Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.
Speaker 2: New York City Mayor Eric Adams appeared in a Manhattan
Speaker 2: courtroom today for the second time in a week. Adams
Speaker 2: was indicted last week on federal corruption charges in a
Speaker 2: widespread criminal investigation in which top city hall aides have
Speaker 2: had their home searched and phone seized by investigators. Adams
Speaker 2: pleaded not guilty and his resisting calls to resign. Meanwhile,
Speaker 2: his lawyer, Alex Spiro, has rolled out an aggressive defense,
Speaker 2: asking the judge to dismiss part of the case right away,
Speaker 2: accusing federal prosecutors of leaking grand jury information, and holding
Speaker 2: a press conference to attack the indictment. Spiro said the
Speaker 2: mayor's flights, upgrades, meals, and hotel rooms do not count
Speaker 2: as bribes under federal law.
Speaker 1: Congressmen get upgrades, they get corner suites at better tables
Speaker 1: at restaurants, they get free appetizers, they have their iced
Speaker 1: t filled up. That's just what happens. That's the truth.
Speaker 1: And we don't in the law leave these public servants
Speaker 1: to be asking themselves every single time, every single day
Speaker 1: they have been any interaction with the public is accepting
Speaker 1: this or taking that appetizer or not waiting in line
Speaker 1: a violation of federal law.
Speaker 2: At the hearing today, federal prosecutors divulged that they're pursuing
Speaker 2: several related investigations that could lead to additional corruption charges
Speaker 2: against Atoms and quite likely will lead to indictments for
Speaker 2: people in his orbit. Joining me is former federal prosecutor
Speaker 2: Jennifer Rogers, a lecturer in law at Columbia Law School.
Speaker 2: The defense is being very aggressive. They made a motion
Speaker 2: to dismiss part of the case within days of the indictment.
Speaker 2: The defense attorney held a press conference. Is this for
Speaker 2: political purposes, a political strategy or is there a legal
Speaker 2: strategy here?
Speaker 3: Well, I think they're trying to do all of it, right.
Speaker 3: I mean, he's a sitting official, so clearly they want
Speaker 3: to work on the political side. But you know, this
Speaker 3: is a legal case. There are legal motions to be made,
Speaker 3: and you know, even the notion of him aggressively saying
Speaker 3: he's going to stay in office has legal implications because
Speaker 3: resigning could be part of a plea agreement, maybe getting
Speaker 3: him a more favorable deal if he wanted to do that.
Speaker 3: So I think it's all part and parcel of an
Speaker 3: aggressive overall defense strategy. But they really are being aggressive.
Speaker 3: I mean you rarely see the motions about the grand
Speaker 3: jury lease alleging that prosecutors or agents somehow the government
Speaker 3: leaked information out of the grand jury. So I mean
Speaker 3: they're firing on all cylinders right now. It's going to
Speaker 3: keep the Southern District busy for sure.
Speaker 2: I mean that was a point blank accusation that the
Speaker 2: Southern District had been leaking information about Adam's alleged care
Speaker 2: for nearly a year.
Speaker 3: Yeah, I mean, I don't know what they're basing that on,
Speaker 3: and I think, you know, they better have receipts if
Speaker 3: they're going to allege something like that. So we'll see
Speaker 3: what they say. That would be unprecedented for the Southern
Speaker 3: District to be found guilty of something like that, So
Speaker 3: you know, my inclination is to say that that it's
Speaker 3: not true and that they won't find any basis to
Speaker 3: believe that that happened. But you know, obviously you never know.
Speaker 3: I mean, there could be a bad seat somewhere, but
Speaker 3: that is so opposite of the ethos of that office
Speaker 3: that you know, it would shock me if that ended
Speaker 3: up being true, So you know, we'll see how it
Speaker 3: plays out.
Speaker 2: Well, so far, they've just pointed to all the different
Speaker 2: news reports that came out over the last year. They
Speaker 2: haven't pointed to any evidence they want the judge to
Speaker 2: do an investigation about that. Do you think that's something
Speaker 2: that a federal judge would engage in.
Speaker 3: That seems very unlikely to me. I mean, if all
Speaker 3: they have is that things from the grand jury have
Speaker 3: made their way into the public realm. I mean, witnesses
Speaker 3: are allowed to talk about what happens in the grand jury.
Speaker 3: It's only prosecutors that are forbidden to share information like that.
Speaker 3: So if a witness goes in and testifies, then or
Speaker 3: she's allowed to speak about that public ways they wish.
Speaker 3: And so that is the most common way, the most
Speaker 3: usual way that information like that would get out into
Speaker 3: the public realm. And in a case like this, where
Speaker 3: everyone would be interested in it. He's obviously a public
Speaker 3: figure of public official. I wouldn't be surprised if some
Speaker 3: witnesses wanted to talk about what they had said in
Speaker 3: the grand jury. So, you know, I suspect the judge
Speaker 3: will not launch an investigation unless they have more than
Speaker 3: just the grand jury happen, and some information from that
Speaker 3: process made its way into the public realm.
Speaker 2: When a defense attorney does something like that, you know,
Speaker 2: accuses the federal prosecutors of wrongdoing, does that set up
Speaker 2: an even more adversarial relationship with the prosecutors?
Speaker 3: I mean it can it can? You know, listen, people
Speaker 3: are only human, and if you have someone on the
Speaker 3: other side who's accusing you of bad things and being
Speaker 3: unpleasant or whatever the case may be, it could impact
Speaker 3: your interactions with that lawyer. But at the end of
Speaker 3: the day, prosecutors want to resolve this case, they'd prefer
Speaker 3: to do it by plea if they can, because that's
Speaker 3: more efficient. So they're going to work with whoever is there.
Speaker 3: And you really can't punish the defendant for his counsel
Speaker 3: being a jerk or you know, making accusations, So ultimately
Speaker 3: they're professionals. They'll work with mister Spiro and his team
Speaker 3: no matter what he says. But they may not like
Speaker 3: it as much as they would if someone was, you know,
Speaker 3: a little less accusatory and more pleasant.
Speaker 2: They're making a motion to dismiss the bribery charge, and
Speaker 2: the defense attorney said that doesn't amount to a federal
Speaker 2: crime at all. First, they're saying there's no quid pro quo,
Speaker 2: and he mentioned at the press conference that there was
Speaker 2: no contemporary exchange of this for them, and that Adams
Speaker 2: allegedly received these benefits over years and it wasn't connected
Speaker 2: sufficiently to helping Turkey open its consulate. I mean, does
Speaker 2: there have to be a contemporaneous quid pro quo?
Speaker 3: So you have to have an agreement to do something
Speaker 3: before you give over whatever the benefit is. The Supreme
Speaker 3: Court ruled in the last term that it can't be
Speaker 3: a gratuity, which would mean kind of a tip after
Speaker 3: the fact. It has to be an agreement before. But
Speaker 3: I think the defense is being a little too aggressive
Speaker 3: with what they're saying. It has to be right. They're
Speaker 3: providing a more strict reading of the statute than is
Speaker 3: in the statutory language and then has been blessed by
Speaker 3: the Supreme Court. What has happened in the last fifteen
Speaker 3: years or so is all of these public corruption statutes
Speaker 3: have gone up for interpretation of the Supreme Court and
Speaker 3: have been narrowed and made more strict, except this one,
Speaker 3: which is Section sixty sixty six Federal Program bribery. This
Speaker 3: is the one that hasn't really been considered by the
Speaker 3: court yet on this point, So you know, listen, they're
Speaker 3: kind of pitching an interpretation of this statute that it's
Speaker 3: theoretically possible the Supreme Court could agree with if this
Speaker 3: case or another case like it gets up to the
Speaker 3: Supreme Court. But where the law sits now, I think
Speaker 3: they're being overly strict with what they're saying. So I
Speaker 3: think what's going to happen is that the judge is
Speaker 3: going to reject this motion right now and say it's
Speaker 3: a question of fact, and the jury will have to
Speaker 3: decide whether or not they've met the quick pro quo
Speaker 3: requirement in this case per the statutory language. And then
Speaker 3: if Adams is convicted, as he appeals up the chain afterwards,
Speaker 3: then we'll see whether the Second Circuit and ultimately the
Speaker 3: Supreme Court are you know, more in his mindset as
Speaker 3: far as what the statutes should be. But I think
Speaker 3: for now they're on safe ground with the charge as
Speaker 3: it is.
Speaker 2: Also, what Mayor Adams has said and what his defense
Speaker 2: attorney has said, is that courtesies to politicians are in
Speaker 2: federal crimes. His attorney, Spiro said, Congressmen get upgrades, they
Speaker 2: get corner suites, they get better tables and restaurants, they
Speaker 2: get free appetizers. They had their iced tea filled up,
Speaker 2: and Adams said, if everyone who did this was indicted,
Speaker 2: you know, you'd be stopping politicians from helping their constituents.
Speaker 3: Yeah, okay, but you can't do it in exchange. You know,
Speaker 3: you can't offer benefits in exchange for those things of
Speaker 3: value that you're taking. There are also rules that apply
Speaker 3: to Adams that require him to file disclosure forms about
Speaker 3: benefits that he's getting over a certain amount of money,
Speaker 3: and he didn't file those forms properly with respect to
Speaker 3: all these benefits that are listed in the indictment. So
Speaker 3: you know, there's a non disclosure part of this that
Speaker 3: makes it look more suspicious that he understood that these
Speaker 3: were things that he should not be taking. And again,
Speaker 3: it's all about the exchange. Like, could he take an
Speaker 3: upgrade if randomly he went to check in for his
Speaker 3: flight and someone said, hey, you're a great mayor, we'd
Speaker 3: like to upgrade you to business class. If there wasn't
Speaker 3: anything about and I expect something from you in return,
Speaker 3: then sure that wouldn't be bribery, but that's not what's
Speaker 3: being alleged here. So you know, part of their job
Speaker 3: is to try to kind of pooh pooh the allegations
Speaker 3: and make it seem like no big deal. So that's
Speaker 3: what they're doing here, and I understand that. But when
Speaker 3: they say things kind of generically like oh, it's like
Speaker 3: filling up your ica, it's not like filling up your iced.
Speaker 2: Coming up next on the Bloomberg Law Show, I'll continue
Speaker 2: this conversation with former federal prosecutor Jennifer Rogers. The defense
Speaker 2: wants to finish the trial by March. Is that doable?
Speaker 2: I'm June Grosso and you're listening to Bloomberg. New York
Speaker 2: City Mayor Eric Adams has launched a legal attack on
Speaker 2: the federal corruption case again against him, with his attorney
Speaker 2: asking a judge to toss out bribery charges, and Alex
Speaker 2: Spiro said the other charges against Adams that he solicited
Speaker 2: and accepted foreign donations and manipulated the city's matching funds program,
Speaker 2: would soon be revealed as equally meritless.
Speaker 1: But Eric Adams obviously had no idea if that occurred,
Speaker 1: whether that occurred, and so the remaining allegations in this
Speaker 1: case rely on the testimony of one staffer. Just think
Speaker 1: about that one staffer who has already lied.
Speaker 2: I've been talking to former federal prosecutor Jennifer Rogers, so
Speaker 2: the donations from foreign sources through straw donors seemed to
Speaker 2: be a different story. And there his defense attorney is
Speaker 2: indicating that the charges were based on the testimony of
Speaker 2: one Adam staffer who lied.
Speaker 3: Well, so this is interesting. I mean, and they want
Speaker 3: to say something about every part of the case, right,
Speaker 3: They don't want to concede anything at this point. What
Speaker 3: they're saying about this part of the case is what
Speaker 3: you would expect when there's a cooperating witness. Okay, there's
Speaker 3: evidence against our guy. Okay, this looks really bad that
Speaker 3: that person is a liar. That's the oldest argument in
Speaker 3: the book, right, and that is clearly a question of facts.
Speaker 3: Is going to be for the jury at trial. There's
Speaker 3: no way that piece of the case is getting dismissed
Speaker 3: at this point or any point before trial and the jury.
Speaker 3: We'll have to sort it out when this person testifies.
Speaker 3: Do we believe her? Is she credible? Is there other
Speaker 3: evidence in the case that corroborates her, and prosecutors, as
Speaker 3: you know, will be working hard. They already have been,
Speaker 3: I'm sure, but will continue to work hard to find
Speaker 3: corroborating evidence that they will present to the jury so
Speaker 3: that they can say it's not just her, it's all
Speaker 3: this other information. It's text messages, it's you know, other
Speaker 3: people testifying similarly, and so on. The one thing about
Speaker 3: this piece of the case, which generally I think is
Speaker 3: quite strong given what's listed in the is that it's
Speaker 3: not all that much money, at least as they've laid
Speaker 3: it out so far. I mean, they talk about ten
Speaker 3: million dollars in matching funds that the campaign received, but
Speaker 3: that's the overall amount of matching funds, not the amount
Speaker 3: of funds that were foreign donors or the use of
Speaker 3: straw donors. So that amount seems to be much much smaller,
Speaker 3: and so it'll be interesting to see as this case developed,
Speaker 3: if they will come up with more, you know, if
Speaker 3: they're currently scrubbing all of his donations to try to
Speaker 3: see if there were other straw donors or other foreign donors,
Speaker 3: because I think they will want to get that to
Speaker 3: be as big a number as possible. Otherwise you risk
Speaker 3: the jury saying really, only you know, fourteen thousand dollars
Speaker 3: or whatever it is, that's not a lot of money
Speaker 3: to be taken from the city.
Speaker 2: Is this count the straw donors count? Is that a
Speaker 2: more straightforward count legally than the bribery, whereas it's more factual.
Speaker 3: Yeah, that they're both factual, But this one is cleaner.
Speaker 3: I mean, if the people who gave the money were foreign,
Speaker 3: you can prove the straw donor scheme, and you prove
Speaker 3: that Adams knew about it and had his people do
Speaker 3: it purposefully, then that's it. You don't have to worry about,
Speaker 3: you know, the timing of the exchange and was this
Speaker 3: for that? And it is a little cleaner, I think,
Speaker 3: which is why I say it's stronger. And the only
Speaker 3: concern that I have about that piece of it is
Speaker 3: that I just don't think the amounts seemed to be
Speaker 3: very high. Now, the foreign element of it, the fact
Speaker 3: that there were foreign donors, the amount doesn't really matter.
Speaker 3: I mean, you're not allowed to accept money in your
Speaker 3: campaign from foreign people or or even non New York
Speaker 3: City residents. I mean it's not just out of the US,
Speaker 3: it's you know, these people have to be New York
Speaker 3: City residents in order to get the matching funds, so
Speaker 3: that doesn't really have an amount tied to it per se,
Speaker 3: But for the New York City residents for whom matching
Speaker 3: funds were given at an eight to one ratio, So
Speaker 3: if you give up to two hundred and fifty dollars,
Speaker 3: it's matched eight to one and you get two thousand
Speaker 3: dollars from the city. That's where I think they don't
Speaker 3: have a high number of straw donors that they can
Speaker 3: say definitively, at least in the indictment. Now were straw
Speaker 3: donors from these foreign donations. So I'm looking to see
Speaker 3: if they actually come up with a bigger number as
Speaker 3: they continue to investigate.
Speaker 2: And Jennifer, what do you make of the fact that
Speaker 2: they say that Adams tried to hamper their investigation? For example,
Speaker 2: he gave over a cell phone but claimed that he
Speaker 2: didn't remember what the code was to open it. Is
Speaker 2: that just something for the jury or might they bring
Speaker 2: obstruction charges?
Speaker 3: Yeah, we'll see. I mean, it's currently more atmospheric than anything,
Speaker 3: but if they get enough, they could bring an obstruction charge.
Speaker 3: They wouldn't bring an obstruction charge based on the fact
Speaker 3: that he says he couldn't remember his past code, because
Speaker 3: how were they really going to prove that that he
Speaker 3: can't remember it. I mean, we can all roll our
Speaker 3: eyes and say that's ridiculous, but that's a different matter
Speaker 3: from proving beyond a reasonable doubt that he purposely obstruct
Speaker 3: an investigation. So I'm sure they're continuing to look. And
Speaker 3: you know, one of the things that always happens after
Speaker 3: you bring an indictment is that people come forward, right
Speaker 3: So people who were previously maybe afraid to talk will
Speaker 3: come forward. People who think that they're now in danger
Speaker 3: of being caught up in the case themselves may actually
Speaker 3: start to cooperate. So as you get more witnesses in
Speaker 3: and you learn more, you may find out things. You
Speaker 3: may find out that when this investigation broke and they
Speaker 3: started talking to people that Eric Adams are, people close
Speaker 3: to him were contacting potential witnesses and telling them, you know,
Speaker 3: not to cooperate, to wipe their phones, et cetera, et cetera.
Speaker 3: There's already some evidence in the indictment about you should
Speaker 3: erase all your text messages with me, et cetera. So
Speaker 3: as those sorts of things are percolating, and more and
Speaker 3: more people are coming forward with information. They'll see whether
Speaker 3: they could actually bring an obstruction charge. I'm sure they're
Speaker 3: looking to do that if they can.
Speaker 2: Well. At the hearing today, the federal prosecutors said they're
Speaker 2: pursuing several related to investigations which we've heard of that
Speaker 2: could lead to additional corruption charges against Atoms and quite
Speaker 2: likely indictments for people in his orbit. So it is
Speaker 2: going to expand.
Speaker 3: Yeah, and that's the way that they work, That's how
Speaker 3: I would expect them to do things. I mean, we
Speaker 3: know already that there have been investigations into other people
Speaker 3: members of his administration, and those may be unrelated to Adams,
Speaker 3: so you know that may not result in any more
Speaker 3: charges for him. But I also think, as I said,
Speaker 3: they will try to expand this particular investigation. The indictment
Speaker 3: suggests that there were numerous other people who were involved
Speaker 3: in this game, right, who were helping him, not just
Speaker 3: the one aid of his who seems to have been
Speaker 3: kind of a translator and conduit to the Turkish folks,
Speaker 3: but other people as well who were involved. So I
Speaker 3: would think that there will be more people charged or
Speaker 3: if not charged along with atoms that they would please
Speaker 3: separately and become cooperating witnesses.
Speaker 2: Do you think from the indictment that they already have cooperators?
Speaker 3: Yes, yes, it looks like they do. It looks like
Speaker 3: the woman who was this conduit liaison person is likely cooperating,
Speaker 3: and probably others as well.
Speaker 2: So would you say it's very unlikely that any of
Speaker 2: the charges would be dismissed at this stage?
Speaker 3: I think so. I don't think anything's going to be
Speaker 3: dismissed now, because now you can only dismiss things. It
Speaker 3: has to be dismissed on the law right. If there
Speaker 3: any questions of fact anything for the jury, then you
Speaker 3: don't get it dismissed. So this is just this charge
Speaker 3: is legally unsupportable. You cannot support this charge with the
Speaker 3: law as it stands now. And you know he can
Speaker 3: make arguments all he wants about oh he wasn't the
Speaker 3: mayor yet, he was only the Brooklyn Borough president. But
Speaker 3: you have to think he had won the Democratic primary.
Speaker 3: It was close to a certainty that he was going
Speaker 3: to be the mayor. So then you get into a
Speaker 3: question of fact. Would people at the Fire Department have
Speaker 3: felt that the certain mayor in a few months is
Speaker 3: putting pressure on them. That's going to be a question
Speaker 3: of fact. So anything that's the question of fact means
Speaker 3: that it's not appropriate for dismissal at this point. And
Speaker 3: as I said, as much as we may think that
Speaker 3: someday the Supreme Court may narrow this statute in a
Speaker 3: way that matters to this case, it hasn't happened yet.
Speaker 3: And so for those reasons, I think the motion to
Speaker 3: dismiss will fail.
Speaker 2: The defense attorney said he wants to finish the trial
Speaker 2: before the March deadline for candidates to be certified for
Speaker 2: the ballot. We don't want this case dragging, he said,
Speaker 2: I mean, is March doable?
Speaker 3: It is? I mean, this is another very aggressive move.
Speaker 3: Usually the defense wants time themselves because they're usually, you know,
Speaker 3: not taken completely by surprise. But once the case is brought,
Speaker 3: you know, they have a lot of work to do.
Speaker 3: But it keeps the prosecutor's seat to the fire. It
Speaker 3: potentially hinders them from investigating as thoroughly as they might want.
Speaker 3: Right if they have to go to trial sooner rather
Speaker 3: than later. The Speedy Trial Bile Act gives seventy days.
Speaker 3: There's a lot of time that will be automatically excluded
Speaker 3: from that that it will extend that time out, like
Speaker 3: time for the briefing and decision on motions and that
Speaker 3: sort of thing. But if the defense comes in and says, listen,
Speaker 3: we want a speedy trial, we want as little time
Speaker 3: excluded as possible, we want to move, the judge is
Speaker 3: likely to do that for them. So we're in the
Speaker 3: beginning of October. I think they definitely could get a
Speaker 3: trial in say February, that would allow them to be
Speaker 3: done by March. I mean, the defense usually gets what
Speaker 3: they want in these senses, because the criminal system gives
Speaker 3: defendants a lot of right and you know, as they should.
Speaker 2: Finally, the judge Dale Ho just took the bench in
Speaker 2: August of twenty twenty three, so not very experienced. Do
Speaker 2: you think that this case will be a lot for
Speaker 2: a new judge to handle?
Speaker 4: Yeah?
Speaker 3: I do, I do. I mean, I really don't know
Speaker 3: much about Judge Hoe. You know, he comes from the
Speaker 3: ACLU and barely got through because the Republicans didn't want
Speaker 3: him in, so he's bought to be, you know, really
Speaker 3: on the liberal side. I don't know how that cuts
Speaker 3: with a democratic Mayor as the defendant. And you know,
Speaker 3: as you said, he hasn't been on the bench for
Speaker 3: very long. This is high profile, it's complicated with some
Speaker 3: of these legal issues, with the statute and the public
Speaker 3: corruption realm. So I do think it's a challenge. You know,
Speaker 3: I'm sure he's smart and capable, and he has lots
Speaker 3: of colleagues on the Southern District Bench who have handled
Speaker 3: all sorts of cases, so you know, I'm sure he'll
Speaker 3: he'll consult with some of them, and yeah, it'll be
Speaker 3: it'll be fun to watch how he handles all of it.
Speaker 2: It's certainly shaping up to be an interesting trial. Thanks
Speaker 2: so much for your insights, Jennifer. That's former federal prosecutor
Speaker 2: Jennifer Rogers. Coming up next. The dock workers strike. This
Speaker 2: is Bloomberg Job Union doc workers at whort it's from
Speaker 2: Maine to Texas are walking picket lines in a strike
Speaker 2: that could reignite inflation and cause shortages of goods if
Speaker 2: it goes on more than a few weeks. The strike,
Speaker 2: affecting thirty six ports, is the first by the International
Speaker 2: long Shoremen's Association since nineteen seventy seven. It's not only
Speaker 2: about wages, but about the workers demands that automation not
Speaker 2: be added to the docks. Blaine Erlick heads the New
Speaker 2: Orleans chapter of the ILA. The truth is robots do
Speaker 2: not pay taxes and they not spend money in their community.
Speaker 2: Joining me is Jonathan Todd, Vice chair of the Transportation
Speaker 2: and Logistics Practice Group at Binesh Law, tell us about
Speaker 2: the reasons behind the strike.
Speaker 4: So port dispute happen, and we hear of these every
Speaker 4: few years across the country. Usually it is a pay issue.
Speaker 4: What's unique about this dispute is the ILA is challenging
Speaker 4: not only the pay that they're receiving under their contracts,
Speaker 4: but also the use of automation at the ports. And
Speaker 4: it's an interesting character because this introduces the idea that
Speaker 4: you protecting traditional labor itself is valuable. And this has
Speaker 4: reminiscence of the actors strikes of a few years ago.
Speaker 4: I think it's fascinating because we'll probably see more of this,
Speaker 4: right But that's the challenge that I think is going
Speaker 4: to be difficult. That this isn't the traditional issue of
Speaker 4: do we pay more and if so, how much? This
Speaker 4: is an issue of exactly what we want from labor
Speaker 4: at our port.
Speaker 2: The president, Harold Daggett said, we want absolute, airtight language
Speaker 2: that there will be no automation or semi automation. Is
Speaker 2: that trying to keep the docs you know from modern
Speaker 2: innovations that would move things faster.
Speaker 4: It's interesting, right, because the world is changing and there's
Speaker 4: been automation for a great period of time. But today
Speaker 4: the capabilities that ports could have to automate what was
Speaker 4: traditionally done by labor, and by you know, more labor
Speaker 4: than could otherwise have, which of course has costs. It
Speaker 4: is greater today than it was. We'll only see that
Speaker 4: grow and so it really is almost unexistential question of
Speaker 4: the degree to which, you know, we value labor in
Speaker 4: this country and traditional jobs.
Speaker 2: As far as the pay raise they offered them something
Speaker 2: like fifty percent raises over the life of the contract,
Speaker 2: with the union on seventy seven percent, that's right.
Speaker 4: I think it is more of a question of, you know,
Speaker 4: what the union would be comfortable with in terms of
Speaker 4: the financial side of it. But the real challenge that
Speaker 4: I see is the question of the degree to which
Speaker 4: we can employ humans in traditional jobs. That's I think
Speaker 4: more fascinating than the question of whether we land at
Speaker 4: fifty percent or seventy seven percent, which are some of
Speaker 4: the numbers on the table, But it all has a
Speaker 4: and that effect of driving you know the cost of
Speaker 4: the service and ultimately you know the cost to land
Speaker 4: product in the US or export product from the US.
Speaker 4: You know, this really is essentially a precipice of what
Speaker 4: we intend to see in terms of human labor at
Speaker 4: our ports. On the East Coast in the Gulf.
Speaker 2: They did settle a doc worker strike on the West Coast.
Speaker 4: One thing I will say is the West Coast tensions
Speaker 4: of late we're interesting in the sense that the unions
Speaker 4: took a different strategy. So the IWLA introduced a rolling
Speaker 4: strike on a on a port support basis, which was resolved,
Speaker 4: you know, relatively quickly, without a great deal of interruption.
Speaker 4: The reason that this approach is you know, very serious
Speaker 4: for the American consumer is because we're talking about a
Speaker 4: strike you know, in mass across thirty six you know,
Speaker 4: major port in the East Coast and the Gulf, and
Speaker 4: of course that accounts for around fifty percent of import
Speaker 4: and export traffic. So the strategy that's being deployed here
Speaker 4: is very different than has been deployed in a recent
Speaker 4: memory on the West Coast.
Speaker 2: Yeah, I was going to say that it seems like
Speaker 2: a more traditional strike than the West Coast and then
Speaker 2: the UAW employed when they went on strike.
Speaker 4: That's right.
Speaker 2: Let's talk about in theory the authority of the president
Speaker 2: to stop the strike.
Speaker 4: So that the president does have the power under the
Speaker 4: Taft Hartley Act to essentially enjoin the strike and require
Speaker 4: a cooling off period when labor would resume and the
Speaker 4: parties would come to the table and discuss the path
Speaker 4: forward to resolve the dispute. This president has on multiple
Speaker 4: occasions said that he does not intend to exercise that power,
Speaker 4: which leads to the really big question for domestic supply chains,
Speaker 4: which is how long will this last? When when clients
Speaker 4: asked me that, and have asked me that in recent years,
Speaker 4: my answer is typically, you know, to expect, you know,
Speaker 4: maybe one or two weeks. And the reason that I
Speaker 4: say that is the last you know, very major strike
Speaker 4: that had implications, you know, such as this was in
Speaker 4: two thousand and two on the West Coast and President
Speaker 4: George W. Bush did exercise half partly and the strike
Speaker 4: was resolved in eleven days. In the absence of that
Speaker 4: kind of action. However, it's essentially anyone's guests as to
Speaker 4: how long this strike may last.
Speaker 2: And the president could, if you wanted, get a court
Speaker 2: order for a cooling off period, right, so.
Speaker 4: There would be a federal action and there would be
Speaker 4: an injunction ending the strike, and then the parties would
Speaker 4: have eighty days as a cooling off period to negotiate
Speaker 4: a resolution.
Speaker 2: So there are a lot of different factors here. Does
Speaker 2: it seem like the union has an advantage in a
Speaker 2: way because of the supply chain is under pressure in
Speaker 2: the aftermath of the hurricane, and you know, it's peak
Speaker 2: shipping season for holiday goods, and it's a presidential election
Speaker 2: coming up soon, so there might be political factors as well.
Speaker 4: Everything you said is exactly right. This is a perfect
Speaker 4: storm of events. We have the presidential race, which you know,
Speaker 4: probably to some degree, influences the executive branch logic on
Speaker 4: how to handle this issue. We also have peak season
Speaker 4: coming particularly for retailers. This is exactly the time that
Speaker 4: retailers are looking to build up inventories so that the
Speaker 4: stores have everything they need to sell through the holiday season.
Speaker 4: Much of that has occurred, some of that has actually
Speaker 4: been front loaded for a number of factors. One of
Speaker 4: those is that the Biden administration rolled out additional duties
Speaker 4: on China goods in September twenty seven, and so all
Speaker 4: these things are coming together that led to additional inflows
Speaker 4: in the West Coast. But it's very very challenging. The
Speaker 4: idea that we no longer have capacity as a country
Speaker 4: to move essentially fifty percent of the goods that we
Speaker 4: would otherwise move into and out of the country is
Speaker 4: economically challenging, and it's important for people to bear in
Speaker 4: mind also that this isn't just an import problem. This
Speaker 4: isn't just ensuring that Americans have all of the goods
Speaker 4: that they would like to buy now and through the
Speaker 4: holiday season. It's also an export problem. There are high
Speaker 4: export volumes at these ports, and so you have a
Speaker 4: number of industries that are impacted, particularly agriculture and the
Speaker 4: auto dutry, where it's now an increased challenge to sell
Speaker 4: domestically produced or domestically manufactured goods around the world due
Speaker 4: to the strike.
Speaker 2: How automated are foreign ports.
Speaker 4: So the degree of automation can be very surprising.
Speaker 2: Uh.
Speaker 4: The the idea that you need an individual for example,
Speaker 4: in equipment at the ports to to visually inspect what
Speaker 4: they're doing and ensure that containers are are offloaded and
Speaker 4: loaded correctly. With the technology we have today, that that's
Speaker 4: not exactly necessary. There are foreign ports, for examples, that
Speaker 4: have individuals that essentially work remotely, meaning that they're not
Speaker 4: you know, at the port on the ground of managing
Speaker 4: equipment to to offload containers and load containers onto vessels.
Speaker 4: So the idea is that you could dramatically reduced headcounts
Speaker 4: and dramatically increase efficiencies with technology. It's happening right now,
Speaker 4: and you know, one way to think about is is
Speaker 4: in many ways analogous to you know, remote work. Generally,
Speaker 4: you know, there are things that technology can do where
Speaker 4: we no longer need individuals or what you hear more
Speaker 4: frequently is that the technology can assist you know, an
Speaker 4: individual in being more productive, maybe moving more containers, maybe
Speaker 4: not physically being in a dangerous position as they're doing
Speaker 4: their work at the court, and those things you can
Speaker 4: understand an abstraction and elsewhere, you know, may be attractive,
Speaker 4: which is why here, you know, we as a nation
Speaker 4: are now confronted with the question of exactly what do
Speaker 4: we want court labor to do and to what degree
Speaker 4: do we feel that that is, you know, valuable because
Speaker 4: you can do a lot of the work with less
Speaker 4: of the labor than you otherwise would.
Speaker 2: What are the estimates for how long before a strike
Speaker 2: affects the supply chain?
Speaker 4: Right so there is disruption right now. I have clients
Speaker 4: who are receiving force majeur notices from the steamship lines,
Speaker 4: essentially saying that you know the anticipated delivery times for
Speaker 4: their containers, and even you know the cost of receiving
Speaker 4: the containers cannot be observed because of course many vessels
Speaker 4: can no longer call upon the ports that they that
Speaker 4: they otherwise would. Those clients who are moving you know,
Speaker 4: cargoes into and out of the United States and are
Speaker 4: are confronting this right now, have a number of tools
Speaker 4: in the toolbox, and this is really a time when
Speaker 4: you know, the logistics industry can do what it does best.
Speaker 4: Some of those tools we saw during COVID and during
Speaker 4: other disruptions like the Baltimore Bridge collapse, for example. I'm
Speaker 4: aware of some in this trees that are using air
Speaker 4: cargo more than they otherwise would. You know, you could
Speaker 4: move a number of goods, especially lighter goods, smaller goods
Speaker 4: by our cargo. It's much more expensive, but it is
Speaker 4: reliable in an environment like this. I'm also aware of
Speaker 4: some domestic UUs industries that are looking at options beyond
Speaker 4: just diverting vessels to the West Coast because this is
Speaker 4: you know, costly and time consuming as well. I know
Speaker 4: some folks are exploring perhaps landing cargoes in Canada or
Speaker 4: Mexico and then moving those containers cross border by motor
Speaker 4: carrier or by rail. That there's really not a good
Speaker 4: answer right now in the sense that all of that
Speaker 4: is difficult and time consuming and costly, and expectations for
Speaker 4: when you will receive inventories or have let's say inputs
Speaker 4: for your own domestic manufacturing, you know, those expectations you
Speaker 4: know very well may not be met. But I viewed
Speaker 4: as a short term and long term problem. Right so,
Speaker 4: there are there are inbound and outbound movements right now
Speaker 4: that are absolutely interrupted. Some client supply chains got in
Speaker 4: front of this by moving cargoes to the West Coast instead,
Speaker 4: but there's absolutely disruption today.
Speaker 2: Thanks for being on the show. That's Jonathan Todd of
Speaker 2: Banesh Law and that's it for this edition of the
Speaker 2: Bloomberg Law Podcast. Remember you can always get the latest
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Speaker 2: slash Law. I'm June Grosso, and this is Bloomberg