NRA Donors Revive Near-Dead Lawsuit by Finding New Lawyers (1)

A once-floundering lawsuit against the National Rifle Association of America that seeks the return of potentially hundreds of millions in donations is back on track after the plaintiffs found new lawyers just before a crucial deadline.

Chicago-based Loevy & Loevy and Southeast law firm Stites & Harbison are now representing the group of disillusioned donors seeking to certify a class-action against one of the most powerful interest groups in US history.

The donors, led by Nashville gun-rights activist David Dell’Aquila, argue the NRA fraudulently solicited donations to protect the Second Amendment but instead used the money to fund its executives’ lavish lifestyles. Their allegations mirror ones leveled in a separate lawsuit by New York Attorney General Letitia James.

But their case was derailed and sat dormant for months after the lead lawyer, Knoxville-based Elliott Schuchardt, was suspended from practicing in federal court in Tennessee, as chronicled in a Bloomberg Law story last week.

The litigation froze last summer when Schuchardt tried to enlist potential co-counsel at the powerful firm Boies Schiller Flexner, but the two couldn’t agree on Schuchardt’s role or his fees. Schuchardt didn’t formally withdraw his appearance until this spring.

After the NRA moved to dismiss the case for lack of prosecution, the Nashville-based judge had set a Wednesday deadline for the plantiffs to find new lawyers.

Jonathan Loevy and Michael Kanovitz, two partners at Chicago-based Loevy & Loevy, are now representing the donors alongside Stites & Harbison member John Wingo, who’s based in Nashville, and Louisville-based members T. Morgan Ward Jr. and Chadwick McTighe.

Loevy & Loevy handles complex litigation and commercial matters but is best known in Chicago for representing wrongfully convicted defendants seeking compensation from the state. The firm found out about the case when Bloomberg Law asked Kanovitz this month to review court documents and provide an independent expert opinion. He told Bloomberg Law the case was “absolutely a viable lawsuit” and days later approached Dell’Aquila and offered to represent him.

“This suit offers a unique opportunity to demand transparency from the NRA and reform the organization,” Kanovitz said in a statement. “We will conduct a fulsome investigation and follow the money. Our goal is to correct the misconduct that has been going on behind closed doors and obtain compensation for the people the NRA defrauded.”

The NRA is represented in the case by William A. Brewer III. He said in a statement that the organization is “eager to move a case forward that it believes totally lacks merit.”

“The NRA is confident in its commitment to good governance, as is evidenced by its defense of NYAG dissolution claims that are no more,” Brewer said, referring to a failed effort to dissolve the organization by New York’s James.

Lavish Spending Alleged

The case seeks to certify a class of NRA donors who could seek returns from late 2015 through early 2019. The NRA took in more than $330 million in donations from 2016 through 2018, according to tax documents.

The case had won an early ruling granting the plaintiffs standing to bring the lawsuit and allowing a fraud claim against the NRA to continue.

Dell’Aquila, the lead plaintiff who had once promised a $10 million donation to the NRA through his estate, has said the case is a vehicle to force management changes at the NRA. He said he has stopped donating to the group and has sought the ouster of NRA Chief Executive Officer Wayne LaPierre.

“I feel like we won the $1.5 billion lottery,” Dell’Aquila said of finding new lawyers. “We were literally down to the wire, with only hours left to obtain new counsel.”

The NRA’s spending on LaPierre’s personal trips and other expenses is the focus of a lawsuit brought by the New York Attorney General’ against the gun-rights group. The suit briefly forced the NRA to seek bankruptcy protection.

LaPierre told a bankruptcy judge last year that he failed to disclose yacht trips and other expenses, including a hunting trip in Botswana, in what he acknowledged were violations of the NRA’s policies. The bankruptcy was later dismissed, with a federal judge ruling it was used to defend against a regulatory challenge rather than financial difficulties.

James alleges the organization wrongfully spent at least $64 million on personal expenses for executives. Her lawsuit failed in its effort to dissolve the New York-based non-profit, but she won a key ruling in May to continue.

https://news.bloomberglaw.com/business-and-practice/nra-donors-revive-near-dead-lawsuit-after-finding-new-lawyers