The New York State Attorney General’s Office and the National Rifle Association squared off in state court Thursday morning, as the two quarreled over whether the NRA had a right to review documents related to the attorney general’s investigation into its tax-exempt status.
New York State Supreme Court Justice Melissa A. Crane held off announcing a final decision at the end of the hearing, though the fractious nature of the disagreement and the potential consequences of Attorney General Letitia James’s probe loomed large over Thursday’s arguments.
James has been trying for months to get the NRA’s former public relations firm, Ackerman McQueen, to send her office documents related to the voluminous services it has provided to the NRA over the pair’s decades-long relationship.
“The non-disclosure agreement has inhibited this investigation, and it is out there as a message to other potential” cooperators, Assistant Attorney General Monica Connell said. “The non-disclosure agreement should have to be stricken.”
Sarah Rogers, an attorney with the NRA’s outside counsel, Brewer, Attorneys & Counselors, argued the NRA’s relationship with Ackerman was so intimate and intertwined that there is no “publicist relationship on earth that is actually factually analogous to this one.”
According to this theory of the case, Ackerman should be considered as “functionally equivalent” to an NRA employee by the court, even though the firm is listed as an independent contractor in state tax forms. Rogers said that this discrepancy is allowed through various legal doctrines.
But John Oleske, another lawyer arguing on behalf of the attorney general, warned that, should the NRA seek to adopt a new “employee” status for its longtime PR firm, this could open up “a tremendous sequela of consequences.”
Ackerman has repeatedly indicated, according to court filings, that it is eager to comply with the attorney general’s request, but that a confidentiality clause in their Services Agreement with the NRA is constraining full cooperation.
The attorney general has informed Ackerman and the NRA that no private contract can supersede her right to receive documents related to a valid investigation or subpoena, which she issued to Ackerman in July.
The NRA maintains that the Services Agreement is still binding upon Ackerman. However, the gun-rights group simultaneously argued that the PR firm should return all confidential information to the NRA, in line with a provision that is only activated when the agreement is ended.
Ackerman has previously claimed that the NRA already “constructively terminated” the agreement through its “many inexplicable actions.”
Donnell also tipped the hand of the attorney general as it concerns what her investigation is pursuing.
“At this point we are looking for information on related-party transactions,” Donnell said, referring to transactions with individuals who also exercise influence over decision-making at the organization.
Various reports have showed that NRA insiders have directly benefited from NRA contracts, although these types of arrangements are not expressly unlawful. Federal tax law makes it illegal for non-profit insiders to provide services to their own organization at above-market rates. New York also requires any potential conflicts of interest to first be vetted by the board of directors.
NRA lawyers also revealed the extent to which Ackerman was considered an indispensable partner, making their fallout over the last year all the more consequential.
“This was a very special relationship,” Rogers said, building on her earlier comments that the relationship was “broader and deeper than a public relations firm would typically connote.”
Rogers also said that NRA General Counsel John Frazer provided joint legal advice to NRA and Ackerman employees.
The judge appeared to take issue with the idea that the pair’s inseparable relationship would be evidence of their protected attorney-client status, rather than a reckless misuse of relationship which could void confidentiality protections.
“Why doesn’t [involving Ackerman] waive privilege wholesale,” Crane asked. “It seems awfully dangerous to do that if you’re interested in privilege protections.”
Notwithstanding the bickering over whether Ackerman is still bound by the agreement’s confidentiality provisions, the attorney general is normally entitled to conduct investigations without the interference of private contracts.
As is the case in New York, and much of the country, private contracts “against public policy are illegal,” in the words of a Brooklyn judge. Public policy is well understood to include the official, lawful duties of public officers, including the New York attorney general.
The New York attorney general launched a formal inquiry into the NRA’s tax-exempt status in April. While the non-profit’s headquarters are located in Virginia, the NRA was incorporated over a century ago in New York state and is subject to oversight from New York regulatory agencies.
During her 2018 campaign to replace former New York Attorney General Eric Schneiderman, James described the NRA as a “terrorist” organization, leading to accusations that her office would unfairly target the nation’s largest gun-rights group.
However, in the few instances where courts have weighed in, the judicial branch has largely upheld James’s approach to the investigation. When investigators with her office planned to take a deposition of former NRA President Lt. Col. Oliver North, the NRA sued to prevent that interview from happening. The group claimed that such an interview could infringe upon information protected by attorney-client privilege.
Crane, also the judge hearing that case, rejected those arguments. When the NRA asked the court to let them sit in on the deposition, Crane also demurred. The deposition went on as scheduled.
The NRA and Ackerman are currently engaged in their own bitter legal disputes, with four ongoing legal proceedings between the pair currently playing out in various courts. The once-amicable relationship began to unravel in 2018, when the prospect of an investigation into the NRA’s financial practices became increasingly likely.
The NRA has long maintained that Ackerman is the only firm not to cooperate with its requests for documentation, purportedly made in order to verify compliance with its own internal oversight policies. Ackerman, in turn, has claimed it has, in fact, obeyed its obligations under the Services Agreement, countering that the NRA has neglected to provide it with documentation needed to demonstrate compliance.
This is a breaking news story and will be updated as more information is provided.