Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio,
Speaker 1: And did you see today that deranged Jack Smith. He's
Speaker 1: the prosecutor.
Speaker 2: He's a deranged person.
Speaker 1: Wants to take away my rights under the First Amendment,
Speaker 1: wants to take away my right of speaking freely and openly.
Speaker 2: Donald Trump never seems to miss an opportunity to ridicule
Speaker 2: Jack Smith, the Special Council who's bringing charges against the
Speaker 2: former president in two cases into jurisdictions. The trial date
Speaker 2: in DC on charges of trying to overturn the twenty
Speaker 2: twenty election is just five months away, but Trump is
Speaker 2: looking for a pass by arguing he has absolute presidential immunity,
Speaker 2: and his attorneys have asked federal Judge Tanya Chuckkin to
Speaker 2: toss out the indictment. Joining me is former federal prosecutor
Speaker 2: Jessica Romp, a professor at Cardozo Law School. Jessica tell
Speaker 2: us about Trump's claim of presidential immunity.
Speaker 3: So their argument is that Trump enjoys absolute presidential immunity
Speaker 3: from prosecution because he claims that the indictment brought by
Speaker 3: the Special Council related to January sixth is based on
Speaker 3: what they contend are his official acts while president. I
Speaker 3: would submit this is the most significant motion that Trump
Speaker 3: has filed to date in all of the cases that
Speaker 3: are pending against him, and that the court's decisions on
Speaker 3: this motion could establish new law regarding whether a president
Speaker 3: is beyond the reach of the criminal law for acts
Speaker 3: taken while president, even after he leaves office.
Speaker 2: What do you make of his attorney's arguments? They make
Speaker 2: several levels of arguments. Are they convincing well?
Speaker 3: The motion is well written, and unlike some arguments we've
Speaker 3: seen from Trump's counsel and some of the cases brought
Speaker 3: against him, this one is well written, it's well presented,
Speaker 3: and it does present a very important issue of law,
Speaker 3: one that the courts will have to take seriously. No
Speaker 3: court has ever squarely decided the question of whether a
Speaker 3: president enjoys absolute immunity from prosecution at all, because there's
Speaker 3: never been a precedent for criminal charges being filed against
Speaker 3: a former president. But there are two issues that the
Speaker 3: courts will have to address in ruling on the motion.
Speaker 3: The first is whether, in fact presidents do enjoy absolute
Speaker 3: immunity from criminal prosecution for acts taken during the presidency,
Speaker 3: and if they find that there is such a thing
Speaker 3: as absolute immunity for president from criminal prosecution, then they
Speaker 3: would have to apply that doctrine of immunity to the
Speaker 3: facts presented in this case. If the court told that
Speaker 3: there is no absolute immunity for a president from prosecution
Speaker 3: even after they leave office, then they don't necessarily have
Speaker 3: to address this second question of whether or not Trump's
Speaker 3: actions fall within the scope of such immunity if they
Speaker 3: find that there isn't such an unity.
Speaker 2: This motion was just filed last Thursday, so prosecutors haven't
Speaker 2: had time to respond. But what do you envision their
Speaker 2: argument will be against the claims of presidential immunity.
Speaker 3: I imagine what they're going to argue is first that
Speaker 3: the courts should not extend the doctrine it's a judge
Speaker 3: made doctrine of immunity for presidents to the criminal context,
Speaker 3: and we can talk about why. I think they have
Speaker 3: very good arguments that the court should not recognize immunity
Speaker 3: from criminal prosecution for former presidents. But secondarily, they will
Speaker 3: argue that even if the court were to find that
Speaker 3: in some cases a president could enjoy immunity from criminal
Speaker 3: prosecution for actions taken while president, that it would not
Speaker 3: apply to the conduct that is alleged in this case,
Speaker 3: because if the courts were to follow the doctrine they
Speaker 3: have applied in the context of civil suits for damages
Speaker 3: brought against a former president, which asks whether or not
Speaker 3: the conduct in question falls within the outer perimeter of
Speaker 3: the president's official response stability, the Special Council would argue
Speaker 3: that these actions do not fall within that outer perimeter.
Speaker 2: Trump's attorneys say the judge should look at Trump's actions
Speaker 2: on their face to determine if they're official, and also
Speaker 2: that even if they were a mix of official and
Speaker 2: campaign related, they should still be covered by the legal
Speaker 2: shield the immunity. Do you agree with that?
Speaker 3: So, in asking whether or not the actions fall within
Speaker 3: the outer perimeter of the president's official responsibility, one has
Speaker 3: to ask at what level of generality do we look
Speaker 3: at the acts. Trump's attorneys invite the court to look
Speaker 3: at them at a very high level of generality and say,
Speaker 3: these are statements on matters of public concern. In his
Speaker 3: tweets and his public statements, for example, at the rally
Speaker 3: on January sixth, he is communicating with state officials about
Speaker 3: elections and communicating with members of the Department of Justice
Speaker 3: about whether or not the presidential election was conducted consistent
Speaker 3: with law. At that level of generality, it's easy to
Speaker 3: characterize his actions as within the outer perimeter of the
Speaker 3: president functions to take care that the laws of the
Speaker 3: United States are faithfully executed. But when you look at
Speaker 3: a more granular level, and also in context of all
Speaker 3: the actions that are alleged in the indictment taken together,
Speaker 3: it's much easier to characterize them not as being within
Speaker 3: the outer perimeter of Trump's official duties as president, but
Speaker 3: instead as crimes or part of a course of conduct
Speaker 3: that was a conspiracy to overturn the election and obstruct
Speaker 3: the official proceedings of Congress and defraud the United States,
Speaker 3: as alleged in the indictment. And so the case law
Speaker 3: does hold that the court should not look into the
Speaker 3: motives behind a particular action and instead look at the
Speaker 3: acts objectively and whether or not they further a presidential function.
Speaker 3: But saying that the court should not look at motives
Speaker 3: does not mean that the court can't look at the
Speaker 3: statements and the actions in context.
Speaker 2: Trump's attorneys also point to his acquittal in the Senate
Speaker 2: impeachment trial in the days after the January sixth attack
Speaker 2: and argue that he can't be tried again after the
Speaker 2: Senate failed to convict and remove him from office.
Speaker 3: I do not think the court will agree with that analysis.
Speaker 3: The language that they point to has to do with
Speaker 3: I think the court would find whether a president could
Speaker 3: be indicted and prosecuted while in office, and if one
Speaker 3: goes back and considers, for example, the analysis in the
Speaker 3: Office of Legal Council memo that was prepared initially in
Speaker 3: nineteen seventy three during the Watergate era, which looked into
Speaker 3: whether or not a sitting president could be subject to
Speaker 3: prosecution while in office. That memo, which was then reaffirmed
Speaker 3: in two thousand by the Office of Legal Council, essentially
Speaker 3: held that because of separation of powers concerned primarily, a
Speaker 3: sitting president could not be prosecuted, but instead would have
Speaker 3: to be subject to impeachment first and removed from office
Speaker 3: before the president would be amenable to criminal prosecution. What
Speaker 3: Trump's lawyers are doing, in effect, is taking that same
Speaker 3: language that provides for the impeachment of a president and
Speaker 3: then contemplates that a president could be criminally prosecuted after
Speaker 3: being removed from office to say that the exclusive remedy
Speaker 3: for a president who commits crimes while in office is
Speaker 3: to be impeached, and that a criminal prosecution could only
Speaker 3: follow as an additional consequence if the president had been
Speaker 3: in fact convicted in the Senate. I think that's not
Speaker 3: a fair reading of that language, and I don't think
Speaker 3: a court would agree with it.
Speaker 2: Has Judge Chuckkin ruled on an issue involving presidential immunity before.
Speaker 3: She has in a different context. It was a case,
Speaker 3: I believe, involving former President Obama who had been sued
Speaker 3: by individuals. She held that he enjoyed absolute immunity from
Speaker 3: that civil action against him in his individual capacity. She
Speaker 3: has not ruled on a question of immunity from criminal prosecution.
Speaker 3: In a case that presents many of the same facts
Speaker 3: in the civil context. Judge Meta from the DC District
Speaker 3: Court ruled that former President Trump did not enjoy absolute
Speaker 3: immunity from civil prosecution with respect to many of the
Speaker 3: claims in a case that was brought by members of
Speaker 3: Congress and members of the Capitol Police who were injured
Speaker 3: in the January sixth ryot. That case is pending before
Speaker 3: the DC Circuit Court of Appeals. It's been pending since December,
Speaker 3: and that case I think will be very instructive to
Speaker 3: Judge Chutkin in ruling on whether or not if she
Speaker 3: gets to the question of whether much of the conduct
Speaker 3: alleged in the Special Council of January sixth indictment falls
Speaker 3: within the outer perimeter of his official responsibilities. If the
Speaker 3: DC Circuit renders an opinion holding that it does not
Speaker 3: fall within the outer perimeter, that would be very instructive
Speaker 3: to her if she gets to that problem. Obviously, in
Speaker 3: the meantime, she may also find persuasive the ruling of
Speaker 3: her fellow judge on her court Dutch Meta that these
Speaker 3: actions largely did not fall within that outer perimeter.
Speaker 2: Tump is the first former president to face a federal indictment.
Speaker 2: So this is uncharted territory. What has the Supreme Court
Speaker 2: ruled in the past in the area of presidential immunity?
Speaker 3: So the Supreme Court has ruled on presidential immunity in
Speaker 3: the context of damages, actions and civil suits. In the
Speaker 3: most important cases a case called Nixon versus Fitzgerald, in
Speaker 3: which the Court said there is a doctrine of absolute
Speaker 3: presidential immunity that shields the president even after he leaves office,
Speaker 3: from damage's actions brought by individuals for actions taken within
Speaker 3: the outer perimeter of the president's official responsibilities. The court
Speaker 3: in that case drew on precedents from the con text
Speaker 3: of other executive officials, such as prosecutors, but it also
Speaker 3: looked to immunity doctrine that court had developed in the
Speaker 3: context of judges, other officials whom the court said would
Speaker 3: if they were not provided immunity, would be potentially subject
Speaker 3: to damages suits brought by aggrieved individuals who would contend
Speaker 3: that these officials had, in the course of their duties
Speaker 3: injured them and that they were entitled to damages. And
Speaker 3: those cases that recognized absolute immunity for prosecutors and judges
Speaker 3: that essentially, if we don't adopt this doctrine, these individuals
Speaker 3: who perform these very public and important duties will be
Speaker 3: distracted and concerned as they perform their duties about the
Speaker 3: potential of being subject to innumerable suits. And so essentially
Speaker 3: we have to balance the potential interest that some civil
Speaker 3: litigants would have in collecting damages against such individuals rightfully
Speaker 3: against the public interest in preserving the ability of these
Speaker 3: officials to do their jobs in the public interest without
Speaker 3: being overly concerned about being subject to suit in the future.
Speaker 3: And the Court recognized that there's obviously a loss in
Speaker 3: some cases for people who would have meritorious claims, but
Speaker 3: that it was counterbalanced by the public interest in having
Speaker 3: these officials be able to perform their duties without such
Speaker 3: concerns and distractions, And so in Nixon versus Fitzgerald, the
Speaker 3: Court said, essentially, we're going to adopt that reasoning which
Speaker 3: applies with great force to the president of the United States, who,
Speaker 3: in addition, as to whom there's real separation of powers
Speaker 3: concerns if the courts were to intrude upon the executive's
Speaker 3: ability to perform his functions as president. But the Court
Speaker 3: again in Nixon versus Fitzgerald, talked about how those cases
Speaker 3: did not opine on the availability of criminal prosecution, and
Speaker 3: in fact, in Nixon versus Fitzgerald, the Court was very
Speaker 3: clear to say, and it has said in subsequent cases
Speaker 3: on the question of absolute presidential immunity, that those cases
Speaker 3: are limited to the question of civil damages in civil
Speaker 3: suits brought by private parties. So I think there's a
Speaker 3: very strong argument to be made that the Court would
Speaker 3: not extend that doctrine of immunity to criminal prosecution.
Speaker 2: What about the case of Trump the Vance where the
Speaker 2: Supreme Court ruled on the Manhattan DA's grand jury subpoena
Speaker 2: to Mazar's Trump's accounting firm.
Speaker 3: I think that's instructive as well, and that builds on
Speaker 3: this idea that the Court sees a distinction between criminal cases,
Speaker 3: including investigations and prosecutions, and civil lawsuits. In the Trump
Speaker 3: Vivance case, I mean that involved the subpoena from a
Speaker 3: state grand jury seeking documents from Trump while he was president,
Speaker 3: and he asserted absolute immunity and that he shouldn't have
Speaker 3: to respond to that state grand jury subpoena, and the
Speaker 3: Court said, the public interest in criminal investigations is really paramount.
Speaker 3: It's a similar interest that the Court talked about in
Speaker 3: the United States versus Nixon when President Nixon as president
Speaker 3: was ordered to comply with a subpoena from the grand
Speaker 3: jury working with the Special prosecutor Archibald Cox, seeking evidence
Speaker 3: in the grand jury's investigation related to Watergate. So in
Speaker 3: both cases, the Court has talked about, essentially the paramount
Speaker 3: public interest in criminal prosecutions and investigations, and how that
Speaker 3: is really quite distinct from the private interests involved in
Speaker 3: civil lawsuits against the former president or president.
Speaker 2: So Trump is all about delay with these cases, and
Speaker 2: his lawyer said they'll try to take this to the
Speaker 2: Supreme Court if they lose at the DC's Circuit rulings
Speaker 2: denying motions to dismiss an indictment normally wouldn't be appealable
Speaker 2: until after a verdict, right, But is this different?
Speaker 3: This is different. And that's one of the reasons why
Speaker 3: I think this motion is so significant, not just on
Speaker 3: the merits and for the new law that it could
Speaker 3: estound Bush once it's decided, but for the fact that
Speaker 3: the motion, because of its nature, and the fact that
Speaker 3: I think it is going to be deemed immediately appealable
Speaker 3: because of the so called collateral order doctrine, could derail
Speaker 3: the trial simply by going through the appellate process, and
Speaker 3: the time it will take for the matter to be decided,
Speaker 3: and how that may well go beyond the March twenty
Speaker 3: twenty four trial date that's been established under the collateral
Speaker 3: ordered doctrine, a decision by a court that can't be
Speaker 3: effectively reviewed on appeal from a final judgment that involves
Speaker 3: an important issue that separate from the merits of the action,
Speaker 3: can be appealed before the action is fully resolved. And
Speaker 3: I think that the claim that the former president is
Speaker 3: advancing that he's entitled to absolute presidential immunity from prosecution
Speaker 3: would meet that standard. It's independent from the merits of
Speaker 3: the case and whether or not he's guilty of the charges.
Speaker 3: And if he were right that he enjoys absolute immunity
Speaker 3: from prosecution, that interest wouldn't be vindicated by being resolved
Speaker 3: after a conviction. If there were a conviction, he's effectively
Speaker 3: arguing I shouldn't even have to stand trial. And so
Speaker 3: I think that there is a very good chance that
Speaker 3: the appellate courts will here that issue before any trial.
Speaker 2: Jessica, if you look at this and we don't have
Speaker 2: the prosecutions brief yet, would you say that it's an
Speaker 2: uphill battle for Trump.
Speaker 3: I expect that the trial court and the DC Circuit
Speaker 3: will rule against Trump. But when it gets to the
Speaker 3: US Supreme Court, and I do anticipate the Supreme Court
Speaker 3: would take this case, then it's a much harder outcome
Speaker 3: to predict. I think on the merits that the Supreme
Speaker 3: Court should rule against him, including on this threshold issue
Speaker 3: of whether or not the doctrine of absolute presidential immunity
Speaker 3: extends to criminal prosecutions. But it's hard to predict how
Speaker 3: this Supreme Court will rule. And if they get to
Speaker 3: the second question, which is whether or not these acts
Speaker 3: fall within the outer perimeter of the presidential functions and duties,
Speaker 3: then again it's going to turn on how the Court
Speaker 3: chooses to characterize the acts at what level of generality,
Speaker 3: and whether they look at them collectively and in context
Speaker 3: or essentially separate them out individually the way the former
Speaker 3: president has invited them to. I also think that there's
Speaker 3: a sort of a larger context here that may influence
Speaker 3: how the Court perceives the consequences of its ruling decisions
Speaker 3: about recognizing immunity, and to what extent do require courts
Speaker 3: to consider the consequences of ruling one way or the
Speaker 3: other explicitly in terms of thinking about the impact on
Speaker 3: the public interest and seeing certain kinds of cases proceed,
Speaker 3: and also the impact on the president's ability to carry
Speaker 3: out their functions without being overly concerned about the consequences
Speaker 3: down the road. In terms of lawsuits or prosecutions. Here
Speaker 3: we have an individual, the former president who's the charge
Speaker 3: defendant in this case, who says that he should not
Speaker 3: be subject to prosecution in part because of the impact
Speaker 3: on future presidents and thinking about their ability to carry
Speaker 3: out their duties without being distracted by worries that they
Speaker 3: themselves would be hauled into court subsequently and charge. And
Speaker 3: he is running for president and saying on the campaign
Speaker 3: trail that if re elected, he would direct his attorney
Speaker 3: general to prosecute his political enemies, including now President Biden.
Speaker 3: And so I do think that the part of the
Speaker 3: mix and the court evaluating the consequences of its ruling
Speaker 3: would be if they do rule that a former president
Speaker 3: can be subject to criminal prosecution while acts while president,
Speaker 3: will that mean that we would subsequently see future prosecutions
Speaker 3: of former presidents sort of ramp up in the way
Speaker 3: that we are seeing essentially an escalation in the threat
Speaker 3: of impeachment for presidents while in office.
Speaker 2: Yeah, that's an interesting point. I want to ask you
Speaker 2: about it hearing next week on the prosecution's motion for
Speaker 2: a gag order on Trump. What are the things that
Speaker 2: hast away when considering a gag order.
Speaker 3: The judge is going to be mindful of the prohibition
Speaker 3: essentially on imposing a prior restraint on an individual from
Speaker 3: exercising their First Amendment rights of freedom of speech. In
Speaker 3: this case, the individual involved also is running for presidents,
Speaker 3: so he has contended that his speech about the case
Speaker 3: overlaps with his political speech and furtherance of his candidacy.
Speaker 3: So on the one hand, the judge is going to
Speaker 3: be very careful not to run a foul of the
Speaker 3: former president's First Amendment rights, and courts have generally been
Speaker 3: very hesitant about any order that in advance restrains an
Speaker 3: individual from exercising their First Amendment rights. On the other hand,
Speaker 3: the judge has a duty and is authorized by law
Speaker 3: to take appropriate action to preserve the fair administration of justice.
Speaker 3: And there are local court rules that effectively mirror the
Speaker 3: rules of professional conduct that tell lawyers that they shall
Speaker 3: not make statements extra judicially outside of court that pose
Speaker 3: a material risk of materially prejudicing a preceding. And so
Speaker 3: the question before the judge with respect to the former
Speaker 3: president is to what extent can she impose an order
Speaker 3: on him as a party as opposed to a lawyer
Speaker 3: to try to ensure that he does not materially prejudice
Speaker 3: that proceeding that is unfolding before her and will eventually
Speaker 3: lead to a trial. So she has to balance those concerns,
Speaker 3: and one of the things she'll be taking into account
Speaker 3: is the record of his statements up until this point
Speaker 3: that pose the risk of materially prejudicing the preceding, including
Speaker 3: by intimidating witnesses. And so she's going to be looking,
Speaker 3: I think, very carefully at the record of his statements
Speaker 3: up until this point, whether they appear to have crossed
Speaker 3: that line or not, which and if they have, then
Speaker 3: she's on a much firmer footing and restraining him. Oh,
Speaker 3: whether they don't come close to that line, in which
Speaker 3: case perhaps it would not be warranted for hitting her
Speaker 3: pose restraint on it.
Speaker 2: It'll be interesting to see if she follows in the
Speaker 2: footsteps of the New York judge who issued a limited
Speaker 2: gag order last week. Thanks so much for your insights, Jessica.
Speaker 2: That's Professor Jessica Roth of Cardozo Law School. Coming up next,
Speaker 2: the star witness testifies against Sam Bankman Freed. This is Bloomberg.
Speaker 2: Caroline Ellison took the witness stand this afternoon and within
Speaker 2: minutes pointed to her former boss and boyfriend, Sam Bankman
Speaker 2: Freed as the man responsible for the loss of billions
Speaker 2: in customer funds and the collapse of the cryptocurrency platform FTX. Ellison,
Speaker 2: who made a deal with prosecutors in exchange for her testimony,
Speaker 2: portrayed Bankman Freed as the brains behind the company operation,
Speaker 2: who knowingly transferred more than fourteen billion dollars of FTX
Speaker 2: customer funds to the sister Hedge fund, directed her to
Speaker 2: ignore concerns about auditors, and inflated Alameda's balance sheet to
Speaker 2: secure loans. Joining me is Bloomberg Legal reporter Ava. Benny Morrison,
Speaker 2: who's covering the trial, set the scene for us. Ava.
Speaker 2: What was it like when Ellison walked into the courtroom?
Speaker 4: Caroline Ellison walked in this afternoon. She was with a
Speaker 4: couple of FBI agents. She was wearing a gray suit
Speaker 4: jacket in a pink dress. She didn't look at Sam
Speaker 4: when she walked past him and took a seat in
Speaker 4: the witness box. Sam just briefly glanced at her as
Speaker 4: she walked past. There was a moment where she was
Speaker 4: asked to point out Sam, and she took quite a
Speaker 4: long time to figure out where he was sitting in
Speaker 4: the courtroom and then acknowledged that he's sitting there. He
Speaker 4: was wearing a suit before getting into her testimony.
Speaker 2: And right off the bat, she admitted to crimes just
Speaker 2: as the prior witness.
Speaker 4: Had done exactly, and I think the prosecutors do that
Speaker 4: to be open and upfront with the jewelry that these
Speaker 4: corporating witnesses have pled guilty to crimes. They've admitted to
Speaker 4: being involved with some of the allegations that Sam Bacon
Speaker 4: Freed is used of as well. So she said, yes,
Speaker 4: he directed me to commit crimes. She said that she
Speaker 4: committed fraud and she was involved in using STX customer
Speaker 4: funds through a hedge fund which was CEO of before
Speaker 4: it collapsed, Almeter Research, and she knew that some of
Speaker 4: those funds were being used to repay creditors. She also
Speaker 4: spoke about how some financial statements were manipulated, essentially given
Speaker 4: to investors, which helped Bankment Free raise more money as
Speaker 4: FTX was in real financial trouble.
Speaker 2: Did she blame bankman Freed for everything? Did she take
Speaker 2: any responsibility?
Speaker 4: She did? She spoke about how she came to know
Speaker 4: Alameda had these special privileges on FTX, and she spoke
Speaker 4: about outlining the probability of Alameter being unable to pay
Speaker 4: some of its loans back to creditors and returning some
Speaker 4: of those customer funds to FGX a couple of years
Speaker 4: or at least a year before FtF collapsed. So, while
Speaker 4: she was alleging that Sam was fully aware that Alameda
Speaker 4: had this relationship with FTX, and that she had conversations
Speaker 4: with him about it and they discussed figures and went
Speaker 4: through spreadsheets together, she seemed to be pretty open and
Speaker 4: detailed about her own involvement in all of this as well.
Speaker 4: She spoke quite confidently, She was very matter of fact.
Speaker 4: She answered each question in a very detailed way.
Speaker 2: Was Sam Bagmunfreed the person who was directing her at
Speaker 2: all times? According to her testimony.
Speaker 4: Yes, she said a number of times that Sam told
Speaker 4: her to do X or Sam directed her to do Y.
Speaker 4: Was very clear from her testimony that she was alleging
Speaker 4: he was the brains of the operation and called the
Speaker 4: shots on what she should be doing. She also said
Speaker 4: that you know, Sam wasn't CEO when she's CEO of
Speaker 4: Elament Research. She often turned to him for advice and
Speaker 4: guidance on making big decisions.
Speaker 2: And how did she describe their relationship.
Speaker 4: She said when she first met Sam when she was
Speaker 4: a trader at Jane Street at Trading in New York
Speaker 4: and then went to work for Alimeter Research for him,
Speaker 4: she said that they dated or off for a few years.
Speaker 4: She said that it was a little bit awkward dating
Speaker 4: her boss, and it led to some awkward situations. She
Speaker 4: said that she felt like he didn't pay her enough
Speaker 4: attention in their personal relationship and she wasn't really getting
Speaker 4: enough out of it, and I think that sort of
Speaker 4: complicated her professional relationship with him.
Speaker 2: We've heard a lot about her notes and a tape recording.
Speaker 4: Yes, this is the interesting thing with Ellison. Obviously, she
Speaker 4: is the prosecution style witness and she has a lot
Speaker 4: of powerful testimony, but she also comes with a lot
Speaker 4: of contemporaneous notes that she made of meetings with other executives,
Speaker 4: even her personal diary. Prosecutors also have a recording of
Speaker 4: an all hands meeting that she had with staff Alimeter
Speaker 4: in November last year, when the company and FTX were
Speaker 4: falling apart. At the scene, so she comes with a
Speaker 4: lot of that evidence as well. We haven't really got
Speaker 4: into the nitty gritty of personal diary notes. There were
Speaker 4: a few references to do lists that she would make
Speaker 4: in Google docs, so that evidence was pretty dry today,
Speaker 4: and we were really in the weeds going through balance
Speaker 4: sheets and probabilities of whether Alameter could afford to repay
Speaker 4: their loans.
Speaker 2: Did anything stand out to you that, you know, you said, wow.
Speaker 4: There was one point where the prosecutor was leading her
Speaker 4: through a series of spreadsheets that she had created and
Speaker 4: spoke to Sam about, and in that she did a
Speaker 4: bit of a calculation on whether they should invest three
Speaker 4: billion dollars in some further investments, and she looked at
Speaker 4: the impact that potential investment would have on Alameda's ability
Speaker 4: to repay some of its loans, and in one scenario,
Speaker 4: if they did the investments, there was one hundred percent
Speaker 4: probability they wouldn't be able to repay them loans. And
Speaker 4: she said that she showed this to Sam and he
Speaker 4: went ahead with some of these major investments. Anyway, I
Speaker 4: thought that was a pretty interesting and typical part of
Speaker 4: her evidence because it seems to suggest that he knew
Speaker 4: how high the stakes were for Alameda and what was
Speaker 4: at risk in terms of repaying loans, that he went
Speaker 4: ahead and well the douce Anyway.
Speaker 2: Thanks Aver. We'll check back with you tomorrow when her
Speaker 2: testimony continues. That's Bloomberg Legal Reporter Ava Benny Morrison. This
Speaker 2: is Bloomberg. What exactly is a legal hot tub. It's
Speaker 2: not as diverting or exciting as it may sound, and
Speaker 2: it really has nothing to do with hot tubs. It's
Speaker 2: formerly called concurrent expert testimony or a concurrent expert evidence proceeding,
Speaker 2: and it's more like a discussion among experts. If you
Speaker 2: haven't heard about it, it's because it's a novelty in
Speaker 2: US courts. Here to tell us all about it and
Speaker 2: how it got. That name is Dan Paskin, Bloomberg Law Reporter.
Speaker 2: So tell us exactly what this legal hot tub is, Dan, Yes,
Speaker 2: So you can kind of think.
Speaker 1: Of it as a debate between experts, often economic experts,
Speaker 1: but not necessarily where instead of one sitting on the
Speaker 1: stand in a trial or on the pre trial hearing
Speaker 1: and getting examined and then cross examined by one size
Speaker 1: attorneys and then the other both or all of the
Speaker 1: witnesses sit together before the judge and are basically prompted
Speaker 1: to debate each other on a series of predetermined topics
Speaker 1: or questions.
Speaker 2: So, tell us about this hot tub. It doesn't sound
Speaker 2: very legal to say, even legal batub tell us what
Speaker 2: federal Judge James Donado used it for in San Francisco
Speaker 2: this summer.
Speaker 1: So Donado held the second hot sub he's held in
Speaker 1: this case. This is a lawsuit alleging Google basically has
Speaker 1: anti competitive control over the payment systems in its play store,
Speaker 1: which is like if you have an Android zone, it's
Speaker 1: where you get your apps. And the second hot tub
Speaker 1: was to basically determine whether the plaintiffs experts have reached
Speaker 1: kind of valid models for figuring out how much consumers
Speaker 1: were harmed by these play store policies and what the
Speaker 1: impact was on the market. Pretty central evidence for a
Speaker 1: trial to figure out whether Google, in fact, you know,
Speaker 1: overcharge customers and buy how much if it did.
Speaker 2: Is the judge the only one asking questions? Or are
Speaker 2: the lawyers asking questions? Is their cross talk between the experts.
Speaker 1: There's a lot of crosstalk. It's almost exclusively Tonauto asking
Speaker 1: the questions. He allows the attorneys a couple attorneys to
Speaker 1: sit with the experts in the hot tub, but they're
Speaker 1: really only allowed to ask questions right at the end
Speaker 1: if they have kind of clarifying questions for either expert. Otherwise,
Speaker 1: to Notato prompts one side or the other. We'll say like, yeah,
Speaker 1: I read your report, I had this question about this,
Speaker 1: you know, one part of the model, and then we'll
Speaker 1: prompt the other experts like do you disagree with that?
Speaker 1: So why it got pretty heated. Several times there was
Speaker 1: I don't know if you would call it yelling, but
Speaker 1: definitely raised voices. The court reporter had to interrupt I
Speaker 1: think three separate times because two experts and the judge
Speaker 1: were talking over each other and she couldn't transcribe that
Speaker 1: in real time. So it definitely is a little more
Speaker 1: chaotic than your average court oral testimony.
Speaker 2: Is this because the expert testimony is so complex for
Speaker 2: the judge to understand? Or is it because this is quicker?
Speaker 2: I mean, what's the real reason behind this?
Speaker 1: The reason do not outheld the hantab was to answer
Speaker 1: this Google motion over whether the experts should be allowed
Speaker 1: to testify or not. And Donato told me in an
Speaker 1: interview afterwards that it's very useful for him understanding their
Speaker 1: testimony and their models. It is really complicated, and that's
Speaker 1: a big reason why judges are deploying hot tubs, that
Speaker 1: they haven't deployed too many of them. But it's not
Speaker 1: just that's the complexity. It's also faster. To another said,
Speaker 1: it's a lot cleaner compared like normal expert testimony, non
Speaker 1: hot tub testimony to a game of telesphone. Right, you've
Speaker 1: got the expert on the stand, you've got their attorney
Speaker 1: questioning them, and then you've got the judge hearing their answers.
Speaker 1: So it's kind of filtered through what questions the attorney
Speaker 1: wants to ask and then how the economist in this
Speaker 1: case answers those questions. The judge might not necessarily be
Speaker 1: getting the exact answers they're looking for and instead getting,
Speaker 1: you know, the version that the economist wants to give,
Speaker 1: the response to the questions the attorney wants to ask.
Speaker 1: And so by having this hot tub, it's a lot
Speaker 1: more direct and clear. The judge can ask really complex
Speaker 1: questions and get, you know, exactly what they want out
Speaker 1: of them, and kind of follow up if you have
Speaker 1: dodges the question or doesn't answers have factorily and they're
Speaker 1: economists to typically get hired for these cases. One who's
Speaker 1: done several of these told me that it's pretty hard
Speaker 1: for an attorney to cross examine them, to kind of
Speaker 1: catch them in errors or obfuscations, because the stuff is
Speaker 1: so complex and because it involves, you know, so many
Speaker 1: years of study. Really the only person in the courtroom
Speaker 1: can really call them on their mistakes or on lack
Speaker 1: of clarity is the other economists. So it also means
Speaker 1: that you have the only other person able to make
Speaker 1: these calls in the room with them and able to
Speaker 1: disagree in real time.
Speaker 2: Do attorneys object to this because it's taking them out
Speaker 2: of the equation with a very important witness or witnesses?
Speaker 1: Yeah, So, I mean, like these are arguably some of
Speaker 1: the most important players in a trial, especially in anti
Speaker 1: trust but also in I imagine you know, patent cases
Speaker 1: and elsewhere, and what they come up with can really
Speaker 1: determine not just whether a company or an individual is
Speaker 1: liable or not, but also you know, monetarily how much
Speaker 1: they have to pay. The attorneys aren't the biggest fans
Speaker 1: of having to step back and basically watch this thing happen.
Speaker 1: But once I spoke to you also appreciated how useful
Speaker 1: it was for the judge and again how clean the
Speaker 1: whole thing was. But yeah, you're right, they definitely losed
Speaker 1: quite a bit of control. They're relegated to preparing for
Speaker 1: the hot tub and then you know, trying to pick
Speaker 1: up pieces afterwards. Probably the most helpless they are throughout
Speaker 1: the proceedings.
Speaker 2: So where does that term hot tub come from Australia?
Speaker 1: Which kind of you when you learn that makes quite
Speaker 1: a bit of sense. I feel like you can you
Speaker 1: can definitely imagine for one of an Australian accents saying
Speaker 1: hot At least it makes sense to me.
Speaker 2: Right.
Speaker 1: These originally pretty much the right around the beginning of
Speaker 1: the decade, and it was deployed originally by the Australian
Speaker 1: Competition Tribunal and their kind of anti trust dedicated port
Speaker 1: system basically for this reason to get a clearer understanding
Speaker 1: of what experts we're talking about and make them really
Speaker 1: drill down on their agreements and their discy agreements. It
Speaker 1: was pretty successful there. They've modified it quite a bit.
Speaker 1: I don't think it's technically called the hot ted there more,
Speaker 1: but it's effectively the way still run the way that's
Speaker 1: Nato Rana in his courtroom, and it's taken off in
Speaker 1: a bunch of other countries in Europe, in South Africa,
Speaker 1: Canada has used. It's mostly been unpopular. In the US,
Speaker 1: We've only found a little less than two dozen instances
Speaker 1: of federal judges using on although it's been to play
Speaker 1: an arbitration a little bit, but it hasn't it hasn't
Speaker 1: taken off.
Speaker 2: Yeah, and I'm wondering have there been any appeals based
Speaker 2: on the fact that this was used.
Speaker 1: So Dnata's case, he in the Google play is used
Speaker 1: a hot tub for class certification about a year ago.
Speaker 1: It was last June, and Google appealed as the ruling,
Speaker 1: which he found in favor of the class and certified
Speaker 1: the cost of consumers that are pretty large cost of
Speaker 1: consumers that would have put Google on the hook for
Speaker 1: for quite a bit of money and hypothetical damages. Google
Speaker 1: appealed that to the Ninth Circuit Court of Appeals in California,
Speaker 1: but before they could actually rule, and it was kind
Speaker 1: unclear exactly how much the hot tub aspect of it
Speaker 1: would affect the ruling. I'm not sure that would have
Speaker 1: changed anything. Donato actually changed his mind in part because
Speaker 1: of evidence that came up at the hot Tub that
Speaker 1: I attended and decertified class kind of rendering the Ninth
Speaker 1: Circuit clebrations mood.
Speaker 2: There's no appeal from his reversal, but in the end
Speaker 2: he decertified the class.
Speaker 1: Yeah, and it looks like they probably won't. The parties
Speaker 1: are actually have settled on a potential settlement. I think
Speaker 1: we'll get details of it in a couple of days.
Speaker 1: It should be pretty interesting. I'm really curious to see
Speaker 1: exactly how much money they're getting and whether there's any
Speaker 1: other form of relief. But no, there hasn't been any
Speaker 1: other appeals. The Men Circuit basically handed the ruling back
Speaker 1: to Donado when he changed his.
Speaker 2: Mind at the end of August, So this was pretty
Speaker 2: consequential then to make him change his mind.
Speaker 1: Yeah. So if you read his ruling on the classification,
Speaker 1: he quotes from the hot tub that I attended at
Speaker 1: the beginning of and basically says it helped him get
Speaker 1: a better understanding of the issues. Basically, what happened was
Speaker 1: part of the model that one of the experts used
Speaker 1: in certifying the class was also relevant for determining damages
Speaker 1: to that class, and the defendants expert tried to poke
Speaker 1: some holes in it at the hot tub that I attended,
Speaker 1: and Donato found those to be kind of a valid attack,
Speaker 1: and so he didn't just throw out the testimony of
Speaker 1: that plaintiffs expert for the merits of the harms, but
Speaker 1: also for the class itself.
Speaker 2: I think they have to come up with a new
Speaker 2: name for this, don't you. The judge held a hot
Speaker 2: tub just doesn't sound right.
Speaker 1: Oh yeah, I mean like pitching the story was quite
Speaker 1: the experience. I got a lot of raised bad roads
Speaker 1: from editors, although I have the receiver of a variety
Speaker 1: of memes created from it, which was pretty nice. But no,
Speaker 1: attorneys don't love it. I talked to an economist. He
Speaker 1: said strongly believes we need to find another term for it.
Speaker 1: If she mentioned that it's kind of weird when you're
Speaker 1: at a conference and someone walks up to you and
Speaker 1: it's like, I recognize you from the hot shows. I
Speaker 1: think people are trying to find another term. But concurrent
Speaker 1: expert evidence that concurrent expert witness proceeding.
Speaker 3: Is not very catchy, not very catchy at all.
Speaker 2: Thanks so much, Dan. That's Dan Paskin, Bloomberg Law Reporter,
Speaker 2: and that's it for this edition of The Bloomberg Law Show.
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