In the gun litigation wars, who really speaks for federalism?
By Walter Olson
Reason, May 1999
The year is 2003, and you finally decide to exercise your American right to own a firearm. You check listings for a store near you ("gun shows," you vaguely recall, were suppressed back in the Clinton administration) and find a few still in business on shabby side streets. The merchandise has tripled in price, the selection is poor, and there's a four-month wait for the model you want. The worst part is that you have to enter all sorts of personal information on a long questionnaire, and the paperwork alone will take weeks to clear--leaving you to wonder who'll have access to your private data once it's in some central digitized registry of gun buyers.
How was it, you wonder, that handgun registration made it through our reputedly Republican Congress? Did some Brady Bill XVII slip by while you weren't looking? The dealer says no: Congress never voted on the new rules one way or the other. They came in as part of the big compromise deal in 2001 settling lawsuits against gun makers--settling some of the lawsuits, at least. Half the makers had already been bankrupted by the litigation, and the rest agreed "voluntarily"--ho ho ho--to what were termed marketing restrictions, aimed at keeping anyone from buying a gun in a state like yours unless they can show they're not planning to transship it to a friend in some place with a stricter gun control law.
Appalled, you complain to your legislators, who reply in chorus: Don't blame us! These suits were carried out under state law, but not our state's; in fact none of these legal actions made it past first base in this part of the country. The whole operation from start to finish has been carried out in states where you don't vote, before judges you didn't help pick, by lawyers you don't know, representing mayors of cities where you don't live. Back in the '90s, there was some talk of nationwide action to cut off excessive litigation against product manufacturers. But that idea never got anywhere because critics viewed it as insufficiently respectful of federalism--of the idea that localities should, by and large, be allowed to run their own legal affairs.
What's wrong with this picture? And which side more deserves to wrap itself in the historic mantle of federalism: the trial lawyers who've launched a coordinated nationwide assault on one industry after another, or the gun owners who'd like to preserve at least a local option of firearms freedom?
In recent years, discarding time-honored constraints on their power, state lawmakers and state courts have put forth one unprecedented assertion of authority after another. They've ditched old common law rules so as to charge deep-pocket defendants with harms that were once considered other people's fault, thus making it thinkable to mulct automakers for the costs of drunk drivers' crashes, tobacco companies for the costs of smokers' indulgence in the weed, and now gun makers for the damage caused when their wares are used in crimes. They've discarded old scruples about the unfairness of inflicting such legal changes retroactively, which leaves them willing to punish the 1974 or 1985 behavior of tobacco or gun purveyors because it transgresses legal principles that creative contingency-fee lawyers came up with 15 minutes ago. (See "Retro Style," August 1997.) And--our topic this month --they've also wriggled out of a series of old rules which used to limit the extent to which they could project their power onto the territory of other states. The doings of state courts and state lawmakers, once regarded as a bulwark of local autonomy, have now paradoxically emerged as a threat to genuine federalism.
Here's how the limits worked until not that long ago. Historic rules of jurisdiction provided that courts could hear suits only over persons and businesses that were present on their own territory, while rules governing "choice of law" or "conflict of law" provided, roughly, that they could try defendants only under the law of the place where those defendants had acted. Suppose the mayor of Newark, New Jersey, felt his city legally aggrieved by a Georgia merchant's sale in South Carolina of some items which eventually made their way north as contraband. Under the old jurisdiction rules, as they operated through approximately the 1950s, the mayor would have had to send lawyers down south to sue, rather than conscript the Georgia merchant up to face suit in New Jersey, a state in which he might never have previously set foot. Even if the merchant agreed for some reason to submit to the New Jersey court's jurisdiction, the old choice of law rules provided that his sale would have to be judged in that court under the law of South Carolina, where it had taken place, and not under that of the Garden State.
These geographic constraints on litigation were taken very seriously indeed; in fact, they were accorded constitutional status. Back in the 19th century, the U.S. Supreme Court had declared that the Due Process Clause protected defendants in lawsuits from being subjected either to the jurisdiction of an inappropriate state or to the application of an inappropriate state's law.
Principles like this worked to discourage obscure local courts from entertaining nationally ambitious litigation. Not only was it difficult to corral an entire class of national defendants into a single local court, but complainants could not routinely seek home court advantage--the sort of danger that Alexander Hamilton had in mind in Federalist 81 when he predicted that "the prevalency of a local spirit" might be found to "disqualify the local [i.e., state] tribunals for the jurisdiction of national causes."
As the century proceeded, however, the old rules increasingly came under fire from litigation-happy reformers. Weren't the constitutional protections for civil defendants mere historical impediments to the rightful emergence of the state courts and legislatures as vigorous policers of the national economy? With little real resistance, such arguments carried the day. In a series of decisions starting in 1945, the Supreme Court pulled back most of the constitutional protection it had formerly accorded defendants against being dragged to an unfamiliar state to be sued. Rules of "long-arm jurisdiction" quickly proliferated, allowing state courts to reach out and put the touch on distant businesses so long as it was deemed reasonably foreseeable that their actions might lead to their being sued in the state --a standard that is, like an underwear waistband, both elastic and circular.
Suddenly it was possible to try suing more or less anyone, more or less anywhere. Some years previously, the court had relaxed the old due process rules against the application of a distant state's law, and the 1960s saw a proliferation of strained theories allowing distant states to apply their own pro-plaintiff laws.
One result was an enormous rise in "forum shopping"--searching out that one local judge or juror pool most favorable to one's claim or hostile to one's opponent. A wide variety of lawsuits that would be of modest value or none at all in Maine, Iowa, or Oregon can now be taken to certain plaintiff-friendly counties in Alabama, Texas, or Tennessee, where they magically acquire very rich settlement value. The pioneering lawsuit seeking compensation for tobacco-related Medicaid expenses just happened to be filed in chancery court in Pascagoula, Mississippi, ensuring what the lawyer filing the case (who is now a jillionaire) called "home cooking."
Once states start perceiving liability law as a way to redistribute money from (mostly) out-of-state defendants to (mostly) in-state plaintiffs, a public-choice dynamic sets in: Why hold back on the sidelines while other states empty the piñata? Thus even reputedly conservative state attorneys general came to join the tobacco litigation, fearful perhaps of being blamed should a settlement enrich other states while they twiddled their thumbs.
The kicker is that lawyers on the attack don't have to win all, most, or even a sizable minority of the cases they file. They can in fact lose 15 in a row, and when they finally get lucky on the 16th they can demand a fortune in punitive damages based on the defendant's entire national course of conduct--never mind that the 15 earlier juries may have found that same course of conduct justifiable. In the famous McDonald's coffee burn case, a New Mexico jury awarded millions in punitive damages against the fast food chain in part to punish the company for its insensitivity in disputing numerous earlier claims of java-related injuries--though a major reason for its resistance was the prevailing sense among lawyers that juries were unlikely to assign liability for keeping takeout coffee hot.
In effect, our liability system has emerged as a kind of firing squad, in which the great majority of juries may aim their rounds harmlessly into the air, declining to view the defendants as worthy of execution, but which is fatal all the same if just one or two of the sharpshooters point as they're told. One result of firing squad liability is utterly to foil the policy of states that would have preferred to be more lenient on an issue. I'm writing these words on a frigid March day in New England, where many of us would be glad to assume the risks of hot takeout coffee, knowing how tepid it can get by the time we consume it after a drive to our destination. But that's not a matter we get to decide for ourselves any more; a New Mexico jury has decided for the whole country.
In much the same way, the gun suits invite Northeastern juries to punish gun makers for not imposing on sales in South Carolina a range of vague requirements that would be found quite unpalatable there, including an anti-smuggling equivalent of "know your customer" rules (to borrow a term from the recent banking controversy) and a completely new requirement that gun makers somehow refrain from fulfilling orders from the Palmetto State if doing so would result in "oversupplying" local buyers, the alternative presumably being to put dealers on allocation even if it leaves their shelves bare by July.
Thus can a few local legal cultures run roughshod over the rest of the country's right to local autonomy. In a rational world, attempts to invoke State A's law to ban gun sales in State B would be greeted by the same astonishment as an attempt by Mississippi legislators to regulate the closing hours of Louisiana saloons, or a resolution by the legislature of Uruguay decreeing the abolition of the British monarchy. Gun control advocates would be forced to get in line with the rest of us who have to actually petition the U.S. Congress when we want a new law passed controlling what people do in other states.
What can be done at this late stage? Presumably the Supreme Court could awaken from its slumber and begin reasserting defendants' old due process rights, but no one expects that any time soon. Some libertarians talk as if the U.S. Congress lacks much rightful authority to regulate the doings of state courts. Yet Article IV, Section 1 of the U.S. Consti-tution grants exactly such a broad-ranging power: "Full faith and credit shall be given in each state to the public acts, records, and judicial proceedings of every other state. And the Congress may by general laws prescribe the manner in which such acts, records and proceedings shall be proved, and the effect thereof." (Emphasis added.) In other words, the Framers gave Congress explicit authority to stipulate the manner in which states must accord due effect to other states' legislation, including in this case the legislative policy of states which choose to provide relatively liberal access to the means of self-defense.
So before the next Brooklyn jury punishes the next gun maker for its sales in some Southern state, it would seem completely in accord with the Framers' intent for Congress to lay down a few ground rules aimed at ensuring that some jurisdictions' laws do not slight the legitimate operation of others'. One promising idea was sketched a decade ago by law professor Michael McConnell, now at the University of Utah: a federal statute generally requiring state courts, when they rule on lawsuits arising from product sales elsewhere, to apply the law of the state where the sale took place. (The essay appears in a 1988 book I edited, New Directions in Liability Law, published by the Academy of Political Science.)
In the meantime, the spokesmen for the litigation lobby will be doing their best to keep up their absurd pose as guardians of federalism. There's no reason for us to let them.
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