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

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Speaker 2: The Department of Justice, joined by eight states, filed a

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Speaker 2: civil antitrust lawsuit in the United States District Court for

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Speaker 2: the Eastern District of Virginia against Google.

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Speaker 1: The Justice Department suit, accusing Google of monopolizing the digital

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Speaker 1: advertising market, is scheduled to go to trial before a

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Speaker 1: jury in September, but Google is trying to avoid trying

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Speaker 1: the case to a jury with a novel move cutting

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Speaker 1: the government to check the search Giant wants a judge,

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Speaker 1: not a jury, to decide the case, and argues the

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Speaker 1: government has no right to a jury trial without a

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Speaker 1: claim for money damages. Joining me is anti trust law

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Speaker 1: expert Harry First, a professor at NYU Law School. Harry,

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Speaker 1: has this been done before, paying damages before a trial

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Speaker 1: or a finding of liability?

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Speaker 3: Not to my knowledge, it's a you know, you might

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Speaker 3: say a clever move, or you might say it's a

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Speaker 3: silly move, or you might say, when it's Google, who

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Speaker 3: cares how many millions of dollars you may pay unnecessarily?

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Speaker 3: So I've never seen this before. Liligans don't usually pay

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Speaker 3: out money in advance of a trial an indvansive even losing,

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Speaker 3: So you've got to have a lot of money to

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Speaker 3: do that.

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Speaker 1: The Google argument is that without a monetary damage's claim,

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Speaker 1: the government has no right to a jury trial. Is

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Speaker 1: that true?

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Speaker 3: Well, Google's argument is, let's see, should we call it silly,

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Speaker 3: ridiculous or desperate? I don't know. So if you are

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Speaker 3: not asking for money, go back to day one. You

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Speaker 3: file a complaint and all you're asking for is an injunction.

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Speaker 3: That is what's called a suit in equity and is

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Speaker 3: just handled by a judge. That's the way cases have

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Speaker 3: been handled since common law period. If, on the other hand,

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Speaker 3: you go into court and you ask for money damages,

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Speaker 3: that has to be before a judge with under the

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Speaker 3: Seventh Amendment, if it's for more than twenty dollars, I think,

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Speaker 3: with a jury. So that's the distinction. Now what Google's

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Speaker 3: trying to say is, oh, guess what. Now there's no damages,

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Speaker 3: so you don't get the jury trial. So presumably the

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Speaker 3: Justice Department will say to this check thank you, but

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Speaker 3: no thank you. You know, we want to prove our

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Speaker 3: damages and we'll prove them anyway. So it is still

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Speaker 3: a suit for damages, and you can't get out of

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Speaker 3: it by sort of pre paying the damages and now saying,

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Speaker 3: guess what, it's not for damages. The suit was always

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Speaker 3: for damaging.

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Speaker 1: The size of the payment hasn't been disclosed, but Google

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Speaker 1: said that after months of discovery, the Justice Department could

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Speaker 1: only point to estimated damages of less than a million.

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Speaker 1: Since the law allows the court to issue treble damages.

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Speaker 1: The speculation is that Google's check is for about three million,

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Speaker 1: which is a drop in the bucket to Google.

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Speaker 3: Well, yeah, I mean originally they claimed at least one

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Speaker 3: hundred million, and what they're going to be able to

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Speaker 3: prove up a trial, it seems to me, is still

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Speaker 3: a question for trial. So I don't know what their

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Speaker 3: expert reports show or whether they have some additional evidence.

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Speaker 3: So I don't know what the amount is, and I think, frankly,

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Speaker 3: it doesn't really matter. The legal point is the case

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Speaker 3: was filed for damages, it is still the case for damages,

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Speaker 3: and paying them off doesn't and the case and doesn't

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Speaker 3: change the nature of the case. So I don't see

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Speaker 3: this as the gambit that's going to work. Their claim

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Speaker 3: is not mooved no matter what how much the checks

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Speaker 3: for and you're right, from anyone's point of view, whether

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Speaker 3: it's five million, ten million, one hundred million dollars, this

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Speaker 3: is not very much to Google. And that's really, frankly

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Speaker 3: not the point. So I think, you know, more significant

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Speaker 3: are the other arguments that Google tries to make, which

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Speaker 3: is that this shouldn't be a tried by a jury.

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Speaker 3: And that's a more straightforward argument. It's not yes, it's

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Speaker 3: a jury trial, but no, it's not a jury trial,

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Speaker 3: because I mean, it would sort of be like saying, well,

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Speaker 3: you asked for an injunction, so yeah, it's fine, We're

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Speaker 3: fine with an injunction. So now it's not a case

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Speaker 3: for anything, So that I don't think that's going to work.

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Speaker 1: Google said that the government has said the case is

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Speaker 1: highly technical and outside the everyday knowledge of most prospective jurors.

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Speaker 1: Google said it's aware of no case in American history

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Speaker 1: where a civil suit brought by the United States pressing

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Speaker 1: only antitrust claims was tried to a jury.

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Speaker 3: You know, it's likely that that's correct simply because the

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Speaker 3: Justice Department has almost never filed suit for damages and

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Speaker 3: so it's not a major claim. What would be an

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Speaker 3: interesting claim is if nobody had ever filed for a

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Speaker 3: jury trial, including private party, and that actually is not true.

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Speaker 3: And in fact, this claim was made in the nineteen

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Speaker 3: eighties in litigation involving the sale of Japanese televisions in

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Speaker 3: the United States at allegedly predatory prices, and the defendant,

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Speaker 3: Japanese television manufacturers, made a strong effort to say there

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Speaker 3: is no right to a jury trial here because it's

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Speaker 3: too complex. The courts never quite got to that holding

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Speaker 3: for other reasons. They focused on other issues. But we've

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Speaker 3: seen the claim before and courts are not all that

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Speaker 3: well disposed to it. In private cases, there are lots

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Speaker 3: of complicated cases, patent infringement cases. Patents are complicated. A

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Speaker 3: lot of patent infringement cases a large part of it

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Speaker 3: to try to juries, trade secret cases, complex fraud cases.

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Speaker 3: There's a lot of complex cases. To say somehow anti

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Speaker 3: trust is beyond the realm is a little silly, particularly

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Speaker 3: after Google had a jury trial in the epic case. Now,

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Speaker 3: Google's right to say that this is unusual for the government,

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Speaker 3: but that's a knock on the government, but not on

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Speaker 3: the legal case. And there are reasons for that. But

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Speaker 3: the government clearly has the statutory right to sue for

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Speaker 3: treble damages. Congress gave that to them in nineteen ninety,

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Speaker 3: originally with single damages nineteen fifty five. I mean it's

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Speaker 3: a specific statue. So, as I said, frivolous, bad argument.

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Speaker 1: Harry, before we go any further, tell us about the

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Speaker 1: government's case against Google here.

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Speaker 3: Basically, it involves the advertising side of what Google does

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Speaker 3: and the auctions that it runs for those ads that

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Speaker 3: you see popping up every time you move online that

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Speaker 3: seem to say, Hi, Harry, this is for you. You know,

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Speaker 3: starts advertising display advertising, and they run auctions. I forget

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Speaker 3: the number every second, but it's a huge volume of

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Speaker 3: advertising auctions. And they run the platform, and they provide

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Speaker 3: the tools for both the advertisers and the publishers of

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Speaker 3: these ads to figure out how much space there is

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Speaker 3: where these ads could go, what to charge, how to

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Speaker 3: aunction them off, so that each side feels they're getting

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Speaker 3: the best deal, and you know, they sort of run

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Speaker 3: the show. And they also have the search engine that

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Speaker 3: generates you know, a lot of the information. So they

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Speaker 3: are all over what people call the ad tech space,

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Speaker 3: and the Justice Department wants to separate out some of

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Speaker 3: these functions so that different platforms might arise that could

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Speaker 3: compete against Google without you know, having the same search engine,

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Speaker 3: having sort of the same tools that seem to favor Google,

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Speaker 3: and placement on Google websites rather than through being so forth.

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Speaker 3: So that's the real thumbnail sketch. But you know everything

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Speaker 3: you read. The first thing you know that people say

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Speaker 3: is well, this is a complicated market to understand. But

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Speaker 3: you know, again, this is what good trial lawyers do.

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Speaker 3: They break down complexity so that the people who have

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Speaker 3: to decide the case. In this case, the jury can

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Speaker 3: follow it through and that's going to be their challenge.

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Speaker 1: You mentioned the Fortnite maker Epic Games case that was

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Speaker 1: one of the worst legal losses for Google. So Google's

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Speaker 1: been burned by a jury. Is that why it may

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Speaker 1: be looking for a judge to decide this case, although

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Speaker 1: I would think that it would be harder to try

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Speaker 1: a case before an experienced trial judge than before a jury.

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Speaker 1: And also a jury can't order the breakup of a company, right.

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Speaker 3: Well, that part of the remedy is going to be

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Speaker 3: decided by the judge and not by the jury. The

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Speaker 3: jury will assess damages, but the sort of equitable part

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Speaker 3: of it. What the ongoing relief will be will be

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Speaker 3: decided in some sort of separate post trial hearing where

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Speaker 3: the government presents few and evidence on what it wants

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Speaker 3: to cure the problem going forward. But damages are compensation

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Speaker 3: for harm in the past, so that will be decided

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Speaker 3: by a jury. And you know, your question now has

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Speaker 3: moved from are they making a frivolous legal argument to

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Speaker 3: are they making a smart tactical argument. And you know,

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Speaker 3: I'm not sure the answer to that. Why do they

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Speaker 3: prefer judge bring them to a jury. And the only

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Speaker 3: answer I can come up with is just what you said.

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Speaker 3: They don't want to present themselves to a jury. They

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Speaker 3: did that an epic which they wanted to avoid desperately

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Speaker 3: and were unable to. And in less than four hours

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Speaker 3: the jury said, we know who you are. You are

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Speaker 3: a monopolist. You know, cut the fancy junk, you're a

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Speaker 3: monopolis and you've excluded competitors. They didn't have much trouble

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Speaker 3: with this. Now you could say, well, one strategy is

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Speaker 3: you make this soak complicated the jury to just throw

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Speaker 3: up their hands and say we can't figure this. On

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Speaker 3: the other hand, a jury trials incentive to both parties

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Speaker 3: to present an understandable case. And you know, the government

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Speaker 3: chose this, and they actually chose a difficult path because

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Speaker 3: they have the burden of proof and they have to

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Speaker 3: make this understandable to the jury. And it's not going

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Speaker 3: to be easy. I don't think it's complicated industry, But

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Speaker 3: you know, if they do it well, the jury will

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Speaker 3: understand it. And maybe that's exactly what Google's afraid of.

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Speaker 3: The jury will see. They're on both sides of these transactions.

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Speaker 3: Even Microsoft, the second largest company in the United States

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Speaker 3: by market cap but valued over what now, three trillion

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Speaker 3: or two trillion, I lose a trillion here or there,

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Speaker 3: even they are having trouble in this space. And you know,

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Speaker 3: I think jurors will get it, and I think Google's

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Speaker 3: afraid that jurors will get it. And obviously they're not

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Speaker 3: so much afraid of the money part here, since they said, hey, here,

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Speaker 3: take our money please. They're worried that the jury is

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Speaker 3: going to find against them that they've monopolized this market

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Speaker 3: and then strong relief is going to follow.

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Speaker 1: But if a jury would get it, wouldn't a judge

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Speaker 1: get it as well? And you know, get it faster

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Speaker 1: and with more background information.

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Speaker 3: I do wonder about that. Judge Brinkhama is a really

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Speaker 3: good district court judge. She's moved this case along pretty quickly.

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Speaker 3: She doesn't seem disposed to, you know, to Google's efforts

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Speaker 3: to get out of her court to do various things.

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Speaker 3: She hasn't dismissed the complaint, So I wonder why they

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Speaker 3: think they'd have a better chance with her when it

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Speaker 3: comes to tactics. These are judgment called. You know, those

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Speaker 3: lawyers may know things about their case, may feel that

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Speaker 3: she could understand better why they're on both sides of

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Speaker 3: the transaction, how these marketplaces work. I don't know. That's

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Speaker 3: a decision they have made, though they don't want twelve

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Speaker 3: people judging their behavior.

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Speaker 1: Some of the plaintiff states that had joined the Justice

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Speaker 1: Department suit said the court to deny Google's motion for

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Speaker 1: some rejudgment allow the case to procedure trial.

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Speaker 4: Quote.

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Speaker 1: Google argues that it lacks monopoly power along every dimension

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Speaker 1: except the one that matters most under the law, whether

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Speaker 1: it has the power to control price or output, and

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Speaker 1: it does. Which side do you think has the easier

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Speaker 1: case here? Because you know, it sounds like Google will

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Speaker 1: have a hard time defending well.

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Speaker 3: As I said, you know, just as in the epic

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Speaker 3: litigation with Fortnite. Yeah, don't look over here that we

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Speaker 3: have a monopoly, look over there, that we compete for

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Speaker 3: lots of other advertising and so forth. And a lot

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Speaker 3: of this does turn on some sort of technical concepts

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Speaker 3: about how we define markets and what the market share is.

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Speaker 3: And the state's position, which I assume will come out

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Speaker 3: in litigation as well, is that we can figure out

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Speaker 3: whether someone is a monopoly, not just buy or even

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Speaker 3: exclusively by defining a market and seeing whether they have

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Speaker 3: most of it. We look and see whether they can

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Speaker 3: do what monopolists do. You know, does it walk like

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Speaker 3: a duck and talk like a duck. It is a duck.

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Speaker 3: So monopolist control price, they raise it, and they restrict output.

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Speaker 3: And that's what you know, they want to show in

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Speaker 3: their case that they control the output of advertising and

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Speaker 3: these advertising services, and that leads to higher prices. And

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Speaker 3: that's sort of what's behind the damages claim, which is

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Speaker 3: why the government shouldn't abandon it so quickly, because they

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Speaker 3: want to show harm that prices have gone up, and

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Speaker 3: you know, there's a direct way of doing it. They

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Speaker 3: bring in a buyer and says, heck, you know, if

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Speaker 3: things were right, I would add to pay less for

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Speaker 3: my ads, and I don't really have a choice but

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Speaker 3: to go through Google, and you know they sack their

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Speaker 3: tolls and if I've got use their platform. So you know,

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Speaker 3: I think they're still going to want to present that

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Speaker 3: that evidence, assuming that they can muster it from their

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Speaker 3: own buyers, which is the federal government.

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Speaker 1: Maybe Google will have a change of heart if Judge Meta,

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Speaker 1: the DC trial judge who's still weighing allegations that Google

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Speaker 1: unlawfully stifled competition for web search, comes out with a

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Speaker 1: ruling against Google.

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Speaker 3: You mean, dropping another shoe might not miss their feet. Yeah,

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Speaker 3: you are right, there's one way or the other. They're

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Speaker 3: in the fire. And the question is, you know, I

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Speaker 3: don't want to pursue the metaphor, but you're right. It's

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Speaker 3: a great point. As this is going along before trial,

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Speaker 3: Judge Meta comes down with the decision, which I think

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Speaker 3: you will that just at least to some degree, they

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Speaker 3: have monopoly and they've engaged in monopolizing conduct, any competitive conduct. Yeah,

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Speaker 3: that may make them say, well, yes, we didn't do

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Speaker 3: so well necessarily before judge. But you know, in some

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Speaker 3: way least they get a cleaner opinion to appeal from

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Speaker 3: as a judgester right, an opinion, so it's going to

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Speaker 3: look different.

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Speaker 1: I hadn't thought about that. That's a good point, Harry.

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Speaker 1: Of course, of course you make a good point, Harry,

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Speaker 1: and that's why I so enjoy having you on the show.

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Speaker 1: Thanks so much. That's Professor Harry First of NYU Law School.

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Speaker 1: Conservatives have targeted the Consumer Financial Protection Bureau since its

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Speaker 1: creation in two thousand and eight, part of the attack

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Speaker 1: on the so called administrative state, but a Supreme Court

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Speaker 1: decision last week upholding the bureau's funding system has vaporized

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Speaker 1: the legal threat to the CFPB, Senator Elizabeth Warren's brainchild.

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Speaker 2: The CFPB is here to stay. And this is really

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Speaker 2: important because you know, it's all about a level playing field.

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Speaker 2: The CFPB is out there fighting every time somebody gets

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Speaker 2: cheated by a bank, every time somebody gets tricked by

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Speaker 2: a mortgage company.

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Speaker 1: Seven to two vote, which divided the justices along unusual lines,

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Speaker 1: was a rare victory for regulation at the Court, which

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Speaker 1: has been slowly chipping away at the power of administrative agencies.

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Speaker 1: The question is whether this ruling is a sign that

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Speaker 1: a majority of the Justice says will reject challenges to

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Speaker 1: agencies in three key decisions yet to be decided this term.

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Speaker 1: Joining me is Andrew Kim, a partner in the Appellate

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Speaker 1: and Supreme Court litigation practice at Goodwin Proctor. The case

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Speaker 1: divided the Court along unusual lines in the concurrence and

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Speaker 1: also with Justice Clarence Thomas writing the majority opinion and

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Speaker 1: his fellow i'll say ultra conservatives Samuel Alito and Neil

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Speaker 1: Gorsich dissenting.

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Speaker 4: I think if this opinion shows anything, the majority opinion

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Speaker 4: shows anything, it's something that we've known all along, which

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Speaker 4: is Justice Thomas marches to the beat of his own drum.

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Speaker 4: And I think most individuals who are watching this decision

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Speaker 4: were expecting some alignment amongst the conservatives on this issue.

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Speaker 4: But I think Justice Kavanaugh, for example, Justice Barrett, you

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Speaker 4: saw that in the concurrence that they joined. I think

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Speaker 4: those two justices and Justice Thomas as well, might have

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Speaker 4: had serious concerns about the more sweeping implications of what

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Speaker 4: it means to defund the entire agency on this novel

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Speaker 4: constitutional theory. And I think Justice Thomas staked out his

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Speaker 4: position in a way that was faithful to what he

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Speaker 4: believed in with respect to the text of the Constitution

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Speaker 4: and the history and tradition of that provision. Obviously, there

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Speaker 4: is a divide now, and it'd be interesting to see

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Speaker 4: how this plays out. How do you apply a history

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Speaker 4: and tradition going forward, especially with Justice's Kavanaugh and Barrett

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Speaker 4: joining Justice Kagan's concurrence, and can you look to a

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Speaker 4: continuing tradition. I think that will be an interesting question

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Speaker 4: going forward. But for at least this case, Justice Thomas

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Speaker 4: stuck to his principles and came out in a way

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Speaker 4: that surprised a lot of people, I think, but I

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Speaker 4: think is also a faitful to his vision of what

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Speaker 4: it means to interpret constitutional provisions with respect to the

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Speaker 4: structure of government and how the government is still to

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Speaker 4: function going forward. And obviously there is a divide between

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Speaker 4: him and Justice's Alito and Gorsag and we'll see going

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Speaker 4: forward whether that division plays a role in future cases,

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Speaker 4: in future structural constitutional challenges that have separations power implications.

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Speaker 4: But if anything, at the end of the day, Justice

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Speaker 4: Thomas sticks to his guns and he decided, and I

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Speaker 4: don't mean to quote Fank Sinatra, but he did it

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Speaker 4: his way, and I think this should surprise in some ways,

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Speaker 4: should surprise nobody.

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Speaker 1: You mentioned Justice Elena Kagan's concurrence, which was joined by

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Speaker 1: liberal Justice Sonya Sotomayor and conservatives Brett Kavanaugh and Amy

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Speaker 1: Coney Barrett. She wrote to emphasize the importance of continuing

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Speaker 1: tradition in interpreting the Constitution's meaning. Quote the founding error

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Speaker 1: practice that Theourt relates became the nineteenth century practice, which

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Speaker 1: became the twentieth century practice, which became today's. If you

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Speaker 1: read between the lines, what do you see in her concurrence?

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Speaker 4: My sense from Justice Kaigan's concurrence is that the Court bipartisan,

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Speaker 4: for lack of a better way of putting it, although

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Speaker 4: there are no parties in the Court, but a combination

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Speaker 4: of liberal and conservative justices are signaling that they don't

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Speaker 4: want novel constitutional arguments that would upturn our system of government,

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Speaker 4: turn over the table, so to speak, and those won't

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Speaker 4: be welcome under this approach to or at least their

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Speaker 4: approach to history and tradition. I think it is a

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Speaker 4: bit of a warning that the Court is not going

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Speaker 4: to entertain every novel argument drawn under the Constitution to

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Speaker 4: try to curb the administrative state, and that there are

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Speaker 4: certain things that are essential to the function of government,

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Speaker 4: like how agencies are funded. So long as there is

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Speaker 4: a long standing tradition of it, the court is going

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Speaker 4: to be very hesitant to overturn that going forward.

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Speaker 1: And explain the novel argument suggested here.

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Speaker 4: Yeah, before this particular case, I think the notion that

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Speaker 4: the Appropriation's clause had much teeth to it in terms

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Speaker 4: of being a check on executive power. I think Appropriation's

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Speaker 4: clause generally had only been litigated only a handful of times.

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Speaker 4: I think opm versus Richmond comes to mind. It's not

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Speaker 4: a constitutional provision that one would think serves as affirmative

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Speaker 4: check on the executive branch in the way that other

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Speaker 4: constitutional provisions might be. Or for example, a recent issue

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Speaker 4: of litigation has been over the take care clause and

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Speaker 4: making sure that the president has the ability to oversee

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Speaker 4: executive officers, especially those who are heads of agencies. The

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Speaker 4: Appropriation's clause is one of those constitutional provisions that rarely

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Speaker 4: gets litigated, and all it serves by its text is

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Speaker 4: it gives power to the Congress the power of the

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Speaker 4: person to speak to ensure that appropriations are made by

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Speaker 4: law and says no money shall be drawn otherwise. It's

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Speaker 4: not a provision that one would think serves as an

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Speaker 4: essential you know, often litigated check on the federal government.

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Speaker 4: But the proponents of this litigation, the Community Financial Services

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Speaker 4: Association of America, they try to turn it into that,

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Speaker 4: they try to weaponize a little used constitutional provision, little

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Speaker 4: use at least in terms of active litigation constitutional litigation.

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Speaker 4: Then they try to turn it into something that could

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Speaker 4: uproot an entire federal agency, citing the admittedly novel although

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Speaker 4: has the majority found grounded, but novel approach to funding

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Speaker 4: a federal agency that we see with the CFPB. So

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Speaker 4: that's what I meant by novel constitution oral argument. You know,

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Speaker 4: we don't see a lot of appropriation's clause litigation, and

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Speaker 4: it is certainly a creative argument. There have been other

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Speaker 4: similar arguments that raised against other federal agencies, but at

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Speaker 4: the end of the day, it is rare to see

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Speaker 4: an argument like this one drawn up in the grand

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Speaker 4: scheme of things when you're talking about separation of power.

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Speaker 1: Coming up next on the Bloomberg Law Show, I'll continue

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Speaker 1: this discussion with Andrew Kim, and we'll talk about what

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Speaker 1: this decision means for the CFPB as it tries to

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Speaker 1: enforce new regulations. I'm June Grosse. When you're listening to Bloomberg,

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Speaker 1: I've been talking to Andrew Kim, a partner at Goodwin Proctor,

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Speaker 1: about the Supreme Court's decision upholding the CFPB's funding system.

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Speaker 1: You know, I've done many segments on the Roberts Court

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Speaker 1: chipping away at the power of the so called administrative state,

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Speaker 1: and this term there are still other cases out there

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Speaker 1: where agency powers are on the chopping block. Shall we say?

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Speaker 1: There are cases involving the Security Exchange Commission, the National

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Speaker 1: Marine Fishery Service, the Environmental Protection Agency, and one of those,

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Speaker 1: the Chevron doctrine is on the chopping block. Can you

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Speaker 1: look at this case and say, well, there'll be a

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Speaker 1: similar result in the other cases and the agencies will

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Speaker 1: be in the winning column. Or is it too soon

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Speaker 1: or are the cases too different?

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Speaker 4: I think you might see some flavor of this in

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Speaker 4: the Jarcacy case, for example, which involves you know, the

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Speaker 4: Seventh Amendments and the non delegation doctrine and the use

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Speaker 4: of aljs because there are still separation of powers concerns raised.

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Speaker 4: And that's what I meant when I said, you know,

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Speaker 4: for example, the ALJA issue, the administrative law judge issue.

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Speaker 4: In jocacy, that's more the kind of structural constitutional challenge

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Speaker 4: that you see. You don't see something like that, you know,

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Speaker 4: the CFPV case where you're trying to challenge the very

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Speaker 4: existence of the agency. I think you may see these

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Speaker 4: principles come into play in jocracy, for example, which is

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Speaker 4: the case concerning the SEC. I will say that jocacy

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Speaker 4: is a little different in that it's not the SEC

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Speaker 4: isn't fighting for its existence in that case, whereas the

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Speaker 4: stakes were much higher for the CFPV here, and I

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Speaker 4: suspect that had something to do. If you see in

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Speaker 4: Justice Cakes's concurrence, I think that's had something to do

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Speaker 4: with the outcome here on cases like relentless or lowber Ride,

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Speaker 4: depending on which one you want to call it. On

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Speaker 4: the Chevon doctor and Chevron defference, I suspect that'll have

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Speaker 4: this case far less of an impact because they're The

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Speaker 4: question is you know, at the end of the day,

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Speaker 4: who is responsible for interpreting statutes and should the agencies

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Speaker 4: that are responsible for the enforcement of the statutes get

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Speaker 4: deference in how they interpret them. I mean, there are

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Speaker 4: separation of powers considerations there with respect to the judiciary,

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Speaker 4: but it's not the sort of thing that's going to

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Speaker 4: cause an existential crisis for a particular agency. And again

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Speaker 4: that that is more a question of statutory interpretation and

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Speaker 4: judicially created doctrines giving deference to the executive branch and

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Speaker 4: their application of admittedly specialist statutes. So I think you're

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Speaker 4: going to see less to draw there. Give. This goes

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Speaker 4: back to your earlier question about the significance of Justice

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Speaker 4: Kaigan's concurrence. You know, to the extent that a case

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Speaker 4: involves a constitutional challenge to essential functioning of what an

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Speaker 4: agency does, that applies across the board to all federal agencies.

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Speaker 4: I think you will see the kind of caution that

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Speaker 4: at least the four justices and really five, because I

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Speaker 4: think some would argue that Justice Jackson I would argue

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Speaker 4: that Justice Jackson signed on with her concurrence. I think

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Speaker 4: you are going to see the more that's at stake

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Speaker 4: for a federal agency and federal agencies across the board.

433
00:25:16,080 --> 00:25:18,959
Speaker 4: Chevron notwithstanding, I think that is the one issue that

434
00:25:19,160 --> 00:25:22,080
Speaker 4: really is a question of should the judiciary be affording

435
00:25:22,080 --> 00:25:25,120
Speaker 4: difference to the executive But other than that, if it's

436
00:25:25,160 --> 00:25:28,399
Speaker 4: the question of an agency's existence or federal agencies and

437
00:25:28,400 --> 00:25:30,920
Speaker 4: how they operate across the board, I think the Court

438
00:25:31,000 --> 00:25:33,639
Speaker 4: will exercise the kind of caution that you saw in

439
00:25:33,680 --> 00:25:34,720
Speaker 4: the CFPB case.

440
00:25:35,119 --> 00:25:39,399
Speaker 1: The CFPB has been threatened since its origin. Does this

441
00:25:39,640 --> 00:25:42,320
Speaker 1: end the threat to the CFPB once and for all.

442
00:25:43,119 --> 00:25:46,000
Speaker 4: I'm going to give an absolute statement, which is rare

443
00:25:46,040 --> 00:25:49,080
Speaker 4: for me. I think the answer is yes. I think

444
00:25:49,119 --> 00:25:53,320
Speaker 4: this is probably the last major constitutional challenge to the

445
00:25:53,359 --> 00:25:56,400
Speaker 4: existence of the bureau. That's not to say others won't

446
00:25:56,440 --> 00:26:00,359
Speaker 4: bring challenges against the CFPB with respect to what the

447
00:26:00,400 --> 00:26:03,400
Speaker 4: agency is doing, and they may say that. Challengers may

448
00:26:03,440 --> 00:26:08,080
Speaker 4: say what the agency is doing is unconstitutional, but those

449
00:26:08,119 --> 00:26:11,400
Speaker 4: are questions about how the agency conducts itself. I think

450
00:26:11,440 --> 00:26:14,840
Speaker 4: this will be the last constitutional challenge. I may be wrong.

451
00:26:15,160 --> 00:26:17,520
Speaker 4: I think there are those who will try to defeat

452
00:26:17,560 --> 00:26:20,080
Speaker 4: the agency, you know, using every effort that they have.

453
00:26:20,200 --> 00:26:23,240
Speaker 4: But I think this is the major, last major constitutional

454
00:26:23,320 --> 00:26:27,119
Speaker 4: challenge against the agency's existence. Now it's a question of

455
00:26:27,119 --> 00:26:30,479
Speaker 4: how the agency comports itself as a federal agency as

456
00:26:30,520 --> 00:26:31,159
Speaker 4: a regulator.

457
00:26:31,480 --> 00:26:35,800
Speaker 1: What's been happening with the enforcement actions of the CFBB

458
00:26:36,080 --> 00:26:40,199
Speaker 1: while this case has been pending before the Supreme Court.

459
00:26:39,800 --> 00:26:42,320
Speaker 4: They've wasted no time. I mean, the day after the

460
00:26:42,359 --> 00:26:47,000
Speaker 4: court's decision, you saw a flurry of activity. In fact,

461
00:26:47,119 --> 00:26:50,520
Speaker 4: Director Chopra had issued a statement saying that they were

462
00:26:50,600 --> 00:26:54,919
Speaker 4: firing on all cylinders. And on the day after, you know,

463
00:26:54,960 --> 00:26:57,600
Speaker 4: the one day after the court decisions, the CFCB had

464
00:26:57,640 --> 00:27:00,960
Speaker 4: issued a number of supplemental notice is filed in court

465
00:27:01,040 --> 00:27:05,480
Speaker 4: saying we'd like to unfreeze these cases. The CFPB took

466
00:27:05,520 --> 00:27:08,760
Speaker 4: steps to try and unfreeze the two rules that had

467
00:27:08,800 --> 00:27:13,240
Speaker 4: been blocked through preliminary injunctions or state through preliminary injunctions

468
00:27:14,840 --> 00:27:18,480
Speaker 4: challenges to the Small Business Data Rule and also the

469
00:27:18,480 --> 00:27:22,640
Speaker 4: credit card fee rule. And the CFP brought an enforcement

470
00:27:22,680 --> 00:27:26,040
Speaker 4: action literally the next day. And we've seen behind the

471
00:27:26,040 --> 00:27:29,080
Speaker 4: scenes that it seems like the CFPB has been gearing

472
00:27:29,160 --> 00:27:33,360
Speaker 4: up on the private side as well, you know, reinitiating investigations,

473
00:27:34,080 --> 00:27:38,640
Speaker 4: reinitiating discussions on the enforcement side. I think they were

474
00:27:38,640 --> 00:27:41,200
Speaker 4: all holding their breath over there at the CSPV waiting

475
00:27:41,200 --> 00:27:43,399
Speaker 4: to see how the Supreme court would come out and

476
00:27:43,440 --> 00:27:46,080
Speaker 4: they've finally been able to let that breath go and

477
00:27:46,080 --> 00:27:49,600
Speaker 4: they're finally breathing out, exhaling, and in that exhale, you're

478
00:27:49,600 --> 00:27:52,760
Speaker 4: seeing a lot of a flurry of enforcement activity.

479
00:27:52,800 --> 00:27:56,440
Speaker 1: Did the CFPB itself put enforcement activity on hold during

480
00:27:56,440 --> 00:27:58,760
Speaker 1: this period or was it that the people that they

481
00:27:58,800 --> 00:28:01,280
Speaker 1: were targeting put cases on hold.

482
00:28:01,800 --> 00:28:04,760
Speaker 4: Both those who were the targets of enforcement actions by

483
00:28:04,800 --> 00:28:08,040
Speaker 4: the Bureau did ask the courts ruling on their cases

484
00:28:08,480 --> 00:28:12,239
Speaker 4: to stay the lawsuits, to temporarily stop them while the

485
00:28:12,280 --> 00:28:16,560
Speaker 4: Supreme courts deciding the CSPB case. But we saw this

486
00:28:16,600 --> 00:28:19,280
Speaker 4: is something rare. When Director Chopar issued his remarks on

487
00:28:19,320 --> 00:28:22,719
Speaker 4: the day of the Supreme Court decision, you saw something

488
00:28:22,800 --> 00:28:24,960
Speaker 4: rare and that when he went and did I think

489
00:28:24,960 --> 00:28:28,280
Speaker 4: a press call afterwards, he confirmed that the Bureau had

490
00:28:28,840 --> 00:28:32,280
Speaker 4: at least frozen or slow rolled enforcement actions that had

491
00:28:32,280 --> 00:28:34,600
Speaker 4: not yet come to fruition, meaning that companies that were

492
00:28:35,000 --> 00:28:39,920
Speaker 4: either being investigated or being subject to pre lawsuit enforcement

493
00:28:40,280 --> 00:28:42,920
Speaker 4: activity by the Bureau that had been slow rolled or

494
00:28:42,960 --> 00:28:46,320
Speaker 4: that had been frozen while the Bureau was waiting for

495
00:28:46,360 --> 00:28:49,120
Speaker 4: this decision. So it was a mix of both. It

496
00:28:49,240 --> 00:28:53,080
Speaker 4: was those both challenging the Bureau had asked to put

497
00:28:53,280 --> 00:28:57,320
Speaker 4: rules that the Bureau had enacted on hold. Those being

498
00:28:57,320 --> 00:29:00,960
Speaker 4: investigated or subject to enforcement actions by the Bureau had

499
00:29:01,080 --> 00:29:04,960
Speaker 4: asked courts to put those cases on hold, and the

500
00:29:05,000 --> 00:29:07,800
Speaker 4: Bureau itself decided to slow roll things on its end.

501
00:29:08,240 --> 00:29:10,040
Speaker 4: That's not to say the Bureau was doing nothing, and

502
00:29:10,120 --> 00:29:12,760
Speaker 4: it continued with its investigations and with some of its

503
00:29:12,840 --> 00:29:16,120
Speaker 4: enforcement activity, but it wasn't going at full strength as

504
00:29:16,160 --> 00:29:18,800
Speaker 4: it is you know, clearly doing now in the wake

505
00:29:18,840 --> 00:29:20,040
Speaker 4: of the Supreme Court's decision.

506
00:29:20,760 --> 00:29:24,560
Speaker 1: So the case over the cap on credit card late fees,

507
00:29:25,120 --> 00:29:27,880
Speaker 1: which is the case that seems to be getting the

508
00:29:27,880 --> 00:29:30,920
Speaker 1: most attention, do you think that's an uphill battle for

509
00:29:30,960 --> 00:29:34,520
Speaker 1: the CFPB. I noticed that that case and the case

510
00:29:34,560 --> 00:29:39,400
Speaker 1: over the small business lending demographic data collection filed in Texas.

511
00:29:39,800 --> 00:29:42,920
Speaker 1: I don't think it's any you know, surprise or coincidence

512
00:29:42,920 --> 00:29:44,280
Speaker 1: that it's filed in Texas.

513
00:29:44,840 --> 00:29:47,280
Speaker 4: I'm not going to opine on the specific merits of

514
00:29:48,000 --> 00:29:51,080
Speaker 4: either of those cases, but I will say I think

515
00:29:51,160 --> 00:29:55,200
Speaker 4: that's the CFPB's next biggest challenge in terms of this

516
00:29:55,240 --> 00:29:56,840
Speaker 4: is the type of thing that we're going to see

517
00:29:56,920 --> 00:30:00,480
Speaker 4: going forward with respect to the CSTB challenge just to

518
00:30:00,720 --> 00:30:04,720
Speaker 4: how it engages in rule making, whether it's engages in

519
00:30:04,760 --> 00:30:08,160
Speaker 4: sound decision making at least in promulgating rules. That is

520
00:30:08,200 --> 00:30:10,000
Speaker 4: the kind of thing that you typically see in the

521
00:30:10,000 --> 00:30:13,600
Speaker 4: agents federal agencies that litigate often in court because of

522
00:30:13,720 --> 00:30:16,640
Speaker 4: trying to defend their actions, and I think this will

523
00:30:16,640 --> 00:30:20,600
Speaker 4: be a challenge for the CFPB On both cases. I

524
00:30:20,600 --> 00:30:23,000
Speaker 4: don't think either will be an easy case for the CFPB.

525
00:30:23,080 --> 00:30:25,800
Speaker 4: I think there are serious merits that the reviewing courts

526
00:30:25,800 --> 00:30:27,640
Speaker 4: will need to address. I'm not going to opine on

527
00:30:27,680 --> 00:30:29,920
Speaker 4: the specific arguments because I don't think it's my place

528
00:30:29,960 --> 00:30:32,240
Speaker 4: to do so. But I think this is very much

529
00:30:32,280 --> 00:30:35,640
Speaker 4: a type of activity that we'll be seeing affirmative litigation

530
00:30:35,720 --> 00:30:38,680
Speaker 4: brought against the CFPB that we'll see going forward. Rather

531
00:30:38,760 --> 00:30:43,040
Speaker 4: than these attempts to broadly strike down the agency and

532
00:30:43,120 --> 00:30:47,120
Speaker 4: its existence, it's more going to be these affirmative lawsuits

533
00:30:47,160 --> 00:30:49,600
Speaker 4: are going to be a check on what the bureau

534
00:30:49,680 --> 00:30:51,960
Speaker 4: is doing and how it is carrying out its activities

535
00:30:51,960 --> 00:30:52,720
Speaker 4: as an agency.

536
00:30:53,320 --> 00:30:56,640
Speaker 1: Let me ask you a broad question. The Fifth Circuit,

537
00:30:56,680 --> 00:30:59,120
Speaker 1: the case that we're talking about on the CFPB was

538
00:30:59,160 --> 00:31:02,760
Speaker 1: from the Fifth Circuit. It the sec case is from

539
00:31:02,760 --> 00:31:05,240
Speaker 1: the Fifth Circuit, and the Fifth Circuit has an inordinate

540
00:31:05,240 --> 00:31:08,600
Speaker 1: amount of cases before the Supreme Court this term. Do

541
00:31:08,600 --> 00:31:11,080
Speaker 1: you think that the Supreme Court is sort of slapping

542
00:31:11,120 --> 00:31:13,640
Speaker 1: down the Fifth Circuit when it's come out with some

543
00:31:13,800 --> 00:31:17,520
Speaker 1: pretty novel and on the edge legal theories.

544
00:31:18,200 --> 00:31:22,000
Speaker 4: I think you're putting it very generously. My suspicion is

545
00:31:22,040 --> 00:31:24,800
Speaker 4: I don't think that the CFPB decisions is to be

546
00:31:24,880 --> 00:31:28,920
Speaker 4: construed as an admonition of the Fifth Circuit per se.

547
00:31:29,320 --> 00:31:31,720
Speaker 4: I would be really interested to see what happens in

548
00:31:31,760 --> 00:31:35,640
Speaker 4: the Jarcracy case, because I will say the appropriation's clause

549
00:31:35,720 --> 00:31:38,680
Speaker 4: argument had been kicking around for the better part of

550
00:31:39,000 --> 00:31:43,200
Speaker 4: a decade. I would say it wasn't entirely new. There

551
00:31:43,280 --> 00:31:45,720
Speaker 4: was some basis for it. It is very novel in

552
00:31:45,760 --> 00:31:48,120
Speaker 4: the sense that you're using this, as I said earlier,

553
00:31:48,320 --> 00:31:51,920
Speaker 4: little youth constitutional provision. But I put it like this,

554
00:31:52,360 --> 00:31:55,520
Speaker 4: it wasn't a departure from established case law because there

555
00:31:55,560 --> 00:31:57,840
Speaker 4: wasn't much established case law at least as to the

556
00:31:57,920 --> 00:32:01,520
Speaker 4: meaning of what the appropriation clause is and how to

557
00:32:01,560 --> 00:32:04,520
Speaker 4: apply it. And that's why you know, the justices in

558
00:32:04,560 --> 00:32:06,880
Speaker 4: this case had really had to rely and lead in

559
00:32:07,000 --> 00:32:10,120
Speaker 4: on history and tradition and really the mere text of

560
00:32:10,160 --> 00:32:12,600
Speaker 4: the recent clause. I would be interested to see what

561
00:32:12,640 --> 00:32:16,080
Speaker 4: happens in jercracy because I think for the Court and

562
00:32:16,120 --> 00:32:19,040
Speaker 4: the Myth of Perstone case as well. I think that

563
00:32:19,560 --> 00:32:22,920
Speaker 4: those cases from the Fifth Circuit, I won't say that

564
00:32:22,920 --> 00:32:26,680
Speaker 4: they mark an extreme departure from case law, but they

565
00:32:26,680 --> 00:32:30,200
Speaker 4: give rise to some serious questions about the issues presented

566
00:32:30,200 --> 00:32:33,720
Speaker 4: in those cases, especially with respect to in jocracy. For example,

567
00:32:33,720 --> 00:32:38,040
Speaker 4: the SEC case, you have very interesting questions about the

568
00:32:38,080 --> 00:32:40,800
Speaker 4: Seventh Amendment and the fact that the Court, the Fifth

569
00:32:40,880 --> 00:32:43,720
Speaker 4: Circuit in that case took the effort to say you

570
00:32:43,840 --> 00:32:45,680
Speaker 4: not only lose on one of these grounds, but you

571
00:32:45,720 --> 00:32:49,040
Speaker 4: lose on all three of these grounds. SEC. If there

572
00:32:49,080 --> 00:32:51,760
Speaker 4: is a case where there might be some reading between

573
00:32:51,760 --> 00:32:54,000
Speaker 4: the lines admonitions of the Fifth Circuit, I think it

574
00:32:54,080 --> 00:32:56,960
Speaker 4: might be from jercacy. Maybe less so in the Myth

575
00:32:57,000 --> 00:32:57,840
Speaker 4: of Perstone case.

576
00:32:58,000 --> 00:33:00,840
Speaker 1: We'll find out by the end of June. So much, Andrew.

577
00:33:01,440 --> 00:33:04,880
Speaker 1: That's Andrew Kim, a partner at Goodwin Proctor. And that's

578
00:33:04,920 --> 00:33:07,880
Speaker 1: it for this edition of the Bloomberg Law Podcast. Remember

579
00:33:07,920 --> 00:33:10,600
Speaker 1: you can always get the latest legal news by subscribing

580
00:33:10,680 --> 00:33:14,080
Speaker 1: and listening to the show on Apple Podcasts, Spotify and

581
00:33:14,200 --> 00:33:18,200
Speaker 1: at bloomberg dot com, slash podcast, slash Law. I'm June

582
00:33:18,240 --> 00:33:20,360
Speaker 1: Grosso and this is Bloomberg