Remington Arms Eyeing Bankruptcy…Again

The Wall Street Journal reported Friday that Remington Arms is preparing to file for Chapter 11 bankruptcy again. If so, this will be the second time in about two years that they’ve sought the protection of the bankruptcy court.

As Michael Bane pointed out on Facebook, Remington had already shut down their AR brands and has missed out on the boom due to COVID-19. Moreover, pistols are selling like hotcakes – except for 1911s. Again, Remington missed out.

Now here is where the potential bankruptcy gets interesting. The probably lead bidder for Remington is the Navajo Nation.

From the WSJ:

The bankruptcy filing could come within days as the gun maker makes preparations for the Navajo Nation to serve as the lead bidder to purchase Remington’s assets out of chapter 11, these people said. Founded in 1816, Remington’s namesake weapons are mainstays in hunting, shooting sports, law enforcement and the military.

The Navajo Nation—a territory with roughly 175,000 people across parts of Utah, Arizona, New Mexico—could finalize a bid for Remington as soon as Friday, one of the people said. Any bid for the company would be subject to competing offers and require bankruptcy-court approval.

The timetable could be pushed back, and an offer from the Navajo Nation isn’t guaranteed to materialize, people familiar with the matter said.

The Navajo Nation, which explored buying Remington as far back as 2018, owns a set of business enterprises in industries including energy, transportation, and utilities. In 2019, a business owned by Navajo Nation purchased coal company Cloud Peak Energy’s mining assets out of bankruptcy.

What makes ownership by the Navajo Nation particularly interesting is that they have sovereign immunity. This is especially true in light of the litigation in Connecticut over Remington’s supposed liability for the Newtown murders.

Jim Shepherd of The Shooting Wire had some very astute comments on this issue today.

So what would a Navajo acquisition look like?

With their business acumen and consultants, it probably wouldn’t look very different from most other offers price-wise. But the Nation’s unique status would introduce two variables: sovereign immunity and tribal law.

Interpreting what sovereign immunity really means, especially in a business negotiation, is an assignment I’m not equipped to complete. It is a complicated relationship between the various tribes and the federal government. While their businesses generally operate under the U.S. tax codes including taxes, there are some very notable exceptions.

Tribes under the terms of sovereign immunity are shielded from litigation much the same as states. That protection “usually extends to suits arising from a tribe’s ‘off-reservation’ or commercial activities, including the activities of an off-reservation tribal casino.”

With regard to business endeavors, federal courts, according to the American Bar Association, generally do not distinguish between “governmental” and “commercial” activities. “Numerous courts,” says the ABA in Doing Business in Indian Country: A Primer “have thus held that tribal sovereign immunity extends to tribal casinos, businesses, schools and corporations (my emphasis).”

While it’s not absolute, there’s a “strong presumption” against any waiver of that immunity, and it can only be abrogated otherwise by an “unequivocal expression” of Congress.

Tribal officials and employees acting in their official capacities and within the scope of their employment are also shielded from damage suits and requests for injunctive relief. They’re also immune from subpoena enforcement to “compel production of tribal witnesses or documents.”

Think what having tribal sovereign immunity would do for a firearms manufacturer. They wouldn’t have to depend upon the Protection of Lawful Commerce in Arms Act which a President Biden and a Democrat-run Congress have promised to repeal. They could look both Brady Legal Project attorneys and ambulance chasing plaintiffs attorneys in the face and say “eff off.” Moreover, could you really imagine any Congress, Republican or Democrat majority, in these days and times trying to take immunity away from tribes?

2020 which was already an “interesting” year just got more interesting. I am anxious to see how this all plays out.

Remington Denied Cert (Updated)

The US Supreme Court has denied a writ of certiorari to Remington in their appeal of the Connecticut Supreme Court’s ruling. That ruling allowed the lawsuit by some of the families of the Newtown murders against Remington to go forward. The Connecticut Supreme Court had said Remington would not be protected by the Protection of Lawful Commerce in Arms Act.

The denial was in the Order List released this morning.

As I mentioned earlier, the anti-PLCAA forces had brought out the big legal guns with Obama’s former Solicitor General. His argument must have swayed enough justices that they voted against taking the case.

You can read more about the Connecticut Supreme Court’s ruling in the case here.

This means that the lawsuit against Remington will go to trial in Connecticut Superior Court and that the plaintiffs can go on a fishing expedition through Remington’s records.

To be blunt, this denial of cert sucks. It turns on its head the supremacy of Federal law and makes a mockery of a law passed by Congress to prevent exactly what the plaintiffs are seeking to do.

UPDATE: Dave Hardy, 2A scholar and attorney, gives his take on the SCOTUS denial of cert in the case. He still thinks the plaintiffs have a long way to go before they win.

Big point: the trial court dismissed the suit for “failure to state a claim.” This is the first stage at which a suit can be reviewed. Dismissal is only proper if it is based on the pleading, bare written allegations. The CT Supremes said only that it couldn’t be, at this stage. Plaintiff still have to prove their allegations (after discovery, they can be challenged by a motion for summary judgement, and if that’s denied, fought at trial). The CT Supremes even allowed that plaintiff may have to surmount “herculean” barriers to win.

I’ll defer to Dave given his long experience as an attorney.

Anti-PLCAA Forces Bring Out Big Legal Guns

Remington Arms et al v. Soto et al is at the US Supreme Court on appeal from the Connecticut Supreme Court. Remington is asking for a writ of certiorari and is seeking to overturn the horrendous ruling out of Connecticut. That 4-3 ruling stretched state law to cover acts that should have been precluded from suit by the Protection of Lawful Commerce in Arms Act.

This past Friday the respondents (aka the anti-PLCAA side) filed their reply brief. The brief itself is not the story here. Rather it is who the ambulance chasing Joshua Koskoff with his novel legal theories corralled to be the counsel of record and to argue the case before the Supreme Court.

The counsel of record is Donald B. Verrilli, Jr. who served as Obama’s Solicitor General from 2011 until 2016. He is now a partner is the high powered California-DC law firm of Munger, Tolles, and Olson. That firm was co-founded by Warren Buffet’s investment partner Charlie Munger.

Donald Verrilli attorney for Soto

The National Law Journal’s Supreme Court Brief has this to say about his appointment.

The families of victims of the Sandy Hook school shooting have retained former U.S. Solicitor General Donald Verrilli Jr. to represent them in their U.S. Supreme Court fight with gunmaker Remington Arms Co. LLC.

Verrilli, now a partner at Munger, Tolles & Olson, was counsel of record for the plaintiffs, according to new filings in the U.S. Supreme Court. He filed a brief on their behalf Friday to oppose Remington’s attempt to have the U.S. Supreme Court rule that a federal law shields it from liability in the Sandy Hook case….

“The Sandy Hook victims were slain in a commando-style assault on the school. Their killer’s weapon of choice was a Bushmaster XM15-E2S rifle, manufactured and marketed by petitioners,” the Munger Tolles team said in their opposition brief. “The XM15-E2S was designed for military combat, specifically to inflict maximum lethal harm on the enemy. Petitioners’ marketing emphasized precisely those characteristics of the firearm. In words and images, petitioners touted the XM15-E2S as a combat-tested weapon that would bestow the power to ‘perform under pressure’ and ‘single-handedly’ conquer ‘forces of opposition.'”

If I had to hazard a guess, I would say Verrilli and the rest of the Munger, Tolles team are doing this case pro bono. The firm takes great pride in their pro bono activities.

This case is all about the supremacy of Federal law. Thus, it takes a bit of chutzpah (or hypocrisy) for Verrilli to argue against PLCAA when one of his self-identified landmark wins (Arizona v. US) was all about the supremacy of Federal law.