Justices weigh if officials went too far
First Amendment case involves New York, NRA
WASHINGTON – The National Rifle Association is battling New York state regulators at the Supreme Court over their reaction to mass shootings, which threatened to choke off insurance and lending to the gun advocacy group.
The case isn’t about the Second Amendment right to bear arms. It’s about the First Amendment right to free speech. The eventual judgment is likely to redefine how far government officials can go in voicing opinions about the businesses they regulate.
The NRA contends that New York’s powerful Department of Financial Services coerced insurers to stop doing business with the group because officials didn’t like its gun advocacy.
A half-dozen current and former prosecutors warned the NRA’s position could weaken enforcement and overwhelm the courts with lawsuits. For example, many of the more than 1,000 people charged in the Jan. 6 Capitol riot asked to dismiss their charges on First Amendment grounds by arguing their actions were the result of believing the 2020 election was stolen. If the Supreme Court rules for the NRA, those defendants could start suing prosecutors.
The Justice Department has weighed in because − depending how the court rules − the justices might complicate the enforcement of laws and regulations. U.S. Solicitor General Elizabeth Prelogar didn’t take sides in the case. But she argued even if state officials went too far in discouraging insurers and banks from doing business with the NRA, the case should be decided narrowly to avoid disrupting other regulators.
The justices were slated to hear oral arguments Monday.
Critics: ‘murder insurance’
The case concerns two sets of actions: one targeting a specific insurance policy, one addressing banks and insurers more broadly.
In April 2017, the NRA, which is headquartered in New York, began marketing “Carry Guard” insurance policies to cover expenses from using a legal firearm in self-defense. Some critics called the policies “murder insurance.” Carry Guard policies were administered by Lockton and underwritten by insurers Chubb and Lloyd’s of London.
The Department of Financial Services began investigating in October 2017. The department can grant or deny licenses, launch investigations, impose millions of dollars in fines and refer matters for criminal prosecution. Chubb and Lockton suspended the Carry Guard program the next month.
In February 2018, after the Parkland shooting, criticism rained down on the NRA, including from then-New York Gov. Andrew Cuomo and Maria Vullo, the superintendent of the financial services department. Vullo began meeting with insurance executives who did business with the NRA. What was said is disputed, but Lloyd’s of London decided to stop underwriting firearm-related policies that month and to scale back its business with the NRA.
The NRA sued Vullo, claiming she “abused her regulatory muscle to punish the organization for its First Amendment-protected speech and to suppress its future speech.” Under Supreme Court precedents, government officials may express their opinions under the First Amendment, but they cannot “attempt to coerce.”
A U.S. District Court judge dismissed most of the NRA’s claims, but allowed the group to continue fighting Vullo over allegations she violated the First Amendment by coercing insurers to stop doing business with the NRA.
The 2nd U.S. Circuit Court of Appeals ruled out even those claims, finding the NRA failed to plausibly allege unconstitutional coercion.
The Supreme Court agreed to hear arguments on whether the First Amendment “permits a government official to threaten regulated entities with adverse regulatory action if they do business with an advocacy organization.”
Regulators: ‘exceptionally dangerous precedent’
The department determined the NRA’s insurance products were “unlawfully marketed” because the group lacked the necessary license.
Vullo argues the NRA’s insurance programs were illegal, so forcing insurers to drop the coverage was a no-brainer.
“Carry Guard violated New York law in numerous respects,” Vullo’s brief said. “It provided coverage for intentional acts and criminal defense costs.”
In May 2018, Lockton and Chubb admitted to unlawfully providing insurance in New York and agreed to pay a collective $8.3 million. In December 2018, Lloyd’s acknowledged violating state law and agreed to pay a $5 million fine.
The NRA agreed to pay $2.5 million and to refrain from offering insurance in New York for five years.
Vullo’s lawyers argue that accepting NRA’s arguments would encourage lawsuits for damages against government regulators and could block legitimate enforcement actions, setting “an exceptionally dangerous precedent.”
Did a letter go too far?
On April 19, 2018, Vullo sent “guidance letters” to New York banks and insurers “in the wake of several recent horrific shootings.” She said the “social backlash” against the NRA and other gun-rights groups “is demanding change now.”
“The Department encourages regulated institutions to review any relationships they have with the NRA or similar gun promotion organizations, and to take prompt actions to managing these risks and promote public health and safety,” the letter said.
Prelogar, writing for the Biden administration, said the first four paragraphs of the New York letter were fair comment under the First Amendment, simply meant to convince companies not to do business with the NRA rather than coerce them.
But she acknowledged the final paragraph might have gone too far in targeting the NRA because of its viewpoint by encouraging businesses to consider “reputational risks” from dealing with pro-gun groups.
Because of disputes over what Vullo said to Lloyd’s, Prelogar said courts would have to gather more evidence before deciding whether she went too far.