The opinion of the court was delivered by: Jack B. Weinstein, Senior District Judge
Dispositive motions in this civil action alleging the creation and maintenance of a public nuisance by gun manufacturers and distributors were heard on March 11 and March 17, 2003. Defendants' global motion for summary judgment was denied in an order dated March 12, 2003. See Nat. Ass'n for the Advancement of Colored People v. A.A. Arms, ___ F.R.D. ___, 2003 WL 1089800 (E.D.N.Y. March 12, 2003). Summary decisions on the remaining pending motions — motions to dismiss and for summary judgment by individual defendants and plaintiff's motion to restore three former defendants — were issued on March 18, 2003; this memorandum and order explains the reasons.
In brief, plaintiff National Association for the Advancement of Colored People ("NAACP") claims that defendants, through their marketing practices in the manufacture, distribution, and sale of guns, have contributed to creating and maintaining a public nuisance and have thereby endangered the public health and safety. The NAACP and its New York members are allegedly disproportionately affected by the resulting widespread access to guns and gun violence. Sought is injunctive relief, including requirements that defendants supervise, regulate, and inspect entities to which they transfer or sell firearms; participate in a program of warranty revocation upon individual re-sale of handguns except where a firearm is sold through a bona fide stocking gun retailer; and contribute to funds established to create an industry-wide monitoring agency and educational programs designed to prevent inappropriate gun acquisition and gun violence.
In addition to the global motion for summary judgment already denied, fourteen manufacturer and distributor defendants (identified individually below) move to dismiss or renew their motions to dismiss for lack of personal jurisdiction on the ground that their activities are de minimis. These motions are denied.
Two entities incorporated and with a principal place of business outside of the United States, Carl Walther GmbhH ("Walther") and Fabbrica D'Armi Pietro Beretta S.p.A. ("Pietro Beretta"), move for summary judgment, arguing both that this court lacks personal jurisdiction over them and that plaintiff cannot establish by clear and convincing evidence — the burden in public nuisance cases — that their conduct as foreign corporations makes them liable. Pietro Beretta argues in the alternative that its presence destroys this court's subject matter jurisdiction. These motions are denied.
Plaintiff NAACP moves to reinstate three defendants — Heckler & Koch, Inc.; Heckler & Koch GmbH; and Henry's Tackle — on the basis of newly obtained and analyzed data. Defendants cannot be reinstated to this case less than one week before trial without severe prejudice to all parties and the court. Plaintiff's motion is denied.
The issues raised involve questions of personal jurisdiction — can and should the individual defendants concerned be required to submit to the jurisdiction of this court? Personal jurisdiction is frequently treated as a light switch that is either on or off; it is switched on only when a defendant's "presence" in the forum state reaches some arbitrary pre-determined amplitude. Such a limited conception fails to recognize the broader purpose behind the doctrine, to insure "the fair and orderly administration of [our] laws." Int'l Shoe Co. v. Washington, 326 U.S. 310, 319, 66 S.Ct. 154, 90 L.Ed. 95 (1945).
Strict "territorial jurisdiction," see Pennoyer v. Neff, 95 U.S. 714 (1877), is no longer a strong principle in a world where boundaries are increasingly fluid and borders are determined more through the conduct and agreement of individuals, organizations, and governments than by the lines that are drawn on maps. See Simon v. Phillip Morris, Inc., 86 F. Supp.2d 95, 124 ff., 131 (E.D.N.Y. 2000) (notice and fair warning rather than strict territorial nexus governs); Harold L. Korn, The Development of Judicial Jurisdiction in the United States: Part I, 65 Brook. L. Rev. 935, 937 (1999) (current "challenges . . . to . . . traditional jurisdictional . . . thinking"); Harold L. Korn, Rethinking Personal Jurisdiction and Choice of Law in Multistate Mass. Torts, 97 Colum. L. Rev. 2183, 2184 (1997) ("[T]he Supreme Court must . . . disavow the doctrine that . . . the United States Constitution requires a territorial nexus between forum and defendant . . . for the exercise of in personam jurisdiction."); Harold L. Korn, The Choice of Law Revolution: A Critique, 83 Colum. L. Rev. 772, 782 ff. (1983); Comment, Mass Tort Jurisdiction and Choice of Law in a Multinational World Communicating by Extraterrestrial Satellites, 37 Willamette L. Rev. 145 (2001) ("fair venue controls in personam jurisdiction"). State lines are not meaningless, but they are only one element to be taken into consideration when determining whether exercise of jurisdiction over a particular defendant in particular circumstances is appropriate.
Jurisdictional criteria used to measure a defendant's "presence" are, on the whole, not clear cut, and cannot be enforced in a mechanical fashion. See Int'l Shoe Co. v. Washington, 326 U.S. 310, 319, 66 S.Ct. 154, 90 L.Ed. 95 (1945) ("It is evident that the criteria by which we mark the boundary line between those activities which justify the subjection of a corporation to suit, and those which do not. cannot be simply mechanical or quantitative."). In addition to technical limitations, an exercise of jurisdiction involves discretionary determinations based on practical considerations, burdens, and tactics. The realities of economic relationships and the effect of corporate conduct across state and national lines cannot be ignored. See Bulova Watch Co. v. K. Hattori & Co., 508 F. Supp. 1322 (E.D.N.Y. 1981). This is particularly true in a large, complex, and expensive litigation like the instant one.
An inflexible application of a traditional jurisdictional analysis that fails to take account of these factors and does no more than add up the "number" of a defendant's "contacts" to see if they reach some given sum does not effectively insure the fair and orderly administration of the law. A reality-based jurisdictional analysis may result, appropriately, in the inclusion of defendants for which appearing at trial could present some burdens. As discussed in section V. below, it may be possible to reduce that burden through an agreement to be bound by any judgment.
III. Defendants' Motions to Dismiss and for Summary Judgment
Plaintiff bears the burden of establishing jurisdiction over the defendants. To defeat these jurisdictional motions it must aver credible facts that, if credited at trial, would establish jurisdiction over each moving defendant. See Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566-67 (2d Cir. 1996) ("In the instant case — where the parties have conducted extensive discovery regarding the defendant's contacts with the forum state, but no evidentiary hearing has been held — `the plaintiff's prima facie showing, necessary to defeat a jurisdiction testing motion, must include an averment of facts that, if credited by [the ultimate trier of fact], would suffice to establish jurisdiction over the defendant.'") (quoting Ball v. Metallurgie Hoboken-Overpelt, SA., 902 F.2d 194, 197 (2d Cir. 1990)).
Personal jurisdiction in diversity cases is determined in accordance with the law of the forum state, here New York, subject to federal due process constraints. See, e.g., Savin v. Ranier, 898 F.2d 304, 306 (2d Cir. 1990); Arrowsmith v. United Press Int'l, 320 F.2d 219, 223 (2d Cir. 1963); CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986).
Jurisdiction in this case is appropriately asserted under section 302 of the New York Civil Procedure Law and Rules, the New York long arm statute. Section 302(a)(3) provides:
[A] court may exercise personal jurisdiction over any
non-domiciliary . . . who in person or through an
agent . . . commits a tortious act without the state
causing injury to person or property within the state
. . . if he
(i) regularly does or solicits business, or engages
in any other persistent course of conduct, or derives
substantial revenue from goods used or consumed or
services rendered, in the state, or
(ii) expects or should reasonably expect the act to
have consequences in the state and derives substantial
revenue from interstate or international commerce.
In addition to demonstrating that all requirements for jurisdiction under this subsection are met, plaintiff must establish that an exercise of jurisdiction would comport with federal due process.
Due process requires that: (1) the defendant has sufficient "minimum contacts" with the state of New York to justify the exercise of personal jurisdiction, and (2) the assertion of jurisdiction is reasonable under the circumstances. See Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 567 (2d Cir. 1996); Int'l Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945)).
The Supreme Court has held that placing a product into the stream of commerce, without more, is insufficient to establish minimum contacts. Asahi Metal Indus. Co. v. Superior Court of California, 480 U.S. 102, 112, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980).
The instant case is not a product liability suit. Plaintiff is not alleging that it has suffered harm in New York because some defective product designed or sold by defendants made its way into New York through the purely fortuitous actions of a consumer. Sought here is injunctive relief to abate an alleged public nuisance in New York. At the heart of the claim are assertions that defendants have done far more to cause harm in New York than simply place their firearms into the stream of commerce. Cf. Asahi, 480 U.S. at 112 ("Additional conduct of the defendant may indicate an intent or purpose to serve the market in the forum State, for example, designing the product for the market in the forum State, advertising in the forum State, establishing channels for providing regular advice to customers in the forum State, or marketing the product through a distributor who has agreed to serve as the sales agent in the forum State."). Plaintiff has averred, and in order to ultimately prevail must establish, that defendants' actions or failure to act appropriately in the manufacture, marketing, and distribution of firearms have interfered with a public right and endangered the New York public's health and safety. See Copart Indus., Inc. v. Consol. Edison Co. of New York, 362 N.E.2d 968 (N.Y. 1977); see also Nat. Ass'n for the Advancement of Colored People v. A.A. Arms, ___ F.R.D. ___, 2003 WL 1089800 (E.D.N.Y. March 12, 2003) (plaintiff has presented sufficient evidence to create a genuine issue of material fact on the challenged elements of its public nuisance claim and therefore survives a motion for summary judgment).
In assessing whether an assertion of jurisdiction is reasonable, five factors must be evaluated: (1) the burden on defendant; (2) the interests of the forum state in adjudicating the case; (3) the plaintiff's interest in obtaining convenient and effective relief; (4) the interstate judicial system's interest in obtaining the most efficient resolution of the controversy; and (5) the shared interest of the states and the international community in furthering appropriate, adopted substantive social policies. See Asahi Metal Indus. Co. v. Superior Court of California, 480 U.S. 102, 113, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987). The two prongs of a due process analysis are interrelated. Assuming that a constitutional threshold of contacts has been demonstrated, fewer contacts may be necessary where the five "reasonableness" factors weigh heavily in favor of an exercise of jurisdiction. See Metro. Life Ins. Co. v. Robertson-Ceco Corp, 84 F.3d 560, 568 (2d Cir. 1996) ("Thus, in assessing whether it may exercise jurisdiction over a particular defendant, a court must weigh the relative strengths and weaknesses of each requirement — that is, depending upon the strength of the defendant's contacts with the forum state, the reasonableness component of the constitutional test may have a greater or lesser effect on the outcome of the due process inquiry.") (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985)).
Under the circumstances of this suit sounding in public nuisance, a determination of whether the requirements of section 302(a)(3) of the New York long arm statute are met with respect to individual defendants is closely tied to the federal due process analysis. Criteria to be considered have been developed, articulated, and employed throughout the history of this case to aid the parties and the court. They include:
1) crimes committed in New York with the defendant's
2) total number of handguns the defendant manufactured
or sold in the United States;
3) number of handguns sold by the defendant in New York;
4) value of gun-related products sold by the defendant
in New York;
5) number of "trace" handguns linked to criminal
investigations in New York that are attributable to
6) sales price of the defendant's handguns (e.g., very
high priced collectors' guns not designed for use);
7) type of gun and its intended use (e.g., very large
handguns used in hunting large game such as heavy
weapons requiring two hands or a stand);
8) connection with the defendant's related companies;
9) distribution methods and their possible effects on
crimes in New York; and
10) the defendant's total revenue from the United
States and New York markets.
Nat. Ass'n for the Advancement of Colored People v. Acusport Corp., 2000 WL 1789094 (E.D.N.Y. Dec. 7, 2000) (citing Simon v. Philip Morris, Inc., 86 F. Supp.2d 95 (E.D.N.Y. 2000); Hamilton v. Accu-Tek, 32 F. Supp.2d 47 (E.D.N.Y. 1998); Bulova Watch Co. v. K. Hattori & Co., 508 F. Supp. 1322 (E.D.N.Y. 1981)); see also Transcript of Hearing June 27, 2002, Nat. Assoc. for the Advancement of Colored People v. A.A. Arms 99 CV 3999 & Nat. Assoc. for the Advancement of Colored People v. Acusport Corp. 99 CV 7037.
These criteria were not designed to provide hard and fast cut-off points, but rather to serve as guideposts in analyzing the appropriateness of the exercise of jurisdiction over individual defendants. They have evolved over the history of this litigation, with certain criteria — particularly total number of handguns manufactured, sold, and "traced" by the Bureau of Alcohol, Tobacco and Firearms ("ATF") (usually at the request of local law enforcement officials) in the United States and New York and distribution practices with a possible effect on crime in New York — emerging as particularly salient. While tracings do not necessarily equate with crime, for purposes of validating jurisdiction they are a fair surrogate. Relevant also are other factors, including a defendant's relationships with other manufacturers, distributors, and dealers.
B. Application — Generally
As found in the order denying defendants' global summary judgment motion, Nat. Ass'n for the Advancement of Colored People v. A.A. Arms, ___ F.R.D. ___, 2003 WL 1089800 (E.D.N.Y. March 12, 2003), plaintiff has presented sufficient evidence to create a genuine issue of material fact on all elements of its tort claim of public nuisance. Sufficient evidence of tortious conduct outside the state and harm in New York has been presented to defeat these jurisdictional motions. Cf. Longines-Wittnauer Watch Co. v. Barnes & Reinecke Inc., 209 N.E.2d 68, 77 (N.Y. 1965) ("[I]t cannot be made too clear that we are concerned solely with the problem of the court's jurisdiction over the person of a nonresident defendant and not with the question of his ultimate liability to a particular plaintiff; that issue is to be considered only after it is decided, on the basis of section 302. that the defendant is subject to the in personam jurisdiction of our courts."); Sybron Corp. v. Wetzel, 385 N.E.2d 1055, 1058 (N.Y. 1978) ("The issue at this juncture is only whether the action should die.").
Assuming that a minimum constitutional threshold of contacts with the state of New York is established for a defendant, the five reasonableness factors must be weighed. If plaintiff proves its claim, an effective and efficient resolution of the controversy would require that the governing practices for gun manufacturers and distributors be as close to uniform as possible. An injunction limiting only defendants' methods of marketing, manufacture, and sale could competitively advantage those manufacturers and distributors outside the case and risk inadvertently distorting the firearm industry.
If a public nuisance and liability are found, the broader the application of any injunction entered the greater the potential effect of that injunction in alleviating future harm.
While there may be some burden on the smaller defendants in litigating in this forum, that burden is outweighed by the other factors. It is possible to assuage or eliminate that burden. See Part V, infra.
Several defendants have argued that nation-wide trace data is now irrelevant in a case focused on harm suffered by the plaintiff in New York. A defendant's participation in the national gun market and the number of handguns traced nationally that are attributable to it remain relevant since to a large extent the national market is closely integrated with the state market. See Simon v. Phillip Morris, Inc., 86 F. Supp.2d 95 (E.D.N.Y. 2000).
C. "Facts" for Purposes of the Motions
Where plaintiff has averred "facts" sufficient to establish personal jurisdiction if ultimately credited at trial, those facts will be accepted as true. "Facts" in the instant case include both raw information and the analyses and conclusions drawn from that information. The court's findings in this memorandum and order are for the purposes of these motions only; the liability of any individual defendant for the alleged public nuisance can and will be determined only on the basis of a full trial record. See Nat. Ass'n for the Advancement of Colored People v. A.A. Arms, ___ F.R.D. ___, 2003 WL 1089800 (E.D.N.Y. March 12, 2003).
Except where indicated, the figures used below are taken from expert reports attached as exhibits to Plaintiff's Opposition to Motions for Summary Judgment by Defendants ("Plaintiff's Opp."). Primarily relied on are: (1) Exhibits 24a (Ratio of Crime Handguns Share to Overall Market Share by Manufacturer for All Guns) and 25a (Ratio of Crime Handguns Share to Overall Market Share by Distributor for All Guns) of Lucy Allen's Expert Report, Ex. A to Plaintiff's Opp.; and (2) Tables 23A (Manufacturers of crime handguns recovered in New York State 1996-2000) and 25A (Distributors of crime handguns recovered in New York State 1996-2000) of Howard Andrews's expert report, Attachment to Ex. B to Plaintiff's Opp. The use of these figures in analyzing the present jurisdictional motions does not preclude defendants from challenging the admissibility of plaintiff's reports or contesting the accuracy or relevancy of the conclusions drawn at trial.
Some familiarity with the history of this litigation is assumed. The following concepts are particularly relevant here. "Handgun"refers to "(a) [a]ny firearm which has a short stock and is designed to be held and fired by the use of a single hand; and (b) [a]ny combination of parts from which a firearm described in paragraph (a) can be assembled." 27 C.F.R. § 478.11 (2003). A "trace" is a process of acquiring records concerning the manufacturer and distributors of a firearm through that firearm's serial number. It is initiated by a "trace request" submitted to the Bureau of Alcohol, Tobacco, and Firearms (now the Bureau of Alcohol, Tobacco, Firearms, and Explosives see 6 U.S.C. § 531 (2003)) ("ATF") by a law enforcement agency. See Report of the Special Master Regarding Certain Data Maintained by the Bureau of Alcohol, Tobacco and Firearms, App. A, Nat. Ass'n for the Advancement of Colored People v. Acusport Corp., 210 F.R.D. 268, 273 (E.D.N.Y. 2002). The figures relied upon refer to the period of time from 1996 until 2000 unless otherwise noted.
D. Application — Motions to Dismiss as De Mimmis
A series of challenges to personal jurisdiction by individual defendants have been heard and decided as additional data and analyses have become progressively available in this case. Where the evidence presented has shown that a defendant's participation in the national and New York gun markets and the impact, if any, on the alleged public nuisance are insufficient to meet the standards set by the New York long arm statute and federal due process, that defendant has been dismissed on de minimis grounds. See, e.g., Nat Ass'n for the Advancement of Colored People v. Acusport Corp., 2000 WL 1789094 (E.D.N.Y. Dec. 7, 2000); Nat. Ass'n Advancement Colored People v. Acusport Corp., 2001 WL 282923 (E.D.N.Y. Mar. 16, 2001); Transcript of Hearing on June 27, 2002. Nat. Ass'n Advancement Colored People v. A.A. Arms 99 CV 3999 & Nat. Ass'n Advancement Colored People v. Acusport Corp. 99 CV 7037.
The following fourteen defendants — Alamo Leather Goods, Inc.; Arms Technology, Inc.; Bill Hicks & Co.; Brazas Sporting Arms, Inc.; Chattanooga Shooting Supplies, Inc.; Euclid Avenue Sales Co.; Excel Industries a/k/a Accu-Tek; Faber Brothers, Inc.; Hicks, Inc.; Interstate Arms; Kiesler's Police Supply; Riley's Inc.; Valor Corporation; and Williams Shooters' Supply — argue that the newly received and analyzed 1996-2000 data from the Bureau of Alcohol, Firearms, and Tobacco ("BATF") shows that they too are de minimis. Each moves for dismissal for lack of personal jurisdiction.
It is worth noting at the outset that all but two of these defendants — Arms Technology, Inc. and Excel Industries a/k/a Accu-Tek — are classed in plaintiff's expert Lucy Allen's report as distributors. See Exhibit 25a. Ms. Allen's report focuses on thirty-one licensed gun distributors who were defendants at the time the report was completed. The majority of these defendants distribute on average less than 40,000 handguns per year. Only one sells in excess of 200,000 handguns annually. While it is estimated that these thirty-one distributors represent only a small percentage of the total number of distributors licensed in this country, over 90% percent of all traces conducted are attributed to them. See Transcript of Hearing March 11, 2003, Nat. Assoc. for the Advancement of Colored People v. A.A. Arms 99 CV 3999 & Nat. Assoc. for the Advancement of Colored People v. Acusport Corp. 99 CV 7037 (David Gross, counsel for eight of the distributor defendants now moving); Exhibit 25a. Although the total percentage market share occupied by these defendants is not known, it can be inferred for the purpose of this motion that they distributed a disproportionate number of traced guns. With the exception of five of these distributors who sell on average close to or greater than 100,000 handguns annually, the percent of total traces attributed to each distributor differs by only a few percentage points (ranging from .4 to 4.4% of total traces). Exhibit 25a.
1. Alamo Leather Goods, Inc.
Alamo Leather Goods, Inc. ("Alamo") is a distributor incorporated and with its principal place of business in Texas. It sold only two guns to New York dealers from 1996-2000, but has average yearly sales of approximately 13,000 guns, Exhibit 25a, and an average yearly revenue of almost four million dollars. It distributes on average 1,270 of the handguns traced per year nationally. Exhibit 25a. Its ratio of percent of guns traced to percent of total United States distributor sales is 2.77, the second ...