UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
------X
NATIONAL ASSOCIATION FOR THE
ADVANCEMENT OF COLORED PEOPLE
(NAACP),
Plaintiff,99 Civ. 3999 (JBW)
99 Civ. 7037 (JBW)
-against-
AMERICAN ARMS, INC./ACUSPORT CORP.,
et al.,
Defendants.
------X
DEFENDANTS' PROPOSED FINDINGS
OF FACT AND CONCLUSIONS OF LAW
Dated:June 9, 2003
DLI-5767104v8
Table of Contents
(continued)
Page
FINDINGS OF FACT...... 1
I.Procedural Posture...... 1
II.The Parties...... 3
III.Related Litigation...... 4
IV.Structure of Firearms Markets...... 4
V.Regulation of the Firearms Markets...... 4
VI.Tracing...... 7
A.ATF Disclosure of Trace Data...... 8
B.Limitations of Trace Data...... 9
C.Use of Trace Data — Generally...... 11
D.Use of Trace Data — Focused Inspections...... 13
VII.Firearm Industry Cooperation with ATF...... 13
VIII.Defendants' Compliance with Laws and Regulations...... 15
IX.Criminal Acquisition of Firearms...... 16
X.Plaintiff's Alleged Injuries...... 17
XI.Declining Homicide Rates...... 20
XII.The Absence of Evidence Tying Defendants' Conduct to Plaintiff's Alleged Injuries..20
XIII.Plaintiff's Flawed Statistical Analysis of the Trace Database...... 22
A.Non-Random Sample...... 22
B.Age Bias in the Selection of Firearms to Trace...... 23
C.FTS Data Are Collected Haphazardly...... 25
D.Changing Methods and Standards of FTS Data Collection...... 25
E.Plaintiff's Expert's Misuse of the FTS Database...... 27
F.Ms. Allen's Use of Other Unreliable Data...... 28
1.Smith & Wesson Warranty Card Information...... 28
2.Plaintiff's Dealer Survey...... 29
G.Ms. Allen's Flawed Statistical Methods...... 30
1.Manufacturer Practices Regression...... 30
2.Dealer Indicators...... 32
3.Traces Related to Straw Purchases...... 33
4.Alleged Problem Dealer Groups...... 34
5.Flow of Guns...... 35
6.Percent of Guns Used in Crime...... 36
7.Homicides and Number of Dealers...... 37
XIV.Dr. Andrew's Analyses of the FTS Database...... 38
XV.Dr. Gundlach's Analysis of Defendants' Practices...... 40
CONCLUSIONS OF LAW...... 43
I.Standing — General...... 43
II.Standing — Direct...... 44
III.Standing — Representational...... 48
IV.Diversity Jurisdiction...... 50
V.Personal Jurisdiction...... 51
VI.Res Judicata...... 51
VII.Role of Advisory Jury...... 55
VIII.Public Nuisance — General...... 55
IX.Public Nuisance — Burden of Proof...... 57
X.Public Nuisance — Elements...... 57
XI.Public Nuisance — Unreasonable Interference...... 59
A.Negligence Theory...... 59
B.Intentional Conduct Theory...... 62
XII.Public Nuisance — Causation...... 64
A.Remoteness...... 65
B.Causal Connection...... 67
XIII.Public Nuisance — Special Injury...... 67
XIV.Injunctive Relief...... 68
XV.Commerce Clause...... 69
XVI.Separation of Powers...... 71
XVII.Comity...... 71
DLI-5767104v8 / -1-UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
------X
NATIONAL ASSOCIATION FOR THE
ADVANCEMENT OF COLORED PEOPLE
(NAACP),
Plaintiff,99 Civ. 3999 (JBW)
99 Civ. 7037 (JBW)
-against-
AMERICAN ARMS, INC./ACUSPORT CORP.,
et al.,
Defendants.
------X
DEFENDANTS' PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW
The manufacturer, importer and distributor defendants submit the following proposed findings of fact and conclusions of law following the trial of this matter.
Findings of Fact
I.Procedural Posture
1.Plaintiff, the National Association for the Advancement of Colored People ("NAACP"), filed Civil Action No. 99 Civ. 3999 (JBW) on or about July16, 1999, against approximately 80 manufacturers and importers of firearms. (Complaint in 99 Civ. 3999.)
2.The NAACP filed Civil Action No. 99 Civ. 7037 (JBW) on or about October28, 1999, against approximately 50 distributors of firearms. (Complaint in 99 Civ. 7037.)
3.By order of the Court on May23, 2002, the two actions were consolidated and plaintiff filed a Fifth Amended and Consolidated Complaint (cited herein as "Fifth Am. Comp.") on or about June 10, 2003. (Fifth Am. Comp.)
4.At a conference with counsel on September9, 2002, the Court indicated its intention to employ an advisory jury to try plaintiff's public nuisance claim, which was later confirmed in a written order. (See Oct.1, 2002 Order.)
5.Selection of the twelve member advisory jury commenced on March24, 2003, and opening statements were given on March 31. (Tr. at 70:23 – 221:9.)
6.Plaintiff presented its direct case from April1 (Tr. at 269:7) through April28 (Tr. at 3630:17-21); defendants presented their evidence from April28 (Tr. at 3640:9) through May5 (Tr. at 4475:18-20); and plaintiff presented a rebuttal case from May5 (Tr. at 4476:16) into May6 (Tr. at 4622:8). Following summations, the case was presented to the jury on May8. (Tr. at 5103:8.)
7.On May14, 2003, the advisory jury concluded its deliberations and, for each company listed on the verdict sheet, indicated either that the party was "liable" or "not liable" or that the jury had "no verdict" because at least ten jurors could not reach agreement. (Court Exhibit 3 of 5/14/03; Tr. at 5190:11-25.)
8.As to 45 of the defendants, the jury returned a verdict of "not liable." (Tr. at 5193:9 – 5200:23.) Those defendants were Arms Technology, Inc.; Bangers, LP; Bersa S.A.; Bill Hick's & Co.; Brazas Sporting Arms, Inc.; Braztech International L.C.; Browning Arms Co.; Camfour, Inc.; Carl Walther GmbH; Century International Arms, Inc.; Charco 2000, Inc.; Chattanooga Shooting Supplies, Inc.; Colt's Manufacturing Company, Inc.; Ceska Zbrojovka, A.S.; CZ-USA, Inc.; Davidson's, Inc.; Eagle Imports, Inc.; European American Armory Corp.; Excel Industries; Fabbrica d'Armi Pietro Beretta S.p.A.; Faber Bros., Inc.; Glock Ges.m.b.H.; Glock, Inc.; Forjas Taurus SA; Heritage Manufacturing, Inc.; Import Sports, Inc.; Israel Military Industries, Ltd.; K.B.I., Inc.; Kel-Tec CNC Industries, Inc.; Kiesler's Police Supply, Inc.; Lew Horton Distributing Company, Inc.; L.W. Seecamp Company, Inc.; Magnum Research, Inc.; North American Arms, Inc.; Para-Ordnance, Inc.; Para-Ordnance Mfg. Inc.; Riley's, Inc.; Ron Shirk's Shooters Supply; Sigarms Inc.; SIG/Sauer; SGS Importers International Inc.; Fratelli Tanfoglio S.n.c.; Walter Craig, Inc.; Williams Shooters Supply, Inc.; and Zanders Sporting Goods, Inc.
9.As to 23 of the defendants, the jury reached "no verdict." (Tr. at 5193:9 – 5200:23.) Those defendants were AcuSport, Inc.; Alamo Leather Goods, Inc.; Beemiller, Inc., d/b/a Hi-Point Firearms; B.L. Jennings, Inc.; Bryco Arms, Inc.; Dixie Shooters' Supply, Inc.; Ellett Brother, Inc.; Euclid Avenue Sales Co.; Haskell Manufacturing, Inc.; Hicks, Inc.; Interstate Arms Corp.; Lipsey's, Inc.; Lorcin Engineering Co., Inc.; MKS Supply, Inc.; Phoenix Arms; RSR Group, Inc.; Scott Wholesale, Inc.; Smith & Wesson Corp.; Sturm, Ruger & Co., Inc.; Southern Ohio Gun, Inc.; Sports South, Inc.; Taurus International Manufacturing, Inc.; and Valor Corporation.[1]
II.The Parties
10.Plaintiff, the NAACP, is a corporation organized under the laws of the State of New York with its headquarters in the State of Maryland. (Fifth Am. Comp. ¶10.)
11.The NAACP is a national membership organization with members in all 50 states. (Fifth Am. Comp. ¶10; Tr. at 271:11-13.)
12.Defendants are either manufacturers, importers or distributors of firearms and are citizens of at least 30 states or a number of foreign countries, but none of which are citizens of either the States of New York or Maryland. (Fifth Am. Comp. ¶¶18– 273.)
III.Related Litigation
13.The Court has taken judicial notice of the complaint filed in People of the State of New York v. Sturm, Ruger & Co., No. 4502586/00 (N.Y. Sup. Ct. filed June 26, 2000). (Tr. at 4639:16– 4640:4.)
14.The Court has taken judicial notice of the New York Supreme Court decision dismissing People of the State of New York v. Sturm, Ruger & Co., No. 4502586/00 (N.Y. Sup. Ct. Aug. 10, 2001), appeal pending. (Tr. at 4639:16– 4640:4.)
15.The Court deemed all defendants' answers amended to assert the affirmative defense of res judicata. (Tr. at 4658:11–18.)
IV.Structure of Firearms Markets
16.The firearms market consists of a primary and a secondary market. (Tr. at 689:19–22.)
17.The primary market consists of transactions through which new firearms move from manufacturers or importers through distributors and retailers to a first retail purchaser. (Tr. at 690:12–19; 768:14–21.)
18.The secondary market is made up of private transactions among non-federally licensed individuals. (Tr. at 689:19–23; 769:4–9; Def. Exh. 92.)
19.More firearms are sold in the secondary market than in the primary market. (Tr. at 689:19–23.)
20.No defendants in this case are part of the secondary market. (Tr. at 768:14–769:9.)
V.Regulation of the Firearms Markets
21.The firearms industry is comprised of a tiered system of regulated federal firearms licensees ("FFLs"). (Tr. at 419:10– 420:5.)
22.The Gun Control Act of 1968 charges the Bureau of Alcohol, Tobacco and Firearms ("ATF") with the responsibilities to: 1) license FFLs; 2) ensure that FFLs comply with the law; and 3) enforce the law. (Tr. at 428:14– 429:3; Def. Exh. 4.)
23.ATF is mandated by law to produce publications cataloging federal, state and local laws, ordinances and regulations relating to firearms. (Tr. at 2277:25– 2278:11.) When dealers receive their licenses, they are given complete copies of the federal firearms laws, the federal firearms regulations, a publication on state law, published ordinances and local laws pertaining to the sale and distribution of firearms. (Tr. at 3805:7–22.) These laws are a code of conduct that governs gun dealers and other industry members. (Tr. at 3845:25– 3846:7.)
24.The firearms laws and regulations, including ATF's primary function as it relates to firearms, are designed to prevent guns from falling into illegal hands, and ATF undertakes to educate FFLs through seminars, meetings, newsletters, publications and other means about such illegal activities as straw purchasing. (Tr. at 3851:11–23; 2364:19– 2367:8; Pltf. Exh. LT-3.)
25.An unlicensed purchaser of a firearm from an FFL must complete a Firearms Transaction Record Over-the-counter form 4473. (Tr. at 456:24– 457:22; Def. Exh. 19.)
26.A potential purchaser of a firearm can be prosecuted for knowingly providing false information on the 4473 form. (Tr. at 567:21– 568:16.)
27.An FFL selling a firearm at a gun show must do so in compliance with the same regulations that would apply for a sale at his business establishment. (Tr. at 1359:8–15.)
28.A seller who knowingly makes a sale to someone who is a straw purchaser conducts an illegal transaction and therefore also commits a felony. (Tr. at 827:17–25; Def. Exh. 19.)
29.The law requires FFLs, which include manufacturers and distributors, to report thefts and losses of firearms to ATF within 48 hours. (Tr. at 465:22–23.)
30.The law does not require private sellers of firearms — i.e., those who are not "engaged in the business" of selling firearms — to conduct background checks or to maintain records that an FFL is required to maintain. (Tr. at 536:15–24; 562:3–11.)
31.Sales at gun shows by non-licensed persons to private citizens are outside the normal three-tier process of the sale of a new firearm from a manufacturer through a distributor and dealer to a first retail purchaser. (Tr. at 1360:21– 1361:24.)
32.FFL applicants must follow many requirements as part of the application process, including notifying the chief law enforcement officer in their jurisdiction of their intent to procure such a license; submitting photographs and fingerprints to ATF; and providing ATF with a certification that the licensed operation complies with all state and local laws. (Tr. at 538:8–17; Def. Exh. 4.)
33.Multiple sales are reported by the retail dealer to the chief law enforcement officer in that jurisdiction and to ATF on a Form 3310 by the close of business on the day of sale. (Def. Exh. 20.)
34.ATF uses the multiple sales form as an investigative tool. (Tr. at 591:13–22; 829:7–13.)
35.ATF must gather information and conduct an investigation to determine whether a dealer is involved in a straw purchase, which is very difficult and often involves undercover work. (Tr. at 604:18– 605:5; 605:18–22.)
36.ATF is not limited to entering and inspecting the premises of an FFL once a year if ATF is investigating a suspected violation of the law. (Tr. at 674:9–12; 674:25– 675:1.)
37.The statutory authority that allows ATF to perform a trace is the same as that which allows ATF to enter onto the business premises of an FFL as many times as it wants, with or without a warrant, and with or without probable cause. (Tr. at 675:21– 676:3.)
38.If ATF believes that certain traces warrant further examination, it has the power to, among other things, conduct inspections, issue subpoenas and assign undercover agents to the case. (Tr. at 846:15–24.)
39.ATF has the authority to conduct criminal investigations as to unlicensed sellers and prohibited purchasers. (Tr. at 590:8–18.)
40.ATF identifies and investigates corrupt dealers. (Tr. at 602:5–18.)
41.ATF has substantial, unique investigative resources not available to manufacturers, importers or distributors. (Tr. at 2452:11– 2463:18; 3807:16– 3808:6; Pltf. Exh. LT-96.)
VI.Tracing
42.A trace is an attempt to identify (a) the FFL or gun store where a recovered gun was initially sold; and (b) the initial gun purchaser. (Tr. at 440:9–11; 3651:8–23.)
43."Tracing" tracks a gun only through the primary market, namely from the gun manufacturer or importer, distributor and retail dealer to the first retail purchaser. (Tr. at 2276:5–10.)
44.The law requires FFLs to keep records of all firearms which it acquires and disposes, which ATF can inspect at any time in connection with a criminal investigation. (Tr. at 463:14–18; 702:25– 703:6; 836:11–18.)
45.Through the Access 2000 program, ATF can trace firearms from manufacturers and importers 24 hours a day, 7 days a week by downloading information from a computer on the licensee's premises without ever actually contacting the licensee. (Tr. at 803:17–23.)
A.ATF Disclosure of Trace Data
46.The firearms trace database contains law enforcement sensitive information. (Tr. at 1055:4–23.)
47.Not all of the data contained in the trace database is publicly available. (Tr. at 1049:19–22.)
48.Law enforcement sensitive information includes data linking a traced gun to a specific crime location, as well as identifying data concerning the firearms distributor and dealer. (Tr. at 1060:24– 1061:5.)
49.Trace information that identifies a retailer or distributor's name or FFL number is not publicly available until the trace request is more than five years old. (Tr. at 1050:15–19; 3743:1–4; 3744:1–6.)
50.Manufacturers and distributors do not receive trace requests as to all of their products that are traced. They are not contacted if ATF is first able to obtain the disposition information from available databases, including outofbusiness records, the multiple sales database, the reported thefts database, and the demand database. (Tr. at 685:13– 686:1; 3656:8– 3664:11.)
51.Because manufacturers and distributors do not receive notification of all traces of the products they sell and do not receive the trace requests concerning the products of other manufacturers or distributors, there is no way a manufacturer or distributor would know the totality of its own traces or the totality of traces related to specific dealers. (Tr. at 686:2–6.)
52.The premature disclosure of certain trace information could reasonably be expected to interfere with pending or prospective law enforcement proceedings. (Tr. at 1060:18–23.)
53.The ATF was ordered by the court in this case to produce trace data which had "not been made publicly available" outside of the ATF. NAACP v. American Arms, Nos. 99 Civ. 3999, 99 Civ. 7037 (JBW) Order (Sept. 18, 2002) (hereinafter, the "Sept. 18, 2002 Order"), at 2.
54.Identification of retailer and distributor names and FFL numbers for traces within the prior five years is among the trace data ordered produced in this case which had "not been made publicly available." (Def. Exh. 45 at ¶20; Def. Exh. 46 at ¶1; Sept. 18, 2002 Order, Ex. A.)
B.Limitations of Trace Data
55.Comprehensive tracing is an ATF effort to have law enforcement agencies trace all the guns they recover. (Tr. at 3680:17– 3681:4.)
56.Some firearms are traced even though they were not in any way involved in a crime. (Tr. at 379:5–10; 3679:2–4; 3915:5–21; 4262:6– 4264:24.)
57.During the tracing process, manufacturers are not told the purpose of the trace, who the requesting police agency is, what the crime code was, where the gun was recovered, or who is being investigated. (Tr. at 1075:16– 1076:23; 3655:23– 3656:7; 3666:3–16; Def. Exh.45 at ¶9; NAACP v. American Arms, Nos. 99 Civ. 3999, 99 Civ. 7037 (JBW), Report of the Special Master Regarding Certain Data Maintained by the Bureau of Alcohol, Tobacco and Firearms ("BATF") (August 16, 2002), at 10.)
58.Most trace requests originate from state and local law enforcement agencies. (Tr. at 3654:8–12.) The trace request form contains no information about the reasons for the trace request or the circumstances of the recovered gun, other than an NCIC crime code if provided, and ATF does not receive underlying police reports reflecting the circumstances of a recovered firearm. (Tr. at 3655:14– 3656:4.) The National Tracing Center does not conduct any further follow-up on trace requests to learn the outcome of any investigations or the reasons underlying the trace requests. (Tr. at 3675:1–10.)
59.After a manufacturer responds to a trace request, it receives no further contact from ATF. (Tr. at 1076:21– 1077:1.)
60.A trace does not mean that the FFL retailer or the first purchaser engaged in illegal or wrongful activity. (Tr. at 842:22– 843:2; 1336:23– 1337:3; 2336:9–12; Def. Exh.29; Pltf. Exh.LT-7.)
61.The ATF never determines that an FFL has engaged in illegal or improper activity based simply on the existence of a trace request. (Tr. at 3708:10– 3709:23.)
62.A law enforcement investigation must be conducted to determine if any wrongdoing has occurred in any given circumstance. (Tr. at 3740:9–13; 3741:4–11.)
63.If the sales volume of an FFL is large, it is more likely that the FFL will also have a larger number of traces. (Tr. at 3709:15– 3710:19.)
64.Plaintiff's statistical experts, Ms. Lucy Allen and Dr. Howard Andrews, both admitted that, despite all their efforts and the availability of non-public portions of the FTS Database for use in this case, they were unable to use the FTS Database to identify dealers who had committed wrongdoing. (Tr. at 2827:2–25; 4621:11–22.)
65.Plaintiff's failure to identify dealers engaged in wrongdoing from the FTS Database was confirmed by defendants' statistical expert, Dr. William Wecker, who independently reviewed the FTS Database to see if it could be used to identify potential problem dealers and concluded that it could not be used for that purpose. (Tr. at 4349:13– 4350:13; 4399:4–24.)
C.Use of Trace Data — Generally
66.Tracing provides investigative leads to law enforcement so that if an initial purchaser of a recovered gun is identified, law enforcement can attempt to learn both the history of the gun and the circumstances surrounding how the gun reached its possessor. (Tr. at 3652:21– 3653:13.)
67.The ATF trace database is a criminal investigative tool, and ATF cannot be responsible for the validity of an analysis by anyone else who may use the database for some other purpose. (Tr. at 789:17–21; Def. Exh. Higgins 2.)
68.Only law enforcement should conduct investigations based on trace leads. (Tr. at 818:18–20; 1028:11–18; 2305:14–20.)
69.Those outside of law enforcement should not receive ATF investigatory information. (Tr. at 2291:5–8.)
70.Trace data cannot be used for any purpose other than as a law enforcement tool. (Tr. at 3741:23– 3742:16; Def. Exh.45.)
71.Disclosure of trace information could compromise ongoing or potential criminal investigations, even potentially leading to injuries to or the death of ATF agents or civilians involved in undercover investigations. (Tr. at 360:1–12; 820:15– 821:1; 1060:18– 1061:5; 2479:11–19; 3667:17– 3668:6; Def. Exh.45.)
72.A manufacturer "merely contacting" a retailer and inquiring as to specific purchases that were the subject of traces could jeopardize a law enforcement investigation. (Tr. at 360:22– 361:3; 3671:11– 3672:18.)
73.ATF prohibits some information from being released to the public because it might jeopardize an investigation or some other ongoing matter. (Tr. at 785:9–13.)
74.Manufacturers and distributors are only expected to respond to trace requests in a timely and accurate manner. ATF does not expect them to do anything more. (Tr. at 3668:13–19; 3669:2– 3670:16; 3673:1–23.)
75.ATF's stated position is that Access 2000 participants should "only [] provide the firearm dispositions to facilitate the timely completion of a firearm trace request for the National Tracing Center Division." (Tr. at 669:8–16; Def. Exh. 64.)