NRA Sues New York, Alleging First Amendment Violations in Insurance Crackdown

May 11, 2018

The National Rifle Association (NRA) has filed a lawsuit against New York’s insurance regulator and Governor Andrew Cuomo, alleging a regulatory overreach by New York officials that has resulted in violations of the NRA’s First Amendment rights.

The NRA’s lawsuit against the New York State Department of Financial Services (DFS), Superintendent Maria T. Vullo and Cuomo is seeking millions of dollars in damages and comes on the back of the NRA lawsuit against Lockton Cos., claiming the insurance broker breached its contract with the firearms lobbying group by ending its participation in its member insurance program Carry Guard.

The new complaint, filed on Friday, in the U.S. District Court for the Northern District of New York, alleges DFS overstepped its regulatory mandate through its investigation into the NRA-branded Carry Guard insurance program and through guidance letters issued on April 19, 2018, to CEOs of insurance companies and banks doing business in New York.

The lawsuit claims the letters encourage institutions to manage reputational risk that may be posed by dealing with gun promotion organizations. The NRA further maintains that a press release issued the same day by Cuomo includes a statement from Vullo urging insurance companies and banks to discontinue their arrangements with the NRA. The complaint states that these moves by DFS have led several insurance companies to sever relationships with the NRA and to cancel insurance policies of New York customers.

Citing the Supreme Court’s Bantam Books, Inc. v. Sullivan case, the NRA’s latest lawsuit argues that “viewpoint discrimination applied through ‘threat[s] of invoking legal sanctions and other means of coercion, persuasion, and intimidation’ violates the Constitution where, as here, such measures chill protected First Amendment activities.”

“Political differences aside, our client believes the tactics employed by these public officials are aimed to deprive the NRA of its First Amendment right to speak freely about gun-related issues and in defense of the Second Amendment,” said William A. Brewer III, partner at Brewer, Attorneys & Counselors and counsel to the NRA, in a statement. “We believe these actions are outside the authority of DFS and fail to honor the principles which require public officials to protect the constitutional rights of all citizens.”

In arguing that DFS exceeded its authority, the NRA says DFS’s regulatory mandate “does not include setting gun-control policy. Nor does any statute or other authority empower DFS to blacklist, from receipt of insurance or banking services, speakers with political viewpoints objectionable to the governor or DFS superintendent. In addition, DFS has no authority to engage in unlawful viewpoint discrimination with respect to commercial speech.”

The NRA claims that the New York probe into its insurance program was “orchestrated by gun-control activists” and advanced by “back channel communications” by New York officials. “Simply put, Defendants made it clear to banks and insurers that it is bad business in New York to do business with the NRA,” the complaint alleges.

In addition to seeking damages, the NRA asks for injunctive relief, arguing that without it defendants’ “blacklisting campaign will continue to damage the NRA and its members, as well as endanger the free speech and association rights guaranteed by the constitutions of the United States and the State of New York.”

During its investigation into the NRA-branded Carry Guard program, DFS found the program unlawfully provided liability insurance to gun owners for acts of intentional wrongdoing and improperly provided legal services insurance for costs and expenses, as well as for any act of self-defense covered under the policy for gun owners and their resident family members who may be charged with a crime involving a legally possessed firearm, according to a DFS press release.

The NRA, which does not have a license from DFS to conduct insurance business in New York, actively marketed and solicited for the Carry Guard program through a website, email and direct mail, among other channels, according to DFS.

“As the primary regulator of insurance companies and state-chartered banks doing business in New York, it is incumbent upon the Department of Financial Services to supervise and guide regulated entities to mitigate the risks to their safety and soundness that may derive from a variety of sources, including reputational risk,” said New York Financial Services Superintendent Maria T. Vullo in a statement regarding the NRA’S lawsuit against New York. “It is equally as important that DFS enforce New York law and take appropriate enforcement action when necessary to protect consumers and ensure the integrity of our financial markets.”

New York officials have fined Lockton and the insurer of the Carry Guard program, Chubb Ltd., millions of dollars. The two firms have also signed a consent order agreeing to cease doing business with the NRA in the state.

“As part of the Department’s ongoing investigation, DFS’s consent orders with both Lockton and Chubb addressed the unlicensed and unlawful activity connected with the NRA’s Carry Guard program, which unlawfully provided liability insurance to gun owners for acts of intentional wrongdoing,” Vullo’s statement continued. “The Department will not stand down from its mandate to enforce New York law.”

Prior to the New York fines being announced, both Chubb and Lockton had indicated they were pulling out of the NRA insurance programs. In so doing, they joined MetLife (which had offered NRA members discounts on home, car, boat and motorcycle insurance), United Airlines and other companies in canceling their business ties with the gun owners’ organization.

This week, Lloyd’s of London, citing the New York probe, announced that it too would be halting all business wth the NRA.

According to the NRA’s complaint, these business actions are the result of “political activism” by Cuomo against the NRA and gun rights organizations. It says Cuomo has called the NRA an “extremist organization” and urged New York companies “to revisit their ties to the NRA and consider their reputations…”

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