Nat'l Rifle Ass'n of Am. v. Cuomo

• Decision Date: 06 November 2018
• Docket Number: 1:18-CV-0566
• Citation: 350 F.Supp.3d 94
• Parties: NATIONAL RIFLE ASSOCIATION OF AMERICA, Plaintiff, v. Andrew CUOMO, Both Individually and in His Official Capacity; Maria T. Vullo, Both Individually and in Her Official Capacity; and The New York State Department of Financial Services, Defendants.
• Court: U.S. District Court — Northern District of New York

350 F.Supp.3d 94

NATIONAL RIFLE ASSOCIATION OF AMERICA, Plaintiff,

v.Andrew CUOMO, Both Individually and in His Official Capacity; Maria T. Vullo, Both Individually and in Her Official Capacity; and The New York State Department of Financial Services, Defendants.

1:18-CV-0566

United States District Court, N.D. New York.

Signed November 6, 2018

Sarah Rogers, Brewer Attorneys & Counselors, New York, NY, Stephanie L. Gase, William A. Brewer, Brewer, Attorneys & Counselors, Dallas, TX, Charles J. Cooper, Harold S. Reeves, Jose Joel Alicea, Michael W. Kirk, Cooper & Kirk, PLLC, Washington, DC, for Plaintiff

Adrienne J. Kerwin, Michael G. McCartin, Helena O. Pederson, New York State Attorney General, Albany, NY, for Defendants

DECISION & ORDER

THOMAS J. McAVOY, Senior United States District Judge

I. INTRODUCTION

Plaintiff the National Rifle Association of America ("Plaintiff" or "the NRA") commenced this action against defendants New York Governor Andrew Cuomo, both individually and in his official capacity ("Gov. Cuomo"); Superintendent of the New York State Department of Financial Services Maria T. Vullo, both individually and in her official capacity ("Supt. Vullo"); and the New York State Department of Financial Services ("DFS") (collectively, "Defendants"). In the Amended Complaint, Plaintiff asserts several federal and New York state constitutional claims, and a New York common law tort claim. See Am. Compl., Dkt. No. 37, passim . Presently before the Court is Defendants' motion pursuant to Fed. R. Civ. P. 12(b)(6) to dismiss the Amended Complaint for failure to state claims upon which relief can be granted. Dkt. No. 40. The Court has considered the parties' briefs, see Dkt. Nos. 40, 48, 51; the briefs of amici curiae the Texas Public Policy Foundation and the American Civil Liberties Union Foundation, see Dkt. Nos. 46, 49; and entertained oral argument from the parties related to claims asserting freedom of speech and due process violations. Oral Arg. Trans., Dkt. No. 52. For the reasons that follow, Defendants' motion is granted in part and denied in part.

II. STANDARD OF REVIEW

On a Fed. R. Civ. P. 12(b)(6) motion, the Court must accept "all factual allegations in the complaint as true, and draw[ ] all reasonable inferences in the plaintiff's favor." Holmes v. Grubman , 568 F.3d 329, 335 (2d Cir. 2009) (internal quotation marks omitted). This tenet does not apply to legal conclusions. Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Similarly, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements ... are not entitled to the assumption of truth." Id. ; see also Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (stating that a court is "not bound to accept as true a legal conclusion couched as a factual allegation").

In considering a Rule 12(b)(6) motion, the Court "may consider the facts alleged in the complaint, documents attached to the complaint as exhibits, and documents incorporated by reference in the complaint." DiFolco v. MSNBC Cable L.L.C. , 622 F.3d 104, 111 (2d Cir. 2010). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly , 550 U.S. at 570, 127 S.Ct. 1955 ). A claim will only have "facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. "Where a complaint pleads facts that are ‘merely consistent with’ a defendant's liability, it ‘stops short of the line between possibility and plausibility of ‘entitlement to relief.’ " Id. (quoting Twombly , 550 U.S. at 557, 127 S.Ct. 1955 ). "Determining whether a complaint states a plausible claim for relief [is] ... a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679, 129 S.Ct. 1937. Plausibility is "a standard lower than probability." Anderson News, L.L.C. v. Am. Media, Inc. , 680 F.3d 162, 184 (2d Cir. 2012). "[A] given set of actions may well be subject to diverging interpretations, each of which is plausible," and "[t]he choice between or among plausible inferences or scenarios is one for the factfinder." Id. A court "may not properly dismiss a complaint that states a plausible version of the events merely because the court finds that a different version is more plausible." Id. at 185. "The role of the court at this stage of the proceedings is ... merely to determine whether the plaintiff's factual allegations are sufficient to allow the case to proceed." Doe v. Columbia Univ. , 831 F.3d 46, 59 (2d Cir. 2016).

III. BACKGROUND

a. DFS Investigation into the Carry Guard Insurance Program

In October 2017, DFS initiated an investigation of the NRA's affinity Carry Guard insurance program,¹ focusing on two insurance companies, Chubb Ltd. ("Chubb") and Lockton Affinity, LLC ("Lockton"), for underwriting and administering this program. Dkt. Nos. 37-4; 37-5.² The Carry Guard program provided, among other policy coverages, (1) liability insurance to gun owners for acts of intentional wrongdoing, and (2) legal services insurance for any costs and expenses incurred in connection with a criminal proceeding resulting from acts of self-defense with a legally possessed firearm, in violation of New York Insurance Law. Dkt. Nos. 37-4; 37-5. The policies issued through the Carry Guard program were underwritten by Chubb and offered by Lockton through New York's excess line market. Dkt. Nos. 37-4 at p. 4; 37-5 at ¶ 13. As part of its investigation, DFS learned that, although it did not have an insurance producer license from DFS, the NRA engaged in marketing of, and solicitation for, the Carry Guard program. Dkt. Nos. 37-4 at pp. 4-6; 37-5 at pp. 3-5. DFS also found that Lockton and the NRA together offered at least eleven additional insurance programs (collectively "additional NRA programs")³ to new and existing NRA members in New York and elsewhere. Dkt. No. 37-4 at pp. 6-7. Pursuant to written agreements with Lloyd's of London ("Lloyd's") and the NRA, Lockton served as the administrator for these additional NRA programs, carrying out such functions as marketing the insurance, binding the insurance, collecting and distributing premiums, and delivering policies to insureds. Id. ¶ 16. Lloyd's and Alea London Ltd. ("Alea") served as the underwriters for these additional NRA programs, which Lockton placed through New York's excess line market. Id. ¶ 17.

Following initiation of the DFS investigation, Lockton suspended the Carry Guard program on November 17, 2017 and is no longer making Carry Guard policies available to New York residents to purchase. Id. ¶ 32. DFS's investigation revealed that Lockton and Chubb violated numerous provisions of the New York Insurance Law in connection with the Carry Guard program and the additional NRA programs. See Dkt. Nos. 37-4, ¶¶ 34-40; 375, ¶¶ 18-19 (discussed below).

The NRA alleges that throughout the investigation, DFS communicated "backchannel threats" to banks and insurers with ties to the NRA that they would face regulatory action if they failed to terminate their relationships with the NRA. Am. Compl. ¶¶ 38, 45. According to the NRA, the Chairman of Lockton called the NRA on February 25, 2018 and confided that Lockton would need to "drop" the NRA entirely for fear of losing its license to operate in New York, and the next day Lockton tweeted it would discontinue providing brokerage services for all NRA-endorsed insurance programs. Id. ¶¶ 42–43. The NRA alleges that, days later, its corporate insurance carrier severed ties with it and said it would not renew coverage at any price. Id. ¶ 44. The NRA alleges that the corporate carrier severed its ties with the NRA "because it learned of Defendants' threats directed at Lockton, and feared it would be subject to similar reprisals." Id.

b. Cuomo Press Release

On April 19, 2018, Gov. Cuomo issued a press release indicating that he was directing DFS to communicate with insurance companies and financial institutions licensed or doing business in New York and urge them to review their relationships with the NRA and similar gun promotion organizations, and consider whether such relationships "harm their corporate reputations and jeopardize public safety." Dkt. No. 37-1 ("Cuomo Press Release"). Gov. Cuomo is quoted as stating:

New York may have the strongest gun laws in the country, but we must push further to ensure that gun safety is a top priority for every individual, company, and organization that does business across the state. I am directing the Department of Financial Services to urge insurers and bankers statewide to determine whether any relationship they may have with the NRA or similar organizations sends the wrong message to their clients and their communities who often look to them for guidance and support. This is not just a matter of reputation, it is a matter of public safety, and working together, we can put an end to gun violence in New York once and for all.

Id.

The press release states that "DFS is encouraging regulated entities to consider reputational risk and promote corporate responsibility in an effort to encourage strong markets and protect consumers." Id. Then, following a statement that "[a] number of businesses have ended relationships with the NRA following the Parkland, Florida school shooting in order to realign their company's values," Supt. Vullo is quoted as stating:

Corporations are demonstrating that business can lead the way and bring about the kind of positive social change needed to minimize the chance that we will witness more of these senseless tragedies. DFS urges all insurance companies and banks doing business in New York to join the companies that have already discontinued their arrangements with

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