Several recent decisions, in state courts in Massachusetts and New York and in federal courts in New York, have clarified that statements made by the attorney general in connection with investigations and enforcement actions do not necessarily indicate improper bias on the part of the attorney general and do not warrant dismissal of the lawsuits.
In a legal battle that has lasted several years, the Massachusetts attorney general claimed that Exxon-Mobil violated Mass. Gen. Laws ch. 93A by making factual misstatements and failing to disclose information related to Exxon’s products and their impact on the climate. The attorney general also alleged that some of Exxon’s marketing materials misled Massachusetts consumers as to the climate impact of Exxon’s products. In the latest of a series of decisions in this litigation, a Massachusetts trial court upheld the attorney general’s discretion to pursue these claims. Commonwealth v. Exxon-Mobil, No. 19-3333 (Mass. Super. Ct. Sept. 24. 2021).
As described more fully in a 2018 Attorney General Journal article. The Massachusetts attorney general issued a civil investigative demand (CID) to Exxon, which Exxon challenged in both state and federal court. The federal court, addressing Exxon’s challenges to investigatory demands from both the Massachusetts and New York attorneys general, held that “Exxon’s allegations fall well short of plausibly alleging that the NYAG and MAG are motivated by an improper purpose. The Complaint and Second Amended Complaint do not allege any direct evidence of an improper motive, and the circumstantial evidence put forth by Exxon fails to tie the AGs to any improper motive, if it exists, harbored by activists . . . . This issue is fatal to Exxon’s claims for violations of the First… and Fourteenth Amendments, … and its claim for conspiracy pursuant to Section 1985.”
The Massachusetts attorney general subsequently sued Exxon in 2019, alleging violations of state consumer protection law. After its motion to dismiss was denied, Exxon filed an answer asserting 38 defenses. After addressing several other defenses, the court turned to Exxon’s defenses brought under a theory of selective enforcement that assert violations of Exxon’s Due Process, Equal Protection and First Amendment rights.” The court held that these defenses are barred under the doctrine of issue preclusion because they were resolved against Exxon in the earlier federal action, as described above. Even if they were not barred, the court held “Exxon has failed to suggest plausibly that the Mass. AG’s actions constitute selective enforcement.”
The court began its analysis of the plausibility of Exxon’s claims by noting that prosecutors’ decisions are shielded by a “presumption of regularity” and a presumption that they have “properly discharged their official duties.” Defendants must show either that the action had a discriminatory effect or was motivated by a discriminatory purpose. In this case, the court found that Exxon’s factual allegations did not “plausibly suggest that Exxon was singled out for disparate treatment. Nor do they plausibly suggest that the Mass. AG is solely engaged in political retaliation and lacks a good faith belief that Exxon engaged in fraud.” The court also noted that the violations alleged are based on purportedly false statements and are not protected by the First Amendment.
A New York state trial court also addressed the attorney general’s prosecutorial discretion in the context of critical statements made by the attorney general of New York about Donald Trump and the Trump Organization in People v. Trump Organization, No. 451685/2020 (N.Y.Sup.Ct. Feb. 17, 2022). In that case, the attorney general initiated a civil investigation into whether respondents had committed persistent fraud in their financial practices and disclosures. The attorney general issued subpoenas seeking evidence (both documents and testimony) from former President Trump and members of his family in connection with the civil investigation. The respondents moved to quash or pause enforcement of the subpoenas until the conclusion of a criminal investigation into the same matters. See the related Attorney General Journal article for additional information about this decision.
Among other things, the respondents’ argued that public statements made by the attorney general show the “impropriety” of her investigation. The court noted that the attorney general, like the former President, “was not deprived of her First Amendment rights to free speech when she was a politician running for a public office with investigatory powers. “As has often been said, that a prosecutor dislikes someone does not prevent a prosecution.” The court continued, “[Respondents] have failed to submit any evidence that the law was not applied to others similarly situated, nor have they submitted any evidence of discrimination based on race, religion, or any other impermissible or arbitrary classification.” The court concluded, “the impetus for the investigation was not personal animus, not racial or ethnic or other discrimination, not campaign promises, but was sworn congressional testimony by a former associate of respondents.”
The state appellate court affirmed the trial court’s decision in People of New York v. Trump Organization, No. 2022-00814 (N.Y. App. Div. May 26, 2022). The appellate court agreed with the trial court that the public statements of the attorney general did not constitute selective prosecution. According to the court, it is possible for a selective prosecution claim to defeat a civil subpoena, but there is no improper selective prosecution here. Selective prosecution requires a showing that the law is being applied “with an evil eye and an unequal hand.” In this case, the investigation began after sworn testimony of a corporate insider and the respondents have not shown that similarly situated corporations have been treated differently.
The Trump Organization and former President Trump also sued the New York attorney general in federal court, Trump v. James, 2022 U.S. Dist. LEXIS 95250 (N.D.N.Y. May 27, 2022), alleging that the attorney general (1) violated their Fourteenth Amendment due process rights by commencing “investigations against Plaintiffs in bad faith and without a legally sufficient basis,” (2) violated their First Amendment rights by seeking to stifle Plaintiffs’ free speech and retaliate against Plaintiffs based upon Mr. Trump’s political views, (3) violated their Fourth Amendment rights by issuing subpoenas without any “justifiable legal or factual basis,” and (4) abused process to advance her own political career and injure Mr. Trump personally and politically.” The attorney general moved to dismiss the complaint based on a number of arguments, including Younger abstention, the Rooker-Feldman doctrine, res judicata, and failure to state a claim.
Under Younger v. Harris, 401 U.S. 37 (1971), “federal courts should generally refrain from enjoining or otherwise interfering in ongoing state proceedings,” The court determined that Younger abstention should apply, but defendants argued that the “bad faith” exception to the general rule should apply here. The “bad faith” exception requires that the plaintiff must show that “the party bringing the state action must have no reasonable expectation of obtaining a favorable outcome”—i.e., brought the proceeding in bad faith—or that the proceeding “has been brought to retaliate for or to deter constitutionally protected conduct” or otherwise “for the purpose to harass.”
The court found that the attorney general was not acting in bad faith. First, there is no showing that the attorney general did not have a “reasonable expectation of obtaining a favorable outcome” in the subpoena enforcement proceeding. The attorney general filed a 45-page petition seeking enforcement, and the state court has ruled in the attorney general’s favor on numerous occasions. Second, the court found there was insufficient evidence of retaliation. “The subpoena enforcement proceeding has a legitimate factual predicate”—the Congressional testimony of Michael Cohen, a Trump Organization official. “While [the attorney general’s] public statements make clear that she disagrees vehemently with Mr. Trump’s political views, Plaintiffs do not identify what protected speech or conduct [the attorney general] allegedly retaliated against them for or demonstrate any causal connection between any such protected activity and the decision to commence the subpoena enforcement proceeding.”
The court held:
After carefully considering the record, including the fact that the subpoena enforcement proceeding has a legitimate factual predicate, concerns an investigation that Justice Engoron has found to be lawful, and has resulted in several orders in [the Attorney General’s] favor, and the fact that there is no evidence before this Court that it was conducted in a manner that is harassing or in bad faith, the Court finds that Plaintiffs have failed to demonstrate that the narrow bad faith exception applies.
The most recent decision about attorney general statements also involves the attorney general of New York. After an investigation, the attorney general filed suit against the National Rifle Association (NRA), seeking, among other things, its dissolution. The NRA filed counterclaims against the attorney general, alleging that her investigation was unconstitutionally retaliatory and selective. People of New York v. National Rifle Association, No. 451625/2020 (N.Y. Sup. Ct. June 10, 2022).
The court began by noting that the counterclaims at issue were limited. For example, the court in March had dismissed several of the attorney general’s claims seeking dissolution of the NRA, because the attorney general’s “allegations concerned primarily private harm to the organization and its members and donors, and the complaint did not allege the type of public harm that was required to impose dissolution of the organization.” The court accordingly eliminated all counterclaims connected to those claims. In addition, the attorney general cannot be sued for counterclaims in her official capacity under New York law, and she is “immune from civil liability for the “judicial phase” of the litigation.” Thus, the counterclaims were limited to the period of the attorney general’s pre-complaint investigation.
The first set of counterclaims alleged that “the Attorney General’s actions amount to unconstitutional retaliation against the NRA and its members for engaging in political speech.” To establish retaliation, a plaintiff must allege ‘(1) that the speech or conduct at issue was protected, (2) that the defendant took adverse action against the plaintiff, and (3) that there was a causal connection between the protected speech and the adverse action.” The third element requires that “the adverse action against the plaintiff would not have been taken absent the retaliatory motive.” The court concluded that this causation element was not present in this case.
The court noted “[t]here is no doubt that the Attorney-General has a right to conduct investigations” under her broad statutory authority to oversee not-for-profit entities, like the NRA, which are organized under New York law. [citations omitted] There are no factual allegations suggesting that the stated concerns driving the investigation – reports of fraud, waste, and looting within the NRA – were imaginary or not believed by the Attorney General.” In fact, the court held, “nonretaliatory grounds” were more than sufficient to justify the Attorney General’s investigation. It yielded a lengthy complaint alleging, in detail, a pattern of misconduct at the highest levels of the NRA. [citations omitted] Many of those claims survived multiple motions to dismiss; none were frivolous.” The court also cited the firing of an NRA executive for conduct similar to that described in the attorney general’s complaint, as well as the decision of a Texas bankruptcy court that “underscored concerns about the NRA’s corporate governance.”
The court next dismissed the NRA counterclaims alleging selective enforcement by the New York attorney general. Showing selective enforcement requires a party to show that it was “selectively treated, compared with others similarly situated, and that such treatment was based on impermissible considerations” [citations omitted] The ‘similarly situated’ element of the test asks ‘whether a prudent person, looking objectively at the incidents, would think them roughly equivalent.” Prosecutorial decisions are presumed to be legitimate, because “the State can select whom to prosecute.” The court noted that the NRA had undertaken an internal investigation in response to the attorney general’s investigation, and that it admittedly had “uncovered evidence of impropriety.” Finally, the court disagreed with the NRA’s conclusion that dismissal of the attorney general’s dissolution claims justified a counterclaim. The court held that the attorney general was authorized to seek dissolution under the relevant New York statutes, and the remedy for insufficiently supported claims was dismissal, not counterclaim liability.