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Session 2 Liability Concerns Speaker Presentations Under product liability theory, a gun manufacturer is not at legal risk simply because it produces a dangerous product, said Prod Davitl Fischer, keynote speaker at the second session. Prof. Fischer is the lames Lewis Parks Professor of Law at the University of Missouri, Columbia, and the author of Products Liability: Cases and Materials (West Group, 2002), a leading book on torts cases, as well as numerous scholarly articles on tort and product liability law. The key determinant of liability, he said, is that the gun be defective. For a manufacturer to be liable, the gun has to malfunction in some way. A product liability action must meet several conditions, Prof. Fischer explained. First, the defendant must be in the market chain of distribution (e.g., a manufacturer, wholesaler, retailer). A casual seller would not be subject to product liability. Second, the gun must be defective, and the defect must emerge while the gun is used as intended. There is no requirement that a product protect against an unforeseeable misuse. Product liability applies to physical harm to persons or property, not to pure economic loss. There are three kinds of defects: manufacturing flaws, design defects, and warning defects. MANUFACTURING DEFECTS Manufacturing defects are quality control failures. Ten thousand tires come off an assembly line; because quality control measures failed, one has 25

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26 OWNER-AUTHORIZED HANDGUNS a flaw and blows out. Because the product deviates from its intended de- sign, the manufacturer is liable for physical harm caused by the flaw. Manu- facturing defects are relatively rare, and such cases constitute a small per- centage of product liability litigation. DESIGN DEFECTS Design defects account for a much larger percentage of liability litiga- tion. These cases are based on allegations that the design makes the product excessively dangerous. If a plaintiff succeeds in persuading the court of this, it could have serious implications, because every product off the assembly line has the same defect. Product liability law is a common-law system. Each state has its own product liability law; the rules are remarkably similar, but there are some significant differences. To escape liability, however, manufacturers must live up to the standard of the most stringent state law. Moreover, to determine whether a product is defective in design, the most common risk-utility test balances (1) the risk associated with using the product against (2) the bur- den of taking steps to eliminate the risk. With firearms, the consequences of a design-related mishap can be quite serious. Not all jurisdictions require proof of a safer alternative design, although plaintiffs often come into court and present evidence of a safer design to the jury. Some jurisdictions use a consumer-expectations test. Even if there is no liability to an open and obvious danger, the product is defective if it contains an unknown, unexpected danger. In these jurisdictions, the question is whether the danger is known. Would a handgun that doesn't have owner- authorized technology be defective under this test? Probably not, because today people do not expect guns to recognize owners. But if in the future people do expect that, under this test a gun could be considered defective. Most jurisdictions, however, use the risk-utility test. The burden of protecting against risk involves many factors, such as the feasibility of imple- menting a safer alternative design. The court must decide if it is mechani- cally, physically possible to implement the safer alternative today. This means manufacturers are held to the standards of experts; they are required to keep up with the state of the art. The risk-utility test, however, also requires taking into account the cost of the safer alternative design. In this case, cost is not just the expense of the alternative design, but also the adverse consequences to the user and the usefulness of the product. For instance, it would be possible to put a governor on an auto engine that

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SESSION2: LIABILITY CONCERNS 27 would make it impossible to drive faster than 20 mph, which would dra- matically reduce the number of road accidents and injuries. But this would also interfere, to a degree unacceptable to users, with the usefulness of the product. So no one requires that. A plaintiff must persuade a jury that a manufacturer could have adopted a safer alternative design that would have eliminated the risk in question, taking into account the cost of the device and the possible impairment to the product's functioning resulting from the new design. Hammond u Colt Ind(ustries, a 1989 Delaware case, involved a replica of a nineteenth-century Colt revolver loaded in all six cylinders. A 13-year- old twirled the gun around his finger and the gun shot him in the head. An action was brought on his behalf charging that Colt should not have sold a gun with a primitive nineteenth-century safety device that did not work. Plaintiffs argued that Colt should have included a modern safety device to prevent such an accident. The modern safety would have prevented the accident, would not have interfered with the gun's use, and would have been very inexpensive. But a gun with such a device would not have been 100 percent authentic. The jury found in Colt's favor. It decided that in the nineteenth century, when the original gun was made, the primitive safety device was state of the art and that products must be judged according to the state of the art prevailing at the time of original manufacture. As a corollary to this decision, manufacturers have no duty to recall and retrofit products that were not defective at the time of manufacture. The duty to recall only applies to defective products, Prof. Fischer said. Recall is required when mandated by a government agency, though many companies recall defective products to prevent injuries even in the absence of a mandate. One of the challenges facing a manufacturer of a user-authorized hand- gun is determining the state of the art at the time of manufacture. Assume, for example, such a firearm goes on the market in 2010. By 2012, the technology will already have evolved rapidly. If in 2020 a lawsuit is brought against a manufacturer for failures in that 2010 gun, one of the things litigated would be whether the gun's makers complied with the state of the art of 2010. Could they have done better? A workshop participant posed this hypothetical situation: In the year 2010, a gun manufacturer makes 21 gun models. Twenty are conventional weapons, but the twenty-first is a "smart" gun. If that gun proves success- ful, could it be argued that the 20 other models are defective, that the manufacturer could have made them better? Prof. Fischer replied that if

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28 OWNER-AUTHORIZED HANDGUNS alternative products are offered, and neither is defective, then there is no liability. An analogy might be cars, which come with and without antilock brakes. However, if smart-gun technology becomes very good, as it might by 2020, then the legal issues could change. Someone selling a conven- tional gun after that date could be liable for selling a defective model be- cause the expectation would be that all new handguns have technology that recognizes the authorized user. In this scenario, manufacturers with smart- gun technology, or simply the patents on the technology, would have a huge competitive advantage. It is not enough for a plaintiff to come up with just any alternative design, Prof. Fischer explained. The new design has to be better overall than the design that was used. A simple example is the use of shatterproof glass in the side windows of automobiles. Putting shatterproof glass in the side windows would completely eliminate the risk of injury by flying glass in an accident. But in a different kind of accident, if the occupant is trapped inside the car, the shatterproof glass would prevent rescuers from reaching the occupant of the vehicle. So putting shatterproof glass in side windows eliminates the risk of one kind of injury but increases the risk of a different, and more catastrophic, injury. In the risk-utility model, these risks must be balanced. A manufacturer may have to make hard choices, and a plaintiff can always argue that the choices were wrong. User-authorized handgun technology can present this very problem. For example, if a manufacturer chooses to use a radio transmitter inside a ring, the gun owner might be able to fire the weapon with only one hand. What happens if that hand is injured? If the range of the sensing device is increased, then a criminal could take the gun away and shoot the owner. By solving one problem, you would create another. Fingerprint technology also has problems, as was discussed earlier. No technology is perfect, and every technology could end up being criticized under one theory or an- other. That is the dilemma gun manufacturers face. Typically, Prof. Fischer said, a product is proved defective by inspec- tion by an expert. But sometimes products are not available for inspection, if they have been destroyed or stolen, for instance. Is there any way to prove that a gun is defective if the gun is missing? Some cases suggest that, under certain circumstances, if a product fails to perform its manifestly intended function, the failure can be inferred to be the result of a defect. If, for example, the steering in a new car fails without warning, and the car hits a tree, one can probably infer that this happened because of a defect

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SESSION2: LIABILITY CONCERNS 29 and that the car was defective when it left the manufacturer. But if the car is three years old, the situation may be different. The steering failure may have resulted from a defect, but there is no reason to believe that the car was defective at the time it left the hands of the manufacturer. The defect might have been introduced at a later time. How does this apply to owner-authorized technology? Suppose a gun allows only the owner to fire it. There could be a failure (1) if it doesn't fire when the owner wants it to or (2) if it fires when an unauthorized person uses it. Is the product defective merely because it failed to work the way it was expected to work? That question can only be addressed by looking at the nature of the technology. But if it is a relatively new handgun that has not been abused or manipulated, we might infer that it was defective at the time it left the manufacturer. WARNING DEFECTS The final theory of product liability is the warning theory, which es- sentially requires reasonable care on the part of the manufacturer. A good warning has three components. First, it must adequately catch the user's attention. Second, it has to adequately apprise the user of the nature of the danger. And third, it has to adequately instruct the user in how to avoid the danger. With user-authorized handgun technology, what would be an ap- propriate warning? Should warnings be written out in a booklet or in- scribed on the gun? The problem with warnings is similar to the problem with designs. There is no perfect warning. A warning that is too detailed, for instance, could be self-defeating itself because no one would read it. Another problem manufacturers must face is that user-authorized tech- nology will probably never be completely foolproof. There are many ways the technology could fail. Because any choice the manufacturer makes might be criticized, there are also many ways a plaintiff could obtain a legal determination regarding the product's defectiveness. If the product is really good and the manufacturer has done its best to design and to warn, the manufacturer might win the case, but the costs of defending the case could be significant. A manufacturer could do several things to insulate itself from these potential problems, Prof. Fischer said. It could develop the best technology possible, give the best warnings, and buy liability insurance and then build the cost of the insurance into the price of the gun. Liability insurance

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30 OWNER-AUTHORIZED HANDGUNS might enable a manufacturer to bear some of the financial risks associated with selling user-authorized technology assuming, of course, that liability costs don't drive the price of the gun so high that it becomes unaffordable. Manufacturers could also seek protection from the government. If the government were to mandate owner-authorized safety devices, it might also implement a scheme to shield manufacturers from civil liability. Manufac- turers would favor this, but it might be hard to achieve politically. If liabil- ity risks to manufacturers must be reduced through insurance, gun users will finance the system. If government steps in, taxpayers will finance it. These are important policy options about which people disagree.

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Pane! Presentations T arry Keane, vice president and general counsel for the National | Shooting Sports Foundation, the firearms industry's major trade as- ! ~ sociation, and general counsel to the Sporting Arms and Ammuni- tion Manufacturers Institute (SAAMI), affirmed that the firearms industry is not opposed to the development of so-called smart-gun technology. Many interest groups now involved in litigation, including municipal litigation, say that the firearms industry has suppressed the development and imple- mentation of smart-gun technology, but that is not the case, Mr. Keane said. The participation of representatives of firearms manufacturers in the NAE workshop, and the descriptions of their companies' work in this area, is evidence of that. The firearms industry's primary concerns about product liability are related to proposed state laws that would mandate the implementation of smart-gun technology. It is abundantly clear from the workshop discussions, Mr. Keane said, that the technology to make user-authorized, or smart, guns is immature. Manufacturers are right to be seriously worried about product liability exposure if they are asked to market products that are not currently reliable and that pose a risk to users and to the general public. Laws that require the incorporation of unreliable technology in hand- guns, Mr. Keane said, are bad public policy because they expose manufac- turers to unjustified and unwarranted liability. Citing Dr. Fischer's discus- sion of the contentious issue of immunity from product-liability lawsuits, Mr. Keane said he is not aware of any state legislation that requires the 31

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32 r cc '' pros suction or smart OWNER-AUTHORIZED HANDGUNS guns and also provides immunity to manufacturers or anyone in the firearms distribution chain. Mr. Keane noted that there is a bill before Congress intended to prevent what he called Frivolous" law- suits brought by the Brady Center and other groups against the firearms industry for the criminal misuse of handguns.4 A number of firearms manufacturers sell products that incorporate built-in, or internal, locking devices. External locks, Mr. Keane noted, have been distributed for years for decades by some manufacturers. Although the number of firearms in the U.S. has been rising, the number of acciden- tal fatalities and criminal homicides involving firearms has been dropping, he said. Firearms accidents are at their lowest rate since record keeping began in 1903. These are indications, Mr. Keane said, that contrary to what other speakers had suggested, consumers are using external gun locks. An internal locking device, like an external one, requires that the consumer lock it and unlock it. If, for the sake of argument, one assumes that external locks are available but are not being used, then the same problem of disuse would apply with internal locking mechanisms. One important question is what constitutes a defect in smart-gun tech- nology. Regardless of the technology, there are significant reliability issues, for instance, issues related to a product's failure mode. Does the product fail so it can still be used, or does it fail so it cannot be used? If one can envision bad outcomes in either scenario, is the product defective? Consumers ought to have a choice, and manufacturers should have the opportunity to market products that consumers want, Mr. Keane said. A properly functioning firearm is not defective in and of itself; it is designed to fire a bullet when the trigger is pulled. The absence, or presence, of a C`smart" device, even if the technology were feasible, would not render the product defective, according to liability principles. The analogy to antilock brakes is a sound one. Another applicable analogy also involves cars. It is foreseeable to General Motors that people will buy cars, that they will drive the cars, that their children will ride in the cars, that accidents will occur, and that some children will be injured. No one would suggest that the absence of a built-in child car seat renders an automobile defective. But 4The House passed the bill, Protection of Lawful Commerce in Arms Act (HR 1036), on April 9, 2003. It has 52 cosponsors in the Senate. The legislation would not provide immunity from liability for harm caused by defective products.

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SESSIONS: PANEL PRESENTATIONS 33 there are car models available today with such built-in seats. The absence of a car seat does not make a car defective. Arthur Bryant, the executive director of Trial Lawyers for Public lus- tice (TLPl), a national public interest law firm, said TLPT has never been involved in gun litigation or taken a position on any gun-related issues. TLPT is neither pro-gun nor anti-gun. Mr. Bryant said the law does not require products to be smart, and it does not require smart guns. The law does require that manufacturers act like they are smart and, when a product could injure someone, act like they care. The law generally says the manufacturer has a duty to prevent foresee- able injuries. "Foreseeable" is a mushy term. When that principle is applied to guns, all of a sudden the discussion gets weird, because guns are intended to cause injuries. So with guns, said Mr. Bryant, the manufacturer has the duty to prevent foreseeable unintended injuries. Manufacturers cannot be expected to prevent all unintended injuries. For example, auto manufacturers can't prevent everyone from being injured in car crashes. Gun manufacturers, no matter what they do, can not pre- vent all unintentional injuries caused by guns. But the law says that manu- facturers have to act responsibly, not negligently; they have to act reason- ably; they have to act with the knowledge of an expert. The law says manufacturers are expected to act as if they know more than consumers, because whether they do or not, they ought to. To act responsibly when making a product, manufacturers must first warn and educate consumers about risks consumers may not fully appreci- ate. Second, companies must design their products so all reasonable steps have been taken to prevent, in this case, unintended foreseeable injuries. If a new design introduces other problems, the manufacturer should try to modify the design to bypass those problems. Third, manufacturers must do everything they reasonably can to make their products to specifications. Mr. Bryant said that most workshop participants seem to accept that gun manufacturers cannot reasonably be expected to produce a reliable smart gun at this time. But, he said, many seem to believe that manufacturers could be doing things now that are "smarter" than what they are actually doing. Some ofthe common-sense, doable things that appear to be superior to external locks are combination locks, transponder rings, and internal locks. But these devices are not being advocated very heavily in the market- place. In other words, they are not being incorporated into most guns.

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34 OWNER-AUTHORIZED HANDGUNS Mr. Bryant said there was a dramatic difference, historically, between the attitudes of firearms manufacturers and the attitudes of most other manufacturers toward the duty to prevent unintended injuries. In most industries, products are routinely designed to avoid causing unintended injuries. But the firearms industry has not consistently made design im- provements a priority. It appears that the incentives for producing a safer product are not as developed in firearms manufacturing as they should be, and this has contributed to a responsibility lag, Mr. Bryant asserted. It is only a matter of time, he said, before a manufacturer is held liable for not incorporating, for instance, internal locks or ring technology. When that happens, there will be powerful incentives for other manufacturers to start incorporating the technology. Mr. Bryant noted that in the early 1980s, the federal government was pushing car manufacturers to install air bags, although the technology was not quite ready. Meanwhile, most cars in America had no rear-seat shoulder belts. The belts cost almost nothing, and they would have prevented some injuries not a massive number, because most car injuries happen in the front seat. But the federal government waited and waited to mandate them. Around this time, a lawsuit was brought against Ford involving a child who was riding in the back seat wearing his lap belt. The car was in a frontal collision, he jackknifed over, his head hit the front seat, and he ended up with brain damage. In court, the plaintiff's lawyers showed how little it would have cost to install a rear shoulder harness. The case was helped because Ford was already selling cars with rear shoulder harnesses in Eu- rope. There was a multimillion dollar verdict, and within two months, the federal government required that car manufacturers install the harnesses. It was the litigation that drove the change. Don't be surprised, Mr. Bryant said, if litigation over existing technologies not smart guns, which may be way off in the future leads to similar quick changes in the gun industry. The threat of liability can affect innovation, Mr. Bryant said. A study (Huber and Litan, 1991) by the Brookings Institution on this topic found two countervailing forces. On the one hand, the threat of liability encour- ages innovation. Manufacturers want their products to be safer to avoid lawsuits. On the other hand, the threat of liability can deter innovation because manufacturers may not want to be the first to introduce a new design that hasn't been proven safe. In other words, the threat of litigation encourages manufacturers to introduce safety-related technologies, but it also encourages them to make sure the innovations work.

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SESSIONS: PANEL PRESENTATIONS 35 It is important to remember, he said, that the perfect can be the enemy of the reasonable, the possible, and the good. If it is reasonable and possible to make guns marginally safer now, while also pursuing the long-term goal of a smart gun, then we ought to be acting through policy, litigation, and engineering to implement the steps that could make some difference. Dennis Henigan, director of the Legal Action Project of the Brady Center to Prevent Gun Violence, said the tort liability system plays an essential role in bringing about design changes intended to prevent the misuse of guns by children and other unauthorized users. History teaches two lessons about product safety, he said. First, the safety of dangerous products is too important to be left in the hands of the manufacturers of those products. Second, making products safer is not sim- ply a matter of science and engineering. It is also a matter of will the will to make products safer. Improvements in product safety in any industry depend on how much the industry is willing to invest in research and de- velopment. That, in turn, depends on the incentives industry has to make its products safer. History also suggests that the free market often does not provide a sufficient incentive. The costs of unsafe products generally are not borne by the industries that manufacture them, Mr. Henigan said. Rather, they are borne by the victims of those unsafe products and by the public, through the cost-spreading mechanisms of private and government insur- ance. In the case of gun-related injury and death, the victims are often not the consumers of the products, nor even related to those consumers. When it comes to guns, the question is not a matter of what consumers ulti- mately want. Everyone has an interest in gun safety. The reason there has not been greater progress toward product safety in the gun industry is not because the industry lacks resources. Rather, he suggested, it is because the industry has not taken seriously its obligation to prevent misuse by un- authorized persons. Mr. Henigan asked why more progress in developing smart guns has not been made. The concept of personalization and resistance to unautho- rized use has been around for a long time. According to Mr. Henigan, the gun industry has invested in research on ways to pack more firepower into smaller, more concealable spaces. But it does not invest in research and development in product safety. Developing safer products is a process. Some early innovations may be imperfect, but they are improvements. Why has this process begun for

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36 OWNER-AUTHORIZED HANDGUNS guns only in the last few years? For most products, government safety regu- lation and the product liability tort system work in tandem to provide strong incentives to make products safer. For example, the auto industry did not introduce seat belts or air bags or make cars more crashworthy out of the goodness of its heart. It did so because of regulatory mandates and civil liability concerns. Automakers made precisely the same arguments that gun manufacturers use today when talking about making guns resistant to unauthorized use. Auto accidents, they said, are caused not by unsafe cars, but by unsafe drivers; improvements in auto safety will make cars unaffordable, will make drivers more careless, and will ultimately cost more lives than they will save. All of those arguments, Mr. Henigan asserted, were ultimately discarded, and we now expect automobiles to have these safety features. Mr. Henigan cited another example, cigarette lighters used by children to start fires that endanger not only the children themselves, but sometimes whole neighborhoods. The problem is very similar to the problem of gun owners leaving their weapons where they are accessible to kids. Courts are now beginning to hold manufacturers of cigarette lighters liable for failing to use existing chil~proofing systems. Interestingly, the manufacturers' de- fense in those lawsuits has been that the lighters are intended for use by adults, not children. The courts have rejected this defense, holding that the cigarette lighter manufacturers have a responsibility to design lighters that are resistant to use by unintended users. The courts have imposed liability even though the lighters did not malfunction in any way. In Perkins u Wilkinson Sword(, the Ohio Supreme Court ruled that a lighter manufac- turer may be liable for failing to use a feasible alternative design that would have prevented harm caused by an unintended, but reasonably foreseeable, use of its product. The Consumer Product Safety Commission (CPSC) now requires that lighters be made childproof. In contrast, guns are specifically exempt from regulation under the CPSC. This is an example of the triumph of raw political power over rationality in public policy, said Mr. Henigan. Guns are the only widely available consumer product that is designed to kill. But there is no federal agency with the authority to recall defective guns or set safety standards for guns. The gun lobby has succeeded in winning the industry that exemption. That means the only incentive to get the gun industry to take its safety responsibilities seriously is the threat of damages liability. Now the industry is trying to immunize itself from the civil liabil- ity system as well.

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SESSIONS: PANEL PRESENTATIONS 37 The firearms industry is desperate for immunity from liability when a tragedy results from an unintended use of a gun. This is because the courts are now starting to find gun manufacturers liable based on an argument similar to the one affecting manufacturers of cigarette lighters. In a case brought in New Mexico last year, Smith u Bryco Arms, the New Mexico Court of Appeals issuccl a landmark ruling holding that a gunmaker could be held liable for failing to install safety mechanisms in guns to prevent unintentional shootings by minors. The safety mechanisms at issue were a magazine-clisconnect safety and a load inclicator, not an integral locking crevice. Significantly, this ruling was handed clown in New Mexico, in gun country. The court said the manufacturer of a product intended to be lethal has a greater responsibility to make it less accessible to foreseeable but un- intenclecl users. The gun industry has great reason to be concerned about its potential liability for failing to move forward on product safety, Mr. Henigan as- sertecl. Allegations based on the inclustry's failure to make guns more resis- tant to unauthorized use are a part of most of the municipal lawsuits his group has filed against the gun inclustry, he notecl. Most of those cases have . . . . survlvec ~ motions to c dismiss. The substantial threat of liability is having a profound impact on the inclustry's behavior and on the design of guns. Prior to 1995, when the Brady Center filed Dix v. Beretta, the first lawsuit focused on a manufacturer's failure to install a gun-locking mechanism, not a single U.S. gun manufacturer had made or sold a gun with an integral locking system. Now, there are at least seven. Mr. Henigan said he doubts the change re- flects legislative manclates, because only one state, Marylancl, has passed legislation that requires new handguns to have an internal locking crevice. Mr. Henigan said that the gun inclustry's contention that gun owners are hostile to personalized technology is false. A study in the New England Journal of Medicine three years ago (Teret et al., 1998) found that 59 per- cent of gun owners favored legislation requiring all new handguns to be personalizecl. Many groups are opposed to the concept of owner-authorizecl guns, but there is simply a compelling logic to the iclea. That logic is clemon- stratecl best, he saicl, by a speaker who will appear later in the program, Paul Blackman of the National Rifle Association (NRA). Mr. Blackman's writ- ten statement says that personalized handguns "woulcl not be the first or the most commonly personalized consumer items. Among the personalized items in widespread ownership in America are houses, motor vehicles, and

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38 OWNER-AUTHORIZED HANDGUNS computers. ' The NRA concludes, Mr. Henigan went on, that this is a bad idea, because personalization cannot solve social problems. Presumably, the NRA would not object, then, to cars without door locks or without key- operated ignitions and antitheft devices. Most people come to precisely the opposite conclusion, he said. lust as we would be appalled if Ford sold cars with no locks, we ought to be equally appalled that the gun industry sells its products without locks.