As part of their Firing Range Operations, Safety, and Lead Management Thought Leadership Series for FFLs and firing ranges, MT2 Firing Range Services and FFL Consultants sponsored a Virtual Summit focused on helping gun range owners and retail services dealers successfully optimize firing range and retail operations.
- Proper lead management of recyclable lead
- Range construction expansion & design-build considerations
- Legalities with ATF – inspections and liabilities – how bad is bad when it comes to inspections?
- Preventing straw purchases & range suicides
- HR: Hiring/firing during “uncertain times”
- Legal: What lies ahead for FFLs if there’s a Biden / Harris administration, liability pitfalls for range and retail operators, and what legal protections should be in place to protect FFL’s from the ATF inspection process and civil lawsuits?
- The new Form 4473 – Highlights and Updates Explained
- Firearm Business Insurance: Can you survive a crisis? Vast differences in firearms-related business operations require policies tailored to meet your needs
The hot topic issue of the day is this Biden-Harris administration and what it means to the industry as a whole; what is an overview of what we can expect?
Joe Kavan: I would caution anyone as we talk about some of these legislative proposals that might be coming through by way of this new administration. Traditionally, if you go back for the last 20 years, there is a degree of alignment based on a specific Party concerning firearms control initiatives. However, you can’t guarantee it. Many Democratic Senators and Democratic Congressmen represent districts don’t like additional legislation pertaining to firearms.
So you can’t guarantee that just because the Senate may have one member who happens to be Democrat or have one member control of the Senate, the Senate will always vote in lockstep, same way with Congress.
We’ve seen people go back and forth on the aisle; that’s important from the perspective of most of the initiatives that the new administration has been talking about. There will require Acts of Congress changes, and most of them will have to pass both Houses of Congress. That’s an essential element. There’s a lot of stuff that can be done by Executive Action, but the majority of these initiatives are going to have to be approved by Congress. Even if they are passed, bear in mind what the composition of the Supreme court is. Over the last four years, there have been many appointees to the Federal District Courts and obviously to the Supreme Court. Many of these acts and laws that get passed will have to work their way up through the courts before they’re declared constitutional or unconstitutional.
We can make some predictions about some of the things they’ve said and how this will work out, but we aren’t going to know a lot until we get the full administration and then find out exactly what they’re planning.
What do you see there as far as potential executive orders?
Joe Kavan: We’ve heard that President Biden has indicated that he wants to reverse an Executive Order from about a year ago. This would be changing the export governance of firearms and certain ammunition from the Department of State to the Department of Commerce. In other words, from ITAR to the EAR. And that was a long thought initiative on this that started with the Obama administration, and then the only hangup was in this class of particular firearms. And it took the Trump Administration to get that through with the Executive Order.
People are finally getting used to doing this under commerce, and it’s been working pretty well. It’s much more streamlined to do it under commerce, unfortunately, now because there is a lot of rhetoric out there that the state department and ITAR should be controlling this, it may well be easily pushed back to the state department. And then it’s going to have to be administered under that. Now, there will have to be corresponding regulations associated with that. They’ll probably just go back to the same regulations they had before. And so now we’ll be back under that same regime. It begs the question, “will there still be congressional notification requirements?”
We’ll have to see how that all plays out. If it goes back by far, presumably, the congressional notification stuff will go back in place because of that statute.
What direction do you see Ars/MSRs going?
Joe Kavan: Well, let’s remember, in 1994, then-Senator Biden, in conjunction with Senator Feinstein, were some of the major proponents of the assault weapons ban. There was so much resistance that the only way they could get that passed was to put a tenure cap on; that limitation went away in 2004. And then the manufacturing sale of the so-called assault weapons and large-capacity magazines went back in place. Universally, almost all of the Democratic candidates had been pushing for an assault weapons ban. It has been stated time and time again by President-elect Biden, while he was campaigning, and he had it on his website, that he will push for an assault weapons ban on the manufacturer and sale of so-called assault weapons.
And I think we all know what those definitions are, but they’re modern sporting rifles, as well as large-capacity magazines. He’s even gone so far as to say he will ban these items’ manufacture and sale and then require the current ownership of those types of firearms to be governed under The National Firearms Act. So presumably, everyone that has them now would be required to register them. Now you go, “Wow, how’s that going to happen?” They’re talking about a buyback program for these types of items, and bear in mind, and I think this is extremely important.
We can’t forget. Senator Harris was the Attorney General for California when many of the California laws went into effect. So a lot of these, she was the architect. Many of these California laws that most people in the firearms industry just loved so much were started by then, Senator Harris, and by then-Attorney General.
And so, if you want to look at what could happen, look to California. To make matters a little bit more interesting, President Obama appointed then-Vice President Biden to look at what type of gun legislation could get put in place as a Vice President. So if President Biden does the same thing with his Vice-President, well, she has the playbook. She has the playbook for what was done in California. Add one more thing. The current Attorney General for California, Xavier Becerra, has been mentioned numerous times as a potential Attorney General under the new administration. So if you put all of those together, you would presumably think that the playbook would be bad.
Mike Brown: Also, when she was Senator, Harris supported two assault weapons bans that Senator Feinstein authored in 2017 and 2019. And she was adamant and very outspoken against Heller on second amendment issues.
Can you speak about the AR pistols and everything that happened with QLLC?
Joe Kavan: What we’ve heard is just absolutely anecdotal comments. And we’ve seen a few letters. We’ve seen a few of the pieces going back and forth concerning the short barrel rifle issue. We’d be guessing about how and why all of this went down. The fact of the matter is that most gun manufacturers were submitting the braces for approval from the ATF, from the firearms branch, and the technology firearms branch. And they were waiting for them. I think in this case, that is something went awry, and the relationship went sideways. This was the first time we’ve seen that; bear in mind that it was a proprietary brace. It wasn’t a brace that had been approved previously.
Many of these manufacturers that are making this type of firearm right now are using braces that had already been approved. So this was a proprietary brace. I mean, there are several factors in that matter that would lend one to say, yeah, but there were some unique circumstances in this case. And I think that’s what is the case here. We don’t know the full background of what happened there. We don’t know the relationship that was going on. We don’t know how all of that worked out. And maybe they didn’t want to wait, and they just decided to move unilaterally on this thing without waiting for approval. And this is the kind of thing that happens when you don’t go through the usual channels.
However, it will be interesting under the new administration because it sounds like The National Firearms Act will become much more prevalent. And there’s always the concept of a short barrel rifle. If this administration will be putting modern sporting rifles, like assault weapons and large-capacity magazines, under the auspices of The National Firearms Act, it would be a quick and easy piece to clarify a short barrel’s definition rifle. So that many of these existing pistols that are out there with a brace, the collapse, the world brace, whatever the case may be, they could quickly throw those into the mix.
We saw it before with bump stocks; an executive action can clear that up by regulation. It wouldn’t surprise me in the least if that gets cleared up very quickly and throws one more of these types of firearms that are out there under the auspices of the National Firearms Act.
It is recommended to seek partnership, get answers, and go through the processes.
Joe Kavan: Bear in mind that there’s no question as a log jam at the firearms technology. Many people have been submitting these samples and the rules changed a bit not too long ago; you didn’t have to submit as many samples. It put some new requirements on this, and that’s fine. That’s entirely within their purview to do. So everybody complied and submitted their samples, and people were very frustrated. We got a lot of phone calls about the log jam at the technology branch. And you can jump up and down and complain and do anything you can. At the end of the day, it works your way through the queue.
We have received phone calls from people asking for our best guess about if they didn’t wait to get approval before going to market. And I said, “Boy, that’s a big risk.” Based on past examples, when you don’t wait, and it goes South, it goes really, really South.
I would not like to be on the other end of what you have to send out that letter and face the backlash of all of their customers saying I have to spend $200 now to register this. I have to tear it apart immediately. I have to give part of my gun away to be compliant. So you get this registered, that’s kind of a nasty ramification or a nasty letter you have to send out to your customers. I don’t think that will affect their business. The issue is, do you really want that happening?
Mike Brown: A part of Harris’ platform was revoking manufacturing licenses for manufacturers who violate the law. So if she is put in charge by the President of these things, that may very well percolate subject to the Senate.
I don’t think that any gun legislation or firearms legislation will probably be the number one priority coming out of the gate. Still, we’ll have a little more color as to what the administration is going to look like and maybe get a little better guess as to what type of initial 100-day agenda they have. Bear in mind that many of these bills have been sitting in Congress for two or three years.
Joe Kavan: The Protection of Lawful Commerce in Arms Act is one of the pivotal protections that manufacturers and dealers have had since 2005. There has been no secret about the credit incoming administration’s desire to eliminate the Protection of Lawful Commerce in Arms Act. During the last congressional session, a bill was introduced to repeal the Protection of Lawful Commerce in Arms Act.
And I’m sure that bill will be re-introduced. And if Congress is controlled by a Democratic Senator or Congressman, that probably will get passed, then we’ll have to see what happens in the Senate. Don’t forget why the Protection of Lawful Commerce in Arms Act was passed. There were several states, cities, and Attorney Generals who were suing firearms manufacturers. Some of them were because they had a product out there that increased the cost of medical assistance and law enforcement because they had firearms on the streets. I mean, some of these were some pretty absurd arguments, and some of them were getting way off the track.
It was directed at trying to shut down the firearms industry. And so the Protection of Lawful Commerce in Arms Act was put in place to protect that. If that goes away, we’re going to be right back in that same regime and these nuisances. And most of them were, in fact, a nuisance. And you’ll see more, and more of them will come up, which will make insurance much more expensive, and that’s going to be a significant problem, and Protection of Lawful Commerce in Arms Act would go away. We have heard time and time again that the firearms industry is immune to lawsuits due to the Protection of Law Commerce in Arms Act. And the fact of the matter is that this was a carefully drafted bill, and there are some exceptions to the Protection of Lawful Commerce in Arms Act. Our firm has defended some manufacturers in these cases and won due to the Protection of Lawful Commerce in Arms Act.
Some lawsuits have been initiated, alleging one of the exceptions to the Lawful Commerce in Arms Act that has been successful. Not the least of which is the Soto case. The case up in Connecticut, and this most people know it as Sandy Hook. And that is using one of the exceptions to the Protection of Lawful Commerce in Arms Act. And as of right now, that lawsuit is continuing, except for the Remington bankruptcy, but the judge has allowed that lawsuit to go forward. So the concept that this was some blanket immunity for the firearms industry is just absolutely false. But to have that go away, the ramifications could be very, very dramatic.
Mike Brown: The mayor of Kansas City, Quinton Lucas, has already filed another one of those lawsuits against firearms manufacturers for increasing the cost of public safety, police and fire response, and that sort of thing. And that case is being a slow walk through the courts because of the pandemic, and everything is just proceeding very, very slowly right now in our court system. But if something should happen in the early term of the new administration, that case could accelerate.
Can you give an overview of the PLCAA?
Mike Brown: It protects the entire industry: manufacturers, retailers from liability arising out of the lawful sale of a firearm. The exceptions typically involve unlawful sales, negligent entrustment, knowingly participating in a straw purchase, things that you might expect not to have protection for. If they do their due diligence at the point of sale and they run the background check, and they get a next proceed. They don’t have any other extrinsic evidence of a straw purchase where people are acting funny or somebody comes in and gets denied, and their buddy comes out of the car and comes in and buys the same gun, and you see that because it’s in front of your glass storefront. Somebody comes in with a marijuana card, and you see it in their wallet, these sorts of things that you knew or should have known reasonably that this sale, there’s something wrong with this sale. That falls under the exceptions.
Is it correct that the PLCAA will only protect the straw purchase if they do everything correctly?
Joe Kavan: The most significant distinction is that when you’re looking at the letter of the law violations from the standpoint of a revocation hearing. We’ve all seen the notice of violations where numerous boxes have not been checked on the 4473; you get written up by the ATF. The ATF pool will come back and perhaps certainly give you a warning conference, maybe even revoke your license if you continue to do that. Nothing else happened by and large; none of those firearms were used in any crime or any injury. It ends there. I mean, the ATF has limited ability to find you; in some cases, they can pursue criminal sanctions against you, but by and large, going through the whole exam process and finding these types of violations are one thing.
However, when you get into the civil realm and an injury of any type, there is an absolute playbook for plaintiffs’ lawyers. It’s a well-written playbook by many of these anti firearms advocacy groups backed by many giant anti firearms law firms and money behind this.
So it’s a very, very important act for the firearms industry. And bear in mind one more thing I want to add about that is that if the PLCAA would go away, so let’s go back to having it in place right now. With it in place, we seldom see an action that goes through the dealer back to the manufacturer. It’s challenging to get back to the manufacturer; if you look at all of the exceptions of the PLCAA, how would the manufacturer know that this was a straw purchase? There was no negligent entrustment. There was no negligence per se. And so the manufacturers have a great deal of protection of the PLCAA. Even if there is a liability at the dealer level, it doesn’t get back to the manufacturer.
We could probably see if this goes away, cases where they’re alleging that this dealer sold the firearm knowing, or should have known this, and the manufacturer sold it knowing it as well. This is precisely what happened in all of these nuisance cases by cities and Attorney Generals before this law was passed. The automobile industry has laws like this. The pharmaceutical industry has laws like this. There are industries out there that it’s in the interest of commerce in the United States to protect from these types of losses. So this isn’t a unique act just for the firearms industry. It exists in all kinds of industries throughout the United States.
Mike Brown: We’ve seen those exact allegations filed in courts. Again, they’re local court cases that I’ve represented the dealer on. But here in Kansas City, we had a lawsuit. It was the genesis for the City of Kansas city lawsuit against the manufacturer that I mentioned earlier. But they’re alleging that the manufacturers sold several very inexpensive firearms directly to the purchaser on the FFL license number, but they essentially drop-shipped these firearms as one part of the problem. It turns out he was a straw purchaser; he pled guilty to that.
But that was the genesis for the mayor of Kansas City, going after the manufacturer for putting these firearms into the local stream of commerce and causing the city enhanced expenses in police response, medical, and the like.
I like to say that people, policies, procedures, and training can go a long way to going around willful if you make sure. Whether it’s with the help of FFL consultants or you’ve got the software and good strong, robust policies and procedures in place to double-check your 4473 at the end of the day and make sure your A&D book is accurate. You must keep good records and make sure your frontline sales personnel follow the same procedure with every customer. Sometimes straw purchasers are impossible to identify if they do it right; it’s going to be virtually impossible to figure it out. Other times, it’s right there, standing on the other side of the counter in front of you. And those are the ones that you need to be catching.
You can say what you want about willfulness, and yes, absolutely, if you’re going to protect yourself from these types of losses, which will cost you an absolute fortune, win or lose, they’re very, very expensive to defend. If you want to protect yourself against that, do everything according to the letter of the law. Have your procedures down to make sure that every box on the 4473 has been checked. Make sure that your A&D books are up to date immediately. All of your forms are in place; anticipate an inspection. Those are the things you can do but bear in mind; there is the stuff that falls out of the sky as well- it’s that straw purchaser where you would not have been able to identify the straw purchase. Still, if there is a crime committed, if there’s a civil liability associated with the use of that firearm, they will be brought into this thing.
Another aspect of this that we have seen in recent years was that the plaintiffs start using this concept of violation of laws concerning the marketing or sales of a particular item. And that’s precisely what happened in the Soto case and the Sandy Hook case. It’s important to understand that you need to comprehend all the aspects of the exception of the PLCAA.
And there are a lot of brilliant lawyers who are plaintiff’s lawyers, just trying to figure out a way ways around this. And that whole concept of the violation of the Connecticut unfair Trade Practices Act is exactly why Soto has survived for such a long time. And those are the kinds of things that just come out of the blue. I mean, who would have known that the way those people were marketing those firearms, that someone would have come up with that argument and said that, “Oh, well, because they were showing these type of ads, it suggested this.” I mean, it was a very noble way to approach this, and you have to recognize the fact that they got through the judge, and she let this continue.
Again, pick up the phone, see what’s going on. Right after that was alleged in the Soto case, we received many phone calls asking if we would look at marketing materials to assess how they are displaying their products, to see if it would violate laws. These Fair Trade Practices Acts are all over the board, every state has one, and they’re all different. So it’s difficult to say what would work or not.
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