Smith & Wesson Brands, Inc. v. Estados Unidos Mexicanos

LII note: The U.S Supreme Court has now decided Smith & Wesson Brands, Inc. v. Estados Unidos Mexicanos

    Issues

    Can the Mexican government hold U.S. firearm manufacturers legally responsible for cartel violence injuries in Mexico based on claims of proximate cause and of aiding and abetting illegal trafficking?

    Oral argument:
    March 04, 2025
    Court below:
    United States Court of Appeals for the First Circuit

    This case asks the Supreme Court to determine whether the Mexican government has sufficiently justified its lawsuit against U.S. firearm manufacturers based on Mexican cartel violence. Smith & Wesson argues that proximate cause necessitates a direct cause, and that Mexico’s injuries are too attenuated to satisfy proximate cause. The Mexican government claims that Smith & Wesson can be held liable for aiding and abetting illegal firearm sales under the predicate exception to the Protection of Lawful Commerce in Arms Act. The outcome of this case has significant implications for corporate liability under tort law and the legal standard of plausibility pleading. 

    Questions as Framed for the Court by the Parties

    (1) Whether the production and sale of firearms in the United States is the proximate cause of alleged injuries to the Mexican government stemming from violence committed by drug cartels in Mexico; and (2) whether the production and sale of firearms in the United States amounts to “aiding and abetting” illegal firearms trafficking because firearms companies allegedly know that some of their products are unlawfully trafficked.

    Facts

    Despite Mexico’s strict firearm laws, Mexico has the third-most firearm-related deaths in the world. From 2003 to 2019, the number of firearm deaths increased from 2,500 to 23,000. The increase in firearm-related violence in Mexico coincided with a growth in firearm production in the United States. Firearm violence imposes an immense cost on the Mexican government, including increasing demand on medical services, increasing the cost of law enforcement, lowering property values, creating a strain on the judiciary, and lessening economic activity.

    American firearm manufacturers produce a wide variety of firearms, including assault rifles, which have high rates of fire and can use magazines containing large amounts of ammunition. Assault rifles are popular with Mexican cartels and are often used by cartel members in the commission of various crimes. Firearm advertisements have used phrases such as “battle proven” and “transforms the military platform to fit civilian precision shooters.”

    Firearms are sold through a three-tier distribution system in which (1) manufacturers sell to distributors, (2) the distributors sell to dealers, and (3) the dealers sell to customers. This system allows cartels and criminals to access firearms through several types of transactions, including sales where the customer purchasing the firearm purchases the firearm for someone who would not be allowed to purchase the firearm themselves, sales by dealers in locations where regulations can be easily avoided, and sales by non-dealers at gun shows, where background checks are not required.

    In 2021, the government of Mexico (“Mexico”) sued seven of the largest firearm manufacturers in the United States, including Smith & Wesson (collectively “Smith & Wesson”), alleging that the manufacturers have facilitated firearm trafficking into Mexico. Mexico claims that Smith & Wesson facilitate firearm trafficking by utilizing design, marketing, and distribution practices susceptible to downstream illegal sales in Mexico.

    Smith & Wesson moved to dismiss the lawsuit in the United States District Court for the District of Massachusetts; and, the district court granted the motion, holding that the Protection of Lawful Commerce in Arms Act ("PLCAA") barred Mexico from suing. The First Circuit overturned the district court’s decision, concluding that the PLCAA’s predicate exception applied.The predicate exception allows suits where a manufacturer “knowingly violated a State or Federal statute applicable to the sale or marketing of [firearms],” and where “the violation was a proximate cause of the harm for which relief is sought.” The First Circuit held that Mexico’s complaint sufficiently alleged that Smith & Wesson aided and abetted downstream firearm sales in knowing violation of several state and federal statutes, and that this violation was the proximate cause of Mexico’s injuries.

    On April 18, 2024, Smith & Wesson petitioned the Supreme Court of the United States for certiorari, challenging the First Circuit’s holding that Mexico’s complaint sufficiently alleged that Smith & Wesson knowingly violated a state or federal statute, and that the alleged violation was the proximate cause of Mexico’s injuries.On October 4, 2024, the Court granted review of both questions.

     

    Analysis

    KNOWING STATUTORY VIOLATION

    Smith & Wesson assert that Mexico has not alleged that Smith & Wesson knew about any specific violations of federal or state statutes. Smith & Wesson highlights that liability for aiding and abetting is typically limited to facilitating “specific wrongful acts.” Smith & Wesson argues that because Mexico has not alleged specific violations, Supreme Court precedent requires that Mexico show “pervasive, systemic, and culpable assistance” by Smith & Wesson “to infer a near-common enterprise with the primary criminals.”  

    Smith & Wesson asserts that Mexico fails to show “pervasive, systemic, and culpable” assistance because the three-tier distribution system used by Smith & Wesson has been used by firearm manufacturers for decades and is designed for law-abiding consumers. Smith & Wesson claims that the three categories of business practices Mexico takes issue with—design, marketing, and distribution—all fail to constitute aiding and abetting.

    First, Smith & Wesson contends that the design of their firearms, specifically the AR-15 rifle, is not evidence that Smith & Wesson aided and abetted criminal activity. Smith & Wesson highlights that the AR-15 is the most popular firearm among American consumers, that its firearm design choices comply with American firearm regulations, and dispute that its design choices are meant to appeal to illegal users.

    Second, Smith & Wesson contends that the appeal of its firearm advertisements to cartels is merely incidental, and that its advertisements are intended to appeal to legal consumers. Smith & Wesson maintains that its advertisements do not promote criminal use, but instead focus on the features of their firearms. Instead, Smith & Wesson contends thatMexico’s issue with the advertisements stems from a belief that firearms with military-like features should not be sold at all.  

    Third, Smith & Wesson claims that, at worst, its distribution practices only fail to stop downstream firearm sales, which is less than the “active participation” required for an aiding and abetting charge. Smith & Wesson argues that dealers who are prone to allowing illegal sales buy from wholesalers instead of manufacturers, and that Mexico showed no evidence that the one petitioner who does directly sell to dealers ever knowingly sold firearms to any dealer prone to allowing illegal transactions.Smith & Wesson contends that even if it knew about specific faulty dealers, it has not actively assisted faulty dealers by manufacturing and selling firearms.

    Mexico responds by reframing the argument around the two components of aiding and abetting liability, (1) providing “knowing aid” to a wrongdoer (2) “with the intent to facilitate” the wrong.Mexico argues that by allowing downstream sales to faulty dealers, Smith & Wesson is deliberately using a distribution system it knows will result in illegal transactions. Mexico contends that Smith & Wesson encourages illegal firearm sales through its inaction in order to develop and maintain a profitable market for illegal firearms in Mexico. Moreover, Mexico asserts that selling dangerous products such as firearms lowers the burden of proof for Mexico to show that Smith & Wesson knows its products were being used illegally. 

    Mexico claims that Smith & Wesson is not engaging in ordinary business simply by normalizing criminal conduct, citing Direct Sales Co. v. United States, where the Court found a mail order pharmaceutical wholesaler was liable for aiding and abetting by selling drugs undiscerningly to doctors who then illegally sold the drugs to others. Mexico argues that Smith & Wesson engages in business in a way that attracts illegal downstream sellers, like the mail-order wholesaler in Direct Sales. Mexico contends that while the firearm sales themselves may be legal, continuing to sell to customers linked to illegal firearms transactions and ignoring governmental requests to reform its distribution systems indicate that Smith & Wesson intends to facilitate illegal firearm transactions.

    Mexico contends that dealers are more involved in Smith & Wesson’s distribution chains than Smith & Wesson suggests, claiming that one petitioner directly sells firearms to dealers engaging in illegal firearm sales to cartels. Mexico argues that Smith & Wesson could disallow wholesalers from selling to dealers with a track record of illegal sales.

    PROXIMATE CAUSE

    Smith & Wesson asserts that it is not the proximate cause of Mexico’s injuries because proximate cause generally does not exist when there are multiple steps between the wrongful conduct and the stated harm, and especially not when the multiple steps involve “separate actions carried out by separate parties” or criminal actions. Smith & Wesson asserts that PLCAA’s predicate exception employs this understanding of proximate cause. 

    Smith & Wesson contends that Mexico’s causal chain connecting Smith & Wesson’s firearm sales to Mexico’s injuries contains eight steps: (1) manufacturers sell to wholesalers; (2) those wholesalers sell to dealers; (3) some of those dealers engage in unlawful transactions; (4) some of those unlawful transactions result in firearms being smuggled into Mexico; (5) the cartels obtain some of the firearms being smuggled; (6) cartel members use the obtained firearms to commit crimes; (7) some of those crimes cause injury in Mexico; and (8) Mexico spends money to alleviate these injuries. Smith & Wesson asserts that the conduct that ultimately causes Mexico’s injuries—the crimes committed by the cartels—is distinct from Smith & Wesson’s conduct. 

    Additionally, Smith & Wesson claims that other factors historically used by the Court to determine proximate cause militate in their favor. First, Smith & Wesson asserts that a casual chain usually does not support a finding of proximate cause when it would be challenging to calculate the damages and liability attributable to the defendant. Smith & Wesson argues that because a multitude of other actors contribute to Mexico’s injuries, such as the dealers conducting the illegal sales and the cartel members committing crimes, it would be impossible to calculate Smith & Wesson’s fault. Second, Smith & Wesson maintains that courts generally consider alleged injuries to be too indirect to justify a lawsuit if there are plaintiffs that suffered more direct harm. Smith & Wesson contends that a more logical suit would be victims of cartel crimes suing the cartels, an approach encouraged by U.S. courts when U.S. cities have filed similar suits against firearm manufacturers. 

    Mexico counters that Smith & Wesson overemphasizes the number of steps in the casual chain, disregards the intentionality of their actions, and ignores the foreseeability of their actions resulting in cartels acquiring firearms. Mexico argues that the term “direct” does not mean that there is only one step in the causal chain, but instead that there is no unforeseeable intervening step. 

    Further, Mexico claims that the PLCAA’s text implies that manufacturers can be liable for downstream third-party actions. Mexico asserts that the PLCAA’s text, which states that Congress intended to bar suits for harm “solely caused” by criminal misuse of firearms by third parties, indicates that the predicate exception applies where the manufacturer’s conduct foreseeably increases the risk of third-party criminal conduct. 

    Mexico maintains that the proper test for proximate cause is whether the defendant could have foreseen the victim’s harm occurring based on the wrongdoer’s actions. Relying on this definition, Mexico claims that a defendant may be liable for third-party actions if the defendant’s conduct created or increased the risk for third-party actions to occur. In those cases, Mexico argues, the third-party actions do not break the causal chain because the defendant could have foreseen the third-party actions and resulting harm. For example, Mexico asserts that a rental company which leaves a car unlocked with the key in the ignition in a high-crime area would be a proximate cause of a pedestrian’s harm if a criminal stole the car and crashed it into the pedestrian, even though the rental company did not cause or encourage the criminal to crash the car into the pedestrian, because the criminal’s theft and subsequent crash were foreseeable results of leaving the car unlocked in a high-crime area.  Mexico asserts that, likewise, Smith & Wesson increase the risk of violent crimes by intentionally running its business in ways that allow cartels to acquire their firearms. Because Smith & Wesson is aware of this risk, Mexico contends, the eventual harm caused by the cartels to Mexico is foreseeable, and Smith & Wesson can be considered a proximate cause of Mexico’s harm. 

    Discussion

    EXPANDING PROXIMATE CAUSE

    The U.S. Chamber of Commerce (“COC”) argues that following Mexico’s definition of proximate cause would drastically increase litigation against companies. COC explains that adopting Mexico’s definition would hold companies liable for the acts of third-party criminals, such as car-ride services for crimes committed by their passengers or oil companies for arson committed using their products. Atlantic Legal Foundation (“ALF”) contends this expanded view of proximate cause will invite foreign and state governments to bring claims alleging social harms against American manufacturers. Furthermore, ALF claims that manufacturers will be forced to increase prices to financially prepare for the increased likelihood of lawsuits, and potentially reduce product availability to reduce the risk of their products being used in third-party criminal actions.Firearm Policy Coalition (“FPC”) asserts increasing tort liability may bankrupt manufacturers, directly conflicting with the legislative intent behind the PLCAA. FPC points to Remington Arms Company’s two filings for bankruptcy after facing intense litigation following the Sandy Hook shooting.

    Fair and Just Prosecution (“FJP”), in support of Mexico, counters that narrowing aiding and abetting liability for routine business practices will inhibit prosecution. FJP provides the example of a pharmaceutical company supplying opioids to a drugstore network with a history of prescription fraud. FJP argues that limiting liability would shield the pharmaceutical company from aiding and abetting charges because drug distribution is a routine business practice, despite the reputation of the drugstore network for supplying fraudulent prescriptions. March for Our Lives Action Fund (“MOL”) argues that reducing liability will encourage firearm companies to “operate with impunity” by turning a blind eye to criminal operations and illegal sales. U.S. Senator Richard Blumenthal and other Members of Congress (“Members of Congress”) argue that an interpretation of proximate cause that decreases liability for firearm manufacturers would inhibit victims of firearm violence from seeking legal remedies. Members of Congress assert that legal accountability here also functions to supplement government enforcement efforts for firearm safety laws.

    FUTURE OF PLAUSIBILITY PLEADING

    In support of neither party, Attorney G. Antaeus B. Edelsohn (“Edelsohn”) argues that accepting Mexico’s claims would undermine established precedent requiring plausibility in a litigant’s complaint. Washington Legal Foundation, in support of Smith & Wesson, claims Mexico’s complaint is “riddled with imponderables.” WLF asserts that with no evidence, Mexico’s allegations do not survive under the current Twombly-Iqbal standard. ALF contends that weakening the plausibility standard would create liability for companies who could plausibly know that their products could be used illegally.

    On the other hand, in support of Mexico, FJP argues that Mexico’s claims fit squarely within the doctrine of plausibility pleading.FJP asserts that Mexico’s allegations do not challenge the plausibility pleading regime because it is plausible to believe that Smith & Wesson knew it was selling to criminal weapon dealers. Social Science, Medical, and Legal Scholars (“Social Science”) notes that Mexico’s plausibility theory fits within established interpretations of this standard. Social Science maintains that Mexico’s complaint focuses solely on Mexico’s own injuries and expenditures. By maintaining this narrow focus, Social Science contends that Mexico does not risk expanding the plausibility test to “license second-guessing of well-pleaded assertions of fact.”

     

    Conclusion

    Garrett Taylor and Alexandra Fertig

     Nicholas Sola 

    Acknowledgments

    The authors would like to thank Professor Heise for his insights into this case. 

    Additional Resources