26-Year-Old Case Against Smith & Wesson et al. by Gary (Indiana) Finally Over

From Smith & Wesson Corp. v. City of Gary, decided today by Chief Judge Robert Altice, joined by Judges Rudolph Pyle and Mary DeBoer:

More than a quarter century ago [in 1999], the City of Gary (the City) sued various manufacturers, wholesalers, and retailers in the firearms industry (Defendants) for injunctive relief and money damages for the harm allegedly caused by, among other things, the unlawful marketing and distribution of handguns. After three prior appeals, the most recent in 2019, some of the City’s claims for public nuisance and negligence survived the pleading stage; other claims were found to be barred by Ind. Code § 34-12-3-3 (the Immunity Statute), which was amended in 2015 to make it retroactive to a date just before the City’s lawsuit against Defendants began. See City of Gary v. Smith & Wesson Corp. (Ind. Ct. App. 2019) (Gary 3).

While the case remained pending in the trial court on remand after Gary 3, the Indiana General Assembly passed House Enrolled Act No. 1235 (HEA 1235) and declared it an emergency, making it effective immediately upon the Governor’s signature on March 15, 2024. This new legislation is codified at I.C. § 34-12-3.5-3 (the Reservation Statute) and provides, with few exceptions not applicable here, that “only the state of Indiana may bring or maintain an action by or on behalf of a political subdivision against a firearm or ammunition manufacturer, trade association, seller, or dealer[.]“

The court concluded that the statute was unconstitutional (contrary to the view of the trial court), and ordered that the City’s lawsuit should therefore be dismissed. Some excerpts from the long opinion:

[1.] The Reservation Statute is not unconstitutional special legislation.

Article 4, Section 22 of the Indiana Constitution prohibits “local or special” legislation on various enumerated topics, none of which is applicable here; Article 4, Section 23 then adds “a residual demand for ‘general’ legislation: ‘In all the cases enumerated in the preceding section, and in all other cases where a general law can be made applicable, all laws shall be general, and of uniform operation throughout the State.’” …

We agree with Defendants and the State that the Reservation Statute is a general law. It does not single out the City (or its lawsuit) by name or by unique characteristic (such as by population parameters). It contains no classification of political subdivisions at all. Rather, the Reservation Statute bars any political subdivision anywhere in the state from independently bringing or maintaining a covered action, regardless of when the action was or is filed. A plain reading of the statute shows statewide application and the mere fact that only one political subdivision—the City—is currently maintaining such an action does not suggest otherwise….

Finally, in the special law context, we address the City’s assertion that there is nothing unique about political subdivisions that justifies prohibiting them from suing firearms dealers or manufacturers…. [But] political subdivisions are indeed unique as compared to private citizens, as it has long been understood that a city “serves but as an agency or instrumentality in the hands of the legislature to carry out its will in regard to local governmental functions and internal concerns.” …

[2.] Separation of Powers Doctrine

The Indiana Constitution commands that each branch of state government respect the constitutional boundaries of the coordinate branches. See Rokita v. Tully (Ind. Ct. App. 2024) (citing Article 3, Section 1 of the Indiana Constitution, which prohibits each branch from “exercis[ing] any of the functions of another, except as in this Constitution expressly provided”)

The City asserts: “The Legislature’s attempt here to quash the current lawsuit, after multiple [appellate decisions] rebuffing Defendants’ efforts to do so, is precisely the type of legislative appropriation of judicial power that the separation of powers doctrine proscribes.” And it asserts that the new law was “designed to undercut the trial court’s authority by rendering meaningless the court’s outstanding discovery orders.” …

As our Supreme Court recently explained:

Generally speaking, laws which establish rights and responsibilities are substantive (the legislative prerogative), and laws which merely prescribe the manner in which such rights and responsibilities may be exercised and enforced are procedural (the judicial prerogative). So under our separation of powers, if a statute is a substantive law, then it supersedes our Trial Rules, but if such statute merely establishes a rule of procedure, then our Trial Rules would supersede the statute….

The City suggests that the Reservation Statute is procedural because “its purpose is to remove a long-adjudicated case from the docket”—”a case that all three levels of Indiana courts have been actively managing for 25 years[.]“The City asserts that this amounts to “an extreme legislative intrusion” into the functioning of the judicial branch. We do not agree.

The Reservation Statute is a substantive law that falls squarely within the legislative prerogative to determine public policy. It reconsolidates in the state authority that the legislature had previously delegated to political subdivisions. We agree with the State that reallocating authority in this way “is a constitutionally permissible exercise of the State’s legislative power.”

[3.] Open Courts Clause

The Open Courts Clause of the Indiana Constitution, Article 1, Section 12, provides: “All courts shall be open; and every person, for injury done to him in his person, property, or reputation, shall have remedy by due course of law. Justice shall be administered freely, and without purchase; completely, and without denial; speedily, and without delay.” …

As a political subdivision and agent of the state, we hold that the City is not subject to the protections of the Open Courts Clause against infringement by the state. Cf. Gary 3 (recognizing that the City is “an agent subject to the control of the State” with no federal due process rights enforceable against the state); Bd. of Comm’rs of Howard Cnty. v. Kokomo City Plan Comm’n (Ind. 1975) (“We conceive [Article 1, Section 1 of the Indiana Constitution] as guaranteeing civil and political rights to all the human inhabitants of the state …. The county has no political or civil rights which this provision would protect against infringement by the state.”).

Further, we observe that the Reservation Statute does not regulate court access. The statute merely governs the relationship between a state and its political subdivisions and grants the right to bring or maintain such actions to the State.

[4.] The City does not have vested rights in the pending lawsuit that would prevent retroactive application of the Reservation Statute.

Having disposed of the constitutional arguments, we are left with determining whether the City has vested rights in the pending lawsuit. It does not. Leaving aside the City’s status as an agent of the state, discussed above, we observe that no final judgment—in fact, no judgment on the substantive merits—has been entered on the limited claims remaining after Gary 3…. As this court observed in Gary 3:

[T]here is a well-reasoned line of authority holding that “a party’s property right in any cause of action does not vest until a final unreviewable judgment is obtained.” “The reason an accrued cause of action is not a vested property interest … until it results in a ‘final unreviewable judgment,’ is that it is inchoate and does not provide a certain expectation in that property interest.” “In civil litigation, … no person has an absolute entitlement to the benefit of legal principles that prevailed at the time the case began, or even at the time of the bulk of the litigation. The legislature may change a statute of limitations at the last instant, extending or abrogating the remedy for an established wrong.” Moreover, it is well settled that “[t]he State remains free to create substantive defenses or immunities for use in adjudication—or to eliminate its statutorily created causes of action altogether[,]” and “the legislative determination provides all the process that is due.”

In other words, as Defendants put it, the City is not “entitled to have the law as it existed in 1999 (or 2001) frozen in time for the duration of the lawsuit.” …

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