By Tim Gaynor
PHOENIX (Reuters) - A wrongful death lawsuit brought by the family of slain Border Patrol agent Brian Terry has been dismissed by a federal judge on the grounds that a court settlement would interfere with the powers of the U.S. government, which has a compensation scheme of its own.
Terry died in a shoot-out with Mexican drug cartel gunmen in southern Arizona in December 2010 in a case tied to a flawed bureau of Alcohol, Tobacco, Firearms and Explosives, or ATF, gun-running operation that embarrassed the Obama administration and strained relations with Mexico.
Last year Terry's parents, Kent and Josephine Terry, filed a $25 million wrongful-death claim against prosecutors and ATF agents alleging they acted in violation of their own policies and that so-called "Fast and Furious" operation negligently allowed the weapons to be bought by violent criminals.
In a written ruling released on Friday, District Judge David G. Campbell found that federal law and prior U.S. Supreme Court rulings barred such damages because the U.S. Congress has passed laws providing compensation - including death benefits - for survivors of federal officers killed in the line of duty.
"The Court recognizes that Plaintiffs have suffered a great loss, and that any financial remedy is likely insufficient to redress their injury," Campbell said in the eight-page ruling.
"But as the Supreme Court has made clear, the bedrock principle of separation of powers counsels against judicially-created remedies when Congress has established a remedial scheme," he added.
An attorney representing Terry's family said they planned to appeal the ruling.
Robert Heyer, Brian Terry's cousin and the chairman of the foundation set up in the fallen agent's name, said the family was disappointed by the ruling.
"We're reading over his order and it appears that he has ruled strictly on a technicality. He has not considered the basis of the claim that said that ATF and the U.S. Attorney's office had created a danger in their pursuit of this gun trafficking operation," Heyer told Reuters by telephone.
"This has never been about a financial amount, this is about gaining justice and holding those individuals accountable for their actions," he added.
The botched sting operation ran from late 2009 to early 2011 out of the Phoenix offices of the ATF and the U.S. Attorney.
The goal was to try to track guns bought by straw buyers with clean backgrounds to senior drug cartel members. However, in most cases ATF agents did not follow the guns beyond the initial buyer.
A number of guns bought in the scheme were recovered from crime scenes in Mexico. Two tracked by the ATF were also retrieved from a remote spot in southern Arizona where Terry was killed, although it was unclear if the weapons were used in his murder.
Terry's slaying set off a political firestorm when it brought to light the ATF sting in which about 2,000 weapons were sold to buyers believed to be straw purchasers for Mexico's powerful drug cartels.
Congressional Republicans slammed the government for the program, and called on Attorney General Eric Holder to resign. The program also strained ties between the Mexican and U.S. governments.
(Editing by Edith Honan, Eric M. Johnson and Eric Walsh)