- The National Rifle Association claims the insurance company stopped doing business with the gun advocacy group because of coercion from New York regulators.
- The head of the New York Department of Financial Services, which has broad powers over banks and insurance companies, warned companies of the potential reputational risks of dealing with the NRA.
WASHINGTON – The National Rifle Association is once again at loggerheads with New York state regulators over its visceral response to mass shootings, threatening to cut off insurance and loans to gun advocacy groups.
This case is not about the Second Amendment right to bear arms. It's about the First Amendment's freedom of speech. The final ruling could redefine the extent to which government officials can express opinions about the companies they regulate.
The Justice Department weighed in because a high court ruling could complicate the ability of judges to enforce state and federal laws and regulations.
U.S. Attorney General Elizabeth Preloger did not take sides in the case. But she argued that even if state regulators did too much to discourage insurance companies and banks from doing business with the NRA, the case should be decided by a narrow margin to avoid confusion for other regulators. .
A group of current and former prosecutors filed arguments in the case, and the Supreme Court's decision covers everything from high-profile charges in the Jan. 6, 2021, attack on the Capitol to blocking the distribution of unapproved drugs. It warned the Supreme Court that it could open the door to lawsuits over everything. Toward the new coronavirus infection (COVID-19).
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According to county prosecutors in Virginia, California, and Michigan, the court has “opened the floodgates to First Amendment litigation and the routine and lawful exercise of prosecutorial or regulatory discretion at all levels.” could provide targets of enforcement actions with new means to attack Oregon and New York.
The NRA promoted an insurance program that critics called “murder insurance”
The NRA claims that New York City's powerful Department of Financial Services forced insurance companies to stop doing business with the group because the agency was not pro-gun.
Headquartered in New York, the NRA began establishing an insurance program for its members in 2000 that provides life, health property, and accident coverage. In April 2017, the NRA began marketing a policy called “Carry Guard,” which covers the costs of using a legal firearm in self-defense. The 'Carry Guard' insurance was managed by Lockton and underwritten by the London insurance company Chubb & Lloyds.
But NRA critics alerted the Manhattan District Attorney's Office to the policy, and prosecutors referred the matter to the Department of Financial Services, which opened an investigation in October 2017. Mr. Chubb and Mr. Lockton suspended the Carry Guard program the following month.
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By February 2018, in the wake of the horrific Parkland, Florida, school shooting, Department of Financial Services Director Maria Vullo began meeting with insurance executives who do business with the NRA. Although there is some debate over the details, Lloyd's of London decided in the same month to stop underwriting firearms-related insurance.
“In short, she publicly stated that her goal was to punish advocacy groups because they opposed their political views,” the NRA claimed.
The NRA sued Vullo, alleging that she “abused her regulatory powers to punish the organization for speech protected by the First Amendment and to stifle future speech.”
How did this case reach the Supreme Court?
The NRA sued Vullo and others, saying their actions punished the organization for its political views. According to Supreme Court precedent, government officials can express their views under the First Amendment, but they cannot “seek to coerce” them.
A U.S. District Court judge rejected most of the NRA's claims, but the group's argument that Vullo violated the First Amendment by forcing insurance companies to stop doing business with the NRA He has confirmed that he will continue to fight against him.
2n.d. The U.S. Circuit Court of Appeals rejected even those claims, finding that the NRA did not plausibly claim unconstitutional enforcement.
The Supreme Court will hear arguments on whether the First Amendment “allows government officials to threaten regulated organizations with adverse regulatory action when doing business with advocacy organizations.” Agreed.
Regulators warn that if Supreme Court accepts NRA's argument it would set an 'extremely dangerous precedent'
Mr. Vullo, who was the Financial Services Commissioner at the time, argues that the NRA's insurance program was illegal and that it deserved to force insurance companies to cut coverage.
The department determined that NRA's insurance products were “unlawfully sold” because NRA Group lacked the necessary licenses.
The department also prohibits insurance coverage for intentional acts and criminal defense costs. Commentators described the carry guard as “murder insurance” and criticized Lockton and Chubb's involvement.
The New York State Department of Financial Services has powerful powers because it can grant or deny licenses, initiate investigations, impose millions of dollars in fines, and refer cases for criminal prosecution. For example, the department fined Deutsche Bank $150 million for failing to consider the “reputational risks” of providing financial services to child trafficker Jeffrey Epstein.
In May 2018, two insurance companies admitted to illegally providing insurance in New York and agreed to pay Lockton $7 million and Chubb $1.3 million. In December 2018, Lloyd's admitted to violating state law and agreed to pay a $5 million fine.
The NRA agreed to pay $2.5 million and refrain from offering insurance in New York state for five years.
“Carry Guard violated New York state law on a number of counts,” Vullo's brief said. “It covered intentional acts and criminal defense costs.”
Vullo argues that accepting the NRA's claims could facilitate damage lawsuits against government regulators and thwart legitimate enforcement actions.
“Accepting the NRA's claims would set an extremely dangerous precedent,” Vullo's lawyers wrote. “This court should deny that alarming request.”
New York state regulators point out “social backlash'' against demands for regulatory reform in response to Florida school shooting
On February 14, 2018, just as the NRA insurance policy was taking off, a Florida teenager opened fire at Marjory Stoneman Douglas High School, killing 17 people. The NRA faced criticism from then-New York Governor Andrew Cuomo, who began meeting with insurance company executives, and from Vullo.
After these meetings, Lloyd's agreed to stop underwriting firearms insurance and reduce its business with the NRA.
On February 25, Lockton's chairman “called the NRA in a distraught state” and “confessed that Lockton needed to 'take down' the NRA due to 'fear of loss.'” [our] The NRA filing said he was “granted permission to do business in New York” even though he had hoped to continue the nearly 20-year business relationship. The next day, Lockton posted on social media that he was discontinuing services from the NRA-endorsed insurance program.
On April 19, 2018, Vullo sent a “letter of information” to banks and insurance companies in New York “in the wake of several recent horrific mass shootings,” including the closure of Columbine High School, Sandy Hook Elementary School, and a music festival in Las Vegas. I mentioned it. Vullo said the “social backlash” against the NRA and other gun rights groups “demands change now.”
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“The Department encourages regulated entities to review their relationships with the NRA and similar pro-gun organizations and take immediate steps to manage these risks and promote public health and safety,” the letter reads. is written.
Preloger, on behalf of the Biden administration, said the first four paragraphs of the New York letter are fair First Amendment comments that should persuade, rather than simply force, companies not to do business with the NRA. He said it was aimed at
But she said the last paragraph may have gone too far in targeting the NRA from the NRA's perspective of encouraging companies to consider the “reputational risk” of doing business with “the NRA or similar pro-gun groups.” admitted that there is. Companies that fail to consider “reputational risk” to their operations face the threat of multimillion-dollar fines from regulators.
Preloger said the court would need to gather more evidence before deciding whether she went too far, as there was controversy over what Vullo told Lloyd's at the time.
“Governments have no right to advocate for their views, including forcing them to criticize views with which they disagree or encouraging citizens to leave groups that express those views,” Preloger wrote in the filing. There is a wide range of freedom.” “But the government cannot punish or suppress such views, nor can it force others to impose punishment or suppression on such views.”
Prosecutors warn that litigation could increase 'astronomically' depending on Supreme Court ruling
Six current and former prosecutors warned that the NRA's position weakens enforcement and could lead to an “astronomical increase” in cases that could overwhelm the courts.
For example, more than 1,000 people were charged in the January 6 riot at the Capitol. Many defendants argued that their actions were a result of their belief that the 2020 election was stolen, and called for the charges to be dismissed on First Amendment grounds.
Depending on how the Supreme Court rules in the NRA case, these defendants could begin filing lawsuits against prosecutors.
The civil suit charges “quality of life crimes” such as “public camping, offers and solicitations for sex, public urination, and blocking sidewalks,” alleging that communities are being over-policed. That could be a deterrent, prosecutors said.
“Such a rule would chill prosecutorial and regulatory actions ranging from high-profile cases to day-to-day enforcement matters,” prosecutors wrote in their filing.
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On the regulatory front, if the Environmental Protection Agency takes action against climate change activists who destroy federal land, protesters could sue the agency, accusing it of trying to silence political comment. Prosecutors said in a filing. Those selling counterfeit branded drugs to treat COVID-19 could face legal action, accusing regulators of trying to silence anti-vaccination messages.
“The threat of weaponized First Amendment litigation under appellants' proposed approach is equally real in the regulatory context,” prosecutors wrote in their filing.
According to the U.S. court system, there were approximately 600,000 civil lawsuits and 32,000 appeals pending in federal courts last year. Prosecutors warned that even if just 1% of the 10 million criminal cases filed in state courts resulted in civil lawsuits, it would add 100,000 more to an already crowded court case.
“Additionally, these numbers would increase astronomically when factoring in the inevitable parallel civil litigation arising from state criminal and regulatory cases,” prosecutors wrote.
