A federal appeals court is weighing whether American gunmakers can be held liable for violence perpetrated south of the U.S. border, presenting a new threat to the domestic gun industry and raising questions over whether a law protecting manufacturers applies to complaints from foreign countries.

Mexico is suing several gunmakers, including Smith & Wesson, claiming that the companies designed weapons they knew could be easily modified by cartels to use for gun violence. Defendants say they have immunity, according to a federal law that protects manufacturers from legal responsibility for gun violence. Federal law and legal precedent limiting foreign lawsuits against American firms also pose a hurdle for Mexico’s case.

The $10 billion suit from Mexico, Estados Unidos Mexicanos v. Smith and Wesson, says the “flood” of guns is “not a natural phenomenon or an inevitable consequence of the gun business,” noting that 70 percent to 90 percent of guns at Mexican crime scenes were trafficked from the United States and that the gun violence from these manufacturers is a “foreseeable result of the defendants’ deliberate actions and business practices.” 

A federal district court dismissed the suit in September, but Mexico’s appeal to the riders of the First Circuit of the United States Court of Appeals has garnered support from 16 different states, nearly all of them predominantly Democratic, and the District of Columbia, that characterized the district court’s ruling as a “misreading” of the laws. 

The Democratic states argue that the legislation protecting gunmakers does not provide “broad immunity” but instead retains “certain common law and statutory remedies for harms brought about by gun industry members’ own misconduct.”

The gunmakers argue that they are protected by the Protection of Lawful Commerce in Arms Act, passed in 2005, which shields manufacturers from legal liability for violence perpetrated using their guns, with few exceptions. The district judge who dismissed the case said the Mexican government lacked standing to sue since the “causal link” between the gun makers and the violence there “is ‘too remote.’” 

In the First Circuit hearing on July 24, one of the judges, Gustavo Gelpi, asked Mexico’s attorney, Steve Shadowen, why it should be that “Mexico would have greater rights in a U.S. court than U.S. citizens who can’t think of any remedy.” Mr. Shadowen replied that, based on precedent, such a situation is “not at all unusual.”

Mr. Shadowen also argued that the law protecting gunmakers only applies to crimes perpetrated on American soil and “does not apply extraterritorially,” meaning the case should be tried on its own terms.

The federal immunity law would appear to shield gunmakers and sellers from most litigation over the sale of their products. However, the law does contain exceptions for negligence and for violations of state law. The state law provision was the basis for a lawsuit by parents of the children killed in the Sandy Hook, Connecticut school shooting in 2012.

The parents prevailed in lower federal courts in their argument that the gunmaker, Remington, violated state law by recklessly encouraging violence in the way it marketed some of its guns. The Supreme Court declined in 2019 to hear Remington’s appeal, and the company ended up filing for bankruptcy after agreeing to a $73 million settlement. Yet, with Sandy Hook, parents sued for a crime that occurred domestically, not internationally.

Mexico’s suit is not the first to be filed by a foreign government against a domestic firm in an American court. RJR Nabisco, Inc. v. The European Community, in which the Supreme Court decided that an anti-organized crime law could be applied abroad if it affects American commerce in some way, offers one parallel, though the gun industry is not accused of organized crime. 

Mexico’s appeal also references Kiobel v. Royal Dutch Petroleum Co., a ruling that suggests defendants can be held liable for crimes committed abroad if, as the appeal notes, the case presents “foreign policy consequences not clearly intended by the political branches.” 

The gunmakers, however, say Kiobel does not allow for domestic application of the Alien Tort Statute, which allows federal courts to hear some cases where there is a violation of the “law of nations” or a treaty, even if the alleged injury did not occur domestically.

Responding to the appeal from Mexico, 20 Republican state attorneys general, led by Montana’s, filed another brief in May asking the First Circuit to affirm the lower court’s judgment and protect the firearms industry. 

The attorneys general attribute the violence to “policy choices by the Mexican government, policy failures in the United States, and independent criminal actions by third parties.” 39 Republican legislators in the House and Senate also submitted a brief in defense of the gun manufacturers. 

Analysts say the recent hearing at the First Circuit, and support for Mexico’s case among blue states, appears to be in line with a concerted effort from gun control backers to penalize gunmakers by using exemptions in the federal gun industry immunity law.

A professor at Georgia State Law School, Timothy Lytton, tells the Sun that he does not believe the case will have implications for domestic regulation of the gun industry, which will still be legally protected. 

Mr. Lytton, though, acknowledges that “if Mexico prevails in this lawsuit, it will greatly expand the industry’s liability exposure for any kind of criminal misuse of its weapons outside the United States that is in any way facilitated by their design or marketing or sales practices.”

Mr. Lytton says he is skeptical of Mexico’s claims, having written in a paper with a co-author, Hillel Levin, that exceptions to immunity merely “provide narrow carve-outs for manufacturers and sellers who violate U.S. federal or state laws,” not for litigation from foreign governments, but Mr. Lytton says it will ultimately be a question of “how broadly” judges “read congressional mandates.” 

Another law professor who teaches at the University of Wyoming College of Law, George Mocsary, calls the suit “frivolous” and “obviously preempted” by the gun industry immunity law.

“It feels like the gun control lobby is taking advantage, frankly, over the nation of Mexico to file the suit,” he tells the Sun, noting that he believes it is “kind of selfish” to ask Mexico to expend money on a lawsuit that is “jurisdictionally barred.” 

A gun control group, the Arms Control Association, declared the Mexican prime minister “person of the year” in early 2022, and some gun control groups have criticized the American government for granting gunmakers too much immunity.

Should the panel rule in Mexico’s favor, the case would return to the lower court “to be judged on its merits,” according to a statement from the Mexican government.

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This story has been updated to clarify the basis of the lawsuit of brought by parents of the Sandy Hook, Connecticut school shooting.