Speaker 1: This is Bloomberg Law with June Grossel from Bloomberg Radio.
Speaker 2: The Trump administration is once again appealing to the Supreme
Speaker 2: Court as it tests the boundaries of the government's power
Speaker 2: to deport migrants. The Department of Homeland Security is asking
Speaker 2: the court to block a judge's order that requires the
Speaker 2: government to give people ten days notice and an opportunity
Speaker 2: to object before they're deported to places other than their
Speaker 2: home countries. Joining me is immigration law expert Leon Fresco,
Speaker 2: a partner at Holland and Knight and the former head
Speaker 2: of the Office of Immigration Litigation in the Obama administration.
Speaker 2: A Massachusetts federal judge ordered the government last month to
Speaker 2: give people ten days notice and an opportunity to object
Speaker 2: before they are sent to a country which is not
Speaker 2: their home country, and he said last week that the
Speaker 2: administration violated his earlier decisions.
Speaker 1: Well, what happened was, this is a case where there
Speaker 1: are a number of foreign nationals who did commit sometimes
Speaker 1: very heinous crimes, and they're from Laos, Vietnam and some
Speaker 1: other places that don't really accept people that the US
Speaker 1: is trying to deport back to those countries. And so
Speaker 1: the US tried to arrange a scenario whereby it could
Speaker 1: deport those people to South Sudan as part of a
Speaker 1: diplomatic arrangement it was having with South Sudan to free
Speaker 1: up some issues because earlier in the year South Sudanese
Speaker 1: people couldn't get visas to travel to the United States,
Speaker 1: and so this was part of a global arrangement where
Speaker 1: that would be thick and that also South Sudan would
Speaker 1: agree to accept people that the United States was trying
Speaker 1: to deport to other countries, not South Sudan. The people
Speaker 1: who were going to be deported to South Sudan heard
Speaker 1: about this and said, well, wait a second, I can't
Speaker 1: be deported to South Sudan. I'm not from there. That's
Speaker 1: very dangerous. It's a country in the middle of a
Speaker 1: civil war. And so they tried to file convention against
Speaker 1: torture claims. There was actually this case filed in the
Speaker 1: District of Massachusetts, which was a habeas claim saying I
Speaker 1: can't be deported without being given the opportunity to have
Speaker 1: an adjudication as to whether the conditions in South Sudan
Speaker 1: are tent amounts to torturing me, because if you just
Speaker 1: drop me off there what am I supposed to do.
Speaker 1: I'm going to start to that because you know, it's
Speaker 1: not a place where you could just go and get
Speaker 1: a job and start working. And so that was the claim.
Speaker 1: And at that time the District Court, at the US government,
Speaker 1: we're arguing about, well, how do you do these claims?
Speaker 1: Can you do them where these people were, which is
Speaker 1: at the moment, they're being detained in Djibouti, a different
Speaker 1: African country where it's just sort of a military operation
Speaker 1: and there's not really this ability to long term have
Speaker 1: these folks there. There was this debate about where do
Speaker 1: these conventions and against torture claims get decided, or do
Speaker 1: you have to bring the people back to the United States.
Speaker 1: The federal government didn't want to bring back the people
Speaker 1: to the United States. It asked that they'd be allowed
Speaker 1: to make these adjudications in Djibouti. The judge said, okay, fine,
Speaker 1: I will let you do that. And then after that
Speaker 1: the government said, no, wait a second, this is way
Speaker 1: too complicated. We actually can't do it in Djibouti. And
Speaker 1: so now the government has gone to the Supreme Court
Speaker 1: and said, just let us do these deportations. The judge
Speaker 1: shouldn't be allowed to prevent us from doing this.
Speaker 2: The Supreme Court has said that the government has to
Speaker 2: give people a reasonable amount of time in order to
Speaker 2: challenge their deportations, but it hasn't spelled out exactly what
Speaker 2: that means, how much time even. But is this situation
Speaker 2: different from the cases that the Supreme Court has dealt
Speaker 2: with because these migrants have already been through the immigration
Speaker 2: system and there are orders of deep against them.
Speaker 1: Correct. The problem is here, these individuals have an order
Speaker 1: of deportation that can be executed at any point to
Speaker 1: their home country, whether it's Llows or Vietnam or whatever,
Speaker 1: and it can also be executed to any other country
Speaker 1: so long as in any of those other countries, there's
Speaker 1: not a likelihood that these individuals will be tortured. And
Speaker 1: so the question is, well, can these individuals make that claim,
Speaker 1: where can they make that claim, When can they make
Speaker 1: that claim, how long do they have to make that claim?
Speaker 1: And does the district court have the ability to interrupt
Speaker 1: that when a person has already been moved outside of
Speaker 1: the United States. And I think that's what the debate
Speaker 1: is going to be, because I think where the federal
Speaker 1: government is concerned is what are we supposed to do
Speaker 1: now that these individuals are in Africa? How do we
Speaker 1: deal with this? Are we going to be forced to
Speaker 1: bring them back to the United States or will be
Speaker 1: forced to actually adjudicate these cases inside of Djibouti, which
Speaker 1: is where the people are now, or can we finalize
Speaker 1: our intentions to deport them to South Sudan? And will
Speaker 1: there just be prophylactic language in the future about what
Speaker 1: is required in the future if they're going to do
Speaker 1: one of these third country deportations. But really we're in
Speaker 1: uncharted territory here, and the Supreme Court is going to
Speaker 1: have to set some standards and some guidelines because if
Speaker 1: the federal government really is focused on these third country deportations,
Speaker 1: then they're going to need to be done in a
Speaker 1: manner that everybody's comfortable with. And the complication with South
Speaker 1: Sudan is just imagine any of us. I mean, if
Speaker 1: any of us get dropped off in South Sudan, what
Speaker 1: do we do next? If there's no food, there's no job.
Speaker 1: You know, if you end up being deported to a
Speaker 1: place where you know that the solution is just the starvation,
Speaker 1: does that end up violating the Convention against torture.
Speaker 2: So how do you think the Supreme Court will approach
Speaker 2: this and how it's handled the other deportation cases.
Speaker 1: The Supreme Court is going to have to decide where
Speaker 1: can these individuals make these claims? Are they allowed to
Speaker 1: make these claims at all? What district court jurisdiction exists here?
Speaker 1: And I don't necessarily think that the Supreme Court, given
Speaker 1: what we've seen so far, is going to be too
Speaker 1: friendly toward this concept of not being able to give
Speaker 1: people an opportunity to make a claim that a deportation
Speaker 1: of sub Sudan is tent amount to torturing.
Speaker 2: That this case is among a growing number of instances
Speaker 2: where judges are finding that the government isn't fully complying
Speaker 2: with court orders having to do with immigration. The Supreme
Speaker 2: Court sort of addressed that peripherally in a case blocking
Speaker 2: the administration from sending more Venezuelans to a Salvador in
Speaker 2: prison by referring to the case of kilmar Arbrigo Garcia,
Speaker 2: who was wrongfully deported as a cautionary tale. But it
Speaker 2: hasn't addressed that issue of not following court orders directly yet.
Speaker 1: Right what the Supreme Court has said is at the moment,
Speaker 1: we're not going to let the Trump administration deport anyone
Speaker 1: else in the future under this Alien Enemies Act, which
Speaker 1: is the law that the Trump administration has wanted to
Speaker 1: use to deport Venezuelan from the trend A Ragua gang
Speaker 1: to El savad or into other places without due process,
Speaker 1: saying they're just members of this gang and that means
Speaker 1: they can be apprehended and deported without seeing a judge.
Speaker 1: And so what the Supreme Court has said, we're putting
Speaker 1: an end to that for the moment, until the lower
Speaker 1: courts can percolate a series of decisions as to a
Speaker 1: what kind of notice is required be, what kind of
Speaker 1: factors can be reviewed by the courts, and see is
Speaker 1: this even constitutional, this usage of the Alien Enemies Act
Speaker 1: in this particular situation. And the Supreme Court will decide
Speaker 1: all of those questions, presumably in one global case, or
Speaker 1: maybe it will break them up unclear. But there's that
Speaker 1: issue with the whole framework of the Alien Enemies Act.
Speaker 1: But now there's this new issue of well, what about
Speaker 1: if someone does have a deportation order already, so we've
Speaker 1: cleared that first step, but now what the issue is
Speaker 1: is you want to send them to a country where
Speaker 1: the country is potentially very dangerous to send that person to.
Speaker 1: You know, you are allowed to send people to a
Speaker 1: third country, but if that third country is dangerous, what
Speaker 1: thoice do we put in this context? And does it
Speaker 1: end up being the exact same as in the context
Speaker 1: of the Alien Enemies Act? Are we going to do
Speaker 1: the same? Are we going to do differently? What are
Speaker 1: we going to do? And so I think again, the
Speaker 1: Supreme Court's going to have to grapple with those issues.
Speaker 2: And I know I've asked you this question several times before,
Speaker 2: but what happened to the case of Ki or Brigo Garcia.
Speaker 1: Well, I mean that case is still pending and the
Speaker 1: district judge is trying to work their way through content
Speaker 1: proceeding to try to figure out again what the government
Speaker 1: is able to do to facilitate mister Abrago Garcia's return
Speaker 1: to the United States. You had a congressman try to
Speaker 1: visit Abrago Garcia, and that Congressman, Glen Ivy, was not
Speaker 1: permitted to see a Brago Garcia. And so now we're
Speaker 1: in the do or die situation where basically the District
Speaker 1: Court is going to have to make some decisions about
Speaker 1: doesn't want to hold the Trump administration in contempt unless
Speaker 1: and until it brings Flabrago Garcia back into the United States.
Speaker 1: And then, of course will the Fourth Circuit agree with
Speaker 1: whatever is decided, and then finally will the Supreme Court
Speaker 1: agree with whatever is decided here. But we start from
Speaker 1: the understanding that the deportation was a mistake, and so
Speaker 1: the question is what happens then, because what the administration
Speaker 1: is saying is, look, if we bring him back, what's
Speaker 1: gonna end up happening is the reason he wasn't deported
Speaker 1: in the first place was because he feared gangs that
Speaker 1: no longer exist in Al Salvador. So we're going to
Speaker 1: win this case anyway. So the question is will there
Speaker 1: be some dispensation given to having a hearing like this
Speaker 1: outside of the United States, or will there be a
Speaker 1: requirement that this individual will be brought back and given
Speaker 1: the same hearing and then presumably removed again outside of
Speaker 1: the United States.
Speaker 2: Okay, stay with me. Leon coming up next on the
Speaker 2: Bloomberg Lawn Show. I'll continue this conversation with immigration law
Speaker 2: expert Leon Fresco. Ice appears to be employing a new
Speaker 2: strategy that it used in arresting a high school student
Speaker 2: in New York City. I'm June Grosso, and you're listening
Speaker 2: to Bloomberg. In immigration courts from New York to Seattle,
Speaker 2: Homeland Security officials are ramping up enforcement actions in what
Speaker 2: appears to be an effort to test out a new
Speaker 2: strategy to speed up deportations. Government attorneys are asking judges
Speaker 2: to dismiss cases against migrants who are there for scheduled
Speaker 2: hearings and then waiting ICE agents arrest the migrants and
Speaker 2: put them in expedited removal proceedings. That's what reportedly happened
Speaker 2: to a New York City high school student from Venezuela
Speaker 2: last week. New York City Mayor Eric Adams, who's allowed
Speaker 2: ICE agents on Rikers Island, said he couldn't get involved
Speaker 2: because New York is a sanctuary city.
Speaker 3: Well, we have to be extremely careful because the New
Speaker 3: York City Council laws. I'm limited on what coination I
Speaker 3: can do, and so sometimes there's a blessing and it's
Speaker 3: a curse.
Speaker 2: I've been talking to immigration law expert Leon Fresco of
Speaker 2: Holland and Knight. Leon, so this Venezuelan high school student
Speaker 2: was in immigration court for a regularly scheduled hearing, and
Speaker 2: after the case against him was dismissed, I say and
Speaker 2: arrested him. His lawyer says, he's here legally seeking asylum,
Speaker 2: but the Trump administration says he's here illegally. And apparently
Speaker 2: this is not an isolated scenario.
Speaker 1: What's happening is this, So the Biden administration had this
Speaker 1: program called the CBP one app parole program, which what
Speaker 1: it said was don't just cross the border illegally. That's
Speaker 1: creating a lot of chaos on the southern border. We
Speaker 1: can't have it. Go to a port of entry, get
Speaker 1: an appointment to go to a port of entry under
Speaker 1: the CBP one app and then if we think that
Speaker 1: you're a legitimate asylum seeker, will parole you into the
Speaker 1: country legally, so you have a legal status while you're
Speaker 1: here trying to get asylum, and you'll go through the
Speaker 1: asylum case. So what's happening now is that the Trump
Speaker 1: administration is saying, for all those people who have been
Speaker 1: led in legally to do an asylum case and immigration court,
Speaker 1: we are going to cancel your legal admission. We're going
Speaker 1: to close that case, and we're going to pretend like
Speaker 1: none of that had happened, and we're going to put
Speaker 1: you in expedited removal, which says that if you are
Speaker 1: here for less than two years and you never had
Speaker 1: a legal basis for coming, you can be removed on
Speaker 1: an expedited basis. But what that requires is for the
Speaker 1: person to be arrested and then they have to have
Speaker 1: a new adjudication as to whether they have a credible
Speaker 1: asylum case, and if they don't, they can immediately be removed.
Speaker 1: But if they do, then they're basically back at square one,
Speaker 1: which is the same immigration court hearing that they were
Speaker 1: arrested at minutes ago. So this bronze student was exactly
Speaker 1: this situation where they were let in legally under the
Speaker 1: CBP one parole app but now they're arrested, placed in
Speaker 1: expedited removal proceedings, and.
Speaker 2: This type of scenario is being played out in immigration
Speaker 2: courts across the country.
Speaker 1: So there's basically three goals of this. Number one is
Speaker 1: maybe twenty twenty five percent of the people that they're
Speaker 1: going to do this too won't actually be able to
Speaker 1: show that they have a credible asylum claim. And so
Speaker 1: with that group, they can just remove them outside of
Speaker 1: the United States, and so that increases the removal number.
Speaker 1: So that's goal number one. Goal number two is to
Speaker 1: the extent people are now scared to go to immigration court.
Speaker 1: When you don't show up the immigration court, you get
Speaker 1: what's called an in absentia of removal order, which is
Speaker 1: you basically lose by default. You get ordered deported and
Speaker 1: that's the end of it. And as long as the
Speaker 1: government can show that you had notice of the hearing,
Speaker 1: then that did you know, Unless there was some earthquake
Speaker 1: or some bridge collapsed or something and that prevented you
Speaker 1: from going to the hearing that day, you're pretty much
Speaker 1: in a bad position there. But the government, and if
Speaker 1: they get these in absent to removal orders, can also
Speaker 1: try to execute those, and that also is easier than
Speaker 1: trying to win a removal order in a hearing. So
Speaker 1: that's the second reason to do this is people stop
Speaker 1: going to court, they get in upsent to removal orders,
Speaker 1: you can deport them more easily. And then the third
Speaker 1: is people will be so afraid about finishing this process
Speaker 1: they'll just take matters into their own hands and go home.
Speaker 1: And so that's really the purpose of this is to
Speaker 1: create this level of fear that people either don't show
Speaker 1: up the court and they get ordered deported or they
Speaker 1: go home. But if they do go to court, they're
Speaker 1: going to get arrested. If you haven't been in this
Speaker 1: country for more than two years, what will happen is
Speaker 1: you will be arrested and put into these expedited removal proceedings.
Speaker 1: And what that will do is for some segment of
Speaker 1: the people, they will be deported immediately. For a larger segment,
Speaker 1: let's say seventy to seventy five percent, they will be
Speaker 1: placed back into the same proceeding they were supposed to
Speaker 1: go to court for that day, but after having been
Speaker 1: arrested and detained and having to pay out a bond,
Speaker 1: and so all of this is very scary and unsettling,
Speaker 1: and that's part of the strategy is to impose those
Speaker 1: kinds of conditions to make it as onderous as possible
Speaker 1: for the people here without status to remain here.
Speaker 2: So then will this student definitely get a hearing.
Speaker 1: Well, so they will first have to show that they
Speaker 1: have a credible asylum playing and of course, because the
Speaker 1: student is from Venezuela, probably will not be that difficult,
Speaker 1: because Venezuela does crack down on political dissidents. If this
Speaker 1: person can show that they had some political oppression in
Speaker 1: the past or they have some political issue, they can
Speaker 1: clear that threshold, and then they'll actually have an asylum hearing,
Speaker 1: which was the whole purpose of why they went to
Speaker 1: court in the first place.
Speaker 2: So now let's turn from high school to college and
Speaker 2: graduate school. There's going to be a hearing this week
Speaker 2: to determine whether a judge should extend a temporary block
Speaker 2: that's keeping the Trump administration from canceling the student visas
Speaker 2: of nearly seven thousand international students at Harvard. This being
Speaker 2: part of Trump's campaign against Harvard tell us about the
Speaker 2: issues here.
Speaker 1: So basically what happened is the Trump administration has been
Speaker 1: trying to get information from Harvard with regard to a
Speaker 1: lot of its practices, but including also the nature of
Speaker 1: its students that are there as foreign students and the
Speaker 1: nature of their conduct. But the issue is that there's
Speaker 1: a normal process where that happens. That it's called the
Speaker 1: every two years recertification, and then there's an application, and
Speaker 1: then if you want to deny the ability for students
Speaker 1: to come. You have to issue an order saying you
Speaker 1: intend to deny re certification, and then there's an opportunity
Speaker 1: to respond, and then there's an appeal and that essentially
Speaker 1: a court case and all of that. And what the
Speaker 1: Trump administration tried to do is to skip all of that.
Speaker 1: And what the court immediately said was you can't do that,
Speaker 1: and you'd a temporary restraining order saying you can't skip
Speaker 1: all of those steps and just take a school out
Speaker 1: of the student an exchange visitor program. And the reason
Speaker 1: you can is because there's a lot of reliance interests involved.
Speaker 1: There's thousands of students. They can't just all go to
Speaker 1: Yale or Stanford or somewhere else because all those schools
Speaker 1: have admissions processes and so you can't just transfer. It's
Speaker 1: not that easy. And if you are one of the
Speaker 1: students who's on a status called OPT, which is called
Speaker 1: optional practical Training, which is something that allows you as
Speaker 1: a student to work after you graduate in the field
Speaker 1: that you graduated from. It allows you to get practical experience,
Speaker 1: then there's nowhere you can transfer because you finished your degree.
Speaker 1: So you could be working, for instance, right now at
Speaker 1: Microsoft or at Google wherever it may be, or even
Speaker 1: at a hospital or you know, doing something medical wherever
Speaker 1: you may be, and if your status gets canceled, then
Speaker 1: that's the end of it. Then you're here illegally. There's
Speaker 1: nothing you can do. You have to go home. And
Speaker 1: so this lawsuit actually, you know, for those people in
Speaker 1: that status, that saves them from falling out of legal status.
Speaker 1: But if that temporary restraining order is lifted, all of
Speaker 1: those people who are in this optional practical training status
Speaker 1: will immediately have to go home. There's going to be
Speaker 1: no way for them to stay legally. They'll have ten
Speaker 1: days to just leave the United States and then from
Speaker 1: abroad to have to figure out if there's some other
Speaker 1: visa program that can take advantage of. Similarly, for the
Speaker 1: students who actually are at Harvard, they're going to have
Speaker 1: to make some decisions regardless, which is do we keep
Speaker 1: having to worry about injunction, go injunction? Yes, injunction lifting
Speaker 1: it and do we want to live under that stress
Speaker 1: or do we want to just transfer to some other
Speaker 1: school or do we just want to leave the United
Speaker 1: States period? Because this is way too stressful, and so
Speaker 1: for a lot of those individuals, I don't imagine they're
Speaker 1: going to want to stay at Harvard and see how
Speaker 1: this ends. And so that creates a very difficult issue
Speaker 1: for Harvard, which is that it's going to lose a
Speaker 1: lot of these students even if it wins its litigation.
Speaker 2: Also, Secretary of State Marco Rubio has ordered US embassies
Speaker 2: worldwide to stop scheduling interviews for student visas because they're
Speaker 2: weighing stricter vetting of applicants social media profiles correct.
Speaker 1: So USCIS had already said this for domestic visa cases,
Speaker 1: and now Secretary of State Rubio is trying to add
Speaker 1: more meat on these bones for foreign student cases to
Speaker 1: give people very specific guidance as to when a visa
Speaker 1: should be denied and when a visa should be approved.
Speaker 1: So at the moment, because that guidance doesn't exist, what
Speaker 1: the Secretary of State said is stop scheduling new appointments
Speaker 1: until we can get this guidance out. Everything I'm told
Speaker 1: is that this will be shortly, so it should be
Speaker 1: a week or two for this guidance to come out.
Speaker 1: It's not going to be something that's going to ban
Speaker 1: all students from coming in forever, but it definitely is
Speaker 1: going to be yet one more very difficult obstacle because
Speaker 1: in a lot of these embassies there's already a backlog
Speaker 1: of appointments and some students never get in. So they
Speaker 1: all need to get their visa appointment and their visa
Speaker 1: by August. If they either can't get an appointment or
Speaker 1: now they can get an appointment, but the problem is
Speaker 1: their case is now taking longer to decide because everybody's
Speaker 1: case now can't be decided at the window. It has
Speaker 1: to be decided after somebody goes and looks through all
Speaker 1: of their social media. Then that's going to be a
Speaker 1: different process which will lead to many more students not
Speaker 1: being able to enter the United States. So what that
Speaker 1: leads to in practice is instead of the normal cycle
Speaker 1: where you get admitted into school in April or May,
Speaker 1: you apply for your visa and you are ready to
Speaker 1: come in in September, it may now be that you
Speaker 1: have to start school in January or maybe even one
Speaker 1: year later in September of the following year, which obviously
Speaker 1: then leads to making America less attractive for foreign students
Speaker 1: to come study, which either is the intent or is
Speaker 1: it I don't know what the intent is here. It
Speaker 1: may also just be to really not have people who
Speaker 1: are putting some very terrible things on their social media
Speaker 1: study in the United States because they're dangerous to the country. So, well,
Speaker 1: that's the way. And see how this is implemented in reality.
Speaker 1: And if in reality what's happening is that the only
Speaker 1: people excluded are people you really wouldn't want to come,
Speaker 1: then you know, then it's a change that is defensible
Speaker 1: and arguable. But if it's really a change that just
Speaker 1: leads to a gridlock so that no one can come
Speaker 1: in the country, even if you're a student from Sweden
Speaker 1: who's here to study electrical engineering or medicine, then that
Speaker 1: becomes a more difficult problem.
Speaker 2: Are there other countries that are popular for students?
Speaker 1: Absolutely so. Students from around the world study in all
Speaker 1: of these countries that you might expect. Canada, they study
Speaker 1: in Australia, they study in New Zealand, they study in
Speaker 1: the United Kingdom, and so every one of these countries.
Speaker 1: It is very interesting. They all go through ebbs and
Speaker 1: flows where they take more students and they take less students.
Speaker 1: They crack down, they loosen up. We've cracked down, We've
Speaker 1: loosened up. Now we're in a sort of crackdown stage again,
Speaker 1: so other countries might loosen up their statuses again. And
Speaker 1: it's very interesting how sort of this happens. So no
Speaker 1: country is linearly they're throw these student visas or against them.
Speaker 1: It's always seems to be an ebb and flow amongst
Speaker 1: all these countries that have universities that bring in foreign students,
Speaker 1: where at some times they're really trying to attract foreign
Speaker 1: students and they say, hey, this is a lot of
Speaker 1: money for our schools and a lot of money for
Speaker 1: our economy, and we're trying to bring in the best
Speaker 1: and brightest, and then at other times they decide, no, no, no, no,
Speaker 1: this is competition for our workers and competition for our
Speaker 1: slots in our schools. So no, in fact, we don't
Speaker 1: want these people. And it's really a back and forth
Speaker 1: that no country has sort of reached the consensus on
Speaker 1: what it thinks of these foreign students.
Speaker 2: Finally found this very interesting. So Scadden Arps was one
Speaker 2: of the law firms who cut a deal with Trump
Speaker 2: to avoid being targeted by him, and they cut one
Speaker 2: hundred million dollar deal to take on causes he supports,
Speaker 2: and what was listed was fighting anti semitism, promoting justice,
Speaker 2: and assisting veterans active military, law enforcement and government officials.
Speaker 2: But now it appears that they're helping an immigrant try
Speaker 2: to avoid removal from the United States, which seems to
Speaker 2: be counter to what the deal was with Trump.
Speaker 1: Well, so here's what's interesting. For many, many years, law
Speaker 1: firms have done these immigration cases for several reasons. Number
Speaker 1: one is that a lot of pro bono cases, big
Speaker 1: law firms can't do them because many times what happens
Speaker 1: is there's conflicts where if you're suing any sort of
Speaker 1: private entity, you'd probably be suing a private entity that
Speaker 1: is either a client or adjacent to a client, and
Speaker 1: so that's very hard. So one of the things you
Speaker 1: can do very easily in a law firm is through
Speaker 1: the government, because the government has its own lawyers, and
Speaker 1: so immigration cases have traditionally been viewed as an area
Speaker 1: where law firms can do work because the other side
Speaker 1: is the government, so they have their own set of lawyers,
Speaker 1: there's no conflict, and also they're discreet enough cases that
Speaker 1: the law firms can do then. But what happens is now,
Speaker 1: if you're in one of these situations where you're theoretically
Speaker 1: running a foul of what the Trump administration has already
Speaker 1: reached the settlement with your law firm to do. Then,
Speaker 1: if you have a pro bono department in your law firm,
Speaker 1: you're going to have to figure out what it is
Speaker 1: you're doing with this kind of work. And if the
Speaker 1: Trump administration says we don't want you doing this work,
Speaker 1: then you're going to have to decide whether you want
Speaker 1: to go where the other law firms are going and
Speaker 1: litigate or what you want to do there. But yes,
Speaker 1: certainly that does create a very complicated issue there.
Speaker 2: Thanks so much as always, Leon, that's Leon Fresco of Honda, Knight,
Speaker 2: Johnson and Johnson's failure to resolve mass toward talent litigation
Speaker 2: through the bankruptcy system was not only a setback for
Speaker 2: the pharmaceutical giant, but also a costly blow for plaintiff's
Speaker 2: lawyers who got behind the effort. Jay and J is
Speaker 2: not appealing the dismissal of its third TALC unit bankruptcy
Speaker 2: and is instead returning to civil court to face about
Speaker 2: sixty thousand lawsuits alleging its baby powder and other consumer
Speaker 2: tel products were tainted with cancer causing asbestos joining me
Speaker 2: is Bloomberg Lawn correspondent Alex Woolf. Alex give us little
Speaker 2: of the flavor of the history of this litigation, so as.
Speaker 4: Jay and Jay tells that they have been the victors
Speaker 4: in much of this calculated litigation over the past decade.
Speaker 4: I believe they won sixteen out of seventeen cases that
Speaker 4: have gone to trial. But in twenty twenty one they
Speaker 4: were hit with a multi billion dollar verdict. The case
Speaker 4: was appealed and the award was dropped slightly, but enough
Speaker 4: to make a large dent in the company at that point.
Speaker 4: In twenty twenty one, the company then began looking at
Speaker 4: alternative ways to address just a mountain of litigations that
Speaker 4: was continuing to grow more and more, sort of as
Speaker 4: each month and year past. These are given with ovarian
Speaker 4: cancer who alleged that the company's baby powder and shower
Speaker 4: to shower products was the cause of their cancer, and
Speaker 4: so Jay and.
Speaker 2: J decided to use this strategy, a bankruptcy strategy that's
Speaker 2: referred to as the Texas two Steps.
Speaker 4: So, beginning of twenty twenty one, they hired a group
Speaker 4: of attorneys from the law firm of Jones Day who
Speaker 4: had sort of pioneered this strategy of taking a large
Speaker 4: corporation that's facing sort of a mountain of mass tort
Speaker 4: litigation and using a Texas state law to separate the
Speaker 4: healthy operating business from its mass tort life abilities and
Speaker 4: then put a new subsidiary housed with all of those
Speaker 4: liabilities into bankruptcy. So Jy and J employed Jones Day
Speaker 4: and did this exact thing in twenty twenty one, starting
Speaker 4: a case first in the Western District of North Carolina
Speaker 4: that then got bumped up to New Jersey where the
Speaker 4: company is based. From there, there there were a number
Speaker 4: of trial and error cases where the courts just sort
Speaker 4: of kept saying, no, you cannot do this. The company
Speaker 4: went back to the group of plaintiffs again and came
Speaker 4: up with another deal. This time it was to bring
Speaker 4: a case in the Southern District of Texas, where the
Speaker 4: law is a little bit different. So this was the
Speaker 4: third case was one in the Houston Bankruptcy Court last ball.
Speaker 2: This was different because J and J approached it in
Speaker 2: a different way.
Speaker 4: In this case, so Jane J's subsidiary, which you know
Speaker 4: is very much controlled by the parent corporation, it reached
Speaker 4: a deal and it conducted a vote sort of before
Speaker 4: the bankruptcy started and said, you know, we have eighty
Speaker 4: three percent I believe of the claimants in this case
Speaker 4: support a plan that we've already negotiated and put together
Speaker 4: neatly for the purpose of filing for bankruptcy, and at
Speaker 4: that point sort of asking the court just sort of
Speaker 4: blessed the work that it had already done outside of
Speaker 4: the bankruptcy.
Speaker 2: Forum and tell us what the judge decided.
Speaker 1: There was a two.
Speaker 4: Week trial this year where there are lots of attorneys
Speaker 4: and experts on caalcul litigation who spoke at the end
Speaker 4: of it all. The judge there said that there were
Speaker 4: problems with some of the voting procedures where you had
Speaker 4: a lot of plaints attorneys who used the power of
Speaker 4: attorneys to vote on behalf of several thousand people, and
Speaker 4: that judge said that that that does not pass muster
Speaker 4: or under the bankruptcy Code. And he also found some
Speaker 4: issues with some of the additional relief that Johnson and
Speaker 4: Johnson wanted through this case, which was providing releases from
Speaker 4: litigation for dozens and dozens of third parties, including retailers
Speaker 4: that sold baby powder.
Speaker 2: So the judge dismisses the bankruptcy and Jay and Jay
Speaker 2: is not going to appeal. It is that surprising, I
Speaker 2: think some people would say, as they were surprised that
Speaker 2: the company was very quick.
Speaker 4: To react to the judges ruling at at the very
Speaker 4: very end of March. They immediately came out and said,
Speaker 4: we are going to return to the civil tourts system.
Speaker 4: We won't pursue this bankruptcy strategy anymore, and we're going
Speaker 4: to go back to the courtroom where we were doing
Speaker 4: a good job and winning cases sort of before we
Speaker 4: even launched the strategy to begin with.
Speaker 2: How many cases are there that the plaintiff's firms now
Speaker 2: have to decide whether to go forward and litigate them?
Speaker 1: Right?
Speaker 4: So what I found interesting was that you know, these
Speaker 4: bankruptcies either and this third one in particular, when it started,
Speaker 4: it put on pause about sixty thousand lawsuits. But when
Speaker 4: it's all said and done, there were ninety three thousand
Speaker 4: I believe bankruptcy claims so port litigation claims against the company.
Speaker 4: So that means that there were another thirty thousand or
Speaker 4: so people that said, you know, I have what would
Speaker 4: be a viable lawsuit against the company. But I just
Speaker 4: haven't filed it yet, but I can assert this claim
Speaker 4: to bankruptcy. So when the bankruptcy is thrown out, you
Speaker 4: then have this these thirty three thousand or so people
Speaker 4: that now must make a choice. You know, do I
Speaker 4: really have a lawsuit that I want to file and
Speaker 4: litigate and pursue and potentially you know, go to trial,
Speaker 4: or or just sort of let it go. In this case,
Speaker 4: many of those claims are held or were represented by
Speaker 4: just a couple of large plaintiffs firms that sort of
Speaker 4: saw an opportunity to settle on mass in a bankruptcy
Speaker 4: setting as opposed to litigating cases or trying to reach
Speaker 4: some sort of settlement outside of the bankruptcy forum.
Speaker 2: I assume most plaintiffs would want to go forward. Isn't
Speaker 2: this on a contingency fee basis?
Speaker 4: I think that it comes down to sort of what
Speaker 4: the retainer agreement say for each law firm and then
Speaker 4: their clients. In this case, I know that there was
Speaker 4: some discussion during the trial over whether or not you know,
Speaker 4: at least one of the firms was only representing clients
Speaker 4: for the purpose of the bankruptcy case. But undoubtedly there
Speaker 4: are several thousand of these claimants that indeed do want
Speaker 4: to suicivil lawsuit, and yes, they are all on a
Speaker 4: contingency basis with these.
Speaker 2: Firms and tell us about the costs of bringing these
Speaker 2: cases for the attorneys.
Speaker 4: So you know, if you're just filing one individual suit,
Speaker 4: it might not seem like all that much. You know,
Speaker 4: a few hundred dollars for filing fees, maybe up to
Speaker 4: one thousand dollars to get all the medical records, you know,
Speaker 4: plus you know, just obviously standards, labor and expenses that
Speaker 4: go with getting a case on file and sort of
Speaker 4: getting getting it in motion to begin with. When you're
Speaker 4: talking about just one case, but it doesn't seem like
Speaker 4: all that much. But when you're talking about thousands of
Speaker 4: cases that these plaintiffs firms didn't prepare to have to
Speaker 4: file in a civil court, that adds up to potentially
Speaker 4: millions of dollars.
Speaker 2: Did the judge find any bad faith?
Speaker 4: The judge did not find that these plaintiffs firms either
Speaker 4: filed claims or pursued on their clients behal in bad faith.
Speaker 4: He just said that they just went about the voting
Speaker 4: process incorrectly.
Speaker 2: So some of these plaintiff's firms. Perhaps all of them
Speaker 2: had to get money from litigation financers to go forward
Speaker 2: with these cases.
Speaker 4: In this case, I don't know exactly how much each
Speaker 4: of these firms involved has borrowed. It would be it
Speaker 4: would stretch the imagination to think that, you know, for instance,
Speaker 4: of one of the lawyers testified that he spent sixty
Speaker 4: eight million dollars marketing the law firm to acquire claimants
Speaker 4: with the purpose of bringing them through bankruptcy. It would
Speaker 4: stretch the imagination that he hasn't borrowed that money to
Speaker 4: begin with, that he could just pay that out of pocket.
Speaker 4: But undoubtedly there are loans that these firms do have
Speaker 4: to pay back which are based on their docative cases
Speaker 4: that they have in in house.
Speaker 2: Some of these were financed, the loans were structured in
Speaker 2: different ways than normally.
Speaker 1: Yeah.
Speaker 4: So so typically, you know, litigation funders that this industry
Speaker 4: that's existed now for you know, some two decades or
Speaker 4: so in the US. UH, they typically have had invested
Speaker 4: money into pursuing commercial cases. You know, maybe maybe you
Speaker 4: know some one large you know, det the company's sort
Speaker 4: of case and only in I believe, you know, the
Speaker 4: last decade or so, uh, did these same investment firms,
Speaker 4: these these litigation funders start looking towards mass torts plaintiff
Speaker 4: sparts for these uh, for these investments as well. And
Speaker 4: it's structured a little bit differently because instead of investing
Speaker 4: in just sort of one single uh civil case, it
Speaker 4: would be a whole dock of cases related to a litigation.
Speaker 4: So you know, it would be like one loan that's
Speaker 4: based upon thousands and thousands of cases.
Speaker 2: Is it possible that some of these firms go out
Speaker 2: of business because of this?
Speaker 4: Or no?
Speaker 2: Might taking it too far?
Speaker 4: That is a good question. I I you know, I truthfully,
Speaker 4: I don't know the answer to that question. I I
Speaker 4: imagine that many of them look towards other funders to
Speaker 4: sort of help them out and refinance. But yeah, you're
Speaker 4: you are getting into the inner workings of an industry
Speaker 4: that is still sort of figuring out sort of just
Speaker 4: how all of this works.
Speaker 2: Okay, this JAY and J case, is it unique as
Speaker 2: far as bankruptcy cases go?
Speaker 4: I think that it is very unique. And the route
Speaker 4: that it's taken, you know, through the civil court and
Speaker 4: then so taking this bite at the apple three times
Speaker 4: in the bankruptcy court.
Speaker 1: That that is.
Speaker 4: That is a very unique pattern. However, it is not
Speaker 4: the first large company I will say, actually, it's not
Speaker 4: the first parent of large parents of a company to
Speaker 4: have its subsidiary thrown out of the bankruptcy while facing
Speaker 4: mass tot litigation. The same thing happened to a a
Speaker 4: unit of three M that manufactured combat ear plug and
Speaker 4: in that case, when the I believe it was a
Speaker 4: court of bankrupcy court in Indiana through its case out, uh,
Speaker 4: it then reads a large settlement with the same group
Speaker 4: of claimants in a civil court.
Speaker 2: Thanks so much Alex for joining me. That's Bloomberg Blog
Speaker 2: correspond Alex Wolf and that's it for this edition of
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