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Thursday, April 14, 2005

National Shooting Sports Foundations

Lawrence G. Keane, senior vice president & general counsel, National Shooting Sports Foundations, Inc.

Statement of Lawrence G. Keane, Senior Vice President & General Counsel, National Shotting Sports Foundations, Inc.

Committee on House Judiciary Subcommittee on Commercial and Administrative Law

March 15, 2005

Chairman Cannon and distinguished members of the Subcommittee, my name is Lawrence G. Keane. I am the senior vice president and general counsel of the National Shooting Sports Foundation, Inc. (NSSF). 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. 800).

Formed in 1961, the National Shooting Sports Foundation, with approximately 2,500 members, is the trade association for the firearm, hunting and recreational shooting sports industry. NSSF is proud of our industry`s cooperative relationship with law enforcement, as exemplified by the NSSF - Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) partnership program called Don`t` Lie for the Other Guy that ATF Director Carl Truscott described as ``vital in educating Federal firearms licensees (FFL`s) and their employees how to recognize and deter the illegal purchase of firearms through straw purchases.`` He called the program ``an important tool for ATF as we pursue our missions of preventing terrorism, reducing violent crime, and protecting the public through Project Safe Neighborhoods and other initiatives.`` NSSF`s commitment to promoting the safe and responsible use of firearms is typified by our Project ChildSafe program. Operating under a grant from the U.S. Department of Justice, NSSF, in partnership with state and local governments throughout the United States, has distributed to the public over 25 million firearm safety kits, which includes a free firearm lock. We are very proud that Don`t Lie and Project ChildSafe are both components of the Justice Department`s Project Safe Neighborhoods program.

We strongly support the Protection of Lawful Commerce in Arms Act (H.R. 800) because it is an important common sense legal reform that will help restore integrity and fairness to our nation`s judicial system by preventing lawsuit abuse. This vital bipartisan legislation is critical to protecting America`s firearm industry from destruction and bankruptcy at the hands of opportunistic trial lawyers, seriously misguided politicians and radical antigun interest groups who seek to destroy and bankrupt our industry through massive damage awards and/or bleed us dry through ever mounting legal fees. These predatory lawsuits misuse and abuse our nation`s judicial system in an attempt to dictate to all Americans public policy choices that are rightfully the purview of Congress and elected state legislators. In dismissing one such suit, a Florida appellate judge astutely observed that [Miami-Dade County`s] request that the trial court use its injunctive powers to mandate redesign of firearms and declare that the [firearms manufacturers`] 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.

This misuse of lawsuits by interest groups to force public policy changes, so-called ``regulation through litigation,`` when under our Constitution those policy choices are for Congress and state legislatures to make, represents a direct threat to the entire business community and the nation`s economy. This is why the U.S. Chamber of Commerce, the National Association of Manufacturers, the National Association of Wholesalers, the American Tort Reform Association, and many others support H.R. 800. As National Association of Manufacturers executive vice president Michael Baroody has said, ``It is a certainty that other businesses will be the next target if these groups succeed in misusing the courts against the firearms industry.``

This legislation is supported by organized labor as well. Cecil Roberts, president of the United Mine Workers of America, which represents nearly a thousand workers at the Remington Arms Company`s plant in New York, said this bill ``will help prevent lawsuits by various parties that are intended to shut down the legitimate and legal firearms industry in the United States because of improper use of firearms by individuals.`` He cautioned, ``The United States is losing our industrial base and since January 2001 we have lost 2.5 million industrial jobs in the U.S. . .We need to take steps to protect and encourage growth of our industrial base, including our firearms manufacturers.``

Beginning in 1998, a group of approximately forty urban politicians, aligned with contingency-fee trial lawyers and anti- gun activists, have flooded our nation`s courts with lawsuits filed against law-abiding, federally licensed firearm manufacturers, wholesale distributors and retailers. These suits blame federally licensed firearm manufacturers for the actions of criminals. The plaintiffs in these cases allege that the sale of a legal product in full compliance with the vast and extensive array of federal, state and local laws and regulations somehow causes criminal violence to occur. They allege that members of the industry are subverting the law by knowingly and willingly selling guns to criminals and are funneling firearms to the so- called ``criminal market.`` These despicable allegations are both patently false and highly offensive and defamatory to the tens of thousands of men and women who work in our industry.

Despite some success in the courts, this well-funded, highly coordinated onslaught of abusive lawsuits against members of our industry continues unabated. Several cases are currently pending at the trial court level with several more cases at various stages of appeal that could be returned to trial courts for costly and time-consuming discovery and trial. A single hundred million dollar verdict will bankrupt virtually all of the defendants. In fact, the companies would almost certainly be unable to post the bond required to enable them to appeal such an award. Recently, the City of New York enacted into law the Gun Industry Responsibility Act that imposes absolute liability on law abiding, federally licensed firearm manufacturers and dealers for criminal shootings that occur in New York City. Members of our industry are being sued today right here in the District of Columbia under a similar law that imposed absolute liability upon manufacturers and dealers for criminal shootings occurring in the District because they lawfully sold a firearm that was then illegally brought into the District and used in the commission of a crime. A manufacturer is being sued in federal court in California for selling firearms to a police department in Washington State that was later used in a criminal shooting. In that same case, a distributor is being sued even though it never owned, possessed or sold the firearm in question. This case, Ileto v. Glock, is the poster child for the Protection of Lawful Commerce in Arms Act.

Winning on the merits is not necessary in order for these politicians and antigun activists to impose through litigation, or financially extorted and coerced settlements, a radical gun control agenda repeatedly rejected by Congress and state legislatures, and not supported by the American public. 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 firearm manufacturers with ``death by a thousand cuts.`` NAACP president Kweisi Mfume said its lawsuit was ``an effort to break the backs`` of industry members. These antigun plaintiffs can implement their gun control policies throughout the entire nation if the coercive effect resulting from the staggering financial cost to defend these baseless suits forces industry members into a Hobson`s choice of either capitulation or bankruptcy. Companies have gone bankrupt, and thousands of people thrown out of work, vindicating themselves against baseless lawsuits; just ask Dow Corning.

The collective, industry-wide cost to defend these ill-conceived, politically motivated, predatory lawsuits has been truly staggering. Exact figures are unavailable because the defendants are competitors, and each considers its defense costs to be confidential business information. However, based on discussions with insurance industry executives, manufacturers` corporate counsel, reading cost estimates in various publications and NSSF`s own experience as a defendant in these cases, I believe a conservative estimate for the total, industry-wide cost of defending ourselves to date now exceeds $200 million dollars. This is a huge sum of money for a small industry like ours. The firearm industry taken together would not equal a Fortune 500 company.

The cost of litigation is borne almost exclusively by the companies themselves. With few exceptions, insurance carriers have denied coverage. These antigun plaintiffs have carefully drafted their complaints to take them outside of liability insurance coverage in order to apply maximum financial pressure on the defendant manufacturers. Because of these lawsuits, firearm industry members now confront skyrocketing premium increases when renewing their insurance policies. In addition, insurance policies now universally exclude coverage for these types of suits. This has resulted in large, across-the-board price increases for consumers. In addition, in these trying economic times, taxpayers of the cities that have chosen to pursue the utterly discredited notion that manufacturers are responsible for the acts of criminals are forced to shoulder their city`s cost of pursuing such a lawsuit, money that would be better spent hiring more police officers, procuring new equipment or funding critical social services.

These lawsuits threaten the very existence of the manufacturers that produce the tools our military and law enforcement agencies use every day to protect America and our freedoms both here at home and abroad. If these companies are driven out of business, from whom will our military and law enforcement purchase firearms? Make no mistake about it; these lawsuits have national defense and homeland security implications.

The legislation you are considering today is perhaps more important for what it does not do. It does not, as antigun interest groups have falsely alleged, ``close the courthouse doors`` to those who have been injured by firearms that have been illegally sold, supplied to a person likely to use the firearm in a manner involving an unreasonable risk of injury to himself or another, or prevent a suit due to a defectively designed or manufactured product. The bill expressly provides that injured parties will be able to assert well-recognized tort law claims against the manufacturers and sellers of firearms. The Wall Street Journal clearly stated in an editorial that, ``This isn`t immunity, as some critics claim. Gun makers and distributors would still have to abide by product liability laws and still face civil suits for violating regulations on sales or distribution. But just as Sony is not responsible for someone who uses a camcorder to film child pornography, no longer could Beretta be held responsible for someone using its legally purchased product to rob a liquor store.`` (Wall Street Journal, April 17, 2003.) It is that abuse of our judicial system that this legislation is carefully drafted to stop, nothing more and nothing less.

The loudest voices arrayed in opposition to this legislation are the same antigun interest groups that are orchestrating and financing the litigation assault to regulate the firearm industry in ways Congress and state legislatures have roundly rejected and hold no support with the American public.

There are several refinements between the bill passed by the House in the 108th Congress (H.R.1036) and this legislation. One change better clarifies that suits can proceed where there is a defective product, but that when a criminal volitionally pulls the trigger causing injury, the manufacturer cannot be sued. As revised, for instance, a juvenile who while target shooting without written permission from his parents (a violation of 18 U.S.C. 922(y)) is injured by defective ammunition could still be able to bring a suit against the ammunition manufacturer. H.R. 800 defines a ``trade association`` based on Internal Revenue Code and regulations. This new definition avoids specious arguments that the former definition was intended to protect the National Rifle Association. There was never any such intention in the previous bill, and this language makes that clear. H.R. 800 provides that manufacturers or sellers can be sued if they ``knowingly`` violate laws applicable to the sale or marketing of the product, and the violation is a proximate cause of harm to the plaintiff. By comparison, H.R. 1036 said ``knowingly and willfully.`` We support these refinements because they enhance and further clarify the bill`s purpose and intent.

Over thirty states have already enacted similar laws to stop ``junk`` lawsuits designed to destroy this industry and to achieve gun control regulation through litigation. We agree with President Bush who recently said, ``Our country depends on a fair legal system that protects people who have been harmed without encouraging junk lawsuits that undermine confidence in our courts while hurting our economy, costing jobs and threatening small businesses.`` The time has come for Congress to enact a common sense legal reform to restore integrity and fairness to our judicial system, protect American jobs and industry and to prevent an unconstitutional attempt to circumvent Congress and state legislatures. We call upon Congress to prevent lawsuit abuse. The future of one of America`s oldest, most important industries and the loss of thousands of American jobs vital to the health of our economy is at stake, as is a critical component of our national security industrial base.

The shuttering of the firearm industry will hit states especially rural states especially hard. Each year hunters and shooters spend $21 billion generating 366,344 jobs that pay more than $8,896,623,900 in salaries and wages and provide $1,223,049,215 in state tax revenue.

In closing, if these lawsuits are not stopped, then it is open season on any industry. It is guns today, and we are already seeing similar legal assaults on the fast food industry cars, alcohol and distilled spirits could be next in line at the courthouse door. In some way, these lawsuits will impact job creation in your districts and states and not for the better.

The National Shootings Sports Foundation urges you to vote in favor of the Protection of Lawful Commerce in Arms Act (H.R. 800). I thank you Mr. Chairman for permitting the NSSF to address the Subcommittee and for the Subcommittee`s attention this morning.


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