Hindsight from The New Gun Week May 1, 1999
Insurance Companies: The Gun Suit Wildcard
by Joseph P. Tartaro
Executive EditorThere is an ancient torture credited to the Chinese called "the death of a thousand cuts," in which no single wound is intended to be deep enough to inflict death, only pain. While this excruciating and deadly torture is inflicted, the shallow slashes to the victim's body are administered by several people and come from many directions and angles.
The campaign launched against gunmakers and marketers by anti-gun cities is only a part of the death of a thousand cuts by which they hope to kill-off the right to keep and bear arms.
Helping to administer this torturous strategy are a battalion of city attorneys and contingency-fee lawyers, as well as attorneys for anti-gun foundations and anti-gun law professors. Lurking in the background as the wildcard in the whole enterprise are the attorneys for the companies that insure gun manufacturers and dealers. The role of this last battery of lawyers is not so much to safeguard and defend the businesses of the insured firearms business clients, but to protect the long-term value of the insurance companies' assets.
Whether or not they personally are pro- or anti-gun, or whether or not they personally believe the insured to be guilty or complicit in any loss, matters little, if at all to this batch of attorneys. Their only purpose is to safeguard assets, and to recommend courses of action that they are convinced will keep the insurance firms in business. While they always like to avoid any settlement without even a hint of admission of negligence, they will often settle cases outside of court if they believe it is the cheapest way out of a contentious issue, based on their own cost-risk analysis of a lawsuit.
What's more, the insured client in such circumstances usually doesn't really have much to say about how and when such settlements are reached.
Roadmap Example
The cases now facing the gun industry are not traditional negligence cases of the ordinary kind which usually confront manufacturers of any product, but what has happened in at least one such pure liability lawsuit involving a pocket pistol may provide an ominous roadmap for final disposition of the city suits.
About a dozen years ago, the insurance company for a small handgun manufacturer with which I had a marketing connection, settled out of court, before trial, for $6 million in a negligence suit filed in Texas against the gunmaker. The manufacturer knew about the suit and had assisted his insurance company's lawyers when asked, but didn't know of, or agreed to the settlement. This gunmaker was merely informed after the fact that the case had been settled, for how much and what the consequences would be to the pistol maker's future insurance premiums.
The case involved the accidental discharge of a pistol loaded with a round in the chamber and without the manual safety engaged, that had been dropped from an unzipped leather portfolio in which it was being carried by the owner with a variety of business papers and discharged. The shot seriously injured for life a third person who happened to be in the area. Of course, the manufacturer's instructions clearly warned that the gun should not be carried with a round in the chamber, and that the manual safety should be engaged at all times except when the user intended to fire it.
As I recall, contributory negligence was not allowed as a defense in such suits in Texas at the time. In either case, the manufacturer looked at what the higher insurance premiums would do to his guns' prices when they finally reached dealer shelves, and decided it would be better to close down the gun manufacturing part of his business.
Now, whatever happens in the lawsuits brought against gun manufacturers and their trade associations and dealers, and whatever the lawyers for the plaintiff cities or gun industry defendants have to argue, the insurance company lawyers have a different agenda, and that wildcard may determine the final outcome in the city suits.
Insurance Firms Antsy
The Wall Street Journal reported in early March that several firearms insurers have notified gun companies and industry trade associations that they won't necessarily cover damage awards in lawsuits, including suits brought by municipalities.
More recently, Gun Week has received reports of extensive, closed-door meetings involving the lawyers for some major firearms industry insurance firms-meetings at which neither the insured defendants nor the plaintiffs were present. There is not enough information to speculate on what the meetings signify, except that they clearly show that the insurance companies are worried and could be formulating a strategy to protect their own future well-being.
Given all of the forgoing, it is not so surprising to learn that a suburban Chicago dealer has reached a settlement of his own with respect to that city's $433 million suit against the gun industry.
Associated Press on April 13 first reported on the dealer's settlement, saying, "a dealer has agreed to testify in the city's $433 million lawsuit that accuses the firearms industry of flooding the streets with weapons deliberately marketed to criminals.
"Robert Taborden is the owner of Bob's Sports Headquarters in Justice, IL, and is the first of 40 gun dealers and makers named in the suit to settle. He also agreed to cooperate in an investigation of the gun industry," AP claimed.
"In return, the city and Cook County will drop all claims for monetary damages against Taborden and his business," said Jennifer Hoyle, a spokeswoman for the city's law department.
"We now have a witness who can give us an insider's account of the manner in which this industry knowingly markets illegal firearms in Chicago,'' a lawyer for the city, Brian Crowe, was quoted by AP, although how the dealer could provide more than a fishing expedition was not explained. Whether the dealer can strengthen the city's case remains to be seen, since he is unlikely to have a full picture of any distribution process except that regulated by the federal government.
Associated Press reported that Stanley Jakala, an attorney representing Taborden, said the settlement was his client's most reasonable option.
"Just look at the damage claim. He was facing a monumental damage claim," Jakala said.
Anti-Gun Allegations
The lawsuit, which Chicago officials and their allies among anti-gun organizations and foundations helping to fund the action expect to be a national test case, charges the gun industry with creating a public nuisance in Chicago by oversupplying suburban gun stores with firearms, knowing they will eventually make their way back into the city. Chicago has a virtual ban on any new firearms which were not registered before the early 1980s, but Illinois law makes no provision for banning sales to Chicago residents, who may also own property in other parts of the state, or in other states.
Similar lawsuits have been filed in New Orleans, Miami-Dade, Atlanta, Bridgeport, CT, and Cleveland, which filed suit on April 8 (see story elsewhere in this issue).
AP reported that "Taborden's shop has entered into a consent decree under which the business will either close within 90 days or comply with a set of rules designed to prevent irresponsible firearms marketing."
While the press service reported that Taborden could not be reached on April 13 and said that an employee at his suburban store refused to take a message, in all likelihood, the gun store and its owner had been advised by his own lawyers and the city's lawyers not to make statements beyond what was given to the press.
When the settlement was announced a few gunowners were quick to label Taborden as another "Benedict Arnold," for agreeing to testify as a witness for the city. Others, however, including many in the industry, felt that it was unlikely that his testimony would help prove Chicago's claim that the gun manufacturers intentionally and knowingly oversupply that or any other market.
Gun Week has learned from other sources that Taborden's gun store reportedly carried no insurance that might cover any possible damage awards resulting from the case. His store would very likely be forced out of business by the continuing cost of legal defense (part of the anti-gun "thousand cuts" strategy), let alone a big award to the city, and he, personally, would be ruined financially.
What he might say as a witness, unless coerced by the city into perjuring himself, is not very likely to help the Chicago case very much, but it might frighten those insurance company lawyers into seeking a dangerous out-of-court settlement, as happened in the tobacco lawsuits by the states.
The New Gun Week is published three times a month by the Second Amendment Foundation (SAF) on the 1st, 10th, and 20th. Hindsight is a commentary written by SAF President and Gun Week Executive Editor Joseph P. Tartaro. This commentary may be reprinted so long as credit is given to the author and the publication. For more information or to subscribe, write Gun Week, PO Box 488, Buffalo, NY 14209, or call 716-885-6408 Monday through Friday 9 a.m. to 5 p.m. EST, or inquire on Compuserve to John Krull, Production manager-JohnSAF@Compuserve.com or gunweeksaf@broadviewnet.netAlso, check out the New Gun Week at http://www.GunWeek.com