Wall Street Journal Reports on NRA Legal Victory

On March 2, 2022, The Wall Street Journal reported that a state court judge dismissed the New York Attorney General’s effort to dissolve the National Rifle Association (NRA), finding that the state’s allegations did not prove the public harm required to impose a “corporate death penalty” on the NRA.

“We applaud the court’s recognition that dissolution is neither appropriate nor justified,” said William A. Brewer III, an attorney for the NRA. “We look forward to continuing the defense of the NRA—and proving that it acts in the best interests of its members and the Second Amendment freedoms in which they believe.”

The Wall Street Journal reported that the ruling by New York Supreme Court Judge Joel M. Cohen “represented a big win for the NRA.” The judge found that dissolving the NRA “could impinge, at least indirectly, on the free speech and assembly rights” of NRA members.

The NRA has been a New York nonprofit since its founding more than 150 years ago. The Journal reported that the NRA has charged that the suit brought by NYAG Letitia James is politically motivated.

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Brewer News Release - NRA Prevails Over NYAG: Court Rules Association Cannot be Dissolved

New York, New York – March 2, 2022…The National Rifle Association of America (NRA) scored a major legal victory today, as a New York court struck down attempts by the New York Attorney General to dissolve the 150-year-old organization. Following a two-hour hearing on December 10, 2021, the Hon. Joel M. Cohen of the New York State Supreme Court issued an opinion today that vindicates the NRA’s position:  the NYAG’s effort to shut down the Association ran afoul of common sense, New York law, and the First Amendment.  

“This is a resounding win for the NRA, its 5 million members, and all who believe in this organization,” says NRA President Charles Cotton. “The message is loud and clear:  the NRA is strong and secure in its mission to protect constitutional freedom.”

The NRA will defend against the surviving claims in the lawsuit – but today’s ruling declares that the NYAG cannot shut down the Association or seize its assets.  

 “We applaud the court’s recognition that dissolution is neither appropriate nor justified,” says William A. Brewer III, partner at Brewer, Attorneys & Counselors and counsel to the NRA. “We look forward to continuing the defense of the NRA – and proving that it acts in the best interests of its members and the Second Amendment freedoms in which they believe.”  

Emphasizing that the NRA is “a prominent advocacy organization that represents the interests of millions of members,” the court said the NYAG failed to meet the “rigorous” standard for state-sponsored dissolution of such a group – and her attempt raised free speech concerns. 

In an opinion, dated March 2, 2022, Justice Cohen writes, “The Attorney General’s claims to dissolve the NRA are dismissed.” It adds, “The Complaint does not allege that any financial misconduct benefited the NRA, or that the NRA exists primarily to carry out such activity, or that the NRA is incapable of continuing its legitimate activities on behalf of its millions of members.”

The NRA has argued that it has demonstrated a commitment to good governance, and long believed that the NYAG’s case was part of a political vendetta. NYAG James famously vowed to “target the NRA” and “investigate the legitimacy of the NRA as a charitable organization” while on the campaign trail in July 2018 – before spending even one day in office and without any evidence of wrongdoing. She filed a lawsuit in August 2020 seeking to shut down the Association.

The NRA has successfully proven there was no legal precedent or factual basis for the NYAG’s scorched-earth, politicized approach.

The court observes, “The Attorney General cites no case in which she or her predecessors have sought – much less obtained – dissolution under analogous circumstances.” The opinion also states, “…dissolving the NRA could impinge, at least indirectly, on the free speech and assembly rights of its millions of members. While that alone would not preclude statutory dissolution if circumstances otherwise clearly warranted it, the Court believes it is a relevant factor that counsels against State-imposed dissolution, which should be the last option, not the first.” 

In addition to the dissolution claims, the court also dismissed claims by the NYAG for unjust enrichment and violations of the Prudent Management of Institutional Funds Act. 

Against the backdrop of the NYAG’s lawsuit, the NRA is pursuing its own legal action against James. In a legal filing, dated February 23, 2021, the NRA responded to the August 2020 lawsuit filed by the NYAG. The filing alleges that her case is part of a crusade to silence a powerful political opponent – and its stated purpose to defend the Second Amendment.

According to the NRA’s filing, “James’s threatened, and actual, regulatory and civil reprisals are a blatant and malicious retaliation campaign against the NRA and its constituents based on her disagreement with the content of their speech. This wrongful conduct threatens to destroy the NRA and chill the speech of the NRA, its members, and other constituents, including like-minded groups and their members.”

Brewer adds, “Today’s developments underscore the simple truth that since taking office in 2019, the Attorney General has pushed a contrived narrative about the NRA in her attempt to support a dissolution claim that is improper. This is a victory for not only the NRA, but all who believe in the right to free speech and association.”

Attorneys for the NRA in this matter are William A. Brewer III, Sarah Rogers and Svetlana Eisenberg.

San Francisco Business Times Reports on Virgin Hotels Case Proceeding to Trial

On January 26, 2022, the San Francisco Business Times reported that a San Francisco Superior Court judge denied Virgin Hotels’ request to rule on some of its allegations against the owner of the former Virgin Hotels San Francisco, clearing the way for the case to go to trial.

The reporting also observes that the Virgin Hotels brand, launched with great expectations, is only affiliated with five properties.

The article reported that Virgin was suing and being sued by the property owner, which had terminated the hotel management agreement with Virgin in April 2020.

“In our clients’ view, this prized hotel asset fell victim to false promises, fraud and mismanagement,” said William Brewer III, a partner at Brewer, Attorneys & Counselors who represents the hotel owner in the case, clients 250 Fourth Development L.P., Paradigm Hotels Group, LLC, et al., in an emailed statement. “They believe that not only has Virgin Hotels failed to deliver on the ‘brand’ it promised, it mismanaged the San Francisco property in an effort to boost its own bottom line. Our clients look forward to this trial.”

The Business Times reports that in an amended cross complaint filed in August 2020, the owner accused Virgin of breach of contract and fraud, and alleged that Virgin overstated gross hotel revenue to inflate its management fee and misrepresented bonus amounts due to employees. The owner claimed it lost tens of millions of dollars in unrealized hotel profits and lost value of the property.

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Brewer Client Prevails in Key Round of Legal Dispute with Virgin Hotels, Lawsuit Proceeds to Trial Next Month

January 24, 2022 – Brewer, Attorneys & Counselors announced that its clients, 250 Fourth Development L.P., Paradigm Hotels Group, LLC, et al. (“Hotel Owner”), prevailed in a key round of its closely-watched dispute with Virgin Hotels San Francisco (“Virgin Hotels”) – paving the way for trial.

In a decision, dated January 21, 2022, the Superior Court of the State of California, County of San Francisco, denied Virgin Hotels’ plea to escape trial on the Hotel Owner’s claims of breach of fiduciary duties by Virgin Hotels. The brand had argued, as to its own complaint, that there existed no triable issue of material fact pertaining to Hotel Owner’s duties under the Hotel Management Agreement (“HMA”) related to the termination provisions. Specifically, the brand argued that Hotel Owner’s only method for termination was to be found with the HMA and that Hotel Owner did not comply.

The Court agreed with the Hotel Owner that contrary to the brand’s arguments, there was evidence sufficient for a jury to conclude that various provisions of the HMA were waived by the parties during the business relationship. Specifically, the Court held that there is a triable issue of material fact concerning Hotel Owner’s allegations that the brand waived all termination related provisions, including a provision Virgin Hotels argued required written notice of termination, rather than notices sent in electronic format. The Court denied Virgin Hotels’ motion and held that the brand did not submit sufficient evidence to disprove the claims and that it failed to meet its evidentiary burden. This ruling sets the stage for trial proceedings to begin on February 7, 2022. 

It has been well chronicled that the Virgin brand is struggling to establish its promised national hotel brand, with properties open in only five locations. In 2010, the brand announced plans to operate up to 25 hotels within seven years. The Hotel Owner’s San Francisco property opened with great fanfare in 2019 under the Virgin name, but currently remains closed.

“In our clients’ view, this prized hotel asset fell victim to false promises, fraud and mismanagement,” says William A. Brewer III, partner at Brewer and counsel to 250 Fourth Development, L.P. “They believe that not only has Virgin Hotels failed to deliver on the ‘brand’ it promised, it mismanaged the San Francisco property in an effort to boost its own bottom line. Our clients look forward to this trial.”

The underlying legal dispute began on May 6, 2020, when Virgin Hotels filed a lawsuit alleging the Hotel Owner’s termination of the HMA on April 8, 2020, violated that agreement. On July 16, 2020, the Hotel Owner filed its Original Cross-Complaint in the Superior Court of the State of California, County of San Francisco. A month later, on August 19, 2020, the Hotel Owner filed its First Amended Cross-Complaint, alleging that Virgin Hotels made misrepresentations to Hotel Owner by, among other things, knowingly overstating Hotel gross revenues to inflate its management fee and misrepresenting bonus amounts due to Hotel employees. As a result, the Hotel Owner claims the loss of tens of millions of dollars in unrealized hotel profits and the lost value of the property.

In total, the Hotel Owner asserts five causes of action against Virgin Hotels, including breach of contract and fraud. Virgin Hotels demurred, or moved to dismiss, the claims. On October 30, 2020, the court entered an order overruling the demurer in its entirety, vindicating each and every one of the Hotel Owner’s claims. In so doing, the court noted that the First Amended Cross-Complaint “adequately pleads constructive fraud.”

In November 2021, the court overruled Virgin Hotels’ attempts to avoid having to face Hotel Owner’s claims against Virgin Hotels for damages done to the project before the Hotel Owner terminated the management agreement. The court also denied Virgin Hotels’ efforts to freeze more than $2 million of Hotel Owner’s property. After failing to obtain dismissal of Hotel Owner’s claims, Virgin Hotels filed an application for a writ of attachment on Hotel Owner’s property – to secure what Virgin Hotels claimed was over $2 million in expenses that Virgin Hotels had either paid or was owed to third parties. The court denied this request in its entirety.

New York Law Journal: NRA Files Motion to Dismiss New York AG's Lawsuit for Dissolution

On September 16, 2021, The New York Law Journal and other media outlets reported that firm client the National Rifle Association of America (NRA) has filed a Motion to Dismiss the New York Attorney General's (NYAG) Amended Complaint, filed on August 16, 2021. The Motion to Dismiss claims that the NYAG seeks to dissolve the NRA in an effort to "silence the constitutionally guaranteed political speech of its 5 million members."

“Since taking office in 2019, the Attorney General has ignored evidence that dissolution is improper and that the NRA Board of Directors acted appropriately at all times,” William Brewer, counsel to the NRA, told the Journal. “The NRA will continue to confront this partisan attack—in the interest of its members and the Second Amendment freedom for which they stand.”

The NYAG's office initially filed its dissolution lawsuit in August 2020, claiming that the NRA misused funds for the personal gain of its top executives. In its Motion to Dismiss, the NRA argues that "[e]ven if the allegations against current and former executives are taken as true (as they must be, for purposes of this Motion), the NRA and its Board would be the victims of the alleged wrongdoing—not perpetrators."

The Motion to Dismiss also notes that a "federal bankruptcy court found after a review of voluminous evidence, that the NRA has undertaken a sustained effort to improve its internal compliance procedures and is in position to continue fulfilling its mission."

“The Texas federal court expressly concluded that the NRA is well-placed to continue improving governance and internal controls and to fulfill its mission, as it has since its whistleblowers came forward,” Brewer wrote. “These findings comprehensively undermine the NYAG’s contrived narrative of an organization rife with corruption that is unable to reform itself and that must, therefore, be dissolved.”

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Uber Faces Trial in Lawsuit Over Sexual Assault by Driver

August 11, 2021 – The Brewer law firm announced that its high-profile lawsuit against Uber is moving forward.

U.S. District Court for the Southern District of New York Judge Lewis J. Liman overruled Uber’s motion to dismiss a 2020 lawsuit that alleges that Uber’s claims relating to rider-safety are materially deceptive. The case now moves forward.

Originally filed on September 28, 2020, the lawsuit was filed by a female passenger who alleges she was sexually assaulted during a 2018 late-night ride home from New York City. Plaintiff, identified as “Jane Doe,” alleges that Uber failed to take reasonable steps to vet the driver, who assaulted her when she drifted off to sleep. In a case that captured national headlines, plaintiff reported that she suffered physical and emotional trauma.

“Our client views this decision as an opportunity to shine a bright light on the company’s failure to protect its female passengers,” says William A. Brewer III, counsel for plaintiff. “There is no doubt that millions of female passengers rely upon Uber’s representations to provide a ‘safe ride.’ Our client experienced something hauntingly different:  assault at the hands of a sexual predator.”

Plaintiff asserts that Uber makes material misrepresentations to customers regarding the safety of its services, especially for female riders.  In a 42-page opinion, dated July 28, 2021, the judge writes that Uber advertises that it provides the “safest rides on the road.” The judge observes that it is reasonable for a consumer to expect that “safety” includes non-traffic-related driver behavior such as sexual assault.

“If Uber had wanted to limit its claim to the make and model, features, or maintenance of the cars, they could have said ‘connecting you to the safest cars on the road,’” writes Judge Liman. He further writes, “Plaintiff sufficiently alleges that Uber’s statements about the safety of its rides were misrepresentations that concealed safety risks. Asserting that a product in its entirety (or majority) has a quality, when in fact only a portion of that product has that quality, is materially deceptive.”

The court observes that Uber had data on the “safe/unsafe composition of its driver pool” at the time of plaintiff’s assault due to the company’s sexual assault data, yet “There is no indication from the pleadings that Uber has shared that data with customers or created a feature to flag drivers that have been reported.” As alleged in plaintiff’s lawsuit, in December 2019, Uber reported nearly 6,000 reports of sexual assaults during its rides in the United States in 2017 and 2018. Approximately 89 percent of the victims were women or female-identifying individuals.

The judge writes, “…Plaintiff has sufficiently alleged that Uber’s misrepresentations concealed a foreseeable risk covering sexual assault of a rider by a driver, which then materialized. Plaintiff has also sufficiently alleged that her reliance on Uber’s misrepresentations caused the loss she suffered – her assault.” Therefore, he concludes that Plaintiff stated a viable claim for negligent misrepresentation.

The decision concludes, “The Court will permit Plaintiff an opportunity to amend the complaint to add allegations that support Uber owed a duty to Plaintiff and its passengers as a common carrier. Plaintiff will also be permitted to amend the complaint with additional facts regarding Uber’s knowledge of Hussain’s [the driver] propensity for sexual assault.”

Plaintiff’s deadline to file an amended complaint is August 27, 2021.

El Paso Times Reports on Lawsuit Against Chrysler Brought by Texas Dealership Owner

On August 9, 2021, the El Paso Times published a front-page article reporting that Brewer client Richard C. Poe II has sued Chrysler, as he fights for control of his Texas dealerships.

The article reported that in a lawsuit filed in federal court in Michigan, Poe claims that Chrysler conspired with three of his father’s business associates and their appointed dealership manager to prevent Poe from taking control of the dealerships.

William Brewer, counsel to Poe, told the Times, “Chrysler knew Richard was the heir apparent. When Dick Poe passed away, the one with legitimate control was Richard, but Chrysler began refusing to talk to Richard and awarded the dealership (control) to the interlopers."

The Times reported that the lawsuit lists the dealerships “derivatively” as plaintiffs along with Poe.

“Because he has an ownership interest in the dealerships," Poe has the legal right to file the lawsuit on behalf of the dealerships so they can receive restitution from Chrysler, Brewer said in a statement. “Naturally, those in control are critical of his efforts to bring this action" because the lawsuit includes allegations against them, he added.

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Brewer News Release - Chrysler Faces Conspiracy and Breach of Contract Claims by Texas Dealership Owner

Dallas, Texas…July 19, 2021 – Brewer, Attorneys & Counselors announced that its client Richard C. Poe II, a fourth generation retail automobile dealer from Texas, filed a federal lawsuit in Michigan against FCA US LLC, formerly known as Chrysler Group LLC (“Chrysler”), accusing the automotive company of joining a conspiracy to damage Poe and unlawfully profiting from doing so.

Poe is from El Paso, Texas, and owns an interest in the oldest Chrysler dealership in Texas through Poe Management, Inc. (“PMI”). Filed on July 19, 2021, in the U.S. District Court for the Eastern District of Michigan, the lawsuit alleges “a betrayal of that historic business relationship between the Poe family and Chrysler” in which Chrysler joined a conspiracy seeking to prevent Poe from controlling the two Chrysler automotive dealerships. Poe’s great grandfather A.B. Poe opened what is now the oldest Chrysler dealership in Texas in 1928.

PMI is the general partner of the two Limited Partnership plaintiffs that own the Poe family dealerships in El Paso: Dick Poe Motors, L.P., a Texas limited partnership that owns the Dick Poe Chrysler/Jeep dealership, and Dick Poe Dodge, L.P., a Texas limited partnership that owns the Dick Poe Dodge/Ram dealership.

The lawsuit alleges that Chrysler joined the conspiracy against Poe by disregarding his legal rights, acting to limit his access to information, allowing a change in management without following proper procedures, and benefitting from the underlying conspiracy. The suit seeks millions in damages.

“As the rightful owner of these longtime Chrysler automotive dealerships, Richard Poe II believes Chrysler’s betrayal cost him millions in damages,” says William A. Brewer III, partner at Brewer, Attorneys & Counselors and counsel to Poe. “Our client believes Chrysler helped effect an improper change of control of the dealerships, so it could benefit from the sale of lucrative ‘reinsurance’ products that were previously underwritten by companies owned by Poe.”

The lawsuit alleges that Anthony E. Bock, a certified public accountant who worked for Poe’s father Dick Poe, abused his fiduciary relationship and joined a conspiracy with the intent to remove Poe from control over the dealerships in order to enrich the corporation. The lawsuit alleges that the others involved in the conspiracy were Karen G. Castro, the former office manager for Dick Poe, Paul O. Sergent, a lawyer who represented the Poes for several years; and Gery A. Reckelbus, a dealership manager.

According to the complaint, 10 days before his death in May 2015, Dick Poe caused an illegal share issuance from PMI that resulted in Richard Poe II becoming a minority shareholder. The lawsuit alleges that within days of Dick Poe’s death, Bock and Castro were named co-independent executors of Dick Poe’s estate in a will that was prepared by Sergent. Bock and Castro subsequently appointed themselves directors of PMI. They then moved to remove Richard Poe II from control over PMI and “unlawfully obtained” Chrysler’s approval of Reckelbus as the “dealer principal” for the dealerships in question.

The lawsuit asserts that Chrysler worked with the conspirators and aided them with their tortious acts by refusing to respond to correspondence from Richard Poe II or his attorneys, refusing to meet with Richard Poe II, and refusing to send notices to Richard Poe II as required by law and by contractual agreements, among other actions.

“Chrysler repeatedly failed and refused to communicate with Richard; failed, on multiple occasions, to respond to voice mails and written communications from Richard and his attorneys; and repeatedly obfuscated its internal decision process and reasons (if any) for denying Richard his rightful place as the successor of the historic, nearly 100-year-old family business,” the complaint alleges.

The lawsuit alleges seven causes of action: a breach of implied covenant of good faith and fair dealing, breach of contract, tortious interference with dealership sales and service agreements, tortious interference with prospective business relationships, fraudulent concealment and fraud by non-disclosure, conversion, and civil conspiracy. 

The lawsuit states, “Chrysler chose not to communicate with Richard and answer his questions. Instead, Chrysler cut Richard out of the loop and began engaging in other tortious conduct with the Relevant Non-Party conspirators.” The lawsuit alleges that with the change of control effected by Chrysler, the conspirators stopped purchasing vehicle protection products that were underwritten by Richard Poe II. Instead, defendants funneled those sales to Chrysler.

“Our client aims to hold Chrysler accountable for its alleged role in this scheme, and to also shine a bright light on the company’s business dealings with dealership owners across the country,” Brewer says.