants have resulted in numerous incidents of violence and death further resulting in significant costs to the City of Newark in order to enforce the laws and to treat the victims of crimes facilitated through the use of Defendants' firearms. In a thoughtful and comprehensive written opinion, Judge Minuskin first rejected defendants' argument that they owed no duty of care to the City. In finding that a duty exists, the judge considered pertinent policy factors, including the inherent dangerousness of handguns, as well as the public's concern about gun safety, as evidenced by the "minute and careful statutory regulation" of the gun industry. Citing actions against gun manufacturers in other jurisdictions, the judge observed that "on the precise facts involved, a substantial number of courts have determined that a cause of action in negligence passed muster." As to the public nuisance claim, the judge adopted the definition set forth in Restatement (Second) of Torts § 821B (1979), and concluded:

The allegations of the Complaint come precisely within the [R]estatement definition. A nuisance may exist even though the creator conducted an entirely lawful enterprise. A municipality may institute an action to abate a nuisance or for damages. Defendants argue that nuisance actions are predicated on misuse of land and not on a factual context of this kind. Defendants' brief asserts that a very large number of cases were examined without finding a single case such as this. However, while this may be accurate, there are no cases which hold that a plaintiff's nuisance action such as this may not be brought. Clearly, the action fits within the general principles of nuisance actions herein, and applying the rule against dismissal of causes of action at their inception, the Defendants' motion as to the nuisance claim must be denied. [Citations omitted.]

Acknowledging that the City must prove "control" over the offending conduct, the judge nevertheless concluded that "control" is a fact-sensitive issue and must be resolved by the fact finder.

Finally, the judge addressed defendants' standing, proximate cause and remoteness arguments, and concluded that the City had a sufficient, direct pecuniary interest to have standing, and that the proximate cause and remoteness issues were fact-sensitive and must be left for resolution by the jury.

II.

PROXIMATE CAUSE

Defendants argue that the City's claims fail as a matter of law because its damages are too remote from defendants' alleged conduct to establish proximate cause. They contend that this principle of "remoteness" applies where the conduct complained of "is at most an indirect cause of the alleged harm"; that is, where: (1) the harm is not the "natural and proximate result" of the alleged tortious conduct; or (2) plaintiff's harm flows merely from the harm visited upon a third person. For this proposition, defendants cite Camden County, supra, 123 F.Supp.2d 245, City of Philadelphia, supra, 126 F.Supp.2d 882; and Ganim, supra, 780 A.2d 98.

In Camden County, the District Court addressed the "remoteness" defense under the rubric of standing. See Steamfitters Local Union No. 420 Welfare Fund v. Philip Morris, Inc., 171 F.3d 912, 921 (3rd Cir. 1999) ("the standing analysis . . . is drawn from common-law principles of proximate cause and remoteness of injury . . ."), cert. denied, 528 U.S. 1105, 120 S.Ct. 844, 145 L.Ed.2d 718 (2000). As in this case, the County alleged generally that defendant gun manufacturers purposefully or negligently produced and distributed more handguns than they reasonably expected to sell to law-abiding purchasers, thereby feeding a known, illegal secondary market. Camden County, supra, 123 F.Supp.2d at 250-51.

In granting defendants' motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), the federal analog to our Rule 4:6- 2(e), the Camden County court reasoned that the standing analysis required an inquiry as to the causal connection between the County's injuries and defendants' conduct. Id. at 256-57 (citing Holmes v. Securities Investor Prot. Corp., 503 U.S. 258, 268, 112 S.Ct. 1311, ___, 117 L.Ed.2d 532, 544 (1992)). Observing that, because of the "sheer number of links in the causal chain" between the County's injuries and the defendants' conduct, it was "helpful" to apply the six- factor, proximate-cause analysis utilized by the United States Supreme Court in Associated Gen. Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519, 537-545, 103 S.Ct. 897, ___, 74 L.Ed.2d 723, 737-43 (1983). Id. at 258. The six factors identified by Associated, a federal antitrust case, were condensed by the Third Circuit in Steamfitters:

(1) the causal connection between defendant's wrongdoing and plaintiff's harm; (2) the specific intent of defendant to harm plaintiff; (3) the nature of plaintiff's alleged injury (and whether it relates to the purpose of the antitrust laws, i.e., ensuring competition within economic markets); (4) "the directness or indirectness of the asserted injury"; (5) whether the "damages claim is . . . highly speculative"; and (6) "keeping the scope of complex antitrust trials within judicially manageable limits," i.e., "avoiding either the risk of duplicate recoveries on the one hand, or the danger of complex apportionment of damages on the other." [171 F.3d at 924 (quoting Associated, supra, 459 U.S. at 537-38, 540, 542-44, 103 S.Ct. at ___, 74 L.Ed.2d at 737-39, 740- 42).]

Applying the six factors, the Camden County court concluded that "proximate cause is lacking . . . ." 123 F.Supp.2d at 264. In reaching that conclusion, it made the following findings relevant to the standing/proximate cause issue: (1) the "causal connection" was "weak" because of the multiple, intervening links between defendants' manufacturing of guns and the use of the guns by the criminal element, id. at 259; (2) all of the damages suffered by the County were "indirect" and derivative of the injuries suffered by the victims of gun violence and, even if part of the damages claimed by the County were for "direct" injuries, the County could not separate with reasonable certainty the cost of normal crime prevention and the costs attributable to the conduct of defendants, id. at 262; and (3) the County's damages were speculative and difficult to measure, and any attempt to allocate fault and damages among the defendants would require undue expenditure of judicial resources. Id. at 263.

In City of Philadelphia, supra, 126 F.Supp.2d at 903-05, the District Court, again applying the antitrust standing analysis, also found that the negligence-based claim of the City failed for lack of proximate cause because its alleged injuries were too remote from defendants' alleged conduct. In Ganim, supra, 780 A.2d at 121-30, the Connecticut Supreme Court reached a similar ...


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