NRA Trial – Phase 2 Conference

Judge Joel Cohen issued a notice today that a pretrial conference will be held next Wednesday, March 6th, in preparation for Phase 2 of the People of the State of New York v National Rifle Association of America et al. The meeting is to discuss the schedule, logistics, and scope of Phase 2 as well as any post-trial motions related to jury phase of the trial.. This is the part of the trial where Judge Cohen will assess penalties and remedies based upon the jury’s findings of liability.

From the notice:

The parties are asked to confer in advance, with the goal of finding common ground on schedule and logistics issues. The parties may, but are not required to, submit letters in advance of the conference if they believe that would assist in focusing the discussion. Such letters should not include legal argument on the merits of any claims or proposed relief. That will come later.

For attorneys that cannot attend in person, he will be using Microsoft Teams to facilitate their participation. Interestingly, there will be a public “view-only” link available for those who request it through the court’s website. I will add any link to that if I can find it.

Josh, You There?

Judge Joel Cohen issued a court notice yesterday asking, in essence, if Josh Powell or his attorneys intended to show up for jury selection and the trial. Given jury selection started on Tuesday, January 2nd, I take it that neither Powell nor an attorney representing him showed up for it.

You may remember that his prior attorneys, Akin Gump, dropped him for what appeared to be a failure to pay his legal bills. Indications at that time were that Powell was then going to act pro se or as his own attorney.

Now I have to wonder if he will just default by not showing up for the trial. It would be foolish to do so especially if he had been trying to cut a deal with the New York Attorney General’s Office. Oh, well, more than one former director has told me that Powell was not the sharpest knife in the drawer.

451625_2020_People_of_the_State_of_v_People_of_the_State_of_COURT_NOTICE_2642

Judge To NRA’s Attorneys – Knock It Off!

I think Judge Joel Cohen is getting a little bit aggravated by NRA’s attorneys attempts to delay the trial before it starts.

The attorneys for the NRA, primarily Noah Peters, are trying to argue that the term “properly administered” is unconstitutionally vague. The term is used in New York’s Estates, Powers
and Trusts Law (“EPTL”) § 8-1.4(m) which provides the basis for the First Cause of Action against the NRA in the NY Attorney General’s amended complaint. In my layman’s opinion, properly administered means you don’t buy suits for Wayne, pay for hair and makeup for Susan, or take free trips from major vendors.

Reading the letters to the judge from both the NYAG and Peters, it appears that this motion to dismiss the First Cause of Action is the fourth such attempt. New York wants to respond to this motion 30 days after the jury delivers a verdict while Peters and the NRA want it ASAP. Both of these letters were sent yesterday.

You may remember that on the Friday before Christmas Judge Cohen had given the NRA a lump of coal when he told them to stop screwing around. He told them then that they could have made this motion months earlier and that he didn’t anticipate delaying trial preparation to give it any attention. Nonetheless, attorneys for the NRA as shown above have continued on their quest to delay.

Today, Judge Cohen issued another notice with regard to the aforementioned letters that the briefing and hearing schedule on the NRA’s motion is stayed until further notice.

From the Court Notice:

The Court has reviewed the NRA and OAG letters regarding the briefing schedule for the NRA’s recently filed motion to dismiss (NYSCEF 2569, 2570). The NRA’s concerns about the timing for briefing this belated and procedurally questionable motion ring hollow, as it is a circumstance entirely of its own making. The Court remains far more concerned about the motion interfering with the trial rather than the other way around. Until further order of the Court, the briefing and hearing schedule on this motion is stayed. The Court will discuss the schedule with the parties during a break in jury selection the week of January 2, 2024.

As I said, I’m just a mere layman when it comes to the law. However, when a judge calls your motion “procedurally questionable” and that your concerns “ring hollow”, he is telling you to knock it off. To continually ignore his plainly given signals as the NRA’s attorneys have done is both arrogant and stupid. This case is finally coming to trial almost 3 1/2 years after it began and Judge Cohen is not going to let anything that could have been done months ago delay it further. Bill Brewer and his group of lawyers need to recognize that and move on.

NY Courts Give NRA Two Lumps Of Coal

The first lump of coal comes from the Appellate Division, First Division. As NRA In Danger reported, the Appellate Division affirmed Judge Joel Cohen’s ruling in which he refused the dismiss the New York AG’s first cause of action in their complaint.

The court said in an unanimous decison:

Plaintiff alleged in detail that the NRA failed to properly administer charitable assets, resulting in improper administration and diminution of property held for charitable purposes; engaged in waste and diversion of charitable assets; and retaliated against whistleblowers. These allegations are sufficient to state a claim under EPTL 8-1.4, which enhances New York Attorney General’s enforcement powers and authorizes it to institute proceedings against trustees who fail to properly administer charitable assets.

As NRA In Danger notes, the court considered the remaining arguments posed by the NRA and found them “unavailing”.

The NRA’s motion from August 15, 2022 is here while Judge Cohen’s denial of the motion to dismiss is here.

The second lump of coal comes from Judge Cohen in a Court Notice issued on December 22nd. The notice states that Judge Cohen has reviewed letters from the NRA with a proposed motion to dismiss the First Cause of Action on the grounds that the statue is “unconstitutionally vague”. He notes that while the AG’s office argues such a motion is procedurally barred, he disagrees given the Commercial Division Rules. He then throws a bone to the NRA’s attorney by saying motions that represent their client’s best interests are not limited. Judge Cohen then lowers the boom.

In any event, given that the parties have undertaken the effort, the Court will provide the following comments. The NRA has had multiple opportunities to present dispositive motions, and each has been dealt with at great length and with extraordinary expenditure of time and effort by the parties and the Court. The newly proposed motion (which would be, at least, the eighty-sixth motion filed in this case) is not based on new facts or a change in the law, and the NRAs arguments clearly could have been asserted in one of its earlier (timely) motions to dismiss or for summary judgment, but was not. Instead, it is being proposed on the eve of trial, with the attendant distraction and potential for delay at a critical period for the parties and the Court as we all prepare for trial. The Court believes this is precisely the type of motion the single motion rule was designed to prohibit. Moreover, the Court is not persuaded that the proposed motion is a challenge to the Courts subject matter jurisdiction, which as the NRA notes is typically an argument that the Court can (and should) consider at any time. All that said, as noted above, the NRA does not need the Courts permission to file its proposed motion. However, the Court does not anticipate interrupting trial preparation or the trial itself (thereby extending the service time of jurors) to devote substantive attention to a motion that could have been brought months or years ago.

I think Judge Cohen’s legal response could be translated to say what Mom’s everywhere have told kids forever- just because you can doesn’t mean you should. A Dad’s response might be more to the point – quit fucking around and get to work.

NRA Trial Date Set (Updated)

Because last week was Thanksgiving Week and it was devoted to family I missed seeing a court notice in the New York AG’s lawsuit against the NRA. It dealt with jury selection and the trial start date.

Judge Joel Cohen has ordered that jury selection begin on Tuesday, January 2nd, 2024 in the late morning. Jury selection will continue day to day until a jury is selected. It will take place in Room 300 of the New York State Supreme Court Building located at 60 Centre Street in Manhattan.

The trial itself will start at 9:30am on January 8th, 2024 in the same courtroom.

Oh, to have the free time (and money) to fly to New York and stay throughout the trial. I don’t know if the trial will be televised but will check on it.

UPDATE: I probably should have checked on this first before originally posting the above. However, I just assumed New York, like most states, had some provision for the audio-visual coverage of most court cases.

As what often happens when you make an assumption, I was wrong.

From Politico:

Trump’s case again highlights how New York has among the most restrictive laws in the nation banning cameras and broadcasts inside the courtroom in most proceedings, a law that dates back to the 1930s. The state Legislature has barely tinkered with it since then. Only Washington D.C. is more stringent on media coverage inside the court, according a report last year by the The Fund for Modern Courts, a nonpartisan nonprofit.

The Village Sun adds that the law banning cameras and recording devices in the courtroom stemmed from the Lindbergh kidnapping trial case in the 1930s.

While there is a bill pending in the New York Senate and Assembly that would allow televising of court proceedings, it has been referred to committee where it remains. Interestingly, the bill is opposed by the NY chapter of the ACLU on the grounds that there is no provision for a defendant to preclude televising a trial. They contend this could impair a criminal defendant’s right to a fair trial.

I guess we will have to rely upon news reports, sketchy as they will be, to know what is going on in the trial day to day.

UPDATE II: NRA In Danger has more on what to expect in the trial now that a date has been set. If what was quoted from a motion transcript carries over to the trial, and there is no reason to expect it won’t, this is not going to be pretty. Even the most ardent backers of Wayne should be cringing over all the dirty laundry of his that will be aired. The old excuse of “well, Wayne told me it isn’t true” just won’t cut it anymore. Those who listened to it and excused his actions should be hanging their heads in shame as they must accept some responsibility for the perilous state of the organization.

NRA Case Positive Spin: Letitia James

Both sides of the dissolution lawsuit involving the New York Attorney General and the NRA are trying to put a positive spin on Judge Joel Cohen’s ruling yesterday. Below is the spin put on it by NY Attorney General Letitia James.

Letitia James in New York City on 19 November 2019.
Reuters photo

NEW YORK – New York Attorney General Letitia James today released the following statement after Justice Joel Cohen of the New York County State Supreme Court rejected a second round of motions brought forward by the National Rifle Association (NRA), Executive Vice-President Wayne LaPierre, and Corporate Secretary and General Counsel John Frazer as they sought to dismiss a lawsuit filed by Attorney General James against the organization in August 2020:

“Today, the court affirmed my office’s right to pursue its long-standing claims that fraud, abuse, and greed permeate through the NRA and its senior leadership. While we’re heartened that the judge rejected the NRA’s attempts to thwart most of the claims in our case against the NRA, we are disappointed that the judge ruled against the dissolution portion of the case. We are considering our legal options with respect to this ruling. We remain committed to enforcing New York law regardless of how powerful any individual or organization may be.”

In today’s decision, the court let stand all of the Office of the Attorney General’s (OAG) claims of self-dealing, abuse, and unlawful conduct by LaPierre, who has been at the helm of the NRA for three decades. Similarly, the court rebuked the efforts by Frazer to dismiss him from the case, finding that OAG’s allegations that Frazer violated his obligations as the NRA’s General Counsel for failing to address conflicts of interest and respond to whistleblowers who alerted the NRA to systemic financial wrongdoing were valid. The court also held that OAG’s claims against the NRA for false regulatory filings and failing to address conflicts of interest will proceed. 

As an attorney friend mentioned to me yesterday, Judge Cohen’s ruling could be appealed. James is acknowledging this in her statement where she says they “are considering our legal options”. That said, I’d be a little surprised if they do appeal it. A partial win is better than no win at all.

NRA Will Not Be Dissolved

Judge Joel Cohen issued a ruling today in the New York Attorney General’s dissolution suit against the National Rifle Association. He dismissed four of the 18 causes of action in the amended complaint brought by Attorney General Letitia James but allowed the remain 14 to continue. Specifically, Judge Cohen dismissed the first, second, 16th, and 18th causes of actions.

The first and second causes of action sought the dissolution of the NRA. In the first cause of action, the NRA was said to have “conducted its business in a persistently illegal manner and abused its powers contrary to the public policy of the State of New York by operating without effective oversight or control by its officers and directors” which was grounds for dissolution under N-PCL § 1109(b)(1). The second cause alleged that “directors or members in control of the NRA have looted or wasted the corporate assets, have perpetuated the corporation solely for their personal benefit, or have otherwise acted in an illegal, oppressive or fraudulent manner.” This would be grounds for dissolution under N-PCL § 1109(b)(1).

He wrote in dismissing those two causes of action:

In arguing for dissolution, the Attorney General’s allegations fail to delineate between the NRA, on the one hand, and its leaders on the other, who acted “without regard to the NRA’s best interests” (see id. ¶ 143 [“LaPierre, together with his direct reports, including Defendants Phillips, Frazer and Powell, instituted a culture of self-dealing, mismanagement, and negligent oversight at the NRA . . . without regard to the NRA’s best interests.”]; id. ¶ 646 [“Despite a conflict of interest and his lack of authority to do so, LaPierre unilaterally determined to place the NRA into bankruptcy to evade a regulatory action in which he was named as a defendant . . . cost[ing] the NRA tens of millions of dollars”]). Conflating the Individual Defendants with the NRA writ large for purposes of dissolution is inappropriate here for the reasons discussed supra. It also ignores the allegations that the wrongdoers in control of the NRA do not necessarily speak for other NRA members, some of whom have tried to instigate reform within the organization but have been met with resistance from entrenched leadership (see, e.g., id. ¶ 491). (emphasis mine)

The 16th cause of action involved the prudent management of institutional funds. This cause of action was dismissed by Judge Cohen as it didn’t properly distinguish between “program-related funds” and “institutional funds”.

The 18th cause of action was specifically against LaPierre, Frazer, Phillips, and Powell. It accused them of common law “unjust enrichment” and sought to recover monies paid to them that were “excessive, unreasonable, and/or unauthorized.” Judge Cohen based his dismissal of this cause of action as it ran afoul of earlier NY Court of Appeals rulings about unjust enrichment. In other words, this was only dismissed due to a technicality.

While the NRA will not be dissolved, this is not to say that the NRA, Wayne LaPierre, and the others are in the clear. The third and fourth causes of action against LaPierre and John Frazer allege breach of fiduciary duty. This was allowed to proceed onwards. Likewise, Judge Cohen found that the allegations contained in the seventh and eighth causes of action which accuse both LaPierre and Frazer of failing to properly administer charitable assets were sufficient to proceed.

The 11th and 14th causes of action were against LaPierre and the NRA respectively. These accuse LaPierre and the NRA of engaging in “unlawful related party transactions.” Judge Cohen found that both claims were sustained.

The 15th cause of action which was allowed to go forward involved violation of the New York whistleblower protections. Judge Cohen said there was sufficient evidence to show that the NRA, Powell, and LaPierre retaliated against whistleblowers and that Frazer was incompetent in carrying out the whistleblower policy. The retaliation against Oliver North as well as the freezing out of directors such as Tim Knight and Esther Schneider from committee assignments is coming back to haunt the NRA.

The final cause of action sustained against the moves by LaPierre and Frazer to have them dismissed is the 17th. That cause of action stated that the NRA and Frazer “made materially false and misleading statements and omissions in the annual reports the organization filed with the Attorney General.” Judge Cohen said that the NRA didn’t contest the falsity of the filings for now and the allegations against Frazer were specific enough that they should continue.

It should be noted that neither Josh Powell nor Woody Phillips sought to have the specific causes of action against them dismissed.

If after all the court proceedings are finished, it could result in the all four of the individual defendants being being barred from the NRA or other New York non-profits and forced repayment of their ill-gotten gains. Moreover, I can foresee a forced restructuring of the NRA in such a way as to prevent the abuses we have seen and are now seeing.

The bottom line is while the NRA has escaped dissolution this is not the end of things.

You can read the full 42-page opinion by Judge Cohen below. It makes for interesting reading.

451625 2020 People of the State of v People of the State of DECISION ORDER on 611 by jpr9954 on Scribd

Intervention By Rocky Marshall Denied

Former NRA Director Rocky Marshall had filed a motion to intervene in the NRA dissolution case. His motion was filed in September 2021. He was still a director when he filed the motion to intervene. New York Not-for-Profit Corporation Law § 720 b (1) gave him the statutory right to intervene.

Today a hearing was held on this motion in New York County Supreme Court. Unfortunately, Judge Joel Cohen denied Mr. Marshall’s intervention motion. I did not have an opportunity to listen to the hearing.

However, Stephen Gutowski of The Reload did cover the hearing and posted a series of tweets about it.

He wrote:

The hearing over former board member Rocky Marshall’s attempt to intervene in the New York suit against the NRA is happening. Marshall and others are trying to intervene as a way of providing an alternative representation of members. 

The judge seems skeptical of letting Marshall intervene without evidence he was illegitimately pushed off the NRA board. 

Marshall’s lawyers are noting they have different claims against the NRA than what New York has brought. They note that a big one is potentially trying to recover legal fees that the interveners believe are excessive. 

The judge says that sort of claim isn’t at issue in the New York suit and wouldn’t be decided there. So, an intervention isn’t necessary. Marshall’s lawyers counter that the NRA could be dissolved in this suit and they wouldn’t be able to make any claims at that point. 

The interveners argue NRA leadership, such as CEO Wayne LaPierre, has acted against the interests of NRA membership. They argue leadership has harmed the organization and they should be able to intervene on behalf of NRA members. 

The NRA’s lawyers are arguing, basically, what the judge had argued earlier. They say Marshall doesn’t have standing to intervene since he isn’t a director anymore. 

The NRA is arguing that because Rocky Marshall ran for NRA president during last year’s board meeting he has a conflict of interest in trying to invene (sic) in the case. 

The NRA is also arguing Marshall filed his intervention too late. The New York AG’s office also don’t want Marshall to intervene. They also argue he has no standing. 

The judge has denied former board member Marshall’s motion to intervene in New York’s case against the NRA. 

The judge says he does value the input of NRA members who don’t agree with how NRA leadership has run the organization, though. 

Judge says Marshall lacks standing because he is no longer an NRA board member. 

It will be interesting to see whether the judge has to decide this same intervention question for a third time if Frank Tait, who is another one of the interveners, is able to get on the NRA board. 

Well, crap! I thought Mr. Marshall had a chance to become an intervenor. As things stand now – and I hate to say it – the closest thing we as members have to someone representing our interests in the case is the NY Attorney General’s Office. That sucks.

Frank Tait noted in a post today:

Rocky’s attorneys made the point that the NRA is being bled dry and that this helps achieve the NY AG’s intent of dissolving the NRA.

That correlates with reporting in The Reload that analyzed the NRA’s finances and found that 20% of the budget is now going for legal expenses. Moreover, Wayne’s attorney Phillip Correll has billed the NRA approximately $175,000 in legal fees as of this past August.

One last thing that came out in the hearing today is that Susan LaPierre is also being represented by Phillip Correll. That leads to the obvious question is who is paying him to represent her – the NRA or the LaPierres?

Motion To Intervene Denied

As I said earlier today, there was the hearing on the Motion to Intervene this afternoon.

After hearing the arguments for and against, Judge Joel Cohen denied the Motion.

The basis for his decision as I can understand it is that having only two member representing the interests of the members was not enough. He kept referring to a 5% of the membership rule as the minimum needed to intervene. Even though the attorneys for the intervenors said they were representing a class of members, the judge disagreed. He kept coming back to the argument that if you let one group intervene then you have to let others intervene.

While it was assumed a sitting director would be joining the Motion to Intervene today, Judge Cohen said he could only rule on the motion in front of him. He did not rule out a revised Motion to Intervene with a sitting director as one of the intervenors.

It is a hell of thing when you have a group on one side that wants to do away with the NRA and a group on the other side that wants to keep looting it with no one allowed in the middle representing the millions of dues paying members.

Motion To Intervene Hearing Today

The hearing on the Motion to Intervene on behalf of the members of the NRA in the dissolution lawsuit will be held this afternoon. Judge Joel Cohen issued a notice on Tuesday that the hearing will proceed as scheduled. It is set for 2:30pm in Manhattan.

In his letter to the court on announcing a sitting director of the NRA would be joining the Motion to Intervene, attorney Taylor Bartlett gave the court the option of postponing it as he expected both the NRA and the NY Attorney General’s Office would ask for time. Bartlett did note that they were ready to go.

We will know the name of the director or directors who will be joining the suit later today. Given a sitting director has the absolute right to intervene and thus has standing, it will be interesting to hear the arguments against allowing it.

If I can find an audio link to the hearing, I will post it.

Stay tuned!