A Wyoming law professor is urging the U.S. Supreme Court to reverse a federal court decision letting governments dissuade banks and insurers from doing business with pro-gun groups.
George Mocsary, University of Wyoming law professor and co-founder of the UW Firearms Research Center, filed an amici brief in the National Rifle Association's appeal to the high court last week, alongside Brian R. Knight, a senior research fellow at the Mercatus Center at George Mason University.
Mocsary, who is a Second-Amendment expert, said he co-authored the brief to curb regulatory abuse against the NRA and other entities.
"This kind of regulatory abuse has been going on for some time," Mocsary told Cowboy State Daily. "It's worse than other times, but what happened in the case of the NRA was just truly over the top."
Mocsary said that besides dissuading insurers and financiers from doing business with pro-gun groups, the New York state government fined three such businesses millions of dollars for related infractions.
California, conversely, did not issue fines for the same infractions. The state of Washington issued fines of roughly $100,000 for specific companies, he said.
The last time Mocsary issued an amicus brief, he said, was in landmark gun-rights case of New York State Rifle and Pistol Association vs. Bruen. The Supreme Court in that case upheld Americans' right to carry firearms in public for self-defense.
"I hope the Supreme Court recognizes the really extreme rights abuses that New York state has been perpetrating, not just against the speech rights of the NRA but also against the insurance companies, and against individuals who want to exercise their First- and Second-Amendment rights," said Mocsary. "All those rights should be vindicated."
Cut Ties With The NRA
Though charged with gun-rights overtones, the case, NRA vs. Vullo, boils down to a First-Amendment question: can state governments use non-binding guidance to dissuade banks and insurers from doing business with certain clients based on a potential for reputational risk?
The U.S. Court of Appeals for the Second Circuit said they can.
It ruled in September that the New York Department of Financial Services was within the law when, in 2018, its now-former Superintendent Maria Vullo dissuaded the state's banks from working with the NRA.
In the wake of the 2018 school shooting in Parkland, Florida, Vullo issued guidance letters calling upon banks and insurance companies doing business in New York to consider "reputational risks from doing business with the NRA or other gun-promotion organizations."
She urged them to join other companies that had cut pro-gun groups out of their clientele.
"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," said Vullo in a concurrent press release.
"(The agency) urges all insurance companies and banks doing business in New York to join the companies that have already discontinued their arrangements with the NRA," she continued, "and to take prompt actions to manage these risks and promote public health and safety."
After Vullo's guidance emerged, more businesses severed their ties with the NRA.
Array Of Technical Regulatory Infractions
Days later, the New York Department of Financial Services came to an agreement with three insurance-related companies, Chubb Limited, Lockton Companies, and Lloyd's of London. The companies came to agree that their underwriting of NRA-endorsed program, Carry Guard, violated New York insurance law.
Carry Guard provided insurance coverage for criminal defense costs for people who'd used firearms to protect persons or property.
Vullo, in February 2018, met with executives from Lloyd's and told them they'd committed "an array of technical regulatory infractions." She told them they could come into compliance by no longer providing insurance to gun groups like the NRA, court documents say.
Vullo, at that time, also voiced her desire to combat the availability of firearms.
Lloyd's agreed to pay $5 million for its infractions. Lockton agreed to pay a $7 million fine. Chubb paid $1.3 million.
All three companies agreed to not to enter into any future agreement with the NRA-backed insurance programs.
Because, Reputation
When the NRA challenged the legality of what it called Vullo's threats, the appeals court ultimately backed Vullo's action and upheld the state's ability to discourage business dealings that are a "reputational risk."
The appeals court said Vullo wrote her guidance in "an even-handed, non-threatening tone," and strove to "persuade, rather than intimidate" the banks not to work with the NRA.
Unpopular Customers
Mocsary and Knight disagreed.
They wrote in their amici brief that banks and insurance firms endure "pervasive ongoing supervision and rely on regulators favor more than other industries do."
Letting the government decide what is a reputation risk for banks could disenfranchise controversial, but law-abiding customers," reads the brief.
"This lets regulators directly tie legal oversight (to whether an institution works with) individuals who are unpopular in some camps or with whom the regulator disagrees as a policy matter," says the Mocsary and Knight brief.
The NRA likewise alleges in its Feb. 7 petition to the Supreme Court that the Second Circuit's opinion gives state officials free rein "to financially blacklist their political opponents."
Representing the NRA in this case is First-Amendment expert and attorney Eugene Volokh.
The court docketed the case on March 6. Vullo's response is due Wednesday.
Clair McFarland may be reached at Clair@CowboyStateDaily.com
