If you’ve ever seen the “Dirty Harry” movies, then you know the name of one of America’s oldest and most successful gun companies, Smith & Wesson. That famed gun maker is now under attack by activist nuns who are seeking to use their small stockholdings in the business to stop it from producing so-called “assault rifles.”
Specifically, the nuns filed a lawsuit in a state court in Nevada on Tuesday, arguing that Smith & Wesson should abandon the manufacture, marketing, and sale of those types of weapons because they “have no purpose other than mass murder.” The nuns also argue that Smith & Wesson’s directors and senior management have exposed the company to liability by proceeding with their current strategy of making and selling “assault weapons,” by which they mean AR-15 style rifles, and not responding to lawsuits over mass shootings.
The nuns filed their lawsuit as shareholders of the company, making it a derivative lawsuit. A derivative lawsuit is one filed by the shareholder or shareholders of a company to address harm or wrongs done to the company. Such a suit is generally brought on behalf of the company against executives or board members. whom the shareholders claim acted in a way that goes against the interests of the company.
“This stockholder derivative action arises because Defendants–members of Smith & Wesson’s Board and senior management team–knowingly allowed the Company to become exposed to significant liability for intentionally violating federal, state, and local laws through its manufacturing, marketing, and sales of AR-15 style rifles and similar semiautomatic firearms,” the nuns claim in the suit.
However, while such lawsuits seek to hold corporate leadership liable for breaches of their fiduciary duties to the company’s shareholders, it’s rare for them to succeed, as most courts tend to find boards are protected from lawsuits for good-faith decisions.
In a statement on the matter, the congregations of Catholic Sisters said, “These rifles [AR-15-style rifles] have no purpose other than mass murder.” They continued, “We call on Smith & Wesson to return to the practices of its first 153 years of existence when it held itself as a successful beacon of responsible gun ownership and did not manufacture, market, or sell military-grade, mass-killing assault weapons.”
Newman Ferrara LLP partner Jeffrey Norton filed the suit on behalf of the sisters and, commenting on it, said, “Much like the pharmaceutical companies being hammered by civil judgments and fines after enjoying years of profits from the sale of dangerous opioids, Smith & Wesson’s board willfully ignores the potentially ruinous exposure the company faces from its marketing and sale of weapons designed specifically for mass killing.”
Continuing, Norton went on to proudly call what the nuns are up to “shareholder activism,” saying, “We are proud to partner with these congregations of Catholic Sisters who have long sought corporate responsibility through their shareholder activism.”
Norton made much the same claim in the suit itself, saying, “Much like the day of reckoning faced by purveyors of opioids who flooded the market with dangerous and deadly products, the Individual Defendants continue to place their own personal interests, greed, biases, beliefs, and political concerns above the interests of the Company and its stockholders, ignoring the high likelihood that the long-term liabilities and risks associated with the manufacturing, marketing, and sales of AR-15 Rifles will far outweigh the short-term benefits brought about through the same.”
Featured image credit: By Niels Noordhoek – Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=19595515
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