Strange bedfellows make for good First Amendment warriors in a case concerning guns, financial institutions, and free speech. Last week, the American Civil Liberties Union (ACLU) announced that it will represent the National Rifle Association (NRA) in National Rifle Association of America v. Vullo, which the Supreme Court recently agreed to hear. The case is an interesting one, with more than a bit of relevance beyond the NRA—particularly for entities related to sexuality or tolerant of sex work.
"We don't support the NRA's mission or its viewpoints on gun rights, and we don't agree with their goals, strategies, or tactics," the ACLU posted on X (formerly Twitter) on December 9. "But we both know that government officials can't punish organizations because they disapprove of their views."
Some might bristle at all this throat-clearing, but it's good to see the ACLU—which has been accused (not unfairly)of putting politics before principles in recent years—loudly embrace civil liberties issues regardless of whether the victim is palatable to progressives. The ACLU knows (even if it seems to have some selective amnesia on this point) that letting government officials abuse authority against groups you disagree with or dislike only makes it easier for officials to abuse you and groups involved in the causes you do like.
The case involves actions taken by Maria Vullo in the wake of the school shooting in Parkland, Florida, in 2018. Vullo was superintendent of the New York State Department of Financial Services (DFS), which has regulatory and enforcement power over banks and insurance companies in the state.
In April 2018, DFS issued a "Guidance on Risk Management Relating to the NRA and Similar Gun Promotion Organizations" to banks, insurance companies, and other financial institutions. The guidance mentioned "several recent horrific shootings, including in Parkland" and noted the "social backlash" that these had produced against the NRA. They then encouraged institutions "to continue evaluating and managing their risks, including reputational risks, that may arise from their dealings with the NRA or similar gun promotion organizations, if any." DFS also urged companies to think of their own "codes of social responsibility" and "to review any relationships they have with the NRA or similar gun promotion organizations, and to take prompt actions to manag[e] these risks and promote public health and safety."
That same day, New York Gov. Andrew Cuomo's office put out a press release crowing that Cuomo had told DFS "to urge insurance companies, New York State-chartered banks, and other financial services companies licensed in New York to review any relationships they may have with the National Rifle Association and other similar organizations."
The press release quotes Vullo saying that "DFS urges all insurance companies and banks doing business in New York to join the companies that have already discontinued their arrangements with the NRA, and to take prompt actions to manage these risks and promote public health and safety."
Vullo's actions echo those of Cook County, Illinois, Sheriff Tom Dart. In 2015, Dart urged credit card companies not to do business with Backpage. Dart suggested that if credit card companies didn't sever ties with Backpage, they could be complicit in sex trafficking and money laundering (despite the fact that Backpage had not even been charged with any such crimes).
Backpage sued, and the U.S. Court of Appeals for the 7th Circuit eventually declared Dart's actions unconstitutional.
You might think the Backpage/Dart episode would dampen enthusiasm for political figures coercing finance companies into dropping disfavored entities or groups. But in recent years, it appears to be an increasingly prevalent tack.
Advocates and politicians seem not just to want to beat ideological foes in the battle of ideas but to destroy their ability to exist at all. And one way to go about that is to strike at a company or group's ability to access banks, payment processors, and other financial services.
There are probably a lot of folks who think, "I don't care if the NRA has access to financial services," just like a lot of people have said the same thing about Backpage, porn websites, and other sex-work-friendly businesses. But even those who can't bring themselves to care on principle should worry about the kinds of precedent this sets.
Remember, we're not talking about people and groups convicted of crimes, nor about authorities using official channels to sanction them. We're talking about authorities attempting a backdoor route to getting what they want.
In this case, Vullo alleges that there was nothing improper about any of this because she didn't directly threaten anyone. "Neither the guidance memoranda nor [the] quote in Governor Cuomo's press release ordered or directed any regulated entity to take any action," states Vullo's June brief to the Supreme Court. "They did not invoke any law or regulation that any regulated entity risked violating" nor "threaten that DFS would take any action against any entity" that didn't ditch the NRA.
But this is weasel talk. Because there was pretty clearly an implicit threat in Vullo's guidance and statements.
"DFS directives regarding 'risk management' must be taken seriously by financial institutions, as risk-management deficiencies can result in regulatory action, including fines of hundreds of millions of dollars," suggested the NRA in its petition to the Supreme Court. "Thus, Vullo's phrasing was deliberate, implicitly threatening enforcement risk."
The NRA also alleged that Vullo "secretly offered leniency to insurers for unrelated infractions if they dropped the NRA" and "extracted highly-publicized and over-reaching consent orders, and multi-million dollar penalties, from firms that formerly served the NRA."
These firms—Lockton Companies, Chubb Limited, and Lloyd's of London—were all associated in some way with the NRA-endorsed "Carry Guard" insurance, which covered expenses related to the use of a gun (including criminal defense and personal injury) and, according to Vullo, violated New York insurance law. DFS issued a $7 million fine to Lockton, a $1.3 million fine to Chubb, and a $5 million fine to Lloyd's.
Subsequently, Chubb and Lockton "agreed to cease underwriting, managing, or selling affinity-insurance programs for the NRA in perpetuity, regardless of the legality of the program," according to the NRA's petition. Soon thereafter, Lloyd's did similarly. "Privately, these companies stated that the decision to sever ties with the NRA arose from fear of regulatory hostility from DFS," states the NRA's petition to SCOTUS. "The NRA has encountered similar fears from providers of corporate insurance, and even banks contacted for basic depository services."
The NRA sued Vullo and Gov. Cuomo, arguing that they violated the First Amendment by instituting an "implicit censorship regime" and retaliating against the NRA because of its gun rights advocacy. The NRA also argued that they violated the 14th Amendment by selectively enforcing state insurance law. The district court dismissed the latter claim but sided with the NRA on the free speech issue.
Vullo appealed, sending the matter to the U.S. Court of Appeals for the 2nd Circuit. This time, the court rejected the NRA's arguments. "Vullo acted reasonably and in good faith in endeavoring to meet the duties and responsibilities of her office," held a three-judge panel of the circuit court.
The NRA appealed and, in November, the Supreme Court agreed to take up the case.
The 2nd Circuit ruling "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," stated the NRA in its petition to the Court.
In addition to the Backpage/Dart debacle, the NRA points to Bantam Books, Inc. v. Sullivan, a 1963 case in which the Supreme Court held that Rhode Island's Commission to Encourage Morality in Youth violated the First Amendment by attempting to use "informal sanctions"—including the "threat of invoking legal sanctions and other means of coercion, persuasion, and intimidation"—to suppress the publication of materials deemed unfit for kids. In the present case, Vullo "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…a gun rights advocacy group," noted the NRA.
Allowing the 2nd Circuit's decision to stand gives "gives state officials free rein to financially blacklist their political opponents—from gun-rights groups, to abortion-rights groups, to environmentalist groups, and beyond," the organization argued.
That seems exactly right. I don't know enough about insurance law to determine whether the Carry Guard coverage really was breaking some technical rules about what kinds of things can be insured. But even if it was, issuing millions in fines seems excessive and at least potentially designed to deter other businesses from doing business with the NRA. What's more, Vullo and Cuomo's statements and the DFS guidance in this case make clear that this was about more than just a particular insurance program or type of coverage. This was clearly about trying to dissuade companies from doing business with Second Amendment advocacy groups at all, in part by hinting that there may be negative consequences for those that do.
As with the porn industry, there are a lot of people disinclined to care when the NRA's rights are violated. But if politicians can get away with pressuring financial institutions to shun the NRA (or Backpage, or porn producers, or whatever entity it is the next time), then they can get away with doing it to any disfavored or marginalized group. And do you really think that politicians won't try to do the same thing to groups you like?
No doubt there are conservative politicians itching to shut off funding for groups that engage in racial justice demonstrations, help women obtain abortions, or advocate for transgender rights. There are progressive politicians who would love to take down platforms that give voice to right-leaning voices. And there are probably folks on both sides who wish they could shut up groups that challenge government authority.
I'll leave the last word to the ACLU: "If the Supreme Court doesn't intervene," it commented, "it will create a dangerous playbook for state regulatory agencies across the country to blacklist or punish any viewpoint-based organizations—from abortion rights groups to environmental groups or even ACLU affiliates."
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