New York State Attorney General Letitia James last August filed a civil lawsuit against the National Rifle Association in Supreme Court of New York County to dissolve the organization, which, since 1871, has been a New York-registered not-for-profit charitable corporation.
Also named in the James action are four current and former high-level NRA officials, including its executive vice president Wayne LaPierre. The 163-page James complaint contains 666 allegations, including many for fraud, conflicts of interest and illegal diversion  and theft of millions of dollars away from the charitable mission of the NRA.
Crucial standing and jurisdictional allegations in the James complaint are based, in part, on the “key person” doctrine recently adopted by the New York Legislature pursuant to a recommendation from the New York Law Revision Commission. The commission was created in 1934 and is the oldest common law legal reform agency in the world.
The NRA unsuccessfully moved to dismiss the James Supreme Court lawsuit or, as an alternative, to transfer it to a forum outside of New York. It then filed an answer with counterclaims and a separate lawsuit against Attorney General James in the U.S. District Court for the Northern District of New York in Albany.
While these actions were pending, the NRA filed a federal Chapter 11 petition for bankruptcy in Dallas, Texas, and sought to reorganize and move there. After a 12-day hearing, on May 11, 2021, Chief Bankruptcy Judge Harlan D. Hale, of the Northern District of Texas, dismissed the NRA petition in a 37-page opinion, stating, “The NRA is using the bankruptcy case to address a regulatory enforcement problem (in New York) and not a financial one.”
Chief Judge Hale pointed out that Wayne LaPierre had kept the bankruptcy filing secret from the NRA Board of Directors and other officials, including its general counsel. Chief Judge Hale stated this was, “nothing less than shocking.” Attorney General James noted that the NRA is an organization in which “the rot runs deep.”
The NRA had two weeks to appeal the Hale bankruptcy decision and has not done so. This means the NRA will have to defend and litigate the James civil claims in New York State. The NRA has withdrawn its Albany federal claims and announced that it will defend against the James lawsuit in the Supreme Court of New York County. Attorney General James expects that discovery in her action against the NRA will proceed for the duration of the year with a trial starting in early 2022.
Jay Carlisle is a professor emeritus at the Elisabeth Haub School of Law at Pace University. He was appointed as a commissioner for the New York State Law Revision Commission by Gov. David Patterson in 2009.
Great to read a timely and insightful article from my civil procedure professor, Jay Carlisle!