1
00:00:03,200 --> 00:00:07,960
Speaker 1: This is Bloombird Law with June Brusso from Bloomberg Radio.

2
00:00:09,119 --> 00:00:12,440
Speaker 1: A federal appeals court has saved City Group from an

3
00:00:12,440 --> 00:00:15,880
Speaker 1: epic mistake that became the talk of Wall Street. City

4
00:00:15,920 --> 00:00:19,760
Speaker 1: Bank mistakenly wired nearly a billion dollars of its own money.

5
00:00:20,079 --> 00:00:22,560
Speaker 1: The district court said it couldn't get that money back.

6
00:00:22,920 --> 00:00:26,159
Speaker 1: Attorney Neil Kantiale argued the case for a City that

7
00:00:26,280 --> 00:00:30,160
Speaker 1: led to the Second Circuit reversing a trial judges decision

8
00:00:30,480 --> 00:00:34,600
Speaker 1: and ruling instead that Revlon's creditors could not keep the

9
00:00:34,680 --> 00:00:37,640
Speaker 1: more than half a billion dollars the bank sent them

10
00:00:37,720 --> 00:00:41,360
Speaker 1: by accident. Joining me is Professor Eric Tally of Columbia

11
00:00:41,440 --> 00:00:46,040
Speaker 1: Law School. Eric, you compared this appellate process to an

12
00:00:46,080 --> 00:00:49,519
Speaker 1: episode of the Twilight Zone. Tell us why. But one

13
00:00:49,560 --> 00:00:52,360
Speaker 1: of the things that was difficult, especially after the trial

14
00:00:52,440 --> 00:00:55,000
Speaker 1: court's opinion, was that we knew that this issue was

15
00:00:55,040 --> 00:00:57,600
Speaker 1: being appealed to the Second Circuit, and we didn't know

16
00:00:57,640 --> 00:00:59,640
Speaker 1: what the Second Circuit was going to do with it,

17
00:00:59,680 --> 00:01:01,600
Speaker 1: whether they were going to affirm it, whether they were

18
00:01:01,600 --> 00:01:04,040
Speaker 1: going to reverse it, where they're going to contract out

19
00:01:04,080 --> 00:01:06,200
Speaker 1: the job to the New York court system, which they

20
00:01:06,240 --> 00:01:09,160
Speaker 1: might have done, and in the interim, what happened is

21
00:01:09,200 --> 00:01:12,680
Speaker 1: that Revalon filed for bankruptcy. Well, bankruptcy is a process

22
00:01:12,760 --> 00:01:16,960
Speaker 1: that requires absolute clarity about who is owed what, and

23
00:01:17,080 --> 00:01:19,880
Speaker 1: here we were in the middle of not knowing who,

24
00:01:19,920 --> 00:01:23,200
Speaker 1: if anyone, was owed this money by Revlon or by

25
00:01:23,240 --> 00:01:27,720
Speaker 1: City Bank, and the bankruptcy process was going forward without

26
00:01:27,760 --> 00:01:31,880
Speaker 1: having any resolution from the Second Circuit. So that's why

27
00:01:31,920 --> 00:01:34,039
Speaker 1: it was a little bit in the twilight zone, because

28
00:01:34,080 --> 00:01:37,040
Speaker 1: there was just kind of a surprising and almost disabling

29
00:01:37,080 --> 00:01:40,319
Speaker 1: amount of uncertainty having to do with what was the

30
00:01:40,400 --> 00:01:44,000
Speaker 1: status of this mistaken payment, whether City Bank could call

31
00:01:44,080 --> 00:01:47,039
Speaker 1: it back, whether City Bank became a lender since they

32
00:01:47,040 --> 00:01:48,920
Speaker 1: paid off the other lenders they get to step in

33
00:01:48,960 --> 00:01:53,080
Speaker 1: their shoes, or whether the debt of Revlon just mysteriously disappeared.

34
00:01:53,120 --> 00:01:56,120
Speaker 1: And every one of those things was a possible outcome,

35
00:01:56,600 --> 00:01:59,279
Speaker 1: and we sat waiting for a year to figure out

36
00:01:59,320 --> 00:02:01,520
Speaker 1: how the Second Circuit was going to rule on this,

37
00:02:01,720 --> 00:02:04,680
Speaker 1: And so all of this bankruptcy planning essentially had to

38
00:02:04,720 --> 00:02:08,160
Speaker 1: be done kind of in the shadow of, you know,

39
00:02:08,320 --> 00:02:12,200
Speaker 1: the northern lights, without really understanding exactly, you know, where

40
00:02:12,240 --> 00:02:14,280
Speaker 1: the light was coming from and where the shadows were

41
00:02:14,320 --> 00:02:17,240
Speaker 1: being cast. So for those who may not have heard

42
00:02:17,280 --> 00:02:21,000
Speaker 1: about this half a billion dollar mistake, just tell us

43
00:02:21,040 --> 00:02:24,640
Speaker 1: what happened here. Yeah, so this actually was all born

44
00:02:24,840 --> 00:02:29,320
Speaker 1: around a two thousand and sixteen very large loan that

45
00:02:29,480 --> 00:02:33,560
Speaker 1: Revlon took out that was financed by a big consortium

46
00:02:33,720 --> 00:02:36,639
Speaker 1: of lenders. And Revlon borrowed this money so that they

47
00:02:36,680 --> 00:02:40,840
Speaker 1: could buy Elizabeth Arden, which is a well known cosmetics company,

48
00:02:40,840 --> 00:02:43,960
Speaker 1: and they eventually did buy Elizabeth Harden and then took

49
00:02:44,000 --> 00:02:47,080
Speaker 1: on this big set of loan obligations. Well, in the

50
00:02:47,200 --> 00:02:50,320
Speaker 1: ensuing years, Revalon was already starting to come up with

51
00:02:50,560 --> 00:02:53,280
Speaker 1: problems on you know, how they could finance themselves, you know,

52
00:02:53,360 --> 00:02:55,760
Speaker 1: COVID hit and they had all kinds of difficulties. So

53
00:02:55,760 --> 00:02:58,959
Speaker 1: they tried a few ways of restructuring their loans ways

54
00:02:59,040 --> 00:03:02,440
Speaker 1: that caused the lenders to say, hey, wait, you can't

55
00:03:02,440 --> 00:03:06,120
Speaker 1: do that. That's not an appropriate way to restructure your loans.

56
00:03:06,160 --> 00:03:09,560
Speaker 1: You're breaching your contract. And it got very very heated,

57
00:03:09,680 --> 00:03:13,840
Speaker 1: so heated in fact, that the lenders were literally just

58
00:03:13,960 --> 00:03:16,760
Speaker 1: about to sue Revlon, saying we want all of our

59
00:03:16,800 --> 00:03:20,600
Speaker 1: money back, And quite literally the night before they filed

60
00:03:20,639 --> 00:03:25,079
Speaker 1: their lawsuit, they checked their bank accounts, and suddenly, mysteriously

61
00:03:25,240 --> 00:03:29,040
Speaker 1: and not announced by anyone, the exact dollar amount that

62
00:03:29,080 --> 00:03:31,680
Speaker 1: they were owed got popped into their bank account. And

63
00:03:31,680 --> 00:03:34,680
Speaker 1: it was because of a huge mistake, a billion dollar

64
00:03:34,800 --> 00:03:38,600
Speaker 1: mistake that City Bank made. City Bank wasn't the borrower,

65
00:03:38,680 --> 00:03:42,200
Speaker 1: but they were the administrative agent that was handling this

66
00:03:42,320 --> 00:03:45,000
Speaker 1: loan on behalf of Revlon, and due to kind of

67
00:03:45,040 --> 00:03:49,360
Speaker 1: a series of technical glitches and and hapless mistakes, City

68
00:03:49,360 --> 00:03:51,760
Speaker 1: Bank pressed the wrong button and paid off all of

69
00:03:51,800 --> 00:03:54,400
Speaker 1: these folks who really, you know, must have thought that

70
00:03:54,480 --> 00:03:57,240
Speaker 1: this was like hitting the powerball lottery, because that was

71
00:03:57,320 --> 00:04:00,360
Speaker 1: exactly what they wanted in the lawsuit that they now

72
00:04:00,440 --> 00:04:03,800
Speaker 1: no longer had to file. Well, within hours, City Bank

73
00:04:03,880 --> 00:04:06,560
Speaker 1: realized that they had screwed up. They didn't even have

74
00:04:06,720 --> 00:04:08,960
Speaker 1: Revlon's money to pay this out. It came out of

75
00:04:08,960 --> 00:04:13,200
Speaker 1: their own coffers, and they contacted these lenders urgently pressing

76
00:04:13,200 --> 00:04:17,040
Speaker 1: them to return the nearly one billion dollar payment. About

77
00:04:17,040 --> 00:04:19,480
Speaker 1: half of them did, but about five hundred million dollars

78
00:04:19,520 --> 00:04:23,280
Speaker 1: worth of the borrowers said, nah, you want this money back,

79
00:04:23,640 --> 00:04:26,240
Speaker 1: you can sue us, And that's exactly what Citty Bank did.

80
00:04:26,520 --> 00:04:29,720
Speaker 1: So this all started in this kind of interesting melodrama

81
00:04:29,760 --> 00:04:35,000
Speaker 1: about Revalon aggressively restructuring getting these lenders upset. They somehow

82
00:04:35,040 --> 00:04:38,240
Speaker 1: magically had this money in their hands that a lot

83
00:04:38,279 --> 00:04:40,440
Speaker 1: of people thought there must be some weird mistake here,

84
00:04:40,920 --> 00:04:42,880
Speaker 1: but they didn't want to give it back. And when

85
00:04:42,920 --> 00:04:45,960
Speaker 1: this went to trial at the trial court level in

86
00:04:46,040 --> 00:04:50,000
Speaker 1: early a federal judge here in New York said, you

87
00:04:50,000 --> 00:04:52,839
Speaker 1: know what, I'm going to apply a very murky and

88
00:04:52,920 --> 00:04:56,039
Speaker 1: not well understood doctrine from New York that's essentially a

89
00:04:56,080 --> 00:05:00,080
Speaker 1: finders keeper's rule that says, in some circumstances, upper and

90
00:05:00,160 --> 00:05:02,320
Speaker 1: that gets a mistake in payment like this gets to

91
00:05:02,440 --> 00:05:04,240
Speaker 1: keep it, and I'm going to allow the lenders to

92
00:05:04,320 --> 00:05:08,800
Speaker 1: keep it. And so that in February sort of you know,

93
00:05:08,960 --> 00:05:11,480
Speaker 1: hit the news wires, and it was pretty big news.

94
00:05:11,480 --> 00:05:14,280
Speaker 1: It surprised me as well, because I had been kind

95
00:05:14,279 --> 00:05:17,120
Speaker 1: of keeping up on this story. And most of the time,

96
00:05:17,160 --> 00:05:20,279
Speaker 1: when you mistakenly give someone a benefit, you usually have

97
00:05:20,320 --> 00:05:22,359
Speaker 1: the ability to clide back in court, and so this

98
00:05:22,400 --> 00:05:25,440
Speaker 1: would be one of these weird exceptions. And the judge

99
00:05:25,440 --> 00:05:28,320
Speaker 1: in this case thought that this thirty year old precedent

100
00:05:28,520 --> 00:05:31,359
Speaker 1: that kind of set this potential very limited path in

101
00:05:31,440 --> 00:05:35,039
Speaker 1: motion applied to these facts as well. So was the

102
00:05:35,120 --> 00:05:40,440
Speaker 1: Second Circuit's decision reversing that opinion not a surprise. I

103
00:05:40,480 --> 00:05:42,960
Speaker 1: think it depends whom you asked to me. It was

104
00:05:43,040 --> 00:05:47,160
Speaker 1: not surprising on the overall merits of the case itself.

105
00:05:47,520 --> 00:05:51,039
Speaker 1: It seems highly implausible that someone that you're about to

106
00:05:51,120 --> 00:05:54,320
Speaker 1: sue will suddenly, without trying to get a settlement agreement

107
00:05:54,360 --> 00:05:57,680
Speaker 1: with you or standstill agreement, suddenly just pay off the money.

108
00:05:57,800 --> 00:06:01,279
Speaker 1: It just kind of taxes one common sense to think

109
00:06:01,279 --> 00:06:05,080
Speaker 1: that that would even be possible. And that's important because

110
00:06:05,400 --> 00:06:11,120
Speaker 1: this limited finders keeper's doctrine requires as an absolute necessity

111
00:06:11,200 --> 00:06:13,840
Speaker 1: that the person that gets the mistake and payment doesn't

112
00:06:13,920 --> 00:06:17,360
Speaker 1: know or doesn't even have reason to know, that it's

113
00:06:17,360 --> 00:06:20,880
Speaker 1: a mistake, and that just didn't seem likely here. These

114
00:06:21,040 --> 00:06:23,840
Speaker 1: lenders knew that Revalon probably was going to pay them

115
00:06:23,880 --> 00:06:26,400
Speaker 1: back in full. The last thing Revlon wanted to do

116
00:06:26,560 --> 00:06:28,800
Speaker 1: is pay them back in full. If Revalon wanted to

117
00:06:28,800 --> 00:06:31,480
Speaker 1: get rid of their loans, Revalon could have gone out

118
00:06:31,520 --> 00:06:34,600
Speaker 1: into the secondary market and bought them up at pennies

119
00:06:34,640 --> 00:06:37,320
Speaker 1: on the dollar. So it was an odd way and

120
00:06:37,480 --> 00:06:40,800
Speaker 1: a completely irrational way to pay off the loans, and

121
00:06:40,839 --> 00:06:43,920
Speaker 1: the Second Circuit when it finally hit that, it said, yeah,

122
00:06:43,960 --> 00:06:47,680
Speaker 1: that that's right. No reasonable person would think that this

123
00:06:47,880 --> 00:06:51,880
Speaker 1: unannounced payoff of the loans was absolutely part of the plan.

124
00:06:51,960 --> 00:06:54,039
Speaker 1: At the very least, they should have gotten on the

125
00:06:54,080 --> 00:06:56,640
Speaker 1: phone and called Revlon and called City Bank and say, hey,

126
00:06:56,680 --> 00:06:58,440
Speaker 1: what's up with this guy's Have you made a mistake

127
00:06:58,520 --> 00:07:00,520
Speaker 1: or not. They didn't do it. They based could you know,

128
00:07:00,560 --> 00:07:03,120
Speaker 1: cut their hands over their ears and hope that that

129
00:07:03,120 --> 00:07:05,440
Speaker 1: would be enough to keep the money. So the main

130
00:07:05,600 --> 00:07:09,080
Speaker 1: reason that the court kicked this back was because of that,

131
00:07:09,160 --> 00:07:11,720
Speaker 1: because the lenders, even if they didn't actually know it

132
00:07:11,760 --> 00:07:14,760
Speaker 1: was a mistake, there were enough red flags there to

133
00:07:14,840 --> 00:07:17,480
Speaker 1: suggest that it was a mistake. On the other hand,

134
00:07:17,960 --> 00:07:20,280
Speaker 1: there is a sense in which this was a surprise,

135
00:07:20,720 --> 00:07:24,520
Speaker 1: in large part because the Second Circuit, the Federal Court

136
00:07:24,560 --> 00:07:27,600
Speaker 1: of Appeal that had it held onto it for a

137
00:07:27,720 --> 00:07:30,960
Speaker 1: year after argument and a lot of people sort of thought, well, look,

138
00:07:31,360 --> 00:07:34,360
Speaker 1: if they're going to make a decision on this, let's

139
00:07:34,400 --> 00:07:37,160
Speaker 1: get rolling on it. And nothing happened. And nothing happened,

140
00:07:37,560 --> 00:07:40,920
Speaker 1: And another option might have been that the Second Circuit

141
00:07:41,040 --> 00:07:43,280
Speaker 1: just thought, oh, gosh, you know, we're trying to interpret

142
00:07:43,320 --> 00:07:46,120
Speaker 1: New York state law, where a federal court New York

143
00:07:46,160 --> 00:07:48,960
Speaker 1: has its own, you know, highest Court of Appeals. Maybe

144
00:07:48,960 --> 00:07:52,360
Speaker 1: we should just ask them what would they do in

145
00:07:52,360 --> 00:07:54,720
Speaker 1: this circumstance, And it doesn't happen all the time, that

146
00:07:54,800 --> 00:07:58,440
Speaker 1: it's something known as certifying an issue to a state court,

147
00:07:58,840 --> 00:08:01,400
Speaker 1: and a lot of people thought that might probably what happened,

148
00:08:01,480 --> 00:08:04,560
Speaker 1: and in fact, I figured that was the odds on favorite.

149
00:08:04,920 --> 00:08:07,960
Speaker 1: The longer the time went on, however, the more mysterious

150
00:08:08,000 --> 00:08:11,320
Speaker 1: it was as to what was going on, because certifying

151
00:08:11,600 --> 00:08:13,880
Speaker 1: something to the New York Court of Appeals, you know,

152
00:08:13,920 --> 00:08:15,520
Speaker 1: it takes a page and a half to do it,

153
00:08:15,560 --> 00:08:17,000
Speaker 1: and then it's off of your desk, and so why

154
00:08:17,040 --> 00:08:18,920
Speaker 1: would it take a year to do this? And I

155
00:08:18,960 --> 00:08:21,400
Speaker 1: think part of it was that there was genuine debate

156
00:08:21,480 --> 00:08:24,520
Speaker 1: going on inside this three judge panel about how to

157
00:08:24,680 --> 00:08:28,840
Speaker 1: deal with this case and whether there was enough law

158
00:08:28,920 --> 00:08:31,920
Speaker 1: on the books to answer this question using New York

159
00:08:32,000 --> 00:08:34,680
Speaker 1: law or they had to you know, seek the delphic

160
00:08:34,800 --> 00:08:37,200
Speaker 1: oracle of the of the Highest Court of New York

161
00:08:37,280 --> 00:08:40,959
Speaker 1: to to tell them more. And eventually the panel unanimously

162
00:08:41,080 --> 00:08:44,200
Speaker 1: came to the conclusion that they could answer the question

163
00:08:44,360 --> 00:08:47,040
Speaker 1: that the trial court judge did get it wrong and

164
00:08:47,080 --> 00:08:50,000
Speaker 1: therefore City Bank gets this money back. But it took

165
00:08:50,040 --> 00:08:52,920
Speaker 1: a year, which was an extraordinary amount of time. And

166
00:08:52,920 --> 00:08:55,880
Speaker 1: in fact, the judge that wrote the opinion, Judge Levolve,

167
00:08:56,040 --> 00:08:59,439
Speaker 1: very well respected judge who probably knows more contracts than

168
00:08:59,520 --> 00:09:01,960
Speaker 1: just about anyone I know. You know, he even put

169
00:09:02,000 --> 00:09:05,199
Speaker 1: a fairly remarkable statement at the end saying, I apologize

170
00:09:05,240 --> 00:09:07,360
Speaker 1: that it took this long, but we were really trying

171
00:09:07,360 --> 00:09:09,920
Speaker 1: to grapple with whether we could answer this question or not.

172
00:09:10,160 --> 00:09:14,000
Speaker 1: And so one gathers that there was a relatively healthy discussion,

173
00:09:14,000 --> 00:09:16,560
Speaker 1: if not debate, amongst the three judges on this panel

174
00:09:16,600 --> 00:09:19,800
Speaker 1: about what to do. Yeah, so the opinions opened a

175
00:09:19,880 --> 00:09:23,240
Speaker 1: little bit of a window on their disagreements. Judge Michael

176
00:09:23,280 --> 00:09:26,480
Speaker 1: Park wrote, this is a straightforward case that many smart

177
00:09:26,520 --> 00:09:30,560
Speaker 1: people have grossly overcomplicated and we should have decided many

178
00:09:30,600 --> 00:09:33,840
Speaker 1: months ago. And then Judge Laval, as you mentioned, wrote,

179
00:09:33,880 --> 00:09:38,800
Speaker 1: I take sole responsibility for that. It's remarkable to see that.

180
00:09:39,559 --> 00:09:41,720
Speaker 1: It really is remarkable. And I think that again kind

181
00:09:41,760 --> 00:09:44,240
Speaker 1: of in the spirit of overly smart people trying to

182
00:09:44,559 --> 00:09:47,760
Speaker 1: Monday Morning quarterback, it can also be true of opinions

183
00:09:48,040 --> 00:09:50,319
Speaker 1: you know, it may well be the case that you

184
00:09:50,320 --> 00:09:52,480
Speaker 1: should just take Judge Laval at his work that he

185
00:09:52,559 --> 00:09:54,960
Speaker 1: and Judge Sack, you know, he wrote in the opinion,

186
00:09:55,040 --> 00:09:57,600
Speaker 1: we thought maybe this is something that we should certify.

187
00:09:57,840 --> 00:10:00,640
Speaker 1: Judge Park, you know, came back with a airly full

188
00:10:00,720 --> 00:10:03,880
Speaker 1: throated opinion that I'm guessing had been you know, maybe

189
00:10:03,920 --> 00:10:07,479
Speaker 1: a draft descent opinion that then turned into a concurrence

190
00:10:07,480 --> 00:10:10,480
Speaker 1: because he brought them along with his position and said,

191
00:10:10,559 --> 00:10:12,360
Speaker 1: you know, we are making this harder than it needs

192
00:10:12,400 --> 00:10:15,120
Speaker 1: to be. I just can't see any reason why anyone

193
00:10:15,160 --> 00:10:18,520
Speaker 1: would think that this would be a deliberate payoff. And

194
00:10:18,559 --> 00:10:21,280
Speaker 1: if you want more proof from that, there's been a

195
00:10:21,320 --> 00:10:24,320
Speaker 1: huge market response to the trial court opinion, and he

196
00:10:24,520 --> 00:10:26,880
Speaker 1: you know, talked about actually some research that I did

197
00:10:26,880 --> 00:10:29,120
Speaker 1: on this that found that after the trial court opinion

198
00:10:29,280 --> 00:10:32,960
Speaker 1: came out, people that were writing these corporate debt contracts

199
00:10:33,240 --> 00:10:38,120
Speaker 1: specifically and overwhelmingly put in new language to say, hey,

200
00:10:38,160 --> 00:10:41,439
Speaker 1: that that City Bank opinion that doesn't apply to this contract.

201
00:10:41,520 --> 00:10:43,439
Speaker 1: So there was almost a kind of a voting by

202
00:10:43,480 --> 00:10:46,280
Speaker 1: their feet affect in which if the people that were

203
00:10:46,360 --> 00:10:49,640
Speaker 1: drafting these contracts really you know, pretty much rushed the

204
00:10:49,679 --> 00:10:52,959
Speaker 1: gates to contract out of the trial courts holding. And

205
00:10:53,160 --> 00:10:55,920
Speaker 1: so the combination of those things I think made Judge

206
00:10:55,920 --> 00:10:59,160
Speaker 1: Park feel like this was a pretty easy call, and

207
00:10:59,200 --> 00:11:01,679
Speaker 1: this made just be you know, Judge Park being very

208
00:11:01,720 --> 00:11:04,960
Speaker 1: persistent in that view and ultimately persuasive in that view,

209
00:11:04,960 --> 00:11:08,240
Speaker 1: and bringing around Judge Laval and Judge Stack and and

210
00:11:08,360 --> 00:11:11,120
Speaker 1: in fact, that's why we have three judge panels. Right,

211
00:11:11,160 --> 00:11:14,240
Speaker 1: it's the idea of deliberation between judges, even if it

212
00:11:14,320 --> 00:11:16,400
Speaker 1: takes a while. And Judge Laval writes this in his

213
00:11:16,480 --> 00:11:19,080
Speaker 1: opinion as well, right, that maybe getting this right is

214
00:11:19,120 --> 00:11:21,240
Speaker 1: better than getting it done in two weeks, And there's

215
00:11:21,280 --> 00:11:23,400
Speaker 1: some truth to that. I guess that. You know, excessive

216
00:11:23,400 --> 00:11:26,720
Speaker 1: delay can be problematic as well, and certainly people felt

217
00:11:26,760 --> 00:11:29,760
Speaker 1: that in the revl on bankruptcy. But you know, ultimately,

218
00:11:29,800 --> 00:11:31,920
Speaker 1: I think they ended up getting to the right place.

219
00:11:32,120 --> 00:11:34,480
Speaker 1: And if it took a little bit of introspection and

220
00:11:34,600 --> 00:11:37,360
Speaker 1: some internal debate, well that's what this system is built

221
00:11:37,360 --> 00:11:41,920
Speaker 1: it to do. So that New York Court ruling that

222
00:11:42,040 --> 00:11:44,800
Speaker 1: creditors can keep money sent to them in error if

223
00:11:44,840 --> 00:11:47,880
Speaker 1: they didn't realize the transfer was an accident, does that

224
00:11:48,000 --> 00:11:52,040
Speaker 1: still stand? It still stands, They didn't overrule the opinion,

225
00:11:52,160 --> 00:11:55,359
Speaker 1: But what they did do is they limited the situations

226
00:11:55,400 --> 00:11:58,520
Speaker 1: in which it would apply. The way that the trial

227
00:11:58,600 --> 00:12:02,640
Speaker 1: court had applied that opinion basically gave it a much

228
00:12:02,800 --> 00:12:07,040
Speaker 1: broader scope of situations where it might apply in. But

229
00:12:07,160 --> 00:12:09,840
Speaker 1: what the judges here did is they dialed it back

230
00:12:09,880 --> 00:12:13,200
Speaker 1: into important respects. The first one is to really reaffirm

231
00:12:13,280 --> 00:12:16,480
Speaker 1: this idea that given all the facts, if you are

232
00:12:16,640 --> 00:12:20,480
Speaker 1: on constructive notice that there might be a mistake here,

233
00:12:20,960 --> 00:12:24,640
Speaker 1: you don't get this special finders Keepers rule going in

234
00:12:24,679 --> 00:12:27,320
Speaker 1: your favor. And then the second thing that they did,

235
00:12:27,400 --> 00:12:29,679
Speaker 1: which was a little bit more of a technicality, is

236
00:12:29,720 --> 00:12:33,480
Speaker 1: that in that case, the loan that was an issue,

237
00:12:33,880 --> 00:12:36,000
Speaker 1: it actually had to be paid off. When it was

238
00:12:36,040 --> 00:12:38,680
Speaker 1: paid off, it was due and payable at the very

239
00:12:38,720 --> 00:12:41,120
Speaker 1: moment the mistake was made. And so there was a

240
00:12:41,200 --> 00:12:43,280
Speaker 1: kind of a sense in which the lenders in that

241
00:12:43,320 --> 00:12:45,520
Speaker 1: case they said, well, yeah, we were expecting it at

242
00:12:45,520 --> 00:12:47,400
Speaker 1: this moment in time, because this was the date that

243
00:12:47,480 --> 00:12:49,240
Speaker 1: the loan was due, and we had said we're not

244
00:12:49,240 --> 00:12:51,760
Speaker 1: going to extend the loan. In this case that the

245
00:12:51,880 --> 00:12:54,640
Speaker 1: loan that got paid off wasn't due for three more years.

246
00:12:55,040 --> 00:12:57,560
Speaker 1: There was an option to pay it off early, but

247
00:12:57,720 --> 00:13:01,000
Speaker 1: it wasn't required to be paid off for three more years.

248
00:13:01,080 --> 00:13:03,640
Speaker 1: It wasn't yet due unpayable. And so the other way

249
00:13:03,720 --> 00:13:07,720
Speaker 1: that the Court limited that holding is to sort of

250
00:13:07,760 --> 00:13:10,680
Speaker 1: clarify that if you're going to use that holding, it

251
00:13:10,760 --> 00:13:14,080
Speaker 1: has to be in a context to like case was

252
00:13:14,520 --> 00:13:18,520
Speaker 1: where the loan in question was in fact payable when

253
00:13:18,640 --> 00:13:22,199
Speaker 1: the mistake got made. Is there a chance that this

254
00:13:22,320 --> 00:13:25,360
Speaker 1: might be appeal to the Supreme Court, Well, there's a chance,

255
00:13:25,400 --> 00:13:28,560
Speaker 1: but realize this ultimately is an issue of the law

256
00:13:28,640 --> 00:13:31,280
Speaker 1: of the state of New York, and so the Supreme

257
00:13:31,280 --> 00:13:35,600
Speaker 1: Court isn't going to have any special expertise in interpreting

258
00:13:35,640 --> 00:13:38,200
Speaker 1: New York law. In fact, on some level they may

259
00:13:38,240 --> 00:13:41,360
Speaker 1: have less expertise than the Second Circuit, which actually sits

260
00:13:41,400 --> 00:13:43,160
Speaker 1: here in New York, and they hob nob with the

261
00:13:43,240 --> 00:13:45,520
Speaker 1: judges in New York all the time. And so there's

262
00:13:45,559 --> 00:13:48,760
Speaker 1: not a constitutional or a federal statute that really is

263
00:13:49,080 --> 00:13:51,360
Speaker 1: going to play a big rule that would give the

264
00:13:51,400 --> 00:13:54,280
Speaker 1: Supreme Court the type of jurisdiction to bring federal law

265
00:13:54,280 --> 00:13:56,760
Speaker 1: into the case. Now they could take the case, I

266
00:13:56,800 --> 00:13:59,160
Speaker 1: think if it gets appealed, it's more likely to be

267
00:13:59,240 --> 00:14:02,559
Speaker 1: appealed to the entire second circuit was known as an

268
00:14:02,559 --> 00:14:06,880
Speaker 1: on bank review to revisit the holding. I don't think

269
00:14:06,920 --> 00:14:09,800
Speaker 1: that's even going to happen, however, because the fact of

270
00:14:09,800 --> 00:14:12,680
Speaker 1: the matter is the Second circuits a large circuit. But

271
00:14:13,280 --> 00:14:16,000
Speaker 1: by you know, luck of a draw, they got Pierre

272
00:14:16,080 --> 00:14:19,200
Speaker 1: Laval as the person that there wrote the opinion. And

273
00:14:19,440 --> 00:14:22,920
Speaker 1: you know, I'm teaching contracts right now. Opinions by Judge

274
00:14:23,000 --> 00:14:27,280
Speaker 1: Laval basically litter the field of contracts. They're really really

275
00:14:27,400 --> 00:14:30,800
Speaker 1: prominent jurists in this field, and so I would expect

276
00:14:30,840 --> 00:14:33,440
Speaker 1: that even with an in an on bank panel setting,

277
00:14:33,920 --> 00:14:37,120
Speaker 1: if Judge Laval has been brought you know, on board

278
00:14:37,160 --> 00:14:38,880
Speaker 1: on this side, and you have every reason to think

279
00:14:38,880 --> 00:14:42,200
Speaker 1: that he has finally in this case, it would be

280
00:14:42,240 --> 00:14:45,240
Speaker 1: an uphill battle to to move to the to the

281
00:14:45,320 --> 00:14:47,480
Speaker 1: on to an on bank review as well that though

282
00:14:47,640 --> 00:14:49,400
Speaker 1: you know, it might be worth a shot, it's not

283
00:14:49,520 --> 00:14:51,800
Speaker 1: overly expensive to do it. So I could you know,

284
00:14:51,880 --> 00:14:56,280
Speaker 1: potentially see the lenders, you know, at least mulling over

285
00:14:56,320 --> 00:14:59,360
Speaker 1: whether they want to take that take that shot. There

286
00:14:59,360 --> 00:15:02,280
Speaker 1: are a couple of other kind of sideline issues about whether,

287
00:15:02,800 --> 00:15:06,080
Speaker 1: um whether the lenders could have a cause of action

288
00:15:06,160 --> 00:15:09,800
Speaker 1: against City Bank because when City Bank did that, then

289
00:15:09,840 --> 00:15:14,920
Speaker 1: they threw the revalon's ability to borrow money and bankruptcy

290
00:15:14,920 --> 00:15:16,720
Speaker 1: into flus because no one knew where any of the

291
00:15:16,760 --> 00:15:20,320
Speaker 1: assets or liabilities were, and that caused Revlon's bankruptcy to

292
00:15:20,440 --> 00:15:23,120
Speaker 1: get even worse, which made things even worse for the lenders.

293
00:15:23,200 --> 00:15:27,080
Speaker 1: There are some, you know, I think somewhat speculative theories.

294
00:15:27,480 --> 00:15:30,240
Speaker 1: They're they're sort of haymakers that that the lenders might

295
00:15:30,280 --> 00:15:32,640
Speaker 1: try to come back with that are totally different lawsuits

296
00:15:32,680 --> 00:15:36,040
Speaker 1: not appealing this one as well. I would not handicap

297
00:15:36,080 --> 00:15:40,000
Speaker 1: those types of claims to have um high likelihood of prevailing,

298
00:15:40,200 --> 00:15:43,600
Speaker 1: but that doesn't mean that they're not necessarily worth filing

299
00:15:43,600 --> 00:15:46,400
Speaker 1: and trying to explore. Thanks for being on the Bloomberg

300
00:15:46,480 --> 00:15:50,200
Speaker 1: LANs Show. Eric, that's Professor Eric Talley of Columbia Law School.

301
00:15:52,040 --> 00:15:55,160
Speaker 1: In a time when our nation is mired in political discord,

302
00:15:55,480 --> 00:15:59,680
Speaker 1: the temporary leader of the Joice Department's largest litigating division

303
00:16:00,120 --> 00:16:04,200
Speaker 1: is outlasting his expected tenure without becoming a target of

304
00:16:04,240 --> 00:16:07,680
Speaker 1: the left or right, even while facing off against red

305
00:16:07,760 --> 00:16:12,520
Speaker 1: states over abortion, guns, and immigration. Brian Boynton is technically

306
00:16:12,560 --> 00:16:15,360
Speaker 1: a political appointee who has been in charge of d

307
00:16:15,640 --> 00:16:20,080
Speaker 1: J Civil Division since President Joe Biden's inauguration, leading a

308
00:16:20,080 --> 00:16:23,040
Speaker 1: team of more than a thousand lawyers. Joining me is

309
00:16:23,120 --> 00:16:27,200
Speaker 1: Ben Penn, Justice Department reporter for Bloomberg Law. Start by

310
00:16:27,320 --> 00:16:31,880
Speaker 1: telling us about Brian Boynton. Who is he? Brian Boyden

311
00:16:32,280 --> 00:16:36,360
Speaker 1: is the temporary head of the Justice Department Civil Division,

312
00:16:36,840 --> 00:16:42,200
Speaker 1: and he was never intended to remain this long as

313
00:16:42,320 --> 00:16:47,760
Speaker 1: the top political appointee over the division that represents the

314
00:16:47,840 --> 00:16:52,000
Speaker 1: federal government in court. But the Biden administration's first nominee

315
00:16:52,360 --> 00:16:56,960
Speaker 1: withdrew unexpectedly last year last a lie, and they have

316
00:16:57,200 --> 00:17:01,280
Speaker 1: not advanced another nominee to replace him. And that's left

317
00:17:01,320 --> 00:17:06,680
Speaker 1: pointed as the top man at the largest litigating division

318
00:17:06,880 --> 00:17:10,720
Speaker 1: of the Department of Justice for about nineteen months now. So,

319
00:17:10,920 --> 00:17:15,119
Speaker 1: in this time of the great political divisions in this country,

320
00:17:15,320 --> 00:17:19,920
Speaker 1: how has he managed to lead this division without becoming

321
00:17:20,040 --> 00:17:23,280
Speaker 1: a target of the left or the right. He has

322
00:17:23,440 --> 00:17:28,800
Speaker 1: really managed as an institutionalist caretaker of the Civil Division,

323
00:17:29,240 --> 00:17:34,040
Speaker 1: not a crusader for policy change, not somebody who is

324
00:17:34,640 --> 00:17:39,240
Speaker 1: looking to achieve outcomes via his litigation decisions. And he's

325
00:17:39,280 --> 00:17:43,040
Speaker 1: also just a low profile person is known as somebody

326
00:17:43,040 --> 00:17:46,560
Speaker 1: who has a really calming presence, and not somebody who

327
00:17:46,600 --> 00:17:50,720
Speaker 1: seeks out the spotlight, not somebody who tries to make

328
00:17:50,720 --> 00:17:54,119
Speaker 1: a name for himself with splashy litigation. He's just a

329
00:17:54,280 --> 00:17:59,320
Speaker 1: lawyer's lawyer, a constitutional First Amendment specialists. So I think

330
00:18:00,119 --> 00:18:03,920
Speaker 1: that's he's been able to get a lot of respect

331
00:18:04,080 --> 00:18:08,000
Speaker 1: internally and throughout other federal agencies in the White House

332
00:18:08,359 --> 00:18:13,400
Speaker 1: for his ability to make these really tough decisions threatening

333
00:18:13,440 --> 00:18:17,000
Speaker 1: the needle between you know, things like you know, it's

334
00:18:17,040 --> 00:18:21,560
Speaker 1: really tough decisions on executive power, while while also trying

335
00:18:21,640 --> 00:18:26,520
Speaker 1: to maintain the Justice Department's reputation before judges and all

336
00:18:26,560 --> 00:18:28,639
Speaker 1: this time. I think, you know a lot of his

337
00:18:28,680 --> 00:18:31,960
Speaker 1: actions wind up getting criticized by people on the left

338
00:18:32,040 --> 00:18:35,280
Speaker 1: and the right, but they'll associated with the Attorney General

339
00:18:35,320 --> 00:18:38,280
Speaker 1: married Garland, for instance, Some on the left thing he's

340
00:18:38,359 --> 00:18:41,840
Speaker 1: he's been too soft on Trump, and you know, other

341
00:18:41,880 --> 00:18:45,840
Speaker 1: people like Benita Gupta, the Associate Attorney General who overseas

342
00:18:45,920 --> 00:18:48,680
Speaker 1: Born and the Civil Division is often a subject on

343
00:18:48,800 --> 00:18:51,719
Speaker 1: the right, you know, who gets accues of being somewhat

344
00:18:51,720 --> 00:18:54,639
Speaker 1: of an idy look and and Boyden winds up, you know,

345
00:18:54,720 --> 00:18:57,159
Speaker 1: missing out on a lot of that screwt. I know,

346
00:18:57,520 --> 00:19:02,800
Speaker 1: one case that angered a lot of liberals was when

347
00:19:02,840 --> 00:19:08,120
Speaker 1: he decided to defend former President Trump in a defamation

348
00:19:08,280 --> 00:19:12,480
Speaker 1: suit brought by the New York columnist E. Gene Carroll

349
00:19:12,680 --> 00:19:17,080
Speaker 1: accusing him of defamation about whether she was raped or not.

350
00:19:17,480 --> 00:19:20,640
Speaker 1: And that got a lot of criticism. That's right, that

351
00:19:20,800 --> 00:19:24,080
Speaker 1: was a decision that not to be fair for really,

352
00:19:24,880 --> 00:19:28,320
Speaker 1: you know, politically charged decisions like that. There's a very

353
00:19:28,320 --> 00:19:31,560
Speaker 1: good chance that Boyden isn't going to be the ultimate

354
00:19:31,600 --> 00:19:34,920
Speaker 1: decider that you know, people above him in the Attorney

355
00:19:34,960 --> 00:19:37,760
Speaker 1: General's Office and the Deputy Attorney General's office are going

356
00:19:37,800 --> 00:19:40,200
Speaker 1: to be weighing in and and and making the call

357
00:19:40,240 --> 00:19:42,560
Speaker 1: and how to proceed. But you know, it's Boyden, as

358
00:19:42,680 --> 00:19:44,919
Speaker 1: the head of the division that is, and as the

359
00:19:44,960 --> 00:19:49,679
Speaker 1: first signature on the government's filings in in that case,

360
00:19:50,200 --> 00:19:53,840
Speaker 1: is the one who is partially at least responsible for

361
00:19:54,240 --> 00:19:59,520
Speaker 1: the decision to continue the prior administration's defense of the

362
00:19:59,560 --> 00:20:04,840
Speaker 1: Trump in that defamation lawsuit. And you know, if you

363
00:20:04,880 --> 00:20:07,320
Speaker 1: look at the pleading, I think it really speaks to

364
00:20:07,560 --> 00:20:12,920
Speaker 1: how Boyden tries really hard to strike a balance, because

365
00:20:12,960 --> 00:20:14,600
Speaker 1: you know, he goes out of his way in it

366
00:20:14,720 --> 00:20:18,240
Speaker 1: to say at the very beginning that the former president

367
00:20:18,520 --> 00:20:23,680
Speaker 1: comments directed at Jean Carol were inappropriate and crude, and

368
00:20:24,320 --> 00:20:28,280
Speaker 1: yet that's not the basis for why they are continuing

369
00:20:28,359 --> 00:20:32,720
Speaker 1: to defend him. There were positions that the right disagrees with,

370
00:20:32,920 --> 00:20:36,800
Speaker 1: much as the left disagreed with the E. Gene Carroll position.

371
00:20:37,119 --> 00:20:40,439
Speaker 1: Tell us about the January six committee, Sure, well, you

372
00:20:40,480 --> 00:20:43,720
Speaker 1: know the Department of Justice, the Civil Division was asked

373
00:20:43,720 --> 00:20:47,760
Speaker 1: by a judge to determine whether they wanted to intervene

374
00:20:47,760 --> 00:20:52,280
Speaker 1: on behalf of Representative Mo Brooks of Alabama, who was

375
00:20:52,440 --> 00:20:57,160
Speaker 1: sued by Congressman Rik swalwell Um for his speech before

376
00:20:57,240 --> 00:21:01,760
Speaker 1: the January six mob and Boyton decided and Civil Division

377
00:21:01,800 --> 00:21:06,240
Speaker 1: decided not to represent Brooks, and they argued that his

378
00:21:06,359 --> 00:21:10,600
Speaker 1: speech was on he was acting in his personal capacity,

379
00:21:10,680 --> 00:21:14,280
Speaker 1: not as a politician, and therefore he wasn't owed the

380
00:21:14,359 --> 00:21:18,359
Speaker 1: protection of the government. Then, in a somewhat related matter,

381
00:21:18,600 --> 00:21:23,960
Speaker 1: he also argued that the January sixth Committee was entitled

382
00:21:24,000 --> 00:21:28,440
Speaker 1: to document from the National Archives, which was something that

383
00:21:28,480 --> 00:21:31,119
Speaker 1: the former president had tried to argue they were not

384
00:21:31,280 --> 00:21:35,840
Speaker 1: entitled to, and Boyton made the argument that the current

385
00:21:35,880 --> 00:21:41,200
Speaker 1: president opinion outweighed the former prevision. What is his management style?

386
00:21:41,359 --> 00:21:44,520
Speaker 1: Is he hands on? I'm told he really he's going

387
00:21:44,560 --> 00:21:48,760
Speaker 1: to be hands on when certain really high profile decisions

388
00:21:49,000 --> 00:21:51,959
Speaker 1: get escalated up to the front office of the Civil Division.

389
00:21:52,160 --> 00:21:53,879
Speaker 1: But at the same time, he shows a lot of

390
00:21:53,920 --> 00:21:58,960
Speaker 1: deference to the opinions and expertise of the career, largely

391
00:21:59,040 --> 00:22:03,080
Speaker 1: career workforce that reports up and uh, he you know,

392
00:22:03,160 --> 00:22:06,680
Speaker 1: he's not going to be somebody who is you know,

393
00:22:07,119 --> 00:22:11,920
Speaker 1: going to allow any scent of partisan politics get involved

394
00:22:11,960 --> 00:22:15,000
Speaker 1: in the legal focus of the lawyers below him in

395
00:22:15,520 --> 00:22:19,560
Speaker 1: deciding how to represent the government. Since he's been so

396
00:22:19,680 --> 00:22:24,840
Speaker 1: successful in this position, why isn't he being put forth

397
00:22:25,080 --> 00:22:28,960
Speaker 1: as the permanent leader of the Civil Division? Well, you know,

398
00:22:29,000 --> 00:22:32,840
Speaker 1: that's a question I tried to ask the Justice Department,

399
00:22:32,880 --> 00:22:37,239
Speaker 1: and they're not commenting on They almost never comment on

400
00:22:37,400 --> 00:22:40,920
Speaker 1: personnel decisions like that. But you know, it's worth noting

401
00:22:41,000 --> 00:22:44,240
Speaker 1: that there's a long history, or at least in recent history,

402
00:22:44,280 --> 00:22:50,320
Speaker 1: of their being acting temporary officials atop the Civil Division

403
00:22:50,640 --> 00:22:54,760
Speaker 1: without an administration for both parties, prioritizing the need to

404
00:22:54,800 --> 00:22:57,440
Speaker 1: get somebody Senate confirmed. You know, in this case, there's

405
00:22:57,480 --> 00:23:00,119
Speaker 1: a sort of conventional wisdom among people I talked. Is

406
00:23:00,400 --> 00:23:03,600
Speaker 1: the story that you know, if it's not broke, don't

407
00:23:03,640 --> 00:23:06,760
Speaker 1: fix it, Like right now, right now, he's doing a

408
00:23:06,760 --> 00:23:10,440
Speaker 1: perfectly fine job as acting. If they were to nominate him,

409
00:23:10,600 --> 00:23:14,480
Speaker 1: they would likely need to move him to a different

410
00:23:14,560 --> 00:23:17,399
Speaker 1: role or ask him to leave the department altogether to

411
00:23:17,480 --> 00:23:21,720
Speaker 1: avoid any complications in his Senate confirmation process, and that

412
00:23:21,760 --> 00:23:23,199
Speaker 1: could take a long time. At this point in the

413
00:23:23,280 --> 00:23:26,840
Speaker 1: calendar year, as close to the mid terms, there really

414
00:23:26,920 --> 00:23:31,080
Speaker 1: isn't going to be much time for any nominees to

415
00:23:31,119 --> 00:23:36,080
Speaker 1: get advanced, especially any nominees outside of judicial nomine who

416
00:23:36,200 --> 00:23:39,640
Speaker 1: has been by far the greatest priority of this administration.

417
00:23:39,800 --> 00:23:43,560
Speaker 1: So that means there's there's really just little political motivation

418
00:23:43,680 --> 00:23:48,760
Speaker 1: right now for them to try to move Boy or

419
00:23:48,800 --> 00:23:52,399
Speaker 1: anyone else for that matter, as the yes Senate confirmed

420
00:23:52,800 --> 00:23:56,520
Speaker 1: leader of the agency. It's also worth considering that, you know,

421
00:23:56,800 --> 00:24:00,840
Speaker 1: quite a bit of the work is going to be defensive,

422
00:24:01,000 --> 00:24:05,520
Speaker 1: not you know, proactive litigating, and that means that whoever

423
00:24:05,600 --> 00:24:07,800
Speaker 1: is in charge of the agency is just doing so

424
00:24:07,880 --> 00:24:10,879
Speaker 1: many of the litigating devisions they have to make regardless

425
00:24:10,920 --> 00:24:13,600
Speaker 1: of who's in control, So so much of the functions

426
00:24:13,640 --> 00:24:16,879
Speaker 1: of the civil divisions are going to continue regardless of

427
00:24:16,920 --> 00:24:20,880
Speaker 1: who's in charge, whether that person has a Senate confirmation

428
00:24:21,200 --> 00:24:24,480
Speaker 1: before their name, and so if the House is taken

429
00:24:24,480 --> 00:24:29,080
Speaker 1: over by Republicans, then the job of the civil litigation

430
00:24:29,400 --> 00:24:32,720
Speaker 1: will crank up. I guess as far as you know

431
00:24:33,240 --> 00:24:38,000
Speaker 1: defending against subpoenas, etcetera. Yeah, that's right. Um, if the

432
00:24:38,040 --> 00:24:43,800
Speaker 1: president or any members of his executive branch are going

433
00:24:43,880 --> 00:24:48,040
Speaker 1: to be subpoena to appear before Congress, not something that

434
00:24:48,640 --> 00:24:52,440
Speaker 1: point in civil division will be responsible for defending those

435
00:24:52,440 --> 00:24:55,639
Speaker 1: officials against those That's only going to make the job,

436
00:24:56,040 --> 00:24:59,560
Speaker 1: you know, even weightier. You've done a story about how

437
00:24:59,560 --> 00:25:04,040
Speaker 1: the Justice Department is becoming more aggressive in targeting companies

438
00:25:04,040 --> 00:25:07,960
Speaker 1: that are fraudently build government agencies. Tell us about that. Yeah,

439
00:25:08,040 --> 00:25:13,879
Speaker 1: so the Justice Department in this administration has increased the

440
00:25:14,000 --> 00:25:18,439
Speaker 1: number of cases. According to a number of attorneys who

441
00:25:18,480 --> 00:25:23,760
Speaker 1: defend companies from false claims that charges, they are noticing

442
00:25:23,920 --> 00:25:29,080
Speaker 1: a significant uptate in the Department's enforcement of that law.

443
00:25:29,480 --> 00:25:33,440
Speaker 1: And you know, it's really a bipartisan law and many

444
00:25:33,520 --> 00:25:38,400
Speaker 1: of its aspects get enforced consistently from administration to administration.

445
00:25:38,520 --> 00:25:42,919
Speaker 1: But you're starting to see some change the natural byproduct

446
00:25:43,119 --> 00:25:47,760
Speaker 1: of how the Department's trial attorneys are evolving in their

447
00:25:47,800 --> 00:25:51,880
Speaker 1: sophistication in their use of data analytics to look at numbers,

448
00:25:52,240 --> 00:25:56,119
Speaker 1: look at medicare bailing numbers, and search for anomalies. You know,

449
00:25:56,240 --> 00:26:00,520
Speaker 1: intis in which maybe healthcare providers are pop a league

450
00:26:00,800 --> 00:26:03,840
Speaker 1: defrauding the government, and uh, in which case you need

451
00:26:03,920 --> 00:26:08,440
Speaker 1: to be targeted for an investigation of potential lawsuits. That's

452
00:26:08,480 --> 00:26:12,200
Speaker 1: just an example of how the Civil Division is starting

453
00:26:12,240 --> 00:26:16,160
Speaker 1: to ema. They loss, we do rely on whistleblower complaints

454
00:26:16,160 --> 00:26:19,040
Speaker 1: filed by a planett attorney, and then they look at

455
00:26:19,040 --> 00:26:23,520
Speaker 1: those complaints and determine whether the government wants to intervene

456
00:26:23,520 --> 00:26:26,399
Speaker 1: on behalf of the plaintiff. But you know, when I

457
00:26:26,480 --> 00:26:31,320
Speaker 1: talked to numerous attorneys to represent companies under the False Coransact,

458
00:26:31,359 --> 00:26:36,520
Speaker 1: and they're just noticing a real more contorted focus from

459
00:26:36,720 --> 00:26:40,200
Speaker 1: the Department and getting more aggressive. Usually the suit is

460
00:26:40,240 --> 00:26:44,560
Speaker 1: already ongoing, a private attorney is representing a whistle blower,

461
00:26:44,640 --> 00:26:48,120
Speaker 1: and then the government intervenes. Those are the usual cases. Yeah,

462
00:26:48,240 --> 00:26:52,640
Speaker 1: or the government decides that they won't intervene, but they will.

463
00:26:52,720 --> 00:26:56,879
Speaker 1: That will allow the whistleblower pace to continue, and the

464
00:26:56,960 --> 00:27:01,080
Speaker 1: government still gets to recoup a share of any recovered

465
00:27:01,200 --> 00:27:05,760
Speaker 1: funds as a result of that. Prior Or that settlement,

466
00:27:06,160 --> 00:27:10,359
Speaker 1: it used to be concentrated in a few districts like

467
00:27:10,440 --> 00:27:15,639
Speaker 1: Philadelphia in Massachusetts. Why and why is it expanding a

468
00:27:15,680 --> 00:27:18,520
Speaker 1: couple of doctors to play. I'm told that part of

469
00:27:18,520 --> 00:27:22,160
Speaker 1: it is just success to get success. So as you've seen,

470
00:27:22,680 --> 00:27:27,320
Speaker 1: you know, more US Attorinese officers across the country decide,

471
00:27:27,359 --> 00:27:30,560
Speaker 1: little by little, hey let's see if we can bring

472
00:27:30,640 --> 00:27:34,000
Speaker 1: more false claims that cases, and those are leading to

473
00:27:34,840 --> 00:27:38,520
Speaker 1: substantial recoveries, and they say, hey, let's try it more often,

474
00:27:38,600 --> 00:27:41,840
Speaker 1: let's increase the caseloads for our trains. And then other

475
00:27:42,000 --> 00:27:45,280
Speaker 1: USE Attorinese officers are noticing as well. Then you also

476
00:27:45,600 --> 00:27:48,399
Speaker 1: just have the fact that thinks of the majority of

477
00:27:48,520 --> 00:27:52,480
Speaker 1: false claims less enforcement recovery comes from the healthcare sector,

478
00:27:52,840 --> 00:27:59,120
Speaker 1: and have you know pharmaceutical Philogelphia and Massaitusetts. It just

479
00:27:59,160 --> 00:28:01,800
Speaker 1: makes more sense to be a concentration of cases in

480
00:28:01,840 --> 00:28:07,120
Speaker 1: these areas. But increasingly, this being the department expanding enforcement

481
00:28:07,160 --> 00:28:11,040
Speaker 1: reach the Profically, it's sort of easy to quantify the

482
00:28:11,320 --> 00:28:14,400
Speaker 1: success of these because you have numbers. Boj did announced

483
00:28:14,440 --> 00:28:19,120
Speaker 1: earlier this year that they had collected five points six

484
00:28:19,119 --> 00:28:25,200
Speaker 1: billion dollars in fiscal one in false Claims Act resolutions.

485
00:28:25,560 --> 00:28:28,760
Speaker 1: That said, about half of that to plenty billion dollars

486
00:28:28,840 --> 00:28:31,919
Speaker 1: came from a from a single case in that produced

487
00:28:31,920 --> 00:28:35,800
Speaker 1: pharma settlement. So the Department boasted five point six billion,

488
00:28:35,880 --> 00:28:38,360
Speaker 1: which they said, you know is the second largest ever

489
00:28:38,680 --> 00:28:42,400
Speaker 1: annual amount under the false coins up. But in reality

490
00:28:43,320 --> 00:28:46,560
Speaker 1: the numbers are a little misleadings. You know, it can

491
00:28:46,600 --> 00:28:49,680
Speaker 1: take more than a year for the Department decimated the

492
00:28:49,720 --> 00:28:53,600
Speaker 1: initial determination on whether to intervene, and the cases got

493
00:28:53,640 --> 00:28:56,200
Speaker 1: hold until that time, and then from there, you know,

494
00:28:56,360 --> 00:28:59,760
Speaker 1: you know how litigation can just take when it's way

495
00:28:59,800 --> 00:29:03,040
Speaker 1: through the courts or the more frequent names settlement negotiations

496
00:29:03,200 --> 00:29:05,480
Speaker 1: can just speak you on out and stall and go

497
00:29:05,560 --> 00:29:08,280
Speaker 1: through multiple phases. So we may see a lot of

498
00:29:08,320 --> 00:29:12,560
Speaker 1: the cases not wind up getting resolved until maybe a

499
00:29:12,600 --> 00:29:15,840
Speaker 1: new president moves in office. Thanks Ben. That's Ben Penn

500
00:29:15,880 --> 00:29:18,320
Speaker 1: of Bloomberg Law, and that's it for this edition of

501
00:29:18,320 --> 00:29:21,000
Speaker 1: the Bloomberg Law Show. Remember you can always get the

502
00:29:21,080 --> 00:29:24,280
Speaker 1: latest legal news on our Bloomberg Law podcast. You can

503
00:29:24,320 --> 00:29:28,560
Speaker 1: find them on Apple Podcasts, Spotify, and at www dot

504
00:29:28,560 --> 00:29:32,680
Speaker 1: Bloomberg dot com slash podcast Slash Law, and remember to

505
00:29:32,760 --> 00:29:35,600
Speaker 1: tune into The Bloomberg Law Show every week night at

506
00:29:35,640 --> 00:29:39,120
Speaker 1: ten pm Wall Street Time. I'm June Grosso and you're

507
00:29:39,240 --> 00:29:40,440
Speaker 1: listening to Bloomberg