The People of the State of New York v. Arm or Ally, LLC

Background

New York brought a civil enforcement action against nine companies accused of manufacturing and selling unfinished frames and receivers directly to consumers without complying with federal or state firearms laws and regulations. The opinion describes these products as items that could be converted into functional firearms by drilling holes or filing excess plastic. The court had previously granted in part and denied in part the defendants’ motions to dismiss New York’s claims. In that earlier order, the court rejected arguments that the products were not “firearms” under 18 U.S.C. § 921(a)(3), and that most of New York’s claims were barred by the Protection of Lawful Commerce in Arms Act, or PLCAA.

The defendants filed an appeal concerning the PLCAA ruling and then moved under 28 U.S.C. § 1292(b) to certify an interlocutory appeal. An interlocutory appeal is an appeal before the district court has entered a final judgment. Certification requires a controlling legal question, substantial grounds for disagreement about that question, and a likelihood that an immediate appeal will materially advance the case.

Question About the Meaning of “Firearm”

The court held that certification was warranted for the question whether the defendants’ unfinished frames and receivers qualified as “firearms” under federal law during the period from June 2016 through July 2022.

The court found this to be a controlling legal question because reversing the ruling could significantly affect how the case proceeds, even though it would not necessarily end the entire action. Four of New York’s seven causes of action relied on alleged federal-law violations, and those claims also relied on alleged state and local violations. The court said that changing the answer to the firearms question would remove substantial support from New York’s principal claims. The issue also had broader importance because of litigation about a newer federal regulation addressing unfinished frames and receivers and the Supreme Court’s review of a similar question.

The court also found substantial grounds for disagreement. It noted that the court’s ruling was consistent with the Second Circuit’s decision that an inoperable weapon can fall within the federal definition of a firearm, but the Fifth Circuit had reached a contrary conclusion in a related case. The Supreme Court’s decision to review that issue, combined with the absence of a Second Circuit decision addressing the precise question, supported certification.

Finally, the court found that an immediate appeal could materially advance the litigation. Reversal could substantially reduce the factual issues required for trial or could result in the case being returned to state court. Because the case was already stayed while the defendants pursued their PLCAA appeal, the court concluded that the certified appeal would, at worst, not delay the case’s progress.

Question About PLCAA Immunity

The court declined to find that the PLCAA ruling independently warranted certification. It explained that reversal would not affect the claims against KM Tactical and Rock Slide USA because, according to the opinion, those defendants did not hold federal firearms licenses and therefore were not entitled to PLCAA immunity. The court also found that the defendants had not adequately developed their arguments about several other PLCAA issues.

The court further concluded that the main PLCAA issue addressed by the defendants did not involve a controlling legal question. The earlier ruling had rejected the defendants’ argument based on New York’s detailed allegations of the defendants’ own repeated or persistent unlawful conduct, rather than on a disputed interpretation of the PLCAA. The court rejected the defendants’ reliance on decisions from other federal district courts as insufficient to establish a substantial ground for disagreement. It stated, however, that the appeals court could review the PLCAA ruling if it accepted the certified appeal concerning the firearms question.

Disposition

Judge Furman granted the defendants’ motion to certify an interlocutory appeal and directed the Clerk of Court to terminate the motion on the docket. The order certified the appeal regarding whether the unfinished frames and receivers were firearms under federal law. It did not independently certify the PLCAA ruling.