Summary by JW Williams
Remington Arms, the manufacturer of the Bushmaster AR-15 weapon that was used in the 2012 Sandy Hook shooting, will reportedly pay $73 million to the families of five children and four adults who were killed. This is the first time that a gun manufacturer has agreed to a major settlement over a mass shooting in the US.
Cerberus Assigned Hundreds of Millions in Debt to Remington
The Cerberus private equity firm, which manages over $30 billion in assets, bought Remington in 2007. It paid $370 million for the deal, which included assuming $252 million in Remington debt. Cerberus put money into a holding company, the Freedom Group, that actually bought Remington, instead of buying Remington outright. In 2012, the year of the Sandy Hook shooting event, Cerberus had Remington borrow hundreds of millions of dollars and use it to buy the holding company’s debt, effectively transferring responsibility for the principal and the interest payments onto Remington. Remington later went into bankruptcy.
Cerberus is also the parent company of DynCorp, which is a major national security contractor with the US government that charges billions for overseas military and police training. DynCorp has been involved in a number of scandals including pedophilia, rape, child trafficking, sexual slavery with boys in Afghanistan, and child pornography. Cerberus has given large donations to both Republicans and Democrats. DynCorp continues to be awarded lucrative government contracts. In 2018, former President Trump named Cerberus co-founder Stephen Feinberg to head the President’s Intelligence Advisory Board.
Sandy Hook Sets New Precedent for Gun Liability Cases
The Remington settlement exploited an exception in a 2005 law shielding gun manufacturers from liability lawsuits. That exception was for marketing, and the families blamed Remington’s ads for inspiring Adam Lanza, the accused killer who stole the gun from his mother.
The 2005 Protection of Lawful Commerce in Arms Act (PLCAA) states “…(3) where a manufacturer or seller of a qualified product knowingly and willfully violated a State or Federal statute applicable to the sale or marketing of the product, and the violation was a proximate cause of the harm for which relief is sought;”
It seems highly unlikely that Remington’s marketing was a factor in the shooting as Lanza didn’t buy the gun as he stole it from his mother. The plaintiffs never produced evidence that Lanza ever saw any of their advertisements. The shooter had the sole responsibility for his actions.
Remington Arms will release all of their discovery and disposition material to the public in a one-sided agreement.
While federal law shields gun manufacturers from some wrongful death litigation, the Connecticut Supreme Court ruled Remington was not immune from liability on the matter of its marketing practices. Remington appealed to the US Supreme Court, which dismissed the opportunity to review the case.
Gun control advocates have been encouraged by the Sandy Hook legal strategy, and now have a precedent that aims to destroy gun manufacturers via litigation and large settlements. New Jersey’s attorney general is now investigating Smith & Wesson’s marketing.
A recent government-funded study found that of all the mass shootings that took place between 1966 and 2019, more than half took place since 2000, with 20% of them occurring between 2010 and 2019.
Market Realist: https://marketrealist.com/p/will-remington-still-make-guns/