NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

Only the most recent FIR version, excluding attachments, is available on the Intranet. Previously issued FIRs and attachments may be obtained from the LFC office in Suite 101 of the State Capitol Building North.

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

Administrative Office of the Courts (AOC)

Attorney General (AG)

SUMMARY

Synopsis of Bill

The Firearms Industry Lawsuit Reform Act protects firearms or ammunition manufacturers, distributors, trade associations or dealers from many kinds of lawsuits by individuals and the state. Only the state or a political subdivision may file a lawsuit under the specific circumstances identified in the bill.

The authority to file a lawsuit and seek damages, injunctive relief or abatement on behalf of the state or any political subdivision of the state from a firearms or ammunition manufacturer, distributor, trade association or dealer (for the lawful design, marketing, distribution, manufacture, sale or transfer of firearms and ammunition) is reserved exclusively to the state. The bill further restricts lawsuits to only those lawsuits authorized by a law enacted by the legislature.

The state or a political subdivision is not prohibited from filing a lawsuit against a firearms or ammunition manufacturer, distributor, trade association or dealer for:

• breach of contract or warranty for firearms or ammunition purchased by the state or a political subdivision; or
• injuries resulting from the malfunction of a firearm or ammunition due to a defect in design or manufacture.

Significant Issues

This Act prevents individuals from filing lawsuits against firearms manufacturers for breach of contract and breach of warranty and for injuries resulting from the malfunction of a firearm or ammunition due to a defect in design or manufacture. Limiting lawsuits in this manner may have constitutional implications.

FISCAL IMPLICATIONS

Although it is unclear how many lawsuits are filed against the firearms industry in New Mexico, and even more unclear how many actions are successful, the bill may result in a slight decrease in revenue to the general fund. In other states, jurors have awarded damages of millions of dollars against firearms manufacturers. All non-compensatory damages awarded to individuals are included in gross income and, therefore, taxable. Of course, if a lawsuit was filed by the state, proceeds would go to the state.

ADMINISTRATIVE IMPLICATIONS

The Administrative Office of the Courts reports that new laws, amendments to existing laws, and new hearings have the potential to increase caseloads in the courts, thus requiring additional resources to handle the increase.

OTHER SUBSTANTIVE ISSUES

By carving out firearms from the universe of products for which individuals may recover damages when they are harmed by the defective design or manufacture, the legislature may be denying a constitutional right of access to courts.

FAR/ar