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

• Decision Date: 15 March 2021
• Docket Number: 1:18-CV-0566
• Citation: 525 F.Supp.3d 382
• 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

525 F.Supp.3d 382

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 March 15, 2021

Sarah Rogers, Michelle Joanna Martin, Mordechai Geisler, Brewer Attorneys & Counselors, New York, NY, William A. Brewer, III, Brewer, Attorneys & Counselors, John C. Canoni, Stanton LLP, Dallas, TX, for Plaintiff.

Adrienne J. Kerwin, William A. Scott, Helena O. Pederson, Michael G. McCartin, New York State Attorney General, Ryan L. Abel, Burke, Scolamiero & Hurd, LLP, Albany, NY, for Defendant Andrew Cuomo.

Adrienne J. Kerwin, William A. Scott, Helena O. Pederson, Michael G. McCartin, New York State Attorney General, Albany, NY, Andrew G. Celli, Jr., Debra L. Greenberger, Elizabeth S. Saylor, Marissa Benavides, Emery Celli Brinckerhoff, Abady, Ward & Maazel LLP, New York, NY, for Defendant Maria T. Vullo.

Adrienne J. Kerwin, William A. Scott, Helena O. Pederson, Michael G. McCartin, New York State Attorney General, Eamon G. Rock, New York State Department of Financial Services, Ryan L. Abel, Burke, Scolamiero & Hurd, LLP, Albany, NY, Kevin John Bishop, Nathaniel J. Dorfman, New York State Department of Financial Services, New York, NY, for Defendant The New York State Department of Financial Services.

DECISION and ORDER

THOMAS J. McAVOY, Senior United States District Judge

I. INTRODUCTION

New York Governor Andrew Cuomo ("Gov. Cuomo"), the New York State Department of Financial Services ("DFS"), and Linda A. Lacewell, the current DFS superintendent ("Supt. Lacewell"), move to dismiss claims in the Second Amended Complaint ("SAC"). See Dkt. No. 210. Former DFS Superintendent Maria T. Vullo ("Ms. Vullo") appeals Magistrate Judge Hummel's decision granting Plaintiff's motion to amend the Complaint, and moves to dismiss the claims against her in the SAC. See Dkt. No. 211. Plaintiff National Rifle Association ("NRA" or "Plaintiff") opposes these motions.

II. PROCEDURAL BACKGROUND

The Court assumes the parties’ familiarity with the procedural history of this case and the underlying claims. It will not restate it here other than as necessary to review the pending motions.

III. DISCUSSION

a. Ms. Vullo's Motion

Rule 72 Objection

In moving for leave to amend, Plaintiff asserted to Judge Hummel that it sought to amend to replead its selective enforcement claims, substitute Supt. Lacewell for Ms. Vullo in its claim for injunctive relief, and make minor, nonsubstantive changes to the pleading. Dkt. No. 202 at 4-5. Judge Hummel found that Plaintiff did not exercise due diligence in moving to amend. See Dkt. No. 202. But, because mere delay absent a showing of bad faith or undue prejudice does not provide a basis to deny the right to amend, he then preceded to addressed these issues. Id. He declined to find that the motion to amend was brought in bad faith, and determined that Ms. Vullo had not established that she would be subjected to undo prejudice such to warrant outright denial of the motion to amend. Id. He then preceded to determine whether the proposed repleaded selective enforcement claim against Ms. Vullo was futile, using a the Rule 12(b)(6) standard and the Court's prior decision on the selective enforcement claims to assess its plausibility. Id. He determined that the proposed pleading plausibly alleged that Ms. Vullo had knowledge of similarly situated comparators, either directly or through a "see-no-evil" policy, and that she declined to prosecute these comparators. Id. Thus, Judge Hummel granted the NRA's motion to replead a selective enforcement claim against Ms. Vullo in her individual capacity. Id.¹ He also granted Plaintiff's motion to the extent it substituted Supt. Lacewell for Ms. Vullo in Plaintiff's request for an injunction. Id. He denied leave to amend to the extent Plaintiff sought to replead a selective enforcement claim against Gov. Cuomo, or to newly plead such a claim against DFS. Id.

Ms. Vullo challenges Judge Hummel's determinations relative to whether the NRA acted in bad faith in seeking to amend, and whether Ms. Vullo will be unduly prejudiced by amendment. Whether applying the clearly erroneous or contrary to law standard of review set out in Rule 72(a), or the de novo standard of review set out in Rule 72(b), see Sokol Holdings, Inc. v. BMB Munai, Inc. , No. 05 CV 3749 KMW DCF, 2009 WL 3467756, at *3-*4 (S.D.N.Y. Oct. 28, 2009),² the Court finds no error in Judge Hummel's assessment of bad faith and undue prejudice. Ms. Vullo does not challenge under Rule 72 Judge Hummel's determination that the selective enforcement claim against her was non-frivolous, but rather challenges the legal viability of that claim under Rule 12(b)(6). Because the Court finds, as addressed below, that Ms. Vullo is entitled to immunity on the selective enforcement claim in the SAC, it need not address her arguments directed to the plausibility of the factual allegations supporting this claim.

Rule 12(b)(6) Motion

On the Rule 12(b)(6) motion, Ms. Vullo argues that she is entitled to absolute and qualified immunity on the selective enforcement, and qualified immunity on the First Amendment claim. The Court starts with the arguments addressed to the selective enforcement claim.

Selective Enforcement Claim

In the selective enforcement claim, Plaintiff asserts that DFS received information from the New York County District Attorney's Office that the NRA was offering an affinity insurance program known as Carry Guard that was illegal under New York Insurance Law ("Insurance Law").³ See SAC, Dkt. No. 203, ¶¶ 34-35. The District Attorney's Office had received its information from an organization, Everytown for Gun Safety, which has an explicit political mission to oppose the NRA. Id. ¶ 34. The DFS investigation into the Carry Guard insurance program initially focused on insurance companies Chubb Group Holdings, Inc. and Illinois Union (together, "Chubb") and Lockton Affinity, LLC ("Lockton") for underwriting and administering this program. The DFS investigation also looked into Lloyd's of London's ("Lloyd's") involvement in the NRA's affinity insurance programs. See Plt. Mem. L. in Opp., Dkt. 220, at 12 ("Lockton brokered and administered, and Lloyd's underwrote, the vast majority of non-Carry Guard policies offered to NRA members and targeted by Defendants."). "Within weeks of commencing its investigation, DFS began to target insurance programs that had nothing to do with firearms, and instead provided coverage similar or identical to coverage endorsed by other New York affinity organizations." SAC ¶ 36. Plaintiff asserts that "Defendants’ goal, from the outset, was to disrupt any and all business arrangements between the NRA and any insurance administrator, broker, or underwriter—indeed, any financial institution." Id.

Chubb, Lockton, and Lloyd's entered into consent orders with DFS in which they agreed that some of the NRA insurance programs they were involved in violated New York Insurance Laws, agreed not to provide these and other insurance programs to the NRA, and agreed to pay substantial civil monetary penalties. See SAC ¶ 62 and Ex. E (Chubb Consent Order); id. ¶¶ 54-55 and Ex. D (Lockton Consent Order); id. ¶ 74 and Ex. I (Lloyd's Consent Order); see also id. ¶ 78.⁴ Ms. Vullo signed the consent orders on behalf of DFS. Plaintiff contends that Chubb, Lockton, and Lloyd's "were coerced to terminate their business arrangements with the NRA and its members—including arrangements having nothing to do with the allegedly unlawful conduct cited by DFS." Id. ¶ 21; see also id. ¶ 93;⁵ ¶ 102.⁶ Plaintiff asserts that "DFS has not announced—even to this day—similar inquiries concerning any" other membership organizations "although their affinity programs involve most, if not all, of the practices and features referenced by DFS in its investigation of the NRA's affinity programs." Id. ¶ 37. Plaintiff contends that "Defendants selectively targeted the NRA because of the NRA's constitutionally protected legislative and grassroots advocacy activities. Defendants specifically intend to undermine the NRA's ability to conduct its affairs in New York—and to advance Cuomo's anti-NRA political agenda." Id.

Plaintiff asserts that based on the NRA's "political views and speech relating to the Second Amendment," SAC ¶ 119, Ms. Vullo "knowingly and willfully violated the NRA's equal protection rights by seeking to selectively enforce certain provisions of the Insurance Law against Lockton's affinity-insurance programs for the NRA. Meanwhile, other affinity-insurance programs that were identically (or at least similarly) marketed by Lockton, but not endorsed by ‘gun promotion’ organizations, have not been targeted by DFS's investigation." Id. ¶ 109. In this regard, the NRA asserts:

58. Several of the purported "violations" assessed pursuant to the Lockton Consent Order concern programs commonly engaged in by numerous additional affinity associations that do not publicly advocate for Second Amendment rights and, therefore, are not targets of Defendants’ unconstitutional conduct. Several such organizations are clients of Lockton—yet the Consent Order does not compel Lockton to discontinue its purportedly unlawful conduct with respect to these clients.

59. For example:

• DFS claims that Lockton Affinity violated Insurance Law § 2122(a)(1) by referring to the insurer's AM Best rating. Yet, at the time this lawsuit was filed, Lockton Affinity's affinity program for the American Optometric Association through AOAExcel ("AOAExcel") touted the "backing of a carrier that is rated A+ (Superior) by A.M. Best. Similarly, Lockton Affinity currently advertises that coverage for the affinity programs designed for the Veterans of Foreign Wars ("VFW") and Moose International Inc. ("Moose") was through companies "rated ‘Excellen

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