Opinion ID: 852959
Heading Depth: 3
Heading Rank: 2

Heading: The City's Public Nuisance Claim

Text: The City alleges that the manufacturers, distributors, and dealers knowingly participate in a distribution system that unnecessarily and sometimes even intentionally provides guns to criminals, juveniles, and others who may not lawfully purchase them. Specifically, the City asserts that [d]efendants affirmatively rely upon the reasonably foreseeable laxness of dealers, and employees, and the ingenuity of criminals to ensure that thousands of handguns find their way into their expected place in the illegal secondary market. The defendants first contend that the lawful distribution of their products cannot constitute a public nuisance. The manufacturers point out, correctly, that in every one of over 1,000 Indiana state court and 50 federal public nuisance decisions courts have recognized public nuisance claims only in two circumstances. Either a statute is violated, or the nuisance stems from use of real property. A variation on this argument is the contention advanced by one retailer that an independent tort must be pleaded to support a public nuisance claim. From this the defendants infer that it is a requirement of a public nuisance action that the claim be based on either misuse of real property or unlawful conduct in the form of either a violation of a statute or an independent tort. The use of real property is not at issue here as to the manufacturers and distributors. The only question, at least as to those defendants, is whether a statutory violation or an underlying tort is required in order to assert a public nuisance claim. The defendants contend that there is no underlying tort here, and also argue that their conduct is legislatively authorized and therefore cannot be a public nuisance. The defendants further contend that even if a public nuisance action could survive, they do not have sufficient control over the handguns at the time of the injury to be liable for harm from their misuse. Similarly, the manufacturers and distributors disclaim control over any unlawful sales and therefore deny liability for any harm generated by the sale of a weapon. [7] Courts have divided on the same or very similar issues under the laws of several other states. [8] For the reason explained below, we conclude that a public nuisance has been alleged under Indiana law and the City is a proper party to assert that claim.
We are not persuaded that a public nuisance necessarily involves either an unlawful activity or the use of land. Defendants cite no Indiana case that establishes this requirement, but point out that all Indiana cases to date have fallen into one of these two categories. We think that is due to the happenstance of how the particular public nuisance actions arose and not to any principle of law. The Court of Appeals reached a similar conclusion in rejecting the contention that a party must be the owner or controller of property to be held liable for a nuisance: [a]lthough most nuisance cases refer to the controversy as being between two landowners, it is because this is the norm, not because the law requires either party to be a landowner. Gray v. Westinghouse Elec. Corp., 624 N.E.2d 49, 53 (Ind.Ct.App.1993) (citations omitted). The court went on to point out that the nuisance statute: uses the broad term whatever to define the possible sources of a nuisance and it does not contain any reference to property ownership by the party creating the nuisance. This indicates the focus of the legislature was on protecting an individual's right to enjoy property from infringement by any source. We hold that the party which causes a nuisance can be held liable, regardless of whether the party owns or possesses the property on which the nuisance originates. Id. at 53. The same reasoning applies to the claim that use of real estate or conduct of an unlawful activity is a prerequisite of a public nuisance. The fact that public nuisance has never been applied to situations other than those involving real property or an unlawful activity does not mean it cannot arise in other contexts. The Restatement also supports the view that neither real estate nor unlawful conduct is a requirement of a public nuisance claim. It is explicit that unlike a private nuisance, a public nuisance does not necessarily involve interference with use and enjoyment of land. Restatement (Second) of Torts § 821B, cmt h (1977). The requirement that a public nuisance arise from unlawful conduct is found in subsection (b) of Restatement (Second) section 821B(2). But subsection (b) is only one of three circumstances that may give rise to a public nuisance. Restatement (Second) section 821B, reads in full: (1) A public nuisance is an unreasonable interference with a right common to the general public. (2) Circumstances that may sustain a holding that an interference with a public right is unreasonable include the following: (a) Whether the conduct involves a significant interference with the public health, the public safety, the public peace, the public comfort or the public convenience, or (b) whether the conduct is proscribed by a statute, ordinance or administrative regulation, or (c) whether the conduct is of a continuing nature or has produced a permanent or long-lasting effect, and, as the actor knows or has reason to know, has a significant effect upon the public right. Subsection (a) acknowledges that a nuisance may arise from a significant interference with public health, safety or convenience. Subsection (c) recognizes that a predictable significant effect upon the public right may constitute a nuisance. The three subsections are plainly alternative means of imposing an unreasonable interference, and the limitations of subsection (b) do not apply to either subsection (a) or (c). In sum, neither the language of the Indiana statute nor the standard case law formulation of public nuisance places those limits on the doctrine. Indeed, courts in this state and elsewhere have typically rejected any such requirement. Accordingly, we hold that there is no requirement that the activity involve an unlawful activity or use of land. If an activity meets the requirements of an unreasonable interference with a public right, it may constitute a public nuisance. Other jurisdictions have reached similar conclusions in the context of handgun cases. In City of Cincinnati, the Ohio Supreme Court noted although we have often applied public nuisance law to actions connected to real property or to statutory or regulatory violations involving public health or safety, we have never held that public nuisance law is strictly limited to these types of actions. City of Cincinnati v. Beretta U.S.A. Corp., 95 Ohio St.3d 416, 768 N.E.2d 1136, 1142 (2002) (citation omitted). The court in City of Chicago v. Beretta U.S.A. Corp ., noted common law public nuisance is not limited to those activities the legislature has declared [to be] public nuisances. 337 Ill.App.3d 1, 271 Ill.Dec. 365, 785 N.E.2d 16, 27 (2002) (brackets in original) (quoting Young v. Bryco Arms, 327 Ill.App.3d 948, 262 Ill. Dec. 175, 765 N.E.2d 1, 17 (2001)). See also City of Chicago v. Festival Theatre Corp., 91 Ill.2d 295, 63 Ill.Dec. 421, 438 N.E.2d 159, 162 (1982). But see City of Philadelphia v. Beretta U.S.A. Corp., 277 F.3d 415, 421 (3d Cir.2002). We also conclude that a public nuisance may exist without an underlying independent tort, although some elements of the two may be indistinguishable in practical terms, as the allegations of this complaint demonstrate. Here the complaint does allege negligence and resulting predicable injury. But a nuisance claim may be predicated on a lawful activity conducted in such a manner that it imposes costs on others. [9] This is the case whether the actor intends the adverse consequences or merely is charged with knowledge of the reasonably predictable harm to others. In either case, the law of public nuisance is best viewed as shifting the resulting cost from the general public to the party who creates it. If the marketplace values the product sufficiently to accept that cost, the manufacturer can price it into the product. If the manufacturers and users of the offending activity conclude that the activity is not worthwhile after absorbing these costs, that is their choice. In either case, there is no injustice in requiring the activity to tailor itself to accept the costs imposed on others or cease generating them. Finally, as City of Chicago noted [o]ne is subject to liability for a nuisance caused by an activity, not only when he carries on the activity but also when he participates to a substantial extent in carrying it on. City of Chicago, 271 Ill.Dec. 365, 785 N.E.2d at 29 (quoting City of Bloomington v. Westinghouse Elec. Corp., 891 F.2d 611, 614 n. 5 (7th Cir.1989) (applying Indiana law)).
The Court of Appeals held that legislative authorization of the defendants activities served as an affirmative defense to any public nuisance claim and insulated the defendants from liability for a harmful activity. City of Gary, 776 N.E.2d at 379, n. 4. We disagree. Presumably the legislative authorization to which the Court of Appeals referred is found either in Indiana Code sections 35-47-2.5-1 through 15, dealing with the sale of handguns, or Article I, Section 32 of the Indiana Constitution, which gives Indiana citizens the right to bear arms in defense of themselves and others. See Kellogg v. City of Gary, 562 N.E.2d 685, 694 (Ind.1990). But as established in Part A, an activity can be lawful and still be conducted in an unreasonable manner so as to constitute a nuisance. The Indiana statutes detail the procedure to be used by a dealer in every handgun transaction involving background checks and furnishing information on gun purchasers to the state police. Intentional failure to observe a statutory standard is presumptively unreasonable. [10] Indeed, the doctrine has been specifically applied to unlawful gun sales. Over a decade ago the Court of Appeals held that sales in violation of gun registration laws are negligence per se for which the seller may be civilly liable. Rubin v. Johnson, 550 N.E.2d 324, 329 (Ind.Ct.App.1990). Some of the activity alleged in the complaint presumably violates those regulatory statutes, either directly in the case of the dealers or as knowing accomplices in the case of the other defendants. More generally, gun regulatory laws leave room for the defendants to be in compliance with those regulations while still acting unreasonably and creating a public nuisance. As the court in AcuSport recently pointed out, [t]he fact that conduct is otherwise lawful is no defense where ... the actions or failures to act of multiple defendants creating in the aggregate a public nuisance can justify liability.... NAACP v. AcuSport, Inc., 271 F.Supp.2d 435, 482 (E.D.N.Y.2003). The essence of a nuisance claim is the foreseeable harm unreasonably created by the defendants' conduct. In any event, the City alleges that the defendants, though subject to regulatory schemes, either directly or as accomplices, are not in compliance with applicable laws. The City has alleged that (1) dealers engage in illegal sales, and (2) the distributors and manufacturers know of their practice and have it within their power to curtail them but do not do so for profit reasons. More specifically, the City claims that manufacturers are on notice of the concentration of illegal handgun sales in a small percentage of dealers, and the ability to control distribution through these dealers, but continue to facilitate unlawful sales by failing to curtail supply. The City also alleges substantial and ongoing human and financial harm from these unlawful sales. These allegations state a claim.
The manufacturers and distributors are all located outside the City, and indeed outside Indiana. They argue that the relief sought by the City's lawsuit would violate the Due Process Clause by imposing extraterritorial regulation and imposing sanctions on conduct outside the City and outside Indiana. It is well established that a state may assert jurisdiction over activity that is conducted outside the state, but has its effects within the jurisdiction. Int'l Shoe Co. v. Washington, 326 U.S. 310, 315, 66 S.Ct. 154, 90 L.Ed. 95 (1945). The defendant's challenge is not lack of personal jurisdiction, but rather that the form of relief the City seeks amounts to an attempt to control activity in another state through Indiana state tort law. BMW of N. Am. v. Gore, 517 U.S. 559, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996), addressed that issue. In that case an Alabama state court had awarded punitive damages based on the nationwide activities of the defendant. Id. at 565, 116 S.Ct. 1589. The Supreme Court held that due process precluded a single state from seeking to change a tortfeasor's conduct in other states. Id. at 572, 116 S.Ct. 1589. At the same time, the Supreme Court observed that [n]o one doubts that a State may protect its citizens by prohibiting deceptive trade practices.... But the States need not, and in fact do not, provide such protection in a uniform manner. Id. 568-69, 116 S.Ct. 1589. The Court went on to observe that both statutory schemes and judicially recognized tort principles are appropriate means to these ends. Id. at 569, 116 S.Ct. 1589. As the Supreme Court put the principles established in BMW in a nutshell: Alabama may insist that BMW adhere to a particular disclosure policy in that State. Alabama does not have the power, however, to punish BMW for conduct that was lawful where it occurred and that had no impact on Alabama or its residents. Nor may Alabama impose sanctions on BMW in order to deter conduct that is lawful in other jurisdictions. Id. at 572-73, 116 S.Ct. 1589. The City here seeks none of the things BMW prohibited. It alleges among other things that the manufacturers engage in deceptive advertising aimed at Gary residents. The City also claims that the defendant's conduct produces ongoing and severe impacts on Gary and its residents that take the form of injuries to its citizens and harm to the City both in terms of public safety and in financial terms. Nor does the City seek damages for effects outside the City of Gary. To the contrary, the harms it alleges are all within its boundaries. Finally, the defendants contend that the only available relief would effect changes in nationwide distribution systems and therefore the City's remedy would both regulate conduct outside the state and seek to deter activity in jurisdictions other than Indiana. The City contends that remedies are available for the harm it alleges in Gary without unduly burdening activity elsewhere. At this stage of the lawsuit this issue is easily resolved. The availability of an appropriate remedy turns on factual assertions by both sides that are resolved in favor of the plaintiff on this motion to dismiss.
The trial court concluded that granting relief to the City would violate the Commerce Clause of the federal constitution. The manufacturer-defendants assert that because the City seeks to prohibit some sales practices, for example sales at gun shows or multiple sales to the same purchaser, this lawsuit constitutes an attempt to regulate firearms through the courts. Defendants cite BMW for their contention that state tort law can be viewed as regulation of interstate commerce. BMW noted that state judicial doctrine may be viewed as regulation, but held the Alabama punitive damages award in that case to violate Fourteenth Amendment due process. We recognize that some have viewed BMW as grounded in the Commerce Clause. [11] But as explained above, the reasons given by the Supreme Court in vacating the Alabama award relate not to state interference with interstate transactions, but rather to Alabama's effort to deter or punish conduct in other states. As such we think BMW is a due process case, not a Commerce Clause case. The activities of the manufacturers that the City seeks to curtail are all directed at the effects on local activities by dealers. Accordingly, we think BMW does not support the defendants' Commerce Clause contention. Whether a particular state remedy rises to the level of a burden on interstate commerce is essentially a balancing exercise in which any inconvenience to the national economy must be justified by the state's interest in protecting its own citizens. Prohibition of sales to these purchasers is within the police power of the state. Presser v. Illinois, 116 U.S. 252, 265, 6 S.Ct. 580, 29 L.Ed. 615 (1886). Indeed, several states ban one form of firearm, the Saturday night special, apparently without significant Commerce Clause challenge. [12] See C.D.M. Prods., Inc. v. City of New York, 76 Misc.2d 369, 350 N.Y.S.2d 500, 503 (N.Y.Sup.Ct.1973). The federal government also imposes requirements on purchases. It is a violation of federal law for a dealer to sell a handgun to a variety of classes of individuals. [13] But federal legislation has expressly denied any intent to preempt state laws regulating guns. 18 U.S.C. 927 (2000). [14] State tort doctrines are equally allowed to thrive as a part of the law of a state. Defendants contend that the City's relief would require manufacturers to change their distribution methods nationwide, and therefore constitutes extraterritorial regulation which violates the Commerce Clause. It is true that the City seeks to change how handguns are distributed, but only those handguns that are sold in and around Gary. Indiana law requires that no sales be made to felons and some others deemed as significant risks. I.C. § 35-47-2-7(b). Imposing liability for negligent, reckless or intentional facilitation of violations of these regulations that cause harm within the local jurisdiction does no more than state tort law has historically done. To avoid that liability, the defendants need only comply with existing state and federal laws governing gun distribution. Defendants also cite Edgar v. MITE Corp., 457 U.S. 624, 102 S.Ct. 2629, 73 L.Ed.2d 269 (1982), for their contention that a state regulatory scheme may violate the Commerce Clause. Edgar involved a state statute that required state approval of a tender offer for a company whose shares were owned across the nation. Id. at 627, 102 S.Ct. 2629. Thus Illinois sought to prevent transactions between buyers and sellers, both of whom were outside the forum state. Here, with the possible exception of the City's effort to block internet sales (which could also be locally regulated by using the shipping address of the buyer), all of the requested relief can be accomplished at a local level. At a minimum, the distributors and manufacturers can stop doing business with those few dealers in the Gary area known to be sources of unusually high volumes of illegal sales. Other more tailored forms of relief limited to local impact are presumably also available. It is well established that a state can establish product liability standards in the absence of federal preemption of the area. Sprietsma v. Mercury Marine, 537 U.S. 51, 60, 123 S.Ct. 518, 154 L.Ed.2d 466 (2002); Geier v. Am. Honda Motor Co., 529 U.S. 861, 886, 120 S.Ct. 1913, 146 L.Ed.2d 914 (2000). The defendants raise no Second Amendment issue. For purposes of the Commerce Clause, there is no qualitative difference between recognition of the negligence and nuisance claims the City asserts as to handguns and restrictions on any other product deemed dangerous. We also see no difference between local requirements designed to make the product itself more safe and requirements that its distribution be conducted consonant with public intent. Applying these general principles, we find no Commerce Clause bar to the City's claim. The City seeks to abate the allegedly unreasonably injurious practices of the defendants in the distribution of handguns that find their way into the hands of criminals in Gary. Local safety concerns have been found to justify banning some products altogether. See, e.g. Nat'l Paint & Coatings Ass'n v. City of Chicago, 45 F.3d 1124, 1130 (7th Cir.1995) (spraypaint); Cohen v. Bredehoeft, 290 F.Supp. 1001, 1003 (S.D.Tex.1968), aff'd 402 F.2d 61 (5th Cir.1968) (fireworks). Certainly where only local retail sales are affected, even an outright ban would not discriminate either formally or in effect against interstate or out of state interests. Nat'l Paint & Coatings Ass'n, 45 F.3d at 1132. Accordingly, a rational basis grounded in public safety may justify it. Exxon Corp. v. Governor of Maryland, 437 U.S. 117, 124, 98 S.Ct. 2207, 57 L.Ed.2d 91 (1978). Even if such a ban were to be evaluated under the more stringent balancing of Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 90 S.Ct. 844, 25 L.Ed.2d 174 (1970), its survival of a commerce clause challenge would turn on factual issues resolved at this pleading stage in favor of the plaintiff. In any event, the form of relief the City seeks falls far short of banning handguns. Even under the traditional Pike test, whether there are less restrictive means and proof of the degree of harm alleviated remain issues for trial. They do not justify dismissal of the claim on Commerce Clause grounds.