On November 22, Smith & Wesson and other U.S. gun manufacturers and distributors moved to dismiss the civil complaint filed against them by Mexico in the U.S. District Court of Massachusetts. The case involves a number of transnational legal issues, including extraterritoriality, Mexico’s sovereign status, and the application of Mexican law in U.S. courts. The suit also highlights the growing relevance of transnational litigation in the field of corporate accountability.

Mexico claims damages in the form of healthcare, security, and other costs, in addition to economic loss arising from the companies’ negligent failure “to exercise reasonable care” in manufacturing, marketing, and selling their guns in ways that reduce the likeliness of their being trafficked into and causing harm in Mexico. These alleged negligent practices, according to Mexico, are the “proximate cause” of the gun violence that has resulted in the loss of 68,387 lives in its territory since 2019 alone. Moreover, Mexico claims that gun manufacturers have profited from the illicit trafficking of their products, citing the substantial increase in the number of U.S. border-state stores while nationwide dealership is in decline.

Background of the Case

A lot is at stake for both Mexico and the defendants, which include six U.S.-based gun manufacturers, a U.S.-based wholesaler, and the non-U.S. parent companies of two of the manufacturers. In its complaint, Mexico claims that the respondents’ products “collectively account for nearly half of all crime guns recovered in Mexico” (47.9%) and for about 68.4% of all crime guns identified as originating in the United States. Meanwhile, although gun companies have seen record U.S. sales since the pandemic began, a flurry of tragic mass shootings and persistent gun violence have also dominated headlines. In a highly publicized piece, Mexican daily Milenio also reported a 37% fall in Smith & Wesson’s shares during the three and a half months since the government’s complaint was filed, although its overall finances remain healthy.

Mexico announced it was pursuing strategic litigation to pressure the U.S. gun industry into exercising due diligence over the production and distribution of their products. At the foreign policy level, Mexico has also raised the issue with the U.S. government bilaterally, and Foreign Minister Marcelo Ebrard recently delivered a statement at the UN Security Council framing arms trafficking as “a threat to international peace and security” while accusing U.S. gun companies of “intentional and negligent practices.”

The Companies’ Arguments for Dismissal

In their joint motion to dismiss, the defendant companies raise six defenses, including that Mexico lacks standing; that the defendants’ connection to the alleged damage is too attenuated; that the firearm industry owes no common-law duty to protect Mexico from crimes committed in that country with their products; that Mexico’s public nuisance claim does not apply to the sale and manufacture of lawful products; and that Mexico cannot invoke its own tort law in substitution of U.S. statutes to hold the companies liable.

Importantly, the defendants also claim immunity under the Protection of Lawful Commerce in Arms Act (PLCAA), adopted by Congress in 2005, which shields firearms manufacturers and dealers from any “qualified civil liability action” that seeks damages or relief “resulting from the criminal or unlawful misuse of a qualified product by the person or a third party.” The scope of this provision is likely to attract considerable scrutiny, particularly given that the Biden-Harris White House recently called on Congress to repeal PLCAA “to hold gun dealers and manufacturers accountable for their contributions to the flow of crime guns.”

PLCAA and the Issue of Extraterritoriality

The companies devote considerable attention to their defense of PLCAA immunity, which, if applicable, would bar many of Mexico’s claims. At issue is whether PLCAA offers immunity to the arms manufacturers for damage committed with their products on U.S. territory alone, or whether it applies to harm arising anywhere.

Mexico argues that PLCAA does not apply “because it bars certain claims against gun manufacturers and distributors only when the injury occurred in the U.S. and the criminal’s misuse of the gun was unlawful under U.S. domestic law.” According to Mexico, PLCAA shields gun companies from claims based only on U.S. domestic law, whereas Mexico is raising claims for breaches of Mexican law for injuries that occurred in Mexico. As argued elsewhere in Just Security, this interpretation is supported by examining PLCAA’s context, which shows that its prohibition of torts for “criminal and unlawful” conduct committed by third parties with the defendants’ products only refers to U.S. federal and state law and not to foreign law. This interpretation is further supported by Mexico’s argument citing the U.S. Supreme Court’s decision in RJR Nabisco v. European Community:

where U.S.-based corporations cause injury abroad to foreign sovereigns, the U.S. Constitution and statutes allow those sovereigns to sue for “violations of their own laws and to invoke federal diversity jurisdiction as a basis for proceeding in U.S. courts.”

To further back this assertion, Mexico relies on the U.S. Supreme Court’s choice-of-law analysis in Sosa v. Alvarez Machain, according to which “[i]n an action for a personal injury, the local law of the state where the injury occurred determines the rights and liabilities of the parties.” But Mexico omits the full quote, which continues: “unless … some other state has a more significant relationship … to the occurrence and the parties.” Following this standard, Mexico is where the harm occurred and where a court will look first, but it is possible that a court would apply the law of a U.S. jurisdiction if it found that it had a more significant relationship to the regulated conduct.

The defendants, however, argue that PLCAA also shields them from claims based on conduct committed abroad. They point to the statute’s protection of U.S. businesses “engaged in interstate and foreign commerce” and cite the avoidance of unreasonable hinderances on international trade as an underlying rationale of the statute. But, as argued here, the references to foreign commerce in PLCAA are explicitly made in connection to the “importation” of firearms to the United States, in keeping with Congress’s focus on the Second Amendment rights of U.S. citizens. Export is not mentioned.

The companies also argue that “[t]he statute says nothing to authorize suits…alleging injuries inflicted by foreign criminals.” But the statute’s text repeatedly bars “liability actions commenced or contemplated by the [U.S.] Federal Government, States, municipalities, and private interest groups and others.” The focus of this language on persons in the United States weighs heavily against the presumption that suits arising out of harm abroad are explicitly precluded by PLCAA, as do other passages which specify that PLCAA focuses on preserving U.S. constitutional rights and civil liberties, and the “principles of federalism, State sovereignty and comity between the sister States” (emphasis added).

The absence of any reference to the protection of foreign relations in PLCAA also leaves open the door for foreign actors, including sovereigns, to bring claims against gun manufacturers for criminal acts committed abroad with their products. In short, the extraterritorial elements in this case might enable causes of action that are barred when brought under U.S. law. This initially seems counterintuitive when the presumption against extraterritoriality often cuts the other way, because courts assume that Congress is “primarily concerned with domestic conditions.” But this presumption prevents U.S. courts from applying a statute extraterritorially unless the conduct that is the “focus of congressional concern” is found in the United States. Therefore, if the correct interpretation of PLCAA is that Congress intended to provide immunity from suit under U.S. law, then its “focus” on domestic legislation means that it cannot bar Mexico’s claims based on Mexican law.

A separate question is whether PLCAA bars claims arising outside the United States from the alleged negligence of the defendants themselves. PLCAA includes an exception which allows actions “brought against a seller for…negligence per se,” which Mexico invokes in count four of its complaint, alleging that the defendants failed “to monitor and discipline their distribution systems so as to prevent or reduce the trafficking of their guns into Mexico.” But the statute defines “seller” and “manufacturer” differently, and the manufacture defendants credibly argue that wholesaler Witmer qualifies as a “seller,” whereas the other named defendants are “manufacturers” to whom this exception does not apply.

Mexico’s Foreign Sovereign Status and Domestic Legislation

Mexico raises additional claims that could fit under one of PLCAA’s exceptions, such as defective design and violations of unfair business practices under Connecticut and Massachusetts state laws. However, it is unclear whether Mexico has standing to bring them as a foreign sovereign. Witmer, the wholesaler defendant, argues that Mexico cannot claim relief under the Massachusetts Consumer Protection Act because this instrument only creates a cause of action for parties engaged in “trade or commerce,” and not for sovereign nations.

It is possible, however, that Mexican laws could also be applicable, in which case the issue of its standing to invoke U.S. consumer protection and antitrust statutes might become less relevant. Mexico’s Federal Law on Firearms and Explosives prohibits gun possession and importation without a permit, and its Federal Civil Code includes liability provisions that it has raised in its public nuisance claim.

The defendants also put forward that Mexico cannot substitute U.S. law for its own domestic legislation and cite international comity principles to claim that “a foreign sovereign cannot use foreign law to regulate the operations of U.S. companies within the United States.” International comity has been used in U.S. law “to defer to foreign lawmakers, to foreign courts, and to foreign governments as litigants.” Here we are concerned with prescriptive comity, which provides for the recognition and application of foreign law which is not contrary to the public policy of the forum. To recognize Mexican laws, the Massachusetts court will need to decide whether Mexico had jurisdiction to prescribe rules for the relevant events, which does not seem problematic in the instant case. Respondents, however, also argue that the U.S. judicial practice of refraining from finding foreign companies liable under U.S. law for acts that were lawful in the country where they occurred should apply to Mexico by way of reciprocity. But there is no international legal obligation that requires this reciprocal treatment and the present case is substantially different, since Mexico is not suing in its own domestic courts.

The companies further point out that Mexico is a covered “person” barred from bringing suit under PLCAA because it falls within the category of “any governmental entity.” Congress, they argue, “could have excluded foreign sovereigns from this definition” to allow suits like this one, but did not. They conclude, therefore, that the statute “expressly contemplates that companies operating in the United States will be protected against suits alleging harms resulting from their firearms that have been distributed abroad.” But foreign sovereigns are not mentioned explicitly in PLCAA as either included or excluded, and no case to date has dealt with this question. Indeed, Mexico’s suit is unprecedented in that governmental claims seeking to overcome PLCAA have been made by U.S. cities and state governments.

The respondents have not raised forum non conveniens – which has been a standard objection to transnational litigation against corporations – as a stand-alone argument against jurisdiction. Unlike most other jurisdictional defenses, forum non conveniens may be raised after the initial responsive pleading and so could still be raised, but the defendants may have strategic reasons for declining to raise it – including that it would require them to concede to personal jurisdiction in Mexico’s courts.

Corporate Due Diligence and Transnational Litigation

Transnational litigation such as this is increasingly being used to close gaps between aspirational international legal rules and their actual enforceability under international human rights law and corporate accountability mechanisms. The substantive international human rights law relevant to Mexico’s case includes the right to life and the protection of bodily integrity as codified in the 1966 International Covenant on Civil and Political Rights (ICCPR), which has been ratified by the United States. However, the U.S. has not acceded to the First Optional Protocol, so claimants have no right to bring complaints under the ICCPR before the United Nations Human Rights Committee, nor do they have a cause of action under domestic law unless there is also a specific violation of U.S. law.

In other jurisdictions, courts have increasingly looked to corporate due diligence standards in cases involving multinational companies and the extraterritorial effects of their business activities. In a recent landmark case, Shell was ordered to reduce its CO2 emissions by The Hague District Court in the Netherlands, which found that “it is universally endorsed that companies must respect human rights.” The District Court reached this conclusion by examining the UNGP and other soft law instruments such as the OECD Guidelines for Multinational Enterprises, which provide that enterprises “should avoid infringing on the human rights of others and should address adverse human rights impacts with which they are involved.”

The United States has fully endorsed the UN Guiding Principles on Business and Human Rights, Principle 11 of which requires enterprises to “avoid infringing on human rights of others and should address adverse human rights impacts with which they are involved.” The commentary specifies that these responsibilities arise for corporations “wherever they operate” and exist independently of states’ own human rights obligations. However, like the ICCPR, the Guiding Principles do not give rise to an independent cause of action in U.S. court.

Another relevant instrument is the Third Revised Draft of the Binding Treaty on Business and Human Rights, which was adopted in August 2021, several weeks after Mexico filed its claims in Massachusetts. Draft article 8.1 enjoins states party to ensure that their domestic law provides for a comprehensive and adequate system of liability of legal and natural persons conducting business activities “within their territory, jurisdiction, or otherwise under their control, for human rights abuses that may arise from their own business activities, including those of a transnational character.” Draft article 7.3(d) requires states to remove legal obstacles “including the doctrine of forum non conveniens, to initiate proceedings in the courts of another State Party in appropriate cases of human rights abuses resulting from business activities of a transnational character.” The Trump administration openly opposed the negotiation process of this instrument, and although the U.S. has recently joined the UN intergovernmental process with a more conciliatory tone, its policy position remains largely unchanged.

Given the challenges associated with converting international law and legal principles into causes of action, Mexico’s use of private transnational litigation – while it will undoubtedly face many challenges of its own – offers one alternative model. This case will be closely watched, both for the implications for Mexico’s public policy efforts to reduce gun violence within its territory and for its place in the broader trend of seeking to hold arms corporations accountable for the transboundary effects of their products.

Image: TECATE, CALIFORNIA – JANUARY 24: A sign warns travelers from the United States about Mexican gun laws they approach the Mexican border on January 24, 2019 in Tecate, California. (Photo by Scott Olson/Getty Images)