CASE PREVIEW

Justices to hear NRA’s free speech argument against New York financial services official

The Supreme Court will hear oral arguments on Monday in a dispute over a lower court’s order that would limit the federal government’s abilities to communicate with social media platforms about their content moderation policies. When that case has finished, the justices will move quickly into a closely related dispute, in which the National Rifle Association alleges that a New York official violated the group’s right to freedom of speech by urging banks and insurance companies that worked with the NRA to cut ties with the group.

The dispute dates back to 2017, when New York’s Department of Financial Services, which oversees banks and insurance companies in the state, opened an investigation into insurance programs, endorsed by the National Rifle Association, to provide coverage for injuries caused by guns.

In 2018, three companies acknowledged that some of the programs endorsed by the NRA violated state law. The companies agreed not to provide any NRA-endorsed insurance programs to New York residents and to pay fines ranging from $1.3 to $7 million.

After the Feb. 2018 shooting by a teenager at a high school in Parkland, Fla., led to the death of 17 students and staff, the head of the department, Maria Vullo, issued a press statement and “guidance” letters in which she called on banks and insurance companies doing business in the state to consider the risks of doing business with the NRA and other organizations that promote guns. Vullo also urged the banks and insurance companies to “join” companies that had cut ties with the NRA.

When several insurance companies stopped doing business with the NRA, and some banks withdrew bids for the group’s business, the NRA went to court, where it sued (as relevant here) Vullo, arguing that she had violated the group’s right to freedom of speech by threatening the companies and banks so that they would break off their relationships with the group.

A federal district court in Binghamton, N.Y., allowed the NRA’s First Amendment claims against Vullo to go forward. Senior U.S. District Judge Thomas McAvoy concluded that – when viewed together – Vullo’s statements “could be interpreted as a veiled threat to regulated industries to disassociate with the NRA or risk” action by the Department of Financial Services.

The U.S. Court of Appeals for the 2nd Circuit reversed McAvoy’s ruling. It held that the NRA had “failed to plausibly allege that Vullo crossed the line between attempts to convince and attempts to coerce.” But in any event, the court of appeals concluded, Vullo was entitled to immunity because the law governing the NRA’s First Amendment claim was not clearly established.

The NRA came to the Supreme Court in February 2023, asking the justices to weigh in. They agreed to take up the NRA’s case in November.

The NRA is represented in the Supreme Court by (among others) Eugene Volokh, a libertarian law professor at UCLA and First Amendment scholar, and the American Civil Liberties Union. In its brief on the merits, the NRA stresses that Vullo could not directly penalize NRA because she disagreed with its support of gun rights. Although she could have criticized the NRA or reminded insurance companies and banks about their legal obligations without violating the First Amendment, they observe, the Supreme Court ruled in 1963 in Bantam Books v. Sullivan that “informal, indirect government efforts to suppress or penalize speech by threatening private intermediaries violate the First Amendment.”

Therefore, the NRA writes, when Vullo used her power over banks and insurance companies to get them to blacklist the NRA, she violated the First Amendment.  

Under the Supreme Court’s cases, the NRA suggests, three factors are relevant to determining whether a speaker crosses over to coercion or inducement. All three of those factors, the NRA says, lead to the conclusion that Vullo violated the group’s First Amendment rights.

The first factor, the NRA explains, is the government official’s power over individuals or entities she is addressing. Here, the NRA says, Vullo acted as the “sheriff of Wall Street” and had the authority to do everything from investigate the banks and insurance companies to revoke their licenses and refer them for criminal prosecution.

The second factor, the NRA notes, is the content or purpose of the government official’s communications. In this case, the NRA emphasizes, Vullo went beyond simply expressing her opinion about guns and instead both threatened companies that did not comply with her “political blacklist” and offered “inducements to those who did.”

The third and final factor, the NRA continues, is the effect of the government’s conduct on its target audience. And here the banks and insurance companies that Vullo was charged with regulating “heard her message loud and clear,” the NRA charges, with many either cutting ties with the NRA or withdrawing bids that they had submitted for the NRA’s business.

Any efforts by the court of appeals to downplay the significance of Vullo’s conduct on the ground that the NRA was unpopular in New York, so that doing business with the group carried a “reputational risk” “effectively blessed a heckler’s veto,” the NRA cautions. The NRA warns of the potentially expansive implications of such a rule: Although it might clear the way for “government officials to target groups for the favorable views of gun-promotion,” the group observes, “in other states, it would permit government officials to target pro-abortion groups on those same grounds.”

The Biden administration, which will be defending its own actions in the battle over its interactions with social media companies on the same day, filed a brief that suggests a middle line. U.S. Solicitor General Elizabeth Prelogar tells the justices in her brief that the NRA’s allegations about Vullo’s February 2018 meetings with Lloyd’s of London, at which Vullo supposedly pressured the insurance company to end its relationship with the NRA because she disagreed with the group’s position, state a claim for a violation of the First Amendment that should be allowed to go forward. But other steps by Vullo, such as enforcement actions against insurance companies, Prelogar writes, do not provide the basis for a First Amendment claim because they were “based on bona fide violations of New York law” and therefore “also consistent with legitimate law enforcement efforts.”

In her brief on the merits, Vullo – who is represented by (among others) former Acting Solicitor General Neal Katyal – urges the court to dismiss the case. She argues that the justices lack the power even to decide whether Vullo violated the First Amendment because the 2nd Circuit ruled that Vullo was immune from suit. Because the Supreme Court did not take up the immunity question, she contends, its ruling on the First Amendment question therefore would be purely advisory, and “can have no effect on the judgment below.”

But if the justices move on to the merits of the NRA’s arguments, Vullo continues, they don’t actually need to consider whether Vullo’s acts were coercive. Most of the NRA’s allegations, she reasons, focus on steps that Vullo took to enforce New York law, for which she is entitled to absolute immunity, such as “executing a consent order or forgoing enforcement of additional violations as part of a negotiated solution.”

Vullo was also simply regulating the insurers’ conduct, rather than retaliating against the NRA’s speech, she explains. Under the Supreme Court’s cases dealing with claims of First Amendment retaliation, she contends, the NRA must show that her decision to take action against it was “objectively unreasonable” – which the group cannot do, she argues, especially with the insurers’ acknowledgments in consent decrees that both they and the NRA had engaged in illegal conduct.

But in any event, Vullo adds, the NRA has not adequately alleged that her statements were coercive. Industry letters and the statement that Vullo issued after the Parkland shooting did not “so much as hint[] that insurers or banks would suffer any adverse consequence for maintaining ties with the NRA, and” – although “critical of the NRA” – the tone was “even handed” and “nonthreatening.” Therefore, she concludes, “they are not remotely comparable to the ‘thinly veiled threats to institute criminal proceeding’ in Bantam Books.”

Vullo echoes the 2nd Circuit’s suggestion that the decisions by banks and insurance companies to cut their ties with the NRA in 2018 are best attributed not to her speech or her enforcement actions, but instead to “a groundswell of public pressure against the NRA” in the wake of the Parkland shooting. And she cautions that a ruling for the NRA would “set an exceptionally dangerous precedent.” The government, she warns, won’t be able to work properly if public officials can’t freely express their views and a prosecutor can – as in this case – be held liable for violating the First Amendment simply by “expressing her views on a matter of public concern, and her acts enforcing New York law against parties who concededly violated it.”

This article was originally published at Howe on the Court.