Today's Scorecard For New York's Kangaroo Legal System

May 30, 2024/ Francis Menton @ Manhattan Contrarian  

(Editor's Note: I can't properly reproduce the picture in this article, so to see it follow the link to Manhattan Contrarian. RK)

The kangaroos’ request shown above, as reported yesterday on X by the Babylon Bee, may not be completely justified with respect to the U.S. federal justice system. It remains to be seen how the prosecutions of our ex-President play out in that arena. However, the kangaroos’ request is 100% justified with respect to the justice system of the State of New York. Here in New York, the recent actions of our prosecutors and legal system make “kangaroo courts” look wise and sensible by comparison.

Somewhere in the mid-2010s, New York prosecutors and regulators decided that all previous norms and ethical restraints had been abolished, and it was now OK to use all resources of their offices to bring down disfavored political targets by any and every means they could think of. As the most notable example, they decided that it was now completely OK even to seek office on the specific promise to destroy one man, Donald Trump, even if they did not know at the time what legal wrong he may have committed. Both our current Attorney General, Letitia James, and our Manhattan District Attorney, Alvin Bragg, campaigned on such specific promises to “get Trump.” Previously, such conduct would have been thought the most grievous ethical violation that a prospective prosecutor could possibly commit. Today, the organized New York bar — once the most prestigious in the country — to its shame, declines to speak out on the issue at all.

Yet all is not necessarily rosy for our sub-kangaroo-level abusers of the legal process. Granted, as you have probably already seen, ex-President Trump was convicted today by a Manhattan jury on some 34 counts of “falsifying business records,” or some such made-up crime that nobody but he would ever be prosecuted for at all on similar facts. Score one for the sub-kangaroos. But on the same day, the sub-kangaroos of New York also lost one in the U.S. Supreme Court. Today’s Supreme Court decision is an important one, and a bad omen for the whole program of progressive prosecution of political enemies, not just in New York. The Court’s decision even gives a glimmer of hope that there may be at least some accountability for the abusers of the legal process.

The Supreme Court decision in question is National Rifle Association of America v. Vullo, issued today. The case arises out of the efforts of a New York regulator, Maria Vullo, then Superintendent of the New York Department of Financial Services, to destroy the NRA by threatening regulatory harassment against banks and insurance companies under her regulatory jurisdiction unless they agreed to stop doing business with the NRA. Vullo’s conduct, as set forth in the Supreme Court’s decision, was quite shockingly thuggish, at a level that you would think would cause even the crazed leftists in New York State government to slow down and think twice. But they operate in a bubble where no voices of sensible outsiders are able to penetrate.

Perhaps the most significant thing about the Supreme Court’s Vullo decision is that it is unanimous. All three “liberals” joined, and the opinion is even written by perhaps the most consistently lockstep of the lockstep leftists on the Court, Sonia Sotomayor. This one was too much even for her.

In 2017 to 2019, Vullo carried out a program to bully and harass banks and insurance companies to stop dealing with the NRA. The NRA sued Vullo and the Department of Financial Services in the Northern District of New York, alleging violation of its First Amendment rights, asserting that Vullo’s program was intended to restrict and shut down its constitutionally protected advocacy. Defendants moved to dismiss, and the District Court declined to grant the motion. However, the defendants appealed that to the Second Circuit Court of Appeals, which allowed the appeal, and reversed, thus dismissing the case. The Supreme Court now revives the claim against Vullo and sends it back to the District Court for trial.

The statement of facts in Justice Sotomayor’s opinion is dry, but still gives a remarkable sense of just how much Ms. Vullo thought she could get away with in going after a political enemy under the guise of her jurisdiction of “regulating banks and insurance companies.” Here are some allegation of Vullo’s conduct with respect to Lloyd’s of London and Chubb, insurance companies that were working with the NRA to underwrite gun-liability insurance policies:

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 also told the Lloyd’s executives she would “focus” her enforcement actions “solely” on the syndicates with ties to the NRA, “and ignore other syndi- cates 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.

In 2018, Vullo issued so-called “guidance letters” to the entire insurance industry, advising all companies to avoid “reputational risk” by ceasing to do business with the NRA:

Just like in her meeting with the Lloyd’s executives, here too Vullo singled out the NRA and other gun-promotion organizations as the targets of her call to action. This time, the Guidance Letters reminded DFS-regulated entities of their obligation to consider their “reputational risks,” and then tied that obligation to an encouragement for “prompt actio[n] to manag[e] these risks.” . . . Evocative of Vullo’s private conversation with the Lloyd’s executives a few weeks earlier, the press release revealed how to manage the risks by encouraging DFS-regulated entities to “‘discontinu[e] their arrangements with the NRA.’”

This case now goes back to the trial court — a federal court in upstate New York, with a jury pool drawn largely from rural areas. (Obviously the NRA is smart enough to pick a potentially-favorable forum.). Ms. Vullo is a defendant personally. She could get hit with some serious liability.

Meanwhile the case against Trump has probably zero chance of surviving all appeals. However, that will take a long time to play out. Trump’s first appeal will go to something called the Appellate Division, First Department, an appellate court also sitting in Manhattan. From there, the next appeal will be to the New York Court of Appeals, and then (if the case is still alive) to the U.S. Supreme Court. Yes, there is a real issue for the Supreme Court, should the case get that far, which is whether the New York DA has jurisdiction to prosecute a federal election law crime, which underlies his theory that Trump’s bookkeeping violations can be raised to a felony.

Anyway, if the Supreme Court was disgusted enough by Vullo’s abuse of her powers to reverse in the NRA case, it would be quite likely that they would reverse in Trump’s case. Indeed, even the New York Court of Appeals is likely to be sufficiently outside the bubble to reverse. The Appellate Division I’m not so sure.

Another Instance Of Our Non-political Expert Regulators In Action

November 03, 2023/ Francis Menton @ Manhattan Contrarian

In the Progressive utopia championed by Woodrow Wilson and his successors, government will iron out the imperfections in human affairs through the use of regulatory agencies run by non-political experts. Such people, being experts and completely non-political, would pose no reason for concern about abuse of power, because of course they would never seek go outside their proper regulatory portfolio to use their authority to stamp out the freedoms and speech of their political opponents on important topics of the day.

In the real world government regulators since the creation of their agencies have inevitably used their powers to disadvantage and silence political opposition. The last few years have seen this phenomenon taken to new levels of blatancy and aggressiveness. In one of the most notable examples, the case of Missouri v. Biden, covered several times on this blog (for example here and here), has brought to light an entire “censorship industrial complex” of federal regulators during the Biden presidency pressuring social media companies to suppress the speech of those opposing official government narratives on topics including Covid-19 origins, lockdowns, vaccine efficacy and side effects, climate change, and much more. Missouri v. Biden (now under the name Murthy v. Missouri) is currently before the Supreme Court, which is considering whether to sustain an injunction against the government’s conduct issued by a district court in Louisiana and mostly affirmed by the Fifth Circuit.

Today comes news that another case raising similar issues has just been accepted by the Supreme Court. This one goes by the name National Rifle Association v. Vullo. The report that the case has been accepted by the Supremes comes from Eugene Volokh on his blog the Volokh Conspiracy. Mr. Volokh is one of the lawyers for the NRA in the Supreme Court. All the relevant documents in NRA v. Vullo, including the opinion below from the Second Circuit and the Cert Petition itself, can be found at the Supreme Court’s website.

NRA v. Vullo illustrates the extent to which regulators today, particularly in blue states or under Democratic administrations, feel themselves completely unconstrained to use their powers to suppress political opponents without the slightest concern about statutory or constitutional limits. New York is going particularly over the top in this regard, and this case unsurprisingly comes out of New York. It involves efforts of the Department of Financial Services and its then-head Maria Vullo, with the active support of then-Governor Andrew Cuomo, to attempt to put the NRA out of business.

You might ask, what regulatory authority does New York’s Department of Financial Services have over the NRA? The answer is, none. But it does have regulatory authority over banks and insurance companies. So it adopted a program of regulatory announcements, threats, “guidance,” press releases, and so forth to coerce/force/shame the banks and insurance companies under its authority to cease to do business with the NRA.

The procedural history so far is that a district judge in upstate New York (Thomas McAvoy) denied the State’s and Ms. Vullo’s motion to dismiss in substantial part, allowing the case to proceed; but the Second Circuit reversed. Under the Second Circuit’s decision, the allegations of the conduct of Ms. Vullo and the DFS were held insufficient to state any claim or justify any relief.

NRA’s Cert Petition cites numerous allegations from the Complaint in the case setting forth what Ms. Vullo did in her campaign to use her regulatory powers over banks and insurance companies to destroy the NRA. Here are a few examples (from Cert Petition pages 9-11):

• Vullo launched an investigation that ostensibly focused on Carry Guard [an insurer that marketed an affinity product with NRA] but quickly expanded to target all the so-called “affinity” insurance products marketed to NRA members—including policies marketed identically to non-NRA affinity groups. . . . Vullo’s investigation targeted no self-defense insurance products except ones endorsed by the NRA.
• Vullo threatened regulated institutions with costly investigations, increased regulatory scrutiny, and penalties should they fail to discontinue their arrangements with the NRA. These exhortations were not limited to Carry Guard, as she indicated that any business relationship with the NRA would invite adverse action.
• Beginning in February 2018, Vullo held several meetings with the executives of institutions subject to her regulatory power. At those meetings, she made back-channel threats that they cease providing services to the NRA in connection with affinity-insurance programs that the NRA endorsed. . . . Although Vullo discussed many technical regulatory infractions plaguing the affinity-insurance marketplace, she made clear that her real interest lay in causing the companies to stop providing insurance to the NRA.
• On April 19, 2018, Vullo had DFS issue official regulatory guidance . . . directed at all banks and insurance companies doing business in New York. . . . In the Guidance Documents, DFS favorably cited groups that had “severed their ties with the NRA” as examples of “corporate social responsibility,” and warned regulated institutions of the “reputational risk” of further “dealings with the NRA” in light of the “social backlash” against the group for its Second Amendment advocacy.

And it goes on from there. Under the Second Circuit’s opinion, all of this kind of conduct against political opponents is perfectly OK, and provides no ground for a court challenge. Here’s more on the Complaint in the case from a blog post by Mr. Volokh at the time of the filing of the Cert Petition back in February:

Among other things, the Complaint states that Superintendent Maria Vullo: 

(1) warned regulated institutions that doing business with Second Amendment advocacy groups posed "reputational risk" of concern to DFS; 

(2) secretly offered leniency to insurers for unrelated infractions if they dropped the NRA; and (3) extracted highly-publicized and over-reaching consent orders, and multi-million dollar penalties, from firms that formerly served the NRA. Citing private telephone calls, internal insurer documents, and statements by an anonymous banking executive to industry press, the Complaint alleges that numerous financial institutions perceived Vullo's actions as threatening and, therefore, ceased business arrangements with the NRA or refused new ones.

Among the precedents that Mr. Volokh cites in support of the Cert Petition is Bantam Books v. Sullivan, described in the Cert Petition as follows:

Bantam Books v. Sullivan (1963) held that a state commission with no formal regulatory power violated the First Amendment when it "deliberately set out to achieve the suppression of publications" through "informal sanctions," including the "threat of invoking legal sanctions and other means of coercion, persuasion, and intimidation."

The more you learn about what regulators are up to, the more you realize that the essence of the job is abuse of power.