Supreme Court sides with NRA in free speech dispute with New York regulator

Washington — The Supreme Court on Thursday ruled in favor of the National Rifle Association in a dispute over whether its free speech rights were violated when the top financial regulator for New York state pushed banks and insurance companies to sever ties with the gun rights group.

The court said in a unanimous opinion written by Justice Sonia Sotomayor that the NRA “plausibly alleged” that the New York regulator violated the First Amendment by coercing regulated entities to end their business relationships with the NRA in order to “punish or suppress” the group’s pro-gun rights advocacy.

“The critical takeaway is that the First Amendment prohibits government officials from wielding their power selectively to punish or suppress speech, directly or (as alleged here) through private intermediaries,” Sotomayor wrote.

The decision revives a lawsuit that the NRA filed against Maria Vullo, the former head of the New York State Department of Financial Services. The group’s suit, known as NRA v. Vullo, had been tossed out by the U.S. Court of Appeals for the 2nd Circuit, but the unanimous court invalidated the lower court’s ruling and sent the case back for further proceedings.

“Government officials cannot attempt to coerce private parties in order to punish or suppress views that the government disfavors,” Sotomayor wrote.

Justices Neil Gorsuch and Ketanji Brown Jackson each authored concurring opinions.

Neal Katyal, who represented Vullo, said in a statement that they are “disappointed” by the Supreme Court’s ruling and refuted the NRA’s allegations that Vullo threatened, coerced or retaliated against insurers.

“Ms. Vullo did not violate anyone’s First Amendment rights,” he said. “Ms. Vullo enforced the insurance law against admitted violations by insurance entities, and industry letters such as those issued by Ms. Vullo are routine and important tools regulators use to inform and advise the entities they oversee about risks.”

The NRA’s lawsuit

The dispute was one of two before the justices that involved so-called jawboning, or informal pressure by the government on an intermediary to take certain actions that will suppress speech. 

This case arose from investigations that Vullo, then the superintendent of New York’s financial services department, opened into two insurers involved in NRA-endorsed affinity programs in 2017. Vullo, who left her post with the state in 2019, found the products offered by insurers Chubb and Lockton violated state insurance law, and she later determined that a third company, Lloyd’s of London, underwrote similar unlawful products for the NRA.

One year later, in 2018, the Department of Financial Services entered into agreements with the three insurance companies, which acknowledged that they provided some unlawful NRA-backed programs. They also agreed to stop providing the policies to New York residents.

In the wake of the 2018 shooting at a high school in Parkland, Florida, Vullo issued guidance letters that urged entities regulated by the Department of Financial Services to “continue evaluating and managing their risks, including reputation risks,” that may arise from their dealings with the NRA or similar gun rights organizations.

Some banks and insurance companies did cut ties with the NRA, which in turn sued the department. The NRA claimed Vullo privately threatened insurers with enforcement action if they maintained their relationship with the advocacy group and created a system of “informal censorship” that was designed to suppress its speech in violation of the First Amendment.

The NRA prevailed before a federal district court, which denied Vullo’s bid to dismiss the case. The district court found that the NRA sufficiently alleged that Vullo’s actions could be interpreted as a “veiled threat” to regulated banks and insurers to stop working with the NRA or risk enforcement action from the Department of Financial Services.

A federal appeals court reversed the district court’s ruling, determining that Vullo’s guidance letters, as well as a press release, couldn’t “reasonably be construed as being unconstitutionally threatening or coercive” since they were written in an “even-handed, nonthreatening tone” and used words intended to persuade, not intimidate.

The 2nd Circuit found that the NRA failed to plausibly allege that Vullo crossed the line into coercion and concluded that she was shielded by qualified immunity, though the Supreme Court did not review that finding.

The NRA then asked the Supreme Court to weigh in, and it agreed to do so in November. The justices held arguments in March.

Writing for the majority, Sotomayor said that Vullo could criticize the NRA and pursue violations of New York state insurance law.

“She could not wield her power, however, to threaten enforcement actions against DFS-regulated entities in order to punish or suppress the NRA’s gun-promotion advocacy,” she wrote. “Because the complaint plausibly alleges that Vullo did just that, the court holds that the NRA stated a First Amendment violation.”

Focusing on Vullo’s interactions with Lloyd’s and the 2018 guidance letters, the court said the NRA’s accusations, “viewed in context,” reinforce the group’s First Amendment claim.

Sotomayor wrote that the additional lower court proceedings may show that the NRA’s claims of coercion are false or certain actions should be viewed differently because of newly disclosed evidence, but at this stage in the case, the court must assume that the factual allegations raised by the gun rights group in its complaint are true.

And although the NRA is not regulated by the New York Department of Financial Services, “Vullo allegedly used the power of her office to target gun promotion by going after the NRA’s business partners. Insurers in turn followed Vullo’s lead, fearing regulatory hostility.”