FILE PHOTO: View of a .50 Caliber Barrett M107A1 semi-automatic rifle at a gun store in Racine, Wisconsin, U.S., June 26, 2023. REUTERS/Brian Snyder/File Photo

By John Kruzel

WASHINGTON (Reuters) - The U.S. Supreme Court on Thursday spared two American gun companies from a lawsuit by Mexico's government accusing them of aiding illegal firearms trafficking to drug cartels and fueling gun violence in the southern neighbor of the United States.

The justices in a 9-0 ruling authored by liberal Justice Elena Kagan overturned a lower court's ruling that had allowed the lawsuit to proceed against firearms maker Smith & Wesson and distributor Interstate Arms. The lower court had found that Mexico plausibly alleged that the companies aided and abetted unlawful sales routing guns to Mexican drug cartels, harming its government.

The justices embraced the argument made by the companies for dismissal of Mexico's suit under a 2005 U.S. law called the Protection of Lawful Commerce in Arms Act that broadly shields gun companies from liability for crimes committed with their products. The Boston-based 1st U.S. Circuit Court of Appeals had decided in 2024 that the alleged conduct by the companies fell outside these protections.

The Supreme Court decided that while it has little doubt that U.S. companies are aware of some unlawful sales to Mexican gun traffickers, Mexico's lawsuit failed to allege that the companies had aided and abetted such illegal firearms sales by deliberately helping to bring about the transactions.

"Mexico's plausible allegations are of 'indifference' rather than assistance," Kagan wrote. "They are of the manufacturers merely allowing some unidentified 'bad actors' to make illegal use of their wares."

The case came to the Supreme Court at a complicated time for U.S.-Mexican relations as President Donald Trump pursues on-again, off-again tariffs on Mexican goods. Trump has also accused Mexico of doing too little to stop the flow of synthetic drugs such as fentanyl and migrant arrivals at the border.

Mexico's lawsuit, filed in Boston in 2021, accused the two companies of violating various U.S. and Mexican laws. Mexico claims that the companies have deliberately maintained a distribution system that included firearms dealers who knowingly sell weapons to third-party, or "straw," purchasers who then traffic guns to cartels in Mexico.

The suit also accused the companies of unlawfully designing and marketing their guns as military-grade weapons to drive up demand among the cartels, including by associating their products with the American military and law enforcement.

Mexico's Foreign Ministry said in a statement that it "strongly disagrees" with the court's ruling and that it would "continue to do everything in its power to curb illicit arms trafficking, exhausting all available legal and diplomatic remedies."

In the lawsuit, Mexico had sought monetary damages of an unspecified amount and a court order requiring Smith & Wesson and Interstate Arms to take steps to "abate and remedy the public nuisance they have created in Mexico."

'CONSTITUTIONALLY PROTECTED PRODUCT'

Noel Francisco, a lawyer for the gun companies, said Thursday's ruling vindicated the "core purpose" of the Protection of Lawful Commerce in Arms Act.

"Our client makes a legal, constitutionally protected product that millions of Americans buy and use, and we are gratified that the Supreme Court agreed that we are not legally responsible for criminals misusing that product to hurt people, much less smuggling it to Mexico to be used by drug cartels," Francisco said.

To avoid its lawsuit being dismissed under the 2005 law, Mexico was required to plausibly allege that the companies aided and abetted illegal gun sales and that such conduct was the "proximate cause" - a legal principle involving who is responsible for causing an injury - of the harms claimed by Mexico.

The Supreme Court, which heard arguments in the case on March 4, declined to resolve the proximate cause question after finding that Mexico's suit failed to adequately allege aiding and abetting.

Gun violence fueled by trafficked U.S.-made firearms has contributed to a decline in business investment and economic activity in Mexico and forced its government to incur unusually high costs on services including healthcare, law enforcement and the military, according to the lawsuit.

Mexico, a country with strict firearms laws, has said most of its gun homicides are committed with weapons trafficked from the United States and valued at more than $250 million annually.

Carlos Perez Ricart, an international affairs researcher at Mexico's Center for Economic Research and Teaching (CIDE), criticized the ruling.

"Once again, the industry is shielded. It doesn't matter how many bullets cross the border or how many people are killed on the Mexican side. Bullets are not the only things that kill; so does the legal impunity guaranteed by Washington," Ricart said in a social media post.

(Reporting by John Kruzel; Additional reporting by Kylie Madry and Natalia Siniawski in Mexico City; Editing by Will Dunham)