Will insurers police gunmakers after $33M Sandy Hook offer?
NEWTOWN — Of all the questions bankrupt gunmaker Remington raised when two of itsfour insurance carriers offered nine Sandy Hook families $3.6 million each to settle their unlawful marketing claim, one thing seems certain to legal experts.
Insurance companies will never look at gunmakers’ liability the same.
“If you are an underwriter who has to explain why you provided coverage for claims of misleading advertising for Remington, why on earth would you ever do that again in today’s environment?” said Peter Kochenburger, executive director of the Insurance Law Program and an associate clinical professor of Law at UConn Law School. “Honestly, you have to think, ‘How much money are we making from these guys anyway?’ ”
Kochenburger is referring to headlines last week about an unusually large and an unusually public settlement offer by two of Remington’s four insurance carriers to nine Sandy Hook families suing under Connecticut’s Unfair Trade Practices Law — a high-profile case now in its seventh year, which shows no sign of ending soon.
As observers wait to see whether families who lost loved ones in the 2012 Sandy Hook shooting take the settlement, and Remington’s two other insurance carriers who didn’t participate in the $33 million offer prepare for trial, some writing is already on the wall, experts said.
Based on what insurers saw in state Superior Court last week, carriers may stop covering gunmakers’ unfair trade practice claims altogether, or carriers may tighten policy constraints, or make coverage so expensive that it tempers the way gunmakers market firearms.
“One role of insurers is to discipline the industry by making demands on their clients about how they act in the market, to drive down the cost of insuring them,” said Alexandra Lahav, the Ellen Ash Peters Professor of Law at UConn Law School. “Litigation is one way to force companies to internalize the cost of products that harm people.”
Remington’s lead attorney James Vogts did not respond to a request for comment on Friday.
Meanwhile in state Superior Court in Waterbury on Friday, Judge Barbara Bellis warned Vogts and Remington’s defense team to comply with the families’ pretrial requests to question company representatives under oath by the end of August, or face a penalty that could include a default judgment against Remington.
The Newtown-based trade association for the firearms industry said fighting the families’ claim in court was the sensible legal response and disagreed that the Remington partial settlement offer is a cautionary tale for insurers.
From the start, Remington has claimed it manufactured a legal AR-15-style rifle that was sold lawfully to Nancy Lanza. It was her 20-year-old son Adam Lanza, and not Remington, who was responsible for the worst crime in modern Connecticut history, the gunmaker’s attorneys said, when Lanza took the rifle from an unlocked closet and shot his way into a locked Sandy Hook School, killing 26 first-graders and educators.
“We were surprised by the carriers’ decision to offer to settle,” said Lawrence Keane, senior vice president and general counsel for the Newtownbased National Shooting Sports Foundation. “In fact, the (families) cannot prove — and do not even allege any facts to support — the narrow claim remaining in the case that the shooter saw, let alone was influenced by any ads to commit his heinous crimes.”
Outlier or landmark?
Keane added that gun industry insurers understand the broad protections firearms makers have under federal law against most liability when their guns are misused.
As such, Keane said, Remington’s partial settlement offer does not change the insurance landscape.
“The Connecticut Supreme Court in allowing the case to go forward acknowledged the (families) have a ‘Herculean’ proof problem,” Keane said. “Insurers know the Connecticut Supreme Court’s 4-to-3 decision is an outlier and that most courts have and will continue to correctly apply the law.”
UConn’s Kochenburger disagrees, saying the only thing that scares insurers more than high risk is unknown risk.
“This case is blazing a new path, so we don’t really know whether it’s an outlier or a landmark,” Kochenburger said. “Insurance companies are used to evaluating risks and paying off lawsuits — what they don’t like is not understanding the magnitude of the risk.”
Kochenburger is speaking of a case that was considered a longshot at best when it was filed at the end of 2014. At the time, Remington was still a leading American gun manufacturer.
Since then, the families’ case has been thrown out of state Superior Court, reinstated by Connecticut Supreme Court, turned down for review by the U.S. Supreme Court when Remington appealed and sent back to trial court after Remington’s bankruptcy in 2020.
On July 26, Bellis dismissed Remington’s motion to throw the families’ unlawful marketing claim out of court, prompting the families’ lead attorney Josh Koskoff to say “This case is moving forward to trial. If Remington did not understand that before today, it should understand it now.”
The following day, Remington filed nine separate settlement offers for each family in state Superior Court. The day of the filing, Koskoff criticized the two Remington insurers who did not participate in the settlement offer and would only say that the families were considering their options.