Nat'l Rifle Ass'n of Am. v. Cuomo

NATIONAL RIFLE ASSOCIATION OF AMERICA, Plaintiff, v. ANDREW CUOMO, MARIA T. VULLO, THE NEW YORK STATE DEPARTMENT OF FINANCIAL SERVICES, Defendants.

1:18-CV-566 (TJM/CFH)

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF NEW YORK

February 18, 2020

APPEARANCES:

Brewer Attorneys & Counselors

750 Lexington Avenue, Floor 14

New York, New York 10022

Attorneys for plaintiff

Office of Attorney General

State of New York

The Capitol

Albany, New York 12224

Attorneys for defendant Andrew

Cuomo, Maria T. Vullo, the New

York State Dept. of Fin. Svcs.

Emery Celli Brinckerhoof & Abady LLO

600 Fifth Avenue, 10^th Floor

New York, New York 10020

Attorneys for defendant Maria T. Vullo

New York State Department of Financial

Services

One State Street

New York, New York 10004-1511

Attorneys for defendant New York

State Dept. of Fin. Svcs.

OF COUNSEL:

SARAH ROGERS, ESQ.

WILLIAM A. BREWER, III, ESQ.

ADRIENNE J. KERWIN, ESQ.

WILLIAM A. SCOTT, ESQ.

HELENA O. PEDERSON, ESQ.

MICHAEL G. MCCARTIN, ESQ.

DEBRA L. GREENBERGER, ESQ.

ELIZABETH S. SAYLOR, ESQ.

NATHANIEL J. DORFMAN, ESQ.

CHRISTIAN F. HUMMEL U.S. MAGISTRATE JUDGE

MEMORANDUM-DECISION & ORDER

Presently pending before the Court is plaintiff's the National Rifle Association ("NRA" or "plaintiff") Motion to Compel Non-party Lloyd's entities to comply with non-party subpoenas or, alternatively, to compel defendant Department of Financial Services ("DFS") to effectuate service on the Lloyd's entities. Dkt. No. 100-1. Defendant DFS opposed. Dkt. No. 109. Plaintiff filed a reply. Dkt. No. 111. For the reasons that follow, plaintiff's Motion to Compel is denied.

I. Background

As defendants provide, "[f]our calendar days prior to the March 26, 2019 date that the NRA identifies as the service date, the NRA attempted service of the subpoenas at issue in this motion." Dkt. No. 109 at 7. On March 22, 2019, a process server attempted to serve upon a DFS clerk, who informed the process server that "the Department does not accept service of third-party subpoenas." Id. On March 26, 2019, the process server returned to DFS and met with a different clerk. Id. The Clerk "mistakenly concluded that the 19 packages were summonses (not subpoenas) with lawsuit initiating documents and issued a receipt to the process server." Id. Moments later, the clerk called the process server advising the server that the papers could not be accepted as DGS could not accept third-party subpoenas. Id. at 7-8. The process server refused to return and advised that he was instructed to leave the documentseven if service was refused. Id. at 8. The next day, DFS mailed the documents and check back to the process server. Id. When the NRA served DFS it also served courtesy copies on the Lloyd's entities. Id.

The NRA seeks to compel the service of subpoenas on 19 syndicates or managing agents of Lloyd's of London ("Lloyd's") that were subject to a consent order with the NRA. Dkt. No. 100-1 at 10. DFS was named as the agent for service of process in a contract between the NRA and several Lloyd's syndicates/managing agents that underwrote insurance policies for the NRA. Id. The Lloyd's entities refused to comply with the subpoenas, arguing that service was not validly effected on DFS, its contractually-designated agent. The NRA argues that the subpoenas are "critical" to their case as it "believes that Lloyd's-related persons were recipients of the 'backroom exhortations' identified in the Amended Complaint." Id. at 7. Similarly, it contends that the Lloyd's entities "are in possession, custody, and control of a robust body of nonpublic information relevant to this case, including documents and testimony that would reflect interactions between Lloyd's and DFS, as well as Lloyd's internal decision-making in response to DFS pressure." Id. at 9.

II. Discussion

A. Arguments

Plaintiff contends that plaintiff and the Lloyd's entities can validly name the Superintendent of DFS as the agent for service of process by contract even if DFS is not aware of this designation. Dkt. No. 100-1 at 13-15. Next, plaintiff argues that NewYork Insurance Law § 1213 "provides explicitly that excess-line insurers, such as the Lloyd's Entities, designate the DFS Superintendent as their agent for service in actions, like this one, that arise out of or relate to their contracts with insureds." Id. at 10. Plaintiff avers that "§1213 contains no language limiting the type of process that may be served on the Superintendent of the DFS. Indeed, the provision permits service of all lawful process in any proceeding, with no exceptions pertaining to subpoenas." Id. at 17. Thus, because it validly effectuated service on DFS, plaintiff argues, DFS's 'purported rejection and return of the subpoenas' has no legal effect." Id. at 19-21. Finally, plaintiff argues that this Court has jurisdiction to enforce the subpoenas as the Lloyd's entities were doing business in New York or, alternatively, because of the state's long-arm statute. Id. at 21-22.

By contrast, DFS argues that New York Insurance Law §§ 1212 and 1213 do not apply to this dispute as it involves an unauthorized foreign insurer - as Lloyd's is an excess line insurer - and third-party subpoenas, not case-initiating documents in an action against the insurer. Dkt. No. 109. DFS contends that to conclude that section 1213 authorizes service of third-party subpoenas on DFS would be "contrary to the canon of statutory construction that '[w]henever possible, statutory language should be harmonized, giving effect to each component and avoiding a construction that treats a word or phrase as superfluous.'" Id. at 15 (quoting In re DeVera v. Elia, 32 N.Y.2d 423, 436 (N.Y. 2018) (additional citation omitted)). Further, DFS argues that the agency has long interpreted §1212 as applying only to papers used to commence a lawsuit againstthe insurer. Dkt. No. 109 at 11.¹ Similarly, they argue that DFS's interpretation is supported by case law. Id.

Next, DFS argues that a private contract between the NRA and the Lloyd's entities cannot expand DFS's responsibility or "statutory powers," especially because DFS is not a party to the agreement. Dkt. No. 109 at 5, 18. Moreover, DFS contends that the contractual provision between NRA and the Lloyd's entities (1) mirrors the language of 1213(e) and is titled "Service of Suit," showing that "the intent of the provision is to be consistent with the understanding that the 'process' which may be accepted by the Superintendent under the Insurance Law"; and (2) "is limited to service of process arising out of a contract of insurance" where as "[t]he conduct at issue in this case is limited to allegations that the NRA has made against the Governor, the former Superintendent of [DFS], and [DFS]." Id. at 18-19. Lastly, DFS opines that the NRA has alternative means to effectuate the service of third-party subpoenas on Lloyd's entities - the Hague Convention. Id. at 20-21.

In reply, plaintiff reiterates its argument that section 1213 authorizes service of the third-party subpoenas, noting that "Section 1213(b), in particular, uses broader language inclusive of lawful process 'in any proceeding instituted by or on behalf of an insured or beneficiary arising out of such contract of insurance.'" Dkt. No. 111 at 4-5. Plaintiff opines that § 1212's language limiting service of process to proceedings against the insurer is "inapposite." Id. at 5. Similarly, plaintiff contends that DFSimproperly relies on other subsections of §1213 - §1213(c)(1) and §1213(d) - but "the granular specificity of §1213(c) and §1213(d) underscores, by contrast, the breadth of §1213 as a whole. If §1213 were intended only to govern lawsuits 'against' an insurer, its bond-posting requirements and attorney-fee provisions could apply uniformly without qualification." Id. Plaintiff further contends that §1213(e) does not apply as it exempts contracts obtained through an excess-line broker, whereas the Lloyd's entities are "'unauthorized insurers' (underwriters), not brokers, of relevant policies." Id. at 6. Plaintiff urges the Court to reject defendants' interpretation "that multiple, redundant designations of the Superintendent as the insurer's agent can nullify one another, depriving a New York insured of swift recourse to a New York court" and "'frustrate the clear intent of the Legislature and lead to an absurd result.'" Id.

B. Analysis

It is well-settled that "the starting point for interpreting a statute is the language of the statute itself." Consumer Prod. Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108 (1980). "[W]here the language of the statute to be interpreted is clear the court must go no further." Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. New York State Dep't of Envtl. Conservation, 810 F. Supp. 1331, 1338 (N.D.N.Y.), modified on recon., 831 F. Supp. 57 (N.D.N.Y. 1993), aff'd in part, rev'd in part, 17 F.3d 521 (2d Cir. 1994) (citing State of Conn. v. U.S. Envtl. Prot. Agency, 656 F.2d 902, 909 (2d Cir. 1981)).

As the Second Circuit has explained, statutory interpretation must "begin with the plain language, giving all undefined terms their ordinary meaning while attempt[ing] to ascertainhow a reasonable reader would understand the statutory text, considered as a whole." Deutsche Bank Nat'l Trust Co. v. Quicken Loans Inc., 810 F.3d 861, 868 (2d Cir. 2015) (internal quotation marks and citation omitted); seeProt. & Advocacy For Pers. With Disabilities, Conn. v. Mental Health & Addiction Servs., 448 F.3d 119, 124 (2d. Cir. 2006). If a statutory provision is ambiguous, the court must "then turn to canons of statutory construction for assistance in interpreting the statute." Greathouse v. JHS Sec. Inc., 784 F.3d 105, 111 (2d Cir. 2015) (citing Daniel v. Am. Bd. of Emergency Med., 428 F.3d 408, 423 (2d Cir. 2005)). "These include looking to the purpose of [a statute], and affording some degree of weight to the interpretations of the agencies charged with enforcing it." Id. at 113.

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