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

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Speaker 2: New York City Mayor Eric Adams appeared in a Manhattan

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Speaker 2: courtroom today for the second time in a week. Adams

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Speaker 2: was indicted last week on federal corruption charges in a

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Speaker 2: widespread criminal investigation in which top city hall aides have

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Speaker 2: had their home searched and phone seized by investigators. Adams

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Speaker 2: pleaded not guilty and his resisting calls to resign. Meanwhile,

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Speaker 2: his lawyer, Alex Spiro, has rolled out an aggressive defense,

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Speaker 2: asking the judge to dismiss part of the case right away,

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Speaker 2: accusing federal prosecutors of leaking grand jury information, and holding

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Speaker 2: a press conference to attack the indictment. Spiro said the

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Speaker 2: mayor's flights, upgrades, meals, and hotel rooms do not count

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Speaker 2: as bribes under federal law.

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Speaker 1: Congressmen get upgrades, they get corner suites at better tables

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Speaker 1: at restaurants, they get free appetizers, they have their iced

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Speaker 1: t filled up. That's just what happens. That's the truth.

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Speaker 1: And we don't in the law leave these public servants

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Speaker 1: to be asking themselves every single time, every single day

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Speaker 1: they have been any interaction with the public is accepting

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Speaker 1: this or taking that appetizer or not waiting in line

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Speaker 1: a violation of federal law.

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Speaker 2: At the hearing today, federal prosecutors divulged that they're pursuing

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Speaker 2: several related investigations that could lead to additional corruption charges

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Speaker 2: against Atoms and quite likely will lead to indictments for

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Speaker 2: people in his orbit. Joining me is former federal prosecutor

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Speaker 2: Jennifer Rogers, a lecturer in law at Columbia Law School.

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Speaker 2: The defense is being very aggressive. They made a motion

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Speaker 2: to dismiss part of the case within days of the indictment.

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Speaker 2: The defense attorney held a press conference. Is this for

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Speaker 2: political purposes, a political strategy or is there a legal

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Speaker 2: strategy here?

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Speaker 3: Well, I think they're trying to do all of it, right.

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Speaker 3: I mean, he's a sitting official, so clearly they want

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Speaker 3: to work on the political side. But you know, this

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Speaker 3: is a legal case. There are legal motions to be made,

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Speaker 3: and you know, even the notion of him aggressively saying

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Speaker 3: he's going to stay in office has legal implications because

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Speaker 3: resigning could be part of a plea agreement, maybe getting

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Speaker 3: him a more favorable deal if he wanted to do that.

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Speaker 3: So I think it's all part and parcel of an

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Speaker 3: aggressive overall defense strategy. But they really are being aggressive.

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Speaker 3: I mean you rarely see the motions about the grand

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Speaker 3: jury lease alleging that prosecutors or agents somehow the government

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Speaker 3: leaked information out of the grand jury. So I mean

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Speaker 3: they're firing on all cylinders right now. It's going to

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Speaker 3: keep the Southern District busy for sure.

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Speaker 2: I mean that was a point blank accusation that the

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Speaker 2: Southern District had been leaking information about Adam's alleged care

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Speaker 2: for nearly a year.

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Speaker 3: Yeah, I mean, I don't know what they're basing that on,

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Speaker 3: and I think, you know, they better have receipts if

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Speaker 3: they're going to allege something like that. So we'll see

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Speaker 3: what they say. That would be unprecedented for the Southern

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Speaker 3: District to be found guilty of something like that, So

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Speaker 3: you know, my inclination is to say that that it's

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Speaker 3: not true and that they won't find any basis to

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Speaker 3: believe that that happened. But you know, obviously you never know.

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Speaker 3: I mean, there could be a bad seat somewhere, but

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Speaker 3: that is so opposite of the ethos of that office

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Speaker 3: that you know, it would shock me if that ended

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Speaker 3: up being true, So you know, we'll see how it

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Speaker 3: plays out.

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Speaker 2: Well, so far, they've just pointed to all the different

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Speaker 2: news reports that came out over the last year. They

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Speaker 2: haven't pointed to any evidence they want the judge to

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Speaker 2: do an investigation about that. Do you think that's something

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Speaker 2: that a federal judge would engage in.

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Speaker 3: That seems very unlikely to me. I mean, if all

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Speaker 3: they have is that things from the grand jury have

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Speaker 3: made their way into the public realm. I mean, witnesses

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Speaker 3: are allowed to talk about what happens in the grand jury.

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Speaker 3: It's only prosecutors that are forbidden to share information like that.

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Speaker 3: So if a witness goes in and testifies, then or

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Speaker 3: she's allowed to speak about that public ways they wish.

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Speaker 3: And so that is the most common way, the most

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Speaker 3: usual way that information like that would get out into

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Speaker 3: the public realm. And in a case like this, where

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Speaker 3: everyone would be interested in it. He's obviously a public

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Speaker 3: figure of public official. I wouldn't be surprised if some

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Speaker 3: witnesses wanted to talk about what they had said in

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Speaker 3: the grand jury. So, you know, I suspect the judge

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Speaker 3: will not launch an investigation unless they have more than

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Speaker 3: just the grand jury happen, and some information from that

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Speaker 3: process made its way into the public realm.

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Speaker 2: When a defense attorney does something like that, you know,

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Speaker 2: accuses the federal prosecutors of wrongdoing, does that set up

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Speaker 2: an even more adversarial relationship with the prosecutors?

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Speaker 3: I mean it can it can? You know, listen, people

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Speaker 3: are only human, and if you have someone on the

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Speaker 3: other side who's accusing you of bad things and being

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Speaker 3: unpleasant or whatever the case may be, it could impact

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Speaker 3: your interactions with that lawyer. But at the end of

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Speaker 3: the day, prosecutors want to resolve this case, they'd prefer

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Speaker 3: to do it by plea if they can, because that's

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Speaker 3: more efficient. So they're going to work with whoever is there.

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Speaker 3: And you really can't punish the defendant for his counsel

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Speaker 3: being a jerk or you know, making accusations, So ultimately

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Speaker 3: they're professionals. They'll work with mister Spiro and his team

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Speaker 3: no matter what he says. But they may not like

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Speaker 3: it as much as they would if someone was, you know,

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Speaker 3: a little less accusatory and more pleasant.

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Speaker 2: They're making a motion to dismiss the bribery charge, and

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Speaker 2: the defense attorney said that doesn't amount to a federal

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Speaker 2: crime at all. First, they're saying there's no quid pro quo,

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Speaker 2: and he mentioned at the press conference that there was

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Speaker 2: no contemporary exchange of this for them, and that Adams

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Speaker 2: allegedly received these benefits over years and it wasn't connected

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Speaker 2: sufficiently to helping Turkey open its consulate. I mean, does

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Speaker 2: there have to be a contemporaneous quid pro quo?

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Speaker 3: So you have to have an agreement to do something

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Speaker 3: before you give over whatever the benefit is. The Supreme

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Speaker 3: Court ruled in the last term that it can't be

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Speaker 3: a gratuity, which would mean kind of a tip after

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Speaker 3: the fact. It has to be an agreement before. But

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Speaker 3: I think the defense is being a little too aggressive

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Speaker 3: with what they're saying. It has to be right. They're

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Speaker 3: providing a more strict reading of the statute than is

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Speaker 3: in the statutory language and then has been blessed by

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Speaker 3: the Supreme Court. What has happened in the last fifteen

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Speaker 3: years or so is all of these public corruption statutes

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Speaker 3: have gone up for interpretation of the Supreme Court and

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Speaker 3: have been narrowed and made more strict, except this one,

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Speaker 3: which is Section sixty sixty six Federal Program bribery. This

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Speaker 3: is the one that hasn't really been considered by the

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Speaker 3: court yet on this point, So you know, listen, they're

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Speaker 3: kind of pitching an interpretation of this statute that it's

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Speaker 3: theoretically possible the Supreme Court could agree with if this

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Speaker 3: case or another case like it gets up to the

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Speaker 3: Supreme Court. But where the law sits now, I think

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Speaker 3: they're being overly strict with what they're saying. So I

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Speaker 3: think what's going to happen is that the judge is

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Speaker 3: going to reject this motion right now and say it's

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Speaker 3: a question of fact, and the jury will have to

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Speaker 3: decide whether or not they've met the quick pro quo

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Speaker 3: requirement in this case per the statutory language. And then

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Speaker 3: if Adams is convicted, as he appeals up the chain afterwards,

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Speaker 3: then we'll see whether the Second Circuit and ultimately the

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Speaker 3: Supreme Court are you know, more in his mindset as

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Speaker 3: far as what the statutes should be. But I think

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Speaker 3: for now they're on safe ground with the charge as

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Speaker 3: it is.

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Speaker 2: Also, what Mayor Adams has said and what his defense

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Speaker 2: attorney has said, is that courtesies to politicians are in

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Speaker 2: federal crimes. His attorney, Spiro said, Congressmen get upgrades, they

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Speaker 2: get corner suites, they get better tables and restaurants, they

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Speaker 2: get free appetizers. They had their iced tea filled up,

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Speaker 2: and Adams said, if everyone who did this was indicted,

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Speaker 2: you know, you'd be stopping politicians from helping their constituents.

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Speaker 3: Yeah, okay, but you can't do it in exchange. You know,

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Speaker 3: you can't offer benefits in exchange for those things of

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Speaker 3: value that you're taking. There are also rules that apply

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Speaker 3: to Adams that require him to file disclosure forms about

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Speaker 3: benefits that he's getting over a certain amount of money,

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Speaker 3: and he didn't file those forms properly with respect to

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Speaker 3: all these benefits that are listed in the indictment. So

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Speaker 3: you know, there's a non disclosure part of this that

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Speaker 3: makes it look more suspicious that he understood that these

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Speaker 3: were things that he should not be taking. And again,

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Speaker 3: it's all about the exchange. Like, could he take an

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Speaker 3: upgrade if randomly he went to check in for his

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Speaker 3: flight and someone said, hey, you're a great mayor, we'd

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Speaker 3: like to upgrade you to business class. If there wasn't

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Speaker 3: anything about and I expect something from you in return,

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Speaker 3: then sure that wouldn't be bribery, but that's not what's

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Speaker 3: being alleged here. So you know, part of their job

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Speaker 3: is to try to kind of pooh pooh the allegations

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Speaker 3: and make it seem like no big deal. So that's

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Speaker 3: what they're doing here, and I understand that. But when

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Speaker 3: they say things kind of generically like oh, it's like

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Speaker 3: filling up your ica, it's not like filling up your iced.

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Speaker 2: Coming up next on the Bloomberg Law Show, I'll continue

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Speaker 2: this conversation with former federal prosecutor Jennifer Rogers. The defense

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Speaker 2: wants to finish the trial by March. Is that doable?

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Speaker 2: I'm June Grosso and you're listening to Bloomberg. New York

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Speaker 2: City Mayor Eric Adams has launched a legal attack on

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Speaker 2: the federal corruption case again against him, with his attorney

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Speaker 2: asking a judge to toss out bribery charges, and Alex

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Speaker 2: Spiro said the other charges against Adams that he solicited

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Speaker 2: and accepted foreign donations and manipulated the city's matching funds program,

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Speaker 2: would soon be revealed as equally meritless.

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Speaker 1: But Eric Adams obviously had no idea if that occurred,

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Speaker 1: whether that occurred, and so the remaining allegations in this

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Speaker 1: case rely on the testimony of one staffer. Just think

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Speaker 1: about that one staffer who has already lied.

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Speaker 2: I've been talking to former federal prosecutor Jennifer Rogers, so

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Speaker 2: the donations from foreign sources through straw donors seemed to

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Speaker 2: be a different story. And there his defense attorney is

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Speaker 2: indicating that the charges were based on the testimony of

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Speaker 2: one Adam staffer who lied.

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Speaker 3: Well, so this is interesting. I mean, and they want

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Speaker 3: to say something about every part of the case, right,

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Speaker 3: They don't want to concede anything at this point. What

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Speaker 3: they're saying about this part of the case is what

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Speaker 3: you would expect when there's a cooperating witness. Okay, there's

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Speaker 3: evidence against our guy. Okay, this looks really bad that

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Speaker 3: that person is a liar. That's the oldest argument in

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Speaker 3: the book, right, and that is clearly a question of facts.

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Speaker 3: Is going to be for the jury at trial. There's

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Speaker 3: no way that piece of the case is getting dismissed

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Speaker 3: at this point or any point before trial and the jury.

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Speaker 3: We'll have to sort it out when this person testifies.

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Speaker 3: Do we believe her? Is she credible? Is there other

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Speaker 3: evidence in the case that corroborates her, and prosecutors, as

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Speaker 3: you know, will be working hard. They already have been,

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Speaker 3: I'm sure, but will continue to work hard to find

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Speaker 3: corroborating evidence that they will present to the jury so

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Speaker 3: that they can say it's not just her, it's all

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Speaker 3: this other information. It's text messages, it's you know, other

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Speaker 3: people testifying similarly, and so on. The one thing about

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Speaker 3: this piece of the case, which generally I think is

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Speaker 3: quite strong given what's listed in the is that it's

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Speaker 3: not all that much money, at least as they've laid

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Speaker 3: it out so far. I mean, they talk about ten

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Speaker 3: million dollars in matching funds that the campaign received, but

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Speaker 3: that's the overall amount of matching funds, not the amount

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Speaker 3: of funds that were foreign donors or the use of

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Speaker 3: straw donors. So that amount seems to be much much smaller,

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Speaker 3: and so it'll be interesting to see as this case developed,

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Speaker 3: if they will come up with more, you know, if

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Speaker 3: they're currently scrubbing all of his donations to try to

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Speaker 3: see if there were other straw donors or other foreign donors,

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Speaker 3: because I think they will want to get that to

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Speaker 3: be as big a number as possible. Otherwise you risk

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Speaker 3: the jury saying really, only you know, fourteen thousand dollars

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Speaker 3: or whatever it is, that's not a lot of money

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Speaker 3: to be taken from the city.

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Speaker 2: Is this count the straw donors count? Is that a

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Speaker 2: more straightforward count legally than the bribery, whereas it's more factual.

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Speaker 3: Yeah, that they're both factual, But this one is cleaner.

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Speaker 3: I mean, if the people who gave the money were foreign,

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Speaker 3: you can prove the straw donor scheme, and you prove

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Speaker 3: that Adams knew about it and had his people do

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Speaker 3: it purposefully, then that's it. You don't have to worry about,

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Speaker 3: you know, the timing of the exchange and was this

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Speaker 3: for that? And it is a little cleaner, I think,

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Speaker 3: which is why I say it's stronger. And the only

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Speaker 3: concern that I have about that piece of it is

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Speaker 3: that I just don't think the amounts seemed to be

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Speaker 3: very high. Now, the foreign element of it, the fact

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Speaker 3: that there were foreign donors, the amount doesn't really matter.

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Speaker 3: I mean, you're not allowed to accept money in your

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Speaker 3: campaign from foreign people or or even non New York

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Speaker 3: City residents. I mean it's not just out of the US,

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Speaker 3: it's you know, these people have to be New York

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Speaker 3: City residents in order to get the matching funds, so

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Speaker 3: that doesn't really have an amount tied to it per se,

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Speaker 3: But for the New York City residents for whom matching

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Speaker 3: funds were given at an eight to one ratio, So

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Speaker 3: if you give up to two hundred and fifty dollars,

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Speaker 3: it's matched eight to one and you get two thousand

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Speaker 3: dollars from the city. That's where I think they don't

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Speaker 3: have a high number of straw donors that they can

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Speaker 3: say definitively, at least in the indictment. Now were straw

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Speaker 3: donors from these foreign donations. So I'm looking to see

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Speaker 3: if they actually come up with a bigger number as

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Speaker 3: they continue to investigate.

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Speaker 2: And Jennifer, what do you make of the fact that

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Speaker 2: they say that Adams tried to hamper their investigation? For example,

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Speaker 2: he gave over a cell phone but claimed that he

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Speaker 2: didn't remember what the code was to open it. Is

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Speaker 2: that just something for the jury or might they bring

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Speaker 2: obstruction charges?

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Speaker 3: Yeah, we'll see. I mean, it's currently more atmospheric than anything,

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Speaker 3: but if they get enough, they could bring an obstruction charge.

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Speaker 3: They wouldn't bring an obstruction charge based on the fact

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Speaker 3: that he says he couldn't remember his past code, because

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Speaker 3: how were they really going to prove that that he

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Speaker 3: can't remember it. I mean, we can all roll our

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Speaker 3: eyes and say that's ridiculous, but that's a different matter

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Speaker 3: from proving beyond a reasonable doubt that he purposely obstruct

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Speaker 3: an investigation. So I'm sure they're continuing to look. And

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Speaker 3: you know, one of the things that always happens after

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Speaker 3: you bring an indictment is that people come forward, right

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Speaker 3: So people who were previously maybe afraid to talk will

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Speaker 3: come forward. People who think that they're now in danger

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Speaker 3: of being caught up in the case themselves may actually

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Speaker 3: start to cooperate. So as you get more witnesses in

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Speaker 3: and you learn more, you may find out things. You

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Speaker 3: may find out that when this investigation broke and they

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Speaker 3: started talking to people that Eric Adams are, people close

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Speaker 3: to him were contacting potential witnesses and telling them, you know,

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Speaker 3: not to cooperate, to wipe their phones, et cetera, et cetera.

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Speaker 3: There's already some evidence in the indictment about you should

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Speaker 3: erase all your text messages with me, et cetera. So

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Speaker 3: as those sorts of things are percolating, and more and

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Speaker 3: more people are coming forward with information. They'll see whether

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Speaker 3: they could actually bring an obstruction charge. I'm sure they're

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Speaker 3: looking to do that if they can.

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Speaker 2: Well. At the hearing today, the federal prosecutors said they're

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Speaker 2: pursuing several related to investigations which we've heard of that

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Speaker 2: could lead to additional corruption charges against Atoms and quite

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Speaker 2: likely indictments for people in his orbit. So it is

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Speaker 2: going to expand.

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Speaker 3: Yeah, and that's the way that they work, That's how

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Speaker 3: I would expect them to do things. I mean, we

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Speaker 3: know already that there have been investigations into other people

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Speaker 3: members of his administration, and those may be unrelated to Adams,

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Speaker 3: so you know that may not result in any more

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Speaker 3: charges for him. But I also think, as I said,

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Speaker 3: they will try to expand this particular investigation. The indictment

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Speaker 3: suggests that there were numerous other people who were involved

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Speaker 3: in this game, right, who were helping him, not just

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Speaker 3: the one aid of his who seems to have been

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Speaker 3: kind of a translator and conduit to the Turkish folks,

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Speaker 3: but other people as well who were involved. So I

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Speaker 3: would think that there will be more people charged or

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Speaker 3: if not charged along with atoms that they would please

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Speaker 3: separately and become cooperating witnesses.

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Speaker 2: Do you think from the indictment that they already have cooperators?

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Speaker 3: Yes, yes, it looks like they do. It looks like

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Speaker 3: the woman who was this conduit liaison person is likely cooperating,

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Speaker 3: and probably others as well.

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Speaker 2: So would you say it's very unlikely that any of

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Speaker 2: the charges would be dismissed at this stage?

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Speaker 3: I think so. I don't think anything's going to be

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Speaker 3: dismissed now, because now you can only dismiss things. It

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Speaker 3: has to be dismissed on the law right. If there

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Speaker 3: any questions of fact anything for the jury, then you

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Speaker 3: don't get it dismissed. So this is just this charge

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Speaker 3: is legally unsupportable. You cannot support this charge with the

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Speaker 3: law as it stands now. And you know he can

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Speaker 3: make arguments all he wants about oh he wasn't the

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Speaker 3: mayor yet, he was only the Brooklyn Borough president. But

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Speaker 3: you have to think he had won the Democratic primary.

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Speaker 3: It was close to a certainty that he was going

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Speaker 3: to be the mayor. So then you get into a

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Speaker 3: question of fact. Would people at the Fire Department have

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Speaker 3: felt that the certain mayor in a few months is

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Speaker 3: putting pressure on them. That's going to be a question

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Speaker 3: of fact. So anything that's the question of fact means

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Speaker 3: that it's not appropriate for dismissal at this point. And

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Speaker 3: as I said, as much as we may think that

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Speaker 3: someday the Supreme Court may narrow this statute in a

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Speaker 3: way that matters to this case, it hasn't happened yet.

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Speaker 3: And so for those reasons, I think the motion to

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Speaker 3: dismiss will fail.

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Speaker 2: The defense attorney said he wants to finish the trial

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Speaker 2: before the March deadline for candidates to be certified for

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Speaker 2: the ballot. We don't want this case dragging, he said,

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Speaker 2: I mean, is March doable?

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Speaker 3: It is? I mean, this is another very aggressive move.

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Speaker 3: Usually the defense wants time themselves because they're usually, you know,

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Speaker 3: not taken completely by surprise. But once the case is brought,

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Speaker 3: you know, they have a lot of work to do.

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Speaker 3: But it keeps the prosecutor's seat to the fire. It

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Speaker 3: potentially hinders them from investigating as thoroughly as they might want.

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Speaker 3: Right if they have to go to trial sooner rather

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Speaker 3: than later. The Speedy Trial Bile Act gives seventy days.

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Speaker 3: There's a lot of time that will be automatically excluded

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Speaker 3: from that that it will extend that time out, like

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Speaker 3: time for the briefing and decision on motions and that

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Speaker 3: sort of thing. But if the defense comes in and says, listen,

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Speaker 3: we want a speedy trial, we want as little time

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Speaker 3: excluded as possible, we want to move, the judge is

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Speaker 3: likely to do that for them. So we're in the

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Speaker 3: beginning of October. I think they definitely could get a

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Speaker 3: trial in say February, that would allow them to be

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Speaker 3: done by March. I mean, the defense usually gets what

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Speaker 3: they want in these senses, because the criminal system gives

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Speaker 3: defendants a lot of right and you know, as they should.

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Speaker 2: Finally, the judge Dale Ho just took the bench in

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Speaker 2: August of twenty twenty three, so not very experienced. Do

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Speaker 2: you think that this case will be a lot for

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Speaker 2: a new judge to handle?

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Speaker 4: Yeah?

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Speaker 3: I do, I do. I mean, I really don't know

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Speaker 3: much about Judge Hoe. You know, he comes from the

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Speaker 3: ACLU and barely got through because the Republicans didn't want

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Speaker 3: him in, so he's bought to be, you know, really

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Speaker 3: on the liberal side. I don't know how that cuts

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Speaker 3: with a democratic Mayor as the defendant. And you know,

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Speaker 3: as you said, he hasn't been on the bench for

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Speaker 3: very long. This is high profile, it's complicated with some

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Speaker 3: of these legal issues, with the statute and the public

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Speaker 3: corruption realm. So I do think it's a challenge. You know,

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Speaker 3: I'm sure he's smart and capable, and he has lots

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Speaker 3: of colleagues on the Southern District Bench who have handled

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Speaker 3: all sorts of cases, so you know, I'm sure he'll

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Speaker 3: he'll consult with some of them, and yeah, it'll be

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Speaker 3: it'll be fun to watch how he handles all of it.

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Speaker 2: It's certainly shaping up to be an interesting trial. Thanks

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Speaker 2: so much for your insights, Jennifer. That's former federal prosecutor

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Speaker 2: Jennifer Rogers. Coming up next. The dock workers strike. This

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Speaker 2: is Bloomberg Job Union doc workers at whort it's from

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Speaker 2: Maine to Texas are walking picket lines in a strike

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Speaker 2: that could reignite inflation and cause shortages of goods if

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Speaker 2: it goes on more than a few weeks. The strike,

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Speaker 2: affecting thirty six ports, is the first by the International

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Speaker 2: long Shoremen's Association since nineteen seventy seven. It's not only

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Speaker 2: about wages, but about the workers demands that automation not

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Speaker 2: be added to the docks. Blaine Erlick heads the New

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Speaker 2: Orleans chapter of the ILA. The truth is robots do

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Speaker 2: not pay taxes and they not spend money in their community.

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Speaker 2: Joining me is Jonathan Todd, Vice chair of the Transportation

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Speaker 2: and Logistics Practice Group at Binesh Law, tell us about

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Speaker 2: the reasons behind the strike.

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Speaker 4: So port dispute happen, and we hear of these every

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Speaker 4: few years across the country. Usually it is a pay issue.

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Speaker 4: What's unique about this dispute is the ILA is challenging

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Speaker 4: not only the pay that they're receiving under their contracts,

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Speaker 4: but also the use of automation at the ports. And

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Speaker 4: it's an interesting character because this introduces the idea that

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Speaker 4: you protecting traditional labor itself is valuable. And this has

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Speaker 4: reminiscence of the actors strikes of a few years ago.

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Speaker 4: I think it's fascinating because we'll probably see more of this,

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Speaker 4: right But that's the challenge that I think is going

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Speaker 4: to be difficult. That this isn't the traditional issue of

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Speaker 4: do we pay more and if so, how much? This

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Speaker 4: is an issue of exactly what we want from labor

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Speaker 4: at our port.

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Speaker 2: The president, Harold Daggett said, we want absolute, airtight language

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Speaker 2: that there will be no automation or semi automation. Is

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Speaker 2: that trying to keep the docs you know from modern

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Speaker 2: innovations that would move things faster.

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Speaker 4: It's interesting, right, because the world is changing and there's

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Speaker 4: been automation for a great period of time. But today

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Speaker 4: the capabilities that ports could have to automate what was

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Speaker 4: traditionally done by labor, and by you know, more labor

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Speaker 4: than could otherwise have, which of course has costs. It

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Speaker 4: is greater today than it was. We'll only see that

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Speaker 4: grow and so it really is almost unexistential question of

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Speaker 4: the degree to which, you know, we value labor in

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Speaker 4: this country and traditional jobs.

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Speaker 2: As far as the pay raise they offered them something

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Speaker 2: like fifty percent raises over the life of the contract,

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Speaker 2: with the union on seventy seven percent, that's right.

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Speaker 4: I think it is more of a question of, you know,

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Speaker 4: what the union would be comfortable with in terms of

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Speaker 4: the financial side of it. But the real challenge that

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Speaker 4: I see is the question of the degree to which

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Speaker 4: we can employ humans in traditional jobs. That's I think

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Speaker 4: more fascinating than the question of whether we land at

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Speaker 4: fifty percent or seventy seven percent, which are some of

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Speaker 4: the numbers on the table, But it all has a

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Speaker 4: and that effect of driving you know the cost of

436
00:24:03,720 --> 00:24:07,000
Speaker 4: the service and ultimately you know the cost to land

437
00:24:07,080 --> 00:24:10,320
Speaker 4: product in the US or export product from the US.

438
00:24:10,640 --> 00:24:14,360
Speaker 4: You know, this really is essentially a precipice of what

439
00:24:14,440 --> 00:24:18,800
Speaker 4: we intend to see in terms of human labor at

440
00:24:18,840 --> 00:24:20,760
Speaker 4: our ports. On the East Coast in the Gulf.

441
00:24:21,760 --> 00:24:25,720
Speaker 2: They did settle a doc worker strike on the West Coast.

442
00:24:26,040 --> 00:24:29,720
Speaker 4: One thing I will say is the West Coast tensions

443
00:24:29,960 --> 00:24:34,640
Speaker 4: of late we're interesting in the sense that the unions

444
00:24:34,640 --> 00:24:39,320
Speaker 4: took a different strategy. So the IWLA introduced a rolling

445
00:24:39,359 --> 00:24:45,680
Speaker 4: strike on a on a port support basis, which was resolved,

446
00:24:45,760 --> 00:24:48,680
Speaker 4: you know, relatively quickly, without a great deal of interruption.

447
00:24:49,720 --> 00:24:53,160
Speaker 4: The reason that this approach is you know, very serious

448
00:24:53,880 --> 00:24:57,639
Speaker 4: for the American consumer is because we're talking about a

449
00:24:58,080 --> 00:25:01,439
Speaker 4: strike you know, in mass across thirty six you know,

450
00:25:01,520 --> 00:25:04,919
Speaker 4: major port in the East Coast and the Gulf, and

451
00:25:04,960 --> 00:25:08,560
Speaker 4: of course that accounts for around fifty percent of import

452
00:25:08,560 --> 00:25:11,800
Speaker 4: and export traffic. So the strategy that's being deployed here

453
00:25:12,359 --> 00:25:15,560
Speaker 4: is very different than has been deployed in a recent

454
00:25:15,600 --> 00:25:16,880
Speaker 4: memory on the West Coast.

455
00:25:17,080 --> 00:25:19,080
Speaker 2: Yeah, I was going to say that it seems like

456
00:25:19,119 --> 00:25:22,840
Speaker 2: a more traditional strike than the West Coast and then

457
00:25:22,880 --> 00:25:26,440
Speaker 2: the UAW employed when they went on strike.

458
00:25:27,040 --> 00:25:27,600
Speaker 4: That's right.

459
00:25:27,760 --> 00:25:32,919
Speaker 2: Let's talk about in theory the authority of the president

460
00:25:33,480 --> 00:25:35,399
Speaker 2: to stop the strike.

461
00:25:35,560 --> 00:25:38,800
Speaker 4: So that the president does have the power under the

462
00:25:38,880 --> 00:25:44,400
Speaker 4: Taft Hartley Act to essentially enjoin the strike and require

463
00:25:44,440 --> 00:25:48,600
Speaker 4: a cooling off period when labor would resume and the

464
00:25:48,640 --> 00:25:52,480
Speaker 4: parties would come to the table and discuss the path

465
00:25:52,560 --> 00:25:56,479
Speaker 4: forward to resolve the dispute. This president has on multiple

466
00:25:56,520 --> 00:26:01,280
Speaker 4: occasions said that he does not intend to exercise that power,

467
00:26:01,520 --> 00:26:05,080
Speaker 4: which leads to the really big question for domestic supply chains,

468
00:26:05,119 --> 00:26:08,800
Speaker 4: which is how long will this last? When when clients

469
00:26:08,880 --> 00:26:12,840
Speaker 4: asked me that, and have asked me that in recent years,

470
00:26:12,880 --> 00:26:15,560
Speaker 4: my answer is typically, you know, to expect, you know,

471
00:26:15,640 --> 00:26:18,639
Speaker 4: maybe one or two weeks. And the reason that I

472
00:26:18,760 --> 00:26:22,320
Speaker 4: say that is the last you know, very major strike

473
00:26:22,720 --> 00:26:25,399
Speaker 4: that had implications, you know, such as this was in

474
00:26:25,440 --> 00:26:29,399
Speaker 4: two thousand and two on the West Coast and President

475
00:26:29,440 --> 00:26:33,399
Speaker 4: George W. Bush did exercise half partly and the strike

476
00:26:33,480 --> 00:26:36,840
Speaker 4: was resolved in eleven days. In the absence of that

477
00:26:36,920 --> 00:26:41,919
Speaker 4: kind of action. However, it's essentially anyone's guests as to

478
00:26:41,960 --> 00:26:43,400
Speaker 4: how long this strike may last.

479
00:26:44,160 --> 00:26:48,200
Speaker 2: And the president could, if you wanted, get a court

480
00:26:48,359 --> 00:26:51,640
Speaker 2: order for a cooling off period, right, so.

481
00:26:51,560 --> 00:26:53,879
Speaker 4: There would be a federal action and there would be

482
00:26:53,880 --> 00:26:57,520
Speaker 4: an injunction ending the strike, and then the parties would

483
00:26:57,560 --> 00:27:01,119
Speaker 4: have eighty days as a cooling off period to negotiate

484
00:27:01,200 --> 00:27:01,800
Speaker 4: a resolution.

485
00:27:02,400 --> 00:27:05,720
Speaker 2: So there are a lot of different factors here. Does

486
00:27:05,760 --> 00:27:09,359
Speaker 2: it seem like the union has an advantage in a

487
00:27:09,400 --> 00:27:14,760
Speaker 2: way because of the supply chain is under pressure in

488
00:27:14,800 --> 00:27:19,160
Speaker 2: the aftermath of the hurricane, and you know, it's peak

489
00:27:19,240 --> 00:27:24,160
Speaker 2: shipping season for holiday goods, and it's a presidential election

490
00:27:24,600 --> 00:27:28,320
Speaker 2: coming up soon, so there might be political factors as well.

491
00:27:29,520 --> 00:27:32,360
Speaker 4: Everything you said is exactly right. This is a perfect

492
00:27:32,359 --> 00:27:37,280
Speaker 4: storm of events. We have the presidential race, which you know,

493
00:27:37,560 --> 00:27:43,600
Speaker 4: probably to some degree, influences the executive branch logic on

494
00:27:43,680 --> 00:27:46,840
Speaker 4: how to handle this issue. We also have peak season

495
00:27:46,920 --> 00:27:51,199
Speaker 4: coming particularly for retailers. This is exactly the time that

496
00:27:51,280 --> 00:27:55,000
Speaker 4: retailers are looking to build up inventories so that the

497
00:27:55,160 --> 00:27:58,760
Speaker 4: stores have everything they need to sell through the holiday season.

498
00:27:59,119 --> 00:28:01,240
Speaker 4: Much of that has occurred, some of that has actually

499
00:28:01,320 --> 00:28:05,760
Speaker 4: been front loaded for a number of factors. One of

500
00:28:05,800 --> 00:28:09,120
Speaker 4: those is that the Biden administration rolled out additional duties

501
00:28:09,160 --> 00:28:14,359
Speaker 4: on China goods in September twenty seven, and so all

502
00:28:14,440 --> 00:28:18,240
Speaker 4: these things are coming together that led to additional inflows

503
00:28:18,320 --> 00:28:22,000
Speaker 4: in the West Coast. But it's very very challenging. The

504
00:28:22,080 --> 00:28:25,680
Speaker 4: idea that we no longer have capacity as a country

505
00:28:26,160 --> 00:28:28,600
Speaker 4: to move essentially fifty percent of the goods that we

506
00:28:28,600 --> 00:28:32,640
Speaker 4: would otherwise move into and out of the country is

507
00:28:32,760 --> 00:28:38,040
Speaker 4: economically challenging, and it's important for people to bear in

508
00:28:38,080 --> 00:28:41,560
Speaker 4: mind also that this isn't just an import problem. This

509
00:28:41,600 --> 00:28:45,360
Speaker 4: isn't just ensuring that Americans have all of the goods

510
00:28:45,400 --> 00:28:48,200
Speaker 4: that they would like to buy now and through the

511
00:28:48,240 --> 00:28:51,560
Speaker 4: holiday season. It's also an export problem. There are high

512
00:28:51,760 --> 00:28:55,240
Speaker 4: export volumes at these ports, and so you have a

513
00:28:55,320 --> 00:28:59,480
Speaker 4: number of industries that are impacted, particularly agriculture and the

514
00:28:59,520 --> 00:29:04,400
Speaker 4: auto dutry, where it's now an increased challenge to sell

515
00:29:04,680 --> 00:29:09,400
Speaker 4: domestically produced or domestically manufactured goods around the world due

516
00:29:09,400 --> 00:29:10,520
Speaker 4: to the strike.

517
00:29:11,200 --> 00:29:14,200
Speaker 2: How automated are foreign ports.

518
00:29:14,720 --> 00:29:20,280
Speaker 4: So the degree of automation can be very surprising.

519
00:29:20,800 --> 00:29:20,920
Speaker 2: Uh.

520
00:29:21,080 --> 00:29:24,680
Speaker 4: The the idea that you need an individual for example,

521
00:29:25,640 --> 00:29:30,840
Speaker 4: in equipment at the ports to to visually inspect what

522
00:29:30,880 --> 00:29:34,160
Speaker 4: they're doing and ensure that containers are are offloaded and

523
00:29:34,480 --> 00:29:38,000
Speaker 4: loaded correctly. With the technology we have today, that that's

524
00:29:38,040 --> 00:29:42,440
Speaker 4: not exactly necessary. There are foreign ports, for examples, that

525
00:29:42,600 --> 00:29:47,120
Speaker 4: have individuals that essentially work remotely, meaning that they're not

526
00:29:47,560 --> 00:29:51,120
Speaker 4: you know, at the port on the ground of managing

527
00:29:51,240 --> 00:29:57,080
Speaker 4: equipment to to offload containers and load containers onto vessels.

528
00:29:57,640 --> 00:30:01,840
Speaker 4: So the idea is that you could dramatically reduced headcounts

529
00:30:01,880 --> 00:30:07,600
Speaker 4: and dramatically increase efficiencies with technology. It's happening right now,

530
00:30:08,120 --> 00:30:10,400
Speaker 4: and you know, one way to think about is is

531
00:30:10,480 --> 00:30:14,360
Speaker 4: in many ways analogous to you know, remote work. Generally,

532
00:30:14,720 --> 00:30:17,800
Speaker 4: you know, there are things that technology can do where

533
00:30:17,800 --> 00:30:20,720
Speaker 4: we no longer need individuals or what you hear more

534
00:30:20,760 --> 00:30:24,000
Speaker 4: frequently is that the technology can assist you know, an

535
00:30:24,000 --> 00:30:29,160
Speaker 4: individual in being more productive, maybe moving more containers, maybe

536
00:30:29,200 --> 00:30:32,800
Speaker 4: not physically being in a dangerous position as they're doing

537
00:30:32,840 --> 00:30:36,440
Speaker 4: their work at the court, and those things you can

538
00:30:36,520 --> 00:30:40,840
Speaker 4: understand an abstraction and elsewhere, you know, may be attractive,

539
00:30:41,600 --> 00:30:44,080
Speaker 4: which is why here, you know, we as a nation

540
00:30:44,160 --> 00:30:46,440
Speaker 4: are now confronted with the question of exactly what do

541
00:30:46,520 --> 00:30:50,440
Speaker 4: we want court labor to do and to what degree

542
00:30:51,320 --> 00:30:55,040
Speaker 4: do we feel that that is, you know, valuable because

543
00:30:55,080 --> 00:30:58,280
Speaker 4: you can do a lot of the work with less

544
00:30:58,280 --> 00:30:59,840
Speaker 4: of the labor than you otherwise would.

545
00:31:00,280 --> 00:31:03,680
Speaker 2: What are the estimates for how long before a strike

546
00:31:04,320 --> 00:31:06,160
Speaker 2: affects the supply chain?

547
00:31:06,600 --> 00:31:10,000
Speaker 4: Right so there is disruption right now. I have clients

548
00:31:10,080 --> 00:31:15,640
Speaker 4: who are receiving force majeur notices from the steamship lines,

549
00:31:16,360 --> 00:31:20,320
Speaker 4: essentially saying that you know the anticipated delivery times for

550
00:31:20,400 --> 00:31:24,840
Speaker 4: their containers, and even you know the cost of receiving

551
00:31:24,880 --> 00:31:29,520
Speaker 4: the containers cannot be observed because of course many vessels

552
00:31:29,560 --> 00:31:32,680
Speaker 4: can no longer call upon the ports that they that

553
00:31:32,720 --> 00:31:37,400
Speaker 4: they otherwise would. Those clients who are moving you know,

554
00:31:37,440 --> 00:31:39,680
Speaker 4: cargoes into and out of the United States and are

555
00:31:40,120 --> 00:31:43,160
Speaker 4: are confronting this right now, have a number of tools

556
00:31:43,160 --> 00:31:45,160
Speaker 4: in the toolbox, and this is really a time when

557
00:31:45,520 --> 00:31:48,560
Speaker 4: you know, the logistics industry can do what it does best.

558
00:31:49,200 --> 00:31:53,040
Speaker 4: Some of those tools we saw during COVID and during

559
00:31:53,160 --> 00:31:58,240
Speaker 4: other disruptions like the Baltimore Bridge collapse, for example. I'm

560
00:31:58,280 --> 00:32:01,160
Speaker 4: aware of some in this trees that are using air

561
00:32:01,240 --> 00:32:04,320
Speaker 4: cargo more than they otherwise would. You know, you could

562
00:32:04,400 --> 00:32:07,840
Speaker 4: move a number of goods, especially lighter goods, smaller goods

563
00:32:08,160 --> 00:32:12,040
Speaker 4: by our cargo. It's much more expensive, but it is

564
00:32:12,360 --> 00:32:17,000
Speaker 4: reliable in an environment like this. I'm also aware of

565
00:32:17,200 --> 00:32:21,040
Speaker 4: some domestic UUs industries that are looking at options beyond

566
00:32:21,120 --> 00:32:24,959
Speaker 4: just diverting vessels to the West Coast because this is

567
00:32:25,520 --> 00:32:28,160
Speaker 4: you know, costly and time consuming as well. I know

568
00:32:28,240 --> 00:32:32,960
Speaker 4: some folks are exploring perhaps landing cargoes in Canada or

569
00:32:33,200 --> 00:32:37,040
Speaker 4: Mexico and then moving those containers cross border by motor

570
00:32:37,120 --> 00:32:40,719
Speaker 4: carrier or by rail. That there's really not a good

571
00:32:40,760 --> 00:32:43,600
Speaker 4: answer right now in the sense that all of that

572
00:32:43,800 --> 00:32:49,440
Speaker 4: is difficult and time consuming and costly, and expectations for

573
00:32:50,080 --> 00:32:53,640
Speaker 4: when you will receive inventories or have let's say inputs

574
00:32:53,640 --> 00:32:56,960
Speaker 4: for your own domestic manufacturing, you know, those expectations you

575
00:32:57,000 --> 00:32:59,000
Speaker 4: know very well may not be met. But I viewed

576
00:32:59,040 --> 00:33:01,120
Speaker 4: as a short term and long term problem. Right so,

577
00:33:01,160 --> 00:33:04,720
Speaker 4: there are there are inbound and outbound movements right now

578
00:33:05,280 --> 00:33:10,240
Speaker 4: that are absolutely interrupted. Some client supply chains got in

579
00:33:10,320 --> 00:33:14,000
Speaker 4: front of this by moving cargoes to the West Coast instead,

580
00:33:14,080 --> 00:33:15,959
Speaker 4: but there's absolutely disruption today.

581
00:33:16,240 --> 00:33:19,000
Speaker 2: Thanks for being on the show. That's Jonathan Todd of

582
00:33:19,040 --> 00:33:21,800
Speaker 2: Banesh Law and that's it for this edition of the

583
00:33:21,840 --> 00:33:25,160
Speaker 2: Bloomberg Law Podcast. Remember you can always get the latest

584
00:33:25,200 --> 00:33:28,080
Speaker 2: legal news by subscribing and listening to the show on

585
00:33:28,160 --> 00:33:32,480
Speaker 2: Apple Podcasts, Spotify, and at Bloomberg dot com, slash podcast,

586
00:33:32,560 --> 00:33:36,400
Speaker 2: slash Law. I'm June Grosso, and this is Bloomberg