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

2
00:00:09,240 --> 00:00:13,800
Speaker 1: We agonize over every curve, over every detail, every corner,

3
00:00:14,680 --> 00:00:18,600
Speaker 1: every element of the interior, the exterior, including things that

4
00:00:18,800 --> 00:00:22,479
Speaker 1: people probably won't even notice. That was Elon Musk five

5
00:00:22,560 --> 00:00:26,520
Speaker 1: years ago, presenting the first batch of Tesla electric compact

6
00:00:26,520 --> 00:00:31,000
Speaker 1: cars at the company's factory in Fremont, California. These days

7
00:00:31,040 --> 00:00:35,080
Speaker 1: you'll find Musk elsewhere in the state agonizing over every

8
00:00:35,120 --> 00:00:38,680
Speaker 1: detail of his new acquisition Twitter. So it's a bit

9
00:00:38,720 --> 00:00:41,440
Speaker 1: of unfortunate timing from Musk that he had to take

10
00:00:41,479 --> 00:00:45,480
Speaker 1: the stand to defend his unprecedented fifty five billion dollar

11
00:00:45,600 --> 00:00:49,160
Speaker 1: Tesla pay package at a Delaware trial this week, where

12
00:00:49,200 --> 00:00:53,600
Speaker 1: a Tesla shareholder is challenging the package as too excessive

13
00:00:53,840 --> 00:00:57,160
Speaker 1: for a part time CEO. My guest is an expert

14
00:00:57,200 --> 00:01:01,840
Speaker 1: in corporate law, Eric Tallely, a professor at Columbia Law School. Eric,

15
00:01:01,840 --> 00:01:04,520
Speaker 1: there seemed to be a lot of questions being addressed

16
00:01:04,520 --> 00:01:07,680
Speaker 1: at the trial. Was the payout excessive? Did the board

17
00:01:07,680 --> 00:01:12,000
Speaker 1: act appropriately independently of Musk? Is he worth the money?

18
00:01:12,040 --> 00:01:15,759
Speaker 1: What are the questions that the judge has to answer

19
00:01:15,800 --> 00:01:18,160
Speaker 1: to come to her decision? Well, I think there are

20
00:01:18,160 --> 00:01:20,480
Speaker 1: two major questions, and there's a little bit of a

21
00:01:20,600 --> 00:01:24,080
Speaker 1: rabbit hole about how Delaware law works. But the two

22
00:01:24,160 --> 00:01:26,600
Speaker 1: things that are going to be really important to understand

23
00:01:26,959 --> 00:01:30,680
Speaker 1: is what was the context by which the shareholders of

24
00:01:30,800 --> 00:01:35,640
Speaker 1: Tesla approved this compensation package, Because it turns out that

25
00:01:35,760 --> 00:01:38,240
Speaker 1: getting a shareholder vote, as long as it's a fully

26
00:01:38,240 --> 00:01:42,399
Speaker 1: informed vote to approve a pay package, does a lot.

27
00:01:42,520 --> 00:01:44,560
Speaker 1: It buys you a lot of real estate if you're

28
00:01:44,560 --> 00:01:46,760
Speaker 1: trying to defend that pay package, but it's got to

29
00:01:46,840 --> 00:01:48,960
Speaker 1: be kind of a by the book vote. And a

30
00:01:49,040 --> 00:01:53,520
Speaker 1: secondarily important issue is to what extent was the anticipated

31
00:01:53,560 --> 00:01:57,600
Speaker 1: size of this compensation package within the realm of kind

32
00:01:57,600 --> 00:02:00,480
Speaker 1: of a reasonable amount, something that would be fair to

33
00:02:00,560 --> 00:02:03,720
Speaker 1: the other shareholders of Tesla, who, after all, we're basically

34
00:02:03,720 --> 00:02:07,320
Speaker 1: going to be diluting themselves a lot as these benchmarks

35
00:02:07,400 --> 00:02:10,000
Speaker 1: got met and a bunch of these options got cashed

36
00:02:10,000 --> 00:02:12,760
Speaker 1: out if those benchmarks got that. So that part is

37
00:02:12,800 --> 00:02:15,680
Speaker 1: really going to turn on how hard was it to

38
00:02:15,840 --> 00:02:19,760
Speaker 1: meet these benchmarks? Were they really almost like automatics or

39
00:02:19,880 --> 00:02:22,240
Speaker 1: did they pretty much require must to work really hard

40
00:02:22,320 --> 00:02:24,560
Speaker 1: to meet them, in which case, you know, if he

41
00:02:24,600 --> 00:02:26,679
Speaker 1: didn't get paid that much maybe he wouldn't have worked

42
00:02:26,720 --> 00:02:29,600
Speaker 1: that hard. That's the argument that Tesla is going to use.

43
00:02:29,639 --> 00:02:32,760
Speaker 1: And so it turns out that the most likely applicable

44
00:02:32,840 --> 00:02:37,239
Speaker 1: legal test here is gonna pivot on those two questions

45
00:02:37,280 --> 00:02:40,280
Speaker 1: in kind of an inter related way. The more likely

46
00:02:40,320 --> 00:02:43,280
Speaker 1: it is that the shareholders actually they knew what they

47
00:02:43,280 --> 00:02:45,880
Speaker 1: were voting on, they voted with their highs wide open,

48
00:02:46,280 --> 00:02:48,519
Speaker 1: the more deference the judge is going to give to

49
00:02:48,600 --> 00:02:51,320
Speaker 1: the pay package. On the other hand, if the shareholders

50
00:02:51,360 --> 00:02:54,680
Speaker 1: didn't know everything or felt sort of bullied or forced

51
00:02:54,720 --> 00:02:57,520
Speaker 1: into this vote, then that pay package and its farness

52
00:02:57,639 --> 00:03:00,680
Speaker 1: is going to get more scrutiny in court. Defending the

53
00:03:00,840 --> 00:03:06,000
Speaker 1: compensation plan, Tesla directors have testified that it was important

54
00:03:06,000 --> 00:03:10,480
Speaker 1: to keep Musk focused on and engaged in running Tesla.

55
00:03:10,800 --> 00:03:13,760
Speaker 1: But Musk agreed with the shareholders lawyer that at the

56
00:03:13,800 --> 00:03:17,080
Speaker 1: time of this pay deal, he was spending about of

57
00:03:17,120 --> 00:03:23,600
Speaker 1: his time at Tesla, at SpaceX, on open Ai, boring,

58
00:03:23,800 --> 00:03:27,720
Speaker 1: and neuralink. And now he testified that he's spending almost

59
00:03:27,760 --> 00:03:31,200
Speaker 1: all his time reorganizing Twitter. So is he a part

60
00:03:31,240 --> 00:03:34,519
Speaker 1: time CEO. Then this makes this case one of the

61
00:03:34,560 --> 00:03:39,640
Speaker 1: most unprecedented executive compensation cases that we've ever seen. Quite frankly,

62
00:03:39,880 --> 00:03:43,440
Speaker 1: most CEOs don't work part time at their companies. They

63
00:03:43,480 --> 00:03:47,080
Speaker 1: are full time employees, and their employees who are paid

64
00:03:47,200 --> 00:03:50,560
Speaker 1: well to basically put every bit of their effort and

65
00:03:50,600 --> 00:03:54,760
Speaker 1: attention into the welfare of the company. Musk has always

66
00:03:54,800 --> 00:03:58,160
Speaker 1: been a little bit mercurial in his habits, and in fact,

67
00:03:58,200 --> 00:04:00,440
Speaker 1: they kind of knew that at the time. This was

68
00:04:00,520 --> 00:04:02,640
Speaker 1: not one of these things where, you know, some of

69
00:04:02,640 --> 00:04:05,640
Speaker 1: these other sideline ventures came up after the fact other

70
00:04:05,680 --> 00:04:08,320
Speaker 1: than Twitter. So there was a sense in which they

71
00:04:08,360 --> 00:04:10,640
Speaker 1: sort of knew they were getting a guy who had

72
00:04:10,720 --> 00:04:15,119
Speaker 1: divided attentions. And weirdly enough, the rationale that Twitter had

73
00:04:15,200 --> 00:04:17,680
Speaker 1: for trying to make sure this pay package at least

74
00:04:17,720 --> 00:04:21,600
Speaker 1: had the potential to be heavily remunerative was that they

75
00:04:21,640 --> 00:04:23,800
Speaker 1: wanted to make sure that it was attractive enough to

76
00:04:23,839 --> 00:04:26,359
Speaker 1: create a honeypot to steal his attention from some of

77
00:04:26,360 --> 00:04:29,200
Speaker 1: these other factors. And so it's kind of interesting that,

78
00:04:29,240 --> 00:04:31,240
Speaker 1: you know, the road that we've gone down under this

79
00:04:31,360 --> 00:04:34,640
Speaker 1: pay package involves Mr Musk kind of wandering off and

80
00:04:34,680 --> 00:04:37,040
Speaker 1: deciding he was going to take over another company Twitter,

81
00:04:37,160 --> 00:04:39,680
Speaker 1: that's not even in the space. I think that argument

82
00:04:39,680 --> 00:04:42,000
Speaker 1: could cut both ways. On the one hand, the plaintiffs

83
00:04:42,000 --> 00:04:44,040
Speaker 1: who were complaining about it sort of said, you know,

84
00:04:44,120 --> 00:04:46,279
Speaker 1: fat load of good that did you. You know, paying

85
00:04:46,360 --> 00:04:49,279
Speaker 1: him this lucrative amount, he was just gonna wander off anyway,

86
00:04:49,560 --> 00:04:52,080
Speaker 1: And maybe the defendants could say, yeah, if we aired,

87
00:04:52,120 --> 00:04:54,320
Speaker 1: we aired him not paying him enough to keep him

88
00:04:54,360 --> 00:04:57,280
Speaker 1: on mission and on target at Tesla, that may end

89
00:04:57,360 --> 00:04:59,480
Speaker 1: up being a little bit of a standoff of a tie.

90
00:04:59,480 --> 00:05:03,680
Speaker 1: I think you've manufacture that argument to go in either direction.

91
00:05:03,800 --> 00:05:06,479
Speaker 1: It is clear. It is clear that the way that

92
00:05:06,560 --> 00:05:10,520
Speaker 1: this played out pretty much came close to the maximal

93
00:05:10,560 --> 00:05:13,760
Speaker 1: payoff that he was going to get from this compensation package.

94
00:05:13,760 --> 00:05:16,919
Speaker 1: It could have been north of fifty six billion dollars,

95
00:05:17,000 --> 00:05:19,480
Speaker 1: just about fifty six billion dollars. It didn't end up

96
00:05:19,560 --> 00:05:21,760
Speaker 1: quite being that because it didn't make all the benchmarks,

97
00:05:21,800 --> 00:05:23,760
Speaker 1: but he's certainly made most of them, got the lion's

98
00:05:23,760 --> 00:05:26,080
Speaker 1: share of that payoff. So if you look at it

99
00:05:26,080 --> 00:05:30,120
Speaker 1: in hindsight, it just looks like a grotesquely large amount

100
00:05:30,200 --> 00:05:34,640
Speaker 1: that is paid. The real operative question, however, was at

101
00:05:34,680 --> 00:05:37,200
Speaker 1: the time that the grant was made, given that he

102
00:05:37,279 --> 00:05:40,200
Speaker 1: wasn't taking any salary, he was only going to do well,

103
00:05:40,240 --> 00:05:43,520
Speaker 1: if Tesla did well, did that make sense at the time,

104
00:05:43,600 --> 00:05:46,320
Speaker 1: and did the shareholders kind of agree with it? As

105
00:05:46,320 --> 00:05:50,359
Speaker 1: far as the question of whether Tesla's board acted independently,

106
00:05:50,839 --> 00:05:55,159
Speaker 1: Musk testified that he had no role whatsoever in setting

107
00:05:55,279 --> 00:05:59,400
Speaker 1: up this unprecedented pay package. However, in text with the

108
00:05:59,480 --> 00:06:03,320
Speaker 1: board men who headed the compensation committee, Musk said he

109
00:06:03,320 --> 00:06:07,080
Speaker 1: should end up owning of the company in a performance

110
00:06:07,120 --> 00:06:10,120
Speaker 1: plan built around a progression of targets that would each

111
00:06:10,160 --> 00:06:14,440
Speaker 1: grant him one percent of Tesla's outstanding shares. Doesn't that

112
00:06:14,560 --> 00:06:18,680
Speaker 1: contradict what he testified to Yeah, there are definitely some

113
00:06:18,760 --> 00:06:21,680
Speaker 1: inconsistent statements. There were some other statements of him and

114
00:06:21,720 --> 00:06:23,840
Speaker 1: the record that basically sort of said, yeah, I'm kind

115
00:06:23,839 --> 00:06:26,720
Speaker 1: of bargaining against myself on this, and so you know,

116
00:06:26,800 --> 00:06:29,719
Speaker 1: I think it's unlikely that at the end of the day,

117
00:06:30,160 --> 00:06:33,799
Speaker 1: anyone's really going to believe that he was so hands

118
00:06:33,800 --> 00:06:37,160
Speaker 1: off at Tesla that the board of directors felt completely

119
00:06:37,200 --> 00:06:41,760
Speaker 1: comfortable just telling him. Know, there are some important cases

120
00:06:41,760 --> 00:06:44,839
Speaker 1: out there that if that's true, if you've got a

121
00:06:44,880 --> 00:06:47,720
Speaker 1: board that's willing to stand up to you, then your

122
00:06:47,920 --> 00:06:51,640
Speaker 1: route to defending your compensation package is even easier. Than

123
00:06:51,680 --> 00:06:54,520
Speaker 1: what Elon Musk is facing right now. Because if you

124
00:06:54,640 --> 00:06:56,880
Speaker 1: really have a board that has bargaining power and is

125
00:06:56,920 --> 00:06:59,520
Speaker 1: willing to say no, they sign off on it, and

126
00:06:59,520 --> 00:07:02,520
Speaker 1: then the careholders vote in a fully informed way to

127
00:07:02,600 --> 00:07:06,040
Speaker 1: sign off on it. The case is basically done under

128
00:07:06,080 --> 00:07:09,440
Speaker 1: Delaware law. And it's interesting that this case has even

129
00:07:09,480 --> 00:07:13,520
Speaker 1: gotten to this point and the Tesla folks and Mosque

130
00:07:13,720 --> 00:07:17,480
Speaker 1: haven't even seriously tried to argue that a truly independent

131
00:07:17,520 --> 00:07:20,800
Speaker 1: board kicked the tires in a really strenuous way. I

132
00:07:20,840 --> 00:07:23,400
Speaker 1: think the main thing that is important in trying to

133
00:07:23,480 --> 00:07:27,160
Speaker 1: argue about, you know, just how independent the board was, is,

134
00:07:27,320 --> 00:07:30,720
Speaker 1: you know, really about what were the shareholders told before

135
00:07:30,760 --> 00:07:34,360
Speaker 1: they voted to approve this transaction. The plaintiffs in this case,

136
00:07:34,400 --> 00:07:36,520
Speaker 1: it sort of said, yeah, the shareholders voted to approve it,

137
00:07:36,720 --> 00:07:38,760
Speaker 1: so they didn't know the full story. The story that

138
00:07:38,840 --> 00:07:40,880
Speaker 1: they got was that the board was really careful in

139
00:07:40,920 --> 00:07:43,280
Speaker 1: working this out and in fact that the board was

140
00:07:43,320 --> 00:07:46,480
Speaker 1: being led along on a leash by Elon Musk at

141
00:07:46,480 --> 00:07:49,760
Speaker 1: an inaccurate disclosure of how things went down, and therefore

142
00:07:49,800 --> 00:07:52,840
Speaker 1: their vote wouldn't really be a by the book vote,

143
00:07:52,840 --> 00:07:55,160
Speaker 1: it would be an hunt informed vote. Formed vote. So

144
00:07:55,200 --> 00:07:57,720
Speaker 1: I think that's the main reason why this has come up,

145
00:07:57,800 --> 00:08:00,960
Speaker 1: not because you know, an informed and empowered board is

146
00:08:01,000 --> 00:08:04,000
Speaker 1: gonna do much work in his defense, other than the

147
00:08:04,040 --> 00:08:07,040
Speaker 1: fact that, you know, the plaintiffs have made an argument

148
00:08:07,080 --> 00:08:10,000
Speaker 1: in trying to beat back the shareholder vote from having

149
00:08:10,040 --> 00:08:12,960
Speaker 1: any effect, that the shareholders didn't know the whole story.

150
00:08:13,160 --> 00:08:15,920
Speaker 1: And you know, there's kind of an interesting question there too, right,

151
00:08:16,120 --> 00:08:20,680
Speaker 1: maybe TESLA is telling the shareholders and their proxy disclosures,

152
00:08:20,680 --> 00:08:23,280
Speaker 1: Oh gosh, the board really used their own judgment in

153
00:08:23,360 --> 00:08:25,760
Speaker 1: deciding to go forward on this, and they studied up

154
00:08:25,800 --> 00:08:28,920
Speaker 1: on it, but it's kind of an open secret and

155
00:08:29,080 --> 00:08:32,920
Speaker 1: everyone knows that Ellen is, you know, this incredibly powerful

156
00:08:33,040 --> 00:08:36,320
Speaker 1: and influential person, and when it came right down to it,

157
00:08:36,400 --> 00:08:38,320
Speaker 1: the board was going to be as weak need as

158
00:08:38,360 --> 00:08:40,640
Speaker 1: anyone else. So it may be the case that the

159
00:08:40,679 --> 00:08:43,160
Speaker 1: plaintiffs are right that there was this description in the

160
00:08:43,200 --> 00:08:46,400
Speaker 1: proxy materials, but no one actually believed it. Everyone sort

161
00:08:46,400 --> 00:08:49,640
Speaker 1: of figured, yeah, Ellen probably runs the roost on this,

162
00:08:49,720 --> 00:08:51,960
Speaker 1: and we're just going to have to presume that, notwithstanding

163
00:08:51,960 --> 00:08:54,360
Speaker 1: what the board is telling us or what these proxy

164
00:08:54,360 --> 00:08:57,080
Speaker 1: disclosures are telling us, you know, he was probably calling

165
00:08:57,120 --> 00:08:59,200
Speaker 1: the shots of the whole time, and and there may

166
00:08:59,200 --> 00:09:01,600
Speaker 1: be some of that argument that comes out later on

167
00:09:02,160 --> 00:09:04,880
Speaker 1: in the post trial briefing. It certainly wouldn't come out,

168
00:09:05,120 --> 00:09:07,120
Speaker 1: you know, during the live trial, but that could be

169
00:09:07,160 --> 00:09:09,600
Speaker 1: sort of, you know, part of the spin that that

170
00:09:09,720 --> 00:09:11,720
Speaker 1: Tesla puts on it, to the extent that there were

171
00:09:11,800 --> 00:09:16,120
Speaker 1: inconsistencies that come out in testimony versus what was in

172
00:09:16,160 --> 00:09:19,920
Speaker 1: those proxy solicitation materials TESLAA say, yeah, but you know,

173
00:09:20,200 --> 00:09:22,520
Speaker 1: no one really believed it anyway. The shareholders kind of

174
00:09:22,559 --> 00:09:25,959
Speaker 1: knew that they were getting a pretty dominated company, and

175
00:09:26,040 --> 00:09:28,440
Speaker 1: they were the sentry to make sure that, you know,

176
00:09:28,480 --> 00:09:32,840
Speaker 1: whatever the compensation package was was okay by them. So

177
00:09:32,880 --> 00:09:36,400
Speaker 1: then why did the judge allow the shareholders attorney to

178
00:09:36,440 --> 00:09:40,880
Speaker 1: go into a series of questions to show that must

179
00:09:41,040 --> 00:09:45,720
Speaker 1: acts with little oversight from Tesla's board. He asked about

180
00:09:45,800 --> 00:09:50,680
Speaker 1: this report that Musk has some fifty Tesla employees working

181
00:09:50,840 --> 00:09:54,679
Speaker 1: at Twitter, and asked whether a board member had ever

182
00:09:54,760 --> 00:09:57,000
Speaker 1: called him to say it's not a good idea to

183
00:09:57,200 --> 00:10:01,560
Speaker 1: use Tesla's resources for one of his private companies. So

184
00:10:01,920 --> 00:10:05,400
Speaker 1: resources of a public company used for a private company.

185
00:10:05,480 --> 00:10:08,200
Speaker 1: I think this was really meant by the plaintiffs, it

186
00:10:08,280 --> 00:10:12,600
Speaker 1: was meant to undercut, not necessarily whether the board's decision

187
00:10:12,840 --> 00:10:15,880
Speaker 1: requires legal deference or not. That's not the defense that

188
00:10:15,960 --> 00:10:18,280
Speaker 1: Tess was putting up. But what they do need to

189
00:10:18,320 --> 00:10:21,360
Speaker 1: be able to show is that that shareholder vote wasn't

190
00:10:21,440 --> 00:10:25,600
Speaker 1: built on kind of a mountain of prevarications and fanciful

191
00:10:25,679 --> 00:10:29,520
Speaker 1: yarns right that that that shareholder vote the shareholders saw

192
00:10:29,559 --> 00:10:32,800
Speaker 1: the package, they saw the projections, and they received a

193
00:10:32,840 --> 00:10:36,120
Speaker 1: description of what went into the structuring of that package.

194
00:10:36,480 --> 00:10:40,000
Speaker 1: Part of that description did say, hey, listen, this board

195
00:10:40,120 --> 00:10:42,840
Speaker 1: wasn't just like, you know, doing everything that Ellen wanted

196
00:10:42,880 --> 00:10:44,800
Speaker 1: to do. They did their own study on this, and

197
00:10:44,800 --> 00:10:46,880
Speaker 1: they think this is a good idea. And so I

198
00:10:46,920 --> 00:10:50,160
Speaker 1: think that's the nature of the inquiry here to try

199
00:10:50,160 --> 00:10:54,640
Speaker 1: to undercut or impeach the credibility of that statement that

200
00:10:54,679 --> 00:10:57,680
Speaker 1: was in the disclosure to shareholders, and the plaintifts are

201
00:10:57,720 --> 00:10:59,840
Speaker 1: trying to prove you know, what they told you that.

202
00:11:00,160 --> 00:11:01,839
Speaker 1: But the fact of the matter is no one wanted

203
00:11:01,880 --> 00:11:03,640
Speaker 1: to say no to Ellon. And here's a bunch of

204
00:11:03,640 --> 00:11:06,920
Speaker 1: examples about people being too chicken to say no to

205
00:11:07,120 --> 00:11:09,920
Speaker 1: Mr Musk, And so I think that's the reason they're

206
00:11:09,920 --> 00:11:12,280
Speaker 1: gonna they're gonna try to use that here. It is

207
00:11:12,320 --> 00:11:15,400
Speaker 1: an important thing for the plainest to do because you know,

208
00:11:15,440 --> 00:11:18,400
Speaker 1: if if this shareholder vote is found by Chancellor McCormick

209
00:11:18,440 --> 00:11:20,840
Speaker 1: to be, you know, kind of a fully informed and

210
00:11:20,880 --> 00:11:24,880
Speaker 1: non coerced vote of the majority of disinterested shareholders, it

211
00:11:24,960 --> 00:11:27,800
Speaker 1: makes the case much harder for the plaintifts to win.

212
00:11:27,960 --> 00:11:31,040
Speaker 1: It doesn't eliminate the possibility, but it shifts all the

213
00:11:31,080 --> 00:11:34,120
Speaker 1: evidentiary burdens onto the plaintiff, and so that makes it

214
00:11:34,160 --> 00:11:37,920
Speaker 1: a much harder case because burdens, particularly in cases that

215
00:11:37,960 --> 00:11:41,360
Speaker 1: are complex to have a lot of facts, burdens are tiebreakers,

216
00:11:41,400 --> 00:11:43,280
Speaker 1: and if you're the one that carries the burden and

217
00:11:43,320 --> 00:11:48,240
Speaker 1: the evidence is a tie, you lose. Chancellor McCormick is

218
00:11:48,440 --> 00:11:52,600
Speaker 1: familiar with Elon Musk because she presided over the short

219
00:11:52,640 --> 00:11:56,719
Speaker 1: lived Twitter lawsuit. At one point early in the testimony

220
00:11:56,840 --> 00:12:00,920
Speaker 1: to express frustration with Musk digressing, I'm going to interrupt

221
00:12:01,040 --> 00:12:03,400
Speaker 1: Mr Musk, because we can listen all day to this.

222
00:12:03,559 --> 00:12:06,000
Speaker 1: It's very interesting, but I don't think it was responsive

223
00:12:06,040 --> 00:12:08,800
Speaker 1: to the question, which I've now forgotten, is she the

224
00:12:08,840 --> 00:12:11,200
Speaker 1: right judge for this? Because she's not putting up with

225
00:12:11,360 --> 00:12:15,199
Speaker 1: any of Mousque's plays. It's a valid question to ask.

226
00:12:15,280 --> 00:12:17,760
Speaker 1: The fact of the matter is a judges are people too,

227
00:12:17,920 --> 00:12:20,679
Speaker 1: and be you know, a lot of this type of

228
00:12:20,880 --> 00:12:24,120
Speaker 1: adjudication involves kind of a sense of the read of

229
00:12:24,160 --> 00:12:26,640
Speaker 1: the room and whether the people that you're adjudicating on

230
00:12:26,720 --> 00:12:28,440
Speaker 1: have a good read of the room. And by the way,

231
00:12:28,440 --> 00:12:30,440
Speaker 1: I was listening in and I had forgotten the question

232
00:12:30,480 --> 00:12:33,040
Speaker 1: as well, So I think he really was, you know,

233
00:12:33,120 --> 00:12:35,800
Speaker 1: doing some monologue ng um in ways that a lot

234
00:12:35,800 --> 00:12:38,960
Speaker 1: of witnesses do quite frankly, I don't know if you notice,

235
00:12:39,000 --> 00:12:42,560
Speaker 1: But as the testimony wore on, particularly after that, Mr

236
00:12:42,640 --> 00:12:45,839
Speaker 1: Musk's affect flattened. You know, a lot of his responses

237
00:12:45,880 --> 00:12:48,880
Speaker 1: were sort of monosyllabic grunts that I guess I took

238
00:12:48,920 --> 00:12:52,160
Speaker 1: to be yeses or knows. But he ended up, you know,

239
00:12:52,200 --> 00:12:55,840
Speaker 1: being much less loquacious and much more clipped in his

240
00:12:55,920 --> 00:12:59,720
Speaker 1: responses towards the end. One possibility was that he realized

241
00:12:59,720 --> 00:13:01,240
Speaker 1: that he you know, he kind of didn't want to

242
00:13:01,280 --> 00:13:04,080
Speaker 1: try the patients of Chance for McCormick. Now, the other

243
00:13:04,160 --> 00:13:07,440
Speaker 1: thing that it's worth that's worth noting, is that Chance

244
00:13:07,520 --> 00:13:10,480
Speaker 1: for McCormick didn't hear any testimony from Mr musk in

245
00:13:10,520 --> 00:13:13,400
Speaker 1: the Twitter Kike, because she heard a lot from his lawyers,

246
00:13:13,720 --> 00:13:16,280
Speaker 1: and she saw a lot of his tweets, and she's

247
00:13:16,400 --> 00:13:19,280
Speaker 1: a lot of interviews, but he never had to appear

248
00:13:19,400 --> 00:13:22,000
Speaker 1: to testify in court in front of her. And so

249
00:13:22,280 --> 00:13:25,160
Speaker 1: I think, you know, it's important to realize, and lawyers

250
00:13:25,160 --> 00:13:27,839
Speaker 1: and judges realized this as well, that you can become

251
00:13:27,880 --> 00:13:31,240
Speaker 1: exasperated with, say the behavior of a lawyer or a

252
00:13:31,679 --> 00:13:36,120
Speaker 1: legal team in front of you without necessarily that exasperation,

253
00:13:36,360 --> 00:13:40,120
Speaker 1: you know, getting kind of transplanted onto the client themselves.

254
00:13:40,360 --> 00:13:42,480
Speaker 1: This is a case that's been baking all the way

255
00:13:42,559 --> 00:13:45,920
Speaker 1: since you know, two thousand nineteen, actually two thousand eighteen,

256
00:13:46,120 --> 00:13:49,240
Speaker 1: and the factual record is long. It has not been

257
00:13:49,240 --> 00:13:52,440
Speaker 1: on a rush schedule in which tempers get short and

258
00:13:52,600 --> 00:13:54,960
Speaker 1: people get impatient. This has been a you know, a

259
00:13:55,000 --> 00:13:57,840
Speaker 1: trial that's been coming up for years, and so on

260
00:13:58,000 --> 00:14:01,360
Speaker 1: some level, I kind of feel like a cancer. McCormick is,

261
00:14:01,600 --> 00:14:04,360
Speaker 1: in my view, sort of the consummate professional in in

262
00:14:04,440 --> 00:14:07,400
Speaker 1: these sorts of settings and is able to separate these

263
00:14:07,440 --> 00:14:10,840
Speaker 1: things from one another and be the types of cases

264
00:14:10,880 --> 00:14:13,680
Speaker 1: are so different from one another that I don't, you know,

265
00:14:13,720 --> 00:14:15,839
Speaker 1: I don't really think that this kind of has as

266
00:14:15,920 --> 00:14:18,319
Speaker 1: much of a time as of the essence aspect as

267
00:14:18,360 --> 00:14:20,440
Speaker 1: the other one was. So I think it's a little

268
00:14:20,480 --> 00:14:24,160
Speaker 1: easier to achieve some form of acoustic separation between these

269
00:14:24,200 --> 00:14:26,480
Speaker 1: two cases than it might be if both of these

270
00:14:26,480 --> 00:14:28,680
Speaker 1: were kind of fire drill cases that were happening at

271
00:14:28,680 --> 00:14:31,480
Speaker 1: the same time. This is a small thing, but I

272
00:14:31,560 --> 00:14:35,800
Speaker 1: wonder if things like this hurt Musk's credibility with the judge.

273
00:14:36,240 --> 00:14:38,560
Speaker 1: There was a lot of questioning about his opinion of

274
00:14:38,600 --> 00:14:43,560
Speaker 1: the SEC. He had written a tweet in July saying

275
00:14:43,840 --> 00:14:48,000
Speaker 1: SEC three letter acronym, middle word is Elon's. This was

276
00:14:48,080 --> 00:14:52,320
Speaker 1: widely read as being vulgar and an insult to the SEC,

277
00:14:52,600 --> 00:14:55,360
Speaker 1: but he claimed on the stand that it was misunderstood

278
00:14:55,400 --> 00:14:59,080
Speaker 1: and really meant save Elon's company. I mean, a, I

279
00:14:59,080 --> 00:15:02,920
Speaker 1: don't think anyone familiar with that particular acronym, and be

280
00:15:03,120 --> 00:15:06,240
Speaker 1: the answer just doesn't seem incredible. Yeah, one's mind can

281
00:15:06,240 --> 00:15:08,560
Speaker 1: cycle for the various other things that could stand in

282
00:15:08,600 --> 00:15:10,720
Speaker 1: for those other two initials. And I won't give you

283
00:15:10,760 --> 00:15:13,400
Speaker 1: a drum solo myself, but yeah, I think this is

284
00:15:13,440 --> 00:15:16,560
Speaker 1: something that he loves to do. He loves to do

285
00:15:16,640 --> 00:15:21,360
Speaker 1: the slightly juvenile, coy kind of word puzzled type of thing,

286
00:15:21,480 --> 00:15:24,840
Speaker 1: and I think that judges can lose their patients with that.

287
00:15:25,040 --> 00:15:28,560
Speaker 1: You know, it's interesting that probably the Twitter case in

288
00:15:28,680 --> 00:15:33,400
Speaker 1: many respects may have laid bare at least one realization that,

289
00:15:33,480 --> 00:15:36,200
Speaker 1: you know, messing around with the Delaware courts. You know,

290
00:15:36,240 --> 00:15:38,200
Speaker 1: you think of this is just a state court system.

291
00:15:38,200 --> 00:15:41,520
Speaker 1: It's nothing compared to the SEC. But the Delaware courts

292
00:15:41,520 --> 00:15:44,520
Speaker 1: are a special breed. They are sort of the business

293
00:15:44,520 --> 00:15:47,520
Speaker 1: court of the United States on some level. And I

294
00:15:47,520 --> 00:15:50,640
Speaker 1: think on some level of the outcome of the Twitter case,

295
00:15:50,720 --> 00:15:54,000
Speaker 1: in which after putting up a big protestation thinking he

296
00:15:54,080 --> 00:15:56,640
Speaker 1: was going to bend gravity to walk away from that deal,

297
00:15:56,920 --> 00:15:58,960
Speaker 1: he ended up closing on its original terms. And I

298
00:15:58,960 --> 00:16:00,520
Speaker 1: think that might have been a large part because of

299
00:16:00,520 --> 00:16:04,400
Speaker 1: the credibility of the court system. And so, yeah, would

300
00:16:04,440 --> 00:16:07,680
Speaker 1: you like to walk that thing back? Probably would, at

301
00:16:07,720 --> 00:16:09,240
Speaker 1: least to the extent that it was going to be

302
00:16:09,280 --> 00:16:11,600
Speaker 1: presented in front of Chancellor McCormick. But I think at

303
00:16:11,600 --> 00:16:14,480
Speaker 1: the time he really didn't realize that the Delaware state

304
00:16:14,480 --> 00:16:17,880
Speaker 1: court system is pretty professional and they're probably not to

305
00:16:17,920 --> 00:16:20,720
Speaker 1: be trifled with on some level. Now I will also

306
00:16:20,840 --> 00:16:24,240
Speaker 1: say that this particular case, I was never much of

307
00:16:24,240 --> 00:16:27,360
Speaker 1: a fan of Mr Musk's position in that earlier case.

308
00:16:27,400 --> 00:16:29,240
Speaker 1: I just thought it was a it was a case

309
00:16:29,240 --> 00:16:33,600
Speaker 1: of buyer's remorse, and he was drastically and desperately looking

310
00:16:33,640 --> 00:16:35,840
Speaker 1: for escape hatches to get out of, but none of

311
00:16:35,880 --> 00:16:38,400
Speaker 1: them was a very good escape hatch. This is a

312
00:16:38,480 --> 00:16:41,160
Speaker 1: stronger case for him. If I were posting odds on this,

313
00:16:41,240 --> 00:16:43,440
Speaker 1: I think it's quite likely he's going to win this case,

314
00:16:43,560 --> 00:16:46,280
Speaker 1: in large part because you know, there is this shareholder

315
00:16:46,360 --> 00:16:50,000
Speaker 1: vote out there the extent of failed disclosures. They're gonna

316
00:16:50,040 --> 00:16:51,960
Speaker 1: have to, you know, show a pretty strong case to

317
00:16:52,040 --> 00:16:55,000
Speaker 1: undercut the validity of that shareholder vote. And then, in addition,

318
00:16:55,440 --> 00:16:58,920
Speaker 1: you know, a lot of corporate law deals with sticks

319
00:16:58,960 --> 00:17:01,760
Speaker 1: with liability. Stick. If you do this, CEO, we're going

320
00:17:01,800 --> 00:17:04,159
Speaker 1: to punish you by forcing you to pay damages and

321
00:17:04,200 --> 00:17:08,520
Speaker 1: so forth when it comes to compensation. It's effectively the

322
00:17:08,560 --> 00:17:11,160
Speaker 1: other side of the sticks. It's the company is also

323
00:17:11,200 --> 00:17:13,359
Speaker 1: sort of saying, Okay, those sticks are doing some work,

324
00:17:13,720 --> 00:17:15,359
Speaker 1: but we want to do a little bit more work

325
00:17:15,400 --> 00:17:18,639
Speaker 1: with some carrot to fine tune those incentives of our

326
00:17:18,720 --> 00:17:22,040
Speaker 1: CEOs and our board members and courts over the years,

327
00:17:22,320 --> 00:17:25,679
Speaker 1: I think probably appropriately has said, yeah, we're probably not

328
00:17:25,720 --> 00:17:27,800
Speaker 1: getting it right for all companies when it comes to

329
00:17:27,840 --> 00:17:29,800
Speaker 1: the sticks. So we're going to give them a little

330
00:17:29,840 --> 00:17:31,919
Speaker 1: bit of deference when it comes to trying to figure

331
00:17:31,960 --> 00:17:34,960
Speaker 1: out how they're gonna situate their carrots on the other

332
00:17:35,000 --> 00:17:37,240
Speaker 1: side of those sticks. And you know, it may well

333
00:17:37,280 --> 00:17:40,040
Speaker 1: be that Tesla overpaid. It may well be that its

334
00:17:40,040 --> 00:17:43,240
Speaker 1: shareholders voted in a foolish way to permit this thing

335
00:17:43,280 --> 00:17:46,160
Speaker 1: to go forward. But if the shareholders were fully informed,

336
00:17:46,200 --> 00:17:48,080
Speaker 1: they knew that what they're getting into, they knew that

337
00:17:48,119 --> 00:17:51,280
Speaker 1: they could be heavily deluded later on, it's a much

338
00:17:51,359 --> 00:17:54,560
Speaker 1: more defensible case for Mr Musk sort of say, yeah,

339
00:17:54,600 --> 00:17:57,000
Speaker 1: and I accepted on that basis, and you know, on

340
00:17:57,000 --> 00:17:59,159
Speaker 1: some levels, for the same reason that I kind of

341
00:17:59,200 --> 00:18:02,399
Speaker 1: had to go through with the Twitter purchase, Testla should

342
00:18:02,440 --> 00:18:05,200
Speaker 1: have to go through with this contract that they after

343
00:18:05,280 --> 00:18:08,320
Speaker 1: all agreed. Now the shareholders, there at least the plaintiffs,

344
00:18:08,359 --> 00:18:11,359
Speaker 1: they're having buyer's remorse, but you know, they voted to

345
00:18:11,440 --> 00:18:13,520
Speaker 1: agree to pay me this, and so I think there

346
00:18:13,640 --> 00:18:15,960
Speaker 1: is kind of an interesting aspect in this case. The

347
00:18:16,040 --> 00:18:18,480
Speaker 1: law is not identical of course, but the tables are

348
00:18:18,520 --> 00:18:21,280
Speaker 1: a little bit turned that now. Mr Musk is the

349
00:18:21,280 --> 00:18:24,359
Speaker 1: person that's sort of saying, let's enforce this contract has written,

350
00:18:24,760 --> 00:18:27,800
Speaker 1: and it's the test LA shareholders that are saying, let

351
00:18:27,840 --> 00:18:30,880
Speaker 1: us walk away from this contract. Thanks. Eric. That's Columbia

352
00:18:30,960 --> 00:18:37,320
Speaker 1: Law School professor Eric Tally, a Republican e o C commissioner,

353
00:18:37,480 --> 00:18:42,240
Speaker 1: is deploying a rarely used agency procedure to silently initiate

354
00:18:42,280 --> 00:18:47,280
Speaker 1: a discrimination investigations against at least three companies providing their

355
00:18:47,280 --> 00:18:51,679
Speaker 1: employees with abortion travel benefits. That's according to five attorneys

356
00:18:51,680 --> 00:18:55,120
Speaker 1: who have seen the charges, joining me as J. Edward Moreno,

357
00:18:55,359 --> 00:18:59,040
Speaker 1: an employment discrimination reporter at Bloomberg Law who wrote the

358
00:18:59,040 --> 00:19:04,320
Speaker 1: exclusive story. How rare are these charges coming from commissioners directly?

359
00:19:05,000 --> 00:19:08,320
Speaker 1: These commissioners charges e o C commissioners, which there are

360
00:19:08,359 --> 00:19:12,120
Speaker 1: five of them, are able to file them independently. They're

361
00:19:12,240 --> 00:19:15,440
Speaker 1: typically used very rarely. In the past two fiscal years,

362
00:19:15,480 --> 00:19:18,000
Speaker 1: they've only been used three times. We still don't have

363
00:19:18,119 --> 00:19:21,200
Speaker 1: the data for this past fiscal year. But they're typically

364
00:19:21,280 --> 00:19:26,560
Speaker 1: used to push settled law or add claims to existing investigations, where,

365
00:19:26,840 --> 00:19:30,199
Speaker 1: for example, if somebody file the charge with the e

366
00:19:30,280 --> 00:19:32,680
Speaker 1: O C because they believed they were discriminated on the

367
00:19:32,720 --> 00:19:35,159
Speaker 1: basis of race. The and the e o C finds

368
00:19:35,200 --> 00:19:37,840
Speaker 1: that the employer was also discriminating on other grounds, they

369
00:19:37,840 --> 00:19:40,879
Speaker 1: can file a commissioners charge to add a claim to

370
00:19:40,920 --> 00:19:44,919
Speaker 1: that investigation that the victims didn't necessarily make. And so

371
00:19:45,000 --> 00:19:48,680
Speaker 1: tell us about these charges you learned about that. We're

372
00:19:48,760 --> 00:19:54,080
Speaker 1: brought by Republican Commissioner Andrea Lucas. E o C Commissioner

373
00:19:54,640 --> 00:19:58,720
Speaker 1: Andrea Lucas, who is appointed by President Trump in has

374
00:19:58,760 --> 00:20:01,480
Speaker 1: filed these commissioners charge, which is against at least three

375
00:20:01,520 --> 00:20:05,760
Speaker 1: companies um alleging that they're discriminating against pregnant employees and

376
00:20:05,840 --> 00:20:11,160
Speaker 1: disabled employees because they're offering they're allegedly offering um abortion

377
00:20:11,200 --> 00:20:15,119
Speaker 1: travel benefits, but not benefits for other medical procedures. What

378
00:20:15,200 --> 00:20:18,960
Speaker 1: I don't quite understand is what other procedures are they

379
00:20:19,040 --> 00:20:22,800
Speaker 1: claiming need travel benefits. Women are getting travel benefits to

380
00:20:22,840 --> 00:20:25,720
Speaker 1: travel out of state because in state they can't get

381
00:20:25,760 --> 00:20:29,240
Speaker 1: an abortion. So what is Lucas claiming here that there

382
00:20:29,240 --> 00:20:32,960
Speaker 1: are disabled workers and pregnant workers who need to go

383
00:20:33,000 --> 00:20:36,159
Speaker 1: out of state for procedures and they can't. Yeah, So

384
00:20:36,280 --> 00:20:38,679
Speaker 1: it's unclear from the charges. They're very brought. They just

385
00:20:38,720 --> 00:20:42,159
Speaker 1: make those two assertions that the company is discriminating against

386
00:20:42,200 --> 00:20:45,359
Speaker 1: pregnant workers and that it's discriminating against disabled workers. So

387
00:20:45,400 --> 00:20:47,879
Speaker 1: the facts of these cases are not yet established. The

388
00:20:48,000 --> 00:20:53,000
Speaker 1: investigations are still ongoing, but the charges make the assumption that,

389
00:20:53,240 --> 00:20:56,679
Speaker 1: for example, somebody with maybe a complicated pregnancy at that

390
00:20:56,720 --> 00:20:59,199
Speaker 1: company or at any of these companies, was maybe not

391
00:20:59,280 --> 00:21:03,560
Speaker 1: able to travel to see a specialist, or a person

392
00:21:03,600 --> 00:21:07,080
Speaker 1: with a disability was not able to travel to seek

393
00:21:07,119 --> 00:21:11,000
Speaker 1: the care that they needed. Meanwhile, these companies were offering

394
00:21:11,480 --> 00:21:14,600
Speaker 1: travel for abortions. As you mentioned, you know, it is

395
00:21:14,640 --> 00:21:18,040
Speaker 1: a little unusual because abortion is unique in that it

396
00:21:18,119 --> 00:21:19,960
Speaker 1: depending on where you are, you may not have access

397
00:21:19,960 --> 00:21:23,760
Speaker 1: to that anymore. Where with pregnancies or other conditions, those

398
00:21:23,800 --> 00:21:27,240
Speaker 1: services are generally offered locally or you know, if not

399
00:21:27,400 --> 00:21:30,480
Speaker 1: in the general vicinity of where you're working. It's also

400
00:21:30,680 --> 00:21:32,920
Speaker 1: unusual in the from the attorneys that I talked to

401
00:21:33,040 --> 00:21:36,440
Speaker 1: for this, Typically abortion travel is covered under a more

402
00:21:36,640 --> 00:21:41,200
Speaker 1: broad healthcare travel policy in an employer's healthcare plans. So

403
00:21:41,520 --> 00:21:43,760
Speaker 1: you know, they may have advertised it as a pledge

404
00:21:43,840 --> 00:21:47,000
Speaker 1: to cover abortion travel, but as far as you know,

405
00:21:47,280 --> 00:21:50,600
Speaker 1: their healthcare plan is concerned. It's just a general healthcare

406
00:21:50,640 --> 00:21:54,680
Speaker 1: travel policy that happens to include abortion. A commissioner can

407
00:21:54,720 --> 00:21:58,040
Speaker 1: just you know, launch an investigation and then the investigators

408
00:21:58,040 --> 00:22:02,280
Speaker 1: have to investigate it. Is there any other step in between? No,

409
00:22:02,560 --> 00:22:05,439
Speaker 1: So there's a couple of avenues for commissioners charges to

410
00:22:05,480 --> 00:22:09,159
Speaker 1: go through. In this case, um, you know, Andrea Lucas

411
00:22:09,200 --> 00:22:13,199
Speaker 1: has the power and authority to based on information she

412
00:22:14,320 --> 00:22:16,840
Speaker 1: you know, maybe publicly available of information or information she

413
00:22:16,880 --> 00:22:20,120
Speaker 1: required otherwise, uh, to file these charges directly. And then

414
00:22:20,520 --> 00:22:24,080
Speaker 1: the district office where that employer you know is headquartered,

415
00:22:24,520 --> 00:22:28,360
Speaker 1: we'll have to investigate that claim. And then if they

416
00:22:28,400 --> 00:22:32,520
Speaker 1: find that there was discrimination, then they kept to conciliate

417
00:22:32,640 --> 00:22:34,560
Speaker 1: or you know, try to reach a settlement, and if

418
00:22:34,560 --> 00:22:38,280
Speaker 1: that doesn't work out in the EOC can sue. But

419
00:22:38,440 --> 00:22:42,760
Speaker 1: this avenue that Andrew Lucas is choosing is quite unusual.

420
00:22:42,920 --> 00:22:47,320
Speaker 1: What is more common and more routine is for say,

421
00:22:47,640 --> 00:22:50,440
Speaker 1: an alleged victim of discrimination at a company to come

422
00:22:50,480 --> 00:22:53,400
Speaker 1: forward to the e o C and say, for example,

423
00:22:53,480 --> 00:22:56,240
Speaker 1: that they feel that they were discriminated against based on

424
00:22:56,280 --> 00:23:00,199
Speaker 1: their race. And let's say, throughout the investigation, the e

425
00:23:00,320 --> 00:23:03,800
Speaker 1: o C finds that the employer was discriminating against other

426
00:23:04,200 --> 00:23:07,920
Speaker 1: employees and candidates based on gender. Well, the victims didn't

427
00:23:07,920 --> 00:23:11,119
Speaker 1: make that specific claim, so the e o C can

428
00:23:11,200 --> 00:23:13,240
Speaker 1: use the commissioner's charts to add that claim to an

429
00:23:13,359 --> 00:23:17,480
Speaker 1: existing investigation. That's what is more common for for these

430
00:23:17,480 --> 00:23:20,640
Speaker 1: types of charges. Is there any case law to support

431
00:23:20,720 --> 00:23:25,960
Speaker 1: these charges, any precedent or are they completely novel? It's

432
00:23:25,960 --> 00:23:28,560
Speaker 1: pretty novel. You know, it's only been since June that,

433
00:23:28,720 --> 00:23:31,320
Speaker 1: you know, the constitutional right to an abortion has been overturned,

434
00:23:31,600 --> 00:23:34,760
Speaker 1: so this has not been tested in federal courts yet.

435
00:23:35,040 --> 00:23:37,879
Speaker 1: But the laws that place here are Title seven of

436
00:23:37,920 --> 00:23:41,080
Speaker 1: the Civil Rights Act of nineteen sixty four and the

437
00:23:41,080 --> 00:23:43,919
Speaker 1: Americans with Disability Act on the Pregnancy Discrimination Act. And

438
00:23:44,040 --> 00:23:45,520
Speaker 1: you know, I talked to a lot of lawyers for

439
00:23:45,520 --> 00:23:49,040
Speaker 1: the story and trying to find these charges, and generally

440
00:23:49,400 --> 00:23:52,480
Speaker 1: what they argue is that the Pregnancy Discrimination Act in

441
00:23:52,520 --> 00:23:56,720
Speaker 1: fact protects an employer's ability to provide abortion benefits rather

442
00:23:56,760 --> 00:24:00,000
Speaker 1: than preclude them from doing so. And also, what's interest

443
00:24:00,040 --> 00:24:02,240
Speaker 1: think about these charges is that since they come from

444
00:24:02,480 --> 00:24:05,560
Speaker 1: a commissioner, they don't necessarily have a victim. There wasn't,

445
00:24:05,640 --> 00:24:08,439
Speaker 1: you know, somebody who came forward and said that they

446
00:24:08,440 --> 00:24:10,760
Speaker 1: felt that they were discriminated against based on off of

447
00:24:10,800 --> 00:24:14,119
Speaker 1: these benefits. So we still haven't seen that come forward,

448
00:24:14,160 --> 00:24:16,480
Speaker 1: and at least that we are aware of UM in

449
00:24:17,000 --> 00:24:20,320
Speaker 1: the courts or in the public eye. What happens. Suppose

450
00:24:20,480 --> 00:24:26,840
Speaker 1: the agency investigates and it believes that discrimination occurred. What happens?

451
00:24:26,880 --> 00:24:29,919
Speaker 1: Then the EOC would then have to go through a

452
00:24:29,920 --> 00:24:33,320
Speaker 1: conciliation period where it tries to negotiate a settlement with

453
00:24:33,400 --> 00:24:37,639
Speaker 1: the employer. UM. A lot of times that doesn't end

454
00:24:37,720 --> 00:24:41,080
Speaker 1: up happening. UM, they are not able to reach a settlement,

455
00:24:41,520 --> 00:24:45,840
Speaker 1: and then the District Office, which you know also is

456
00:24:45,880 --> 00:24:49,639
Speaker 1: the one trying to reach the settlement, will let the

457
00:24:49,680 --> 00:24:53,560
Speaker 1: General Council's Office know and they will make a decision

458
00:24:53,640 --> 00:24:57,159
Speaker 1: in this case since it's you know, uh, the issues

459
00:24:57,160 --> 00:24:59,240
Speaker 1: here are novel and like I said, I haven't been

460
00:24:59,240 --> 00:25:03,760
Speaker 1: tested in corporate were it would likely result in a

461
00:25:03,760 --> 00:25:08,080
Speaker 1: commission vote. So the five commissioners now four commissioners because

462
00:25:08,200 --> 00:25:11,560
Speaker 1: UM when just just resigned, will have to vote on

463
00:25:11,600 --> 00:25:14,400
Speaker 1: whether or not they would like to pursue litigation. Here,

464
00:25:15,080 --> 00:25:20,640
Speaker 1: you write that these arguments that Lucas makes mirror those

465
00:25:20,760 --> 00:25:25,760
Speaker 1: of the agency's former general Council right, so UM. The

466
00:25:25,800 --> 00:25:30,439
Speaker 1: agency's former General Council, Sharon Gustafson, she was appointed by

467
00:25:30,480 --> 00:25:33,400
Speaker 1: President Trump and served the General Council throughout the Trump administration.

468
00:25:33,840 --> 00:25:39,359
Speaker 1: In October, began sending letters two employers basically warning that

469
00:25:39,600 --> 00:25:41,879
Speaker 1: her interpretation of the law as a former eo C

470
00:25:41,960 --> 00:25:44,800
Speaker 1: General Council was that, you know, the same as what

471
00:25:44,960 --> 00:25:48,280
Speaker 1: Andrea Lucas is alleging in these charges is that the

472
00:25:48,280 --> 00:25:52,480
Speaker 1: abortion travel benefits are potentially discriminatory. UM. That ruffled a

473
00:25:52,480 --> 00:25:55,960
Speaker 1: bit of feathers among the employer community and little er

474
00:25:56,680 --> 00:26:00,760
Speaker 1: than a letter to the e o C requesting some

475
00:26:00,840 --> 00:26:04,040
Speaker 1: sort of ethics investigation or some sort of response from them,

476
00:26:04,560 --> 00:26:06,240
Speaker 1: saying that that you know that that was not the

477
00:26:06,280 --> 00:26:09,199
Speaker 1: agency's position, and that's pretty much what they did. They

478
00:26:09,240 --> 00:26:13,000
Speaker 1: responded to the letter saying that kostoptancies don't reflect There's

479
00:26:13,160 --> 00:26:16,800
Speaker 1: one thing that I find interesting about Christopson's letter is

480
00:26:17,080 --> 00:26:19,119
Speaker 1: it was sent out broadly. She's, um, you know, a

481
00:26:19,240 --> 00:26:23,240
Speaker 1: solo practice attorney, and it was sent out broadly to employers. UM.

482
00:26:23,320 --> 00:26:26,639
Speaker 1: And it's unclear the letters goal one if it was

483
00:26:26,840 --> 00:26:30,960
Speaker 1: if its goal was to attract clients or and to

484
00:26:31,880 --> 00:26:36,680
Speaker 1: the letter also specifically notes that you know, employers could

485
00:26:36,680 --> 00:26:40,600
Speaker 1: be subject to commissioners charges or targeted investigations, which, as

486
00:26:40,640 --> 00:26:44,320
Speaker 1: I mentioned earlier, have historically been pretty rare, especially in

487
00:26:44,359 --> 00:26:46,320
Speaker 1: the way that she's suggesting that they may be used.

488
00:26:46,840 --> 00:26:51,680
Speaker 1: Does Lucas have a connection to Gustafson. They crossed passed

489
00:26:51,680 --> 00:26:55,840
Speaker 1: at the agency. Um. Lucas, uh, like I said, joined

490
00:26:55,880 --> 00:26:58,959
Speaker 1: the agency in the latter half of towards the end

491
00:26:58,960 --> 00:27:02,439
Speaker 1: of the Trump administration, and Kustafson left the agency in

492
00:27:02,520 --> 00:27:06,239
Speaker 1: early one at the start of the wider administration. And

493
00:27:06,280 --> 00:27:09,520
Speaker 1: tell us about Lucas and her focus. Yes, so, Lucas

494
00:27:09,560 --> 00:27:12,960
Speaker 1: has been known to UM have a priority in religious

495
00:27:13,040 --> 00:27:17,720
Speaker 1: liberty in the workplace. She often speaks at events and

496
00:27:17,920 --> 00:27:22,000
Speaker 1: other sorts of panels where she talks about religious discrimination

497
00:27:22,000 --> 00:27:24,119
Speaker 1: in the workplace. She's also has quite a bit of

498
00:27:24,119 --> 00:27:28,240
Speaker 1: focus on disability issues. In fact, she deviates from her

499
00:27:28,320 --> 00:27:31,920
Speaker 1: Republican colleagues often when it comes to those litigations votes,

500
00:27:32,240 --> 00:27:36,119
Speaker 1: particularly when it comes to you know, religious discrimination or

501
00:27:36,240 --> 00:27:41,880
Speaker 1: disability discrimination issues. What's the makeup of the commission as

502
00:27:41,880 --> 00:27:46,960
Speaker 1: far as Republicans and Democrats? Yes, so, currently, um, there's

503
00:27:47,000 --> 00:27:49,720
Speaker 1: a Democratic chair who sets the agenda and puts things

504
00:27:49,840 --> 00:27:54,960
Speaker 1: forward for a vote, and there are three Republican commissioners

505
00:27:55,000 --> 00:27:58,159
Speaker 1: and one other Democrats, so it's a Republican majority but

506
00:27:58,160 --> 00:28:02,920
Speaker 1: with a Democratic chair. Um. As of this week, Janet Dillon,

507
00:28:03,160 --> 00:28:05,639
Speaker 1: who is one of the Republican commissioners who charged the

508
00:28:05,680 --> 00:28:10,240
Speaker 1: commissions during the Trump administration, resigned, so by next week

509
00:28:10,520 --> 00:28:14,639
Speaker 1: the Commission's makeup will be and even to two partisan split,

510
00:28:15,080 --> 00:28:17,440
Speaker 1: so much of the same gridlock that the agency is

511
00:28:17,520 --> 00:28:20,120
Speaker 1: that the Commission has been experiencing for the past year,

512
00:28:20,280 --> 00:28:24,480
Speaker 1: so will likely remain for you know, until Biden is

513
00:28:24,520 --> 00:28:28,240
Speaker 1: able to confirm a Democrat into the open seats, having

514
00:28:29,160 --> 00:28:33,240
Speaker 1: has he nominated a Democrat. Yeah, and um, I believe

515
00:28:33,600 --> 00:28:37,040
Speaker 1: in the spring he nominated a civil rights attorney, Coupon

516
00:28:37,080 --> 00:28:40,400
Speaker 1: a cour and she's had a bit of trouble getting

517
00:28:40,400 --> 00:28:43,000
Speaker 1: through the Senate. Um. You know, there was a committee

518
00:28:43,000 --> 00:28:46,200
Speaker 1: markup for her confirmation where there was a deadlock, which

519
00:28:46,280 --> 00:28:49,480
Speaker 1: means that the Senate needs to have another procedural vote

520
00:28:49,480 --> 00:28:53,080
Speaker 1: before there's a full floor vote on her nomination. Currently,

521
00:28:53,200 --> 00:28:54,920
Speaker 1: and now after the mid terms, it seems that the

522
00:28:54,960 --> 00:28:57,600
Speaker 1: Senate is going to have you know, Democratic control, but

523
00:28:57,720 --> 00:29:00,800
Speaker 1: still a pretty pretty razors and majority. So we'll see

524
00:29:00,800 --> 00:29:02,640
Speaker 1: how that plays out. I know that by the end

525
00:29:02,680 --> 00:29:05,040
Speaker 1: of the year she is not confirmed, she will have

526
00:29:05,080 --> 00:29:07,520
Speaker 1: to be renominated and start the whole process off again.

527
00:29:08,160 --> 00:29:11,880
Speaker 1: Is there a new General Council since Gustafson left? Her

528
00:29:11,880 --> 00:29:16,840
Speaker 1: position has been opened since she left in early There

529
00:29:16,920 --> 00:29:19,560
Speaker 1: is a nominee for her position, who a fact has

530
00:29:19,640 --> 00:29:23,160
Speaker 1: a committee vote coming up this week, considering she wouldn't

531
00:29:23,240 --> 00:29:24,560
Speaker 1: you know she has a little bit less power than

532
00:29:24,600 --> 00:29:27,200
Speaker 1: a commissioner, does you know? She doesn't vote on policy

533
00:29:27,240 --> 00:29:30,000
Speaker 1: issues necessarily. She has proven to be a little less

534
00:29:30,000 --> 00:29:33,360
Speaker 1: controversial than the cut has vote. You know, Still with

535
00:29:33,440 --> 00:29:36,440
Speaker 1: the Senate, it's it's very hard to predict whether her

536
00:29:36,480 --> 00:29:39,560
Speaker 1: nomination will go smoothly. Um, and she has a committee

537
00:29:39,560 --> 00:29:43,640
Speaker 1: markup coming up this week. The agency said that Gustafson's

538
00:29:43,800 --> 00:29:47,120
Speaker 1: views after she sent out that letter didn't reflect the

539
00:29:47,240 --> 00:29:49,800
Speaker 1: views of the E e O C. So then why

540
00:29:49,920 --> 00:29:54,400
Speaker 1: is this commissioner able to start an investigation with those

541
00:29:54,400 --> 00:29:58,400
Speaker 1: same views? You know, commissioners have the authority and power

542
00:29:58,520 --> 00:30:02,320
Speaker 1: to do that completely into sally, And in fact, she

543
00:30:02,440 --> 00:30:06,080
Speaker 1: filed these charges and her colleagues wouldn't even necessarily be

544
00:30:06,280 --> 00:30:09,200
Speaker 1: informed about them like she could do this completely independently,

545
00:30:09,240 --> 00:30:12,520
Speaker 1: without having any sort of vote or discussion with her colleagues.

546
00:30:12,760 --> 00:30:15,280
Speaker 1: Like I said, it's it's very rare that something like

547
00:30:15,320 --> 00:30:19,040
Speaker 1: that happens. I think maybe the chair might be aware

548
00:30:19,040 --> 00:30:22,000
Speaker 1: of it, but again, this is within her authority. I

549
00:30:22,000 --> 00:30:24,680
Speaker 1: don't know if there's much the chair, the or anyone

550
00:30:24,680 --> 00:30:27,120
Speaker 1: else at the agency can do about that. This is

551
00:30:27,120 --> 00:30:29,080
Speaker 1: an exclusive. Can you tell us how you found out

552
00:30:29,080 --> 00:30:33,680
Speaker 1: about this? Right? So, after we covered sharing Gustafa's letter

553
00:30:33,840 --> 00:30:36,760
Speaker 1: and how that ruffled some feathers into the employer community,

554
00:30:37,040 --> 00:30:40,520
Speaker 1: and you know, ever since then, I've just been really

555
00:30:40,560 --> 00:30:43,240
Speaker 1: working the phones and talking to a lot of employment

556
00:30:43,240 --> 00:30:46,480
Speaker 1: attorneys and I eventually heard that some attorneys that I

557
00:30:46,520 --> 00:30:49,720
Speaker 1: spoke to have clients who have received those charges. And

558
00:30:49,880 --> 00:30:52,800
Speaker 1: I was able to confirm that with about five attorneys

559
00:30:52,840 --> 00:30:55,400
Speaker 1: that at least three charges exist, and those five attorneys

560
00:30:55,400 --> 00:30:58,640
Speaker 1: have seen those charges and read the allegations. To me, Well,

561
00:30:58,680 --> 00:31:02,959
Speaker 1: congratulations on your store, Thanks Edward. That's j Edward Moreno

562
00:31:03,040 --> 00:31:05,720
Speaker 1: of Bloomberg Law and that's it for this edition of

563
00:31:05,720 --> 00:31:08,440
Speaker 1: the Bloomberg Law Show. Remember you can always get the

564
00:31:08,480 --> 00:31:11,680
Speaker 1: latest legal news on our Bloomberg Law podcast. You can

565
00:31:11,720 --> 00:31:15,960
Speaker 1: find them on Apple podcasts Spotify and at www dot

566
00:31:15,960 --> 00:31:20,120
Speaker 1: bloomberg dot com, slash podcast, Slash Law, and remember to

567
00:31:20,200 --> 00:31:23,000
Speaker 1: tune into The Bloomberg Law Show every week night at

568
00:31:23,040 --> 00:31:26,560
Speaker 1: ten BM Wall Street Time. I'm June Grossow, and you're

569
00:31:26,640 --> 00:31:27,840
Speaker 1: listening to Bloomberg