Does the First Amendment Allow a Government Official to Make Threats Like a Mob Boss?

“Nice business you got there. It’d be a shame if something happened to it.”

April 21, 2023   •  By Barnaby Zall

What would you do if a powerful government regulator “suggested” you drop one of your customers because she didn’t like the customer’s political speech? What if she pointed out that lots of your “responsible” competitors had cut off that customer already, and that she had just levied millions of dollars in fines against three competitors who failed to follow her “advice?”

And what if you were that disliked customer, a well-known and controversial advocacy group? Can a government official choke off your access to banks and insurance companies because she didn’t like your politics? Does punishing regulated companies because they do business with the government’s political foes violate the First Amendment? The Supreme Court has just been asked that question, and the  question is important enough that 18 states just urged the Court to consider it, citing “troubling allegations of governmental abuse of power.”

This scenario becomes more believable when you learn it involves the National Rifle Association and Maria Vullo, formerly the New York State Superintendent of Financial Services, who regulated banks and insurance companies. Her boss, then-Governor Andrew Cuomo, tweeted: “If I could have put the @NRA out of business, I would have done it 20 years ago. I’ll see you in court.” But the First Amendment protects the NRA’s controversial speech and its members’ association with it, so Cuomo couldn’t put the group “out of business” for its views.

Eventually, Gov. Cuomo tried an “indirect” way to choke the NRA out of business: threaten the highly-regulated financial companies that provide essential services to the NRA. On April 19, 2018, Cuomo issued a media release saying: “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.” Companies in highly-regulated industries worry about regulators who claim they have “reputational risk.” But “reputational risk” is usually about a firm’s “reputation” for solvency and sound business practices, not the political views of the firm’s customers.

As constitutional litigators David Rivkin and Andrew Grossman wrote in The Wall Street Journal: “It’s the classic threat of B-movie mobsters: Nice business you got there, it’d be a shame if something happened to it. … the Constitution’s protections don’t amount to much if government officials can censor disfavored opinions simply by labeling them ‘reputational risk.’ … Gin up enough online outrage or disagreement by officials or purported experts, and you can justify censoring anything or anyone.”

Superintendent Maria Vullo did what her boss told her to do. She issued “Guidance Letters” to banks and insurers doing business in New York and secretly met some she knew were doing business with the NRA to “urge” them to stop. She slapped millions of dollars in fines on some who didn’t stop. She only focused on the NRA, not other organizations doing the same sort of thing.

Her plan worked. The NRA’s insurers, for example, stopped insuring the organization’s members. They admitted they feared Vullo’s retribution.

The NRA filed suit, citing its First Amendment rights to free expression and association. The American Civil Liberties Union, no friend of the NRA, filed an amicus brief: “Political advocacy organizations throughout the United States, including the American Civil Liberties Union, rely on access to a number of basic services in order to function. Many of these services are highly regulated, including insurance, banking, legal services, and accounting. … Although public officials are free to express their opinions and may condemn viewpoints or groups they view as inimical to public welfare, they cannot abuse their regulatory authority to retaliate against disfavored advocacy organizations and to impose burdens on those organizations’ ability to conduct lawful business.”

On March 15, 2021, the NRA won in the trial court. The trial court said: “the First Amendment ‘require[s] courts to draw fine lines between permissible expressions of personal opinion [by public officials] and implied threats to employ coercive state power to stifle protected speech.’ …  it was plausible to conclude that the combination of Defendants’ actions, including Ms. Vullo’s statements in the Guidance Letters and Cuomo Press Release as well as the purported ‘backroom exhortations,’ could be interpreted as a veiled threat to regulated industries to disassociate with the NRA or risk DFS enforcement action.”

In September 2022, however, the U.S. Court of Appeals for the Second Circuit reversed the lower court. Where the NRA and the trial court saw “implied threats” meant to punish the NRA, the Second Circuit declared, “Vullo was doing her job in good faith. … She used her office to address policy issues of concern to the public.” The Second Circuit said Vullo’s actions were “persuasion,” not “coercive.”

But the Second Circuit’s decision ignored the Supreme Court’s decision in Bantam Books, Inc. v. Sullivan, 372 U.S. 58, 66-67 (1963) (“informal sanctions such as the threat of invoking legal sanctions and other means of coercion, persuasion, and intimidation” violate the First Amendment). Twenty years earlier, the Second Circuit itself had found that an “official’s invocation of his title, as well as his reference to other economically-beneficial assets owned by the entity, reasonably suggested that the official ‘intended to use his official power to retaliate against it if it did not respond positively to his entreaties.’” Okwedy v. Molinari, 333 F.3d 339, 341-42, 344 (2d Cir. 2003) (defendant “threaten[ed] to employ coercive state power to stifle protected speech,” whether through “direct regulatory or decisionmaking authority” or “in some less-direct form.”).

For 60 years, federal courts have distinguished between “attempts to convince” and “attempts to coerce” by weighing the government officials’ regulatory authority over the targeted entity, the language used in the alleged threat, and whether the targeted entity reasonably perceived the statement as a threat., LLC v. Dart, 807 F.3d 229, 230-32 (7th Cir. 2015). Here, Vullo had authority, secretly delivered a threat, and the targeted firms recognized and obeyed the threat.

Now the NRA has asked the Supreme Court to review the case. UCLA Law Professor Eugene Volokh, one of the top First Amendment scholars in the country, is counsel of record on the NRA’s Petition for Certiorari (review) to the Court. The Petition’s Introduction begins:

The Second Circuit’s opinion below gives state officials free rein to financially blacklist their political opponents—from gun-rights groups, to abortion-rights groups, to environmentalist groups, and beyond. It lets state officials “threaten[ ] regulated institutions with costly investigations, increased regulatory scrutiny and penalties should they fail to discontinue their arrangements with” a controversial speaker, on the ground that disfavored political speech poses a regulable “reputational risk.” It also permits selective investigations and penalties targeting business arrangements with disfavored speakers, even where the regulator premises its hostility explicitly on an entity’s political speech and treats leniently, or exempts, identical transactions with customers who lack controversial views. In sum, it lets government officials, acting with undisguised political animus, transmute “general backlash” against controversial advocacy into a justification for crackdowns on advocates (and firms who serve them), eviscerating free speech rights.

At this stage in this case’s five-year history, the briefs are designed only to interest the Supreme Court in deciding to review the case (or not). The Court most often decides to grant review when its review could help ensure nationwide uniformity in the law by resolving “conflicts” between lower courts. The Petition’s basic argument is that the Second Circuit’s opinion conflicts with both long-standing Supreme Court precedent and other Circuit court decisions, including Bantam Books and In those cases, courts found that informal and indirect threats to essential suppliers violate the First Amendment.

In Backpage, for example, as renowned Judge Richard Posner put it, “The Sheriff of Cook County, Tom Dart, has embarked on a campaign intended to crush Backpage’s adult section—crush Backpage, period, it seems—by demanding that firms such as Visa and MasterCard prohibit the use of their credit cards to purchase any ads on Backpage, since the ads might be for illegal sex-related products or services, such as prostitution. Visa and MasterCard bowed to pressure from Sheriff Dart and others by refusing to process transactions in which their credit cards are used to purchase any ads on Backpage, even those that advertise indisputably legal activities.” 807 F.3d at 230.

The principle at stake in NRA v. Vullo is much larger than just the NRA or former New York politicians. The First Amendment doesn’t permit government officials to make “mobsters’ threats” to banks and other corporations because of advocates’ public policy or political views. The legal test is whether the government officials’ actions are persuasion (which is legal) or coercion (which is not). Sometimes that’s hard to decide, but here the evidence is pretty clear. Courts usually worry about “chilling speech” and give the benefit of the doubt to the First Amendment. As the Supreme Court once famously said: “Where the First Amendment is implicated, the tie goes to the speaker, not the censor.” Here, the trial court did, but the Second Circuit did not. That’s what this case is about.

The Supreme Court will likely decide whether to review NRA v. Vullo in the next few months. If the Court accepts the case, a decision will probably come in early 2024.


Barnaby Zall

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