Source: https://corporate.findlaw.com/litigation-disputes/california-supreme-court-turns-back-gun-foes-in-merrill-v.html
Timestamp: 2019-04-18 11:34:18+00:00

Document:
The California Supreme Court has dealt a serious setback to gun opponents who seek to hold gun manufacturers and distributors liable for criminal shootings. In a 5-1 decision, the California Supreme Court ruled that California law barred lawsuits against gun companies for their alleged negligent marketing and distribution of firearms. Merrill v. Navegar, Inc., No. S083466, 2001 WL 877117 (Cal. Aug. 6, 2001). In so ruling, the California Supreme Court has now joined the highest court of New York in rejecting new legal theories of liability that recently have been asserted against the gun industry.
Merrill v. Navegar arose out of an horrific shooting attack in San Francisco on July 1, 1993. Gian Luigi Ferri went to the 34th floor of a high-rise office building, walked into the office of a law firm against whom he held a grudge, and began shooting. Mr. Ferri was heavily armed with a .45-caliber pistol and two TEC-9/DC9 assault weapons that were manufactured by Navegar, Inc. Before he ended his attack by shooting himself, Mr. Ferri killed eight people and wounded six others.
Mr. Ferri allegedly used the TEC-9/DC9s firepower to "lay down" a field of fire so that his intended victims could not escape his attack. Mr. Ferri was carrying hundreds of rounds of ammunition preloaded in 40 to 50 round magazines, and the TEC-9/DC9s assault weapons were modified so that they would fire in rapid bursts. Mr. Ferri had purchased his TEC-9/DC9s in Nevada, as California had outlawed them through the California Assault Weapons Control Act of 1989.
The shooting victims brought a negligence lawsuit against Navegar based on Navegar's decision to make the TEC-9/DC9 assault weapon available for sale to the general public when it allegedly knew or should have known that the assault weapon had no legitimate sporting or self-defense purpose and was particularly well suited to a military assault on large numbers of people. In support of their case, the shooting victims pointed to evidence that the TEC-9/DC9 had no legitimate purpose because it was too inaccurate even for target shooting. The TEC-9/DC9 was designed to be fired from the shooter's hip; the barrel of the gun was threaded to accommodate silencers and flash suppressors; and Navegar advertised the assault weapon as having excellent resistance to fingerprints. Navegar's director of national sales and marketing testified that he welcomed negative news stories about the TEC-9/DC9s because "whenever anything negative has happened, sales have gone tremendously high."
The California Court of Appeal concluded that the shooting victims had a cause of action against Navegar for negligent distribution of TEC-9/DC9 assault weapons. Merrill v. Navegar, Inc., 89 Cal. Rptr. 2d 146 (Cal. Ct. App. 1999). While it noted that the risk of harm from criminal misuse of firearms is always present in society, the Court of Appeals reasoned that gun manufacturers have a duty to use reasonable care to minimize risks associated with firearms. The intermediate appellate court, therefore, held that a gun manufacturer owes a duty of reasonable care not to create risks above and beyond those inherent from the presence of firearms in society.
The California Supreme Court reversed the Court of Appeal, ruling that Section 1714.4 of the California Civil Code precluded the shooting victims' lawsuit against Navegar. This California statute provided, in relevant part, that a gun manufacturer may not be held liable "in a products liability action . . . on the basis that the benefits of [its] product do not outweigh the risk of injury posed by [the product's] potential to cause serious injury, damage, or death when discharged."
The shooting victims argued that Section 1714.4 was inapplicable because they had brought a "negligence" action against Navegar — not a "products liability action" to which Section 1714.4 refers. The California Supreme Court rejected this argument, explaining that a "products liability action" could be premised on either a negligence theory or a strict liability theory. Therefore, Section 1714.4 encompassed both negligence and strict liability theories in products liability cases.
The dissenting justice argued that the shooting victims' lawsuit fell outside Section 1714.4 because Navegar was allegedly negligent in selling the TEC-9/DC9 to the general public and failing to restrict sales of the TEC-9/DC9 to the police and military who may have lawful uses for the firearm given its rapid, lethal firepower. According to the dissent, Section 1714.4 precluded product defect claims, not a negligent marketing or distribution claim as the shooting victims had brought.
On this key point, the Court's majority disagreed, and held that Section 1714.4 barred negligent marketing and distribution claims as well. The majority reasoned that a negligent distribution claim called for Section 1714.4's forbidden risk/benefit test, because the claim involves a weighing of the risks and benefits of distributing the weapon to the public in light of the weapon's design features. Thus, according to the majority, negligent distribution claims were "essentially design defect claims in disguise." The majority further observed that the dissent's view would render Section 1714.4 useless because every shooting victim could avoid Section 1714.4 by alleging that the gun manufacturer was negligent in selling the gun to the general public.
The majority finally noted that the shooting victims had expressly disavowed a negligent advertising claim against Navegar because there was dubious proof that Mr. Ferri has seen Navegar's advertisements. Nevertheless, Section 1714.4 would have blocked a negligent distribution claim because, according to the majority, such a claim necessarily depends on a consideration of the risks and benefits of the weapon's design features.
Merrill v. Navegar is a substantial obstacle to persons and entities that have brought lawsuits against the gun industry for criminal shootings. Several California municipalities, such as Los Angeles, San Diego and San Francisco, have brought suits against gun manufacturers and distributors, seeking to enjoin gun companies' marketing and distribution practices. These municipality lawsuits may be significantly limited, or even eliminated, as a result of Merrill v. Navegar.
Merrill v. Navegar represents further judicial reluctance to open up courthouse doors to legal assaults against the gun industry and reflects a judicial preference to have state or federal legislatures resolve gun controversies. Only four months earlier, New York's highest court dismissed a negligent marketing and distribution claim brought against gun companies, and expressed its reluctance "in imposing novel theories of tort liability while the difficult problem of illegal gun sales in the United States remains the focus of a national policy debate." Hamilton v. Beretta U.S.A. Corp., 727 N.Y.S.2d 7 (N.Y. Apr. 26, 2001).
Several gun manufacturers and distributors have sought coverage from liability insurers with respect to the recent gun lawsuits. The recent decisions by the California Supreme Court and the New York Court of Appeals further reduce the viability of these coverage claims by showing that negligent marketing claims will not stand as a matter of law. Furthermore, the Merrill v. Navegar decision is in accord with court decisions in the insurance coverage context that hold that negligent marketing claims are essentially product liability claims that fall within the products hazard exclusion of liability insurance policies. E.g., Brazas Sporting Arms, Inc. v. American Empire Surplus Lines Ins. Co., 220 F.3d 1 (1st Cir. 2000).
Paul Janaskie assisted with the preparation of this Alert.

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