New York Sun Publishes Editorial in Support of NRA
March 5, 2024 – The New York Sun published an editorial today in support of Brewer client the NRA. The editorial, “Good News for the NRA – and New York,” commented on the “dissolution lawsuit” filed by the New York Attorney General against the NRA. A jury trial recently concluded in the matter.
The Sun wrote, “We wouldn’t want the week to go by without a word of congratulations to the National Rifle Association, one of America’s most venerable and distinguished civil rights organizations. The worst of the legal onslaught launched by Governor Andrew Cuomo and Attorney General Letitia James has passed. Despite their best efforts to close the doors of the NRA, a Manhattan jury’s verdict leaves the organization intact.”
The publication continued, “Someday, no doubt, the historians are going to mark what happened in this case as a politically motivated prosecution designed to dismantle a non-profit organization whose views cut against the liberal orthodoxy prevailing in the Empire State. Why else would General James emphasize the NRA’s role as “the largest and most influential pro-gun organization in the nation” when she filed her suit “seeking to dissolve” the group?”
NRA Responds to New York Trial Verdict; Decision Validates NRA’s Position Regarding Wrongdoing by Certain Vendors and Insiders
February 23, 2024 – A jury verdict in a high-profile New York trial confirms what the National Rifle Association of America (NRA) contended all along – that it was victimized by certain former vendors and “insiders” who abused the trust placed in them by the Association. The jury found no cause to remove NRA General Counsel and Secretary John Frazer, the remaining NRA employee who is an individual defendant in the action.
NRA officials set a confident tone today following the verdict in the New York Attorney General v. NRA lawsuit. In August, 2020, the NYAG filed a “dissolution lawsuit” against the NRA, along with claims against four individual defendants: former EVP Wayne LaPierre; Frazer; former CFO Wilson Phillips; and former Chief of Staff Joshua Powell.
The NYAG originally sought to put the NRA out of business. She had claimed the actions in question led “to the loss of more than $64 million in just three years.” But the allegations by the NYAG that survived to the jury-verdict stage were starkly diminished relative to their complaint: as jury deliberations approached, the government was forced to drop half of its whistleblower allegations for lack of evidence, along with a number of conflict-of-interest claims.
During a 24-day jury trial, the NRA established the NYAG cannot prove self-dealing or bad faith by the NRA Board of Directors. The NRA disputed key allegations in the NYAG’s complaint – namely, that any governance issues at the NRA are “persistent.” As importantly, the NRA established that it adopted new policies and accounting controls, displaced vendors and “insiders” who abused the Association, and accepted reparations for costs determined to be excess benefits. Most of these corrective measures – part of an internal investigation ignited by the NRA Board – were adopted before the NYAG filed her lawsuit.
The NRA’s commitment to good governance was on full display during the trial proceedings.
“We appreciate the service of the jury and the opportunity to present evidence about the positive direction of the NRA today,” says NRA President Charles Cotton. “NRA members should be heartened by the NRA’s commitment to best practices, and we will continue to amplify our compliance record in the pivotal next phase of these proceedings. To the extent there were control violations, they were acted upon immediately by the NRA Board beginning in summer 2018.”
Of particular importance, the six-person jury found that of 10 related-party transactions of which the NRA was accused, the NRA Audit Committee was found to have properly reviewed and ratified 8 of them. However, the six-person jury found that many of the business arrangements in which the NRA entered were appropriate and did not qualify as improper related party transactions. However, the six-person jury rendered a verdict that found the NRA failed to properly administer the organization and its assets, and that it violated whistleblower protections of New York Nonprofit Law.
With respect to other individual defendants, the jury found Mr. LaPierre and Mr. Phillips violated their statutory obligations to discharge the duties of their position in good faith and with care. The jury found the monetary harm suffered by the NRA for each individual was $5.4 million and $2 million, respectively. (Defendant Powell reached a settlement with the NYAG prior to the start of the jury proceedings.)
The jury decision paves the way for the second phase of the proceedings – a bench trial before Justice Joel M. Cohen where the judge is expected to rule on any final remedies against defendants.
In the final analysis, individual defendants could face financial awards payable to the NRA. No money damages will be awarded against the Association.
The NRA’s case focused on its compliance efforts and the organization’s commitment to good governance following summer 2018 whistleblower complaints and the substantial evidence that it was the victim of fraud by a number of its vendors. When the NRA Board was alerted to these facts, it led an investigation into spending allegations and determined that certain individuals participated in transactions that ran afoul of NRA policies and procedures. Trial testimony confirmed the NRA Board was unaware of the arrangements in question.
In furtherance of its governance reforms, the NRA terminated a string of vendors, including Ackerman McQueen/Mercury Group, Associated Television, International, Under Wild Skies, and a travel consultancy. It cancelled consulting arrangements with certain NRA board members, adopted a new whistleblower policy in 2020, and recently hired a new compliance manager.
“A parade of NRA witnesses and independent experts established that the NRA was the victim of actions that were pursued in secrecy and not in the interests of the Association – by former vendors and fiduciaries,” says NRA counsel William A. Brewer III. “In any event, the NYAG’s case focused on the past and the NRA lives in the present. It was the NRA that ultimately established the record being pursued by the NYAG. Our client looks forward to phase two of these proceedings – emboldened by its record of good governance.”
Although it was not a matter before the jury, the NRA effectively demonstrated that the NYAG’s lawsuit was motivated by political animus. As a candidate for NYAG in summer 2018, Letitia James called the NRA a “terrorist organization” and “criminal enterprise.” She vowed to pursue the NRA if elected, and quickly did so upon taking office in 2019.
Other New York Actions: Defending Free Speech
Against the backdrop of the NYAG trial, the NRA is preparing for another case involving New York government officials. On March 18, 2024, the U.S. Supreme Court will hear arguments in the NRA’s First Amendment case against former financial regulator Maria T. Vullo.
In a May 2018 lawsuit, the NRA alleged that Vullo, at the behest of former New York Governor Andrew Cuomo, took aim at the NRA and conspired to use the regulatory power of the New York Department of Financial Services (DFS) to “financially blacklist” the NRA – coercing banks and insurers to cut ties with the Association to suppress its pro-Second Amendment speech. The NRA argues that Vullo’s actions as DFS superintendent were meant to silence the NRA – using “guidance letters,” backroom threats, and other measures to cause financial institutions to “drop” the Association.
The NRA's First Amendment claims withstood multiple motions to dismiss. But in 2022, after Vullo appealed the trial court’s ruling, the Second Circuit struck down the NRA’s claims.
On February 7, 2023, the NRA petitioned the U.S. Supreme Court, seeking review of the Second Circuit decision. On November 3, 2023, the Court granted review on the following question: Does the First Amendment allow a government regulator to threaten regulated entities with adverse regulatory actions if they do business with a controversial speaker, as a consequence of (a) the government’s own hostility to the speaker’s viewpoint or (b) a perceived “general backlash” against the speaker’s advocacy?
Since that time, more than 190 individuals and organizations have filed 22 amicus briefs in support of the NRA’s legal position. If successful, the NRA ultimately aims to prove Vullo, Cuomo and others conspired with James to penalize the NRA for its protected speech. Such developments could help the Association resurrect First Amendment claims against James, as well as unseal materials from an earlier discovery phase of the case.
“The NRA is eager to break the seal on facts surrounding an unprecedented weaponization of power against the NRA and its speech,” says Brewer. “There is little question former and current public officials were conspiring with Everytown and others to financially damage and politically suppress the NRA. Their actions harmed democracy and the rule of law – and letting relevant facts and documents remain secret does, too.”
Brewer Storefront Files Motion for Leave to File Amicus Brief in Fifth Circuit Voting Rights Case
February 22, 2024 —Brewer Storefront filed a motion for leave to file an amicus brief in support of plaintiffs in the Petteway v. Galveston County case before the U.S. Court of Appeals for the Fifth Circuit. The Storefront is the pro bono community service affiliate of Brewer, Attorneys & Counselors.
The matter at issue concerns whether coalitions of minority voters – in this case Latino and Black voters – can continue to together bring Section 2 Voting Rights Act (VRA) claims. This includes situations where they constitute a group that is geographically compact and politically cohesive that forms a majority in a single member district. The Petteway case concerns Galveston County Commissioner redistricting maps. The Storefront typically brings its voting rights cases under Section 2, which prohibits voting practices or procedures that discriminate based on race, color, or membership in a language minority group.
The amicus notes that the Fifth Circuit was the first Federal Circuit to expressly allow minority coalition claims and has continued to do so. The brief cites the history of the Fifteenth Amendment and the suppression of minority voter rights that followed it. The brief states, “it is clear that the VRA is intended to broadly protect minority voting rights, including coalition claims, not limit protections of certain minority groups based on the composition of the group facing disenfranchisement.”
The brief adds that barring coalitions would gut the VRA, concluding that, “If Defendants are successful in this appeal, coalitions of minority litigants will have no meaningful opportunity to challenge demonstrably discriminatory practices that abridge their right to vote or dilute the power of their votes across the Fifth Circuit. Such action would frustrate Congress’ clearly stated purpose for enacting the VRA in 1965 and subsequently reauthorizing it 5 times over the next 40 years—effectively gutting the VRA as to a wide array of minorities.”
Since it opened in 1995, the Storefront has brought numerous successful Section 2 VRA cases lawsuits on behalf of Latino, African American and Asian voters across North Texas. The Storefront has brought coalition claims before, including in the current Shafer v. Pearland Independent School District case. Most recently, on August 18, 2023, it was announced that the Storefront successfully resolved a Voting Rights Act case with the Lewisville Independent School District (LISD) – paving the way for a new electoral system in LISD.
The Storefront has successfully challenged many at-large election systems and unfairly drawn single-member districts. Under the Voting Rights Act, those lawsuits alleged that such systems deny voters of color a fair opportunity to meaningfully participate in the electoral process – and to elect school board representatives or city council members of their choosing.
“We ask the Fifth Circuit to uphold the standing of voters of color to combine in coalition classes to challenge voting systems that deny minorities an equal opportunity to vote,” said William A. Brewer III, partner at Brewer Storefront. “Given the increasingly multiracial composition of our democracy, coalition cases should be allowed to continue under the Voting Rights Act of 1965. Any effort to bar coalition claims is a transparent effort to suppress minority votes.”
Law360 reports on NRA First Amendment Case Before the Supreme Court
February 21, 2024 – Law360 reports that former New York Department of Financial Services (DFS) Superintendent Maria T. Vullo filed a respondent brief with the U.S. Supreme Court in connection with the case National Rifle Association of America (NRA) v. Vullo, which will be heard in March. The NRA is represented in the case by Brewer, Attorneys & Counselors, the American Civil Liberties Union (ACLU), and First Amendment scholar Eugene Volokh.
In a 2018 complaint against Vullo, the NRA said guidance memos Vullo issued to banks and insurers recommending that New York financial institutions evaluate the reputational risks arising from their dealings with the NRA amounted to an “overt viewpoint-based discrimination campaign.” In her brief to the Supreme Court, Vullo rejected the NRA's position that the statements were a "veiled threat."
NRA counsel William A. Brewer III told Law360 in a statement that the "respondents understate the NRA's allegations."
"It is not just that Vullo 'spoke out about matters of public concern,' but that she intentionally engineered a blacklisting campaign against the NRA at the direction of then Governor Cuomo because of its public advocacy," Brewer said. "The claim that the NRA's arguments should be rejected because they might 'encourage damage suits' against public officials is a red herring — an unpersuasive excuse to avoid scrutiny of the actions in question."
The NRA is also represented by Noah Peters and Sarah B. Rogers of Brewer Attorneys & Counselors.
Law 360 Reports on NRA Trial, Closing Arguments
February 15, 2024 - Law360 reported on the conclusion of a six-week trial concerning the New York Attorney General Letitia James’ (NYAG) case against the National Rifle Association of America (NRA) in New York.
The NYAG filed suit against the NRA, former CEO and Executive Vice President Wayne LaPierre, former CFO Wilson Phillips, General Counsel John Frazer, and former Chief of Staff Joshua Powell in August 2020, alleging defendants misspent millions of dollars and that the NRA and executives steered vendor contracts to insiders. The Brewer firm represents the NRA in the case.
The report noted that the NRA said its board was a victim of improper spending by executives and that the Association instituted compliance reforms once that alleged misconduct came to light.
"The essence of fraud is that it's a lie. The victim doesn't know about it," Brewer Partner Sarah Rogers told the jury. "What the NRA did when it discovered the fraud was, it dug in. ... The NRA left no stone unturned."
Rogers added that the NYAG sued the NRA because she "despised" the group, and that she tried "to impose the death penalty on it and take all its money" – through a corporate dissolution claim that was dismissed in March 2022.
Read more here.
Chambers and Partners Recognizes Brewer Firm in Texas Regional Spotlight
Chambers and Partners recognized Brewer, Attorneys & Counselors in its Texas Regional Spotlight Guide 2024 for Dallas in the category of Dispute Resolution.
Chambers is based in London and ranks and provides insights into law firms and lawyers globally. The legal research company uses in depth research methodology and conducts detailed interviews to determine rankings.
The regional spotlight recognizes small and medium-sized boutique law firms well-known for their expertise in selected practice areas. The Chambers Review notes that the Brewer firm is known as a “strong litigation boutique offering clients representation in an array of disputes” and that the firm has “deep expertise” in the hospitality sector.
In 2024, Chambers awarded spotlight recognition to 157 firms in Texas in 12 cities and 11 practice areas. Texas regional spotlight firms handle a range of litigation in state and federal trial and appellate courts.
See Brewer’s profile here.
Newsmakers: More Texas Firms Announce Partner Promotions
Brewer, Attorneys & Counselors Names Dallas Partner
January 22, 2024- Brewer, Attorneys & Counselors announced that its Dallas attorney Noah Peters was promoted to its partnership.
Peters brings extensive expertise in appellate advocacy, focusing on Labor & Employment and Civil Rights law. He has been a senior member of the team representing the National Rifle Association of America (NRA) in its First Amendment case against a former New York financial regulator. The U.S. Supreme Court in November accepted the case for review. Peters was previously the solicitor at the Federal Labor Relations Authority, a federal agency that administers the labor-management relations program for 2.1 million federal employees worldwide. In this senior-level position, Peters was the agency’s chief legal officer and briefed and/or argued 17 different cases before federal appellate courts, many of them involving novel questions of labor law and/or federal jurisdiction. He successful briefed, argued, and won numerous federal appeals, as well as the dismissal of multiple federal district court lawsuits.
Read the article here.
Law360 Publishes Expert Analysis by William Brewer on Threat to the Voting Rights Act
January 19, 2024 – Partner William Brewer writes in Law360’s “Access to Justice” section about a split among circuit courts regarding private citizens’ ability to sue under Section 2 of the Voting Rights Act (VRA). Section 2 of the VRA prohibits voting practices and procedures that discriminate on the basis of race, color or membership in a language minority group.
“If allowed to stand, the ruling imperils the ‘foundational’ right to self-government and creates a split among circuit courts regarding the standing of private citizens’ ability to sue – casting doubt on the future protection of voting rights in the United States,” Brewer writes.
He writes that while the Supreme Court upheld the VRA in Allen v. Milligan in June 2023, a ruling by the Eighth Circuit in Arkansas State Conference NAACP v. Arkansas Board of Apportionment threatens the VRA by finding that only the federal government can bring Section 2 VRA cases, not individuals and groups. Days before the Eighth Circuit decision, the Fifth Circuit affirmed the existence of a private right of action in Robinson v. Ardoin, creating the circuit court split.
Brewer emphasizes that since Section 2’s passage, hundreds of suits have been brought by private citizens serving as plaintiffs.
“If the case proceeded to the Supreme Court and the court were to rule that there is no private right of action, it would gut Section 2 and offer voters of color no individual power to seek remedies under the law. Such a ruling would nearly destroy the VRA,” Brewer writes.
Brewer concludes by urging that the private right of action must be clarified and that, “The prioritization of fairness and equal access to the voting process should ultimately prevail – to protect the rights of private plaintiffs and the freedoms that define our democracy.”
Read the article here.
Associate Malvina Palloj and Brewer Storefront Associate Director Katherine Leal Unmuth contributed to the article. The Storefront is the Brewer firm’s community service affiliate and has brought many successful Section 2 VRA cases in North Texas.