Speaker 1: This is Bloomberg Law with June Grossel from Bloomberg Radio.
Speaker 2: Why do you think Presidents Clinton, Bush Obama have not.
Speaker 3: Used i EPA to impose tariffs?
Speaker 4: It's one of the most important cases of the term,
Speaker 4: a test of presidential power where President Trump's signature economic
Speaker 4: policy is at stake and a decision against him could
Speaker 4: mean refunding of more than one hundred billion dollars. And
Speaker 4: after nearly three hours of oral arguments on Wednesday, it
Speaker 4: appears that Supreme Court justices across the ideological spectrum are
Speaker 4: skeptical that Trump has the legal authority to impose billions
Speaker 4: of dollars in tariffs. Chief Justice John Roberts and Justice
Speaker 4: Sonya Sotomayor said, the tariffs are taxes, and the Constitution
Speaker 4: gives taxing power to Congress.
Speaker 5: It's a congressional power, not a presidential power to tax.
Speaker 5: And you want to say tariffs are not taxes, but
Speaker 5: that's exactly what they are, degenerating money from American citizens revenue.
Speaker 6: The vehicle is in position of taxes on Americans and
Speaker 6: that has always been the core power of Congress.
Speaker 4: Trump is arguing that the International Emergency Economic Powers Act,
Speaker 4: or AIPA gives him virtually unlimited powers to impose tariffs
Speaker 4: by executive order. But as several justices pointed out, the
Speaker 4: word tariffs is nowhere to be found in that law.
Speaker 4: Here are the Chief Justice and Justice Katanji Brown Jackson, Well, but.
Speaker 6: The exercise of the power is to impose tariffs, right,
Speaker 6: and the statute doesn't use the word tariffs.
Speaker 3: Your argument suggests that we should see the word imposed,
Speaker 3: the phrase impose tariffs in that same series of things
Speaker 3: that the president could do. We don't see that word,
Speaker 3: And instead you take regulate and say that must mean that.
Speaker 4: No other president has tried to impose tariffs under AJEPA,
Speaker 4: and Justice Neil Gorsuch, a Trump appointdee, expressed alarm at
Speaker 4: the idea that Congress could delegate such seemingly unlimited power
Speaker 4: to the president.
Speaker 2: Congress, as a practical matter, can't get this power back
Speaker 2: once it's handed it over to the President's a one
Speaker 2: way ratchet toward the gradual but continual accretion of power
Speaker 2: in the executive branch and away from the people's elected representative.
Speaker 4: All three lower courts that ruled on the issue found
Speaker 4: the tariffs to be unlawful. My guest is Timothy Bright Bell,
Speaker 4: partner and co chair of the International Trade practice at
Speaker 4: Wiley Rhin. Tim tell us what's at stake in this case.
Speaker 7: This case involves the centerpiece of President Trump's economic agenda.
Speaker 7: Is the biggest trade case the Supreme Court has ever heard,
Speaker 7: and it goes straight to the key constitutional issue of
Speaker 7: who has the power to impose tariffs, the US Congress
Speaker 7: or the president. President Trump says the law that he used,
Speaker 7: the International Emergency Economic Powers Act, gives him the power
Speaker 7: to regulate imports, and that that includes the power to
Speaker 7: impose tariffs, including ventanyl tariffs on China, Canada, and Mexico,
Speaker 7: and reciprocal economic tariffs on almost all countries. Whereas the
Speaker 7: plaintiffs in this case say that Congress has that power
Speaker 7: and cannot delegate that power, and that AEPA, which has
Speaker 7: never before been used to impose tariffs, does not include
Speaker 7: that power and afford So that is what is at stake.
Speaker 7: And of course the tariffs under AEPA have led to
Speaker 7: collection of hundreds of billions of dollars of tariffs already,
Speaker 7: so it's very high economic stakes for the companies and
Speaker 7: industries that it paid those tariffs as well.
Speaker 4: There's always a textual analysis these days, and many of
Speaker 4: the justices were concerned that the text of the statute
Speaker 4: doesn't mention the word tariffs at all exactly.
Speaker 7: The argument focused quite heavily on this law used by
Speaker 7: President Trump AIPA and whether that law, which gives the
Speaker 7: president the power to regulate imports, also includes the power
Speaker 7: to impose tariffs. That really dominated most of the hearing,
Speaker 7: and the justices asked very difficult questions on both sides.
Speaker 7: The administration said that the ability to impose tariffs is
Speaker 7: a core application of the ability to regulate imports in
Speaker 7: a historical context, said that, of course, the power to
Speaker 7: regulate imports would be read to include tariffs because tariffs
Speaker 7: have been used throughout our country's history. On the other hand,
Speaker 7: several justices were skeptical of that, and the plaintiffs in
Speaker 7: this case said that when the delegation and includes tariff authority,
Speaker 7: there is always specific language to that effect, and that
Speaker 7: there are always conditions and tests and agency decisions that
Speaker 7: have to go into that tariff power. So there was
Speaker 7: a good amount of the argument focused on those issues,
Speaker 7: and again, whether power to regulate imports includes the power
Speaker 7: to impose tariffs, and.
Speaker 4: What did you think about the Solicitor General's argument that
Speaker 4: the Trading with the Enemy Act of nineteen seventeen gives
Speaker 4: the president authority to impose these tariffs.
Speaker 7: The Solicitor General argued, yes, that the Trading with the
Speaker 7: Enemy Act was used to impose tariffs in a prior
Speaker 7: situation by President Nixon, and that there's no reason to
Speaker 7: think that anything had changed when AIPA had passed. On
Speaker 7: the other hand, the plaintiffs had a response to that
Speaker 7: in terms of the fact again that when tariffs are involved,
Speaker 7: there are always conditions on their use, there are always
Speaker 7: specific procedures, and also the fact that the reality is
Speaker 7: that no other president in fifty years has used AIPA
Speaker 7: to impose tariffs.
Speaker 4: The Major Questions doctrine came up several times during the arguments.
Speaker 4: It basically says that when the executive branch takes an
Speaker 4: action with major political or economic significance, Congress has to
Speaker 4: have expressly authorized it, and the Chief Justice made it
Speaker 4: fairly clear that he thought the Major Questions doctrine applies here.
Speaker 7: Yes, So the question here is, does the Major Questions
Speaker 7: doctrine require a clear statement in AIPA that it includes
Speaker 7: the power to impose tariffs, and this Court has not
Speaker 7: hesitated to start using that doctrine more broadly. But I
Speaker 7: think you're right that the justices had some concerns about
Speaker 7: pursuing it in this venue. And again, the question comes
Speaker 7: to is the power to tariff implied in the power
Speaker 7: to regulate imports or if it's not. Was this a
Speaker 7: question that Congress was required to state clearly that tariffs
Speaker 7: were a part of what was envisioned by the new law.
Speaker 4: The Conservatives us the Major Questions doctrine to block several
Speaker 4: of President Biden's initiatives, like his student loan forgiveness program.
Speaker 4: If they allow Trump to impose these tariffs, do you
Speaker 4: think they'll have to explain why the Major Questions doctrine
Speaker 4: applied to Biden but not Trump.
Speaker 7: I think it's an interesting question whether they'll go there
Speaker 7: or whether they will just focus on the language of
Speaker 7: AIBA and this issue of whether the power to regulate
Speaker 7: imports includes the power to tariff, and I think several
Speaker 7: justices went down that road. I don't think just because
Speaker 7: these doctrines have been used in other cases, such as
Speaker 7: the Biden student bond forgiveness case doesn't necessary mean that
Speaker 7: they will have to address it in this opinion if
Speaker 7: they have other bases for finding that the tariffs were
Speaker 7: legal or improper in any way.
Speaker 4: And Justice Gorsuch in particular expressed alarm about the seeming
Speaker 4: lack of limitations on the powers the President was claiming here.
Speaker 7: Justice of course the hypothetical of if Congress can delegate
Speaker 7: the tariff authority, what would prohibit Congress from delegating everything,
Speaker 7: including the power to declare war, which is clearly given
Speaker 7: in the Constitution to Congress. And so that was a
Speaker 7: very interesting discussion. I'm certainly raising some concerns about the limits,
Speaker 7: if any, on the authority that the government was claiming.
Speaker 4: So where do you think the justices are going to
Speaker 4: come out here?
Speaker 7: Well, I'm not in the business of making predictions. Generally.
Speaker 7: My own personal view is that the Court's three Democratic
Speaker 7: justices probably vote against these tariffs. And the question is
Speaker 7: whether some of the majority of the Court have similar
Speaker 7: concerns about the president's use of this law. And I
Speaker 7: do think that it's still a very close decision. It
Speaker 7: could go either way. I thought Chief Justice Roberts and
Speaker 7: Justice Barrett and Justice Gorsich were perhaps more skeptical of
Speaker 7: the president's tariff authority under a than the other justices. Yues.
Speaker 7: The only other point I would make is, although it
Speaker 7: was discussed in the oral argument, I have a hard
Speaker 7: time seeing this court making a split decision that some
Speaker 7: of President Trump's tariffs are acceptable but others are not.
Speaker 4: So if the Court does rule against Trump, what happens
Speaker 4: next as far as his tariffs are concerned.
Speaker 7: Well, two things would happen. First of all, there would
Speaker 7: likely be some sort of a refund process for importers
Speaker 7: that paid the tariffs during this time, and there is
Speaker 7: some precedent for that before That was discussed during the
Speaker 7: oral argument a situation where the court struck down a
Speaker 7: harbor maintenance tax and there was basically a process where
Speaker 7: companies could file claims for the amount of the tax
Speaker 7: that they paid. So Justice Barrettz was concerned that this
Speaker 7: could be a mess and could be very unwieldy. I
Speaker 7: guess the more important point is what will the president
Speaker 7: do going forward? And I think it's clear that tariffs
Speaker 7: are still a cornerstone of this administration's economic policy. And
Speaker 7: if the Court says that the President cannot use AIPA,
Speaker 7: the President will likely pivot to one of several other
Speaker 7: trade tools that are available, and the Court mentioned many
Speaker 7: of these, including Section one twenty two, the section two
Speaker 7: thirty two, the National Security Law, which the administration has
Speaker 7: already made quite a bit of use of in this administration,
Speaker 7: Section three zero one, and so forth. The limit on
Speaker 7: those laws is that they do require studies or actions
Speaker 7: by other agencies. So Section two thirty two requires a
Speaker 7: study and a report by the Commerce Department and consultation
Speaker 7: with the Defense Department in order to decide that imports
Speaker 7: of a certain product like semiconductors or pharmaceuticals are a
Speaker 7: threat to national security. Similarly, Section three oh one, which
Speaker 7: was the law used to impose tariffs on China during
Speaker 7: the first Trump administration, also requires a detailed study by
Speaker 7: the US Trade Representative with public inputs. So those tools,
Speaker 7: for the most part, cannot be used as quickly as
Speaker 7: AIPA was used by President Trump.
Speaker 4: This case was fast tracked by the court so a
Speaker 4: ruling could come as quickly as the end of the year.
Speaker 4: Thanks so much for joining me, tim that's Timothy Bright,
Speaker 4: Bill of Willie Rhin Coming up next to the Bloomberg
Speaker 4: Law show. Prosecutors get us scolding from the judge in
Speaker 4: the case against former FBI director James Comey. I'm June
Speaker 4: Grosso and you're listening to Bloomberg.
Speaker 2: My heart is broken for the Department of Justice, but
Speaker 2: I have great confidence in the federal judicial system.
Speaker 1: I'm innocent, so let's have a trial.
Speaker 4: But will the criminal case against former FBI director James
Speaker 4: Comy even get to trial. Comy is pleaded not guilty
Speaker 4: to the charges of lying to Congress in twenty twenty,
Speaker 4: and his defense has filed several motions to get the
Speaker 4: case dismissed before trial. They include emotion to dismiss because
Speaker 4: the government is engaged in a vindictive and selective prosecution,
Speaker 4: emotion to dismiss because the interim us attorney was appointed illegally,
Speaker 4: and emotion to dismiss because Comy's testimony was literally true.
Speaker 4: And on Wednesday, a clearly exasperated judge scolded the prosecutors
Speaker 4: for the Justice Department's indict first and investigate second approach
Speaker 4: to the case. Magistrate Judge William Fitzpatrick then ordered the
Speaker 4: prosecutors to turn over to the defense a raft of
Speaker 4: potential evidence, including full transcripts of the grand jury proceedings.
Speaker 4: My guest is former federal prosecutor Robert Mintz, a partner
Speaker 4: maccarter and English Bob. How unusual is it for a
Speaker 4: judge to make these kinds of remarks that the Justice
Speaker 4: Department here indicted first, an investigated second, and that the
Speaker 4: prosecutors may have mishandled some evidence.
Speaker 8: Well, it's very unusual for the judge to comment on
Speaker 8: the prosecutor's conduct and to comment on the evidence of
Speaker 8: the case this early in the process. And it suggests
Speaker 8: that the court, at least this judge, of the magistrate
Speaker 8: judge who was handling this argument, has some serious questions
Speaker 8: about the procedures used by prosecutors and whether or not
Speaker 8: they had really put together the evidence necessary to pursue
Speaker 8: this case. And the warning that he gave prosecutors with
Speaker 8: regard to mishandling evidence turns on this whole question of
Speaker 8: evidence seized from sirch warrants way back in twenty nineteen
Speaker 8: and twenty twenty in an unrelated investigation, And there's going
Speaker 8: to be an inquiry now into whether or not the
Speaker 8: information that prosecutor seesed many years ago is being properly
Speaker 8: utilized in this prosecution.
Speaker 4: And that evidence was seized from Comy's friend and former
Speaker 4: attorney Daniel Richmond as part of an internal investigation of
Speaker 4: leaks in the Russia case during the first Trump administration.
Speaker 4: Let's talk about the judge ordering the full grand jury
Speaker 4: transcripts to be handed over. That could be a treasure
Speaker 4: trove for the defense, which claims that there were severe
Speaker 4: and pervasive irregularities in the presentation to the grand jury
Speaker 4: by the newly installed interim US Attorney Lindsey Halligan, who
Speaker 4: had no experience as a prosecutor.
Speaker 8: It's not unusual for transcripts of witnesses who might appear
Speaker 8: before the grand jury to be turned over.
Speaker 9: To the defense. In fact, it's required.
Speaker 8: Prosecutors generally prefer not to have witnesses who are favorable
Speaker 8: to the government testify in the grand jury because then
Speaker 8: those statements and that testimony has to be turned over
Speaker 8: to the defense, and it provides defense lawyers fodder for
Speaker 8: cross examination if the witness testifies at trial in any
Speaker 8: way differently or inconsistently with the testimony they gave before
Speaker 8: the grand jury.
Speaker 9: But what's going to be interesting here for the.
Speaker 8: Defense team is not so much what was said from
Speaker 8: the witness, who in this case was an FBI agent
Speaker 8: who is simply summarizing the case, but the questions that
Speaker 8: were posed by the prosecutor in this case, the interim
Speaker 8: US attorney Lindsay Halligan, how she presented the case to
Speaker 8: the grand jurors, how she presented the law to the
Speaker 8: grand jurors, how she may have answered any questions that
Speaker 8: grand jurors raised. Because what happens during the grand jury
Speaker 8: process is that there's a grand jury foreman and the
Speaker 8: grand jury formant has a conversation, often when the prosecutor
Speaker 8: is outside of the grand jury room, and then the
Speaker 8: foreman will ask questions on behalf of all the grand jurors.
Speaker 8: That happens fairly frequently, and in this case, we know
Speaker 8: that the grand jurors decided not to return an indictment
Speaker 8: on one of the three counts, So there's no question
Speaker 8: that there was some significant conversation and debate going on
Speaker 8: among the grand jurors and probably a number of questions
Speaker 8: that were posed to the prosecutor. The defense team is
Speaker 8: going to be very interested in seeing how Lindsey Halligan
Speaker 8: answered those questions, and they're going to be looking to
Speaker 8: see whether there's anything she did that they will argue
Speaker 8: was improper in front of that grand jury that could
Speaker 8: possibly taint the entire indictment. And if they can ultimately
Speaker 8: convince the judge that the irregularities are serious enough so
Speaker 8: that it taints the entire grand jury process and that
Speaker 8: indictment is thrown out, they may well have won their
Speaker 8: case because the station of limitations, I'm sure they will argue,
Speaker 8: has now expired.
Speaker 4: Apparently the government is concerned about turning over the grand
Speaker 4: jury transcripts because they agreed to turn over the evidence
Speaker 4: ceased from Richmond, but they're appealing the magistrate judges ordered
Speaker 4: to turn over the grand jury transcripts.
Speaker 8: Well, that's not surprising that they are appealing that, because again,
Speaker 8: it's so unusual for defense lawyers to get the actual presentation,
Speaker 8: and it's quite possible that there were some statements that
Speaker 8: were made that could be problematic for prosecutors. So they
Speaker 8: have now appealed the magistrate judge's decision that's requiring them
Speaker 8: to turn over the grand jury material to the district
Speaker 8: court judge, and they're basically arguing that the magistrate judge
Speaker 8: exceeded his authority in ordering the grand jury transcripts to
Speaker 8: be turned over. They are arguing that the defense team
Speaker 8: had already fought in motion to seek to get access
Speaker 8: to the grand jury presentation, and that that was pending
Speaker 8: before the District Court judge, and that the magistrate judge
Speaker 8: was at that point only appointed to deal with a
Speaker 8: question of potential privileged materials, and in requiring that the
Speaker 8: grand jury material be turned over, he went beyond the
Speaker 8: scope of the authority that was delegated to him by
Speaker 8: the District Court Judge.
Speaker 4: Bob in terms of the motion to dismiss the indictment
Speaker 4: because Lindsay Halligan was illegally serving when she brought the
Speaker 4: charges against Comy. US Attorney General Pam Bondy filed a
Speaker 4: court document on Monday saying that she had retroactively given
Speaker 4: Halligan the additional title of Special Attorney. I mean, I
Speaker 4: too would like to go back in time and correct
Speaker 4: some of my mistakes. But will a court allow her
Speaker 4: to go back to September and basically say, oh, I
Speaker 4: meant to give her this title too.
Speaker 8: I think the argument by the Attorney General that she
Speaker 8: can retroactively give Eastern Virginia's top prosecutors an extra title
Speaker 8: in order to try to defend against the claims that
Speaker 8: Halligan was improperly appointed is probably not going to gain
Speaker 8: a lot of traction with the courts.
Speaker 9: Typically, the courts will look.
Speaker 8: At the facts at the time and whether or not
Speaker 8: the appointment was proper under the rules, under the regulations,
Speaker 8: under the statues.
Speaker 9: At the time of the appointment.
Speaker 8: And I think it's an uphill battle to argue that
Speaker 8: even if there was a deficiency, then that can be
Speaker 8: remedied retroactively by an appointment.
Speaker 4: In one of the motions to dismiss, the defense claims
Speaker 4: the indictment is hopelessly vague and defective on its face,
Speaker 4: that Senator ted Cruz's questions to Comy were fundamentally ambiguous
Speaker 4: and that Comy's response was literally true. Let's listen to
Speaker 4: the exchange between Cruz and Komy.
Speaker 2: What mister McKay is saying and what you testify to
Speaker 2: this committee cannot both be true. One or the other
Speaker 2: is false. Who's telling the truth?
Speaker 1: I just can only speak to my testimony.
Speaker 10: I stand by what the test money you summarized that
Speaker 10: I gave in May of twenty seventeen.
Speaker 4: So the defense wants the prosecution to tell them which
Speaker 4: of Komy's statements are you claiming were false?
Speaker 8: Yeah, And that's exactly why false statement prosecutions are extremely difficult,
Speaker 8: because you have to parse through exactly what was the
Speaker 8: question and what was the answer and demonstrate that at
Speaker 8: the time the answer was given, it was not only false,
Speaker 8: but it was intentionally false, and that it was false
Speaker 8: about something that was material. So in this case, the
Speaker 8: prosecution is based on hearing before the Senate Judiciary Committee
Speaker 8: on September thirtieth, twenty twenty, and at that hearing, Senator
Speaker 8: Ted Cruz asked mister Comy whether he had authorized someone
Speaker 8: at the FBI to be an anonymous.
Speaker 9: Source in news reports.
Speaker 8: The indictment says that mister Comy misled the committee by
Speaker 8: saying that he had not done so. Now, Comy's lawyers
Speaker 8: have attacked that indictment by saying that the questioning by
Speaker 8: mister Cruz was vague and imprecise, and point out that
Speaker 8: at the time that Senator Cruz was questioning mister Comy
Speaker 8: about whether he had authorized anybody to leak information, that
Speaker 8: Senator Cruz was referring to Andrew McCabe, who once served
Speaker 8: as mister Comy's deputy at the FBI, and was not
Speaker 8: referring to Daniel Richman, who had been a former FBI
Speaker 8: employee and later became the attorney for James Comy. So
Speaker 8: they're arguing that the indictment is defective on its face,
Speaker 8: because in order to prove that mister Comy lied, you
Speaker 8: have to show that there was a clear question and
Speaker 8: that he gave a clearly false, a knowingly false answer
Speaker 8: to it, and that he had an intention to mislead
Speaker 8: the committee, and that the information he provided that was
Speaker 8: false was material, and that this somehow obstructed the relevant
Speaker 8: congressional proceeding. They say that that information is not contained
Speaker 8: in the indictment, and one of their emotions is the
Speaker 8: requirement that the government provide that information.
Speaker 9: So what you have here basically.
Speaker 8: Is an argument that the indictment is defective on its face. So,
Speaker 8: in other words, it's not had an argument that the
Speaker 8: government has its facts throng, because a factual dispute is
Speaker 8: something that has to.
Speaker 9: Be resolved by a jury at trial.
Speaker 8: They are arguing that this is a decision that really
Speaker 8: needs to be made by the judge because on its face,
Speaker 8: the government is unable to prove the charges. The allegations
Speaker 8: in the indictment simply are not enough to sustain a
Speaker 8: valid conviction, and that's why they're filing this whole slew
Speaker 8: of arguments to try to get this case dismissed before
Speaker 8: it ever goes to trial.
Speaker 4: And prosecutors would not be able to bring the charges
Speaker 4: again because the statute of limitations has run out, and
Speaker 4: supposedly that's why the indictment was rushed through. Comy's indictment
Speaker 4: came just five days after President Trump had demanded on
Speaker 4: truth Social that Attorney General Pam Bondi bring charges against Komy,
Speaker 4: New York Attorney General Letitia James, and Senator Adam Schiff.
Speaker 4: So legal experts were talking about as selective and vindictive
Speaker 4: prosecution motion even before the defense made that motion in
Speaker 4: the case. Comy's motion papers include a sixty page long
Speaker 4: list of links that detail Trump's negative comments about him
Speaker 4: over the years. How strong is their vindictive prosecution motion?
Speaker 4: I know it's very hard to get a case dismissed
Speaker 4: on those grounds, That's exactly right.
Speaker 8: I mean, motions for vindictive prosecution.
Speaker 9: Are exceedingly hard to win.
Speaker 8: They require defendants to prove the prosecutors have displayed animus
Speaker 8: towards them while they were seeking to exercise their rights,
Speaker 8: and that the charges never would have been brought except
Speaker 8: for that animus. Now, prosecutors have argued in response that
Speaker 8: the comments made by President Trump to prosecute mister Komy
Speaker 8: were only suggesting that if mister Komy committed a crime,
Speaker 8: that they ought to prosecute him, and that he was
Speaker 8: not directing the Department of Justice to prosecute mister Komey
Speaker 8: regardless of whether or not a crime was committed. We'll
Speaker 8: have to see how the judge handles that at the
Speaker 8: end of the day. But the vindictive prosecution standard is
Speaker 8: fairly high and that may be a difficult argument for
Speaker 8: the defense to prevail on.
Speaker 4: We'll see how it goes at the hearings next week.
Speaker 4: Thanks for a great conversation, Bob. That's former federal prosecutor
Speaker 4: Robert Mintz of McCarter and English. Coming up next on
Speaker 4: the Bloomberg Law Show, Michael Jordan's racing team scores a
Speaker 4: key victory in court in its antitrust lawsuit against NASCAR.
Speaker 4: I'm June Grosso and you're listening to Bloomberg.
Speaker 10: Look I've been a fan of the game for a
Speaker 10: long period of time, you know, and you know, when
Speaker 10: we first started this coal process, I've always said that
Speaker 10: y'all want to fight for the betterment of the sport.
Speaker 4: You know.
Speaker 10: Even though they try to point out that, you know,
Speaker 10: we made you know, some money, or we had successful business,
Speaker 10: that's not the point. The point is is that the
Speaker 10: sport itself needs to continually change for the better for
Speaker 10: the fans as well as for the teams as well
Speaker 10: as from NASCAR tooth.
Speaker 4: They understand that Michael Jordan's racing team scored a huge
Speaker 4: win off the track in its anti trust case against NASCAR.
Speaker 4: Jordan's twenty three to eleven racing team and front Row
Speaker 4: Motorsports claimed that NASCAR acts like an illegal monopoly in
Speaker 4: a dispute that centers on new charter agreements which both
Speaker 4: teams refuse to sign, and on Tuesday, a federal judge
Speaker 4: agreed that NASCAR controls the market for premier stock car
Speaker 4: racing and granted partial summary judgment to the two racing teams.
Speaker 4: The decision turns up the pressure to settle ahead of
Speaker 4: the December one trial date. Although Jordans says he's ready
Speaker 4: for trial.
Speaker 10: I look forward to going down on the fire. If
Speaker 10: I have to fight this to the end for the beliment.
Speaker 1: Of the sport, I will do that.
Speaker 4: Joining me is anti trust law expert Harry First, a
Speaker 4: professor at NYU Law School. Harry explained Michael Jordan's anti
Speaker 4: trust case against NASCAR.
Speaker 6: This is a tussle between the family that has controlled
Speaker 6: NASCAR and I guess stock car racing for many years,
Speaker 6: almost uniquely in sports.
Speaker 1: You know, most sports.
Speaker 6: Are controlled by groups of team owners, but this is
Speaker 6: one that's only controlled by one family, this France family.
Speaker 6: You know, I guess It's had its ups and downs,
Speaker 6: but it's pretty up now.
Speaker 1: You know.
Speaker 6: They're sort of the only real game in town for
Speaker 6: the top Line Cup racing. There basically been arguments between
Speaker 6: the owners of these racing teams and the Frances over
Speaker 6: who's going to sort of split the money, particularly broadcast revenue.
Speaker 6: I think they both need each other. Race car owners
Speaker 6: need tracks to race on, and NASCAR, you know, has
Speaker 6: made itself through a series of moves, acquisitions and so forth,
Speaker 6: is basically the only place where you can have these
Speaker 6: high level races. And of course you've got to have
Speaker 6: the race cars racing or else you've got nothing to show.
Speaker 6: So they both need each other. But apparently the racing
Speaker 6: teams have not been hugely profitable unlike other sports. It's
Speaker 6: very expensive to maintain these, according to the litigation anyway,
Speaker 6: and the Frances, So the plaintiffs say, the plaintiff's being
Speaker 6: two of these teams, and one being this twenty three
Speaker 6: to eleven racing, which is Michael Jordan's. The plaintiffs say
Speaker 6: that the Frances take most of the revenue, particularly the
Speaker 6: broadcast revenue, and we're not getting enough, you know. The
Speaker 6: Francis say, well, you don't like it, take it or
Speaker 6: leave it, and that's when the litigation particularly broke out.
Speaker 4: It sounds like anti trust to me, but sounds like yeah,
Speaker 4: sounds like it.
Speaker 7: Is it?
Speaker 4: So this partial summary judgment was about the relevant market,
Speaker 4: which we've talked about before is key to anti trust.
Speaker 6: So the litigations had a little back and forth. The
Speaker 6: district court judge seems pretty well disposed of the plaintiff's claims,
Speaker 6: at one point issuing this injunction requiring NASCAR to admit
Speaker 6: the two teams into the I guess it was a
Speaker 6: twenty twenty four Circuit and the Court of Appeals knocked
Speaker 6: that down for various reasons.
Speaker 1: So the district.
Speaker 6: Court judge granted the plaintiff's motion for partial summary judgement.
Speaker 6: I mean, some of the important issues are now out
Speaker 6: of the case, and particularly, as you mentioned, this contentious
Speaker 6: issue over what's the relevant market. Is it just this
Speaker 6: NASCAR premiere racing market? Does it include you know, other
Speaker 6: kinds of stock car racing? There are other tiers? Does
Speaker 6: it include other motor sports? The game and anty trust
Speaker 6: if you're a defendant, is to constantly include different kinds
Speaker 6: of substitutes.
Speaker 1: Of what people would watch. But here the market is
Speaker 1: a labor.
Speaker 6: Market that they're arguing about, and the question is, you know,
Speaker 6: what are the choices available for these race car drivers
Speaker 6: who are selling their services? And this is basically it.
Speaker 6: So it looked like a pretty strong claim on market definition.
Speaker 6: But proving market definition is expensive, you know, requires lots
Speaker 6: of experts, and this is before you get to the jury,
Speaker 6: this summary judgment stage. But a lot of the record's
Speaker 6: been developed, and the district court judge sort of took
Speaker 6: an interesting turn on this. He said, well, if there's
Speaker 6: a dispute of fact, which there always is, in market definition.
Speaker 6: I think it's really broad. You know, while you could
Speaker 6: have lots of race car drivers, there are lots of
Speaker 6: choices that the race car drivers have. I think it's
Speaker 6: really narrow, say the plaintiffs. So lots of things to
Speaker 6: argue in front of a jury. But the judge says, ah,
Speaker 6: guess what, NASCAR you filed a counterclaim against these driver
Speaker 6: teams which had gotten together to jointly negotiate with NASCAR
Speaker 6: over these agreements that they're charges. So we're alleging that
Speaker 6: you sort of engage in a price fixing conspiracy. So
Speaker 6: they filed a counterclaim. Now, unfortunately for them, when you
Speaker 6: file a complaint in anty trust, normally you have to
Speaker 6: put in your complaint what the relevant market is. So
Speaker 6: they defined a market which was pretty much the same
Speaker 6: as the market that Michael Jordan defined, but basically the
Speaker 6: same labor market. It's these racing teams, you know, the
Speaker 6: premier stock car racing group, you know, at the very top.
Speaker 1: So they basically define the same market.
Speaker 6: So the judge says, sorry, you've already admitted it, and
Speaker 6: you know, we hold that you've made this admission. That's
Speaker 6: your admission, So we're done, and you're done and we
Speaker 6: don't have to try this issue. I'm sure that defendants
Speaker 6: and their lawyers were not all that happy with that,
Speaker 6: and I mean, I think it's pretty supportable on appeal,
Speaker 6: and there would have been ways to handle the complaint
Speaker 6: that didn't fall into this trap. But they were sort
Speaker 6: of too clever by half. It was a very clever counterclaim,
Speaker 6: but there was no requirement that they even needed to file.
Speaker 4: It is this sort of the ballgame.
Speaker 1: Then well it's not quite the ballgame.
Speaker 6: So the judge also did something else, not just the
Speaker 6: market definition, but you have to.
Speaker 1: Have monopoly power or in this case monops.
Speaker 6: A EE power as the sole buyer, and there have
Speaker 6: to be high barriers to entry, hard to get into
Speaker 6: this market. And the judge found on all of those things.
Speaker 6: You know, they've had this position for years and years
Speaker 6: as the sole buyer. It's very hard to have a
Speaker 6: competing leg. It's hard to even start your own racing team.
Speaker 6: They had estimates on that in the record. So the
Speaker 6: judge said, no, you've got this high entry barrier. It's
Speaker 6: very hard to enter. There are really no substitutes. There
Speaker 6: aren't other teams out there, you know, to race. So
Speaker 6: on the having monopoly or monopsony power interrelevant market is
Speaker 6: now out of the case, but that still leaves the
Speaker 6: question really two questions. One is they have to engage
Speaker 6: in some anti competitive conduct that maintains their monopoly position,
Speaker 6: and that's still going to go to trial, and that involves,
Speaker 6: you know, maybe their acquisitions of these other tracks, which
Speaker 6: they did. There were some exclusive agreements. There's this agreement
Speaker 6: that if you sign an agreement, you wave your.
Speaker 1: Anti trust claims. All of those will go together into
Speaker 1: a trial.
Speaker 6: And then there's the question of damages and that's going
Speaker 6: to be interesting because you know, the plaintiffs want more money.
Speaker 1: As a plaintiffs always won isay, you took too much,
Speaker 1: I didn't get enough. But they have to.
Speaker 6: Show what the competitive rate would be for these teams,
Speaker 6: and you know that's going to be a battle of
Speaker 6: they're economists. So there's still a distance to go. Maybe
Speaker 6: we'll never get there, and the parties are now going
Speaker 6: to settle. I don't know, but this I think was
Speaker 6: a pretty big win for the plaintiffs.
Speaker 4: They've had mediation sessions and private negotiations which obviously haven't worked.
Speaker 4: But after the last court hearing, Michael Jordan said, settlement
Speaker 4: has always been on the table, and the pressure is
Speaker 4: on when the trial date is coming up soon.
Speaker 6: And it seems to me what they're really arguing over
Speaker 6: is how do we split the pot so that the
Speaker 6: teams have enough money to invest in these fast cars
Speaker 6: and you know, all the things we need to do,
Speaker 6: and you know, at the end of the day, perhaps
Speaker 6: unfortunately for consumers, there's not going to be another circuit
Speaker 6: because these are private.
Speaker 1: Plaintiffs pursuing this.
Speaker 6: So the goal is not to split up nascars so
Speaker 6: there are competing circuits and you'd have real competition in
Speaker 6: this kind of racing. This is not Michael Jordan's goal.
Speaker 6: That's not the goal of private parties. The goal is
Speaker 6: to basically split the monopoly profits differently so they will
Speaker 6: likely benefit you know, consumers. I don't know, maybe not
Speaker 6: so much.
Speaker 4: If I'm the defendant. I don't want to be in
Speaker 4: a courtroom sitting opposite Michael Jordan with his star power.
Speaker 4: I mean, you know how juries are mesmerized right by stars.
Speaker 6: Asking for damages in a jury trial is a good move,
Speaker 6: particularly these days. I mean, juries have come in with
Speaker 6: some pretty big verdicts in these big cases against major defendants.
Speaker 1: You know, Google is one example. So, yeah, defendants have
Speaker 1: never liked Church. Let's put it that way.
Speaker 4: Yes, defendants do always seem to prefer a bench trial.
Speaker 4: Before I let you go, Harry, I just want to
Speaker 4: get your take on the bidding war between Pfizer and
Speaker 4: Novo Nordisk over the obesity drugs startup met Sarah, which
Speaker 4: has some antitrust implications. Pfizer had initially agreed to buy
Speaker 4: met Sarah for four point nine billion dollars in September
Speaker 4: and then let the bidding begin. The reports now are
Speaker 4: that Pfizer has matched Novo's ten billion dollar bid.
Speaker 6: This is an old fashioned bidding war. I keep saying
Speaker 6: to people, this is obviously a really fat market for profits.
Speaker 6: So the global market for weight loss drugs is now
Speaker 6: figured out about seventy two billion dollars and in another
Speaker 6: five years projected to be about one hundred and forty billion.
Speaker 6: I mean, this is huge money. This is sort of
Speaker 6: a fun fight, I guess, particularly if you're a shareholder
Speaker 6: of Metzarah. What I love is the revenues of met
Speaker 6: Sarah for this year have been zero. They don't have
Speaker 6: a product their weight loss drug is now entering Phase
Speaker 6: three clinical trials, which many but not all drugs get
Speaker 6: through successfully. So everyone's betting that this will go through
Speaker 6: through successfully. But it's not out yet and it hasn't
Speaker 6: been approved yet by the Food and Drug Administration. But
Speaker 6: Pfizer doesn't have a weight loss drug, and Novo Nordisk
Speaker 6: is having a lot of financial problems even though they
Speaker 6: probably have about fifty percent of the market, with those
Speaker 6: Zembic and Wagovi literally having the rest. You know, this
Speaker 6: is a market. It's not one hundred percent monopolized like NASCAR,
Speaker 6: but maybe larger implications for health and money than nascars.
Speaker 6: And the tactics that are being used are really quite
Speaker 6: interesting because Phizer is not only arguing that Novo Nordists,
Speaker 6: at least at a time higher bid, couldn't and shouldn't
Speaker 6: be accepted and so in violation of their agreement that
Speaker 6: they had, they've also filed the preemptive any trust case
Speaker 6: against Novo Nordisk and Metsera alleging that their agreement, this
Speaker 6: merger agreement is illegal.
Speaker 1: They've not only.
Speaker 6: Tried to stop it in Delaware Chancery Court, which has
Speaker 6: normal jurisdiction over corporate matters, but they've also filed in
Speaker 6: federal court in Delaware a separate any trust case. I'm
Speaker 6: alleging some very unusual things about this deal and alleging
Speaker 6: that the deal itself is illegal under the Sherman Act
Speaker 6: monopolization any competitive and under the Clayton Act, and the
Speaker 6: Federal Trade Commission has gotten involved a little bit as well.
Speaker 1: The FTC.
Speaker 6: You know, there's this shutdown that they haven't been able
Speaker 6: to do anything. Lo and behold, they awaken from their
Speaker 6: slumber and for the first time in almost a month,
Speaker 6: they granted early termination. You know, when you have a
Speaker 6: merger you have to file, you wait for thirty days
Speaker 6: at least to give the government forcers time to at
Speaker 6: least see if they want to get more information. They
Speaker 6: gave Fizer's bid early termination after fifteen days in the
Speaker 6: middle of this shutdown, saying, hey, no prob even though
Speaker 6: apparently Pfizer has some weight loss drugs in its own pipeline.
Speaker 1: Not clear exactly so, but they said, hey, no problem
Speaker 1: with that.
Speaker 6: And then they issued a letter to the lawyers for
Speaker 6: Lenovo Nordisk.
Speaker 1: And met Sarah.
Speaker 6: We've read about this deal which has not been filed
Speaker 6: with the federal takers. We read about it, and we're
Speaker 6: a little concerned that it may violate the Hartscott Rodino Act,
Speaker 6: which involves notification to the government that you're planning around
Speaker 6: with this, and so you better watch this.
Speaker 1: So what exactly is.
Speaker 6: Going on, I don't know, but they seem to be
Speaker 6: putting a little thumb on the scales in favor of Pfizer,
Speaker 6: whether intentionally or not. But they've really injected, sorry, they've
Speaker 6: injected themselves into this. It's an old fashioned antitrust tactical bruhaha.
Speaker 6: You know how it's going to end up, I'm not sure,
Speaker 6: but it's really something to be watching. This is one
Speaker 6: with real implications for competition.
Speaker 1: And for health.
Speaker 4: Who knew that weight laws drugs would also involve antitrust?
Speaker 4: Thanks so much, Harry. As always, that's Professor Harry First
Speaker 4: of NYU Law School. And that's it for this edition
Speaker 4: of The Bloomberg Law Show. Remember you can always get
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