1
00:00:02,759 --> 00:00:07,000
Speaker 1: This is Bloomberg Law with June Brossel from Bloomberg Radio.

2
00:00:08,960 --> 00:00:12,440
Speaker 2: It's a huge win for Sam Altman and a massive

3
00:00:12,560 --> 00:00:17,400
Speaker 2: defeat for Elon Musk. Today, a jury rejected Musk's claims

4
00:00:17,400 --> 00:00:22,000
Speaker 2: that open Ai, under Altman's leadership, betrayed its mission to

5
00:00:22,040 --> 00:00:26,400
Speaker 2: benefit the public by morphing into a for profit business,

6
00:00:26,800 --> 00:00:30,200
Speaker 2: with a verdict finding that Musk waited too long to

7
00:00:30,280 --> 00:00:33,600
Speaker 2: sue the company. The jury didn't reach the merits of

8
00:00:33,720 --> 00:00:37,560
Speaker 2: Musk's claims, but decided the case on a procedural point

9
00:00:37,760 --> 00:00:42,720
Speaker 2: involving the statute of limitations. Musk intends to appeal the decision.

10
00:00:43,120 --> 00:00:46,680
Speaker 2: Joining me is Bloomberg Legal reporter Madelin Meckelberg who covered

11
00:00:46,680 --> 00:00:50,880
Speaker 2: the trial. Madlin. So, this was a unanimous verdict by

12
00:00:50,920 --> 00:00:53,279
Speaker 2: a nine member jury, tell us about it.

13
00:00:53,760 --> 00:00:57,080
Speaker 3: The jury in Oakland delivered a verdict after I think

14
00:00:57,120 --> 00:01:00,480
Speaker 3: about two hours, maybe less than two hours of deliverys

15
00:01:00,560 --> 00:01:04,760
Speaker 3: on Monday morning, and that verdict was that Elon Musk

16
00:01:04,800 --> 00:01:08,000
Speaker 3: had waited too long to bring his claims against open Ai,

17
00:01:08,160 --> 00:01:10,880
Speaker 3: Sam Altman, Greg Brockman and Microsoft.

18
00:01:11,319 --> 00:01:14,640
Speaker 2: It was a three year statute of limitations. Explain what

19
00:01:14,800 --> 00:01:19,120
Speaker 2: the factual dispute was about when the statute started running.

20
00:01:19,560 --> 00:01:23,160
Speaker 3: Jurors were told by Judge Evon Gonzalez Rodriguez, who's presiding

21
00:01:23,200 --> 00:01:25,959
Speaker 3: over this case, that the way they should assess statute

22
00:01:25,959 --> 00:01:30,120
Speaker 3: of limitations is whether or not Elon Musk should have

23
00:01:30,280 --> 00:01:33,720
Speaker 3: known about the conduct that he's alleging at an earlier date,

24
00:01:34,120 --> 00:01:36,520
Speaker 3: and whether a reasonable person would have known. You know,

25
00:01:36,560 --> 00:01:38,959
Speaker 3: there's a lot of qualifiers in there, a reasonable person

26
00:01:39,280 --> 00:01:42,600
Speaker 3: given the circumstances. Basically, they're saying he should have known

27
00:01:42,600 --> 00:01:45,240
Speaker 3: about this well before he did. This was something we

28
00:01:45,280 --> 00:01:47,760
Speaker 3: heard about a bit at trial. They were really attempting

29
00:01:47,800 --> 00:01:51,120
Speaker 3: to build out kind of a timeline of communications because

30
00:01:51,480 --> 00:01:55,240
Speaker 3: Elon left Open Ai in twenty eighteen, he formed his

31
00:01:55,280 --> 00:01:58,240
Speaker 3: own AI company in twenty twenty three, and then he

32
00:01:58,320 --> 00:02:01,320
Speaker 3: brought this lawsuit in twenty twenty five, and as he

33
00:02:01,400 --> 00:02:04,600
Speaker 3: described it to jurors, his feelings towards his co founders

34
00:02:04,600 --> 00:02:07,440
Speaker 3: and the company they changed over time. So he described

35
00:02:07,440 --> 00:02:09,920
Speaker 3: how he started to lose faith in them, lose confidence,

36
00:02:09,960 --> 00:02:12,960
Speaker 3: and then he only became convinced that they stole a charity,

37
00:02:13,040 --> 00:02:15,960
Speaker 3: as he describes it much later on. But I think

38
00:02:16,040 --> 00:02:20,080
Speaker 3: jurors obviously were not buying that explanation based on this verdict,

39
00:02:20,120 --> 00:02:22,320
Speaker 3: I think it would be fair to suggest that they

40
00:02:22,360 --> 00:02:25,840
Speaker 3: probably believed that if he was genuinely concerned about this,

41
00:02:25,840 --> 00:02:28,440
Speaker 3: this is something that he would have filed much sooner.

42
00:02:28,520 --> 00:02:30,440
Speaker 4: That's ultimately what this boils down to.

43
00:02:31,240 --> 00:02:34,400
Speaker 2: So you have three weeks about of testimony and they

44
00:02:35,040 --> 00:02:38,919
Speaker 2: never reached the merits of Musk's claim but went off

45
00:02:38,960 --> 00:02:40,440
Speaker 2: on a procedural issue.

46
00:02:40,600 --> 00:02:41,040
Speaker 4: That's right.

47
00:02:41,080 --> 00:02:43,840
Speaker 3: So the jury did not issue a verdict on any

48
00:02:44,000 --> 00:02:47,640
Speaker 3: of the specific claims that Musk brought forward. All they

49
00:02:47,680 --> 00:02:50,640
Speaker 3: said was he didn't sue soon enough. Those were the

50
00:02:50,639 --> 00:02:53,520
Speaker 3: first three questions on the verdict form, and so.

51
00:02:53,680 --> 00:02:55,120
Speaker 4: You know, all the other things are muted.

52
00:02:55,160 --> 00:02:57,480
Speaker 3: If he didn't sue early enough, then there's no reason

53
00:02:57,480 --> 00:02:58,960
Speaker 3: for them to go through the rest of the forum.

54
00:03:00,000 --> 00:03:02,600
Speaker 3: I know we've talked previously the way that this case

55
00:03:02,720 --> 00:03:04,799
Speaker 3: was set up. The jury verdict was going to be

56
00:03:04,919 --> 00:03:08,160
Speaker 3: an advisory verdict, so in something non binding for the

57
00:03:08,240 --> 00:03:11,280
Speaker 3: judge to take back to her chamber's mule and decide later.

58
00:03:11,720 --> 00:03:14,559
Speaker 3: But after they handed down their verdict, she said, immediately,

59
00:03:15,080 --> 00:03:18,639
Speaker 3: I'm going to accept the jury's verdict. I'm dismissing these charges,

60
00:03:18,840 --> 00:03:21,200
Speaker 3: and that's the end of it and kind of wiped

61
00:03:21,200 --> 00:03:22,919
Speaker 3: her hands of this phase of the litigation.

62
00:03:23,800 --> 00:03:27,200
Speaker 2: I understand that one of Musk's lawyers said they were

63
00:03:27,200 --> 00:03:28,000
Speaker 2: going to appeal.

64
00:03:28,480 --> 00:03:31,160
Speaker 3: That should come as no surprise to anybody who's followed

65
00:03:31,160 --> 00:03:34,960
Speaker 3: Elon Musk or any of his litigation in the past. Yes,

66
00:03:35,080 --> 00:03:37,480
Speaker 3: they are planning to file an appeal in this case.

67
00:03:38,000 --> 00:03:40,600
Speaker 3: They believe that the jury and the judge got it wrong.

68
00:03:40,760 --> 00:03:42,600
Speaker 3: So this is not the last that we're going to

69
00:03:42,640 --> 00:03:45,840
Speaker 3: hear from them. And I think eagle eyed watchers of

70
00:03:45,880 --> 00:03:48,360
Speaker 3: the docket in this case might remember that there are

71
00:03:48,440 --> 00:03:51,640
Speaker 3: actually a few other live claims that didn't make it

72
00:03:51,680 --> 00:03:55,240
Speaker 3: to trial, and those are antitrust claims that Musk filed

73
00:03:55,280 --> 00:03:58,560
Speaker 3: against open Ai and Microsoft. And what happened here is

74
00:03:58,600 --> 00:04:01,440
Speaker 3: the judge basically said, there's too much going on in

75
00:04:01,440 --> 00:04:03,360
Speaker 3: this case. We're going to separate it into a few

76
00:04:03,400 --> 00:04:06,000
Speaker 3: different phases. This first one is going to be focused

77
00:04:06,120 --> 00:04:08,960
Speaker 3: just on the breach of charitable trust and unjust enrichment.

78
00:04:09,520 --> 00:04:12,120
Speaker 3: So now that this phase is done, you know, pending

79
00:04:12,200 --> 00:04:14,600
Speaker 3: the outcome of these appeals, now they're going to have

80
00:04:14,640 --> 00:04:16,880
Speaker 3: to figure out how to deal with these other anti

81
00:04:16,880 --> 00:04:20,640
Speaker 3: trust claims. Some might be thinking that it would make

82
00:04:20,680 --> 00:04:23,520
Speaker 3: logical sense for the open Aye lawyers to now argue, well,

83
00:04:23,600 --> 00:04:27,320
Speaker 3: if the statute of limitations was in play here, surely

84
00:04:27,400 --> 00:04:29,359
Speaker 3: that should apply to these claims as well.

85
00:04:29,400 --> 00:04:31,880
Speaker 4: And I think that's still an open ended question. So

86
00:04:32,440 --> 00:04:34,279
Speaker 4: this is far from the last word.

87
00:04:34,200 --> 00:04:37,800
Speaker 3: In the Musk Altman feud showdown, however you want to

88
00:04:37,839 --> 00:04:38,320
Speaker 3: describe it.

89
00:04:38,360 --> 00:04:39,800
Speaker 4: We've got a lot more litigating to.

90
00:04:39,760 --> 00:04:42,920
Speaker 2: Go, So let's talk about the trial a little bit.

91
00:04:43,400 --> 00:04:47,000
Speaker 2: Was it a test of the credibility of Mosque versus

92
00:04:47,040 --> 00:04:49,640
Speaker 2: the credibility of Altman? Or was it more than that?

93
00:04:50,440 --> 00:04:54,560
Speaker 3: I mean, legally speaking, No, it's not about credibility. It's

94
00:04:54,600 --> 00:04:57,159
Speaker 3: about what did the contract say, what did the papers say? Like,

95
00:04:57,200 --> 00:05:00,159
Speaker 3: it's about these legal statutes that they're fighting over. But

96
00:05:00,200 --> 00:05:03,000
Speaker 3: I think attorneys on both sides kind of in their

97
00:05:03,040 --> 00:05:06,120
Speaker 3: closing statements, we heard from them very clearly that they

98
00:05:06,160 --> 00:05:08,920
Speaker 3: do believe that this is a case of credibility. Again,

99
00:05:08,960 --> 00:05:11,400
Speaker 3: the jury didn't really get to this by talking about

100
00:05:11,400 --> 00:05:14,880
Speaker 3: the statute of limitations, but that was their their argument

101
00:05:14,960 --> 00:05:18,240
Speaker 3: on both sides. There's some fundamental facts about this that

102
00:05:18,480 --> 00:05:21,480
Speaker 3: we can't really dispute. We know what happened kind of

103
00:05:21,480 --> 00:05:24,320
Speaker 3: on paper, we know who gave money, how much money,

104
00:05:24,680 --> 00:05:27,120
Speaker 3: But what we don't know and what we have to

105
00:05:27,160 --> 00:05:29,880
Speaker 3: rely on the witnesses for is filling in some of

106
00:05:29,920 --> 00:05:32,839
Speaker 3: those gaps. How were people feeling, what were the intentions

107
00:05:32,880 --> 00:05:36,320
Speaker 3: behind making certain moves, And so, of course the open

108
00:05:36,360 --> 00:05:38,839
Speaker 3: Aye attorneys say that you need to trust Sam Altman's

109
00:05:38,920 --> 00:05:42,000
Speaker 3: version of events. They stressed the jury that there's no

110
00:05:42,200 --> 00:05:45,719
Speaker 3: documents or emails or any testimony that they heard in

111
00:05:45,800 --> 00:05:48,880
Speaker 3: court that backs up what Elon Musk said. And then

112
00:05:49,279 --> 00:05:52,920
Speaker 3: Musk's lawyers spent a huge portion of their time presenting

113
00:05:52,960 --> 00:05:56,200
Speaker 3: their case in trying to poke holes in Altman's credibility

114
00:05:56,279 --> 00:05:59,680
Speaker 3: and questioning people about his ouster in twenty twenty three,

115
00:06:00,279 --> 00:06:02,359
Speaker 3: and just kind of trying to really make a go

116
00:06:02,480 --> 00:06:05,560
Speaker 3: at his reputation and repeatedly calling him a liar and

117
00:06:05,560 --> 00:06:08,240
Speaker 3: saying he's untrustworthy. So I think at the end of

118
00:06:08,240 --> 00:06:10,160
Speaker 3: the day, they wanted it to be kind of a

119
00:06:10,279 --> 00:06:12,520
Speaker 3: character contest between these guys.

120
00:06:12,920 --> 00:06:15,680
Speaker 2: I think when the trial first started, I said, why

121
00:06:15,720 --> 00:06:19,880
Speaker 2: are they such bitter enemies after they were friends? So

122
00:06:19,960 --> 00:06:22,280
Speaker 2: can you explain what the trial revealed about that?

123
00:06:22,960 --> 00:06:25,360
Speaker 3: Right? The trial kind of gave us a look behind

124
00:06:25,360 --> 00:06:27,680
Speaker 3: the curtain at a lot of things like this is

125
00:06:27,720 --> 00:06:30,240
Speaker 3: a story that you know, if you're following tech and

126
00:06:30,360 --> 00:06:34,440
Speaker 3: AI is kind of AI started as this scrappy startup

127
00:06:34,480 --> 00:06:36,640
Speaker 3: and now is you know, estimated to be worth the

128
00:06:36,680 --> 00:06:39,760
Speaker 3: trillion dollars or whatever. You know, this gave us a

129
00:06:39,800 --> 00:06:42,880
Speaker 3: look at what actually happened there, and I think a

130
00:06:42,920 --> 00:06:46,719
Speaker 3: lot of it boiled down to disagreements about the future

131
00:06:46,720 --> 00:06:50,800
Speaker 3: of open AI very generally, but it was very personal.

132
00:06:50,440 --> 00:06:52,880
Speaker 4: For these guys. I think, like for Elon Musk, he's

133
00:06:52,920 --> 00:06:53,599
Speaker 4: really made.

134
00:06:53,480 --> 00:06:56,600
Speaker 3: AI and this AI safety, he's trying to make that

135
00:06:57,080 --> 00:06:59,719
Speaker 3: a really big part of who he is, what's important

136
00:06:59,720 --> 00:07:02,000
Speaker 3: to him, what he's fighting for, And the same goes

137
00:07:02,000 --> 00:07:04,440
Speaker 3: for these other guys. They've really put all of their

138
00:07:04,480 --> 00:07:06,919
Speaker 3: focus and attention on building this company.

139
00:07:07,040 --> 00:07:08,960
Speaker 4: And the twenty seventeen.

140
00:07:09,160 --> 00:07:13,800
Speaker 3: Scuffle over the power struggle essentially between these guys about

141
00:07:13,800 --> 00:07:17,360
Speaker 3: who should actually control open AI, I think that's what

142
00:07:17,440 --> 00:07:21,120
Speaker 3: got us to where we are today, where there's such animosity.

143
00:07:22,040 --> 00:07:24,840
Speaker 3: I think if you talk to Musk critics, they might

144
00:07:24,920 --> 00:07:28,640
Speaker 3: paint this as someone who regrets kind of while picking

145
00:07:28,720 --> 00:07:30,720
Speaker 3: up his marbles and walking out the door when he

146
00:07:30,760 --> 00:07:33,560
Speaker 3: did because of course, in twenty seventeen, they wouldn't have

147
00:07:33,640 --> 00:07:37,160
Speaker 3: known what a tremendous success Open AI would become, and

148
00:07:37,640 --> 00:07:41,080
Speaker 3: Elon Musk gets no part of that pie now, and

149
00:07:41,120 --> 00:07:44,120
Speaker 3: so I think there's certainly some element of that and

150
00:07:44,200 --> 00:07:47,200
Speaker 3: kind of hindsight, you know, you can see the full picture.

151
00:07:47,760 --> 00:07:49,480
Speaker 4: But now that Elon Musk has.

152
00:07:49,440 --> 00:07:51,600
Speaker 3: Emerged as a competitor in the AI space, I think

153
00:07:51,640 --> 00:07:54,120
Speaker 3: that's only adding kind of fuel to the fire. And

154
00:07:54,240 --> 00:07:58,800
Speaker 3: certainly he's been doing his best to continue kind of

155
00:07:58,800 --> 00:08:01,600
Speaker 3: throwing elbows at open ama I as things have moved forward,

156
00:08:01,640 --> 00:08:03,280
Speaker 3: and Opening Eye doesn't take it quietly.

157
00:08:03,720 --> 00:08:06,080
Speaker 4: You know, they push back, Altman pushes back. This is

158
00:08:06,120 --> 00:08:07,280
Speaker 4: not a one way feud.

159
00:08:07,400 --> 00:08:10,400
Speaker 3: They definitely both have a lot of animosity towards each

160
00:08:10,400 --> 00:08:12,840
Speaker 3: other that this is not going to resolve.

161
00:08:12,840 --> 00:08:16,480
Speaker 2: Outside of Musk and Altman, who were the main witnesses.

162
00:08:17,200 --> 00:08:19,640
Speaker 3: I think Greg Brockman was a really important witness, and

163
00:08:19,680 --> 00:08:23,640
Speaker 3: he's someone who often gets overwritten in the headlines because it's,

164
00:08:23,720 --> 00:08:26,640
Speaker 3: you know, Musk versus Altman, but it's also Musk versus

165
00:08:26,720 --> 00:08:29,960
Speaker 3: Greg Brockman, who's the president of open AI. He's also

166
00:08:30,000 --> 00:08:32,280
Speaker 3: one of the co founders, and he had a really

167
00:08:32,360 --> 00:08:34,840
Speaker 3: I think important perspective. He was on the stand for

168
00:08:34,920 --> 00:08:38,000
Speaker 3: quite some time, and one of the most interesting things

169
00:08:38,000 --> 00:08:41,160
Speaker 3: that I think he was talking about was his concerns

170
00:08:41,200 --> 00:08:45,000
Speaker 3: about what Elon did or didn't know about AI and

171
00:08:45,080 --> 00:08:47,400
Speaker 3: kind of raising doubts that he had the chops and

172
00:08:47,440 --> 00:08:50,520
Speaker 3: the vision necessary to be a leader. But he was

173
00:08:50,559 --> 00:08:53,600
Speaker 3: also an important witness, I think for Musk's case because

174
00:08:53,640 --> 00:08:55,720
Speaker 3: we got to see a lot of his personal journal

175
00:08:55,880 --> 00:08:59,640
Speaker 3: entries from this time period where he would document conversations

176
00:08:59,640 --> 00:09:01,800
Speaker 3: he had with people and kind of weigh out of

177
00:09:01,840 --> 00:09:04,560
Speaker 3: pros and cons of just different decisions that he was making.

178
00:09:04,960 --> 00:09:07,240
Speaker 3: And I think, you know, there wasn't really like a

179
00:09:07,360 --> 00:09:09,839
Speaker 3: big key piece of evidence was like, oh my gosh

180
00:09:09,880 --> 00:09:12,200
Speaker 3: in this case. But he had one line in his

181
00:09:12,240 --> 00:09:14,439
Speaker 3: journal where he was talking about what will it take

182
00:09:14,480 --> 00:09:16,880
Speaker 3: to get me to one billion dollars? And that's something

183
00:09:16,880 --> 00:09:20,240
Speaker 3: that Musk's lawyers like really zeroed in on because they

184
00:09:20,240 --> 00:09:23,280
Speaker 3: were trying to show that they were motivated by money

185
00:09:23,360 --> 00:09:27,240
Speaker 3: and enriching themselves and not by promoting the mission of

186
00:09:27,280 --> 00:09:29,640
Speaker 3: open AYE. So I think he was a really valuable

187
00:09:29,640 --> 00:09:32,120
Speaker 3: witness in that he got in some good jobs for

188
00:09:32,160 --> 00:09:35,719
Speaker 3: open AI, but he also exposed some vulnerability for kind

189
00:09:35,760 --> 00:09:37,160
Speaker 3: of Musk's perspective there.

190
00:09:37,760 --> 00:09:40,520
Speaker 2: Microsoft was part of this trial, though you'd never know

191
00:09:40,640 --> 00:09:43,320
Speaker 2: it to see the coverage of it. I mean, did

192
00:09:43,360 --> 00:09:44,720
Speaker 2: they put on any witnesses.

193
00:09:45,280 --> 00:09:48,240
Speaker 3: We heard very little from Microsoft, and their lawyer actually

194
00:09:48,320 --> 00:09:50,760
Speaker 3: joked about that during the closing arguments. He was like,

195
00:09:51,280 --> 00:09:53,600
Speaker 3: you hardly heard from us during the course of this trial,

196
00:09:53,720 --> 00:09:55,320
Speaker 3: and I don't think I have to tell you why.

197
00:09:55,480 --> 00:09:58,000
Speaker 3: Like that's kind of their whole argument is like, this

198
00:09:58,120 --> 00:10:00,880
Speaker 3: has nothing to do with us, like us out of it.

199
00:10:01,200 --> 00:10:05,320
Speaker 3: We did hear from Microsoft's CEO Satynadella at one point

200
00:10:05,400 --> 00:10:08,800
Speaker 3: kind of talking about his decision to make those early

201
00:10:08,840 --> 00:10:11,160
Speaker 3: investments in open ai and why it was something the

202
00:10:11,200 --> 00:10:13,760
Speaker 3: company valued, and we heard from a handful of other

203
00:10:13,800 --> 00:10:16,760
Speaker 3: people at the company. I think at the end of

204
00:10:16,800 --> 00:10:19,960
Speaker 3: the day, it isn't there bite. I don't think they're

205
00:10:20,000 --> 00:10:23,040
Speaker 3: wrong about that legally, like certainly they're part of this.

206
00:10:23,200 --> 00:10:26,200
Speaker 3: They've contributed significant amount of money to open ai and

207
00:10:26,280 --> 00:10:29,800
Speaker 3: have this unique partnership with them. But even when we're

208
00:10:29,840 --> 00:10:32,640
Speaker 3: talking about the jury verdict, where they're talking about the

209
00:10:32,640 --> 00:10:35,440
Speaker 3: statute of limitations, there are three questions. You know, the

210
00:10:35,480 --> 00:10:39,640
Speaker 3: statute of limitations for breach of charitable trust for unjustin Richmond,

211
00:10:39,679 --> 00:10:42,800
Speaker 3: but also for Microsoft aiding and abetting the breach of

212
00:10:42,880 --> 00:10:45,320
Speaker 3: charitable trust. And they didn't even answer that one because

213
00:10:45,360 --> 00:10:48,680
Speaker 3: if they decided there's no breach of charitable trust, you know,

214
00:10:48,880 --> 00:10:50,040
Speaker 3: claim to be considered in.

215
00:10:49,960 --> 00:10:51,840
Speaker 4: The first place, then they don't have to get into that.

216
00:10:52,120 --> 00:10:55,160
Speaker 3: So definitely Microsoft was taking a backseat in this one,

217
00:10:55,160 --> 00:10:58,000
Speaker 3: and I think they were, you know, probably okay with that.

218
00:10:58,480 --> 00:11:02,520
Speaker 2: So finally this gives open ai the go ahead to

219
00:11:03,360 --> 00:11:04,080
Speaker 2: go public.

220
00:11:04,360 --> 00:11:06,280
Speaker 3: I don't know if this is something that they were

221
00:11:06,360 --> 00:11:10,920
Speaker 3: necessarily waiting for. I don't have any special insights into that. Essentially, though,

222
00:11:10,920 --> 00:11:13,200
Speaker 3: it's that it should have been business as usual for them.

223
00:11:13,480 --> 00:11:15,160
Speaker 4: Hard to say what's ahead.

224
00:11:15,480 --> 00:11:18,600
Speaker 2: Thanks so much, Madlin for your reporting throughout the trial.

225
00:11:19,040 --> 00:11:22,920
Speaker 2: That's Bloomberg Legal reporter Madlein Meckelberg coming up next on

226
00:11:22,920 --> 00:11:27,240
Speaker 2: the Bloomberg Law Show. The National Labor Relations Board wants

227
00:11:27,280 --> 00:11:31,079
Speaker 2: the full Sixth Circuit to review a decision that dampens

228
00:11:31,120 --> 00:11:34,320
Speaker 2: its power. It's a case that's likely headed to the

229
00:11:34,360 --> 00:11:38,720
Speaker 2: Supreme Court. I'm June Grosso and you're listening to Bloomberg.

230
00:11:41,679 --> 00:11:45,040
Speaker 2: The US Court of Appeals for the Sixth Circuit rocked

231
00:11:45,120 --> 00:11:48,800
Speaker 2: the National Labor Relations Board with a recent ruling that

232
00:11:49,000 --> 00:11:54,280
Speaker 2: threatens the NLRB's power to establish labor policy through individual

233
00:11:54,360 --> 00:11:59,079
Speaker 2: case decisions, potentially disrupting the way the agency has operated

234
00:11:59,120 --> 00:12:02,560
Speaker 2: for more than nine years. In a three to two decision,

235
00:12:02,720 --> 00:12:06,560
Speaker 2: the Appellate Court ruled that the Board overstepped its authority

236
00:12:06,920 --> 00:12:11,600
Speaker 2: by creating a new framework aimed at better policing union elections.

237
00:12:12,280 --> 00:12:15,440
Speaker 2: The Board is asking the full Circuit to review the

238
00:12:15,520 --> 00:12:19,080
Speaker 2: decision on bank My guest is an expert in labor

239
00:12:19,160 --> 00:12:23,000
Speaker 2: law and Lofosso a professor at the University of Cincinnati

240
00:12:23,080 --> 00:12:25,960
Speaker 2: Law School, and tell us about the case itself.

241
00:12:26,559 --> 00:12:30,240
Speaker 1: So in that case, the board found that the employer

242
00:12:30,320 --> 00:12:35,040
Speaker 1: committed these extensive, unfairlyure practices during an organizational drive at

243
00:12:35,080 --> 00:12:38,960
Speaker 1: the Woodford Reserve Distillery. And then once the employer found

244
00:12:38,960 --> 00:12:41,200
Speaker 1: out about this that there was a majority of employees

245
00:12:41,200 --> 00:12:45,640
Speaker 1: who signed these cards, management responded with a rapid series

246
00:12:45,720 --> 00:12:50,160
Speaker 1: of unprecedented targeted benefits a second across the board race.

247
00:12:50,440 --> 00:12:52,560
Speaker 1: It started at one dollar and went up another four.

248
00:12:52,720 --> 00:12:55,840
Speaker 1: So think about that. That's five dollars an hour across

249
00:12:55,840 --> 00:12:58,160
Speaker 1: the board race. That's a ten thousand dollars pay, raise

250
00:12:58,200 --> 00:13:01,839
Speaker 1: for everyone expanded, and progression pay. I mean, I can

251
00:13:01,880 --> 00:13:06,000
Speaker 1: go on these benefits which were really like bribes, and you.

252
00:13:06,040 --> 00:13:07,640
Speaker 2: Left out the free bottles of bourbon.

253
00:13:08,640 --> 00:13:10,840
Speaker 1: Yeah, I was gonna say, also the bourbon, and you

254
00:13:10,840 --> 00:13:14,040
Speaker 1: know bourbon costs. I looked it up for bourbon goes

255
00:13:14,080 --> 00:13:16,520
Speaker 1: for like anything from like I think thirty nine dollars

256
00:13:16,559 --> 00:13:19,239
Speaker 1: to over sixty dollars a bottle, maybe even more expensive.

257
00:13:19,320 --> 00:13:22,560
Speaker 1: So these were nice decent bottles of bourbon, you know,

258
00:13:22,920 --> 00:13:26,520
Speaker 1: from mid range to a little bit higher. And so

259
00:13:26,920 --> 00:13:30,480
Speaker 1: this obviously interfered with employee free choice. So the region

260
00:13:30,880 --> 00:13:33,400
Speaker 1: asked for both a GISTLE bargaining order and a Cemex

261
00:13:33,480 --> 00:13:36,120
Speaker 1: bargaining order, which are two different bargaining orders, but they

262
00:13:36,120 --> 00:13:38,679
Speaker 1: basically are the same remedy, but they're based on two

263
00:13:38,679 --> 00:13:41,280
Speaker 1: different theories. And the board just decided to go with

264
00:13:41,320 --> 00:13:42,680
Speaker 1: the one c Mex.

265
00:13:43,200 --> 00:13:45,960
Speaker 2: So then tell us about the Cemex bargaining order.

266
00:13:46,280 --> 00:13:50,040
Speaker 1: What that is. So under Cemex, which is a new

267
00:13:50,120 --> 00:13:53,240
Speaker 1: Supreme Court precedent, it's only a few years old. Under

268
00:13:53,320 --> 00:13:57,440
Speaker 1: the Biden Board, once a union presents evidence of majority

269
00:13:57,520 --> 00:14:01,800
Speaker 1: sport with cards and requests recognition, then the employer has

270
00:14:01,880 --> 00:14:05,239
Speaker 1: a choice of two things. It has to either voluntarily

271
00:14:05,280 --> 00:14:08,240
Speaker 1: recognize the union or it has to within two weeks

272
00:14:08,800 --> 00:14:11,040
Speaker 1: file what's called an r M petition, which is a

273
00:14:11,040 --> 00:14:13,040
Speaker 1: petition for an election. But it's called an r M

274
00:14:13,120 --> 00:14:16,880
Speaker 1: petition because management, the employer, has to file the election,

275
00:14:17,120 --> 00:14:19,400
Speaker 1: not the employees. So they have that choice. They can

276
00:14:19,440 --> 00:14:23,720
Speaker 1: either say, Okay, I recognize you, or I'm not so sure.

277
00:14:23,800 --> 00:14:26,040
Speaker 1: I have a doubt. I'm going to ask for an election.

278
00:14:26,800 --> 00:14:30,800
Speaker 1: So if the employer chooses the election route and commits

279
00:14:31,000 --> 00:14:35,440
Speaker 1: any unfair labor practices, then the board will see will

280
00:14:35,520 --> 00:14:40,440
Speaker 1: view the election process as tainted and will issue the

281
00:14:40,480 --> 00:14:43,880
Speaker 1: bargaining order as a remedy to restore the employee's last

282
00:14:44,040 --> 00:14:48,160
Speaker 1: uncoerced expression of free choice, which was the cards, because

283
00:14:48,200 --> 00:14:51,360
Speaker 1: the majority cards expressed that there was a majority that

284
00:14:51,440 --> 00:14:55,600
Speaker 1: wanted the union. Now, the other remedy, which the Supreme

285
00:14:55,640 --> 00:14:59,000
Speaker 1: Court adopted in nineteen sixty nine, you know that's almost

286
00:14:59,040 --> 00:15:03,119
Speaker 1: sixty years now. Well, that remedy said that the employees

287
00:15:03,160 --> 00:15:07,160
Speaker 1: have to file the election and if there are a

288
00:15:07,320 --> 00:15:11,720
Speaker 1: lot of unfair layer practices, then they can issue this

289
00:15:11,840 --> 00:15:14,480
Speaker 1: bargaining order. So both have the bargaining order, but they're

290
00:15:14,560 --> 00:15:18,920
Speaker 1: kind of based on two different theories. One is based

291
00:15:19,000 --> 00:15:22,560
Speaker 1: on the sheer number of unfair layer practices and the

292
00:15:22,600 --> 00:15:26,360
Speaker 1: other is based on unfair labor practices that are tainting

293
00:15:26,520 --> 00:15:29,600
Speaker 1: the election. Okay, so the two different theories getting to

294
00:15:29,640 --> 00:15:33,360
Speaker 1: the same thing, and they're both remedial. Now, the Sixth

295
00:15:33,440 --> 00:15:36,400
Speaker 1: Circuit agreed with the Board and the facts that said, yup,

296
00:15:36,440 --> 00:15:39,040
Speaker 1: you're right, this was atrocious. I mean, they don't use

297
00:15:39,040 --> 00:15:42,120
Speaker 1: the word atrocious, but they agreed that the employer committed

298
00:15:42,360 --> 00:15:45,200
Speaker 1: multiple unfair layer practices and that it was supported by

299
00:15:45,240 --> 00:15:49,400
Speaker 1: substantial evidence, and that the board properly considered all the behavior.

300
00:15:50,200 --> 00:15:55,360
Speaker 1: But they said the remedy was wrong. Now, the board

301
00:15:55,600 --> 00:15:59,960
Speaker 1: only decided even though the alj found both a CMX

302
00:16:00,560 --> 00:16:04,920
Speaker 1: and a ghissle bargaining order. In other words, either rationale

303
00:16:05,000 --> 00:16:06,720
Speaker 1: got you there. The board said, we're only going to

304
00:16:06,840 --> 00:16:09,040
Speaker 1: use c MEX. We don't need to go to ghissel.

305
00:16:09,800 --> 00:16:13,040
Speaker 1: The court said you can't do that. They had several reasons,

306
00:16:13,360 --> 00:16:15,360
Speaker 1: and they said, but the most important one, which was

307
00:16:15,720 --> 00:16:18,520
Speaker 1: really this is what was very shocking about the decision,

308
00:16:18,880 --> 00:16:22,560
Speaker 1: So the most important one. Because c MEX was an

309
00:16:22,680 --> 00:16:26,880
Speaker 1: unlawful legislative rule that could not be adopted through adjudication.

310
00:16:26,920 --> 00:16:29,360
Speaker 1: In other words, the Board engaged into in a policy

311
00:16:29,400 --> 00:16:34,200
Speaker 1: decision and that CEMEX creates this new substantive rule that

312
00:16:34,320 --> 00:16:38,240
Speaker 1: imposes new obligations legal obligations on employers and therefore is

313
00:16:38,280 --> 00:16:42,800
Speaker 1: required under the APA to go through notice and comment

314
00:16:42,880 --> 00:16:48,240
Speaker 1: rule making. Now this is shocking because the Supreme Court

315
00:16:48,240 --> 00:16:52,320
Speaker 1: has never said this. In fact, it has always said

316
00:16:52,360 --> 00:16:56,520
Speaker 1: it's the Board's choice whether to engage in so called

317
00:16:56,640 --> 00:17:00,920
Speaker 1: rule making or policy making through rule making or through adjudication.

318
00:17:01,560 --> 00:17:04,960
Speaker 2: So the Board is asking the whole circuit to review

319
00:17:05,040 --> 00:17:07,400
Speaker 2: this two to one decision.

320
00:17:08,200 --> 00:17:12,600
Speaker 1: Unsurprisingly, the Board decided that it had to file a

321
00:17:12,680 --> 00:17:16,440
Speaker 1: petition for a rehearing on Bank. And so there's right

322
00:17:16,440 --> 00:17:18,840
Speaker 1: now two petitions for rehearing on Bank. There's one by

323
00:17:18,840 --> 00:17:21,320
Speaker 1: the union that's supporting the board, and of course the

324
00:17:21,320 --> 00:17:23,680
Speaker 1: Board filed one.

325
00:17:23,960 --> 00:17:27,560
Speaker 2: So then there's absolutely no Supreme Court precedent for this.

326
00:17:29,280 --> 00:17:35,120
Speaker 1: The Court has never, never rejected what the Board did

327
00:17:35,160 --> 00:17:38,119
Speaker 1: because it chose adjudication over rulemaking.

328
00:17:38,359 --> 00:17:39,440
Speaker 2: Never the Supreme Court.

329
00:17:39,600 --> 00:17:42,760
Speaker 1: The sixty year precedent was when the Supreme Court said

330
00:17:42,800 --> 00:17:46,040
Speaker 1: Ghissle was an appropriate remedy and that Ghissle reasoning was

331
00:17:46,080 --> 00:17:49,600
Speaker 1: appropriate that's a sixty year They never reached the gissle

332
00:17:49,680 --> 00:17:54,280
Speaker 1: question here because the Board decided we only need CMEX

333
00:17:54,600 --> 00:17:56,040
Speaker 1: to support the bargaining order.

334
00:17:56,200 --> 00:17:59,479
Speaker 2: Is this like, Is this then a novel interpretation by

335
00:17:59,560 --> 00:18:00,439
Speaker 2: the six Circuit.

336
00:18:00,880 --> 00:18:04,800
Speaker 1: It's not only a novel interpretation, it's an interpretation that

337
00:18:04,920 --> 00:18:09,880
Speaker 1: flies in the face of administrative law, of Supreme Court precedent,

338
00:18:09,960 --> 00:18:13,600
Speaker 1: of every single precedent. It's really a shocking decision when

339
00:18:13,640 --> 00:18:15,720
Speaker 1: you read it. They could have said, we don't think

340
00:18:15,760 --> 00:18:18,440
Speaker 1: the CMX bargaining order fits here. They could have said

341
00:18:18,480 --> 00:18:21,639
Speaker 1: a lot of things. We think CMX is ultravirus like

342
00:18:21,640 --> 00:18:23,280
Speaker 1: in other words, the board really can't do that for

343
00:18:23,320 --> 00:18:26,000
Speaker 1: other reasons. But they say the board can't do it

344
00:18:26,320 --> 00:18:28,800
Speaker 1: the way it did it, that it wasn't allowed to

345
00:18:28,880 --> 00:18:33,760
Speaker 1: adopt a CX bargaining order through adjudication. The CMX bargaining

346
00:18:33,840 --> 00:18:37,159
Speaker 1: order was adopted through adjudication in another case, CMX, this

347
00:18:37,320 --> 00:18:40,960
Speaker 1: is brown. So then the board took its precedent CMX,

348
00:18:41,640 --> 00:18:44,720
Speaker 1: and then it applied it in this case. The board

349
00:18:44,800 --> 00:18:48,919
Speaker 1: does this all the time. Now, just imagine now that

350
00:18:49,000 --> 00:18:52,159
Speaker 1: the Board can't create any policies through adjudication. It has

351
00:18:52,200 --> 00:18:56,840
Speaker 1: to do all rulemaking. This would change the entire landscape

352
00:18:56,880 --> 00:19:00,879
Speaker 1: of how the board does policymaking. And you can go

353
00:19:00,960 --> 00:19:05,520
Speaker 1: Supreme Court after Supreme Court precedent that says that the

354
00:19:05,560 --> 00:19:09,080
Speaker 1: Board is allowed to do this through adjudication. I mean,

355
00:19:09,080 --> 00:19:13,160
Speaker 1: the Board does almost everything through adjudication. So that's what's

356
00:19:13,200 --> 00:19:14,639
Speaker 1: so shocking about this case.

357
00:19:15,000 --> 00:19:19,600
Speaker 2: What about that extended football metaphor so likening the NLRB

358
00:19:20,080 --> 00:19:22,800
Speaker 2: having a choice between adjudication and rule making to a

359
00:19:22,840 --> 00:19:25,960
Speaker 2: team electing to run or pass the ball quote, but

360
00:19:26,040 --> 00:19:28,680
Speaker 2: once the board chooses a run play, it cannot throw

361
00:19:28,720 --> 00:19:32,320
Speaker 2: the ball downfield after crossing the line of scrimmage. The

362
00:19:32,400 --> 00:19:36,960
Speaker 2: board cannot exercise its rule making power through the adjudication process.

363
00:19:37,640 --> 00:19:40,040
Speaker 1: I don't even understand what that means. I mean, it's

364
00:19:40,119 --> 00:19:44,399
Speaker 1: nice that he knows football. I understand that once you run,

365
00:19:44,680 --> 00:19:47,280
Speaker 1: you know you're non passing. I get that, But that

366
00:19:47,480 --> 00:19:52,800
Speaker 1: is irrelevance here. The board always does this. Look, let's

367
00:19:52,800 --> 00:19:56,040
Speaker 1: say he's right. Let's say the Court's right. The Supreme

368
00:19:56,040 --> 00:19:57,800
Speaker 1: Court has to say that the Supreme Court has to

369
00:19:57,840 --> 00:20:02,119
Speaker 1: overrule its precedent. All the court precedent says the opposite.

370
00:20:02,720 --> 00:20:06,679
Speaker 1: So this is completely activist. How do you litigate. If

371
00:20:06,720 --> 00:20:09,560
Speaker 1: you can't even depend upon the Courts of Appeals to

372
00:20:09,640 --> 00:20:14,560
Speaker 1: apply Supreme Court precedent. Fine, we know the Supreme Court

373
00:20:14,720 --> 00:20:17,480
Speaker 1: can change its rules. And even when the Supreme Court

374
00:20:17,560 --> 00:20:21,919
Speaker 1: changes its rules, then it shakes up business, it shakes

375
00:20:22,040 --> 00:20:25,000
Speaker 1: up how we understand the law, it shakes up the

376
00:20:25,080 --> 00:20:28,320
Speaker 1: rule of law. Right. So, for example, the Supreme Court

377
00:20:28,320 --> 00:20:30,640
Speaker 1: decided that Revuwade was no longer the law of the land.

378
00:20:30,840 --> 00:20:31,800
Speaker 1: We knew that could happen.

379
00:20:32,000 --> 00:20:32,400
Speaker 4: It did.

380
00:20:32,520 --> 00:20:35,760
Speaker 1: Okay, the Supreme Court has overturned plus E versus Ferguson

381
00:20:35,760 --> 00:20:38,120
Speaker 1: and Brown versus Board of Education. The Supreme Court's allowed

382
00:20:38,119 --> 00:20:41,800
Speaker 1: to do this, But imagine if a lower court did that.

383
00:20:42,400 --> 00:20:44,840
Speaker 1: What the lower court could do is say, we think

384
00:20:44,880 --> 00:20:48,080
Speaker 1: this is a bad rule. Supreme Court, you should overrule

385
00:20:48,119 --> 00:20:51,880
Speaker 1: its precedents. But it can't overrule Supreme Court precedent, which

386
00:20:51,920 --> 00:20:52,920
Speaker 1: is what it's done here.

387
00:20:53,240 --> 00:20:57,280
Speaker 2: Just logistically, is it wise to ask the whole Sixth

388
00:20:57,320 --> 00:21:02,120
Speaker 2: Circuit to review this when ken of its sixteen active

389
00:21:02,200 --> 00:21:08,160
Speaker 2: status judges were appointed by Republicans, including seven by President Trump.

390
00:21:08,680 --> 00:21:12,200
Speaker 2: So if the Circuit grandson on Bank review and then

391
00:21:12,240 --> 00:21:14,679
Speaker 2: they lose, there, isn't it worse?

392
00:21:16,480 --> 00:21:19,360
Speaker 1: No, for a couple of reasons. One is that it's

393
00:21:19,400 --> 00:21:21,680
Speaker 1: the board's policy, at least it was when I was there,

394
00:21:22,160 --> 00:21:25,200
Speaker 1: to go for bank review before it goes to the

395
00:21:25,200 --> 00:21:27,600
Speaker 1: Supreme Court. So to me, the signals that the Board

396
00:21:27,600 --> 00:21:29,720
Speaker 1: thinks this is so important that we consider going to

397
00:21:29,760 --> 00:21:33,760
Speaker 1: the Supreme Court. The second reason is this actually doesn't

398
00:21:33,760 --> 00:21:36,399
Speaker 1: help the conservatives. And this is the reason. The Board

399
00:21:36,520 --> 00:21:41,639
Speaker 1: currently has a Republican majority, has a Trump appointed Republican majority,

400
00:21:41,840 --> 00:21:47,280
Speaker 1: and a Trump appointed General Council. If that Trump appointed

401
00:21:47,480 --> 00:21:52,680
Speaker 1: Republican majority cannot make policy through judication, it's going to

402
00:21:52,840 --> 00:21:57,160
Speaker 1: slow it down a lot. I mean, this is a

403
00:21:57,200 --> 00:22:01,399
Speaker 1: procedural question. Really, it's an administry of law question that

404
00:22:01,560 --> 00:22:06,680
Speaker 1: favors neither side. In the abstract. It happens to favor

405
00:22:06,880 --> 00:22:11,560
Speaker 1: a very liberal decision here because this is Jennifer Brutso's

406
00:22:11,680 --> 00:22:14,159
Speaker 1: or part of her theory. This was under the Biden board,

407
00:22:14,400 --> 00:22:17,320
Speaker 1: but in the next few years it would favor all

408
00:22:17,359 --> 00:22:21,399
Speaker 1: these conservative decisions. So they don't think so. And I

409
00:22:21,400 --> 00:22:23,919
Speaker 1: think that what the Board is really doing is fine.

410
00:22:24,000 --> 00:22:27,320
Speaker 1: If we're going to lose, we might lose CX. In

411
00:22:27,320 --> 00:22:30,960
Speaker 1: other words, maybe the court will say CMEX is not

412
00:22:31,119 --> 00:22:34,080
Speaker 1: a good idea. And that was that the Board shouldn't

413
00:22:34,080 --> 00:22:37,199
Speaker 1: have a remedy in this way. But what it can't

414
00:22:37,280 --> 00:22:41,520
Speaker 1: do is dictate to the board that it's not allowed

415
00:22:41,560 --> 00:22:46,080
Speaker 1: to create policy through adjudication. And that's neutral. That's a

416
00:22:46,160 --> 00:22:49,639
Speaker 1: neutral rule. So it shouldn't It shouldn't matter about conservative

417
00:22:49,720 --> 00:22:52,840
Speaker 1: versus liberal, unless you want to just slow down all

418
00:22:52,840 --> 00:22:56,479
Speaker 1: of their policymaking, or you just want to rip apart

419
00:22:56,600 --> 00:22:59,040
Speaker 1: the new deal completely. That's a possibility.

420
00:22:59,400 --> 00:23:01,800
Speaker 2: Stay with me, and coming up next on the Bloomberg

421
00:23:01,920 --> 00:23:05,800
Speaker 2: Law Show, I'll continue this conversation with Professor Ann Lafosso

422
00:23:06,400 --> 00:23:08,760
Speaker 2: we'll take a look at what the NLRB said in

423
00:23:08,800 --> 00:23:13,359
Speaker 2: its petition and might the Supreme Court reverse its own precedent.

424
00:23:13,760 --> 00:23:19,240
Speaker 2: It certainly happened before. A recent ruling by the US

425
00:23:19,400 --> 00:23:22,840
Speaker 2: Court of Appeals for the Sixth Circuit threatens the National

426
00:23:22,920 --> 00:23:28,320
Speaker 2: Labor Relations Board's power to establish labor policy through individual

427
00:23:28,400 --> 00:23:33,240
Speaker 2: case decisions, potentially disrupting the way the agency has operated

428
00:23:33,320 --> 00:23:36,000
Speaker 2: for more than ninety years. It was a three to

429
00:23:36,080 --> 00:23:39,680
Speaker 2: two decision, and the National Labor Relations Board is asking

430
00:23:39,720 --> 00:23:43,080
Speaker 2: the full Circuit to review the decision. On bank I've

431
00:23:43,080 --> 00:23:46,120
Speaker 2: been talking to Anne Lafasso, an expert in labor law

432
00:23:46,200 --> 00:23:49,320
Speaker 2: and a professor at the University of Cincinnati Law School.

433
00:23:50,040 --> 00:23:54,399
Speaker 2: The Supreme Court is skeptical of the administrative state, and

434
00:23:54,440 --> 00:23:57,399
Speaker 2: that's putting it mildly. Could they say, oh, wait, we

435
00:23:57,640 --> 00:24:00,960
Speaker 2: like this decision by the Sixth Circuit here they could.

436
00:24:01,320 --> 00:24:03,879
Speaker 1: They could, but they would have to get rid of

437
00:24:04,480 --> 00:24:07,320
Speaker 1: let me see, I wrote all this down Channery two.

438
00:24:07,840 --> 00:24:13,199
Speaker 1: Whyman Gordon Bell Aerospace all for these are foundational administrative

439
00:24:13,240 --> 00:24:16,040
Speaker 1: law cases that say that the board is allowed to

440
00:24:16,160 --> 00:24:22,040
Speaker 1: choose between rulemaking and adjudication. They invented this new motivation

441
00:24:22,200 --> 00:24:24,880
Speaker 1: test that said when the board is motivated by general

442
00:24:24,920 --> 00:24:28,160
Speaker 1: policy rather than solely by the facts, like that nothing

443
00:24:28,240 --> 00:24:32,359
Speaker 1: is in the precedent about that mischaracterized se MIX is

444
00:24:32,440 --> 00:24:35,480
Speaker 1: sort of fitting into its theory, saying that c MIX

445
00:24:35,560 --> 00:24:39,480
Speaker 1: is somehow this one size fit all rule, when se

446
00:24:39,480 --> 00:24:41,560
Speaker 1: MIX actually says, you have to have done this, you

447
00:24:41,600 --> 00:24:43,120
Speaker 1: have to have done this, you have to have done

448
00:24:43,160 --> 00:24:47,600
Speaker 1: this to get this remedy. It's extremely fact intensive. They

449
00:24:47,760 --> 00:24:52,800
Speaker 1: ignored at least seven administrative law principles how the board

450
00:24:52,840 --> 00:24:56,159
Speaker 1: not only can create policy through adjudication, it can change

451
00:24:56,160 --> 00:25:01,359
Speaker 1: policy through adjudication. So it's actually creating this Circuit split

452
00:25:01,520 --> 00:25:05,640
Speaker 1: on a foundational late law question. But it's also it's

453
00:25:05,720 --> 00:25:10,679
Speaker 1: a shocking interpretation because it would mean that any agency

454
00:25:10,720 --> 00:25:14,800
Speaker 1: that does adjudication, it would change that. Now here's the thing.

455
00:25:15,480 --> 00:25:20,639
Speaker 1: The Board is pretty much the only the only agency

456
00:25:20,680 --> 00:25:24,840
Speaker 1: that does this by adjudication. So what I think is

457
00:25:24,880 --> 00:25:29,720
Speaker 1: that clerks and judges do not understand labor law, so

458
00:25:30,119 --> 00:25:36,000
Speaker 1: they applaued somehow the more normal administrative rulemaking model to

459
00:25:36,080 --> 00:25:41,439
Speaker 1: the Board. The Board has done four rules or something

460
00:25:41,560 --> 00:25:46,119
Speaker 1: in the entire ninety year history. Okay, that means it

461
00:25:46,160 --> 00:25:50,120
Speaker 1: would be a totally new agency. And the Supreme Court

462
00:25:50,160 --> 00:25:53,199
Speaker 1: has said this, Congress has never gone against it. So

463
00:25:53,320 --> 00:25:57,240
Speaker 1: somehow these two judges have decided that we're going to

464
00:25:57,320 --> 00:26:00,760
Speaker 1: just change the way the whole agency works. It is

465
00:26:00,840 --> 00:26:06,840
Speaker 1: shocking for its its hootspa. Okay, it's shocking. It's just shocking.

466
00:26:07,200 --> 00:26:09,720
Speaker 1: So I'm never shocked by what the Supreme Court does.

467
00:26:09,760 --> 00:26:12,080
Speaker 1: If the Supreme Court has done this, I'd be mildly shocked.

468
00:26:12,119 --> 00:26:14,239
Speaker 1: But at least it would be the Supreme Court that

469
00:26:14,720 --> 00:26:19,879
Speaker 1: is allowed to change its mind. This is mandatory authority.

470
00:26:20,680 --> 00:26:22,320
Speaker 1: If I were in judge, am I allowed to just

471
00:26:22,720 --> 00:26:25,439
Speaker 1: ignore Dobbs? And say yeah, sorry, you know I allowed

472
00:26:25,440 --> 00:26:26,840
Speaker 1: to do that to all when she get have an

473
00:26:26,840 --> 00:26:29,600
Speaker 1: abortion at nine months, you know, I mean, no, it

474
00:26:29,640 --> 00:26:32,000
Speaker 1: doesn't matter what my views are. I have to follow

475
00:26:32,119 --> 00:26:32,920
Speaker 1: the Supreme Court.

476
00:26:33,320 --> 00:26:37,560
Speaker 2: So tell us about the petition the NLRB file to

477
00:26:37,600 --> 00:26:39,520
Speaker 2: try to get on bank review.

478
00:26:40,320 --> 00:26:44,359
Speaker 1: Okay, So let's see. I did a little chart, and

479
00:26:45,080 --> 00:26:49,919
Speaker 1: basically the board in the Union first say that the

480
00:26:49,960 --> 00:26:54,919
Speaker 1: board has wide latitude, vast latitude to choose adjudication or rulemaking,

481
00:26:55,280 --> 00:26:59,359
Speaker 1: and almost always chooses adjudication. That's in contrast to what

482
00:26:59,560 --> 00:27:01,840
Speaker 1: the majority already says, so that the Descent degrees, so

483
00:27:02,160 --> 00:27:04,080
Speaker 1: that Scent, the Board, and the Union all agree on

484
00:27:04,080 --> 00:27:09,040
Speaker 1: that interpretation of Chenery two. The majority says that Channery

485
00:27:09,119 --> 00:27:13,359
Speaker 1: two somehow limits adjudication to resolving the particular problem of

486
00:27:13,359 --> 00:27:16,720
Speaker 1: a particular case. I've never heard that before. The Descent

487
00:27:16,800 --> 00:27:20,159
Speaker 1: says that they cherry picked language out of that and

488
00:27:20,320 --> 00:27:23,480
Speaker 1: instead that Chenery two actually affirms broad discretion, and the

489
00:27:24,119 --> 00:27:26,120
Speaker 1: Board and the Union say that too. They say that

490
00:27:26,160 --> 00:27:30,960
Speaker 1: the majority misreads Chenery two. It does not restrict adjudication,

491
00:27:31,760 --> 00:27:36,440
Speaker 1: and that Chenery two prohibits rigid limits on agencies' ability

492
00:27:36,800 --> 00:27:40,800
Speaker 1: to choose adjudication. Well, I'm going in another Supreme Court

493
00:27:40,840 --> 00:27:44,840
Speaker 1: case where the majority says it forbids adjudication to create

494
00:27:45,000 --> 00:27:48,520
Speaker 1: a new rule, and the Board and the Union along

495
00:27:48,560 --> 00:27:52,760
Speaker 1: with the Descent, say that the majority misapplies it, and

496
00:27:52,840 --> 00:27:55,560
Speaker 1: that in fact, in why I'm in Gordon, the Supreme

497
00:27:55,600 --> 00:27:59,400
Speaker 1: Court itself enforced that rule, which was by adjudication, all right.

498
00:27:59,680 --> 00:28:02,960
Speaker 1: And then Bell Aerospace is another one where they say

499
00:28:03,080 --> 00:28:06,800
Speaker 1: that it reads marginal utility is a limit on adjudication.

500
00:28:07,480 --> 00:28:10,919
Speaker 1: The Board and the Union say that Bell Aerospace categorically

501
00:28:10,920 --> 00:28:14,960
Speaker 1: affirms the Board's discretion to choose adjudication. These are all

502
00:28:15,040 --> 00:28:17,840
Speaker 1: standard interpretations. Let me put it this way. If a

503
00:28:17,880 --> 00:28:21,439
Speaker 1: student wrote that majority opinion, I would give them a D.

504
00:28:21,800 --> 00:28:24,240
Speaker 1: I wouldn't give them an F because they at least

505
00:28:24,240 --> 00:28:28,800
Speaker 1: wrote something, But they would not fare well in my class.

506
00:28:29,040 --> 00:28:31,000
Speaker 1: I mean if they were a Supreme Court judge and

507
00:28:31,040 --> 00:28:33,440
Speaker 1: they wanted to write this and say we are changing

508
00:28:33,480 --> 00:28:35,720
Speaker 1: the rule. But they don't even say they're changing the

509
00:28:35,800 --> 00:28:38,240
Speaker 1: rule because they can't because they know they're not allowed.

510
00:28:38,360 --> 00:28:40,360
Speaker 1: At least the Supreme Court will tell us they're changing

511
00:28:40,360 --> 00:28:42,760
Speaker 1: the rule. I would hope anyway. Oh, the role of

512
00:28:43,120 --> 00:28:48,280
Speaker 1: board experience the majority says the board cannot rely on experience,

513
00:28:48,480 --> 00:28:51,720
Speaker 1: when there are dozens of cases that say the board

514
00:28:51,760 --> 00:28:55,600
Speaker 1: can rely on its experience. I don't know where this

515
00:28:55,680 --> 00:28:59,880
Speaker 1: is coming from. Alternate rationales, because the Alja talked about

516
00:29:00,280 --> 00:29:04,719
Speaker 1: CMX and Gissle. All of a sudden, administrative agencies can

517
00:29:04,840 --> 00:29:09,360
Speaker 1: have alternate rationales. Courts have alternate rationales for things. I've

518
00:29:09,360 --> 00:29:12,360
Speaker 1: never heard of something like this. I mean, I can

519
00:29:12,440 --> 00:29:15,640
Speaker 1: go on and on with this, but I don't want

520
00:29:15,640 --> 00:29:17,840
Speaker 1: to bore your arm. I mean, I'm excited about this

521
00:29:17,880 --> 00:29:20,760
Speaker 1: case because it's so ridiculous. But we'll see what happens

522
00:29:20,800 --> 00:29:23,680
Speaker 1: because the Supreme Court might you know, shot us. Oh no,

523
00:29:23,800 --> 00:29:26,360
Speaker 1: it wouldn't be a shock, because the Supreme Court loves

524
00:29:26,400 --> 00:29:30,000
Speaker 1: to in the last decade has Oh well, it's certainly

525
00:29:30,040 --> 00:29:31,560
Speaker 1: been good business for law professors.

526
00:29:31,560 --> 00:29:32,120
Speaker 4: I'll say that.

527
00:29:32,480 --> 00:29:35,240
Speaker 2: So this only applies in the Sixth Circuit, then.

528
00:29:35,320 --> 00:29:37,120
Speaker 1: Yeah, it only applies in the sixth Circuit. But it's

529
00:29:37,160 --> 00:29:39,280
Speaker 1: only a matter of time before the Fifth Circuit decides

530
00:29:39,320 --> 00:29:41,480
Speaker 1: that sounds like a good idea, And that means the

531
00:29:41,520 --> 00:29:44,400
Speaker 1: Eleventh Circuit will go where the Fifth Circuit goes. And

532
00:29:44,480 --> 00:29:48,640
Speaker 1: so I would assume that they will be a deep

533
00:29:48,720 --> 00:29:51,560
Speaker 1: split before long. I mean, who knows, maybe the other

534
00:29:51,720 --> 00:29:54,400
Speaker 1: circuits will go whoa. I mean, especially if the Sixth

535
00:29:54,400 --> 00:29:57,440
Speaker 1: Circuit on Bank says, maybe this wasn't such a good idea.

536
00:29:57,440 --> 00:30:01,560
Speaker 1: May maybe we made a mistake, and maybe our law

537
00:30:01,560 --> 00:30:05,200
Speaker 1: clerks didn't take administrative law or labor law, and maybe

538
00:30:05,200 --> 00:30:08,120
Speaker 1: they didn't understand. I don't know where their law clerks

539
00:30:08,160 --> 00:30:10,640
Speaker 1: came from, but I hope it wasn't from the University

540
00:30:10,680 --> 00:30:12,960
Speaker 1: of Cincinnati because I'd have to talk to my colleagues

541
00:30:13,000 --> 00:30:14,080
Speaker 1: about what they're teaching then.

542
00:30:14,480 --> 00:30:18,080
Speaker 2: And the NLRB has a policy of non acquiescence, so

543
00:30:18,360 --> 00:30:20,440
Speaker 2: they won't change because of this decision.

544
00:30:20,640 --> 00:30:23,800
Speaker 1: Right, Yeah, the b MLRB, as you said, policy of

545
00:30:23,840 --> 00:30:28,000
Speaker 1: non acquiescence, which means the MLRB has to have a

546
00:30:28,120 --> 00:30:31,880
Speaker 1: national rule because labor law shouldn't change depending on where

547
00:30:31,880 --> 00:30:35,520
Speaker 1: you are, so it will just say that, Okay, if

548
00:30:35,560 --> 00:30:38,240
Speaker 1: we're in the Sixth Circuit, we'll have to follow this rule.

549
00:30:38,520 --> 00:30:40,840
Speaker 1: That's why they're asking for the en banc review. As

550
00:30:40,880 --> 00:30:43,640
Speaker 1: I always tell my students, labor law is what the

551
00:30:43,680 --> 00:30:46,640
Speaker 1: Supreme Court said it is, or the board says it is.

552
00:30:47,280 --> 00:30:50,160
Speaker 1: It's only what the circuit says it is. If you're

553
00:30:50,160 --> 00:30:54,000
Speaker 1: in that circuit. Otherwise you follow the board's rule, and

554
00:30:54,000 --> 00:30:55,960
Speaker 1: then if that's overruled by the Supreme Court, you follow

555
00:30:56,000 --> 00:31:01,040
Speaker 1: the Supreme Court's rule. Now, the sister circuits, my look

556
00:31:01,080 --> 00:31:02,920
Speaker 1: at the sixth Circuit and say, wow, that's a good idea,

557
00:31:03,000 --> 00:31:04,880
Speaker 1: Like I think the Fifth Circuit, I mean, the Fifth

558
00:31:04,880 --> 00:31:08,200
Speaker 1: Circuit's much more radicalized than the Sixth Circuit. I mean,

559
00:31:08,240 --> 00:31:12,680
Speaker 1: the Fifth Circuit loses before the Supreme Court relatively often lately.

560
00:31:13,120 --> 00:31:14,719
Speaker 1: I would have been less shocked if this came out,

561
00:31:14,800 --> 00:31:15,719
Speaker 1: this is the Fifth Circuit.

562
00:31:16,360 --> 00:31:19,640
Speaker 2: Yeah, because the Fifth Circuit is seemingly always trying to

563
00:31:19,680 --> 00:31:22,200
Speaker 2: push the envelope in a lot of different areas.

564
00:31:22,280 --> 00:31:24,120
Speaker 1: The sixth Circuit doesn't seem to do that as much.

565
00:31:24,160 --> 00:31:26,040
Speaker 1: They seem to be much more disciplined. And these are

566
00:31:26,080 --> 00:31:28,640
Speaker 1: George Delvia Bush to come out of the sixth Circuit.

567
00:31:28,640 --> 00:31:31,240
Speaker 2: And these were both George W. Busha pointee. So they've

568
00:31:31,240 --> 00:31:33,040
Speaker 2: been on the bench for a long time.

569
00:31:33,480 --> 00:31:36,360
Speaker 1: That's another thing. I'm pretty sure I've argued against some

570
00:31:36,440 --> 00:31:38,640
Speaker 1: of these guys when I was at the Board, and

571
00:31:38,720 --> 00:31:41,320
Speaker 1: so I was like, wait, they know better. I know

572
00:31:41,480 --> 00:31:42,240
Speaker 1: they know better.

573
00:31:42,880 --> 00:31:44,760
Speaker 2: So then does this mean there was already a split

574
00:31:44,800 --> 00:31:46,840
Speaker 2: in the circuits, and the Supreme Court could take this

575
00:31:47,000 --> 00:31:47,960
Speaker 2: case right away.

576
00:31:48,760 --> 00:31:52,360
Speaker 1: Well, I would say, yes, it's not even a split

577
00:31:52,400 --> 00:31:55,520
Speaker 1: in the circuits, it's a split with the Supreme Court.

578
00:31:56,160 --> 00:32:00,400
Speaker 1: So they are defying the Supreme Court right now. Yes,

579
00:32:00,480 --> 00:32:03,600
Speaker 1: the Supreme Court could take this right now. Hopefully the

580
00:32:03,640 --> 00:32:07,560
Speaker 1: Sixth Circuit will realize, wow, we kind of misread this precedent,

581
00:32:08,000 --> 00:32:11,560
Speaker 1: and maybe we can get rid of c MECHS a

582
00:32:11,560 --> 00:32:14,280
Speaker 1: different way if they don't like c Mechs. There's ways

583
00:32:14,320 --> 00:32:17,040
Speaker 1: to get rid of c MECHS if they don't like it.

584
00:32:17,280 --> 00:32:21,000
Speaker 2: Because this was not the way because Justice Gorsich got

585
00:32:21,040 --> 00:32:25,680
Speaker 2: annoyed with District Court judges who he said weren't following

586
00:32:25,760 --> 00:32:29,000
Speaker 2: Supreme Court precedent in the emergency docket.

587
00:32:29,320 --> 00:32:34,000
Speaker 1: Right even if Gorsuch himself said I agree with this

588
00:32:34,080 --> 00:32:36,360
Speaker 1: approach and now I want to change the Supreme Court,

589
00:32:36,560 --> 00:32:41,960
Speaker 1: he should be annoyed. It's a lack of discipline, it's outrageous.

590
00:32:42,440 --> 00:32:44,920
Speaker 2: So it's going to be very interesting to hear what

591
00:32:45,640 --> 00:32:50,280
Speaker 2: the full Circuit says if there is an on bank review.

592
00:32:51,160 --> 00:32:54,080
Speaker 2: This is a really complicated area of the law, and

593
00:32:54,160 --> 00:32:57,120
Speaker 2: so thanks so much for taking us through it. That's

594
00:32:57,160 --> 00:33:01,480
Speaker 2: Professor and Lafasso of the University of Since Law School.

595
00:33:01,800 --> 00:33:04,120
Speaker 2: And that's it for this edition of The Bloomberg Law Show.

596
00:33:04,440 --> 00:33:06,800
Speaker 2: Remember you can always get the latest legal news on

597
00:33:06,840 --> 00:33:11,120
Speaker 2: our Bloomberg Law podcasts. You can find them on Apple Podcasts, Spotify,

598
00:33:11,320 --> 00:33:16,360
Speaker 2: and at www dot bloomberg dot com slash podcast Slash Law,

599
00:33:16,760 --> 00:33:19,320
Speaker 2: And remember to tune into The Bloomberg Law Show every

600
00:33:19,400 --> 00:33:23,280
Speaker 2: weeknight at ten pm Wall Street Time. I'm June Grosso

601
00:33:23,440 --> 00:33:25,040
Speaker 2: and you're listening to Bloomberg