James v. NRA: The NRA’s Fight to Survive in New York

Over the past year and a half, New York Attorney General Letitia James has been fighting for the dissolution of the National Rifle Association (NRA) in New York County Supreme Court. James’ basis for filing suit against the NRA and a number of its senior leaders revolves around allegations of corporate corruption and the illegal handling of millions of dollars. This money, James’ office holds, was used by figures like the Executive Vice President for their own personal gain instead of the “charitable mission of the organization.” 

Since the case’s inception in August of 2020, the NRA seemed to be running from Attorney General James as her office gathered multiple smaller legal victories. This pattern continued until, on March 2nd of this year, a New York County Supreme Court Justice struck down James’ attempt to dissolve the NRA. James’ lawsuit, however, has been allowed to carry on against the NRA and its senior leaders. This article will track the history of the lawsuit and discuss what is at stake depending on the ultimate decision of the New York Court.

Some background information is essential to understanding the case. It may seem strange that the existence of a national organization like the NRA would be in jeopardy due to the actions of a single state’s attorney general. The reason Attorney General James was able to seek the dissolution of the NRA is because the organization was founded and incorporated in New York in 1871. This history puts the organization under the oversight of the New York Attorney General’s Office. Since New York is well known to favor Democratic leadership, supporters of the NRA have suggested the organization relocate to a state whose leaders are more sympathetic to its pro-Second Amendment cause, like Texas. New York State law, however, makes this movement very difficult, requiring nonprofit organizations like the NRA to get permission from the Attorney General before relocating. Obviously, there was no chance James would let the NRA leave New York as she sought its dissolution.

The NRA attempted to get around this requirement by forming a shell company called Sea Girt LLC in Texas. This action was taken so that, when both the NRA and Sea Girt shortly thereafter declared Chapter 11 bankruptcy in January of 2021, the case would be heard in Texas instead of New York. Chapter 11 bankruptcy would allow the NRA to reorganize while continuing its business operations, and all that was necessary for the filing was approval by a federal bankruptcy court in Texas. Taken together, these steps would allow the NRA to relocate to Texas while completely bypassing the need for approval from Letitia James. At least, this would have been the case if not for Texas Bankruptcy Judge Harlin Hale, who threw out the NRA’s bankruptcy claim in May of 2021. His reasoning was that the NRA filed for bankruptcy in bad faith, doing so only to avoid James’ lawsuit and the generally stricter business regulations in New York rather than due to an inability to repay debtors. His opinion was evidenced by statements from the NRA and its top executives, which discussed the organization’s strong financial status and disdain for New York’s business regulations. Simply put, the NRA was forced to stay in New York. 

At this point in the case, Attorney General James seemed to be at an advantage over the NRA and its leaders, legally speaking. James claimed another victory over the NRA after, in June of 2021, the organization withdrew a countersuit it filed against her in federal court which claimed she was targeting the NRA because she disagreed with the organization’s speech. The NRA did refile the suit against James in New York State Court, but James still appeared to be ahead of the gun rights organization. This advantage held true until March 2nd of this year, when New York County Supreme Court Justice Brian Cohen stated that James and her office could not seek the dissolution of the NRA.

Dissolution was James’ main objective in her suit against the NRA, so it is only natural that the gun rights group would laud this ruling as a major win. Dissolving the NRA could “impinge” on the free speech and assembly rights of its five million members, Cohen said. Cohen also held that James’ allegations against the NRA, which detail reports of millions of dollars of misappropriated funds, are not indicative that the organization cannot continue its normal, legal operations. A final opinion Cohen provided was that the “corporate death penalty” can only be issued if the conduct of the corporation can be shown to cause sufficient public harm; the allegations against the NRA, according to Cohen, do not fit this description. It should be noted, though, that Justice Cohen also threw out the NRA’s attempt to dismiss the case. This decision allows Attorney General James to go forward with her allegations of corporate greed and corruption. Looking forward, it seems that the balance of power between both parties is more evenly matched than ever before as possible legal avenues are explored on both sides. 

In regards to Attorney General James, her allegations are clearly credible enough for Justice Cohen to refuse to dismiss the case. It therefore seems likely that James will win her lawsuit against the NRA or, more specifically, several of its top executives, including Executive Vice President Wayne LaPierre and corporate secretary John Frazer. Since James’ allegations against these individuals revolve around them illegally siphoning money away from the NRA for personal gain, they will be held liable for millions of dollars in restitution made payable to the NRA. Such a ruling seems odd considering James’ initial goal of dissolving the NRA. If the NRA were dissolved, then the resulting funds would be paid to organizations with a similar mission. LaPierre and Frazer would also be permanently barred from holding an executive position in any charitable organization incorporated in New York. These potential consequences seem underwhelming in comparison to the vastness of the allegations against LaPierre and Frazer, but that is only because James was disallowed from pursuing the dissolution of the NRA. Armed with this information, it now seems that the NRA made out much better with Justice Cohen’s decision than was initially apparent.

As for the NRA and its leaders, there is still the countersuit that was refiled in New York State Court against Attorney General James. This suit alleges that she targeted the NRA and its leaders because she disagreed with the content of their pro-Second Amendment Speech. Among the NRA’s evidentiary points, it is noted that James has never before sought the dissolution of a nonprofit organization in the same manner as she did with the NRA. However, this argument is unlikely to hold weight given the Attorney General’s aim to make the restitution funds from the NRA executives made payable to organizations with similar political missions. Speaking generally, the NRA appears to have very few cards to play against Attorney General James in the remainder of the case, and yet the consequences of this fact seem to matter little given that the NRA’s existence is no longer in jeopardy.

For more information on the case when it becomes available, search People of the State of New York, by Letitia James v. National Rifle Association of America, et al. or visit the New York Attorney General’s Press Release Page.

Nicholas Duffy is a Sophomore at Brown University, concentrating in Economics. He is a staff writer for the Brown Undergraduate Law Review and can be contacted at nicholas_duffy@brown.edu.