Supreme Court to Hear Free Speech Complaint by NRA Against New York Regulator

By Andrew G. Simpson | November 6, 2023

The U.S. Supreme Court last Friday agreed to hear an appeal by the National Rifle Association of a case in which it accuses a New York insurance regulator of violating its free speech rights when she urged insurance companies and banks to consider the “reputational risks” of doing business with the NRA.

The NRA has claimed that former New York Department of Financial Services Superintendent Maria T. Vullo infringed its First Amendment 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 not doing business with gun groups including the NRA.

The gun advocacy organization has argued that Vullo’s statements and letters constituted “harassment” and “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The group originally made claims of selective enforcement, as well as violations of its equal protection rights and of its First Amendment rights against Vullo. A federal district court dismissed the selective enforcement claim and, finding Vullo was shielded by absolute immunity, it dismissed the equal protection claim as well. However, the district court allowed the free speech claims to proceed because it questioned whether she was protected by qualified immunity against those claims.

Vullo appealed the denial of its summary judgment bid on the free speech claims. The NRA had filed two First Amendment claims: that Vullo “established an unconstitutional implicit censorship regime in an effort to chill the NRA’s protected speech” and that Vullo “unconstitutionally retaliated against the NRA for its protected speech.”

In September 2022, the Second Circuit Appeals Court upheld the dismissal of the equal protection claim and also dismissed the free speech claims on grounds of absolute immunity.

The appeals court ruled that Vullo was within her rights as a regulator and entitled to qualified immunity for speaking out as she did. The federal 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’s lawyer, William A. Brewer, said the NRA is ready to argue its case before the Supreme Court.

“We are grateful the Supreme Court will review this First Amendment case and excited by the opportunity to argue to the Court that a government regulator cannot take adverse action against its political enemies,” said Brewer in a statement. “The ruling from the Second Circuit condones public officials having unbridled power to attack those with whom they disagree.”

In its petition to the Supreme Court, the NRA argues that the Second Circuit’s opinion “gives state officials free rein to financially blacklist their political opponents – from gun rights groups, to abortion-rights groups, to environmentalist groups, and beyond.” The group argues that the opinion “erroneously opened the door to unrestrained harassment of advocacy groups by state officials, and seeks to have it closed.”

The Supreme Court granted review on the following question: Does the First Amendment allow a government regulator to threaten regulated entities with adverse regulatory actions if they do business with a controversial speaker, as a consequence of (a) the government’s own hostility to the speaker’s viewpoint or (b) a perceived “general backlash” against the speaker’s advocacy?

Case Background

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 were illegal in the state because they provided insurance coverage for intentional criminal acts. DFS also found that the NRA promoted Carry Guard without an insurance producer license. She fined the insurance firms more than $13 million. The insurance firms agreed to stop selling NRA-endorsed products that New York considered illegal. Each consent decree allowed the entities to continue to do business with the NRA, however.

Vullo’s controversial comments in 2018 came two months after the shooting at a 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. Vullo spoke out against gun violence through guidance letters to the industry and a press statement issued by the New York governor. Vullo called upon banks and insurance companies doing business in New York to consider the risks, including “reputational risks,” that might arise from doing business with the NRA or “similar gun promotion organizations,” and she urged the banks and insurance companies to “join” other companies that had discontinued their associations 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.”

The appeals court found that immunity must consider whether an official’s actions violated clearly established law and this must be viewed in a case’s specific context. That is, the “contours of the right must be sufficiently clear that a reasonable official would understand that what he is doing violates that right.” While the exact official action need not have been previously held unlawful, its unlawfulness must be apparent in light of pre-existing case law, the appeals court stated in concluding that Vullo was entitled to immunity.

“[E]ven assuming the NRA sufficiently pleaded that Vullo engaged in unconstitutionally threatening or coercive conduct, we conclude that Vullo is nonetheless entitled to qualified immunity because the law was not clearly established and any First Amendment violation would not have been apparent to a reasonable official at the time,” the appeals court concluded.

The court noted that it is not aware of any case where a government official has been held to have violated the First Amendment by making statements that use “only suggestive language and rely on the power of persuasion.”

The Second Circuit said that government officials like Vullo have a duty and a right to address issues of public concern. The court concluded:
“The Complaint’s factual allegations show that, far from acting irresponsibly, Vullo was doing her job in good faith. She oversaw an investigation into serious violations of New York insurance law and obtained substantial relief for the residents of New York. She used her office to address policy issues of concern to the public. Even assuming her actions were unlawful, and we do not believe they were, the unlawfulness was not apparent by any means. Accordingly, even assuming the NRA plausibly alleged a First Amendment violation, Vullo would be protected by qualified immunity in any event.”

About Andrew G. Simpson

Simpson covers the east region for the Insurance Journal, a sister publication. More from Andrew G. Simpson

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