Supreme Court, New York County, June 10, 2022

Letitia James, Attorney General, New York City (Monica A. Connell, Jonathan D. Conley, Yael Fuchs and Stephen Thompson of counsel), for plaintiff.

Brewer, Attorneys & Counselors, New York City (William A. Brewer III, Svetlana M. Eisenberg and Mordechai Geisler of counsel), for The National Rifle Association of America, Inc., defendant.

On this motion, New York Attorney General Letitia James (the Attorney General) [*2]seeks to dismiss counterclaims filed by defendant The National Rifle Association of America, Inc. (NRA), which challenge the constitutionality of her decisions to investigate the NRA and, ultimately, to seek judicial dissolution{**75 Misc 3d at 1002} of the NRA in this case. For the reasons set forth below, the Attorney General's motion is granted.^[FN1]

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 it 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.

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 any cognizable legal theory" (Weil, Gotshal & Manges, LLP v Fashion Boutique of Short Hills, Inc., 10 AD3d 267, 270-271 [1st Dept 2004] [internal quotation marks and citation omitted]; see also Leon v Martinez, 84 NY2d 83, 88 [1994]; Tri Term. Corp. v CITC Indus., 100 Misc 2d 477, 479 [Sup Ct, NY 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 {**75 Misc 3d at 1003}"accorded their most favorable intendment" (Summit Solomon & Feldesman 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 v National Rifle Assn. of Am., Inc., 74 Misc 3d 998 [Sup Ct, NY County 2022]; NYSCEF Doc Nos. 609-611).^[FN2] First, to the extent the counterclaims seek declaratory and injunctive relief stemming from the dissolution claims, those [*3]claims are moot. Second, the remaining counterclaims (for monetary damages) are alleged against the Attorney General solely in her individual capacity (NYSCEF Doc No. 543 at 3).^[FN3] 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.^[FN4]

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{**75 Misc 3d at 1004} against the NRA and its members for engaging in political speech (CC ¶¶ 59-107).^[FN5]

" '[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, 587 US —, —, 139 S Ct 1715, 1722, slip op at 5 [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 Department of Educ. of the City of N.Y., 121 AD3d 569, 569-570 [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, 587 US at —, 139 S Ct at 1722, slip op at 5 [emphasis omitted]). "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" (Nieves, 587 US at —, 139 S Ct at 1722, slip op at 5; 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 [*4]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]).

[1] 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{**75 Misc 3d at 1005}motive" (Nieves, 587 US at —, 139 S Ct at 1722, slip op at 5). 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 (Matter of Schneiderman v Tierney, 2015 NY Slip Op 30851[U], *5 [Sup Ct, NY 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" (Hartman, 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 Doc No. 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, 15). And in this action, current {**75 Misc 3d at 1006}NRA members have sought leave to intervene to address "concerns . . . about the NRA's management by the Individual Defendants and current Board" (NYSCEF Doc No. 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 National Rifle Assn. of Am., 628 BR 262, 284-285 [ND Tex 2021]). The court also alluded to "cringeworthy facts" about the [*5]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 proved), the NRA cannot recover on its retaliation counterclaims even assuming, for argument's sake, that Attorney General James harbored personal animus toward the NRA.^[FN6] Again, "[i]t is not enough to show that an official acted with a retaliatory motive and that the plaintiff was injured" (Nieves, 587 US at —, 139 S Ct at 1722, slip op at 5; 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, 587 US at —, 139 S Ct at 1723, slip op at 7). In the end, an objectively reasonable investigation—here, one uncovering credible evidence of wrongdoing—is not rendered unconstitutional solely by the {**75 Misc 3d at 1007}investigator's subjective state of mind (see Trump Org., 2022 NY Slip Op 30538[U], *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, 2019 WL 3564570, *3-5, 2019 US Dist LEXIS 131966, *5-17 [SD NY, Aug. 6, 2019, 18-CV-9150 (JMF)] [dismissing retaliation claims with prejudice where plaintiff failed to plead facts "support(ing) an inference of causation"]; Richards v City of New York, 2021 WL 3668088, *3, 2021 US Dist LEXIS 155979, *7-10 [SD NY, Aug. 18, 2021, No. 20-CV-3348 (RA)(KNF)] [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 sixth 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 ¶¶ 108-130). As noted, the Attorney General's filing of this lawsuit is an act for [*6]which she "is entitled to absolute immunity from liability," so the focus here is on the claims alleging "selective enforcement by virtue of the pretextual investigation prior to commencement of this dissolution proceeding" (NYSCEF Doc No. 543 at 25, NRA mem of law in opp to mot to dismiss; CC ¶ 112 [alleging James "has announced no investigations into other New York-based non-profits for similar alleged misconduct"]).

"A claim of selective prosecution requires a showing 'that the law has been administered "with an evil eye and an unequal hand" ' " (Matter of People v Trump Org., Inc., 205 AD3d 625,{**75 Misc 3d at 1008} 626 [1st Dept, May 26, 2022], quoting People v Goodman, 31 NY2d 262, 269 [1972]). The elements of such a claim are twofold. "A party must show that it was selectively treated, compared with others similarly situated, and that such treatment was based on impermissible considerations" (id. at 627; Wandering Dago, Inc. v Destito, 879 F3d 20, 40 [2d Cir 2018] [same]). "The 'similarly situated' element of the test asks 'whether a prudent person, looking objectively at the incidents, would think them roughly equivalent' " (Bower Assoc. v Town of Pleasant Val., 2 NY3d 617, 631 [2004] [citation omitted]; Sonne v Board of Trustees of Vil. of Suffern, 67 AD3d 192, 203 [2d Dept 2009] [noting "(e)xact correlation is neither likely nor necessary"]). But "even different treatment of persons similarly situated, without more, does not establish a claim" (Bower, 2 NY3d at 631). "The person must be singled out for an impermissible motive not related to legitimate governmental objectives, which could include personal or political gain, or retaliation for the exercise of constitutional rights" (Sonne, 67 AD3d at 203-204).

A claim of selective prosecution also must overcome the presumption that, generally speaking, the State can select whom to prosecute. "[T]he Government retains 'broad discretion' as to whom to prosecute" because "the decision to prosecute is particularly ill-suited to judicial review" (Wayte v United States, 470 US 598, 607 [1985]). The U.S. Supreme Court's concerns in Wayte about "[j]udicial supervision in this area" are particularly relevant here:

"[F]actors as the strength of the case, the prosecution's general deterrence value, the Government's enforcement priorities, and the case's relationship to the Government's overall enforcement plan are not readily susceptible to the kind of analysis the courts are competent to undertake. Judicial supervision in this area, moreover, entails systemic costs of particular concern. Examining the basis of a prosecution delays the criminal proceeding, threatens to chill law enforcement by subjecting the prosecutor's motives and decisionmaking to outside inquiry, and may undermine prosecutorial effectiveness by revealing the Government's enforcement policy. All these are substantial concerns that make the courts properly hesitant to examine the decision whether to prosecute" (id. at 607-608 [emphasis added]).{**75 Misc 3d at 1009}

Wayte's concerns are heightened where, as here, the selective enforcement claims seek to pry open a nonpublic law enforcement investigation undertaken prior to the commencement of a lawsuit.

Recognizing those concerns, "[t]he conscious exercise of some selectivity in enforcement of the law is not in itself a constitutional violation" (People v Goodman, 31 NY2d 262, 268 [1972], citing Oyler v Boles, 368 US 448 [1962]). And "[u]nder New York law, in a selective prosecution allegation, the defendant has a 'heavy burden' of overcoming the presumption that the prosecution has not violated the law" (People v O'Hara, 9 Misc 3d 1113[A], 2005 NY Slip Op 51516[U],*4-5 [Sup Ct, Kings County 2005], citing People v Blount, 90 NY2d 998, 999 [1997] ["Defendants did not meet their heavy burden of establishing that they were victims of unconstitutional selective enforcement of the penal laws"]; see People v Dominique, 90 NY2d 880, 881 [1997] ["Under [*7]this 'presumption of regularity' the law further presumes that no official or person acting under an oath of office will do anything contrary to his official duty, or omit anything which his official duty requires to be done. Substantial evidence is necessary to overcome that presumption"]).

[2] Here, the NRA's allegations in the selective enforcement counterclaims do not overcome the presumption that the Attorney General acted lawfully in pursuing the dissolution claims through her investigation. Indeed, the counterclaims tacitly acknowledge the problems that prompted the investigation in the first place. The NRA insists that the Attorney General's investigation was "wrongful" and "pretextual" because it "had undertaken a course correction to improve its compliance controls and internal governance" (CC ¶ 113). In doing so, the NRA concedes that a "course correction" was needed, undercutting its assertion that the Attorney General's concerns were wholly fabricated. The NRA also ignores that the "course correction" came, in part, as a response to the threat of the Attorney General's investigation. As the NRA itself alleges, it "undertook a top-to-bottom review of its operations and governance" to fend off a "politically driven 'compliance audit' " (id. ¶ 15). And that process exposed "those [the NRA] determined had abused its trust" (id.). So, while the NRA's own internal investigation uncovered evidence of impropriety, it argues that outside investigation by the Attorney General (exercising her clear statutory authority with respect to not-{**75 Misc 3d at 1010}for-profit corporations) somehow violated its constitutional rights. Endorsing that kind of theory would severely frustrate law enforcement objectives (Wayte, 470 US at 607), and is not the basis for a valid constitutional claim.

One product of the Attorney General's investigation was her attempt to dissolve the NRA in this action. The court's recent dismissal of the Attorney General's dissolution claims does not undermine the presumed legality of her investigation. As this court noted, the Attorney General is entitled, by statute, "to seek judicial dissolution of a charitable entity that has violated the law" (People v National Rifle Assn. of Am., Inc., 74 Misc 3d 998, 1023 [Sup Ct, NY County 2022]). Where, as here, a claim for dissolution is found to be legally insufficient, the proper remedy is dismissing that claim, not imposing liability on the Attorney General for exercising her statutory right to bring it. To hold otherwise would license exactly the kind of "[j]udicial supervision in this area" that the law discourages, "entail[ing] systemic costs" such as "chill[ing] law enforcement by subjecting the prosecutor's motives and decisionmaking to outside inquiry" (Wayte, 470 US at 607-608; see also Exxon Mobil, 316 F Supp 3d at 711-712 [warning about "seriously compromis(ing)" effect "(i)f every time a questionable legal theory were pursued in an investigation . . . the target could run into federal court and enjoin the state investigation on pretext grounds" (emphasis omitted)]).

The counterclaims also fail to allege that the NRA was treated differently from similarly situated charitable organizations due to impermissible considerations (Trump Org., 205 AD3d at 627 ["Appellants have not identified any similarly implicated corporation that was not investigated or any executives of such a corporation who were not deposed. Therefore, appellants have failed to demonstrate that they were treated differently from any similarly situated persons"]; Jarrach v Sanger, 2010 WL 2400110, *8, 2010 US Dist LEXIS 57248, *25 [ED NY, June 9, 2010, No. 08 CV 2807(SJF)(ARL)] ["Conclusory allegations of selective treatment are insufficient to state an equal protection claim"] [granting motion to dismiss equal protection claim]). While the NRA cites to enforcement matters where the Attorney General did not seek dissolution (see CC ¶ 38), these purported comparators fail as a matter of law. Among other things, they involved settlements in which the charities agreed to overhaul their leadership (NYSCEF Doc No. 560 at 7). But in [*8]this case, two of the individual defendants are the{**75 Misc 3d at 1011} current NRA chief executive officer and general counsel and secretary to the Board. Their continued direction of the NRA undermines the NRA's argument that this action relates to isolated bad conduct by a handful of former executives. The Attorney General has, moreover, pursued enforcement actions against other charities, including by seeking dissolution of those entities (CC ¶ 39; see NYSCEF Doc No. 660 [submitting several other dissolution examples]).

The NRA's arguments in opposition are unavailing. First, the selective enforcement counterclaims do not, as the NRA maintains, trigger a strict scrutiny analysis of whether the government action was the least restrictive means available in exercising its authority. The NRA has not cited a single instance where this standard was applied to a claim based on the alleged discriminatory application of a facially neutral law. Second, the NRA places undue emphasis on the court's colloquy with the Attorney General's counsel at the December 10, 2021 oral argument on the defendants' motions to dismiss the complaint (NYSCEF Doc No. 510, oral argument tr at 28). The court's questions to counsel probed the nature of the harm—public versus private—alleged by the Attorney General in support of her office's dissolution claims (id. at 27-29). But as indicated, the legal insufficiency of those claims—for failing to allege "the type of public harm that is the legal linchpin for" judicial dissolution (NRA, 74 Misc 3d at 1004)—does not automatically impose liability on the Attorney General (see id. at 1023 [noting "(t)hat (it) is true" the Attorney General "is entitled to seek judicial dissolution of a charitable entity that has violated the law"]).

Therefore, the branch of the Attorney General's motion seeking dismissal of the NRA's fifth and sixth counterclaims is granted.

Further, the branch of the Attorney General's motion seeking dismissal of the seventh counterclaim, which seeks a declaratory judgment that N-PCL 1101 and 1102 are unconstitutional as applied to the NRA in this action (CC ¶¶ 131-137), is also granted as that counterclaim has been rendered moot by the court's dismissal of the dissolution claims.

C. The court need not decide issues of qualified immunity.

The court need not—and does not—rule today on the scope of the Attorney General's qualified immunity under federal and state law. For the reasons stated in Parts A and B, supra, the NRA's counterclaims fail to adequately allege the deprivation{**75 Misc 3d at 1012} of a constitutional right. And because the Attorney General is not liable, "the court need not further pursue the qualified immunity inquiry" (Kelsey v County of Schoharie, 567 F3d 54, 62 [2d Cir 2009]; Pearson v Callahan, 555 US 223, 236 [2009] [recognizing that "discussion of why the relevant facts do not violate clearly established law may make it apparent that in fact the relevant facts do not make out a constitutional violation at all"]; Finch v City of New York, 591 F Supp 2d 349, 360-361 [SD NY 2008] ["If there is no constitutional violation, the defendant is not liable and the court need not proceed further"]).

Accordingly, it is ordered that the Attorney General's motion is granted and the amended counterclaims (NYSCEF Doc No. 325) are dismissed with prejudice.