People v. Nat'l Rifle Assn. of Am. Inc.

The following e-filed documents, listed by NYSCEF document number (Motion 013) 264, 265, 266, 267, 268, 269, 270, 271, 272, 273, 274, 275, 276, 277, 278, 279, 288 were read on this motion to DISMISS COUNTERCLAIMS. On this motion, New York Attorney General Letitia James (the “Attorney General”) seeks to dismiss counterclaims filed by Defendant National Rifle Association of America, Inc. (“NRA”), which challenge the constitutionality of her decisions to investigate the NRA and, ultimately, to seek judicial dissolution of the NRA in this case. For the reasons set forth below, the Attorney General’s motion is granted.¹ As discussed below, the NRA’s factual allegations do not support any viable legal claims that the Attorney General’s investigation was unconstitutionally retaliatory or selective. The investigation followed reports of serious misconduct and it uncovered additional evidence that, at a bare minimum, undermines any suggestion that was a mere pretext to penalize the NRA for its constitutionally protected activities. Although certain of the Attorney General’s claims were dismissed by the Court on legal grounds, they were serious claims based on detailed allegations of wrongdoing at the highest levels of a not-for-profit organization as to which the Attorney General has legitimate oversight responsibility. And many legally viable claims remain. The narrative that the Attorney General’s investigation into these undeniably serious matters was nothing more than a politically motivated — and unconstitutional — witch hunt is simply not supported by the record. DISCUSSION On a motion to dismiss, the Court must “accept the complaint’s factual allegations as true, according to plaintiff the benefit of every possible favorable inference, and determining only whether the facts as alleged fit within a cognizable legal theory” (Weil, Gotshal & Manges, LLP v. Fashion Boutique of Short Hills, Inc., 10 AD3d 367, 270-71 [1st Dept 2014] [internal quotation marks and citation omitted]; see also Leon v. Martinez, 84 NY2d 83, 88 [1994]; Tri Term. Corp. v. CITC Indus., Inc., 100 Misc 2d 477, 479 [Sup Ct, New York County 1979] ["A counterclaim is in essence a complaint by a defendant against the plaintiff and alleges a viable cause of action upon which the defendant seeks judgment."]). However, bare legal conclusions and “factual claims which are either inherently incredible or flatly contradicted by documentary evidence” are not “accorded their most favorable intendment” (Summit Solomon & Feldman v. Lacher, 212 AD2d 487, 487 [1st Dept 1995]). As a threshold matter, the scope of the NRA’s counterclaims was narrowed as a result of the Court’s Decision and Order, dated March 2, 2022, dismissing the Attorney General’s dissolution claims (the “Decision and Order”) (People by James v. Natl. Rifle Assn. of Am., Inc., 74 Misc 3d 998 [Sup Ct, New York County 2022]; NYSCEF 609-611).² First, to the extent the counterclaims seek declaratory and injunctive relief stemming from the dissolution claims, those claims are moot. Second, the remaining counterclaims (for monetary damages) are alleged against the Attorney General solely in her individual capacity (NYSCEF 543 at 3).³ And third, since both sides agree that the Attorney General is immune from civil liability for the “judicial phase” of the litigation itself, the remaining portions of the counterclaims focus primarily on her decision to investigate the NRA following her public comments denouncing the organization.⁴ A. The Retaliation Counterclaims Fail to State Causes of Action. The NRA’s First, Second, Third, and Fourth Counterclaims (collectively, the “Retaliation Counterclaims”) allege that the Attorney General’s actions amount to unconstitutional retaliation against the NRA and its members for engaging in political speech (CC

59-107).⁵ “‘[A]s a general matter the First Amendment prohibits government officials from subjecting an individual to retaliatory actions’ for engaging in protected speech” (Nieves v. Bartlett, 139 S Ct 1715, 1722 [2019], quoting Hartman v. Moore, 547 US 250, 256 [2006]). “To state a First Amendment retaliation claim sufficient to withstand a motion to dismiss, a plaintiff must allege ‘(1) that the speech or conduct at issue was protected, (2) that the defendant took adverse action against the plaintiff, and (3) that there was a causal connection between the protected speech and the adverse action’” (Dolan v. Connolly, 794 F3d 290, 294 [2d Cir. 2015]; Massaro v. Dep’t of Educ., 121 AD3d 569, 569-70 [1st Dept 2014] [citing to Second Circuit authority for analysis of Federal and State Constitution retaliation claims]). With respect to the third element, causation, “[i]t is not enough to show that an official acted with a retaliatory motive and that the plaintiff was injured — the motive must cause the injury” (Nieves, 139 S Ct at 1722). “Specifically, it must be a ‘but-for’ cause, meaning that the adverse action against the plaintiff would not have been taken absent the retaliatory motive” (id.; see Hartman, 547 US at 260 ["[A]ction colored by some degree of bad motive does not amount to a constitutional tort if that action would have been taken anyway.”]). And here, “there is an added legal obstacle in the longstanding presumption of regularity accorded to prosecutorial decisionmaking” (Hartman, 547 US at 263). “[T]his presumption that a prosecutor has legitimate grounds for the action [she] takes is one we do not lightly discard, given our position that judicial intrusion into executive discretion of such high order should be minimal” (id. at 263, citing Wayte v. United States, 470 US 598, 607-608 [1985]). The causal element is missing here. The NRA fails to allege that the Attorney General’s investigation into the NRA’s activities “would not have been taken absent the retaliatory motive” (Nieves, 139 S Ct at 1722). Or stated differently, the NRA fails to allege that the investigation was without a lawful basis (cf. Hartman, 547 US at 263 [holding "the absence of probable cause" must be alleged in retaliatory prosecution cases to "link the allegedly retaliatory official to a prosecutor whose action has injured the plaintiff"]). Indeed, the record dispels that notion conclusively. To begin with, “[t]here is no doubt that the Attorney-General has a right to conduct investigations” under her broad statutory authority to oversee not-for-profit entities, like the NRA, which are organized under New York law (Schneiderman v. Tierney, 2015 NY Slip Op. 30851[U], *2 [Sup Ct, New York County 2015]; see generally N-PCL, EPTL). There are no factual allegations suggesting that the stated concerns driving the investigation — reports of fraud, waste, and looting within the NRA — were imaginary or not believed by the Attorney General. And “[a]bsent such factual allegations, the Court is in no position to infer that duly authorized state investigations are pretextual” (Exxon Mobil Corp. v. Schneiderman, 316 F Supp 3d 679, 710 [SD NY 2018], affd in part, appeal dismissed in part sub nom. Exxon Mobil Corp. v. Healey, 28 F4th 383 [2d Cir 2022]). The results of the Attorney General’s investigation, moreover, give credence to its stated non-retaliatory basis. “[W]hen nonretaliatory grounds are in fact insufficient to provoke the adverse consequences,…that retaliation is subject to recovery as the but-for cause of official action offending the Constitution” (Harman, 547 US at 256). The converse is true here: the “nonretaliatory grounds” were more than sufficient to justify the Attorney General’s investigation. It yielded a lengthy complaint alleging, in detail, a pattern of misconduct at the highest levels of the NRA (see NYSCEF 333). Many of those claims survived multiple motions to dismiss; none were frivolous. In fact, the NRA itself recognized many of the same issues about corporate governance underlying the Attorney General’s investigation. Within the NRA, whistleblowers “push[ed] for additional documentation and transparency,” an effort which was “met with resistance from a handful of its executives and vendors” (CC 15). One executive “was fired by the NRA for many of the same issues alleged in the Complaint,” while the group “became embroiled in litigation” against others who “abused its trust” (id. 7). And in this action, current NRA members have sought leave to intervene to address “concerns…about the NRA’s management by the Individual Defendants and current Board” (NYSCEF 377 at 2). Further, when the NRA sought to evade the Attorney General’s actions in New York by filing for bankruptcy in Texas, the federal bankruptcy court there underscored concerns about the NRA’s corporate governance. For example, the bankruptcy court noted “the surreptitious manner in which [Wayne] LaPierre obtained and exercised authority to file bankruptcy for the NRA,” finding the decision to “[e]xclude[] so many people from the process of deciding to file for bankruptcy, including the vast majority of the board of directors, the chief financial officer, and the general counsel,…nothing less than shocking” (In re Natl. Rifle Assn. of Am., 628 BR 262, 285 [Bankr ND Tex 2021]). The court also alluded to “cringeworthy facts” about the NRA’s past misconduct. It found “[s]ome of the conduct that gives the Court concern is still ongoing,” including “very recent[ ] violat[ions]” of the NRA’s internal procedures and “ lingering issues of secrecy and a lack of transparency” (id. at 283-284). Because the non-retaliatory grounds for the Attorney General’s investigation were objectively well-founded (albeit not yet proven), the NRA cannot recover on its Retaliation Counterclaims even assuming, for argument’s sake, that Attorney General James harbored personal animus toward the NRA.⁶ Again, “[i]t is not enough to show that an official acted with a retaliatory motive and that the plaintiff was injured” (Nieves, 139 S Ct at 1722; Hartman, 547 US at 260 ["If there is a finding that retaliation was not the but-for cause of the discharge, the claim fails for lack of causal connection between unconstitutional motive and resulting harm, despite proof of some retaliatory animus in the official's mind."]). The causation element bridges the gap, ensuring that a retaliation claim is tethered to “objectively unreasonable” actions, not just “the subjective animus of an officer” (Nieves, 139 S Ct at 1723). In the end, an objectively reasonable investigation — here, one uncovering credible evidence of wrongdoing — is not rendered unconstitutional solely by the investigator’s subjective state of mind (see Trump Org., 2022 NY Slip Op. 30538[U], at *5 ["[T]hat a prosecutor dislikes someone does not prevent a prosecution.”]). And, contrary to the NRA’s position, courts may dismiss First Amendment retaliation claims at the motion to dismiss stage for failure to adequately allege but-for causation (see, e.g., Avery v. DiFiore, No. 18-cv-9150, 2019 WL 3564570, at *3-5 [SD NY Aug. 6, 2019] [dismissing retaliation claims with prejudice where plaintiff failed to plead facts "support[ing] an inference of causation”]; Richards v. City of New York, No. 20-cv-3348, 2021 WL 3668088, at *3 [SD NY Aug. 18, 2021] [granting dismissal where plaintiff failed to allege that improper motive was the but-for cause of alleged retaliation]). Dispatching fatally flawed retaliation claims against public officials at this early stage is not merely permissible, but serves a salutary gatekeeping function. Without enforcing the requirement to allege but-for causation, “[a] plaintiff can afflict a public officer with disruption and expense by alleging nothing more, in practical terms, than action with a retaliatory animus, a subjective condition too easy to claim and too hard to defend against” (Hartman, 547 US at 257). Therefore, the branch of the Attorney General’s motion seeking dismissal of the NRA’s First, Second, Third, and Fourth Counterclaims is GRANTED. B. The Selective Enforcement Counterclaims Fail to State Causes of Action. The NRA’s Fifth and Six Counterclaims (collectively, the “Selective Enforcement Counterclaims”) allege that the Attorney General’s decision to investigate and seek dissolution of the NRA represents selective prosecution, in violation of the NRA’s constitutional right to equal protection (CC