Bloomberg Law
Dec. 19, 2018, 12:01 PM

INSIGHT: Holding Firearms Dealers Accountable for Online Straw Sales

Julie G. Reiser
Julie G. Reiser
Cohen Milstein Sellers & Toll PLLC
Molly J. Bowen
Molly J. Bowen
Cohen Milstein Sellers & Toll PLLC
Sally Handmaker Guido
Sally Handmaker Guido
Cohen Milstein Sellers & Toll PLLC

Given the epidemic levels of gun violence in America and the increasing shift to online commerce, a recent suit in Oregon established new legal precedent at the state and federal level to hold dealers accountable for unlawful straw sales and provides a roadmap for attorneys representing gun violence victims.

The wrongful death lawsuit was brought by attorneys at Cohen Milstein and the Brady Center to Prevent Gun Violence on behalf of the family of Kirsten Englund, who was murdered by a mentally troubled man who had illegally obtained a gun from an online dealer via a straw purchaser. In this case the straw purchaser was his mother, herself a mental health professional, who used her credit card and had her background checked before the purchase despite allegations that the son was the true purchaser. (Estate of Kirsten Englund v. World Pawn Exchange et al., No: 16-cv-598 (Coos Cty. Circuit Court)).

In this first-of-its-kind litigation, Englund established that online gun dealers can be liable for shooting deaths despite the bifurcated nature of online firearms sales and a major obstacle in the Protection of Lawful Commerce in Arms Act (PLCAA).

Before Englund: Dealers Must Verify ID

A fundamental premise of our federal gun control regulatory scheme is that firearms dealers must know who is buying a firearm, perform a background check on that person, transfer the firearm only to the person who cleared the background check, and maintain certain records regarding the purchaser.

This framework ensures that the dealer looks the true purchaser in the eye and determines whether he is legally permitted to purchase a gun. Firearms dealers also are required to consider whether a purchaser presents red flags that call into question the legality of the purchase and whether it is acting reasonably in selling a gun to that purchaser.

As evidenced in Enrique Marquez’ plea agreement in the 2015 San Bernadino shooting that killed 14 people and wounded 22 more, in a straw purchase the true purchaser and ultimate user of the gun does not go into the store and purchase it; instead, he sends in another person to pretend to be the purchaser, undergo the background check, complete the forms, and accept the gun. In Following the Gun: Enforcing Federal Laws Against Firearms Traffickers (June 18, 2000), the Bureau of Alcohol, Tobacco, Firearms & Explosives identifies straw-purchased guns as “a significant overall crime and public safety problem” due to their use by criminals and firearms traffickers.

Despite their illegality, straw sales are alarmingly frequent – in part because firearms dealers have not consistently identified and stopped these sales.

As decided in Abramski v. United States (134 S. Ct. 2259, 2269 (2013)), because straw purchases involve the provision of false information on federally mandated forms, they violate gun control statutes even if the purchaser is otherwise legally entitled to buy a gun. Therefore, prior to Englund, the illegality of straw purchases from brick-and-mortar sellers was well-established.

Online Gun Transactions: Different Process, Same Rules?

In online firearms sales, the transaction responsibilities are split between two different federally-licensed dealers. First, the online seller interacts with the customer at the point of purchase. However, because federal law prohibits a dealer from shipping a firearm directly to a customer, the online seller must ship the firearm to another dealer in the customer’s home state.

Next, the customer selects the dealer to which the gun will be transferred, and that dealer is required to perform the background check on the customer, obtain completed ATF transaction documents, and transfer the firearm to the actual purchaser and to no one else.

In Englund, the online dealer was the principal “seller” of the firearm, as it was sold from the dealer’s inventory to the purchaser. An unemployed, mentally ill young man alleged to be the true purchaser selected the weapon and interacted with the online seller through a web portal and email. Over the course of multiple transactions, his name and email were identified, as were those of the straw purchaser, his mother. The online seller neither asked any questions about the disparity between these individuals nor spoke directly with either one.

Rather, the online seller sent firearms and invoices for effecting these sales to a local pawn shop. Notably, the online seller chose not to provide the full record of its communications with the purchaser that would have suggested a potential straw purchase. The purchaser’s mother, whose credit card was used for the purchase, came into the store, underwent the legally-mandated background check, filled out the forms, and accepted the firearms.

Approximately a year later, the mentally ill man encountered Kirsten Englund at a scenic overlook and murdered her with one of the guns.

Both Dealer Defendants Argued Neither Could be Liable

The separation of the roles and information known to the online seller and in-state transferor led both defendants in Englund to argue that neither could be liable for online straw sales.

Defendants’ primary argument was that neither dealer had sufficient information to engage in a “knowing” violation of state or federal firearms law, and therefore they were immunized by PLCAA, which preempts state law causes of action against firearms dealers absent a “predicate exception” or other exception. (15 U.S.C. § 7903(5)(A)(iii)). Had Defendants’ argument prevailed, it would have provided immunity to all dealers involved in online gun sales.

The “predicate exception” applies when a defendant knowingly violates, aids, or abets the violation of a statute applicable to the sale or marketing of firearms, which is the proximate cause of the harm for which relief is sought. In Englund, the online dealer argued that it could not “knowingly” violate straw purchase laws, because it did not know the identity of the ultimate recipient of the gun. The in-store dealer argued it could not “knowingly” violate those same laws because it did not have information indicating someone other than the individual who came to pick up the guns was the true purchaser.

The facts of Englund illustrate the fallacy of the dealers’ defenses. The online seller failed to investigate or stop the sale despite interacting electronically with the shooter and accepting his mother’s credit card to purchase the firearm.

Instead, the online seller shipped the firearm to a pawn shop in the shooter’s home state without informing the pawn shop of these communications. And, the online seller processed an invoice with the names of both the shooter and his mother without clearly specifying the sole purchaser. The pawn shop failed to ask any questions about that anomaly before transferring the firearm to the shooter’s mother.

Although one person paying for a gun that is intended for another is a classic example of a straw sale, the online seller argued that this was a harmless fact of modern online commerce, akin to Amazon. Defense counsel went as far as suggesting that since children may use parents’ credit cards to buy toys, there was no legal liability if they did so to buy guns. The court, however, rejected this position as profoundly misunderstanding the legal obligations of firearms dealers. The court ruled that the complaint sufficiently alleged that both dealer defendants either knowingly violated or aided and abetted the straw purchasers in violating firearm statutes.

The court’s rationale acknowledges that dealers engaged in online straw sales are acting in concert with each other and with the actual and straw purchasers to complete an unlawful sale. By permitting aiding and abetting allegations to proceed, the court accepted plaintiff’s view that actions and knowledge of the sellers can create liability.

The court also rejected defendants’ arguments at motion to dismiss that Ms. Englund’s murder was not foreseeable as matter of law for having occurred 13 months after the purchase. The court stated definitively that “a foreseeable outcome arising from a seller of firearms violating gun safety laws that were designed to keep firearms out of the hands of dangerous people is that innocent people would be harmed or worse murdered.” (Englund, Order on Mot. to Dismiss).

Finally, plaintiff argued that the online seller was in violation of Oregon Revised Statute § 166.416(1), for providing false information in connection with the purchase of a firearm because it misrepresented the name of the credit card owner on the invoice. At motion to dismiss, the court held that “a reasonable person could find that both [firearms dealers] knowingly violated and/or aided and abetted [the shooter and his mother] in violating a statute applicable to the sale or marketing of firearms.” (Englund, Order on Mot. to Dismiss).

At summary judgment, after the in-store dealer settled, the court again held that a reasonable jury could find that the online dealer violated Section 166.416(1) by “providing false information to [the pawn shop] relating to the purchase and sale” of one of the guns, noting the wrong name for the credit card holder and the online dealer’s failure to provide all communications to the in-store seller.

Beyond Englund, the court’s ruling establishes that online sellers may be liable even though the false information may not relate to the background check or records mandated under federal law, and even though the online dealer did not ultimately hand the firearm to the straw purchaser.

Implications of Englund

For firearms dealers, Englund is groundbreaking as it establishes that online straw sales can give rise to liability for both dealers involved in online transactions.

Responsible businesses should take steps to ensure they have processes to identify and prevent online straw purchases. Indeed, insurers should require such safeguards. For example, the Englund settlement required the dealers to take additional steps to confirm the identity of the actual purchaser and to investigate red flags designed to stop potential straw sales.

Significantly, the pawn shop agreed to stop transferring firearms sold online altogether. Recognizing firearms dealers’ role in preventing gun violence, the pawn shop defendant publicly stated that it “… has an important role to play in preventing dangerous people from obtaining firearms, and keeping its community safe. [And it] recommends and encourages that all gun dealers, including online sellers, go beyond the legal minimum to implement the safest business practices to prevent firearms from being obtained by criminals, straw purchasers, and other persons who pose a danger to themselves or others when in possession of a firearm.”

For victims of gun violence, Englund provides reassurance that when firearm dealers fail to take reasonable steps to prevent online straw sales, they can pursue justice through the court system. Despite PLCAA, Englund provides direct precedent that holds the law will not immunize firearm dealers who engage in online transactions with knowledge of facts indicative of straw sales.

Author Information

Julie Goldsmith Reiser is a partner at Cohen Milstein who oversaw the firm’s pro bono litigation efforts in Englund, litigated in conjunction with the Brady Center to Prevent Gun Violence and the D’Amore Law Group. Raymond M. Sarola is an associate at Cohen Milstein who led the Englund pro bono litigation team, which included Molly J. Bowen and Sally Handmaker Guido, both associates at the firm.

Sincere thanks to our co-counsel at the Brady Center to Prevent Gun Violence, D’Amore Law Firm, and Nick Kahl LLC for their invaluable contributions to Vivian Englund, as Personal Representative of the Estate of Kirsten Englund v. World Pawn Exchange et al., No: 16-cv-598 (Coos Cty. Circuit Court). The Order Denying Motion to Dismiss can be found here. The Order Denying Motion for Summary Judgment can be found here.