New York’s Attempted Hit on the NRA Violated the First Amendment

Gun Rights

The federal government’s informal censorship campaigns against Americans’ online speech have justifiably ignited public outrage. Extensive reporting, as well as a lawsuit now before the Supreme Court, have revealed that the federal government cajoled and coordinated with social-media platforms to remove or suppress disfavored speech. Given these platforms’ outsized significance in national discourse in the digital age, this story deserves the public attention it has garnered.

Government officials’ informal efforts to stifle legal speech and conduct extend far beyond social media and the internet, however. As the Competitive Enterprise Institute has chronicled at length, the government has perpetrated softcore censorship (known as “jawboning”) throughout many parts of American life for decades.

The U.S. body politic must contend with and excise this broader trend. As Andrew Grossman and Kristin Shapiro noted recently in a paper for the Cato Institute, “Any policy approach that is limited to social media will miss areas where government officials are able to wield significant power and influence to suppress constitutionally protected speech and association.”

The Supreme Court will soon hear one such case, National Rifle Association of America v. Vullo. Here, the NRA alleges that a left-wing New York state official violated the First Amendment by coercing financial institutions to discontinue their business with the organization. This effort combined vague semi-formal regulatory guidance and an explicit threat of legal action, the NRA says.

Nonetheless, the 2nd U.S. Circuit Court of Appeals ruled for Maria Vullo, the former superintendent of the New York State Department of Financial Services (DFS). After the infamous 2019 mass shooting at a high school in Parkland, Florida, Vullo issued a guidance letter urging financial institutions to “to continue evaluating and managing their risks, including reputational risks, that may arise from their dealings with the NRA or similar gun promotion organizations.”

The 2nd Circuit said the letter’s language “cannot reasonably be construed as being unconstitutionally threatening or coercive” and, therefore, fell within the government’s well-established right to express opinions to private actors. This reasoning reflects an ignorance of the financial service industry’s regulatory culture, write Brian Knight and George Mocsary, two business-law scholars. The two explain that financial regulators possess ill-defined and expansive powers and operate quite closely with private firms. In this unique environment, both regulators and regulated businesses often understand so-called guidance documents as directives. “Regulated firms have historically faced formal and informal penalties for failure to conform to guidance that was nominally non-binding,” Knight and Mocsary write. 

What’s more, the DFS, in its official capacity, monitors institutions’ “reputational risks.” Invoking such risks — while perhaps seemingly harmless to the layperson or the 2nd Circuit — suggests some sanction could follow non-compliance.

The 2nd Circuit also handwaved a still starker coercion attempt. Vullo met with insurance marketplace Lloyd’s of London (then an NRA partner) to discuss potential regulatory infractions. According to the complaint, Vullo “made it clear … that DFS was less interested in pursuing the infractions of which she spoke, so long as Lloyd’s ceased providing insurance to gun groups, especially the NRA.” The appeals court concluded that “context shows that she was merely carrying out her regulatory responsibilities.” How Vullo’s threat — enhanced regulatory scrutiny should Lloyd’s continue doing business with the NRA — falls short of coercion remains unanswered in the 2nd Circuit’s opinion.

There is a striking distinction between NRA v. Vullo and the social-media jawboning case. The social-media platforms in question seemed content with — if not outright eager for — official input regarding content moderation (although they often rejected specific government requests). This obscured the boundary between state coercion and platform-solicited advisement.

In NRA v. Vullo, the NRA’s financial partners seemed happy to continue the partnership absent regulatory scrutiny. One partner, Lockton Companies, LLC, “placed a distraught phone call to the NRA,” saying that “it would need to ‘drop’ the NRA for fear of ‘losing [its] license’ to do business in New York,” per a filing from the NRA’s counsel.

For anybody still in doubt, then-Gov. Andrew Cuomo tipped the state’s hand on the platform then known as Twitter. “The regulations NY put in place are working. We’re forcing the NRA into financial jeopardy,” he posted when the NRA complained of losing its financial partners. “We won’t stop until we shut them down.” 

Unfortunately for Cuomo and Vullo, the First Amendment shields citizens against precisely this sort of petty tyranny and arbitrary rule. The First Amendment does not bend due to Democrats’ antipathy for the Second. To curb the modern jawboning epidemic, and to enforce the Bill of Rights faithfully, the Supreme Court must correct the 2nd Circuit’s error and rule for the NRA.

David B. McGarry is a policy analyst at the Taxpayers Protection Alliance.

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