OSD 276: The Supreme Court rules against Paulie Walnuts
On the ruling in NRA v. Vullo.
This week the Supreme Court ruled 9-0 that Maria Vullo, the former head of New York’s Department of Financial Services, violated the First Amendment by telling insurance companies to stop doing business with gun rights organizations.
In “OSD 213: Nice company you’ve got there. Be a shame if something happened to it.”, we covered an open letter that DFS published as part of the same push against “gun promotion organizations”:
[I]n 2020, New York’s Department of Financial Services sent an open letter to the banking industry warning about the dangers of seeming too gun-friendly. The DFS is a powerful agency with jurisdiction over every bank that operates in New York, which essentially means every significant bank in the US. Their “Guidance on Risk Management” letter included this passage, in which you can just about hear the regulators cracking their knuckles:
The tragic devastation caused by gun violence that we have regrettably been increasingly witnessing is a public safety and health issue. Our financial institutions can play a significant role in promoting public health and safety in the communities they serve, thereby fulfilling their corporate social responsibility to those communities. They are also in the business of managing risks, including their own reputational risks, by making risk management decisions on a regular basis regarding if and how they will do business with certain sectors or entities. In light of the above, and subject to compliance with applicable laws, the Department encourages its chartered and licensed financial institutions to continue evaluating and managing their risks, including reputational risks, that may arise from their dealings with the NRA or similar gun promotion organizations, if any, as well as continued assessment of compliance with their own codes of social responsibility. The Department encourages regulated institutions to review any relationships they have with the NRA or similar gun promotion organizations, and to take prompt actions to managing these risks and promote public health and safety.
Justice Sotomayor, writing this week for a unanimous Supreme Court in NRA v. Vullo, cited more examples of the same theme:
Consider first Vullo’s authority, which serves as a backdrop to the NRA’s allegations of coercion. The power that a government official wields, while certainly not dispositive, is relevant to the objective inquiry of whether a reasonable person would perceive the official's communication as coercive…. As DFS superintendent, Vullo had direct regulatory and enforcement authority over all insurance companies and financial service institutions doing business in New York. Just like the commission in Bantam Books, Vullo could initiate investigations and refer cases for prosecution. Indeed, she could do much more than that. Vullo also had the power to notice civil charges and, as this case shows, enter into consent decrees that impose significant monetary penalties.
Against this backdrop, consider Vullo’s communications with the DFS-regulated entities, particularly with Lloyd’s. According to the NRA, Vullo brought a variety of insurance-law violations to the Lloyd’s executives’ attention during a private meeting in February 2018. The violations included technical infractions that allegedly plagued the affinity insurance market in New York and that were unrelated to any NRA business.
Vullo allegedly said she would be “less interested in pursuing the[se] infractions … so long as Lloyd's ceased providing insurance to gun groups, especially the NRA.” Vullo therefore wanted Lloyd’s to disassociate from all gun groups, although there was no indication that such groups had unlawful insurance policies similar to the NRA’s.
Vullo also told the Lloyd’s executives she would “focus” her enforcement actions “solely” on the syndicates with ties to the NRA, “and ignore other syndicates writing similar policies.” The message was therefore loud and clear: Lloyd’s “could avoid liability for [unrelated] infractions” if it “aided DFS’s campaign against gun groups” by terminating its business relationships with them.
Here’s even more from Justice Sotomayor, via Josh Blackman’s roundup at The Volokh Conspiracy:
On February 27, Vullo met with senior executives at Lloyd’s. There, speaking on behalf of DFS and then-Governor Andrew Cuomo, Vullo “presented [their] views on gun control and their desire to leverage their powers to combat the availability of firearms, including specifically by weakening the NRA.” ….
The same day that DFS issued the Guidance Letters, Vullo and Governor Cuomo issued a joint press release that echoed many of the letters’ statements. The press release included a quote from Vullo “‘urg[ing] all insurance companies and banks doing business in New York’” to join those “‘that have already discontinued their arrangements with the NRA.’” ….
The press release cited Chubb’s decision to stop underwriting Carry Guard as an example to emulate. The next day, Cuomo tweeted: “‘The NRA is an extremist organization. I urge companies in New York State to revisit any ties they have to the NRA and consider their reputations, and responsibility to the public.’” ….
A follow-on tweet from Cuomo reaffirmed the message: Businesses in New York should “‘consider their reputations’” and “‘revisit any ties they have to the NRA,’” which he called “‘an extremist organization.’” ….
Vullo’s boss, Governor Cuomo, also urged businesses to disassociate with the NRA to put the organization “into financial jeopardy” and “shut them down.”
That’s all pretty damning as evidence of coercion, which is why the Court voted 9-0 that it’s unconstitutional. Remember, this is a Court that’s very divided on gun rights — Justice Sotomayor wrote this unanimous opinion despite joining a 2010 dissent in McDonald v. Chicago arguing that there is no individual right to own a gun in the first place.
Here’s a trickier question: why didn’t the coercion work? This is tried-and-true Tammany Hall style arm-twisting, and there was a time when it would have worked easily. (Side note: here’s a fun story re arm-twisting from Josh Blackman about a personal call he received from Governor Cuomo during litigation between Cody Wilson and New York.) And even in this case, it kind of did work! The regulated insurance companies did as they were told and promptly cut off all business with gun groups. But New York won that battle and lost the war — now there’s an embarrassing Supreme Court loss, and precedent that will make similar intimidation much harder in the future not just for DFS, but for government agencies generally.
There’s a scene from The Sopranos where Patsy and Burt, two guys from Tony’s crew, go into a new local coffee shop to offer their “protective services”. But it turns out not to be the kind of business they’re used to working with:
Patsy: Welcome to the neighborhood. We’re from the North Ward Merchants Protective Cooperative.
…
Burt: You really should have some round the clock security.
Dale (coffee shop manager): Isn’t that what the police are for?
Patsy: They do their best, but they’ve got their hands full. Your weekly dues to us will give you all the supplemental safety net you’ll ever need.
Dale: I can’t authorize anything like that. It’d have to go through corporate in Seattle.
Patsy: We merchants prefer to deal on a personal, one-on-one basis.
Dale: I don’t have any discretionary funds. It’s got to go through corporate.
Burt: How do you think corporate would feel if — for the sake of argument — someone threw a brick through your window?
Dale: They’ve got like 10,000 stores in North America. I don’t think they’d feel anything.
Patsy (leaning in close): What if, God forbid, it wasn’t just vandalism. What if an employee, even the manager say, was assaulted.
Dale: Look. Every last fucking coffee bean is in the computer and has to be accounted for. If the numbers don’t add up, I’ll be gone and somebody else will be here.
Cut to exterior. Patsy and Burt leave the coffee shop, bewildered and disappointed.
Patsy: It’s over for the little guy.
A perfectly good protection racket that used to work great, but it’s suddenly in an environment that it wasn’t evolved to handle. Like a marlin dropped into a foot race.
There’s an analogy here to what New York tried to do. The Tammany Hall approach worked when it could happen behind closed doors. And as evidenced by Gov. Cuomo’s tweets, the state thought it would work in broad daylight. But the same thing that motivated those — eyeballs — meant that this weaponization of regulatory agencies was doomed. These agencies derive their power from the fact that they have a narrow focus and most of society is too busy to pay much attention to what they’re doing. The combination of (a) doing something way over the line and (b) calling all of society’s attention to it was never going to work.
Weaponized agencies are powerful secret weapons. That’s not to say they can’t get what they want in public. It’s just to say that when it goes public, things get messy. That’s not ideal, but forcing a mess is better than unchecked power tidily rolling forward in private. So the lesson going forward is to shine light onto regulatory coercion. That’s not guaranteed to fix it, but it does improve the odds.
This week’s links
David Yamane’s book Gun Curious is now available
A well-written book from one of the only sociologists studying gun culture through a neutral lens. Check it out.
A surgeon on wound trends from the war in Ukraine
The chief of neurosurgery at [Mechnikov Hospital, Ukraine’s main war wound hospital] shared with me the hospital’s experience with vertebral artery injuries. (These are two arteries in the spine that feed the brain.) Because of the violent force that causes such injuries, most patients die before reaching the hospital. The typical neurosurgeon will see two or three patients with such terrible injuries over the course of a career. The U.S. military, with incredible evacuation resources, treated 18 vertebral artery injuries during 20 years in Iraq. Mechnikov has treated 91 in two years.
The writer was also the governor of Kansas from 2018 to 2019.
Thread from a subscriber on the real story behind gun carry being banned at military bases
Forgotten Weapons on the Glock 46, the rotating barrel Glock
More about Open Source Defense
Merch
Stickers for your safe or your Pelican cases.
OSD Discord server
If you like this newsletter and want to talk live with the people behind it, join the Discord server. The OSD team is there along with tons of readers. See you there.