Consideration of Public Policy Factors in Negligence Claims

Facts of the Case

Armslist.com is an online marketplace of third-party listings for the private sale and purchase of firearms. The website is operated and managed by Armslist LLC, a Pennsylvania limited liability company, and Jonathan Gibbon, the company’s member manager. Armslist LLC and Mr. Gibbon were sued by Erin Bauer and Richard Webber separately on behalf of their family members who were killed in 2018 using guns that were listed on armslist.com. Mr. Webber’s daughter, Sara Schmidt, was a Wisconsin resident who was shot and killed by her husband the day after he purchased a firearm through a private party listing on armslist.com. Ms. Schmidt’s husband had been prohibited by a court from owning any firearms after being arrested for domestic violence. The firearm that was used to shoot Ms. Bauer’s husband, a Chicago Police Commander, was initially sold by a private individual in Wisconsin and then changed hands until it was ultimately obtained by Mr. Bauer’s killer.

Mr. Webber and Ms. Bauer alleged negligence among other Wisconsin state law claims, including public nuisance, civil conspiracy, wrongful death, survival action, piercing corporate veil, aiding and abetting tortious conduct, and loss of consortium. The plaintiffs asserted that the armslist.com website design allowed individuals to bypass federal and state laws governing firearm sales and that Armslist LLC should have implemented measures to prevent illegal transactions, such as background checks and a waiting period. Armslist LLC argued that the plaintiffs failed to raise a claim by which relief could be granted under state law.

The cases were brought before two separate judges for the U.S. District Court for the Eastern District of Wisconsin. The district court granted both motions to dismiss filed by Armslist LLC, concluding that Mr. Webber and Ms. Bauer “failed to plausibly allege the website’s design caused the deaths” (Webber, p 949). The plaintiffs appealed to the U.S. Court of Appeals for the Seventh Circuit, arguing that the district court did not sufficiently establish the facts before addressing the public policy factors and dismissing the cases. The defendants argued that the dismissals should be affirmed on the grounds of Wisconsin law or as preempted by the Communications Decency Act, 47 U.S.C. § 230 (2018). Armslist LLC and Mr. Gibbon also asserted the plaintiffs were seeking to impose a duty to protect others from harm arising from hosting third-party advertisements for firearm sales through the online marketplace, which the defendants argued runs afoul of § 230(c)(1) given that the business entity is not considered the “publisher or speaker” of the online listings.

Ruling and Reasoning

The Seventh Circuit affirmed the dismissal of each case, noting that a finding of causation for the negligence claims would contradict Wisconsin state laws on the regulation of firearms. Most of the plaintiffs’ negligence claims were of three main categories: lack of evidence of the transaction’s legality, lack of background checks and transaction records, and lack of a waiting period before ownership is transferred. The court of appeals considered these claims in the context of Wis. Stat. § 175.35 (2021), which governs firearms sales, including who qualifies as a firearms dealer and their respective responsibilities. The court ruled that, because armslist.com is not a firearms dealer, they are not beholden to § 175.35’s regulations of firearms dealers and thus do not qualify as a liable entity when state and federal requirements for firearms dealers are not observed.

In addition to cause-in-fact considerations, Wisconsin law also examines public policy factors through state legislation in determining the causation element of negligence. The term “proximate cause” is no longer used; instead, Wisconsin courts consider six public policy factors, where the satisfaction of any one factor precludes liability. These factors include whether the injury is too remote from the negligence, whether recovery is out of proportion to the culpability of the tortfeasor, whether it was highly extraordinary that the negligence would bring about the harm, whether recovery would place an unreasonable burden on the tortfeasor, whether recovery is likely to open the way to fraudulent claims, and whether allowing recovery would expand liability with “no sensible or just” endpoint.

The Seventh Circuit analyzed the plaintiffs’ negligence claims under the second and sixth public policy factors. Regarding the second policy factor, the court emphasized that “statutes inform culpability.” As neither private sellers nor websites such as armslist.com are obligated to uphold regulations for firearm transactions, the court of appeals concluded that finding in favor of the negligence claims would be disproportionate to the defendant’s culpability. Regarding the sixth public policy factor, the appeals court emphasized that supporting the negligence claims would expand liability beyond the legislature’s intent and contradict state statutes regarding firearm sales. The court found that the three main categories of alleged negligence failed under the sixth public policy factor in both suits.

The Seventh Circuit also examined causation with three additional categories of allegations that were not in obvious tension with Wisconsin statutes: allowing high-volume sellers, failure to flag illegal conduct, and failure to provide updated firearms laws on the website. Although there can be multiple cause-in-fact elements, the court noted that establishing cause in fact requires that a defendant’s negligence was “actively operating” when the damages were incurred. In considering cause in fact, there must be a reasonable factual connection between the breach and damages. The high-volume seller claim alleging Armslist LLC failed to prevent unlawful transactions did not establish that armslist.com allowed the firearm to be purchased illegally, and the claim did not reveal a factual contribution to the chain of events that led to Mr. Bauer’s death. Both plaintiffs also did not sufficiently explain how the deaths would not have occurred but for Armslist LLC’s alleged negligence in failing to both flag illegal conduct and provide regularly updated information pertaining to firearms laws on the website. The appeals court concluded that these allegations did not plausibly demonstrate that the design of armslist.com caused the deaths.

The Seventh Circuit determined the plaintiffs’ negligence claims insufficiently established causation on the grounds of state law, and thus, resolving the preemption concern regarding § 230 was unnecessary. The Seventh Circuit affirmed the dismissal of each case by the district court, emphasizing that Wisconsin statutes and public policy factors were appropriately considered regarding causation.