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Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio,

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Speaker 1: And did you see today that deranged Jack Smith. He's

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Speaker 1: the prosecutor.

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Speaker 2: He's a deranged person.

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Speaker 1: Wants to take away my rights under the First Amendment,

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Speaker 1: wants to take away my right of speaking freely and openly.

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Speaker 2: Donald Trump never seems to miss an opportunity to ridicule

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Speaker 2: Jack Smith, the Special Council who's bringing charges against the

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Speaker 2: former president in two cases into jurisdictions. The trial date

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Speaker 2: in DC on charges of trying to overturn the twenty

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Speaker 2: twenty election is just five months away, but Trump is

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Speaker 2: looking for a pass by arguing he has absolute presidential immunity,

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Speaker 2: and his attorneys have asked federal Judge Tanya Chuckkin to

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Speaker 2: toss out the indictment. Joining me is former federal prosecutor

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Speaker 2: Jessica Romp, a professor at Cardozo Law School. Jessica tell

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Speaker 2: us about Trump's claim of presidential immunity.

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Speaker 3: So their argument is that Trump enjoys absolute presidential immunity

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Speaker 3: from prosecution because he claims that the indictment brought by

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Speaker 3: the Special Council related to January sixth is based on

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Speaker 3: what they contend are his official acts while president. I

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Speaker 3: would submit this is the most significant motion that Trump

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Speaker 3: has filed to date in all of the cases that

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Speaker 3: are pending against him, and that the court's decisions on

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Speaker 3: this motion could establish new law regarding whether a president

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Speaker 3: is beyond the reach of the criminal law for acts

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Speaker 3: taken while president, even after he leaves office.

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Speaker 2: What do you make of his attorney's arguments? They make

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Speaker 2: several levels of arguments. Are they convincing well?

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Speaker 3: The motion is well written, and unlike some arguments we've

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Speaker 3: seen from Trump's counsel and some of the cases brought

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Speaker 3: against him, this one is well written, it's well presented,

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Speaker 3: and it does present a very important issue of law,

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Speaker 3: one that the courts will have to take seriously. No

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Speaker 3: court has ever squarely decided the question of whether a

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Speaker 3: president enjoys absolute immunity from prosecution at all, because there's

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Speaker 3: never been a precedent for criminal charges being filed against

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Speaker 3: a former president. But there are two issues that the

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Speaker 3: courts will have to address in ruling on the motion.

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Speaker 3: The first is whether, in fact presidents do enjoy absolute

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Speaker 3: immunity from criminal prosecution for acts taken during the presidency,

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Speaker 3: and if they find that there is such a thing

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Speaker 3: as absolute immunity for president from criminal prosecution, then they

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Speaker 3: would have to apply that doctrine of immunity to the

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Speaker 3: facts presented in this case. If the court told that

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Speaker 3: there is no absolute immunity for a president from prosecution

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Speaker 3: even after they leave office, then they don't necessarily have

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Speaker 3: to address this second question of whether or not Trump's

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Speaker 3: actions fall within the scope of such immunity if they

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Speaker 3: find that there isn't such an unity.

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Speaker 2: This motion was just filed last Thursday, so prosecutors haven't

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Speaker 2: had time to respond. But what do you envision their

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Speaker 2: argument will be against the claims of presidential immunity.

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Speaker 3: I imagine what they're going to argue is first that

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Speaker 3: the courts should not extend the doctrine it's a judge

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Speaker 3: made doctrine of immunity for presidents to the criminal context,

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Speaker 3: and we can talk about why. I think they have

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Speaker 3: very good arguments that the court should not recognize immunity

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Speaker 3: from criminal prosecution for former presidents. But secondarily, they will

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Speaker 3: argue that even if the court were to find that

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Speaker 3: in some cases a president could enjoy immunity from criminal

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Speaker 3: prosecution for actions taken while president, that it would not

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Speaker 3: apply to the conduct that is alleged in this case,

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Speaker 3: because if the courts were to follow the doctrine they

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Speaker 3: have applied in the context of civil suits for damages

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Speaker 3: brought against a former president, which asks whether or not

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Speaker 3: the conduct in question falls within the outer perimeter of

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Speaker 3: the president's official response stability, the Special Council would argue

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Speaker 3: that these actions do not fall within that outer perimeter.

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Speaker 2: Trump's attorneys say the judge should look at Trump's actions

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Speaker 2: on their face to determine if they're official, and also

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Speaker 2: that even if they were a mix of official and

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Speaker 2: campaign related, they should still be covered by the legal

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Speaker 2: shield the immunity. Do you agree with that?

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Speaker 3: So, in asking whether or not the actions fall within

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Speaker 3: the outer perimeter of the president's official responsibility, one has

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Speaker 3: to ask at what level of generality do we look

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Speaker 3: at the acts. Trump's attorneys invite the court to look

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Speaker 3: at them at a very high level of generality and say,

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Speaker 3: these are statements on matters of public concern. In his

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Speaker 3: tweets and his public statements, for example, at the rally

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Speaker 3: on January sixth, he is communicating with state officials about

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Speaker 3: elections and communicating with members of the Department of Justice

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Speaker 3: about whether or not the presidential election was conducted consistent

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Speaker 3: with law. At that level of generality, it's easy to

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Speaker 3: characterize his actions as within the outer perimeter of the

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Speaker 3: president functions to take care that the laws of the

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Speaker 3: United States are faithfully executed. But when you look at

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Speaker 3: a more granular level, and also in context of all

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Speaker 3: the actions that are alleged in the indictment taken together,

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Speaker 3: it's much easier to characterize them not as being within

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Speaker 3: the outer perimeter of Trump's official duties as president, but

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Speaker 3: instead as crimes or part of a course of conduct

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Speaker 3: that was a conspiracy to overturn the election and obstruct

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Speaker 3: the official proceedings of Congress and defraud the United States,

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Speaker 3: as alleged in the indictment. And so the case law

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Speaker 3: does hold that the court should not look into the

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Speaker 3: motives behind a particular action and instead look at the

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Speaker 3: acts objectively and whether or not they further a presidential function.

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Speaker 3: But saying that the court should not look at motives

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Speaker 3: does not mean that the court can't look at the

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Speaker 3: statements and the actions in context.

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Speaker 2: Trump's attorneys also point to his acquittal in the Senate

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Speaker 2: impeachment trial in the days after the January sixth attack

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Speaker 2: and argue that he can't be tried again after the

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Speaker 2: Senate failed to convict and remove him from office.

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Speaker 3: I do not think the court will agree with that analysis.

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Speaker 3: The language that they point to has to do with

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Speaker 3: I think the court would find whether a president could

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Speaker 3: be indicted and prosecuted while in office, and if one

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Speaker 3: goes back and considers, for example, the analysis in the

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Speaker 3: Office of Legal Council memo that was prepared initially in

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Speaker 3: nineteen seventy three during the Watergate era, which looked into

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Speaker 3: whether or not a sitting president could be subject to

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Speaker 3: prosecution while in office. That memo, which was then reaffirmed

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Speaker 3: in two thousand by the Office of Legal Council, essentially

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Speaker 3: held that because of separation of powers concerned primarily, a

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Speaker 3: sitting president could not be prosecuted, but instead would have

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Speaker 3: to be subject to impeachment first and removed from office

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Speaker 3: before the president would be amenable to criminal prosecution. What

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Speaker 3: Trump's lawyers are doing, in effect, is taking that same

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Speaker 3: language that provides for the impeachment of a president and

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Speaker 3: then contemplates that a president could be criminally prosecuted after

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Speaker 3: being removed from office to say that the exclusive remedy

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Speaker 3: for a president who commits crimes while in office is

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Speaker 3: to be impeached, and that a criminal prosecution could only

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Speaker 3: follow as an additional consequence if the president had been

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Speaker 3: in fact convicted in the Senate. I think that's not

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Speaker 3: a fair reading of that language, and I don't think

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Speaker 3: a court would agree with it.

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Speaker 2: Has Judge Chuckkin ruled on an issue involving presidential immunity before.

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Speaker 3: She has in a different context. It was a case,

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Speaker 3: I believe, involving former President Obama who had been sued

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Speaker 3: by individuals. She held that he enjoyed absolute immunity from

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Speaker 3: that civil action against him in his individual capacity. She

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Speaker 3: has not ruled on a question of immunity from criminal prosecution.

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Speaker 3: In a case that presents many of the same facts

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Speaker 3: in the civil context. Judge Meta from the DC District

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Speaker 3: Court ruled that former President Trump did not enjoy absolute

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Speaker 3: immunity from civil prosecution with respect to many of the

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Speaker 3: claims in a case that was brought by members of

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Speaker 3: Congress and members of the Capitol Police who were injured

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Speaker 3: in the January sixth ryot. That case is pending before

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Speaker 3: the DC Circuit Court of Appeals. It's been pending since December,

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Speaker 3: and that case I think will be very instructive to

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Speaker 3: Judge Chutkin in ruling on whether or not if she

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Speaker 3: gets to the question of whether much of the conduct

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Speaker 3: alleged in the Special Council of January sixth indictment falls

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Speaker 3: within the outer perimeter of his official responsibilities. If the

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Speaker 3: DC Circuit renders an opinion holding that it does not

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Speaker 3: fall within the outer perimeter, that would be very instructive

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Speaker 3: to her if she gets to that problem. Obviously, in

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Speaker 3: the meantime, she may also find persuasive the ruling of

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Speaker 3: her fellow judge on her court Dutch Meta that these

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Speaker 3: actions largely did not fall within that outer perimeter.

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Speaker 2: Tump is the first former president to face a federal indictment.

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Speaker 2: So this is uncharted territory. What has the Supreme Court

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Speaker 2: ruled in the past in the area of presidential immunity?

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Speaker 3: So the Supreme Court has ruled on presidential immunity in

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Speaker 3: the context of damages, actions and civil suits. In the

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Speaker 3: most important cases a case called Nixon versus Fitzgerald, in

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Speaker 3: which the Court said there is a doctrine of absolute

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Speaker 3: presidential immunity that shields the president even after he leaves office,

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Speaker 3: from damage's actions brought by individuals for actions taken within

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Speaker 3: the outer perimeter of the president's official responsibilities. The court

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Speaker 3: in that case drew on precedents from the con text

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Speaker 3: of other executive officials, such as prosecutors, but it also

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Speaker 3: looked to immunity doctrine that court had developed in the

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Speaker 3: context of judges, other officials whom the court said would

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Speaker 3: if they were not provided immunity, would be potentially subject

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Speaker 3: to damages suits brought by aggrieved individuals who would contend

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Speaker 3: that these officials had, in the course of their duties

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Speaker 3: injured them and that they were entitled to damages. And

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Speaker 3: those cases that recognized absolute immunity for prosecutors and judges

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Speaker 3: that essentially, if we don't adopt this doctrine, these individuals

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Speaker 3: who perform these very public and important duties will be

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Speaker 3: distracted and concerned as they perform their duties about the

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Speaker 3: potential of being subject to innumerable suits. And so essentially

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Speaker 3: we have to balance the potential interest that some civil

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Speaker 3: litigants would have in collecting damages against such individuals rightfully

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Speaker 3: against the public interest in preserving the ability of these

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Speaker 3: officials to do their jobs in the public interest without

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Speaker 3: being overly concerned about being subject to suit in the future.

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Speaker 3: And the Court recognized that there's obviously a loss in

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Speaker 3: some cases for people who would have meritorious claims, but

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Speaker 3: that it was counterbalanced by the public interest in having

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Speaker 3: these officials be able to perform their duties without such

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Speaker 3: concerns and distractions, And so in Nixon versus Fitzgerald, the

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Speaker 3: Court said, essentially, we're going to adopt that reasoning which

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Speaker 3: applies with great force to the president of the United States, who,

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Speaker 3: in addition, as to whom there's real separation of powers

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Speaker 3: concerns if the courts were to intrude upon the executive's

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Speaker 3: ability to perform his functions as president. But the Court

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Speaker 3: again in Nixon versus Fitzgerald, talked about how those cases

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Speaker 3: did not opine on the availability of criminal prosecution, and

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Speaker 3: in fact, in Nixon versus Fitzgerald, the Court was very

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Speaker 3: clear to say, and it has said in subsequent cases

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Speaker 3: on the question of absolute presidential immunity, that those cases

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Speaker 3: are limited to the question of civil damages in civil

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Speaker 3: suits brought by private parties. So I think there's a

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Speaker 3: very strong argument to be made that the Court would

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Speaker 3: not extend that doctrine of immunity to criminal prosecution.

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Speaker 2: What about the case of Trump the Vance where the

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Speaker 2: Supreme Court ruled on the Manhattan DA's grand jury subpoena

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Speaker 2: to Mazar's Trump's accounting firm.

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Speaker 3: I think that's instructive as well, and that builds on

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Speaker 3: this idea that the Court sees a distinction between criminal cases,

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Speaker 3: including investigations and prosecutions, and civil lawsuits. In the Trump

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Speaker 3: Vivance case, I mean that involved the subpoena from a

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Speaker 3: state grand jury seeking documents from Trump while he was president,

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Speaker 3: and he asserted absolute immunity and that he shouldn't have

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Speaker 3: to respond to that state grand jury subpoena, and the

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Speaker 3: Court said, the public interest in criminal investigations is really paramount.

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Speaker 3: It's a similar interest that the Court talked about in

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Speaker 3: the United States versus Nixon when President Nixon as president

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Speaker 3: was ordered to comply with a subpoena from the grand

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Speaker 3: jury working with the Special prosecutor Archibald Cox, seeking evidence

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Speaker 3: in the grand jury's investigation related to Watergate. So in

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Speaker 3: both cases, the Court has talked about, essentially the paramount

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Speaker 3: public interest in criminal prosecutions and investigations, and how that

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Speaker 3: is really quite distinct from the private interests involved in

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Speaker 3: civil lawsuits against the former president or president.

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Speaker 2: So Trump is all about delay with these cases, and

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Speaker 2: his lawyer said they'll try to take this to the

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Speaker 2: Supreme Court if they lose at the DC's Circuit rulings

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Speaker 2: denying motions to dismiss an indictment normally wouldn't be appealable

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Speaker 2: until after a verdict, right, But is this different?

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Speaker 3: This is different. And that's one of the reasons why

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Speaker 3: I think this motion is so significant, not just on

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Speaker 3: the merits and for the new law that it could

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Speaker 3: estound Bush once it's decided, but for the fact that

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Speaker 3: the motion, because of its nature, and the fact that

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Speaker 3: I think it is going to be deemed immediately appealable

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Speaker 3: because of the so called collateral order doctrine, could derail

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Speaker 3: the trial simply by going through the appellate process, and

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Speaker 3: the time it will take for the matter to be decided,

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Speaker 3: and how that may well go beyond the March twenty

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Speaker 3: twenty four trial date that's been established under the collateral

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Speaker 3: ordered doctrine, a decision by a court that can't be

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Speaker 3: effectively reviewed on appeal from a final judgment that involves

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Speaker 3: an important issue that separate from the merits of the action,

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Speaker 3: can be appealed before the action is fully resolved. And

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Speaker 3: I think that the claim that the former president is

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Speaker 3: advancing that he's entitled to absolute presidential immunity from prosecution

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Speaker 3: would meet that standard. It's independent from the merits of

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Speaker 3: the case and whether or not he's guilty of the charges.

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Speaker 3: And if he were right that he enjoys absolute immunity

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Speaker 3: from prosecution, that interest wouldn't be vindicated by being resolved

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Speaker 3: after a conviction. If there were a conviction, he's effectively

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Speaker 3: arguing I shouldn't even have to stand trial. And so

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Speaker 3: I think that there is a very good chance that

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Speaker 3: the appellate courts will here that issue before any trial.

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Speaker 2: Jessica, if you look at this and we don't have

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Speaker 2: the prosecutions brief yet, would you say that it's an

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Speaker 2: uphill battle for Trump.

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Speaker 3: I expect that the trial court and the DC Circuit

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Speaker 3: will rule against Trump. But when it gets to the

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Speaker 3: US Supreme Court, and I do anticipate the Supreme Court

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Speaker 3: would take this case, then it's a much harder outcome

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Speaker 3: to predict. I think on the merits that the Supreme

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Speaker 3: Court should rule against him, including on this threshold issue

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Speaker 3: of whether or not the doctrine of absolute presidential immunity

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Speaker 3: extends to criminal prosecutions. But it's hard to predict how

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Speaker 3: this Supreme Court will rule. And if they get to

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Speaker 3: the second question, which is whether or not these acts

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Speaker 3: fall within the outer perimeter of the presidential functions and duties,

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Speaker 3: then again it's going to turn on how the Court

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Speaker 3: chooses to characterize the acts at what level of generality,

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Speaker 3: and whether they look at them collectively and in context

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Speaker 3: or essentially separate them out individually the way the former

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Speaker 3: president has invited them to. I also think that there's

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Speaker 3: a sort of a larger context here that may influence

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Speaker 3: how the Court perceives the consequences of its ruling decisions

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Speaker 3: about recognizing immunity, and to what extent do require courts

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Speaker 3: to consider the consequences of ruling one way or the

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Speaker 3: other explicitly in terms of thinking about the impact on

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Speaker 3: the public interest and seeing certain kinds of cases proceed,

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Speaker 3: and also the impact on the president's ability to carry

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Speaker 3: out their functions without being overly concerned about the consequences

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Speaker 3: down the road. In terms of lawsuits or prosecutions. Here

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Speaker 3: we have an individual, the former president who's the charge

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Speaker 3: defendant in this case, who says that he should not

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Speaker 3: be subject to prosecution in part because of the impact

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Speaker 3: on future presidents and thinking about their ability to carry

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Speaker 3: out their duties without being distracted by worries that they

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Speaker 3: themselves would be hauled into court subsequently and charge. And

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Speaker 3: he is running for president and saying on the campaign

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Speaker 3: trail that if re elected, he would direct his attorney

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Speaker 3: general to prosecute his political enemies, including now President Biden.

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Speaker 3: And so I do think that the part of the

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Speaker 3: mix and the court evaluating the consequences of its ruling

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Speaker 3: would be if they do rule that a former president

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Speaker 3: can be subject to criminal prosecution while acts while president,

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Speaker 3: will that mean that we would subsequently see future prosecutions

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Speaker 3: of former presidents sort of ramp up in the way

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Speaker 3: that we are seeing essentially an escalation in the threat

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Speaker 3: of impeachment for presidents while in office.

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Speaker 2: Yeah, that's an interesting point. I want to ask you

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Speaker 2: about it hearing next week on the prosecution's motion for

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Speaker 2: a gag order on Trump. What are the things that

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Speaker 2: hast away when considering a gag order.

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Speaker 3: The judge is going to be mindful of the prohibition

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Speaker 3: essentially on imposing a prior restraint on an individual from

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Speaker 3: exercising their First Amendment rights of freedom of speech. In

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Speaker 3: this case, the individual involved also is running for presidents,

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Speaker 3: so he has contended that his speech about the case

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Speaker 3: overlaps with his political speech and furtherance of his candidacy.

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Speaker 3: So on the one hand, the judge is going to

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Speaker 3: be very careful not to run a foul of the

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Speaker 3: former president's First Amendment rights, and courts have generally been

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Speaker 3: very hesitant about any order that in advance restrains an

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Speaker 3: individual from exercising their First Amendment rights. On the other hand,

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Speaker 3: the judge has a duty and is authorized by law

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Speaker 3: to take appropriate action to preserve the fair administration of justice.

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Speaker 3: And there are local court rules that effectively mirror the

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Speaker 3: rules of professional conduct that tell lawyers that they shall

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Speaker 3: not make statements extra judicially outside of court that pose

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Speaker 3: a material risk of materially prejudicing a preceding. And so

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Speaker 3: the question before the judge with respect to the former

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Speaker 3: president is to what extent can she impose an order

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Speaker 3: on him as a party as opposed to a lawyer

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Speaker 3: to try to ensure that he does not materially prejudice

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Speaker 3: that proceeding that is unfolding before her and will eventually

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Speaker 3: lead to a trial. So she has to balance those concerns,

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Speaker 3: and one of the things she'll be taking into account

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Speaker 3: is the record of his statements up until this point

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Speaker 3: that pose the risk of materially prejudicing the preceding, including

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Speaker 3: by intimidating witnesses. And so she's going to be looking,

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Speaker 3: I think, very carefully at the record of his statements

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Speaker 3: up until this point, whether they appear to have crossed

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Speaker 3: that line or not, which and if they have, then

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Speaker 3: she's on a much firmer footing and restraining him. Oh,

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Speaker 3: whether they don't come close to that line, in which

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Speaker 3: case perhaps it would not be warranted for hitting her

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Speaker 3: pose restraint on it.

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Speaker 2: It'll be interesting to see if she follows in the

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Speaker 2: footsteps of the New York judge who issued a limited

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Speaker 2: gag order last week. Thanks so much for your insights, Jessica.

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Speaker 2: That's Professor Jessica Roth of Cardozo Law School. Coming up next,

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Speaker 2: the star witness testifies against Sam Bankman Freed. This is Bloomberg.

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Speaker 2: Caroline Ellison took the witness stand this afternoon and within

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Speaker 2: minutes pointed to her former boss and boyfriend, Sam Bankman

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Speaker 2: Freed as the man responsible for the loss of billions

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Speaker 2: in customer funds and the collapse of the cryptocurrency platform FTX. Ellison,

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Speaker 2: who made a deal with prosecutors in exchange for her testimony,

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Speaker 2: portrayed Bankman Freed as the brains behind the company operation,

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Speaker 2: who knowingly transferred more than fourteen billion dollars of FTX

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Speaker 2: customer funds to the sister Hedge fund, directed her to

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Speaker 2: ignore concerns about auditors, and inflated Alameda's balance sheet to

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Speaker 2: secure loans. Joining me is Bloomberg Legal reporter Ava. Benny Morrison,

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Speaker 2: who's covering the trial, set the scene for us. Ava.

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Speaker 2: What was it like when Ellison walked into the courtroom?

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Speaker 4: Caroline Ellison walked in this afternoon. She was with a

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Speaker 4: couple of FBI agents. She was wearing a gray suit

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Speaker 4: jacket in a pink dress. She didn't look at Sam

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Speaker 4: when she walked past him and took a seat in

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Speaker 4: the witness box. Sam just briefly glanced at her as

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Speaker 4: she walked past. There was a moment where she was

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Speaker 4: asked to point out Sam, and she took quite a

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Speaker 4: long time to figure out where he was sitting in

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Speaker 4: the courtroom and then acknowledged that he's sitting there. He

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Speaker 4: was wearing a suit before getting into her testimony.

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Speaker 2: And right off the bat, she admitted to crimes just

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Speaker 2: as the prior witness.

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Speaker 4: Had done exactly, and I think the prosecutors do that

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Speaker 4: to be open and upfront with the jewelry that these

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Speaker 4: corporating witnesses have pled guilty to crimes. They've admitted to

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Speaker 4: being involved with some of the allegations that Sam Bacon

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Speaker 4: Freed is used of as well. So she said, yes,

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Speaker 4: he directed me to commit crimes. She said that she

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Speaker 4: committed fraud and she was involved in using STX customer

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Speaker 4: funds through a hedge fund which was CEO of before

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Speaker 4: it collapsed, Almeter Research, and she knew that some of

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Speaker 4: those funds were being used to repay creditors. She also

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Speaker 4: spoke about how some financial statements were manipulated, essentially given

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Speaker 4: to investors, which helped Bankment Free raise more money as

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Speaker 4: FTX was in real financial trouble.

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Speaker 2: Did she blame bankman Freed for everything? Did she take

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Speaker 2: any responsibility?

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Speaker 4: She did? She spoke about how she came to know

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Speaker 4: Alameda had these special privileges on FTX, and she spoke

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Speaker 4: about outlining the probability of Alameter being unable to pay

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Speaker 4: some of its loans back to creditors and returning some

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Speaker 4: of those customer funds to FGX a couple of years

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Speaker 4: or at least a year before FtF collapsed. So, while

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Speaker 4: she was alleging that Sam was fully aware that Alameda

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Speaker 4: had this relationship with FTX, and that she had conversations

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Speaker 4: with him about it and they discussed figures and went

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Speaker 4: through spreadsheets together, she seemed to be pretty open and

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Speaker 4: detailed about her own involvement in all of this as well.

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Speaker 4: She spoke quite confidently, She was very matter of fact.

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Speaker 4: She answered each question in a very detailed way.

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Speaker 2: Was Sam Bagmunfreed the person who was directing her at

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Speaker 2: all times? According to her testimony.

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Speaker 4: Yes, she said a number of times that Sam told

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Speaker 4: her to do X or Sam directed her to do Y.

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Speaker 4: Was very clear from her testimony that she was alleging

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Speaker 4: he was the brains of the operation and called the

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Speaker 4: shots on what she should be doing. She also said

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Speaker 4: that you know, Sam wasn't CEO when she's CEO of

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Speaker 4: Elament Research. She often turned to him for advice and

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Speaker 4: guidance on making big decisions.

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Speaker 2: And how did she describe their relationship.

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Speaker 4: She said when she first met Sam when she was

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Speaker 4: a trader at Jane Street at Trading in New York

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Speaker 4: and then went to work for Alimeter Research for him,

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Speaker 4: she said that they dated or off for a few years.

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Speaker 4: She said that it was a little bit awkward dating

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Speaker 4: her boss, and it led to some awkward situations. She

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Speaker 4: said that she felt like he didn't pay her enough

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Speaker 4: attention in their personal relationship and she wasn't really getting

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Speaker 4: enough out of it, and I think that sort of

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Speaker 4: complicated her professional relationship with him.

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Speaker 2: We've heard a lot about her notes and a tape recording.

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Speaker 4: Yes, this is the interesting thing with Ellison. Obviously, she

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Speaker 4: is the prosecution style witness and she has a lot

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Speaker 4: of powerful testimony, but she also comes with a lot

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Speaker 4: of contemporaneous notes that she made of meetings with other executives,

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Speaker 4: even her personal diary. Prosecutors also have a recording of

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Speaker 4: an all hands meeting that she had with staff Alimeter

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Speaker 4: in November last year, when the company and FTX were

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Speaker 4: falling apart. At the scene, so she comes with a

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Speaker 4: lot of that evidence as well. We haven't really got

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Speaker 4: into the nitty gritty of personal diary notes. There were

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Speaker 4: a few references to do lists that she would make

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Speaker 4: in Google docs, so that evidence was pretty dry today,

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Speaker 4: and we were really in the weeds going through balance

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Speaker 4: sheets and probabilities of whether Alameter could afford to repay

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Speaker 4: their loans.

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Speaker 2: Did anything stand out to you that, you know, you said, wow.

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Speaker 4: There was one point where the prosecutor was leading her

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Speaker 4: through a series of spreadsheets that she had created and

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Speaker 4: spoke to Sam about, and in that she did a

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Speaker 4: bit of a calculation on whether they should invest three

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Speaker 4: billion dollars in some further investments, and she looked at

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Speaker 4: the impact that potential investment would have on Alameda's ability

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Speaker 4: to repay some of its loans, and in one scenario,

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Speaker 4: if they did the investments, there was one hundred percent

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Speaker 4: probability they wouldn't be able to repay them loans. And

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Speaker 4: she said that she showed this to Sam and he

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Speaker 4: went ahead with some of these major investments. Anyway, I

441
00:26:07,200 --> 00:26:09,800
Speaker 4: thought that was a pretty interesting and typical part of

442
00:26:09,840 --> 00:26:13,080
Speaker 4: her evidence because it seems to suggest that he knew

443
00:26:13,400 --> 00:26:16,840
Speaker 4: how high the stakes were for Alameda and what was

444
00:26:16,840 --> 00:26:21,040
Speaker 4: at risk in terms of repaying loans, that he went

445
00:26:21,080 --> 00:26:23,160
Speaker 4: ahead and well the douce Anyway.

446
00:26:22,880 --> 00:26:25,520
Speaker 2: Thanks Aver. We'll check back with you tomorrow when her

447
00:26:25,560 --> 00:26:29,960
Speaker 2: testimony continues. That's Bloomberg Legal Reporter Ava Benny Morrison. This

448
00:26:30,080 --> 00:26:34,440
Speaker 2: is Bloomberg. What exactly is a legal hot tub. It's

449
00:26:34,480 --> 00:26:37,560
Speaker 2: not as diverting or exciting as it may sound, and

450
00:26:37,600 --> 00:26:40,200
Speaker 2: it really has nothing to do with hot tubs. It's

451
00:26:40,280 --> 00:26:46,080
Speaker 2: formerly called concurrent expert testimony or a concurrent expert evidence proceeding,

452
00:26:46,440 --> 00:26:49,399
Speaker 2: and it's more like a discussion among experts. If you

453
00:26:49,440 --> 00:26:52,040
Speaker 2: haven't heard about it, it's because it's a novelty in

454
00:26:52,200 --> 00:26:55,120
Speaker 2: US courts. Here to tell us all about it and

455
00:26:55,160 --> 00:26:59,240
Speaker 2: how it got. That name is Dan Paskin, Bloomberg Law Reporter.

456
00:27:00,320 --> 00:27:05,400
Speaker 2: So tell us exactly what this legal hot tub is, Dan, Yes,

457
00:27:05,520 --> 00:27:06,840
Speaker 2: So you can kind of think.

458
00:27:06,680 --> 00:27:10,480
Speaker 1: Of it as a debate between experts, often economic experts,

459
00:27:10,480 --> 00:27:14,159
Speaker 1: but not necessarily where instead of one sitting on the

460
00:27:14,240 --> 00:27:16,800
Speaker 1: stand in a trial or on the pre trial hearing

461
00:27:17,240 --> 00:27:20,359
Speaker 1: and getting examined and then cross examined by one size

462
00:27:20,359 --> 00:27:24,080
Speaker 1: attorneys and then the other both or all of the

463
00:27:24,119 --> 00:27:27,240
Speaker 1: witnesses sit together before the judge and are basically prompted

464
00:27:27,280 --> 00:27:30,440
Speaker 1: to debate each other on a series of predetermined topics

465
00:27:30,480 --> 00:27:31,200
Speaker 1: or questions.

466
00:27:31,440 --> 00:27:35,240
Speaker 2: So, tell us about this hot tub. It doesn't sound

467
00:27:35,320 --> 00:27:38,600
Speaker 2: very legal to say, even legal batub tell us what

468
00:27:38,920 --> 00:27:42,399
Speaker 2: federal Judge James Donado used it for in San Francisco

469
00:27:42,440 --> 00:27:43,000
Speaker 2: this summer.

470
00:27:43,440 --> 00:27:46,800
Speaker 1: So Donado held the second hot sub he's held in

471
00:27:46,840 --> 00:27:50,959
Speaker 1: this case. This is a lawsuit alleging Google basically has

472
00:27:51,000 --> 00:27:56,080
Speaker 1: anti competitive control over the payment systems in its play store,

473
00:27:56,160 --> 00:27:58,080
Speaker 1: which is like if you have an Android zone, it's

474
00:27:58,119 --> 00:28:01,080
Speaker 1: where you get your apps. And the second hot tub

475
00:28:01,840 --> 00:28:06,040
Speaker 1: was to basically determine whether the plaintiffs experts have reached

476
00:28:06,200 --> 00:28:10,920
Speaker 1: kind of valid models for figuring out how much consumers

477
00:28:10,960 --> 00:28:14,639
Speaker 1: were harmed by these play store policies and what the

478
00:28:14,760 --> 00:28:19,359
Speaker 1: impact was on the market. Pretty central evidence for a

479
00:28:19,440 --> 00:28:22,719
Speaker 1: trial to figure out whether Google, in fact, you know,

480
00:28:22,800 --> 00:28:25,560
Speaker 1: overcharge customers and buy how much if it did.

481
00:28:26,200 --> 00:28:29,000
Speaker 2: Is the judge the only one asking questions? Or are

482
00:28:29,040 --> 00:28:33,080
Speaker 2: the lawyers asking questions? Is their cross talk between the experts.

483
00:28:33,400 --> 00:28:36,679
Speaker 1: There's a lot of crosstalk. It's almost exclusively Tonauto asking

484
00:28:36,680 --> 00:28:40,120
Speaker 1: the questions. He allows the attorneys a couple attorneys to

485
00:28:40,160 --> 00:28:43,280
Speaker 1: sit with the experts in the hot tub, but they're

486
00:28:43,320 --> 00:28:45,280
Speaker 1: really only allowed to ask questions right at the end

487
00:28:45,280 --> 00:28:48,840
Speaker 1: if they have kind of clarifying questions for either expert. Otherwise,

488
00:28:48,880 --> 00:28:53,160
Speaker 1: to Notato prompts one side or the other. We'll say like, yeah,

489
00:28:53,200 --> 00:28:55,560
Speaker 1: I read your report, I had this question about this,

490
00:28:55,680 --> 00:28:58,680
Speaker 1: you know, one part of the model, and then we'll

491
00:28:58,720 --> 00:29:01,560
Speaker 1: prompt the other experts like do you disagree with that?

492
00:29:01,960 --> 00:29:05,280
Speaker 1: So why it got pretty heated. Several times there was

493
00:29:05,480 --> 00:29:06,960
Speaker 1: I don't know if you would call it yelling, but

494
00:29:07,000 --> 00:29:11,000
Speaker 1: definitely raised voices. The court reporter had to interrupt I

495
00:29:11,040 --> 00:29:15,160
Speaker 1: think three separate times because two experts and the judge

496
00:29:15,160 --> 00:29:18,120
Speaker 1: were talking over each other and she couldn't transcribe that

497
00:29:18,160 --> 00:29:20,760
Speaker 1: in real time. So it definitely is a little more

498
00:29:20,840 --> 00:29:23,160
Speaker 1: chaotic than your average court oral testimony.

499
00:29:23,800 --> 00:29:28,120
Speaker 2: Is this because the expert testimony is so complex for

500
00:29:28,240 --> 00:29:33,440
Speaker 2: the judge to understand? Or is it because this is quicker?

501
00:29:33,480 --> 00:29:35,320
Speaker 2: I mean, what's the real reason behind this?

502
00:29:35,840 --> 00:29:38,880
Speaker 1: The reason do not outheld the hantab was to answer

503
00:29:39,760 --> 00:29:42,680
Speaker 1: this Google motion over whether the experts should be allowed

504
00:29:42,680 --> 00:29:45,840
Speaker 1: to testify or not. And Donato told me in an

505
00:29:45,880 --> 00:29:50,840
Speaker 1: interview afterwards that it's very useful for him understanding their

506
00:29:50,880 --> 00:29:53,560
Speaker 1: testimony and their models. It is really complicated, and that's

507
00:29:53,640 --> 00:29:56,600
Speaker 1: a big reason why judges are deploying hot tubs, that

508
00:29:56,840 --> 00:29:59,680
Speaker 1: they haven't deployed too many of them. But it's not

509
00:29:59,800 --> 00:30:03,280
Speaker 1: just that's the complexity. It's also faster. To another said,

510
00:30:03,320 --> 00:30:07,920
Speaker 1: it's a lot cleaner compared like normal expert testimony, non

511
00:30:07,960 --> 00:30:10,360
Speaker 1: hot tub testimony to a game of telesphone. Right, you've

512
00:30:10,360 --> 00:30:13,080
Speaker 1: got the expert on the stand, you've got their attorney

513
00:30:13,160 --> 00:30:16,240
Speaker 1: questioning them, and then you've got the judge hearing their answers.

514
00:30:16,240 --> 00:30:18,840
Speaker 1: So it's kind of filtered through what questions the attorney

515
00:30:18,840 --> 00:30:21,920
Speaker 1: wants to ask and then how the economist in this

516
00:30:22,040 --> 00:30:25,600
Speaker 1: case answers those questions. The judge might not necessarily be

517
00:30:25,640 --> 00:30:29,320
Speaker 1: getting the exact answers they're looking for and instead getting,

518
00:30:29,840 --> 00:30:32,640
Speaker 1: you know, the version that the economist wants to give,

519
00:30:32,640 --> 00:30:34,880
Speaker 1: the response to the questions the attorney wants to ask.

520
00:30:34,960 --> 00:30:37,479
Speaker 1: And so by having this hot tub, it's a lot

521
00:30:37,560 --> 00:30:40,600
Speaker 1: more direct and clear. The judge can ask really complex

522
00:30:40,720 --> 00:30:43,960
Speaker 1: questions and get, you know, exactly what they want out

523
00:30:44,000 --> 00:30:46,360
Speaker 1: of them, and kind of follow up if you have

524
00:30:46,640 --> 00:30:50,000
Speaker 1: dodges the question or doesn't answers have factorily and they're

525
00:30:50,000 --> 00:30:55,200
Speaker 1: economists to typically get hired for these cases. One who's

526
00:30:55,200 --> 00:30:58,200
Speaker 1: done several of these told me that it's pretty hard

527
00:30:58,240 --> 00:31:00,000
Speaker 1: for an attorney to cross examine them, to kind of

528
00:31:00,120 --> 00:31:04,040
Speaker 1: catch them in errors or obfuscations, because the stuff is

529
00:31:04,040 --> 00:31:06,240
Speaker 1: so complex and because it involves, you know, so many

530
00:31:06,280 --> 00:31:09,320
Speaker 1: years of study. Really the only person in the courtroom

531
00:31:09,400 --> 00:31:12,800
Speaker 1: can really call them on their mistakes or on lack

532
00:31:12,840 --> 00:31:15,320
Speaker 1: of clarity is the other economists. So it also means

533
00:31:15,360 --> 00:31:18,160
Speaker 1: that you have the only other person able to make

534
00:31:18,240 --> 00:31:20,760
Speaker 1: these calls in the room with them and able to

535
00:31:21,720 --> 00:31:22,880
Speaker 1: disagree in real time.

536
00:31:23,600 --> 00:31:27,280
Speaker 2: Do attorneys object to this because it's taking them out

537
00:31:27,280 --> 00:31:31,240
Speaker 2: of the equation with a very important witness or witnesses?

538
00:31:32,480 --> 00:31:35,360
Speaker 1: Yeah, So, I mean, like these are arguably some of

539
00:31:35,440 --> 00:31:39,120
Speaker 1: the most important players in a trial, especially in anti

540
00:31:39,160 --> 00:31:42,560
Speaker 1: trust but also in I imagine you know, patent cases

541
00:31:42,600 --> 00:31:45,560
Speaker 1: and elsewhere, and what they come up with can really

542
00:31:45,600 --> 00:31:49,000
Speaker 1: determine not just whether a company or an individual is

543
00:31:49,080 --> 00:31:51,920
Speaker 1: liable or not, but also you know, monetarily how much

544
00:31:51,960 --> 00:31:56,400
Speaker 1: they have to pay. The attorneys aren't the biggest fans

545
00:31:56,240 --> 00:31:59,240
Speaker 1: of having to step back and basically watch this thing happen.

546
00:31:59,560 --> 00:32:03,360
Speaker 1: But once I spoke to you also appreciated how useful

547
00:32:03,360 --> 00:32:05,800
Speaker 1: it was for the judge and again how clean the

548
00:32:05,800 --> 00:32:09,880
Speaker 1: whole thing was. But yeah, you're right, they definitely losed

549
00:32:09,960 --> 00:32:12,800
Speaker 1: quite a bit of control. They're relegated to preparing for

550
00:32:12,880 --> 00:32:15,760
Speaker 1: the hot tub and then you know, trying to pick

551
00:32:15,840 --> 00:32:19,240
Speaker 1: up pieces afterwards. Probably the most helpless they are throughout

552
00:32:19,280 --> 00:32:20,680
Speaker 1: the proceedings.

553
00:32:21,320 --> 00:32:24,800
Speaker 2: So where does that term hot tub come from Australia?

554
00:32:25,120 --> 00:32:27,920
Speaker 1: Which kind of you when you learn that makes quite

555
00:32:27,960 --> 00:32:29,920
Speaker 1: a bit of sense. I feel like you can you

556
00:32:29,920 --> 00:32:32,640
Speaker 1: can definitely imagine for one of an Australian accents saying

557
00:32:32,680 --> 00:32:34,840
Speaker 1: hot At least it makes sense to me.

558
00:32:35,040 --> 00:32:35,240
Speaker 2: Right.

559
00:32:35,600 --> 00:32:38,680
Speaker 1: These originally pretty much the right around the beginning of

560
00:32:38,680 --> 00:32:42,680
Speaker 1: the decade, and it was deployed originally by the Australian

561
00:32:42,720 --> 00:32:46,400
Speaker 1: Competition Tribunal and their kind of anti trust dedicated port

562
00:32:46,480 --> 00:32:50,480
Speaker 1: system basically for this reason to get a clearer understanding

563
00:32:50,520 --> 00:32:52,800
Speaker 1: of what experts we're talking about and make them really

564
00:32:52,880 --> 00:32:55,760
Speaker 1: drill down on their agreements and their discy agreements. It

565
00:32:55,800 --> 00:32:58,200
Speaker 1: was pretty successful there. They've modified it quite a bit.

566
00:32:58,280 --> 00:33:00,280
Speaker 1: I don't think it's technically called the hot ted there more,

567
00:33:00,280 --> 00:33:02,600
Speaker 1: but it's effectively the way still run the way that's

568
00:33:02,640 --> 00:33:05,320
Speaker 1: Nato Rana in his courtroom, and it's taken off in

569
00:33:05,360 --> 00:33:08,280
Speaker 1: a bunch of other countries in Europe, in South Africa,

570
00:33:08,920 --> 00:33:12,959
Speaker 1: Canada has used. It's mostly been unpopular. In the US,

571
00:33:13,080 --> 00:33:16,000
Speaker 1: We've only found a little less than two dozen instances

572
00:33:16,160 --> 00:33:20,320
Speaker 1: of federal judges using on although it's been to play

573
00:33:20,360 --> 00:33:23,160
Speaker 1: an arbitration a little bit, but it hasn't it hasn't

574
00:33:23,160 --> 00:33:23,640
Speaker 1: taken off.

575
00:33:24,120 --> 00:33:28,200
Speaker 2: Yeah, and I'm wondering have there been any appeals based

576
00:33:28,240 --> 00:33:30,080
Speaker 2: on the fact that this was used.

577
00:33:30,640 --> 00:33:35,880
Speaker 1: So Dnata's case, he in the Google play is used

578
00:33:35,960 --> 00:33:38,840
Speaker 1: a hot tub for class certification about a year ago.

579
00:33:39,080 --> 00:33:43,200
Speaker 1: It was last June, and Google appealed as the ruling,

580
00:33:43,480 --> 00:33:46,680
Speaker 1: which he found in favor of the class and certified

581
00:33:46,720 --> 00:33:49,320
Speaker 1: the cost of consumers that are pretty large cost of

582
00:33:49,360 --> 00:33:51,720
Speaker 1: consumers that would have put Google on the hook for

583
00:33:51,720 --> 00:33:54,280
Speaker 1: for quite a bit of money and hypothetical damages. Google

584
00:33:54,360 --> 00:33:57,280
Speaker 1: appealed that to the Ninth Circuit Court of Appeals in California,

585
00:33:57,520 --> 00:34:00,000
Speaker 1: but before they could actually rule, and it was kind

586
00:34:00,200 --> 00:34:03,520
Speaker 1: unclear exactly how much the hot tub aspect of it

587
00:34:03,560 --> 00:34:06,880
Speaker 1: would affect the ruling. I'm not sure that would have

588
00:34:07,000 --> 00:34:10,680
Speaker 1: changed anything. Donato actually changed his mind in part because

589
00:34:10,719 --> 00:34:12,880
Speaker 1: of evidence that came up at the hot Tub that

590
00:34:12,960 --> 00:34:17,640
Speaker 1: I attended and decertified class kind of rendering the Ninth

591
00:34:17,680 --> 00:34:19,040
Speaker 1: Circuit clebrations mood.

592
00:34:19,400 --> 00:34:22,120
Speaker 2: There's no appeal from his reversal, but in the end

593
00:34:22,160 --> 00:34:23,680
Speaker 2: he decertified the class.

594
00:34:24,719 --> 00:34:27,520
Speaker 1: Yeah, and it looks like they probably won't. The parties

595
00:34:27,520 --> 00:34:31,040
Speaker 1: are actually have settled on a potential settlement. I think

596
00:34:31,040 --> 00:34:32,680
Speaker 1: we'll get details of it in a couple of days.

597
00:34:33,200 --> 00:34:35,439
Speaker 1: It should be pretty interesting. I'm really curious to see

598
00:34:35,440 --> 00:34:37,399
Speaker 1: exactly how much money they're getting and whether there's any

599
00:34:37,400 --> 00:34:39,959
Speaker 1: other form of relief. But no, there hasn't been any

600
00:34:40,040 --> 00:34:44,279
Speaker 1: other appeals. The Men Circuit basically handed the ruling back

601
00:34:44,320 --> 00:34:46,359
Speaker 1: to Donado when he changed his.

602
00:34:46,400 --> 00:34:50,080
Speaker 2: Mind at the end of August, So this was pretty

603
00:34:50,080 --> 00:34:52,840
Speaker 2: consequential then to make him change his mind.

604
00:34:53,880 --> 00:34:56,840
Speaker 1: Yeah. So if you read his ruling on the classification,

605
00:34:56,920 --> 00:34:59,239
Speaker 1: he quotes from the hot tub that I attended at

606
00:34:59,239 --> 00:35:02,719
Speaker 1: the beginning of and basically says it helped him get

607
00:35:02,760 --> 00:35:06,200
Speaker 1: a better understanding of the issues. Basically, what happened was

608
00:35:06,800 --> 00:35:09,760
Speaker 1: part of the model that one of the experts used

609
00:35:10,440 --> 00:35:15,000
Speaker 1: in certifying the class was also relevant for determining damages

610
00:35:15,080 --> 00:35:18,719
Speaker 1: to that class, and the defendants expert tried to poke

611
00:35:18,800 --> 00:35:21,520
Speaker 1: some holes in it at the hot tub that I attended,

612
00:35:21,560 --> 00:35:24,240
Speaker 1: and Donato found those to be kind of a valid attack,

613
00:35:24,880 --> 00:35:28,440
Speaker 1: and so he didn't just throw out the testimony of

614
00:35:28,480 --> 00:35:32,200
Speaker 1: that plaintiffs expert for the merits of the harms, but

615
00:35:32,280 --> 00:35:33,640
Speaker 1: also for the class itself.

616
00:35:34,160 --> 00:35:35,440
Speaker 2: I think they have to come up with a new

617
00:35:35,520 --> 00:35:37,960
Speaker 2: name for this, don't you. The judge held a hot

618
00:35:38,040 --> 00:35:39,480
Speaker 2: tub just doesn't sound right.

619
00:35:40,160 --> 00:35:42,799
Speaker 1: Oh yeah, I mean like pitching the story was quite

620
00:35:42,840 --> 00:35:44,560
Speaker 1: the experience. I got a lot of raised bad roads

621
00:35:44,600 --> 00:35:48,840
Speaker 1: from editors, although I have the receiver of a variety

622
00:35:48,880 --> 00:35:51,239
Speaker 1: of memes created from it, which was pretty nice. But no,

623
00:35:51,360 --> 00:35:53,840
Speaker 1: attorneys don't love it. I talked to an economist. He

624
00:35:54,120 --> 00:35:58,120
Speaker 1: said strongly believes we need to find another term for it.

625
00:35:58,200 --> 00:36:00,560
Speaker 1: If she mentioned that it's kind of weird when you're

626
00:36:00,560 --> 00:36:02,239
Speaker 1: at a conference and someone walks up to you and

627
00:36:02,280 --> 00:36:04,360
Speaker 1: it's like, I recognize you from the hot shows. I

628
00:36:04,360 --> 00:36:07,280
Speaker 1: think people are trying to find another term. But concurrent

629
00:36:07,360 --> 00:36:10,640
Speaker 1: expert evidence that concurrent expert witness proceeding.

630
00:36:10,600 --> 00:36:13,160
Speaker 3: Is not very catchy, not very catchy at all.

631
00:36:13,440 --> 00:36:16,880
Speaker 2: Thanks so much, Dan. That's Dan Paskin, Bloomberg Law Reporter,

632
00:36:17,320 --> 00:36:19,680
Speaker 2: and that's it for this edition of The Bloomberg Law Show.

633
00:36:20,000 --> 00:36:22,319
Speaker 2: Remember you can always get the latest legal news on

634
00:36:22,400 --> 00:36:26,680
Speaker 2: our Bloomberg Law Podcast. You can find them on Apple Podcasts, Spotify,

635
00:36:26,840 --> 00:36:31,879
Speaker 2: and at www dot Bloomberg dot com slash podcast Slash Law,

636
00:36:32,280 --> 00:36:34,880
Speaker 2: And remember to tune into The Bloomberg Law Show every

637
00:36:34,920 --> 00:36:38,840
Speaker 2: weeknight at ten pm Wall Street Time. I'm June Grosso

638
00:36:38,960 --> 00:36:40,520
Speaker 2: and you're listening to Bloomberg