WEBVTT - NCAA Fight Over Athlete Compensation Is Toss-Up 0:00:03.200 --> 0:00:07.960 This is Bloomberg Law with June Brussel from Bloomberg Radio. 0:00:14.080 --> 0:00:17.480 This weekend, college sports fans will be watching the basketball 0:00:17.560 --> 0:00:20.640 court as the Final Four is played, But this week 0:00:20.840 --> 0:00:24.639 fans were watching another court, the Supreme Court, in what 0:00:24.800 --> 0:00:27.120 seemed like a toss up for the n C Double 0:00:27.200 --> 0:00:29.880 A in a case that could loosen its grip over 0:00:30.000 --> 0:00:34.360 college and mean greater compensation for student athletes. The n 0:00:34.400 --> 0:00:36.839 C Double A is trying to shield its rules from 0:00:36.920 --> 0:00:40.560 antitrust scrutiny and asking the jostice Is to overturn a 0:00:40.680 --> 0:00:43.840 ruling that would let member schools offer their athletes more 0:00:43.880 --> 0:00:47.400 in the way of education related compensation. Many of the 0:00:47.479 --> 0:00:51.440 jostices seemed sympathetic to the students here at johnstice Is 0:00:51.479 --> 0:00:55.520 Brett Kavanaugh, Clarence Thomas, and Samuel Alito. I mean you 0:00:55.600 --> 0:01:00.520 said earlier, Uh, this would allow the player is to 0:01:00.680 --> 0:01:03.720 receive six thousand dollars a year, as if that were 0:01:03.760 --> 0:01:09.920 some exorbitant amount when the TV contracts are in the billions. Well, 0:01:09.920 --> 0:01:14.559 it just strikes me as odd that the coaches salaries 0:01:14.600 --> 0:01:18.280 have ballooned and they're in the amateur ranks as are 0:01:18.360 --> 0:01:22.800 the players. So the argument is they are recruited, they're 0:01:22.920 --> 0:01:25.840 used up, and then they're cast aside without even a 0:01:25.880 --> 0:01:28.840 college degree. So they say, how can this be defended 0:01:29.160 --> 0:01:32.919 in the name of amateurism? But the Justice is also 0:01:33.040 --> 0:01:37.000 seemed worry of undermining the world of college sports as 0:01:37.040 --> 0:01:40.880 justice is Sonya Soto Mayor and Stephen Bryer expressed, how 0:01:40.880 --> 0:01:44.720 do we know that we're not just destroying the game 0:01:45.280 --> 0:01:49.760 as it exists? I worry a lot about judges getting 0:01:49.760 --> 0:01:55.400 into the business of deciding how amateur sports should be run. 0:01:55.800 --> 0:01:58.560 Joining me is Audrey Anderson, head of the higher education 0:01:58.640 --> 0:02:02.600 practice at Bassbar and Sims. Tell us about the issue here, Audrey, 0:02:02.920 --> 0:02:08.560 the issue before the Court is an antitrust ruling that 0:02:08.680 --> 0:02:11.560 the Ninth Circuit entered against the m C Double A 0:02:11.800 --> 0:02:14.320 that found some of the limits that the m C 0:02:14.440 --> 0:02:17.880 double A puts on the compensation that can be received 0:02:17.880 --> 0:02:21.800 by student athletes to be unlawful under the anti trust laws, 0:02:21.880 --> 0:02:23.880 and the n C double A is asking the Supreme 0:02:23.919 --> 0:02:27.480 Court to overrule that and find that the m C 0:02:27.560 --> 0:02:30.519 double A is allowed under the anti trust laws to 0:02:31.200 --> 0:02:36.440 limit all forms of compensation to student athletes. What kinds 0:02:36.480 --> 0:02:40.400 of compensation did the Ninth Circuit say, We're Okay, I 0:02:40.440 --> 0:02:44.520 mean we're not talking about actually paying salaries to student athletes, 0:02:44.560 --> 0:02:48.520 are we know what the Districcord and the Ninth Circuit 0:02:48.919 --> 0:02:51.800 held was that the m C double A could not 0:02:52.320 --> 0:02:58.840 limit educationally related benefit to be provided to student athletes 0:02:59.160 --> 0:03:03.560 that were non cash. They also ruled that the double 0:03:03.639 --> 0:03:08.040 A had to allow student athletes to receive up to 0:03:08.560 --> 0:03:12.800 fifty nine hundred dollars a year in cash or cash 0:03:12.840 --> 0:03:17.720 equivalent payments that were education or academic related. So there's 0:03:17.720 --> 0:03:21.800 a lot of talking about in the argument, and what's 0:03:21.840 --> 0:03:25.720 the N double as argument about this? The N double 0:03:25.760 --> 0:03:31.320 aise argument is that under the antitrust laws, they are 0:03:31.360 --> 0:03:36.320 what you would call a joint venture. The participants in 0:03:36.800 --> 0:03:41.080 their entity have to agree on things like the rules 0:03:41.080 --> 0:03:43.480 of the game, like how many players will be out 0:03:43.520 --> 0:03:46.240 there out on the field in order for them to 0:03:46.320 --> 0:03:50.640 provide their products college sports at all. And they say, 0:03:50.720 --> 0:03:52.960 one of the rules we have to have for us 0:03:53.000 --> 0:03:56.240 to provide the product of college sports is that the 0:03:56.280 --> 0:03:59.520 athletes will be amateurs. And for us that means that 0:03:59.640 --> 0:04:03.000 the students won't be paid anything. We get to define 0:04:03.120 --> 0:04:06.000 what amateurism is. What the m C double A really 0:04:06.120 --> 0:04:08.640 wants to get from this case is a change in 0:04:08.680 --> 0:04:11.400 the anti trust laws. They say it's not a change, 0:04:11.400 --> 0:04:14.720 but they want a clarification that under the anti trust laws, 0:04:15.080 --> 0:04:19.039 court should give very deferential review to any rule that 0:04:19.080 --> 0:04:22.640 the m C double A says is related to amateurism. 0:04:23.279 --> 0:04:26.720 Did most of the justices seem very sympathetic to the 0:04:26.760 --> 0:04:30.640 athletes position, some pointing out that college sports is a 0:04:30.720 --> 0:04:34.600 multibillion dollar business and the amount of money the coaches get. 0:04:34.920 --> 0:04:38.080 Absolutely there was a lot of sympathy for the athletes 0:04:38.520 --> 0:04:43.200 and a lot of statements showing that the court thinks 0:04:43.320 --> 0:04:47.080 that college athletics has changed a lot since the last 0:04:47.120 --> 0:04:50.159 time the Court considered an antitrust case about the m 0:04:50.200 --> 0:04:52.479 C double A, which is in the mid nineteen and 0:04:52.640 --> 0:04:56.480 many members of the court noting that the large amounts 0:04:56.520 --> 0:04:59.760 of money that's in college athletics now and that the 0:05:00.000 --> 0:05:04.160 to be benefiting everybody except the student athletes is an 0:05:04.200 --> 0:05:07.120 important difference for how they view the case under the 0:05:07.120 --> 0:05:10.599 antitrust law. But some of the galstices did seem to 0:05:10.680 --> 0:05:14.520 be buying into the n C double as position that 0:05:14.800 --> 0:05:19.800 these payments would change the amateur nature of college sports. Again, 0:05:19.800 --> 0:05:23.560 though they're talking about only six thousand dollars right. I 0:05:23.680 --> 0:05:26.360 heard that concern to June, and I think that part 0:05:26.360 --> 0:05:29.440 of it is that nobody really knows what will happen. 0:05:30.000 --> 0:05:33.520 Part of it is will six thousand dollars a year 0:05:33.640 --> 0:05:36.640 to student athletes who participate on some of these what 0:05:37.200 --> 0:05:40.240 change the game? I think part of it is are 0:05:40.279 --> 0:05:45.320 there some schools or conferences that will set up internships 0:05:45.400 --> 0:05:48.400 that have large amounts of money attached to them. I 0:05:48.440 --> 0:05:50.360 think part of it, though, two, is there's a lot 0:05:50.360 --> 0:05:53.320 of concern about what will the next cases be If 0:05:53.360 --> 0:05:55.840 this is okay and when say that this is a 0:05:56.000 --> 0:06:00.800 legal rubric for reviewing rules around amateurism, well, what will 0:06:00.839 --> 0:06:03.839 that allow the next set of wine is to challenge 0:06:04.040 --> 0:06:09.120 and challenge successfully? And will that ruin college sports? And 0:06:09.320 --> 0:06:12.479 we just don't know what will happen because you don't 0:06:12.480 --> 0:06:15.080 know how the market will respond. And you know, those 0:06:15.160 --> 0:06:18.240 conferences are still allowed to put in place whatever kind 0:06:18.240 --> 0:06:20.320 of limit they would like to put in place, just 0:06:20.400 --> 0:06:22.279 the m C double A can't put them in place. 0:06:22.560 --> 0:06:27.000 And any individual school makes the decision about what they 0:06:27.000 --> 0:06:30.800 are going to offer. It's not like this injunction required 0:06:31.080 --> 0:06:35.680 any school to provide any particular benefit to its students. Athletes. 0:06:36.560 --> 0:06:38.800 Can you read where the court might come out in 0:06:38.800 --> 0:06:43.040 this case? I thought that there was a fair amount 0:06:43.080 --> 0:06:46.000 of sympathy to the athletes situations, But I also heard 0:06:46.040 --> 0:06:47.720 a fair amount of sympathy to some of the m 0:06:47.760 --> 0:06:50.839 C double as practical arguments. I came out of this 0:06:51.000 --> 0:06:54.440 June not really knowing exactly where the court was going 0:06:54.520 --> 0:06:58.400 to come out. I did not hear much sympathy for 0:06:58.640 --> 0:07:02.520 the m C double A home run argument of give 0:07:02.560 --> 0:07:06.040 the m C double a very deferential review for anything 0:07:06.200 --> 0:07:11.000 it determines to be amateurism related. I did, however, hear 0:07:11.040 --> 0:07:15.800 the Court having a lot of concerns about putting in 0:07:15.880 --> 0:07:20.320 place or approving any kind of rule that would allow 0:07:20.480 --> 0:07:24.320 courts to be micromanaging the rules of the m C 0:07:24.440 --> 0:07:28.680 double A or allowing student athletes to be bringing the 0:07:28.800 --> 0:07:32.360 m C double A into court for endless rounds of litigation. 0:07:32.640 --> 0:07:36.080 So I think the court's very concerned about that. Is 0:07:36.080 --> 0:07:39.360 there any middle ground for the court here? The Court 0:07:39.480 --> 0:07:43.239 is definitely trying to find some kind of middle ground, 0:07:43.760 --> 0:07:47.280 And I don't know how much of middle ground there 0:07:47.480 --> 0:07:51.760 is in terms of this particular injunction, right, But you 0:07:51.840 --> 0:07:54.160 heard Brier trying to get at that when he was 0:07:54.280 --> 0:07:58.360 asking Seth Waxman, you know, now, tell me just what 0:07:58.600 --> 0:08:01.160 is it about this injunction and tell me the line 0:08:01.960 --> 0:08:05.200 and words in the injunction that you don't like. He 0:08:05.320 --> 0:08:07.000 was trying to find a middle ground. I think the 0:08:07.040 --> 0:08:09.200 middle ground that the court is trying to look for 0:08:10.240 --> 0:08:14.600 is how can we come up with some method of 0:08:14.680 --> 0:08:21.240 reviewing the double A rule that make sure that the 0:08:21.640 --> 0:08:26.400 double A can't exploit the athletes while not making the 0:08:26.480 --> 0:08:30.720 courts the micromanager of the double A and what happened 0:08:30.760 --> 0:08:36.080 the last time? Just explain what happened the ruling? Then, Well, 0:08:36.160 --> 0:08:41.080 in four UM, the court said that you had to 0:08:41.160 --> 0:08:45.720 apply the Well, the court said that the um different 0:08:45.800 --> 0:08:47.880 that the n C Double A couldn't set rules about 0:08:47.960 --> 0:08:51.319 how much money the different conferences could get for selling 0:08:51.840 --> 0:08:56.400 for selling the TV rights to their broadcast. And then 0:08:56.400 --> 0:09:00.840 the answerable said that that it would be horrible if 0:09:00.880 --> 0:09:06.200 the different conferences and schools were competing for selling TV rights. Well, 0:09:06.240 --> 0:09:09.520 they all do that now. And as they were talking 0:09:09.520 --> 0:09:11.920 about in the court today, you know, now there used 0:09:11.960 --> 0:09:15.040 to be a rule that coaches or assistant coaches could 0:09:15.080 --> 0:09:17.120 only be paid a certain amount. That was an n 0:09:17.280 --> 0:09:20.400 double A rule. That was struck damity any trust laws. 0:09:21.280 --> 0:09:24.000 There's a push in Congress, and there are laws in 0:09:24.080 --> 0:09:28.240 some states like Florida that that are pushing the double A. 0:09:28.360 --> 0:09:32.280 Perhaps Yeah, the there's a law that's going to go 0:09:32.320 --> 0:09:35.040 into effect in Florida and California's past. The law that 0:09:35.720 --> 0:09:39.560 says that UM, nobody the n C double A and 0:09:39.640 --> 0:09:43.080 no school can limit the right of a student athlete 0:09:43.120 --> 0:09:46.439 to sell the rights to their name, image and likeness. 0:09:48.160 --> 0:09:55.520 So UM that means that UH, students athletes have to 0:09:55.559 --> 0:10:03.240 be able to UM get UH deals, to sponsor products, 0:10:03.280 --> 0:10:09.640 to sell advertising rights to a YouTube channel, UM, things 0:10:09.679 --> 0:10:15.480 like that. So that that and that's going to change, 0:10:16.200 --> 0:10:21.160 um the extent to which some student athletes can get money. 0:10:21.160 --> 0:10:26.400 Now those moneys are from third parties, not from the 0:10:26.520 --> 0:10:31.319 schools themselves. UM. And so the MT double are going 0:10:31.360 --> 0:10:35.120 to change its rules about allowing student athletes to get 0:10:35.160 --> 0:10:37.120 those kind of moneys. Right now they're not allowed to. 0:10:37.840 --> 0:10:39.920 So that the m C double as that they were 0:10:39.960 --> 0:10:44.160 going to change their rules, and then they stopped that 0:10:44.240 --> 0:10:48.960 process because the Department of Justice sent them a letter saying, 0:10:49.120 --> 0:10:51.839 the new rules that you think you're going to put 0:10:51.880 --> 0:10:56.840 into place, They may have some antitrust problems. It seems 0:10:56.840 --> 0:10:59.240 like it's a matter of time if you have laws 0:10:59.240 --> 0:11:01.120 like this in californ Orny, in Florida, that it's a 0:11:01.120 --> 0:11:05.319 matter of time. You know, little by little professionalism is 0:11:05.360 --> 0:11:10.240 going to creep into college sports. Well, the m C 0:11:10.360 --> 0:11:13.280 double A has other legal arrows in its quiver, so 0:11:13.360 --> 0:11:19.280 it has said UM in other court proceedings that um, 0:11:19.320 --> 0:11:22.120 if those state laws go into effect, they plan to 0:11:22.360 --> 0:11:27.280 challenge those laws under a different under the Commerce Clause 0:11:27.320 --> 0:11:30.200 of the Constitution. So they may try to get quick 0:11:30.240 --> 0:11:33.679 injunctions against some of those laws and tie them up 0:11:33.800 --> 0:11:37.680 in litigation for a matter of time. But that's why 0:11:37.679 --> 0:11:39.720 it's so important for the MT double A to be 0:11:39.840 --> 0:11:43.960 doing um lobbying at the federal level to get the 0:11:44.080 --> 0:11:48.280 US Congress to pass some kind of a law that 0:11:48.360 --> 0:11:52.440 would settle all of this. Thanks Audrey, that's Audrey Anderson 0:11:52.480 --> 0:11:58.320 of Bassparian Sims, Bullman SAX was at the Subreme Court 0:11:58.400 --> 0:12:00.280 and it was billed as a case that could deal 0:12:00.320 --> 0:12:04.520 a sweeping blow to class action securities fraud lawsuits, but 0:12:04.600 --> 0:12:07.720 the case kind of fizzled out in oral arguments. A 0:12:07.800 --> 0:12:11.800 decade ago, investors filed a class action lawsuit a legend. 0:12:11.800 --> 0:12:13.880 They were deceived to the tune of as much as 0:12:13.960 --> 0:12:18.560 thirteen billion dollars by Goldman's repeated public assurances that it 0:12:18.640 --> 0:12:22.200 was being vigilant about avoiding conflicts of interest. But Goldman 0:12:22.280 --> 0:12:25.880 said those assurances were so generic they couldn't possibly have 0:12:25.920 --> 0:12:29.400 been responsible for propping up the stock price. Many of 0:12:29.400 --> 0:12:32.000 the getice is said the issues had narrowed as the 0:12:32.080 --> 0:12:34.880 case bounced up and down the court system, and that 0:12:35.000 --> 0:12:37.920 both sides now seemed to agree on the legal standard. 0:12:38.160 --> 0:12:41.040 Here are justice is Amy Coney Barrett and Stephen Bryer. 0:12:41.360 --> 0:12:43.600 So now we are left, you know, in this position 0:12:43.760 --> 0:12:47.040 where you've both moved more closely together, and now we 0:12:47.080 --> 0:12:49.560 have to decide what to do about the Second Circuit's opinion. 0:12:50.960 --> 0:12:53.440 This seems like an area that the more that I 0:12:53.480 --> 0:12:56.839 read about it, the less that we write, the better. 0:12:57.280 --> 0:13:00.240 Joining me is Mark Rifkin, a partner at wolf Holland's Seen. 0:13:00.800 --> 0:13:04.880 Mark explained the issue over these statements, which included promises 0:13:05.000 --> 0:13:09.400 that Goldman had extensive procedures and controls designed to identify 0:13:09.440 --> 0:13:12.760 and address conflicts of interest. So the plaintiffs say that 0:13:12.800 --> 0:13:17.360 those statements, which the parties characterized as generalized statements. But 0:13:17.400 --> 0:13:20.640 to me, they're actually pretty specific. They're not related to 0:13:20.679 --> 0:13:24.880 any direct line of business of Goldman Sacks, but they're 0:13:24.880 --> 0:13:28.240 more generalized, and so in that sense, their generic statements. 0:13:28.240 --> 0:13:32.080 But the plaintiffs say that when Goldman Sacks got into 0:13:32.080 --> 0:13:36.320 trouble because of trading in securities that were adverse to 0:13:36.360 --> 0:13:39.760 the interests of their clients, they failed to disclose that 0:13:39.800 --> 0:13:44.760 information to the public. That information eventually became public knowledge 0:13:44.960 --> 0:13:49.360 when a complaint was filed against Goldman for that and 0:13:49.760 --> 0:13:52.840 that action, that disclosure had no effect on the price 0:13:52.840 --> 0:13:56.760 of the stock, because the plaintiffs say that Goldman had 0:13:56.800 --> 0:14:02.480 issued these reassuring generalized statement which maintained the price of 0:14:02.520 --> 0:14:05.640 the stock in the marketplace, and they say that was 0:14:05.720 --> 0:14:09.040 false inness leading. Because low and behold, when the bad 0:14:09.080 --> 0:14:13.600 news comes out and Goldman is exposed, the allegations are exposed, 0:14:13.640 --> 0:14:16.600 and the extent of the problem is exposed, the price 0:14:16.600 --> 0:14:21.040 of the stock dropped, and that stock drop on the 0:14:21.080 --> 0:14:25.160 disclosure lad the stock price to trade at the price 0:14:25.200 --> 0:14:27.880 that the plaintiff say it should have traded at all. Along, 0:14:28.560 --> 0:14:32.320 Goldman did not admit wrongdoing, and it's five million dollars 0:14:32.360 --> 0:14:35.280 settlement with the sec but it did say it made 0:14:35.280 --> 0:14:38.520 a mistake in failing to disclose, which is unusual for 0:14:38.560 --> 0:14:42.160 a settlement. Correct, And I think you need to look 0:14:42.200 --> 0:14:45.640 at the nature of the underlying allegation is that Goldman 0:14:45.760 --> 0:14:49.800 was engaged in conduct that was inconsistent with the interests 0:14:49.840 --> 0:14:54.400 of not its stockholders, but its clients. And that's Goldman's 0:14:54.440 --> 0:14:58.440 life blood, that they put the interests of their clients first, 0:14:58.680 --> 0:15:01.160 that what they do is of the benefit of the clients. 0:15:01.160 --> 0:15:03.600 And that's why I think that those statements, although they 0:15:03.600 --> 0:15:08.200 were general statements, are actually pretty important to Goldman customers. 0:15:08.640 --> 0:15:11.960 And if you're an investor in Goldman Sacks as a stockholder, 0:15:12.120 --> 0:15:14.200 that means they should be pretty important to you. So 0:15:14.280 --> 0:15:17.800 I think these statements turned out to be very material. 0:15:18.280 --> 0:15:21.440 And that's the real rub of the issue is were 0:15:21.560 --> 0:15:26.120 these statements important to the market And do the plaintiffs 0:15:26.120 --> 0:15:30.400 have the right to rely on a presumption of reliance 0:15:30.440 --> 0:15:33.800 based on the importance the materiality of the statements. But 0:15:34.160 --> 0:15:37.760 if they do, can Goldman rebut that presumption by some 0:15:37.840 --> 0:15:40.880 other evidence. That's really the heart of the issue that 0:15:41.160 --> 0:15:43.800 was argued in the Supreme Court. This is an appeal 0:15:43.800 --> 0:15:47.200 of a Second Circuit decision what did the second Circuit decide? 0:15:47.960 --> 0:15:54.440 So the Second Circuit affirmed the District Court's decision granting 0:15:54.560 --> 0:15:58.040 class certification, and this was actually the second time class 0:15:58.080 --> 0:16:02.480 certification had been in the Second Circuit. The district courts 0:16:02.520 --> 0:16:08.080 certified the class. Originally, the Second Circuit remanded that decision 0:16:08.080 --> 0:16:11.280 and directed the court to reconsider certain parts of the decision. 0:16:12.080 --> 0:16:16.560 The District Court did that certified the class again. The 0:16:16.800 --> 0:16:20.840 case was appealed to the Second Circuit, and the Second 0:16:20.840 --> 0:16:27.800 Circuit affirmed the district courts decision granting class certification, finding 0:16:27.920 --> 0:16:34.040 that the defendants could not rebut the presumption of reliance 0:16:34.160 --> 0:16:38.640 that the plaintiffs were entitled to invoke under um under 0:16:38.640 --> 0:16:41.760 basic versus Levins, And that's the issue that then went 0:16:41.800 --> 0:16:46.120 up to the Supreme Court. What were the justices concerned about? Well, 0:16:46.160 --> 0:16:49.600 I think the courts concerned with two issues. Number One, 0:16:49.920 --> 0:16:53.320 the way the presumption works centers around the materiality of 0:16:53.360 --> 0:16:56.800 the statements in question. Essentially, what the presumption says is 0:16:56.880 --> 0:17:00.320 that if you trade in an orderly and efficient market, 0:17:00.920 --> 0:17:05.679 and the information that the plaintiff alleges is either misrepresented 0:17:05.800 --> 0:17:09.600 or omitted from the market, and it's important information. It's 0:17:09.600 --> 0:17:12.639 information that a reasonable shareholder would want to know, so 0:17:12.720 --> 0:17:16.640 it's material, and you don't need to rely on anything 0:17:16.680 --> 0:17:20.040 other than the integrity of the market price in order 0:17:20.080 --> 0:17:22.920 to be able to stay to claim under the securities laws. 0:17:22.960 --> 0:17:26.159 And that's the presumption of reliance that you're entitled to 0:17:26.280 --> 0:17:29.320 under the Supreme Court's Basic versus Levins and decision. But 0:17:29.440 --> 0:17:33.520 it's just the presumption. And so the defendant then has 0:17:33.560 --> 0:17:38.000 the opportunity to come back and rebut that presumption by showing, 0:17:38.040 --> 0:17:41.920 for example, that the statements that the plaintiffs claim are 0:17:41.960 --> 0:17:45.199 actionable were not material as a matter of law, or 0:17:45.280 --> 0:17:47.840 did not have an impact on the price of the stock, 0:17:47.960 --> 0:17:50.840 or perhaps in the case of an individual pointiff, he 0:17:51.119 --> 0:17:54.640 or she would never have relied upon those statements had 0:17:54.680 --> 0:17:56.679 he or she known them, and it didn't matter to 0:17:56.760 --> 0:18:00.040 the pointiff whether the price was efficient or inefficient. I 0:18:00.040 --> 0:18:04.760 can't imagine an individual attack like that on particular plaintiff, 0:18:04.880 --> 0:18:08.280 but a defendant is always able to try to prove 0:18:08.600 --> 0:18:12.920 that the information that was allegedly misrepresented was not material, 0:18:13.200 --> 0:18:16.120 and that's exactly what Goldman Sachs tried to do here. 0:18:16.400 --> 0:18:21.600 And Judge Croudy in the District Court concluded that Goldman's 0:18:21.640 --> 0:18:26.320 experts did not adequately rebut the presumption of reliance and 0:18:26.400 --> 0:18:30.480 so certified the class. That's the very narrow holding that 0:18:30.520 --> 0:18:33.359 went up to the Supreme Court. Jealtic is from both 0:18:33.359 --> 0:18:37.480 sides of the ideological spectrum said that as the case evolved, 0:18:37.760 --> 0:18:41.760 the party's positions moved more towards the middle. Yes, and 0:18:41.800 --> 0:18:44.840 that's certainly the case in the district court. Goldman argued 0:18:45.040 --> 0:18:48.560 that the court was not entitled to consider those statements 0:18:48.560 --> 0:18:50.600 at all, because Goldman took the position that they were 0:18:50.640 --> 0:18:53.119 completely immaterial as a matter of law. They were so 0:18:53.320 --> 0:18:57.719 generalized and so vague that they were meaningless to individual investors, 0:18:57.720 --> 0:19:00.960 and Goldman lost that position in the record on emotion 0:19:01.000 --> 0:19:04.080 to dismiss the court found that the statements were specific 0:19:04.240 --> 0:19:08.000 enough and related to Goldman's business in such an important 0:19:08.000 --> 0:19:11.320 way that they were material for purposes of stating a 0:19:11.400 --> 0:19:15.439 cause of action. So now roll forward, and the question is, well, okay, 0:19:15.480 --> 0:19:19.720 what can Goldman Sachs say about those statements to rebut 0:19:19.880 --> 0:19:23.680 the presumption of reliance? And so now they have to 0:19:23.720 --> 0:19:27.080 say something different, not that you can't consider them, but 0:19:27.240 --> 0:19:30.600 that you have to consider the vagueness of them. And 0:19:30.680 --> 0:19:33.320 so the argument sort of shifted in its focus, and 0:19:33.400 --> 0:19:35.720 Goldman says, well, okay, if they may be actionable, but 0:19:36.040 --> 0:19:38.800 our experts say they were so meaningless that they didn't 0:19:38.800 --> 0:19:42.080 move the needle in the marketplace. And the pointiff said, no, 0:19:42.200 --> 0:19:46.600 that's not true. Your experts haven't shown that the disclosures 0:19:46.640 --> 0:19:51.719 didn't have an effect on price when the real truth 0:19:51.920 --> 0:19:56.920 about Goldman's alleged misconduct came to light. And so that 0:19:57.000 --> 0:19:59.879 was the issue that was decided on class certification. And 0:20:00.000 --> 0:20:02.480 that's why the parties had to change their positions because 0:20:02.480 --> 0:20:06.320 the context changed. So what's the court's likely decision here? 0:20:07.119 --> 0:20:09.520 I think where where the court is likely to come 0:20:09.520 --> 0:20:13.240 out here is to say that there was no error 0:20:13.760 --> 0:20:18.680 that needs to be addressed. The District Court properly followed 0:20:18.680 --> 0:20:23.480 the second Circuits mandate from the first appeal, properly evaluated 0:20:23.720 --> 0:20:27.159 not just the plaintiffs position, and the presumption of reliance 0:20:27.280 --> 0:20:31.800 that the parties concede applied to the motion for class certification. 0:20:32.040 --> 0:20:36.760 And if I understand the record correctly, Goldman Sachs admitted 0:20:37.040 --> 0:20:41.080 that the plaintiffs had introduced enough evidence on the motion 0:20:41.160 --> 0:20:46.119 for class certification to invoke the presumption, but that they 0:20:46.200 --> 0:20:50.320 then had the opportunity to rebut it with this expert testimony, 0:20:50.520 --> 0:20:54.679 and they offered expert testimony that the District Court found 0:20:54.880 --> 0:20:59.879 did not rise to the level necessary to rebut the presumption. 0:21:00.400 --> 0:21:02.679 And I think where the Supreme Court comes out here 0:21:02.680 --> 0:21:05.919 in the easiest path is to say that it's for 0:21:05.960 --> 0:21:09.960 the district Court to evaluate the evidence that's presented. The 0:21:10.080 --> 0:21:13.880 District Court did that. The District Court rendered a decision 0:21:13.920 --> 0:21:18.040 that the Second Circuit evaluated under the appropriate standards, and 0:21:18.119 --> 0:21:23.240 the Second Circuit affirmed the District Court's decision. There's nothing 0:21:23.320 --> 0:21:27.040 for us to look at here. And so that's where 0:21:27.280 --> 0:21:30.040 I think Justice Brier was heading when he said, the 0:21:30.119 --> 0:21:32.840 less we write, the better we are. And that's the 0:21:32.920 --> 0:21:37.280 outcome that that says the least, which is this really 0:21:37.359 --> 0:21:40.320 is an appeal we should not be hearing or writing upon. 0:21:40.880 --> 0:21:43.280 And so there was a suggestion that one outcome would 0:21:43.280 --> 0:21:48.160 be that the court concludes that sarcery was improvidently granted, 0:21:48.440 --> 0:21:50.280 and that happens from time to time in a case 0:21:50.320 --> 0:21:54.400 like this. There was some concern going into this that 0:21:55.000 --> 0:21:58.680 this is the first time that securities class action has 0:21:58.760 --> 0:22:02.639 been heard by the Supreme Court since any of the 0:22:02.760 --> 0:22:06.880 Trump appointees were on the court. Was there a conservative 0:22:07.119 --> 0:22:13.600 liberal split in anyway? Well, the the only interesting part 0:22:13.720 --> 0:22:17.119 to the argument from a political if you will, from 0:22:17.119 --> 0:22:21.240 a political standpoint, at least in my mind, was Justice Thomas. 0:22:21.240 --> 0:22:24.280 Of course, any time you hear Justice Thomas speak, it's 0:22:24.440 --> 0:22:28.320 it's interesting because he asks questions so rarely, but now 0:22:28.960 --> 0:22:32.280 in in the COVID landscape, he has asked questions, And 0:22:32.359 --> 0:22:35.879 here he asked questions that suggested to me at least 0:22:35.960 --> 0:22:40.639 that he was hoping that the Court might reconsider the 0:22:40.720 --> 0:22:44.399 presumption of reliance after Basic versus Levinson. But other than that, 0:22:44.480 --> 0:22:47.320 I think I think these are such narrow technical issues 0:22:47.400 --> 0:22:50.760 that it's hard to say that the that the political 0:22:51.480 --> 0:22:56.399 differences between the Trump appointees and the and the and 0:22:56.480 --> 0:23:00.720 the more liberal justices on the court really will make 0:23:00.800 --> 0:23:03.959 much difference. I mean, these are very narrow technical legal issues. 0:23:04.640 --> 0:23:08.640 We didn't even we haven't yet talked about the rule 0:23:08.760 --> 0:23:12.520 three oh one issue, which is who who bears the 0:23:12.520 --> 0:23:17.280 burden of proof versus the burden of production. But it's 0:23:17.320 --> 0:23:20.080 such a hyper technical and legal issue that I don't 0:23:20.119 --> 0:23:23.679 see the political spectrum really making a difference in the 0:23:23.720 --> 0:23:30.520 outcome here. This case has been on. Since what happens next? 0:23:30.800 --> 0:23:33.399 You have they had discovery yet? Well, sure, because this 0:23:33.480 --> 0:23:36.760 is this is a class ratification, so the plaintiffs have 0:23:37.200 --> 0:23:41.760 withstood emotion to dismiss. Then they did two rounds of 0:23:41.760 --> 0:23:45.520 class ratification because there was that second appeal in the case. 0:23:46.480 --> 0:23:51.280 If the Supreme Court affirms the Second Circuit's decision, which 0:23:51.280 --> 0:23:54.400 I'm fairly sure the Court will do, then it will 0:23:54.440 --> 0:23:56.920 go back to the second Circuit and be sent right 0:23:56.960 --> 0:24:00.199 back to the district Court for the remainder of the case. 0:24:00.880 --> 0:24:06.080 If the Court were to reverse or remand with instructions, 0:24:06.359 --> 0:24:08.959 then it would go back to the second Circuit and 0:24:09.040 --> 0:24:13.080 the Second Circuit might write again, or it might simply 0:24:13.200 --> 0:24:15.480 remand the case again to the district Court for a 0:24:15.640 --> 0:24:19.280 third bite at the apple. But I don't think that 0:24:19.280 --> 0:24:23.760 that's going to happen because I think that the prevailing view, 0:24:24.600 --> 0:24:27.720 at least from the questions that the court asked, I 0:24:27.760 --> 0:24:31.480 think the prevailing view seemed to be that this was 0:24:31.520 --> 0:24:35.240 a matter that the district Court has some discretion to consider, 0:24:35.760 --> 0:24:40.240 that the district Court exercised its discretion, And while any 0:24:40.280 --> 0:24:44.119 one justice of the Supreme Court might might differ in 0:24:45.119 --> 0:24:49.840 how the evidence was evaluated. I don't think that that 0:24:50.000 --> 0:24:53.680 rises to the level of a precedent sett in case 0:24:53.720 --> 0:24:57.240 that requires the Supreme Court to right a lengthy opinion, 0:24:57.359 --> 0:25:00.320 send it back and start all over again. I just 0:25:00.359 --> 0:25:02.560 don't see that happening here, because I think the record 0:25:03.119 --> 0:25:05.480 is actually a pretty pretty well developed one and a 0:25:05.480 --> 0:25:09.240 pretty good one for for the plaintiffs in this case 0:25:09.680 --> 0:25:14.040 to uh to prevail and simply proceed with their case. 0:25:14.640 --> 0:25:19.040 Does the decision in this case have any ramifications, any 0:25:19.080 --> 0:25:24.160 impact on class actions coming up, or are the facts 0:25:24.160 --> 0:25:28.000 so narrow and so specific that it doesn't well. I 0:25:28.440 --> 0:25:31.520 think that if the Court does what I expected to do, 0:25:31.560 --> 0:25:35.600 which is to write an opinion that simply affirms the 0:25:35.720 --> 0:25:39.879 Second Circuit's decision or just withdraws the grain of sarcenari, 0:25:40.280 --> 0:25:42.880 then it will have very little impact. If if they 0:25:42.920 --> 0:25:47.679 decide to write on rule three oh one, UM, it 0:25:47.840 --> 0:25:51.840 might have some impact in some cases, but I just 0:25:51.880 --> 0:25:55.119 don't see those issues being important enough for the Supreme 0:25:55.119 --> 0:25:58.359 Court to write on here. So I think it's likely 0:25:59.000 --> 0:26:04.520