National Rifle Association, New York Attorney General Square Off in Heated Courtroom Battle

Lawyers from New York Attorney General Letitia James's office squared off against the NRA's outside counsel Thursday morning. James and NRA CEO Wayne LaPierre are pictured. New York Daily News Archive / Alex Wong/Getty

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 County 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 NRA has argued that a confidentiality clause in their Services Agreement with Ackerman allows the nonprofit to review and object to Ackerman's compliance with the attorney general before she receives the documents.

The attorney general's office strenuously contested that notion.

"The nondisclosure agreement has inhibited this investigation, and it is out there as a message to other potential" cooperators, Assistant Attorney General Monica Connell said. "The nondisclosure agreement should have to be stricken."

"A Tremendous Sequela of Consequences"

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 serving a subpoena upon Ackerman would be akin to "serving a subpoena upon the NRA's in-house public relations department."

According to this theory, Ackerman should be considered as "functionally equivalent" to an NRA employee by the court, even though the firm is listed as an independent contractor on state tax forms, and protected by privilege. 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 expose the nonprofit to "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 the confidentiality clause 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, now estranged from the NRA, has previously claimed that the nonprofit already "constructively terminated" the agreement through its "many inexplicable actions."

The Attorney General's Office Says It's Targeting Insider Deals

Connell, the assistant attorney general, also tipped the hand of the attorney general's office as it concerns what her investigation is pursuing.

"At this point we are looking for information on related-party transactions," Connell said, referring to transactions with individuals who also exercise influence over decision-making at an 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 nonprofit 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 cooperation 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 the relationship that 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.

NRA Has Previously Tried to Intervene in James's Probe

The New York attorney general launched a formal inquiry into the NRA's tax-exempt status in April. While the nonprofit'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 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.

In response to a request for comment, the Brewer firm called the attorney general's efforts "unprecedented" and an "alarming expansion of the government's power."

"The Attorney General seeks the ability to upend legally formed, appropriate relationships between fiduciaries without any demonstration of need or an entitlement to do so," William A. Brewer III, the firm's namesake, said in a written statement. "In practical terms, the Attorney General – in her zeal to attack the NRA – seeks to conduct a secret investigation in a situation never intended by the legislature or countenanced by any court. The NRA must protect its privileges and its members' confidential information. We are confident in our legal position, and anxiously await the ruling from the court."

Later on Thursday, James provided Newsweek with a statement accusing the NRA of "attempting to stifle and interfere" with her office's probe.

"As we argued in our papers, we are fighting this action because the NRA has no authority to act as gatekeeper, a set of virtual eyes and ears over the Attorney General Office's investigations," James said. "We won't allow the NRA to control responses to subpoenas, intimidate witnesses, or compromise the integrity of our legal action."

This article reflects an updated quote from the NRA's outside counsel, a new statement from the firm and a statement from the attorney general.