Will Remington’s Bankruptcy Delay Justice for Sandy Hook Shooting Victims?

On the day following the massive March For Our Lives demonstration, a U.S. firearms manufacturer that has been in business for over two centuries filed for Chapter 11 bankruptcy protection.

The Remington Outdoor Company, which began producing flintlocks in 1816, has seen a significant decline in sales. After being rejected by thirty other lenders, Remington finally managed to secure approximately $100 million in bankruptcy financing from Franklin Resources Inc., a subsidiary of JP Morgan Chase, and a few other institutions that have not been identified in court documents.

Remington’s bankruptcy raises the question of what will happen to claims against the company that have been filed by the families of the Sandy Hook Elementary shooting that took place in Newton, Connecticut in December 2014. The lawsuit, originally filed in 2015, was dismissed by state Superior Court Judge Barbara Bellis on grounds that gun manufacturers are immune from liability under the Protection of Lawful Commerce in Arms Act (PLCAA).

Nonetheless, the plaintiffs have continued to press forward, asking the state Supreme Court to reinstate the lawsuit on grounds of “negligent entrustment.” This is similar to a situation in which a bartender gives car keys to a patron who is visibly intoxicated. The plaintiffs allege that Remington aggressively marketed a military assault rifle to “video-game playing, military-obsessed 18-year-olds” such as the shooter, Adam Lanza.

It is not yet known if the plaintiffs’ argument will stand. Professor Timothy Lytton of the Georgia State University College of Law speculates that the case may eventually go all the way to the U.S. Supreme Court. It has, nonetheless, raised questions about the timing of Remington’s bankruptcy filing.

According to the company, its current troubles stem from miscalculations made during the run-up to the 2016 presidential election. Remington, anticipating major growth in gun sales as the result of a Hilary Clinton victory, began expanding operations, taking out a number of loans in order to do so.

When a Clinton victory failed to materialize, so did the expected increase in revenue. Nonetheless, the fact remains that the entire gun industry is watching the Connecticut Supreme Court closely, as its decision will have huge ramifications. The good news for Remington is that any ruling on the Sandy Hook lawsuit is likely to be delayed while the company is in bankruptcy proceedings.

Bankruptcy could also provide Remington an opportunity to attempt to reach a negotiated settlement with the plaintiffs. Generally, the best outcome of any lawsuit is to reach a settlement before the case goes to trial (and in fact, the majority of lawsuits are resolved in this manner). However, if the case goes to trial, a verdict in favor of the Sandy Hook plaintiffs could open a major loophole in the PLCAA, leaving gun manufacturers open to liability that they have so far managed to escape.

That is the opinion of Professor Heidi Li Feldman of the Georgetown University Law Center, who pointed out in a recent Los Angeles Times article that “There are a lot of ways organizations can use bankruptcy to maneuver around the tort system,” thus evading – or at least delaying – liability. She also believes that Remington’s timing in seeking bankruptcy protection is indicative of their concerns about the strength of the plaintiffs’ case.

How the Sandy Hook families’ quest for justice will play out in light of Remington’s bankruptcy filing is anyone’s guess at this point. Feldman says that while a victory for the plaintiffs is not a foregone conclusion, neither is it out of the question. At the same time, lawyers for the plaintiffs are confident that their case will move forward, stating that they “do not expect this filing to affect the families’ case in any material way.”