S. Ct. Will Hear NRA's Case Alleging That N.Y. Government Coerced Companies to Stop Doing Business with NRA

The controversy is similar to part of the controversy in Murthy v. Missouri (formerly Missouri v. Biden), which also involves allegations of government coercion aimed at interfering with speech.

The case is NRA v. Vullo, and the Court agreed to consider this question (as formulated by the NRA):

Bantam Books v. Sullivan (1963) held that a state commission with no formal regulatory power violated the First Amendment when it "deliberately set out to achieve the suppression of publications" through "informal sanctions," including the "threat of invoking legal sanctions and other means of coercion, persuasion, and intimidation." Respondent here, wielding enormous regulatory power as the head of New York's Department of Financial Services ("DFS"), applied similar pressure tactics—including backchannel threats, ominous guidance letters, and selective enforcement of regulatory infractions—to induce banks and insurance companies to avoid doing business with Petitioner, a gun rights advocacy group. Respondent targeted Petitioner explicitly based on its Second Amendment advocacy, which DFS's official regulatory guidance deemed a "reputational risk" to any financial institution serving the NRA. The Second Circuit held such conduct permissible as a matter of law, reasoning that "this age of enhanced corporate social responsibility" justifies regulatory concern about "general backlash" against a customer's political speech….

Does the First Amendment allow a government regulator to threaten regulated entities with adverse regulatory actions if they do business with a controversial speaker, as a consequence of (a) the government's own hostility to the speaker's viewpoint or (b) a perceived "general backlash" against the speaker's advocacy?

The Court didn't grant review on the second question, which relates to qualified immunity. Here's my post on the petition, from March, though you can read all the filings here:

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William Brewer, Sarah Rogers & Noah Peters of Brewer Attorneys & Counselors and I filed a petition earlier this month asking the Supreme Court to review the Second Circuit decision in NRA v. Vullo ….

I generally tend to agree with the NRA's ideological views, to a considerable extent, but I would have been glad to be engaged to argue a similar case on behalf of groups I disagreed with as well; it's a pretty important First Amendment question that can affect groups with all sorts of views. (Note that the ACLU filed an amicus brief on NRA's side in the District Court.) Here's our Introduction:

The Second Circuit's opinion below gives state officials free rein to financially blacklist their political opponents—from gun-rights groups, to abortion-rights groups, to environmentalist groups, and beyond. It lets state officials "threaten[ ] regulated institutions with costly investigations, increased regulatory scrutiny and penalties should they fail to discontinue their arrangements with" a controversial speaker, on the ground that disfavored political speech poses a regulable "reputational risk."

It also permits selective investigations and penalties targeting business arrangements with disfavored speakers, even where the regulator premises its hostility explicitly on an entity's political speech and treats leniently, or exempts, identical transactions with customers who lack controversial views. In sum, it lets government officials, acting with undisguised political animus, transmute "general backlash" against controversial advocacy into a justification for crackdowns on advocates (and firms who serve them), eviscerating free speech rights.

Reaching this result, the Second Circuit disregards basic pleading standards and undermines fundamental First Amendment freedoms. It also departs from this Court's precedent in Bantam Books, Inc. v. Sullivan and from the Seventh Circuit's precedent in Backpage.com, LLC v. Dart.

This case arises from a series of actions—including press releases, official regulatory guidance, and contemporaneous investigations and penalties—issued by or on behalf of New York's powerful Department of Financial Services ("DFS") against financial institutions doing business with the NRA. Among other things, the Complaint states that Superintendent Maria Vullo: (1) warned regulated institutions that doing business with Second Amendment advocacy groups posed "reputational risk" of concern to DFS; (2) secretly offered leniency to insurers for unrelated infractions if they dropped the NRA; and (3) extracted highly-publicized and over-reaching consent orders, and multi-million dollar penalties, from firms that formerly served the NRA. Citing private telephone calls, internal insurer documents, and statements by an anonymous banking executive to industry press, the Complaint alleges that numerous financial institutions perceived Vullo's actions as threatening and, therefore, ceased business arrangements with the NRA or refused new ones.

The NRA brought First Amendment claims against Vullo and Governor Andrew Cuomo in their official and individual capacities. The individual-capacity claims against Vullo, which were the subject of the Second Circuit's decision, withstood two motions to dismiss. But when Vullo appealed the District Court's refusal to grant her qualified immunity at the pleading stage, the Second Circuit held that the NRA's allegations fail to state a First Amendment claim at all.

In effect, the Second Circuit holds that a government official must explicitly threaten adverse consequences for disfavored speech—and must do so in the absence of any contemporaneous assertion of a regulatory interest—for a First Amendment retaliation claim to arise. The Second Circuit's opinion thereby creates a circuit split with the Seventh Circuit's decision in Backpage.com, which held that a government official violated the First Amendment in circumstances closely comparable to these.

In addition, the Second Circuit refuses to accept the Complaint's allegation that Vullo clearly and unambiguously threatened insurers in private meetings, and selectively parses Vullo's official communications to disregard key passages and deny NRA the favorable inferences to which it is entitled on a motion to dismiss. The Second Circuit's decision thus defies this Court's command that, in evaluating qualified immunity, "courts must take care not to define a case's 'context' in a manner that imports genuinely disputed factual propositions."

The Second Circuit denudes Vullo's regulatory guidance of the "context" that made it ominous, while importing favorable "context" to frame Vullo's contemporaneous, selective targeting of NRA business associates as benign. "The 'context' here," the Circuit opines, "was an investigation, commenced months before the meetings, that was triggered by a referral from the DA's Office." The Circuit ignores boasts by Vullo's boss, Governor Cuomo, that her regulatory actions were "forcing the NRA into financial jeopardy." And the Second Circuit's suggestion that Vullo had non-retaliatory motives for investigating the insurance policies at issue is rebutted by the facts pleaded in the Complaint.

The Second Circuit goes on to suggest that even if Vullo did make threats, such threats were justified by the "general backlash" against the NRA "and businesses associated with them" which "was intense after the Parkland shooting." Indeed, this backlash "continues today," with many people "speaking out" against the NRA's gun rights advocacy. Such "backlash" against a speaker's viewpoint, the Second Circuit opines, "likely" has financial consequences that would justify financial blacklisting of that speaker for its controversial advocacy.

In support, the Second Circuit cites a "diversity, equity, and inclusion" consultant who charges companies for "consulting packages" to implement "corporate social responsibility" programs, as well as a "survey" commissioned by a marketing company that "strives to insert the brand's social mission and innovations into mainstream conversations through traditional and social media." The reliance on such sources underscores the unsoundness of the opinion below.

This Court has not hesitated to summarily overturn circuit court decisions, like the Second Circuit's, that disregard the applicable pleading standard in determining qualified immunity. Here, the Second Circuit makes the same error as the lower courts in Lombardo v. City of St. Louis, Missouri, 141 S. Ct. 2239 (2021) (per curiam), Sause v. Bauer, 138 S. Ct. 2561 (2018) (per curiam), and Tolan v. Cotton, 572 U.S. 650 (2014) (per curiam). In all three, this Court summarily reversed because the circuit courts refused to accept well-pleaded facts and draw reasonable inferences in favor of the non-moving party in determining qualified immunity.

The public importance of this case cannot be overstated. A regulatory regime—even a facially content-neutral one—that "inhibit[s] protected freedoms of expression and association" violates the First Amendment. See NAACP v. Button, 371 U.S. 415, 437-38 (1963); NAACP v. Alabama ex rel. Patterson, 357 U.S. 449, 460-62 (1958). An overt campaign by state officials to wield regulatory power against a disfavored civil rights organization—here the NRA—precisely because of its disfavored speech at least as clearly merits this Court's attention and reversal.

Reversal is urgent because the Second Circuit's opinion threatens basic First Amendment rights at a time when the First Amendment is under widespread attack. As the American Civil Liberties Union ("ACLU") has warned, "If the NRA's allegations were deemed insufficient to survive the motion to dismiss, it would set a dangerous precedent for advocacy groups across the political spectrum."