WEBVTT - Democrats Put Focus on Project 2025 0:00:03.200 --> 0:00:08.000 This is Bloomberg Law with June Brusso from Bloomberg Radio. 0:00:10.119 --> 0:00:15.080 In her first campaign rally as the presumptive Democratic presidential nominee, 0:00:15.360 --> 0:00:19.599 Vice President Kamala Harris targeted Donald Trump and what she 0:00:19.800 --> 0:00:22.720 called his Extreme Project twenty twenty five. 0:00:23.160 --> 0:00:25.840 Donald Trump wants to take our country backward. 0:00:27.000 --> 0:00:30.840 He and his Extreme Project twenty twenty five. 0:00:30.680 --> 0:00:35.800 Agenda will weaken the middle class. 0:00:36.320 --> 0:00:38.279 Like we know, we got to take this serious thing. 0:00:38.280 --> 0:00:39.640 Can you believe they put that thing in writing? 0:00:44.600 --> 0:00:46.760 Read it as nine hundred pages. 0:00:48.120 --> 0:00:48.960 But here's the thing. 0:00:49.840 --> 0:00:52.199 When you read it, you will see Donald Trump intends 0:00:52.200 --> 0:00:54.240 to cut Social Security and Medicare. 0:00:54.840 --> 0:00:59.400 Project twenty twenty five, the nine hundred page conservative manifesto 0:01:00.200 --> 0:01:04.880 by the right leaning Heritage Foundation, proposes a massive overhaul 0:01:04.920 --> 0:01:09.840 of the federal government, including scrapping climate change rules, stopping 0:01:09.920 --> 0:01:14.839 sales of the abortion pill, lessening worker protections, replacing civil 0:01:14.959 --> 0:01:19.800 servants with Trump loyalists, and dismantling the Education, Commerce, and 0:01:19.880 --> 0:01:24.080 Homeland Security departments. Harris is putting it in the spotlight, 0:01:24.440 --> 0:01:28.720 although Democrats, including President Joe Biden, have been using it 0:01:28.760 --> 0:01:32.240 to showcase the threats to the country if Trump wins 0:01:32.240 --> 0:01:33.200 the White House again. 0:01:33.840 --> 0:01:36.679 It's a blue crid for the second Trump term that 0:01:36.800 --> 0:01:40.600 every American should read and understand. Now. Of course Trump 0:01:40.680 --> 0:01:43.240 is lying about him now, he said, tries to this 0:01:43.400 --> 0:01:45.920 is himself, just like he's tried to this himself for 0:01:46.000 --> 0:01:49.560 Overturny Grovy Wade. 0:01:48.400 --> 0:01:51.800 And recent polling shows there's been a dramatic uptick in 0:01:51.880 --> 0:01:55.960 awareness and negative views of Project twenty twenty five since 0:01:56.040 --> 0:02:00.160 late June, when Democrats began emphasizing the plan as it's 0:02:00.160 --> 0:02:03.480 a central plank of their campaign against Trump. Trump has 0:02:03.520 --> 0:02:07.560 tried to distance himself from Project twenty twenty five. The 0:02:07.680 --> 0:02:10.440 critics point out that it was led by former officials 0:02:10.440 --> 0:02:14.040 in his administration. Joining me is Bloomberg Lobbying and legal 0:02:14.040 --> 0:02:18.200 affairs reporter Emily Burnbaum. Emily tell us the point of 0:02:18.360 --> 0:02:21.720 Project twenty twenty five what it's aimed at. 0:02:21.919 --> 0:02:26.000 So, this is an effort spearheaded by the Heritage Foundation, 0:02:26.200 --> 0:02:29.119 which is a right leaning think tank in Washington. They 0:02:29.240 --> 0:02:31.920 brought together over one hundred conservative groups to create a 0:02:31.960 --> 0:02:36.120 playbook for a second Trump administration. It lays out a 0:02:36.240 --> 0:02:39.440 very expansive vision for how to push a far right 0:02:39.480 --> 0:02:44.560 agenda through every federal agency. Essentially, you know some of 0:02:44.600 --> 0:02:48.640 The proposals that have gotten the most attention include using 0:02:48.680 --> 0:02:52.519 power of the federal government to ban abortion, dismantling the 0:02:52.560 --> 0:02:57.839 Department of Education, banning pornography. So there's a ton in there, 0:02:58.120 --> 0:03:02.880 and the thrust of it is in visioning a truly conservative government. 0:03:03.560 --> 0:03:07.600 Trump has said his campaign isn't affiliated with Project twenty 0:03:07.639 --> 0:03:11.360 twenty five, but there are connections there, definitely. 0:03:11.600 --> 0:03:16.079 So there have been tallies showing that over one hundred 0:03:16.120 --> 0:03:20.120 and forty people associated with Project twenty twenty five served 0:03:20.120 --> 0:03:24.639 in the Trump administration. It's led by former Trump administration officials. 0:03:24.960 --> 0:03:28.160 A lot of the proposals in the plan itself echo 0:03:28.880 --> 0:03:35.280 Trump campaign promises. So the connections are undeniable and they're 0:03:35.440 --> 0:03:39.280 increasingly difficult to shake as Democrats keep hammering on this. 0:03:39.760 --> 0:03:42.920 You know, Trump tied to Project twenty twenty five. Trump 0:03:43.040 --> 0:03:45.119 tied to the Project twenty twenty five ideas. 0:03:45.320 --> 0:03:47.120 So this has been out for a while. 0:03:47.600 --> 0:03:51.120 Why suddenly is it coming, you know, into focus for 0:03:51.200 --> 0:03:51.760 the public. 0:03:52.800 --> 0:03:58.320 Democrats have really leaned into this messaging around Project twenty 0:03:58.320 --> 0:04:01.960 twenty five. You know, they're using it as a way 0:04:02.200 --> 0:04:05.800 to say, here's what the world will look like if 0:04:05.800 --> 0:04:09.240 Trump is re elected. You know, sort of to scare people. 0:04:10.240 --> 0:04:13.400 And also it was brought into the news just a 0:04:13.400 --> 0:04:16.839 couple of weeks ago because the head of the Heritage Foundation, 0:04:17.000 --> 0:04:21.520 Kevin Roberts, said that we are in the process of 0:04:21.560 --> 0:04:25.640 carrying out a second American Revolution to take back power 0:04:25.680 --> 0:04:28.640 from the elite, and he said it'll be bloodless as 0:04:28.680 --> 0:04:30.800 long as the left allowed it to be. So that 0:04:30.880 --> 0:04:33.559 was really scary rhetoric, and I think that created another 0:04:33.600 --> 0:04:37.320 opportunity for Democrats to point to this as a boogeyman. 0:04:37.920 --> 0:04:41.080 And here's a clip of that Robert's statement, in. 0:04:41.000 --> 0:04:43.560 Spite of all this nonsense from the left, we are 0:04:43.640 --> 0:04:46.240 going to win. We're in the process of taking this 0:04:46.360 --> 0:04:48.320 country back, and we are in the process of the 0:04:48.360 --> 0:04:52.800 Second American Revolution, which will remain bloodless if the left allows. 0:04:52.480 --> 0:04:52.760 It to be. 0:04:53.560 --> 0:04:57.520 Do you think that Roberts and conservatives like him want 0:04:57.560 --> 0:04:59.760 to get attention for this, even if it's negative A. 0:05:01.160 --> 0:05:03.880 I think so. I think that they've been a little 0:05:03.880 --> 0:05:08.240 frustrated by how much they've been tied to Trump. You know, 0:05:08.279 --> 0:05:11.680 the Trump campaign has continually pushed back. They say, we 0:05:11.720 --> 0:05:15.040 don't know these people. That doesn't make them look great. 0:05:15.200 --> 0:05:19.200 But I do think that they are standing by everything 0:05:19.360 --> 0:05:21.840 in the plan. You know, they're proud that they brought 0:05:21.880 --> 0:05:24.560 together so many conservatives to come up with an agenda. 0:05:24.920 --> 0:05:27.240 You know, when Trump came into power last time, one 0:05:27.240 --> 0:05:30.279 of the issues was that they didn't really know how 0:05:30.279 --> 0:05:34.960 to wield power effectively. They had some policy ideas you 0:05:35.000 --> 0:05:38.240 know about immigration, et cetera, but they didn't know how 0:05:38.279 --> 0:05:40.560 to use the government to make that happen. So this 0:05:40.680 --> 0:05:42.960 is an effort to fill in that vacuum. So I 0:05:43.000 --> 0:05:46.200 think the more attention is on the plan, you know, 0:05:46.240 --> 0:05:47.839 the more they're getting out their message. 0:05:48.000 --> 0:05:49.800 If they didn't want to be tied to Trump, then 0:05:50.040 --> 0:05:52.640 why did they have so many people who were in 0:05:52.720 --> 0:05:55.080 the Trump administration writing these things. 0:05:55.839 --> 0:05:56.440 It's a good. 0:05:56.320 --> 0:05:58.960 Question, and they say, you know, this playbook could be 0:05:59.040 --> 0:06:04.680 used by any few Republican administration. I think they want 0:06:04.680 --> 0:06:07.640 to create some daylight because they want to differentiate between 0:06:08.120 --> 0:06:12.040 the conservative movement and the Trump campaign. You know, conservative 0:06:12.080 --> 0:06:17.960 movement has a broader vision, has more long term momentum 0:06:18.000 --> 0:06:19.920 than just the next four years. 0:06:20.320 --> 0:06:24.040 Project twenty twenty five proposes that the entire federal bureaucracy, 0:06:24.240 --> 0:06:28.400 including independent agencies like the Department of Justice, be placed 0:06:28.480 --> 0:06:32.400 under direct presidential control and In the nine hundred pages, 0:06:32.480 --> 0:06:35.960 they take each of the departments and give suggestions about 0:06:36.040 --> 0:06:38.560 what should be done. So let's start with the Department 0:06:38.560 --> 0:06:41.400 of Labor. The section was written by Jonathan Berry, who 0:06:41.440 --> 0:06:45.599 headed the regulatory office at Trump's Labor department. What's the 0:06:45.640 --> 0:06:49.880 sort of message here, anti working class, anti unions. 0:06:50.560 --> 0:06:55.800 Yes, it's definitely very anti union, pro employer. And that's 0:06:55.839 --> 0:06:59.760 according to labor experts who I talk to. A lot 0:06:59.800 --> 0:07:05.000 of the proposals would just make life easier for companies, so, 0:07:05.320 --> 0:07:07.960 you know, it would make it harder to create unions. 0:07:08.320 --> 0:07:11.640 It would allow them to avoid paying over time. It 0:07:11.680 --> 0:07:16.880 would even allow miners to take on some potentially dangerous 0:07:16.960 --> 0:07:20.040 work as long as their parents that it was okay. 0:07:20.440 --> 0:07:24.600 So it lays out a pretty pro employer visions under 0:07:25.440 --> 0:07:26.520 Republican administration. 0:07:26.800 --> 0:07:30.160 I thought that was so odd to let miners take 0:07:30.200 --> 0:07:31.200 on dangerous work. 0:07:31.280 --> 0:07:32.240 What is that about. 0:07:32.720 --> 0:07:36.520 That's an increasingly popular position among Republicans. You know, a 0:07:36.560 --> 0:07:40.040 lot of this comes down to the administrative state. You know, 0:07:40.120 --> 0:07:46.720 there's this frustration among conservatives that Democrats have effectively taken 0:07:46.800 --> 0:07:50.960 over the government bureaucracy. They're imposing all these rules to 0:07:51.000 --> 0:07:53.760 push their vision of society. You know, and so this 0:07:53.880 --> 0:07:56.960 is their respond to that, and I think that, you know, 0:07:57.120 --> 0:07:59.240 this is just a small piece. 0:07:59.120 --> 0:08:04.640 Of that, and apparently wanting to undo labor laws that 0:08:04.680 --> 0:08:08.200 protect children. I thought it was strange that he denied 0:08:08.240 --> 0:08:11.600 in an email that Corporate America backs all of his proposals, 0:08:11.960 --> 0:08:15.960 pointing out he favors phasing out temporary guest work of visas, 0:08:16.240 --> 0:08:20.080 eliminating use of forced labor abroad, and giving workers time 0:08:20.120 --> 0:08:24.320 off for Sabbath observance. Those particular things seem so odd 0:08:24.360 --> 0:08:25.280 to single. 0:08:24.880 --> 0:08:25.360 Out to me. 0:08:26.360 --> 0:08:28.640 Yeah, I mean, you know, there's a lot of wonky 0:08:28.680 --> 0:08:32.320 policy proposals in there. But you know, Jonathan Barry himself, 0:08:33.080 --> 0:08:35.440 he worked at Trump's labor department, like you said, then 0:08:35.559 --> 0:08:39.839 he revolved out to a corporate law firm called Boyden Gray. 0:08:40.240 --> 0:08:43.440 They take on a lot of conservative cases. Now he's 0:08:43.480 --> 0:08:46.800 representing companies, including a coalition of home care companies that 0:08:46.800 --> 0:08:50.360 are accused of feeling to pay over time. You know, 0:08:50.480 --> 0:08:52.800 he's plotting how to get back in the administration. I 0:08:52.800 --> 0:08:56.960 think it's a very Washington story. You know, the pro 0:08:57.080 --> 0:09:00.680 corporate agenda in government outside government, and then back in government. 0:09:01.600 --> 0:09:04.680 Then you have the Department of Energy and This was 0:09:04.720 --> 0:09:08.680 written by Bernard mcnamie, a Trump appointee of the Federal 0:09:08.800 --> 0:09:12.040 Energy Regulatory Commission. What are they looking to do with 0:09:12.080 --> 0:09:13.080 the Energy Department? 0:09:13.400 --> 0:09:17.800 Among other proposals, they should eliminate offices that work on 0:09:18.000 --> 0:09:19.600 net zero carbon goals. 0:09:19.880 --> 0:09:20.160 You know. 0:09:20.400 --> 0:09:24.960 They basically say the Biden administration has moved too fast 0:09:25.160 --> 0:09:30.040 with green policies. They're trying to accelerate the energy transition 0:09:30.160 --> 0:09:33.480 too quickly. So he's calling for an end to the 0:09:33.520 --> 0:09:37.679 so called war on oil and natural gas, trying to 0:09:37.720 --> 0:09:42.440 pull back a lot of government efforts to fight climate change, 0:09:42.559 --> 0:09:45.120 you know, create a much more oil and gas friendly 0:09:45.400 --> 0:09:46.120 energy department. 0:09:46.720 --> 0:09:48.080 The Department of Transportation. 0:09:48.320 --> 0:09:50.959 Note was written by Diana I don't know if I'm 0:09:50.960 --> 0:09:51.960 pronouncing this correctly. 0:09:52.160 --> 0:09:54.400 Firch got Roth, a deputy. 0:09:54.040 --> 0:09:57.840 Assistant director in Trump's Transportation Department. I just want to 0:09:57.840 --> 0:10:00.880 note that so far all of the authors has worked 0:10:00.880 --> 0:10:04.080 in the Trump administration. Tell us about her proposals. 0:10:04.760 --> 0:10:09.040 Yeah, so the main message is that the Biden administration 0:10:10.120 --> 0:10:13.960 has moved too fast on electric vehicles, that they are 0:10:14.160 --> 0:10:19.760 subsidizing EV producers like Tesla at the expense of legacy automakers. 0:10:19.920 --> 0:10:23.719 So a lot of her positions align with the positions 0:10:23.720 --> 0:10:26.480 of you know, Ford and other automakers. 0:10:27.000 --> 0:10:29.959 So how would Elon Musk, who's already given fifty million 0:10:30.040 --> 0:10:32.760 dollars to a Trump back, how would you. 0:10:32.920 --> 0:10:33.679 React to this? 0:10:34.559 --> 0:10:38.040 I think Elon Musk definitely wouldn't be happy with a 0:10:38.040 --> 0:10:40.480 lot of the proposals in this chapter. But I think 0:10:40.559 --> 0:10:43.560 part of his play is getting close to Trump in 0:10:43.640 --> 0:10:47.880 order to push his agenda to the Republican administration. So 0:10:47.920 --> 0:10:50.080 something a lot of people say about Trump is his 0:10:50.400 --> 0:10:53.840 opinion is informed by whoever he talked to last. So 0:10:54.400 --> 0:10:57.520 for Elon Musk, it's the very strategic play to get 0:10:57.559 --> 0:10:59.199 really close to him. 0:11:00.360 --> 0:11:05.000 The EPA chapter in Project twenty twenty five was written 0:11:05.040 --> 0:11:08.560 by the former chief of staff for Trump's EPA administrator. 0:11:08.880 --> 0:11:11.120 We can sort of imagine what it is, but tell 0:11:11.200 --> 0:11:13.199 us a little more so her. 0:11:13.200 --> 0:11:16.360 Vision of the EPA. They would cut a lot of offices, 0:11:16.480 --> 0:11:19.000 so in general, it's a lot about shrinking the EPA, 0:11:19.120 --> 0:11:23.320 which she says is bloated and bureaucratic, especially cutting offices 0:11:23.320 --> 0:11:27.720 dedicated to climate protection. It would expand oil and gas leases. 0:11:28.480 --> 0:11:32.679 It would shrink the workforce, so it would also halt 0:11:32.760 --> 0:11:36.959 grants to advocacy groups, so it would disentangle itself from 0:11:36.960 --> 0:11:39.680 a lot of the you know, pro climate groups that 0:11:39.679 --> 0:11:43.160 are operating on the ground. So it would it would 0:11:43.240 --> 0:11:47.360 really make the EPA much less effective as an agency. 0:11:47.559 --> 0:11:51.320 Which Trump also did during his presidency. Now, the Department 0:11:51.400 --> 0:11:55.640 of Justice chapter was written by Gene Hamilton, who served 0:11:55.640 --> 0:11:59.560 as counselor to the AGE during the Trump administration. Here 0:11:59.600 --> 0:12:03.520 a lot of of sort of endorsement of conspiracy theories 0:12:03.559 --> 0:12:06.719 that we've been hearing, you know, since the Trump administration. 0:12:07.520 --> 0:12:10.400 I want to read a quote from that chapter. Quote, 0:12:10.559 --> 0:12:13.560 large swaths of the Department have been captured by an 0:12:13.640 --> 0:12:19.920 unaccountable bureaucratic menagerial class and radical left ideologues who have 0:12:20.000 --> 0:12:23.239 embedded themselves throughout its offices and components. 0:12:24.120 --> 0:12:27.600 Yeah, a lot of this chapter is focused on, you know, 0:12:27.960 --> 0:12:32.719 this anxiety that the dj has been captured by what 0:12:32.760 --> 0:12:35.600 he calls the radical left, you know, pointing to the 0:12:35.800 --> 0:12:40.280 FBI bringing back up some of the concerns around Hunter 0:12:40.360 --> 0:12:45.320 Biden's laptop. So it really lays out a plan to 0:12:45.480 --> 0:12:49.560 ensure that conservatives are calling the shots at the Justice Department. 0:12:50.559 --> 0:12:53.360 It you know, envisions pivoting away from a focus on 0:12:53.440 --> 0:12:59.560 domestic terrorism, rejecting federal probes of police abuse. It calls 0:12:59.559 --> 0:13:03.360 for actor duty military personnel and National guardsmen at the border, 0:13:03.720 --> 0:13:07.400 so kind of totally revamping the DJ turning away from 0:13:07.480 --> 0:13:11.640 civil rights, turning towards violent crime. That's the gist of 0:13:11.679 --> 0:13:12.439 that chapter. 0:13:12.520 --> 0:13:15.360 And the chapter on the White House by a former 0:13:15.400 --> 0:13:19.160 Trump Deputy Chief of Staff. Of course, wokism has got 0:13:19.200 --> 0:13:20.319 to be in this somewhere. 0:13:20.920 --> 0:13:24.040 Focism is basically in every chapter, and it's especially in 0:13:24.080 --> 0:13:26.280 this chapter, which is one of the first. So it's 0:13:26.280 --> 0:13:32.040 about combating wokeism. It's about, you know, creating better connections 0:13:32.160 --> 0:13:36.600 with conservative media, you know, how to use the media 0:13:36.880 --> 0:13:40.440 to promote the president's agenda. And it focuses a lot 0:13:40.480 --> 0:13:43.760 on pushing back on what he says is the less 0:13:43.840 --> 0:13:49.120 aggressive attacks on life and religious liberty. So Rick Dearborn, 0:13:49.679 --> 0:13:52.239 you know, he's a lobbyist for a lot of companies, 0:13:52.520 --> 0:13:56.600 a lot of well known companies, you know, City Group, Rizon, Meta, Amazon, 0:13:57.040 --> 0:14:00.679 and he is calling for a White House that is, 0:14:01.280 --> 0:14:04.280 you know, corporate friendly and anti woke. 0:14:04.880 --> 0:14:08.160 I think most people haven't read through this whole nine 0:14:08.240 --> 0:14:12.400 hundred pages and just know about the bullet points. Do 0:14:12.440 --> 0:14:15.280 you know how many of these they've distributed or sent 0:14:15.400 --> 0:14:15.920 to people. 0:14:17.200 --> 0:14:20.560 They're definitely trying to get this out across Washington, you know, 0:14:20.680 --> 0:14:24.000 like Project twenty twenty five is more than just a playbook. 0:14:24.040 --> 0:14:24.280 Two. 0:14:24.360 --> 0:14:28.560 They're also soliciting resumes for conservatives who want to serve 0:14:28.600 --> 0:14:31.960 in a Trump administration. They're doing trainings about how to 0:14:32.400 --> 0:14:35.040 use the levers of government to push a conservative agenda. 0:14:35.920 --> 0:14:40.440 So they're trying their best to push this across the 0:14:40.480 --> 0:14:45.560 conservative movement. Interestingly, there have been a few conservative groups 0:14:45.560 --> 0:14:48.320 that were associated with it at the beginning that have 0:14:49.040 --> 0:14:54.120 distanced themselves as it becomes more controversial. So we'll see, 0:14:54.320 --> 0:14:57.040 you know over the next month how many conservative groups 0:14:57.040 --> 0:14:59.800 are left standing as supporters of this agenda. 0:15:00.680 --> 0:15:02.760 Looks like the Democrats are not going to let it 0:15:02.800 --> 0:15:06.840 go easily. Thanks so much, Emily. That's Bloomberg Lobbying and 0:15:06.920 --> 0:15:10.880 legal affairs reporter Emily Burnbaum turning out a corporate law 0:15:10.880 --> 0:15:14.520 in the Delaware courts. The Delaware judge whose landmark ruling 0:15:14.560 --> 0:15:17.320 on shareholder agreements landed him at the center of a 0:15:17.400 --> 0:15:21.320 month's long legal drama, issued a novel decision yesterday in 0:15:21.360 --> 0:15:26.000 a dispute involving a Morgan Stanley subsidiary Vice Chancellor Jay 0:15:26.120 --> 0:15:30.960 Travis Laster handed six billion dollars to XRI Investment Holdings, 0:15:31.280 --> 0:15:34.920 ruling again for the water recycling company, two years after 0:15:34.960 --> 0:15:38.400 he took the rare step of asking Delaware's top court 0:15:38.640 --> 0:15:42.200 to overturn his decision in the company's favor. Joining me 0:15:42.240 --> 0:15:45.360 to sort all this out is business law professor Eric 0:15:45.440 --> 0:15:49.440 Tally of Columbia Law School. Eric, this is a very 0:15:49.480 --> 0:15:51.479 confusing set of facts. 0:15:51.600 --> 0:15:52.680 Can you walk. 0:15:52.520 --> 0:15:53.040 Us through it? 0:15:53.640 --> 0:15:56.640 Yes. The case itself was kind of an interesting case 0:15:56.720 --> 0:16:00.160 because it involved, you know, setting up various type of 0:16:00.320 --> 0:16:05.200 business structures to try to create what essentially amounted to 0:16:05.280 --> 0:16:09.200 kind of like a second mortgage or a subordinated loan, 0:16:09.320 --> 0:16:13.240 and so there were all kinds of constraints in doing it. 0:16:13.280 --> 0:16:16.840 But the person that was trying to basically use stock 0:16:16.960 --> 0:16:20.480 that he had in a company called XRI. He had 0:16:20.520 --> 0:16:24.920 some stock in this company and he wanted to you know, 0:16:25.280 --> 0:16:29.440 basically borrow money for another company to try to turn 0:16:29.520 --> 0:16:33.520 that company into a more profitable venture. But the problem 0:16:33.800 --> 0:16:37.760 was that he had already entered into this agreement not 0:16:38.000 --> 0:16:41.840 to use the stock that he owned as direct collateral. 0:16:41.920 --> 0:16:45.080 He couldn't, you know, do what's called getting secured loan 0:16:45.160 --> 0:16:48.920 secured against that because the company he owned a stock 0:16:48.960 --> 0:16:51.600 and had lent him money as well, and they basically 0:16:51.880 --> 0:16:53.440 were saying, look, if you don't pay it back, we're 0:16:53.440 --> 0:16:55.480 going to use that stock as the collateral for our 0:16:55.520 --> 0:16:58.920 first loan. He ended up working with his own lawyer, 0:16:59.280 --> 0:17:01.720 but then also worked with like the CEO of the 0:17:01.760 --> 0:17:04.440 company that he owned stock in, to try to set 0:17:04.520 --> 0:17:09.560 up a way to structure things so that he could 0:17:09.640 --> 0:17:14.719 still kind of borrow more money against the value of 0:17:14.760 --> 0:17:17.159 these these shares that he owned, but not to step 0:17:17.200 --> 0:17:20.879 on the toes of the company that already had that 0:17:21.000 --> 0:17:24.119 claim on those shares as collateral. So it was a 0:17:24.200 --> 0:17:26.959 little bit complicated because there are all kinds of balls 0:17:26.960 --> 0:17:30.400 in the air at the same time. But even though 0:17:30.440 --> 0:17:33.880 it was really complicated, it was also true that he, 0:17:34.200 --> 0:17:37.000 you know, had been working kind of hand in glove 0:17:37.680 --> 0:17:40.600 with the CEO of the company he owned stock in 0:17:41.119 --> 0:17:43.720 to try to you know, design this thing. And this 0:17:43.920 --> 0:17:46.000 was an old friend of his as well. And so 0:17:46.440 --> 0:17:50.359 you know where things ended up getting is things didn't 0:17:50.400 --> 0:17:53.960 go particularly well for this new business that he was 0:17:53.960 --> 0:17:57.480 trying to create. He wasn't able to make payments on 0:17:57.600 --> 0:18:03.400 his various loans, including that original one, and only then 0:18:03.600 --> 0:18:08.040 when relationships began to sour, did the guy that he 0:18:08.119 --> 0:18:11.760 was working with, the CEO, basically blow the whistle and say, oh, 0:18:11.840 --> 0:18:16.320 he set up this elaborate scheme and violated some of 0:18:16.400 --> 0:18:21.639 the contractual restrictions that he had agreed to long ago 0:18:21.760 --> 0:18:25.480 when he borrowed that first amount secured against the stock. 0:18:25.640 --> 0:18:27.760 So it was a you know, a kind of a 0:18:27.800 --> 0:18:32.399 big Rube Goldberg machine that absolutely this person had built, 0:18:32.560 --> 0:18:36.560 but he kind of was working with someone that was 0:18:36.600 --> 0:18:39.439 the CEO of the other side that would make a 0:18:39.480 --> 0:18:43.119 complaint about it, and they never really sort of voiced 0:18:43.119 --> 0:18:46.120 their own concerns until it was really really late in 0:18:46.400 --> 0:18:48.440 the game, and then they did. 0:18:49.320 --> 0:18:52.560 So that was the case that Laster got tell us 0:18:52.600 --> 0:18:52.840 what he. 0:18:52.800 --> 0:18:53.320 Did with it. 0:18:53.640 --> 0:18:56.560 He had to deal with what was kind of an 0:18:56.560 --> 0:18:59.439 odd situation in that, you know, when you sort of 0:18:59.520 --> 0:19:03.920 look at the from sixty thousand feet, you know this guy, yes, 0:19:04.000 --> 0:19:08.159 he probably built a Rube Goldberg machine that violated some 0:19:08.240 --> 0:19:10.560 of the terms in the deal that he had struck, 0:19:10.720 --> 0:19:12.639 but by the same token to the other side, at 0:19:12.720 --> 0:19:15.040 least the CEO the other side knew what he was 0:19:15.080 --> 0:19:18.960 doing and they didn't object to it until things really 0:19:19.359 --> 0:19:23.680 went south. And that's what Vice Chancellor Laster in his opinion, 0:19:24.040 --> 0:19:27.000 he wanted to sort of recognize this fact that you know, 0:19:27.040 --> 0:19:29.159 they kind of acquiesced in what he was up to, 0:19:29.400 --> 0:19:32.880 but the way that the law works didn't give him 0:19:32.920 --> 0:19:36.919 the ability to use this, this idea that you know 0:19:36.960 --> 0:19:39.480 they were in on it, and therefore they shouldn't be 0:19:39.520 --> 0:19:43.439 able to just foreclose and seize the shares away. So 0:19:43.800 --> 0:19:47.480 when he wrote that opinion, that first opinion, he almost 0:19:47.800 --> 0:19:51.760 asked the Delaware Supreme Court please overruled me on this, 0:19:52.240 --> 0:19:55.520 because I kind of don't like the outcome that I 0:19:55.560 --> 0:19:58.320 got to here, but it seems to be the outcome 0:19:58.440 --> 0:20:03.000 that our precedents have suggested for this case. And so 0:20:03.119 --> 0:20:06.520 then goes to the Delaware Supreme Court and they come 0:20:06.560 --> 0:20:09.000 back and said, no, by Standsley last year, you got 0:20:09.040 --> 0:20:12.800 it exactly right. We're not going to overrule you. The 0:20:12.880 --> 0:20:17.160 fact that you know that you know this guy had 0:20:17.280 --> 0:20:21.240 done something that was not allowed in his original loan, 0:20:21.680 --> 0:20:25.119 even if he was helped by this CEO, does not 0:20:25.960 --> 0:20:30.359 does not foreclose the conclusion that this was something that 0:20:30.400 --> 0:20:33.640 was in violation of his loan, And from the very 0:20:33.680 --> 0:20:36.280 moment he did it, it was void and they could 0:20:36.359 --> 0:20:40.600 just seize the shares back from him. So this this gentleman, 0:20:40.640 --> 0:20:43.320 mister Hollyfield, really kind of took at the chops from 0:20:43.480 --> 0:20:48.960 multiple directions, and by Standley Laster you kind of get 0:20:48.960 --> 0:20:50.919 the sense he sort of felt for the guy, but 0:20:51.440 --> 0:20:54.440 didn't see the law on the books to give him 0:20:54.560 --> 0:20:57.760 much relief. In the Delaware Supreme Court wasn't willing to 0:20:57.920 --> 0:20:58.680 go there either. 0:20:58.920 --> 0:21:02.240 Have you ever heard of a judge sort of asking to. 0:21:02.200 --> 0:21:06.720 Be reversed, Well, it's not as unusual as you might 0:21:06.760 --> 0:21:08.520 think it would be, because I think a lot of 0:21:08.560 --> 0:21:10.639 times when judges sort of say, look, the law is 0:21:10.680 --> 0:21:14.359 clear on this, this seems somewhat inequitable, and it would 0:21:14.400 --> 0:21:17.080 be a good idea if someone at a higher level, 0:21:17.119 --> 0:21:21.200 whether it's a legislature or a supreme court, would sort of, 0:21:21.240 --> 0:21:23.280 you basically say we're going to do things differently, either 0:21:23.280 --> 0:21:26.760 with a new statute or by overruling an existing precedent. 0:21:26.880 --> 0:21:29.720 So a lot of times this is not a completely 0:21:29.760 --> 0:21:32.600 surprising thing for a trial court judge to say, look, 0:21:32.840 --> 0:21:35.199 I'm bound by the precedents that have been handed to 0:21:35.280 --> 0:21:38.440 me by, among other folks, the Supreme Court of Delaware. 0:21:38.720 --> 0:21:40.960 I've got to live within them. I think that leads 0:21:41.000 --> 0:21:43.399 me to kind of an outcome that seems kind of 0:21:43.480 --> 0:21:46.240 unfair here, and I want to signal to the Supreme Court, 0:21:46.800 --> 0:21:49.359 don't worry, I won't take it personally if you reverse 0:21:49.440 --> 0:21:52.479 me here, and in fact I invite you to consider 0:21:52.640 --> 0:21:56.520 doing so. What was sort of interesting, particularly in this instance, 0:21:56.600 --> 0:21:59.760 is that while by chances the last probably does get 0:22:00.480 --> 0:22:05.359 reversed more than the average judge for reasons largely having 0:22:05.400 --> 0:22:07.880 to do with his creativity, this is a situation where 0:22:07.880 --> 0:22:10.919 they chose not to reverse him and basically sort of 0:22:11.160 --> 0:22:13.960 continued the outcome that he got to that he felt 0:22:14.040 --> 0:22:17.200 uncomfortable with, but the Supreme Court of Delaware evidently felt 0:22:17.200 --> 0:22:18.119 more comfortable with it. 0:22:18.480 --> 0:22:21.040 Coming up next on the Bloomberg Law Show, I'll continue 0:22:21.040 --> 0:22:24.960 this conversation with Columbia Law School professor Eric Tally, and 0:22:25.000 --> 0:22:29.320 we'll talk about that landmark ruling on shareholder agreements that 0:22:29.520 --> 0:22:33.400 landed Judge Laster at the center of a month's long 0:22:33.520 --> 0:22:37.119 legal drama and led to the Delaware legislature taking action. 0:22:37.480 --> 0:22:40.199 I'm June Grosso, and you're listening to Bloomberg. I've been 0:22:40.240 --> 0:22:43.760 talking to business law professor Eric Tally of Columbia Law School. 0:22:44.320 --> 0:22:47.639 What's with the length of these opinions? One with his 0:22:47.800 --> 0:22:50.560 was one hundred and fifty four pages. The Delaware Supreme 0:22:50.600 --> 0:22:53.639 Court came back with a seventy eight page opinion. 0:22:54.960 --> 0:22:58.080 Delaware Chancer Court opinions tend to be a little bit 0:22:58.160 --> 0:23:01.680 longer than others. I think this is in large part 0:23:01.680 --> 0:23:05.359 because they realize that people are watching right, that this 0:23:05.520 --> 0:23:10.400 is a transaction that has caused a dispute. But regardless 0:23:10.400 --> 0:23:12.760 of the holding that they have, there may be fifty 0:23:12.880 --> 0:23:17.440 sixty two thousand other future transactions that may be designed 0:23:17.440 --> 0:23:20.800 around the very holding of this situation. And so, because 0:23:20.840 --> 0:23:24.680 Delaware is such a focal area, even its trial court 0:23:24.720 --> 0:23:27.600 opinions can tend to be a little bit more on 0:23:27.720 --> 0:23:32.120 the on the lengthy side, simply to anticipate a bunch 0:23:32.200 --> 0:23:34.280 of the different ways that people might read it. Now, 0:23:34.640 --> 0:23:36.720