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In NRA Supreme Court Case, Justices Unite Against NY Regulators
Regulators argued that insurers could face legal exposure for doing business with an armed group during an era of mass shootings — and the NRA had nothing to do with selling insurance.
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USA TODAY
WASHINGTON – The National Rifle Association will get another chance to punish New York regulators which discouraged insurance companies and bankers from doing business with the gun advocacy group, the Supreme Court ruled Thursday unanimously.
O NRA sued New York Department of Financial Servicesarguing that regulators had coerced insurance companies against promoting policies by gun rights group. But regulators, led by former superintendent Maria Vulloargued that they were simply pointing out that insurers could face legal exposure for doing business with an armed group during an era of mass shootings and major lawsuits — and the NRA had nothing to do with selling insurance.
A U.S. District Court rejected most of the NRA’s case, but allowed a First Amendment dispute over whether Vullo was simply expressing an opinion, as permitted by the First Amendment, or coercing the companies she regulated, which is not permitted. The 2nd U.S. Circuit Court of Appeals found the coercion claim not plausible and dismissed the case entirely.
But the Supreme Court on Thursday overturned the appeals court’s ruling and allowed the NRA’s case to proceed.
“Ultimately, the critical conclusion is that the First Amendment prohibits government officials from selectively exercising their power to punish or suppress speech, either directly or, as alleged here, through private intermediaries,” said Justice Sonia Sotomayor. wrote in the decision.
The NRA called the decision a stinging rebuke of the state’s blacklisting campaign.
“This victory is a victory for the NRA in the fight to protect freedom,” said NRA President Bob Barr. “This is a historic moment for the NRA in its stance against government excess.”
David Cole, a lawyer with the American Civil Liberties Union advocacy group who represented the NRA, said the ruling “confirms that government officials have no business using their regulatory authority to blacklist disfavored political groups.”
How did New York regulate the NRA?
The NRA began selling insurance policies in April 2017, called “Carry Guard,” to cover legal expenses arising from the use of a firearm in self-defense. The “Carry Guard” policies were administered by insurance broker Lockton and underwritten by insurers Chubb and Lloyd’s of London.
But the NRA was not licensed to sell insurance in New York, and the Department of Financial Services began investigating in October 2017. Chubb and Lockton suspended the Carry Guard program the following month.
In February 2018, after a terrible school shooting in Parkland, Florida, 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 firearms-related policies that month.
“In short, she made no secret of the fact that her goal was to penalize an advocacy group because it opposed her political views,” the NRA argued.
The NRA sued Vullo, alleging that it “abused its regulatory strength to punish the organization for its First Amendment-protected speech and to suppress its future speech.”
In May 2018, two of the insurers admitted illegally providing insurance in New York and agreed to pay $7 million from Lockton and $1.3 million from Chubb. In December 2018, Lloyd’s recognized violating state law and agreed to pay a $5 million fine.
The ARN agreed to pay US$2.5 million and refrain from offering insurance in New York for five years.
“The Carry Guard violated New York law in several respects,” Vullo’s report said. “It provided coverage for intentional acts and criminal defense costs.”
What is the NRA lawsuit about?
The NRA argued that regulators went too far in discouraging insurers from doing business with the group.
On April 19, 2018, Vullo sent “guidance letters” to New York banks and insurance companies “following several recent horrific shootings,” listing Columbine High school, Sandy Hook Elementary School and a music festival in Las Vegas. Vullo said the “social backlash” against the NRA and other gun rights groups “demands change now.”
“The Department encourages regulated institutions to review any relationships they have with the NRA or similar gun promotion organizations, and to take immediate steps to manage these risks and promote public health and safety,” the letter said. Attorney General Elizabeth Prelogar, speaking on behalf of the Biden administration, said the first four paragraphs of the New York letter were fair comments under the First Amendment, intended simply to convince companies not to do business with the NRA, rather to coerce them.
But she acknowledged that the final paragraph may have gone too far in targeting the NRA given its viewpoint, encouraging companies to consider “reputational risks” when dealing with “the NRA or similar gun promotion organizations.” Companies that fail to consider “reputational risks” to their businesses face the threat of multimillion-dollar fines from regulators.
Because of disputes over what Vullo told Lloyd’s at the time, Prelogar said the courts would have to gather more evidence before deciding whether she went too far with them.
“The government has broad freedom to speak for itself, including by vigorously criticizing views with which it disagrees and encouraging citizens to dissociate themselves from groups that express those views,” Prelogar wrote in his document. “But the government cannot punish or suppress such views; nor can it coerce others to inflict punishment or suppression for it.”
Legal experts consider the decision a victory for freedom of expression
Legal experts called the ruling a victory for the First Amendment.
“The Supreme Court has made clear that a government official cannot directly or indirectly coerce a private party to punish disfavored speech on behalf of the government,” said Brent Skorup, a legal fellow at the libertarian Cato Institute, who presented an argument in the case.
“A unanimous court ruled that the government cannot use intermediaries to punish speech,” said Adam Candeub, a law professor at Michigan State University.