350 F. Supp. 3d 94
N.D.N.Y.2018Background
- In Oct 2017 DFS investigated the NRA's Carry Guard affinity insurance program (underwritten/ administered by Chubb and Lockton) and found violations of New York Insurance Law; Lockton suspended Carry Guard and later entered a consent order; Chubb entered a similar consent order.
- In April 2018 Governor Cuomo (press release and a tweet) and DFS Superintendent Vullo (guidance letters) urged New York insurers and banks to consider reputational/public-safety risks from ties to the NRA and to manage those risks.
- DFS issued consent orders with Lockton ($7M penalty) and Chubb ($1.3M) that prohibited future participation in NRA-affiliated programs (Lockton’s order was geographically limited to New York; Chubb’s was broader).
- The NRA alleges DFS made "backchannel threats" to financial institutions and insurers, causing banks and insurers to sever or decline relationships and depriving the NRA of insurance/banking services and royalties, harming its operations.
- The NRA sued Cuomo, Vullo, and DFS raising First and Fourteenth Amendment claims (speech, association, equal protection, due process), §1983 conspiracy, and tortious interference; defendants moved to dismiss under Rule 12(b)(6).
- The Court denied dismissal of the First Amendment speech claims and selective-enforcement monetary-equals-protection claims, but dismissed or limited other claims (association, many equal-protection injunctions, stigma-plus and property due-process, conspiracy, and tortious interference) as detailed below.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Guidance Letters, Cuomo press release, backchannel statements and consent orders plausibly constituted government threats/coercion that chilled NRA speech | The combined public guidance and private exhortations amounted to implied threats to regulate banks/insurers that did not cut ties with the NRA, causing economic harm and chilling core political speech | The communications were government advocacy (government speech) and lawful regulatory guidance, not coercive threats; no actionable First Amendment violation | Court: Denied dismissal — allegations plausibly state First Amendment censorship/retaliation claims; context, regulatory authority, timing and insurers’ reactions suffice to survive 12(b)(6) |
| Freedom of association: whether actions directly and substantially burdened NRA's associative rights | Actions deprived NRA of essential banking/insurance services and thus severely interfered with its ability to associate politically | Defendants argue any burden is incidental and not the direct equivalent of denial of recognition or punishment | Court: Dismissed association claim (Count Three) — plaintiff alleged only indirect/incidental burdens, not direct and substantial interference |
| Equal protection selective-enforcement: standing and scope of relief (injunctive and damages) | Selective enforcement against NRA-affiliated programs (vs. other affinity programs) was viewpoint-based; seeks injunctions and monetary relief | Defendants: NRA lacks standing to attack consent orders to which it is not party and cannot show impending selective enforcement justifying injunctions | Court: Partial grant/partial denial — monetary damages for past selective enforcement survive; injunctions to vacate or bar enforcement of Lockton/Chubb consent orders dismissed for lack of standing; injunction against future selective enforcement dismissed without prejudice (may re-plead) |
| Due process stigma-plus and property claims: whether statements + enforcement deprived NRA of liberty or property without process | Stigmatizing public statements plus deprivations of contracts/banking rights deprived NRA of reputation and property | Defendants: Statements are opinions (not provably false) and NRA lacks a protected property entitlement to do business with third-party banks/insurers | Court: Dismissed stigma-plus claims without prejudice (statements are non-actionable opinion; insufficiently particularized derogatory statements); dismissed property-based due-process claims with prejudice (no protected entitlement) |
| §1983 conspiracy | Defendants conspired to violate NRA’s rights by coordinating guidance, outreach, and enforcement | Plaintiff alleges meeting-of-minds via Cuomo directing Vullo and consent orders; cites timing and parallel actions | Court: Dismissed conspiracy claim without prejudice — complaint lacks nonconclusory, particularized allegations of an agreement or overt acts showing a meeting of the minds |
| State tortious interference with prospective economic advantage | Cuomo and Vullo intentionally induced Lockton to enter consent order to harm NRA’s business; used improper means/malice | Defendants: Consent order followed admissions of unlawful conduct by Lockton; conduct served regulatory/enforcement purpose, not sole-purpose malice or wrongful means | Court: Dismissed tortious-interference claims with prejudice — plaintiff failed to allege defendants acted solely from malice or used wrongful/independent tortious means |
Key Cases Cited
- Holmes v. Grubman, 568 F.3d 329 (2d Cir.) (Rule 12(b)(6) pleading standards require accepting factual allegations and drawing inferences for plaintiff)
- Ashcroft v. Iqbal, 556 U.S. 662 (Sup. Ct.) (legal conclusions and threadbare recitals are not entitled to an assumption of truth)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (Sup. Ct.) (plausibility standard for complaints)
- Bantam Books, Inc. v. Sullivan, 372 U.S. 58 (Sup. Ct.) (government communications that imply enforcement and are followed by official action can chill speech)
- Okwedy v. Molinari, 333 F.3d 339 (2d Cir.) (public-official statements that can be interpreted as threats of regulatory retaliation actionable under First Amendment)
- Zieper v. Metzinger, 474 F.3d 60 (2d Cir.) (courts must consider totality of circumstances to distinguish exhortation from coercion)
- Matal v. Tam, 137 S. Ct. 1744 (Sup. Ct.) (government-speech doctrine and caution against using it to justify viewpoint suppression)
- Sorrell v. IMS Health Inc., 564 U.S. 552 (Sup. Ct.) (heightened scrutiny for laws that burden speech because of disagreement with message)