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Cuomo vs. Cuomo: NRA speech case divides regulators for father-and-son New York governors

SCOTUS briefs favor gun rights group against blacklist pressure on insurers, banks. Not even Biden administration is 100% behind Empire State. Pro-life pregnancy center network says it just lost insurance for same reason.

Published: January 17, 2024 11:00pm

New York's pressure on banks and insurance companies to eschew business with the National Rifle Association, claiming the group's First Amendment activity creates a "reputational risk," isn't going over well with other Second Amendment advocacy groups, unsurprisingly.

But the antagonism toward the Empire State's Department of Financial Services also created cross-ideological bedfellows among two dozen friend-of-the-court briefs filed with the Supreme Court, most on Tuesday, challenging New York's win at the 2nd U.S. Circuit Court of Appeals.

More than 100 Republican federal lawmakers and state attorneys general, a GOP-led legislature, civil liberties groups, First Amendment and business scholars, conservative and libertarian think tanks, and a network of pro-life pregnancy centers joined an arsenal of pro-gun activists in briefs giving ammunition to the NRA.

DFS used "backchannel threats, ominous guidance letters, and selective enforcement of regulatory infractions" to isolate the NRA from the financial system, according to the gun-rights group's petition to SCOTUS. 

The justices agreed to consider the First Amendment implications of regulators threatening regulated entities for doing "business with a controversial speaker" due to viewpoint hostility or "a perceived 'general backlash' against the speaker's advocacy."

Despite not objecting to gun control in principle, the ACLU said it's representing the NRA because the 2nd Circuit ruling opens the floodgates to other states punishing ideologically opposed nonprofits, "including the ACLU itself." UCLA First Amendment law professor Eugene Volokh is co-counsel.

Embarrassingly for former DFS Superintendent Maria Vullo, the named defendant, and disgraced former Democratic Gov. Andrew Cuomo, who appointed and led the anti-NRA charge with her, Vullo's predecessor under Cuomo's father, Mario, is siding with the NRA. 

The only briefs thus far even partly supporting New York came from the Biden administration and lawyers for local governments, which warned government speech was imperiled if SCOTUS cracked down too hard on officials leaning on regulated entities.

The NRA's claims about Vullo's February 2018 meetings with Lloyd's of London, soon after the Parkland school shooting in Florida, "state a plausible First Amendment claim," but her April 2018 guidance is murkier, the Justice Department brief said. SCOTUS must reject arguments that "threaten to condemn legitimate government activity" in "more typical circumstances."

The International Municipal Lawyers Association filed the same brief for NRA v. Vullo and Murthy v. Missouri, the latter of which deals with the similar constitutional issue of government officials pressuring social media companies to suppress disfavored narratives. 

"Attempts to convince are lawful; attempts to coerce are not," IMLA wrote, asking the high court to clarify that a "reasonable person" must view the speech as coercive and that possessing "regulatory or enforcement authority" does not make government speech "inherently coercive."

The 2nd Circuit downplayed the "crucial context" of Vullo's sweeping authority, former Democratic Gov. Mario Cuomo's Superintendent of Insurance James Corcoran, now in private practice, told the justices. 

Because the superintendent's "immense discretion over whether, when, and how to deploy" her power is combined with "a highly complex web of rules to police," regulated firms "treat their regulator’s 'encouragements' as edicts," Corcoran wrote. 

He warned that the "stability of both the American economy and democracy" are at risk if other state regulators successfully "cut off a politically disfavored group’s access to basic financial services."

DFS isn't the first regulator to try this, and prior incidents "generated sufficient controversy that bankers and insurance companies were well aware of them," according to Mercatus Center research fellow Brian Knight and University of Wyoming law professor George Mocsary, whose focus is "the intersection of firearms law and insurance law."

The Federal Deposit Insurance Corporation used "guidance combined with 'moral suasion'" and "ratchet[ed] up the intensity of supervisory and examination activities" to convince banks to stop offering legal "refund anticipation loans" and banking services to payday lenders, their brief said. FDIC guidance also played a role in the Obama administration's anti-gun initiative Operation Choke Point, belatedly rebuked by the Trump administration.

This happened in the pro-life context with Heartbeat International, whose "own insurance provider recently cancelled its general liability policy, bluntly stating that Heartbeat’s stance on legalized abortion precipitated the move," the pro-life pregnancy center network's lawyers at Alliance Defending Freedom wrote.

The 2nd Circuit found that Vullo's "social backlash" justification for cutting off the NRA was "reasonable," ADF noted.

"This judicial approval of the heckler’s veto is extraordinary," and the high court should instruct lower courts that "public outrage can neither excuse nor explain away government coercion of private censorship."

The Project for Privacy and Surveillance Accountability, whose senior policy advisers are former Rep. Bob Goodlatte, R-Va., and former Sen. Mark Udall, D-Colo., blasted the 2nd Circuit for justifying Vullo's guidance under "corporate social responsibility" theory, which a different state could use to stop "doing business with Black Lives Matter."

The Constitution "protects the exercise of various rights precisely because they are unpopular or cause inconvenience," according to the group, which focuses on Foreign Intelligence Surveillance Act reform. The 2nd Circuit endorsed a "heckler’s veto enforced via regulators claiming that unfashionable views or actors create an impermissible financial risk from the hecklers."

As the American Center for Law and Justice echoed in a heading, "The Persuasion vs. Coercion Distinction Ignores Practical Reality." Not only was Vullo "encouraging" regulated entities to reassess financial relationships with pro-gun groups, but Gov. Andrew Cuomo was "publicly praising" her "for targeting the NRA," the conservative legal group said.

Given that the "vast majority of companies in the country" incorporate in Delaware, the First State could force them "to create positions on their boards for Diversity, Equity, and Inclusion officers" using the 2nd Circuit precedent, Indiana and Mississippi AGs Todd Rokita and Lynn Fitch told SCOTUS on behalf of residents who are NRA members.

They speculated about what New York will target next: "Tomorrow, perhaps abortion. And next week? Maybe it will extend its program of disassembling First Amendment rights to religious believers. There is no perceivable end in sight."

Montana AG Austin Knudsen led peers from 22 other states and the Arizona Legislature in asking SCOTUS to reverse the 10th and 2nd Circuits, which "stepped out of line" in recent years by letting "enterprising political officials [...] jawbone speech intermediaries with impunity so long as they avoid making explicit threats."

Missouri AG Andrew Bailey signed that brief and is suing the Biden administration for its social media pressure, yet he's also a "jawboning practitioner," according to a brief led by the Foundation for Individual Rights and Expression.

Bailey joined an AGs' letter last summer threatening Target for selling "Pride" merchandise, including "tuck-friendly" swimsuits for boys who identify as girls, and for donating to the group GLSEN, which the letter states helps activists direct public schools to withhold information from parents and others "that may reveal a student’s gender identity."

America First Legal sued Target for the financial fallout of its Pride marketing.

This double-mindedness on Bailey's part "illustrates that the threat of informal governmental censorship is not limited to either side of our partisan divide," says the brief, which also includes the First Amendment Lawyers Association.

First Amendment scholars including superlawyer Floyd Abrams and former 10th Circuit Judge Michael McConnell, now at Stanford's Hoover Institution, said "lower courts have, at times, struggled to define the line between permissible government speech and impermissible coercion" under the high court's 1963 precedent Bantam Books.

"The facts of this case require no such struggle," they wrote, because Vullo's actions "crossed every recognized line by a country mile."