NRA v Vullo

[DaveBj]

Following is a rather lengthy and detailed article by my younger son Erik on the NRA v Vullo case, previously mentioned by @KyJim on 3 November. Arguments were heard before the Supreme Court two days ago. The article, which begins below, is not copyrighted, and I have his permission to copy it here.

On Monday, the Supreme Court heard arguments on two cases that are linked -- National Rifle Association v Vullo, and Murthy v Missouri -- cases that have been grouped together in being referred to as the “jawboning cases”. In this context, jawboning refers to a situation where the government tries to pressure a private company into taking certain actions. The question at hand in one of the cases is whether the government inappropriately tried to use its coercive power to get the private company to do what it wanted. The question at hand in the other case is whether the government can communicate with certain private businesses at all.

You probably have never heard of the first case above, NRA v Vullo. In that case, the facts appear to be setting up pretty conclusively for a SCOTUS victory for the NRA. For anyone who has an initial reaction of “I hate the NRA, we can’t have that”, well, you might actually be wanting to root for the NRA here.

The second case above, Murthy v Missouri, could be one you have heard of. Even if you’re not that familiar with the details of it, there’s a good chance you’ve heard commentators on the right yell about “election interference” while commentators on the left….well, they don’t agree with that, they’re more along the lines of “the government didn’t do anything it hasn’t done before”.

It’s always wise to dig into the details of cases like these before we form opinions on what should happen. See what you think after you know more about them. It’s okay if you don’t change your opinion (unless it’s wrong, of course. Joke. That was a joke, people.). But at least you’ll have a properly-informed opinion for folks to disagree with.

***NRA v. Vullo***

Whether you happen to like “gun rights” or the NRA at all, look at the facts of the case and then see what you think.

So, back in 2017, the New York State Department of Financial Services (call them DFS) opened an investigation into an insurance program offered by the NRA, called “Carry Guard”. On the face of it, it seems like a legit product - it offered insurance to cover legal costs (civil or criminal) if a customer shot another person, in self-defense. So far, so good. But, if you can believe this, they promoted a feature of the insurance program that would provide liability defense coverage even where the insured acted WITH CRIMINAL INTENT.
For reasons that should be obvious, New York doesn’t really permit insurance contracts intended to insure people for criminal acts. So the DFS opened an investigation into Carry Guard. The results ended up being that the three insurance companies that underwrote Carry Guard agreed to stop doing so, and they agreed to pay $13 million in fines. Coincidentally (and I do mean that, one has nothing to do with the other), one of the three companies was Chubb, which is the insurance company former Pres. Donald Trump was relying on to provide his $460 million fraud bond, but which has told him they’re not going to do so.

Now, up to this point, nobody really has a problem with any of these facts. There’s nobody on the right (or the left) yelling about how New York unfairly targeted Carry Guard, or yelling about how it was unfair that they shut down an insurance offering that offered to insure people for committing acts even with criminal intent. So far, everyone is onboard with this.

The problem comes in what happened next. As some analysts have put it, the head of the DFS, Mario Vullo (hence, the name on the lawsuit) did something really stupid.

Fast forward to Feb 2018, and you have the tragic Parkland school shooting in Florida. After the shooting happened, DFS sends out to insurance companies across the land, a notice of “guidance” signed by Vullo.

What did this guidance say? Don’t forget to lock up when you leave? Don’t be cheap, spring for higher-end creamer in the break room? Unfortunately, those would be funny, but they weren’t what the guidance said.

The guidance notice encouraged insurers to “continue evaluating and managing their risks . . . that may arise from their dealings with the NRA or similar gun promotion organizations.” This guidance is basically “encouraging” insurance companies not to do business with gun promotion organizations like the NRA.

Now, the guidance doesn’t explictly threaten to take any action, it’s just a “suggestion”, right? The problem is that at the same time DFS sent this out to insurance companies, those insurers know DFS is in the middle of collecting a $13 million fine for doing what they’re “suggesting” the insurance companies “reconsider”. DFS was now suggesting or implying that these companies might face similar action if they do perfectly legal business with the same kind of groups.

***What’s The Problem Here?***

What’s at issue here in NRA v Vullo is a potential First Amendment violation.
To understand this better here, we have to more clearly understand what the government is and is not allowed to do in situations like this. We have to have the right understanding of who can do what. Many times, what we’re actually allowed to do may be different from what other people (like really vocal people out there in media) yell about.

One note: Any time we say government in this discussion, we also mean government officials acting in the official capacity of their positions. So Maria Vullo, when she acts as the head of New York’s DFS, can be referred to here as both “the government” and a “government official”.

So, first, this isn’t a case where the government violated rights simply by sending out a notice. That’s not the case at all. The government IS ALLOWED to communicate in an official manner with any kind of private company or individual it wants. So that’s not the problem.

It isn't a case where the government violated rights by expressing a critical viewpoint. As a general rule, the government has a virtually unlimited right to express whatever viewpoint it wants about things. The government can tell everyone they think the NRA is bad for America. The government can make public calls for laws that the NRA doesn’t happen to like. The government can even say unkind things about the NRA to other private business leaders. And, just as importantly, if a group like the NRA were to do something illegal, the government is within its rights to warn other private businesses about the legal risks they might incur if they wanted to join that illegal activity. Note the word ILLEGAL - that’s an important proviso that will come back up later.

As such, it also isn’t a case when rights were violated by the government asking a company to stop doing business with someone else, like the NRA. It’s just as important to understand that the government IS ALLOWED to ask anyone it wants to STOP DOING BUSINESS with a group like the NRA. Or any other lawful group, for that matter. So that’s not the problem, either.

So if the government is allowed to do all of those things, why is there a potential First Amendment violation?

Because while the Constitution allows a government official to communicate with any company and ask it to stop doing business with anyone else like the NRA, it DOES NOT permit the government to COERCE them into stopping lawful business with an advocacy group (like the NRA).

The crux here is that the “guidance” was issued so soon after the Carry Guard investigation and penalty, it looks very much like the kind of coercion the Constitution doesn’t allow.

And so here we are with NRA v Vullo being argued in front of the Supreme Court.

***Look Back At Another Case***

A case way back in 1963 - Bantam Books vs Sullivan - has been very influential in helping clarify how the law deals with this question of communication vs. coercion. In their decision on the case, the Supreme Court said that while the government can express whatever opinion it wants about an organization or what it is doing, they can’t use law enforcement to threaten, whether explicitly or even just implying, them with criminal charges if that person doesn’t stop doing something that is protected by the First Amendment. In other words, something Legal.

So what happened with Bantam Books was….there was a government body called the Rhode Island Commission to Encourage Morality in Youth, and one of the things they did was identify books and magazines that they deemed objectionable for sale or display to youths under 18.

The Commission would send notices to book stores seeking their “cooperation” in removing such books and magazines. And in their notices, they would remind the sellers of the commission’s “duty to recommend to the Attorney General, prosecution of purveyors of obscenity”.

Ok, so this appears to be setting up as a First Amendment violation. But what set Bantam Books off was that, after receiving the Commission’s notice, they would also be visited by a uniformed police officer who would ask them “what steps they had taken in response to the notice”.

Bantam Books sued, arguing that the combination of a threat of prosecution in the letter followed by a visit by law enforcement, crossed the line into coercion. And the Supreme Court agreed with them, ruling 8-1 in Bantam’s favor.

Coming back to 2024 (or 2019), there are obvious parallels between Vullo and what happened in Bantam Books. And some distinctions, too. Uniformed police never showed up at any insurance offices. The guidance from DFS doesn’t even mention the possibility of any enforcement action against an insurer that keeps doing business with the NRA.

But the circumstances of the time mean they didn’t really have to. The fact that the notice happened so close to the DFS administering substantial penalties against someone who was doing something similar to what they were talking about, many people looking at the circumstances can’t help but draw the parallels.

Whether this is judged by the Court to truly qualify as an impermissible kind of coercion by the government that violates the First Amendment, that’s what the arguments on Monday aimed to lay out or refute.

***How did the arguments go?***

We’ve said before that sometimes you can get a sense in advance of how the Court is leaning based on the questions the justices ask or how they seem to respond to answers.

The gist of the arguments on Monday went like this. The NRA argued that Vullo’s actions were similar to the coercive conduct way back in Bantam Books. They even alleged (one would assume they had to provide some kind of proof on this) that New York officials had urged Lloyd’s (the huge insurance company) to refuse to do business with the NRA in exchange for getting favorable treatments from the state in other cases.

On the other side, New York’s defense counsel emphasized that the NRA has broken the law with the insurance product, and the state was only reacting to that. Which might be a valid argument if they were able to sufficiently convince the Justices about that.

Remember, the government can’t coerce anyone to stop LAWFUL action, even though they can “strongly advise” them about the fact they don’t like it. UNLAWFUL action is another matter.

My thought on New York's argument there is that it seems obvious that Vullo WASN'T simply informing other insurers about illegal conduct. The notice talked about evaluating all of their business relationships with NRA-like groups. No "illegal" condition or modifier was mentioned. So the average person should be able to read the guidance and assume Vullo is talking about legal business relationships. Which, to me, means it doesn't stop it from being illegal coercion.

***What do the legal folks think?***

After hearing the oral arguments, is there a consensus of opinion by the Court pundits on how these are going to be decided? Full disclosure, I haven’t read nearly the full spectrum of people giving analysis, but I have read a few that seem to agree on some basic predictions.

Most of what I’ve seen says that even the conservative justices like Justice Alito didn’t really seem convinced by New York’s argument - that they were only taking the action they did because the NRA had engaged in something illegal (selling an illegal insurance product).

So the expectation is that the state of New York is going to lose and the NRA is going to win this one. Putting aside whatever you think about the NRA or gun control or anything else, this case really appears to be simply about the government trying to tamp down lawful behavior (doing business with an advocacy group) through illegal coercion. In a free liberal democracy that we claim to be, it’s good that we have cases like this to clarify the limits on what the government can do here.

Remember, this is the first case of the two that was heard on Monday. But this case will be significant because its decision intersects with the second one - a case that is also about whether the government can ask a private company to do something.

Expect a decision by SCOTUS in the summer.