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NRA Seeks Preliminary Injunction Against New York State Department of Financial Services to Confront Expedited Enforcement Action

FEBRUARY 28, 2020 – Brewer, Attorneys & Counselors announced today that its client, the National Rifle Association of America (“NRA”), seeks a preliminary injunction in federal court to block the New York State Department of Financial Services (“DFS”) from conducting enforcement proceedings against the NRA. On February 5, 2020, DFS served a Statement of Charges against the NRA and noticed a hearing on April 6, 2020 to address alleged violation of New York State insurance law. 

Filed on February 28, 2020, the NRA’s court papers claim that in the face of startling new evidence and documents detailing backroom pressure it placed on insurance companies to blacklist the NRA, the DFS hurriedly amended its hearing rules, then contrived to conclude its investigation of the NRA – so it could divert important issues to a private, DFS-controlled forum instead of a New York jury.  

The NRA alleges that DFS’s latest actions against the Association threaten important rights under the First Amendment and the Equal Protection Clause of the United States Constitution. Two heavyweight expert witnesses – a former senior New York insurance regulator, John R. Cashin, and civil procedure titan Arthur R. Miller – agree. 

“The actions of DFS come in the face of the NRA pursuing an amended lawsuit in federal court to lay bare the details of a chief allegation:  the NRA has been treated more harshly and differently by DFS than other regulated entities – singled out to weaken gun-rights advocacy in New York,” says William A. Brewer III, counsel to the NRA. “The NRA plans to defend itself and expose the motives of those involved in the attacks against the Association and its members.”

The dispute between the NRA, DFS, and New York Gov. Andrew Cuomo took root in 2017, when an anti-NRA activist group urged New York State officials to investigate insurance products offered to NRA members.  The NRA claims that DFS’s resulting investigation broadened into a blacklisting campaign that coerced insurers, banks, and others to cut ties with the NRA – or face the full range of consequences that New York’s financial regulators might impose. Alleging that Gov. Cuomo and DFS aimed to stifle and punish pro-gun speech, the NRA brought a federal lawsuit under the First Amendment and Fourteenth Amendment in May 2018.  

The NRA’s First Amendment lawsuit alleges that DFS, Gov. Cuomo, former DFS Superintendent Maria T. Vullo and anti-gun groups worked hand-in-glove to orchestrate the financial “blacklisting” campaign against the NRA, threatening reprisals against companies that provided services such as health insurance to NRA members.  On December 23, 2019, the NRA moved to amend that lawsuit to include explicit new allegations of backroom dealings between Vullo and Lloyd’s of London. 

The original DFS investigation continued throughout the pendency of the NRA’s federal lawsuit. As today’s filing states, “the NRA never asked the Court to enjoin its [the DFS investigation] progress.” 

However, in early December 2019, the NRA revealed that it had “uncovered new evidence in support of its selective-enforcement claims” against DFS. The NRA announced it intended to pursue an amended lawsuit but, according to the NRA, just days before the NRA was scheduled to submit its amended pleading, DFS “contacted the NRA and announced that it intended imminently to commence an administrative proceeding against the NRA — the first of its kind in the Department’s history, pursuant to just-amended procedural rules enacted by DFS on an ‘emergency’ basis.”

Brewer explains, “The NRA believes the timing of DFS’s enforcement action – on the heels of that proposed amendment – is no coincidence. Rather than litigate these troubling allegations in federal court, where they belong, DFS seeks to distract the public with negative headlines and divert important legal issues to a chamber it controls.”

In connection with today’s filing, expert witnesses claim that any DFS adjudicatory procedure would be “highly likely to involve factual issues overlapping with those before the Court” in the federal case.

Former Deputy Superintendent of Insurance for the State of New York John R. Cashin states that, since 2014, he finds no evidence of proceedings by DFS against any other affinity client. Further, in more than 45 years, he has “never witnessed hostilities against an affinity client that are comparable to those directed by DFS at the NRA.” 

NYU Law School Professor Arthur R. Miller writes, “Allowing DFS to avert, preempt, or muddle this Court’s adjudication of the NRA’s claims by diverting core factual issues to a DFS-controlled tribunal would subject the NRA to irreparable harm.”

Miller continues, “Although courts may justifiably hesitate to obstruct ongoing regulatory investigations, in this matter it appears that DFS’s fact gathering is complete, and adjudicating its allegations is the only step that awaits. So long as applicable statutes of limitations can be tolled, staying state proceedings to allow for the resolution of the NRA’s previously filed federal claims would not discernibly prejudice defendants. By contrast, allowing DFS to pursue its present course could gravely prejudice the NRA and, as a matter of precedent, prejudice the constitutional rights of any similarly situated party who finds itself the target of government viewpoint discrimination.”

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