National Rifle Association of America v. Vullo

WHETHER VULLO’S ACTIONS WERE IMPERMISSIBLY COERCIVE

The NRA argues that Vullo’s conduct violates the First Amendment because she used her position as Superintendent of DFS to coerce financial entities into blacklisting the NRA for its political advocacy. Brief for Petitioner, NRA at 20. The NRA contends that the First Amendment’s prohibition on viewpoint discrimination protects speakers from both direct and indirect bans on their speech by the government, including through private intermediaries. Id. at 21–22.

The NRA asserts that the test to determine whether the government has crossed the line from permissible speech to impermissible coercion is whether a reasonable recipient would understand the government’s actions as a threat. Id. at 24. The NRA cites Bantam Books, a case in which a Rhode Island government agency sent official letters to booksellers stating that certain books were objectionable for sale and distribution for minors. Id. at 25. In Bantam Books, the NRA argues, although the government agency did not make it directly illegal to sell such books, it nonetheless violated the First Amendment because a reasonable recipient of the official letters would have understood the government’s message as a threat to stop selling the books or face adverse consequences. Id. at 25–26. The NRA contends that Vullo’s conduct satisfies the three-part test for impermissible coercion established in Bantam Books, which requires a court to look at: (1) the authority of the government actor; (2) the content and purpose of their communications; and (3) the reactions of those who received the government’s message. Id. at 28.

First, the NRA argues that Vullo held vast regulatory authority over the financial institutions that ultimately stopped doing business with the NRA. Id. at 28. The NRA posits that Vullo supervised more than 3,000 institutions, had enforcement discretion over a vast code of regulations, and possessed the power to enforce punitive measures such as fines and criminal referrals. Id. at 30. The NRA claims that given Vullo’s authority, any reasonable financial institution would have taken her letters asking them to consider the “reputational risk” of associating with the NRA as a threat. Id.

Second, the NRA contends that Vullo’s words and actions threatened the financial institutions. Id. at 30. The NRA argues that a threat need not be explicit, citing several cases including Bantam Books, in which the government merely “thanked” booksellers for their supposed cooperation without issuing any express warning of retaliation. Id. at 31. The NRA contends that through Vullo’s guidance letters and press release, Vullo connected financial institutions’ legal obligation to consider “reputational risk” with her desire for institutions to “review” their relationships with the NRA and to “take prompt actions” to manage these risks. Id. at 33. The NRA further argues that in a subsequent press release, Vullo explicitly asked companies to discontinue arrangements with the NRA. Id. The NRA asserts that Vullo’s actions responded to the NRA’s gun promotion advocacy and not to any legal violation. Id. at 34. The NRA adds that in meetings with insurance executives, Vullo offered both leniency and prosecution for unrelated infractions, depending on the company’s continued business with the NRA. Id. The NRA maintains that Vullo demonstrated her power to regulate by publicly issuing punitive measures against two of the NRA’s principal insurance providers. Id. at 34–35.

Finally, the NRA claims that financial institutions heeded Vullo’s message by ceasing business ties with the NRA. Id. at 36. For example, the NRA argues that one of the providers of its insurance programs, Lockton, informed the NRA that it would have to stop doing business for fear of losing its insurance license in New York. Id. The NRA also asserts that its general liability insurance carrier refused to renew coverage at any price and that its three principal insurance partners entered consent orders prohibiting them from providing even fully lawful insurance with the NRA. Id. at 37.

Vullo counters that the NRA’s complaint does not plausibly allege coercion. Brief for Respondent, Vullo at 34. Vullo acknowledges that the First Amendment prohibits government coercion but argues that the Court has long permitted governments to express their own opinions. Id. at 35. Vullo contends that courts look to four factors to evaluate whether a government’s speech has crossed the line from permissibly convincing to impermissibly coercive: (1) whether the speech referred to adverse consequences; (2) the official’s word choice and tone; (3) whether the official’s speech was perceived as a threat; and (4) whether the official had regulatory authority over the conduct at issue. Id. at 36–37. Vullo argues that all four factors refute the NRA’s allegations of coercion. Id. at 37.

First, Vullo asserts that the most important consideration in evaluating the nature of her speech is that she did not threaten the NRA, either explicitly or implicitly, with adverse consequences. Id. Vullo argues that the industry letters and press release used the language of encouragement rather than coercion and do not come close to any of the statements in Bantam Books. Id. at 38. Vullo contends that unlike in Bantam Books or any related cases, Vullo never invoked her regulatory authority, stated that she was conducting investigations, or suggested that compliance with her views would eliminate the need for prosecution. Id. Vullo also argues that her softer language stands in contrast to other more forceful DFS communications and that any reasonable observer would have understood her letters as her own views on corporate social responsibility, rather than a threat of enforcement against those with whom she disagreed. Id. at 38–39. Vullo asserts that the consent orders were simply an exercise of her law enforcement authority redressing admitted violations, not indirect threats. Id. at 39. Vullo argues that the NRA’s claims about the alleged meeting between her and Lloyd’s are vague, conclusory, and implausible and do not allege anything specific that Vullo said in the meeting. Id. at 40.

Second, Vullo contends that her tone and word choice in the letters and press release were non-threatening and persuasive, rather than intimidating. Id. at 41. Vullo argues that she used words such as “encourage” and “review” and that her statements stand in stark contrast to the tone of other communications currently at issue before the Court. Id. at 42. Vullo contends that the tenor of the consent orders merely described the insurer’s illegal conduct and the ensuing penalties which is typical of such consent orders. Id.

Third, Vullo argues that regulated parties understood her statements as expressions of her own policy views. Id. Vullo claims that financial institutions cut ties with the NRA because of the Parkland shooting and in response to DFS’s investigation of illegal conduct, not because of her actions. Id. For example, Vullo asserts that Lockton's alleged statement about dropping the NRA for fear of losing its license occurred before Vullo’s meeting with Lloyd’s. Id. at 43. Vullo also contends that the NRA never specified when its general liability insurance carrier decided not to renew its insurance policies, and that these events all allegedly occurred before she issued her industry letters. Id. at 43–44. Vullo argues that DFS prohibited the NRA’s three principal insurance partners from providing any NRA-affiliated insurance because all of the NRA’s programs are illegal due to its failure to obtain a license. Id. at 44.

Finally, Vullo claims that the NRA overstates her regulatory authority and consequently her ability to coerce. Id. at 45. Vullo argues that DFS’s authority extends only to 159 New York state-chartered banks and that it can only enforce penalties through consent orders or adjudicatory proceedings, where regulated entities have the opportunity to be heard, under judicial review. Id.

DISMISSAL OF THE COMPLAINT

The NRA argues that the Second Circuit failed to consider the coercive effect of Vullo’s actions as a whole when it reversed the district court’s denial of Vullo’s motion to dismiss. Brief for Petitioner, at 40. The NRA contends that the court did not properly consider whether her statements asking banks to consider “reputational risk” were a threat. Id. The NRA asserts that the court overlooked the fact that the consent orders barred each company from ever providing even lawful insurance programs with the NRA. Id. at 41. The NRA further argues that the court did not draw all inferences in the NRA’s favor as required under a Rule 12(b)(6) motion to dismiss. Id. at 42.

Vullo counters that the Court should not permit the NRA’s complaint to survive a motion to dismiss because that would expose public officials to disruptive discovery and deter officials from enforcing laws for fear of damages suits. Brief for Respondent, at 34–35. Vullo argues that the NRA’s claim fails even setting aside coercion, because she is entitled to absolute immunity for her enforcement acts. Id. at 25–28. Vullo further argues that the NRA has failed to plausibly allege any injury caused by retaliation against its speech rather than its illegal acts and failed to plausibly allege that Vullo censored the NRA’s speech rather than regulated its economic activity. Id. at 28–32.