Supreme Court Backs NRA in First Amendment Claim Against New York Regulator

The U.S. Supreme Court has revived a claim by the National Rifle Association (NRA) that a former New York regulator allegedly violated the organization’s First Amendment rights by coercing insurers and banks to terminate their business relationships with the NRA in order to punish or suppress the NRA’s gun rights advocacy.

“Government officials cannot attempt to coerce private parties in order to punish or suppress views that the government disfavors,” the court declared in a unanimous opinion written by Justice Sonia Sotomayor.

The Supreme Court found the NRA’s allegations that former New York Department of Financial Services Superintendent Maria T. Vullo violated its First Amendment rights to be plausible. The high court vacated a 2022 judgment of the U. S. Court of Appeals for the Second Circuit that dismissed the NRA’s claims. It remanded the case back to the circuit court for further proceedings.

The NRA claimed that Vullo infringed its free speech rights when she spoke out against gun violence and issued a press release and guidance letters urging banks and insurance companies in New York to consider the “reputational risks” of doing business with gun groups including the NRA. The gun advocacy organization argued that Vullo’s statements and letters constituted “threats” of adverse action if insurers or banks failed to support her efforts to “stifle the NRA’s speech” and to retaliate against the NRA.

The case stems from events in 2018 after Vullo’s department investigated the NRA-sponsored Carry Guard insurance programs offered by broker Lockton and insurer Chubb and similar programs underwritten by Lloyd’s of London. The DFS investigation concluded that the NRA-endorsed programs violated New York insurance law by providing insurance coverage for intentional criminal acts. DFS also found that the NRA promoted Carry Guard without an insurance producer license.

As a result of the DFS investigation, Lloyd’s of London, Chubb and Lockton signed consent decrees agreeing to discontinue the sale of the NRA insurance plans in New York. Each consent decree expressly allowed the entities to continue to do business with the NRA.

Vullo was quoted in the press release as stating that “business can lead the way and bring about the kind of positive social change needed to minimize the chance that we will witness more of these senseless tragedies,” and urging “all insurance companies and banks doing business in New York to join the companies that have already discontinued their arrangements with the NRA, and to take prompt actions to manage these risks and promote public health and safety.”

Vullo’s comments came two months after the shooting at Marjory Stoneman Douglas High School in Parkland, Florida, where 17 high school students and staff were killed. In the wake of the shooting, the NRA and other gun promotion groups faced intense backlash.

A panel of the Second U.S. Circuit Court of Appeals ruled in September 2022 that Vullo was within her rights as a regulator and that she was entitled to qualified immunity for speaking out as she did. The federal appeals court said that NRA’s First Amendment claims rested on whether Vullo’s statements were “implied threats to employ coercive state power to stifle protected speech.” Circuit Judge Denny Chin, writing for the three-judge panel, found that was not the case and that Vullo’s words “speak for themselves, and they cannot reasonably be construed as being unconstitutionally threatening or coercive.”

The NRA appealed to the Supreme Court that has now rejected that appeals court approach, concluding that the NRA plausibly alleged a First Amendment claim.

“While a government official can share her views freely and criticize particular beliefs in the hopes of persuading others, she may not use the power of her office to punish or suppress disfavored expression,” the high court stated, adding that the First Amendment prohibits government officials from relying on the “threat of invoking legal sanctions and other means of coercion . . . to achieve the suppression” of disfavored speech.”

As DFS superintendent, Vullo had direct regulatory and enforcement authority over all insurance companies and financial service institutions doing business in New York.

The court said Vullo’s communications with the DFS-regulated entities made clear she wanted Lloyd’s to disassociate from all gun groups, although there was no indication that such groups had unlawful insurance policies similar to the NRA’s. Vullo also allegedly told the Lloyd’s executives she would “focus” her enforcement actions “solely” on the syndicates with ties to the NRA, “and ignore other syndicates writing similar policies.”

The Supreme Court said the “message was loud and clear” that Lloyd’s could avoid liability for unrelated infractions if it aided DFS’s campaign against gun groups by ending its business relationships with them. Vullo’s alleged communications, the court found — whether seen as a threat or as an inducement — “were reasonably understood as coercive.”

The court said NRA’s other allegations concerning Vullo’s guidance and communications reinforce the NRA’s First Amendment claim. The high court criticized the Second Circuit’s conclusion that they were “examples of permissible government speech” and “legitimate enforcement action,” finding that the circuit court could only reach this conclusion by taking the allegations in isolation and failing to draw reasonable inferences in the NRA’s favor.

Vullo claimed that the NRA’s position, if accepted, would stifle government speech and hamper legitimate enforcement efforts, but the Supreme Court said its conclusion simply reaffirms the general principle that where the complaint plausibly alleges coercive threats aimed at punishing or suppressing disfavored speech, the plaintiff states a First Amendment claim.

“Nothing in this case immunizes the NRA from regulation nor prevents government officials from condemning disfavored views. The takeaway is that the First Amendment prohibits government officials from wielding their power selectively to punish or suppress speech, directly or (as alleged here) through private intermediaries,” the court stated.

The American Civil Liberties Union provided legal representation for the NRA in the appeal.

Reaction

A lawyer for the NRA called the ruling “a landmark victory for the NRA and all who care about our First Amendment freedom.” The attorney, William A. Brewer, added that the opinion confirms that “New York government officials abused the power of their office to silence a political enemy.”

Vullo’s attorney, Neal Katyal, said the ruling required the Supreme Court to treat the “NRA’s untested allegations as true even though these allegations have no evidentiary merit.”

Katyal said the NRA’s allegations about the Lloyd’s meetings are false, and that Vullo “did not threaten, coerce or retaliate against anyone.” He said he believes that the Second Circuit, which threw out the lawsuit on qualified immunity grounds before, will reaffirm Vullo’s claim of qualified immunity. The Supreme Court did not address the immunity issue.