WEBVTT - The Deadliest Corporate Crime in U.S. History

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<v Speaker 1>You're listening to Bloomberg Law with June Grassoe from Bloomberg Radio.

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<v Speaker 1>It's the deadliest corporate crime in US history. And P

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<v Speaker 1>G and E pleaded guilty to eighty four counts of

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<v Speaker 1>manslaughter on Tuesday for its role in igniting the California

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<v Speaker 1>wildfire that killed eighty four people, destroyed nearly nineteen thousand

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<v Speaker 1>homes and businesses, and the entire town of Paradise. On

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<v Speaker 1>the same day that CEO, Bill Johnson, repeated the guilty

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<v Speaker 1>plead to involuntary manslaughter eighty four times before Judge Michael Deames,

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<v Speaker 1>another judge, cleared the way for the company to exit bankruptcy,

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<v Speaker 1>although the long term future of the utility Giant remains

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<v Speaker 1>in question. Joining me as former prosecutor Peter Henning, a

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<v Speaker 1>professor at Wayne State University Law School, how unusual is

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<v Speaker 1>it for a corporation to plead guilty two felonies. Well,

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<v Speaker 1>Bill Johnson, the CEO of P G and E, stood

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<v Speaker 1>up in the Bauque County the Superior Court and pleaded

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<v Speaker 1>guilty eighty four times. This is unprecedented. We haven't seen

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<v Speaker 1>a company stand up and say we're guilty of manslaughter

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<v Speaker 1>eighty four different times. Ke g and E is still

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<v Speaker 1>under probation for a conviction for a gas pipeline blast

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<v Speaker 1>that killed eight people. So were they sort of backed

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<v Speaker 1>into a corner here? They really were backed into a corner.

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<v Speaker 1>They had to negotiate some kind of a deal with

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<v Speaker 1>the county prosecutor and they're going to end up paying

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<v Speaker 1>three and a half million dollar fine, and then they're

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<v Speaker 1>also going to pay five hundred thousand dollars to the

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<v Speaker 1>Butte County Prosecutor's office to cover the cost of the investigation.

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<v Speaker 1>So what had happened was that there was a hook

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<v Speaker 1>that was on one of the power lines that came

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<v Speaker 1>detached and that ended up starting the Paradise fire. And

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<v Speaker 1>so you now have Bill Johnson standing up in court

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<v Speaker 1>saying we're sorry for what happened here. So, Peter, some

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<v Speaker 1>people look at this and say, Okay, they're going to

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<v Speaker 1>pay a lot of money, but no executives are being

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<v Speaker 1>sent to jail when this is the company that has

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<v Speaker 1>repeatedly done things that were illegal. Yes, and in fact,

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<v Speaker 1>you know, with the various fires that have started in

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<v Speaker 1>northern California, much of it is traceable to p genese

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<v Speaker 1>failures and what you have happening here is no one

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<v Speaker 1>is being held responsible except for Bill Johnson CEO, who

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<v Speaker 1>had to show up in court and plead guilty. But

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<v Speaker 1>no one in the corporate Hiero or key is being

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<v Speaker 1>held responsible for this beyond the three and a half

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<v Speaker 1>million dollars that Penny has to pay. Plus they've entered

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<v Speaker 1>into a settlement with the families of the people who

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<v Speaker 1>died for thirteen and a half billion dollars and they're

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<v Speaker 1>going to pay that in stock. So, you know, is

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<v Speaker 1>a stock going to be worth anything? That's an interesting

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<v Speaker 1>question to ask because it may be worthless stock. There

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<v Speaker 1>was a lot of talk about the governor threatening a

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<v Speaker 1>state takeover of p g n e. In a situation

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<v Speaker 1>like this, or a company has repeatedly failed to live

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<v Speaker 1>up to standards and affects community after community, why not

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<v Speaker 1>have a public takeover of it. Well, I think that's

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<v Speaker 1>an interesting question because Governor Gavin Newsome has said that

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<v Speaker 1>he wants to see p g n e UM respond

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<v Speaker 1>to it's many and various failures, the many fires that

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<v Speaker 1>have broken out in northern California and killed any number

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<v Speaker 1>of people. He wants to see them perhaps be taken

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<v Speaker 1>over and run like a public utility that would allow

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<v Speaker 1>for people to um pay their bills, but to still

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<v Speaker 1>it would still be a public utility and it would

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<v Speaker 1>be regulated by the states. So the Public Service Commission

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<v Speaker 1>is still going to be regulating p G and E,

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<v Speaker 1>and I don't think they're going to allow p G

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<v Speaker 1>and E to raise its rates very much. I do

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<v Speaker 1>think that they are going to say, look, you're not

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<v Speaker 1>going to cover the thirteen and a half billion dollars

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<v Speaker 1>by raising your rates and forcing people to pay much

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<v Speaker 1>higher rates. Coming up next, Don Bloomberg Law victims will

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<v Speaker 1>get a chance to speak their piece before the sentencing

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<v Speaker 1>of p G n E. I've been talking to Professor

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<v Speaker 1>Peter Henning of Wayne State University Law School about p

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<v Speaker 1>G and E pleading guilty to involuntary manslaughter and admitting

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<v Speaker 1>that it killed eighty four people after its equipment ignited

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<v Speaker 1>the deadliest fire in California state history. Explain what happened

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<v Speaker 1>to Arthur Anderson and how that won't happen here because

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<v Speaker 1>basically California residents can't say I'm not going to use

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<v Speaker 1>p G n E anymore. Well, what it happened with

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<v Speaker 1>Arthur Anderson was they were convicted of obstruction of justice.

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<v Speaker 1>It turned out three years later the Supreme Court reverse

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<v Speaker 1>to the conviction. But hear, what you have with P

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<v Speaker 1>G and E is you have a company acknowledging that

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<v Speaker 1>it killed eight four different people. And so this is

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<v Speaker 1>really going to be very costly for p G and E.

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<v Speaker 1>Even after the San Bruno explosion that happened south of

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<v Speaker 1>San Francisco that killed eight different people, you're still going

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<v Speaker 1>to have the company on probation. And I would expect

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<v Speaker 1>that the federal judge in San Francisco who's overseeing the

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<v Speaker 1>probation to crack the whip on them and force p

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<v Speaker 1>G and E to upgrade its towers and upgrade the

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<v Speaker 1>hooks that are holding onto the various power lines. And

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<v Speaker 1>it would not surprise me if the federal district judge

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<v Speaker 1>in San Francisco said, look, you have to improve how

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<v Speaker 1>you are operating theater. Explain why prosecutors couldn't charge individual executives.

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<v Speaker 1>It's essentially a case that involves corporate negligence. And that's

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<v Speaker 1>why the CEO of the company came in and pleaded

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<v Speaker 1>guilty eighty four times and said that we can't make

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<v Speaker 1>up for the loss of life here. And so what

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<v Speaker 1>I think we're going to see happen with p G

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<v Speaker 1>and E is that there is a real chance that

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<v Speaker 1>the state is going to take them over and run

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<v Speaker 1>them as a public utility and uh not allow them

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<v Speaker 1>to raise their rates to cover the cost of the

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<v Speaker 1>thirteen and a half billion dollars that they have agreed

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<v Speaker 1>to pay out to the various families of the victims.

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<v Speaker 1>And so I would not surprise me if Governor Knew

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<v Speaker 1>some stepped in and said, look, p g NY, you're

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<v Speaker 1>not going to continue to operate the way you've been operating.

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<v Speaker 1>You've got to take a step back, and you've got

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<v Speaker 1>to be run as a public utility. This is the

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<v Speaker 1>second bankruptcy for pg n E in twenty years. So

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<v Speaker 1>when they've run into serious problems, they go into bankruptcy

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<v Speaker 1>and then they're guaranteed to come out of it because

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<v Speaker 1>the state needs them. Absolutely. The state needs p G

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<v Speaker 1>n E because it it covers most of northern California

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<v Speaker 1>and UM and so there's no way really to shut

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<v Speaker 1>the utility down, and they're going to need to come

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<v Speaker 1>up with a way to figure out how they can

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<v Speaker 1>turn p G and E into a public utility and

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<v Speaker 1>ensure that it continues to operate properly and that they

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<v Speaker 1>they improve their UM power grid and the power lines.

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<v Speaker 1>And I think they're going to have to go back

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<v Speaker 1>and replace all the hooks that are holding up the

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<v Speaker 1>various power lines. This is really going to be an

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<v Speaker 1>issue for Governor Newsom. I think he's going to try

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<v Speaker 1>to step in and say, look, p G and E,

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<v Speaker 1>you can't continue to operate the way you have been operating.

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<v Speaker 1>I want to get your take on this. I read

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<v Speaker 1>that prosecutors have been trying for forty years to charge

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<v Speaker 1>companies for killing people, and the closest comparison is BPS

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<v Speaker 1>manslaughter play in the deep Water Horizon. That's probably the

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<v Speaker 1>closest analogy, because ten people on the deep Water Horizon

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<v Speaker 1>died and so BP ended up pleading guilty UM in

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<v Speaker 1>that case and paid a very substantial fine. UM. And

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<v Speaker 1>because of the blowout that happened on the deep Water Horizon,

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<v Speaker 1>you have beaches for miles that were polluted, and so

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<v Speaker 1>British Petroleum had to go and clean up all those

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<v Speaker 1>beaches and so UM. It would not surprise me if

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<v Speaker 1>Governor Knewsome stepped in and said, look, p G. And

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<v Speaker 1>E cannot continue to operate the way it has been operating.

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<v Speaker 1>That they have to improve how they are preventing fires

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<v Speaker 1>and trying to keep fires from happening. And it would

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<v Speaker 1>not surprise me if Governor Knewsome got the state legislature

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<v Speaker 1>to step in and say, look, you're no longer a

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<v Speaker 1>private utility, You're now a public utility. The judge is

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<v Speaker 1>going to allow the victims and relatives of the victims

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<v Speaker 1>to make impact statements before the sentencing. The sentencing has

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<v Speaker 1>already been agreed to. Do victim impact statements really help?

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<v Speaker 1>I think it might well affect the sentencing because the

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<v Speaker 1>judge Weims in Butuque County is going to listen to

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<v Speaker 1>the victim impact statements and make a decision um based

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<v Speaker 1>on you know, the three and a half million PG

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<v Speaker 1>and E has to pay UM. He could increase that

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<v Speaker 1>fine and a look, you've got to compensate these victims,

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<v Speaker 1>and you have to pay them um substantially more than

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<v Speaker 1>the thirteen and a half billion that p G and

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<v Speaker 1>E has agreed to. So far, do victims finding cathartic

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<v Speaker 1>to make these statements in court? I think it certainly

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<v Speaker 1>provides the measure of Catharsis because families of the victims

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<v Speaker 1>can come in and point the finger at P. G

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<v Speaker 1>and E and say, you destroyed lives. You destroyed eighty

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<v Speaker 1>four different lives by pleading guilty to the manslaughter charges,

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<v Speaker 1>and now you're going to have to pay a cost

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<v Speaker 1>for that. Thanks for being on Bloomberg Law, Peter. That's

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<v Speaker 1>Peter Henning, a professor at Wayne State University Law School.

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<v Speaker 1>Coming up next on Bloomberg Law. Why the Supreme Court

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<v Speaker 1>gave the Atlantic Past pipeline the Okay, I'm jam Brasso

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<v Speaker 1>and this is Bloomberg