INDIANAPOLIS | The stern remarks and sharp questions posed Monday by the Indiana Court of Appeals gave the city of Gary hope its 1999 lawsuit against gun manufacturers and dealers will go forward in spite of a federal law designed to shield the industry from liability claims involving criminal misuse of products.

The three-judge appellate panel appeared to take umbrage at the industry's assertion that the federal Protection of Lawful Commerce in Arms Act that Congress approved in 2005 prohibits Indiana courts from moving ahead with the Gary lawsuit.

"How can they be changing the law when it hasn't been decided yet by the courts?" Judge Patricia Riley asked during Monday's oral arguments.

Michael Rice, a Dallas attorney representing the firearms industry, said Congress appropriately decided the Gary lawsuit and dozens more launched by other cities "were a threat and burden on interstate and foreign commerce."

Isaac Lidsky, a U.S. Department of Justice attorney, also argued in support of the federal law, saying Lake County Judge Robert Pete was mistaken last year when he became the first jurist to declare the act unconstitutional.

Lidsky told the court Congress "routinely preempts state common law" when it comes to liability issues and Pete wrongly asserted that the federal law infringed on the duties of state courts.

Brian Siebel, a senior attorney for the Brady Center to Prevent Gun Violence, said the industry's arguments are "based on the statute they wished Congress had passed." He said the federal law only immunizes the firearms industry from cases where manufacturers and gun dealers did nothing wrong.

The Gary lawsuit, which the Indiana Supreme Court allowed to go forward in 2003, alleges gunmakers and dealers created a public nuisance by failing to prevent criminals from illegally obtaining and misusing handguns. At issue is whether Indiana's public nuisance statute can be applied to the case. The appellate panel appeared to express interest Monday in seeing that question decided.

Judge John Sharpnack said the courts have yet to decide whether the industry facilitated illegal straw-man sales that resulted in the city of Gary "having to deal with a sea, if you will, of illegal firearms in their community."

Rice and Lidsky declined further comment after the hearing. But Siebel said the Gary case could succeed where similar suits in other states have stalled.

"The thing that is unique here is that we do have a unanimous (Indiana) Supreme Court decision that essentially has applied this (nuisance) statute to this conduct and said, 'Go forward with this case because you've met the pleading elements (and) they've knowingly violated this statute,'" Siebel said. "I think that does, certainly, make us a stronger case."