WEBVTT - Google Cuts a Check & CFPB Revenge Tour 0:00:03.200 --> 0:00:08.000 This is Bloomberg Law with June Brusso from Bloomberg Radio. 0:00:10.240 --> 0:00:13.520 The Department of Justice, joined by eight states, filed a 0:00:13.560 --> 0:00:17.200 civil antitrust lawsuit in the United States District Court for 0:00:17.280 --> 0:00:20.200 the Eastern District of Virginia against Google. 0:00:21.280 --> 0:00:25.720 The Justice Department suit, accusing Google of monopolizing the digital 0:00:25.800 --> 0:00:29.400 advertising market, is scheduled to go to trial before a 0:00:29.480 --> 0:00:33.280 jury in September, but Google is trying to avoid trying 0:00:33.320 --> 0:00:36.560 the case to a jury with a novel move cutting 0:00:36.560 --> 0:00:40.360 the government to check the search Giant wants a judge, 0:00:40.400 --> 0:00:43.559 not a jury, to decide the case, and argues the 0:00:43.600 --> 0:00:46.639 government has no right to a jury trial without a 0:00:46.640 --> 0:00:49.680 claim for money damages. Joining me is anti trust law 0:00:49.720 --> 0:00:53.920 expert Harry First, a professor at NYU Law School. Harry, 0:00:53.920 --> 0:00:58.080 has this been done before, paying damages before a trial 0:00:58.160 --> 0:00:59.560 or a finding of liability? 0:01:00.240 --> 0:01:03.040 Not to my knowledge, it's a you know, you might 0:01:03.120 --> 0:01:05.880 say a clever move, or you might say it's a 0:01:05.920 --> 0:01:09.400 silly move, or you might say, when it's Google, who 0:01:09.440 --> 0:01:12.440 cares how many millions of dollars you may pay unnecessarily? 0:01:12.880 --> 0:01:16.839 So I've never seen this before. Liligans don't usually pay 0:01:16.880 --> 0:01:21.040 out money in advance of a trial an indvansive even losing, 0:01:21.400 --> 0:01:22.800 So you've got to have a lot of money to 0:01:22.880 --> 0:01:23.160 do that. 0:01:23.720 --> 0:01:27.559 The Google argument is that without a monetary damage's claim, 0:01:27.959 --> 0:01:30.920 the government has no right to a jury trial. Is 0:01:30.959 --> 0:01:31.679 that true? 0:01:32.760 --> 0:01:37.280 Well, Google's argument is, let's see, should we call it silly, 0:01:37.400 --> 0:01:42.360 ridiculous or desperate? I don't know. So if you are 0:01:42.440 --> 0:01:45.240 not asking for money, go back to day one. You 0:01:45.319 --> 0:01:48.440 file a complaint and all you're asking for is an injunction. 0:01:48.920 --> 0:01:52.400 That is what's called a suit in equity and is 0:01:52.520 --> 0:01:55.880 just handled by a judge. That's the way cases have 0:01:55.920 --> 0:01:59.800 been handled since common law period. If, on the other hand, 0:01:59.880 --> 0:02:02.640 you go into court and you ask for money damages, 0:02:03.000 --> 0:02:07.440 that has to be before a judge with under the 0:02:07.520 --> 0:02:11.440 Seventh Amendment, if it's for more than twenty dollars, I think, 0:02:11.600 --> 0:02:15.000 with a jury. So that's the distinction. Now what Google's 0:02:15.000 --> 0:02:18.160 trying to say is, oh, guess what. Now there's no damages, 0:02:18.240 --> 0:02:21.799 so you don't get the jury trial. So presumably the 0:02:21.880 --> 0:02:24.480 Justice Department will say to this check thank you, but 0:02:24.600 --> 0:02:26.600 no thank you. You know, we want to prove our 0:02:26.680 --> 0:02:29.119 damages and we'll prove them anyway. So it is still 0:02:29.120 --> 0:02:32.320 a suit for damages, and you can't get out of 0:02:32.400 --> 0:02:35.760 it by sort of pre paying the damages and now saying, 0:02:36.120 --> 0:02:38.840 guess what, it's not for damages. The suit was always 0:02:38.840 --> 0:02:39.360 for damaging. 0:02:39.840 --> 0:02:43.760 The size of the payment hasn't been disclosed, but Google 0:02:43.800 --> 0:02:46.679 said that after months of discovery, the Justice Department could 0:02:46.720 --> 0:02:49.520 only point to estimated damages of less than a million. 0:02:50.080 --> 0:02:53.640 Since the law allows the court to issue treble damages. 0:02:53.720 --> 0:02:58.280 The speculation is that Google's check is for about three million, 0:02:58.360 --> 0:03:01.120 which is a drop in the bucket to Google. 0:03:01.960 --> 0:03:05.840 Well, yeah, I mean originally they claimed at least one 0:03:05.919 --> 0:03:08.639 hundred million, and what they're going to be able to 0:03:08.680 --> 0:03:11.680 prove up a trial, it seems to me, is still 0:03:11.800 --> 0:03:15.000 a question for trial. So I don't know what their 0:03:15.040 --> 0:03:19.240 expert reports show or whether they have some additional evidence. 0:03:19.639 --> 0:03:21.920 So I don't know what the amount is, and I think, frankly, 0:03:22.120 --> 0:03:25.040 it doesn't really matter. The legal point is the case 0:03:25.680 --> 0:03:29.680 was filed for damages, it is still the case for damages, 0:03:30.200 --> 0:03:34.120 and paying them off doesn't and the case and doesn't 0:03:34.240 --> 0:03:36.880 change the nature of the case. So I don't see 0:03:36.920 --> 0:03:39.800 this as the gambit that's going to work. Their claim 0:03:39.880 --> 0:03:42.600 is not mooved no matter what how much the checks 0:03:42.640 --> 0:03:46.280 for and you're right, from anyone's point of view, whether 0:03:46.360 --> 0:03:50.200 it's five million, ten million, one hundred million dollars, this 0:03:50.360 --> 0:03:53.400 is not very much to Google. And that's really, frankly 0:03:53.440 --> 0:03:56.680 not the point. So I think, you know, more significant 0:03:56.760 --> 0:03:59.800 are the other arguments that Google tries to make, which 0:03:59.800 --> 0:04:04.080 is that this shouldn't be a tried by a jury. 0:04:04.480 --> 0:04:07.880 And that's a more straightforward argument. It's not yes, it's 0:04:07.920 --> 0:04:10.320 a jury trial, but no, it's not a jury trial, 0:04:10.400 --> 0:04:12.800 because I mean, it would sort of be like saying, well, 0:04:12.800 --> 0:04:15.400 you asked for an injunction, so yeah, it's fine, We're 0:04:15.440 --> 0:04:17.560 fine with an injunction. So now it's not a case 0:04:17.560 --> 0:04:19.760 for anything, So that I don't think that's going to work. 0:04:19.880 --> 0:04:22.400 Google said that the government has said the case is 0:04:22.480 --> 0:04:27.480 highly technical and outside the everyday knowledge of most prospective jurors. 0:04:27.800 --> 0:04:30.679 Google said it's aware of no case in American history 0:04:30.720 --> 0:04:33.640 where a civil suit brought by the United States pressing 0:04:33.760 --> 0:04:37.039 only antitrust claims was tried to a jury. 0:04:37.600 --> 0:04:42.440 You know, it's likely that that's correct simply because the 0:04:42.640 --> 0:04:46.719 Justice Department has almost never filed suit for damages and 0:04:46.920 --> 0:04:51.720 so it's not a major claim. What would be an 0:04:51.839 --> 0:04:55.600 interesting claim is if nobody had ever filed for a 0:04:55.680 --> 0:04:59.559 jury trial, including private party, and that actually is not true. 0:05:00.040 --> 0:05:03.480 And in fact, this claim was made in the nineteen 0:05:03.600 --> 0:05:08.280 eighties in litigation involving the sale of Japanese televisions in 0:05:08.320 --> 0:05:12.920 the United States at allegedly predatory prices, and the defendant, 0:05:13.279 --> 0:05:17.880 Japanese television manufacturers, made a strong effort to say there 0:05:18.000 --> 0:05:20.760 is no right to a jury trial here because it's 0:05:20.800 --> 0:05:26.720 too complex. The courts never quite got to that holding 0:05:27.040 --> 0:05:30.440 for other reasons. They focused on other issues. But we've 0:05:30.480 --> 0:05:34.599 seen the claim before and courts are not all that 0:05:34.720 --> 0:05:38.080 well disposed to it. In private cases, there are lots 0:05:38.080 --> 0:05:42.479 of complicated cases, patent infringement cases. Patents are complicated. A 0:05:42.520 --> 0:05:45.479 lot of patent infringement cases a large part of it 0:05:45.520 --> 0:05:50.040 to try to juries, trade secret cases, complex fraud cases. 0:05:50.279 --> 0:05:53.119 There's a lot of complex cases. To say somehow anti 0:05:53.200 --> 0:05:58.520 trust is beyond the realm is a little silly, particularly 0:05:58.640 --> 0:06:03.480 after Google had a jury trial in the epic case. Now, 0:06:03.640 --> 0:06:06.520 Google's right to say that this is unusual for the government, 0:06:06.720 --> 0:06:09.440 but that's a knock on the government, but not on 0:06:09.560 --> 0:06:12.320 the legal case. And there are reasons for that. But 0:06:12.360 --> 0:06:14.919 the government clearly has the statutory right to sue for 0:06:14.960 --> 0:06:18.720 treble damages. Congress gave that to them in nineteen ninety, 0:06:19.160 --> 0:06:22.400 originally with single damages nineteen fifty five. I mean it's 0:06:22.400 --> 0:06:27.560 a specific statue. So, as I said, frivolous, bad argument. 0:06:27.800 --> 0:06:30.480 Harry, before we go any further, tell us about the 0:06:30.480 --> 0:06:32.840 government's case against Google here. 0:06:33.480 --> 0:06:37.640 Basically, it involves the advertising side of what Google does 0:06:37.680 --> 0:06:41.440 and the auctions that it runs for those ads that 0:06:41.560 --> 0:06:45.320 you see popping up every time you move online that 0:06:45.480 --> 0:06:48.359 seem to say, Hi, Harry, this is for you. You know, 0:06:48.720 --> 0:06:53.120 starts advertising display advertising, and they run auctions. I forget 0:06:53.200 --> 0:06:57.159 the number every second, but it's a huge volume of 0:06:57.320 --> 0:07:01.839 advertising auctions. And they run the platform, and they provide 0:07:01.839 --> 0:07:05.800 the tools for both the advertisers and the publishers of 0:07:05.880 --> 0:07:09.560 these ads to figure out how much space there is 0:07:09.600 --> 0:07:12.600 where these ads could go, what to charge, how to 0:07:12.960 --> 0:07:15.559 aunction them off, so that each side feels they're getting 0:07:15.600 --> 0:07:18.320 the best deal, and you know, they sort of run 0:07:18.360 --> 0:07:22.080 the show. And they also have the search engine that 0:07:22.240 --> 0:07:25.640 generates you know, a lot of the information. So they 0:07:25.640 --> 0:07:29.600 are all over what people call the ad tech space, 0:07:30.320 --> 0:07:34.160 and the Justice Department wants to separate out some of 0:07:34.240 --> 0:07:39.440 these functions so that different platforms might arise that could 0:07:39.680 --> 0:07:44.280 compete against Google without you know, having the same search engine, 0:07:44.320 --> 0:07:48.200 having sort of the same tools that seem to favor Google, 0:07:48.320 --> 0:07:53.000 and placement on Google websites rather than through being so forth. 0:07:53.440 --> 0:07:56.880 So that's the real thumbnail sketch. But you know everything 0:07:56.920 --> 0:07:59.760 you read. The first thing you know that people say 0:07:59.880 --> 0:08:02.920 is well, this is a complicated market to understand. But 0:08:03.240 --> 0:08:05.960 you know, again, this is what good trial lawyers do. 0:08:06.000 --> 0:08:09.520 They break down complexity so that the people who have 0:08:09.560 --> 0:08:12.400 to decide the case. In this case, the jury can 0:08:12.440 --> 0:08:14.880 follow it through and that's going to be their challenge. 0:08:15.960 --> 0:08:19.880 You mentioned the Fortnite maker Epic Games case that was 0:08:19.960 --> 0:08:24.040 one of the worst legal losses for Google. So Google's 0:08:24.040 --> 0:08:26.440 been burned by a jury. Is that why it may 0:08:26.480 --> 0:08:30.240 be looking for a judge to decide this case, although 0:08:30.280 --> 0:08:32.840 I would think that it would be harder to try 0:08:32.840 --> 0:08:37.559 a case before an experienced trial judge than before a jury. 0:08:37.760 --> 0:08:41.199 And also a jury can't order the breakup of a company, right. 0:08:41.640 --> 0:08:43.760 Well, that part of the remedy is going to be 0:08:43.760 --> 0:08:46.600 decided by the judge and not by the jury. The 0:08:46.679 --> 0:08:50.720 jury will assess damages, but the sort of equitable part 0:08:50.760 --> 0:08:53.680 of it. What the ongoing relief will be will be 0:08:53.760 --> 0:08:58.160 decided in some sort of separate post trial hearing where 0:08:58.200 --> 0:09:02.240 the government presents few and evidence on what it wants 0:09:02.280 --> 0:09:07.040 to cure the problem going forward. But damages are compensation 0:09:07.200 --> 0:09:10.600 for harm in the past, so that will be decided 0:09:10.640 --> 0:09:14.520 by a jury. And you know, your question now has 0:09:14.600 --> 0:09:18.840 moved from are they making a frivolous legal argument to 0:09:19.559 --> 0:09:22.640 are they making a smart tactical argument. And you know, 0:09:22.960 --> 0:09:25.760 I'm not sure the answer to that. Why do they 0:09:25.800 --> 0:09:29.440 prefer judge bring them to a jury. And the only 0:09:29.480 --> 0:09:33.360 answer I can come up with is just what you said. 0:09:32.800 --> 0:09:36.040 They don't want to present themselves to a jury. They 0:09:36.040 --> 0:09:38.920 did that an epic which they wanted to avoid desperately 0:09:39.000 --> 0:09:42.240 and were unable to. And in less than four hours 0:09:42.240 --> 0:09:45.000 the jury said, we know who you are. You are 0:09:45.040 --> 0:09:48.640 a monopolist. You know, cut the fancy junk, you're a 0:09:48.720 --> 0:09:52.160 monopolis and you've excluded competitors. They didn't have much trouble 0:09:52.200 --> 0:09:55.120 with this. Now you could say, well, one strategy is 0:09:55.160 --> 0:09:57.880 you make this soak complicated the jury to just throw 0:09:57.920 --> 0:10:00.760 up their hands and say we can't figure this. On 0:10:00.800 --> 0:10:04.440 the other hand, a jury trials incentive to both parties 0:10:04.480 --> 0:10:08.160 to present an understandable case. And you know, the government 0:10:08.240 --> 0:10:13.360 chose this, and they actually chose a difficult path because 0:10:13.400 --> 0:10:15.600 they have the burden of proof and they have to 0:10:15.640 --> 0:10:18.800 make this understandable to the jury. And it's not going 0:10:18.880 --> 0:10:22.520 to be easy. I don't think it's complicated industry, But 0:10:22.960 --> 0:10:25.120 you know, if they do it well, the jury will 0:10:25.200 --> 0:10:29.080 understand it. And maybe that's exactly what Google's afraid of. 0:10:29.600 --> 0:10:33.079 The jury will see. They're on both sides of these transactions. 0:10:33.480 --> 0:10:39.720 Even Microsoft, the second largest company in the United States 0:10:39.800 --> 0:10:43.160 by market cap but valued over what now, three trillion 0:10:43.200 --> 0:10:45.160 or two trillion, I lose a trillion here or there, 0:10:45.280 --> 0:10:49.120 even they are having trouble in this space. And you know, 0:10:49.320 --> 0:10:52.160 I think jurors will get it, and I think Google's 0:10:52.200 --> 0:10:55.760 afraid that jurors will get it. And obviously they're not 0:10:55.880 --> 0:10:59.800 so much afraid of the money part here, since they said, hey, here, 0:11:00.200 --> 0:11:03.160 take our money please. They're worried that the jury is 0:11:03.200 --> 0:11:06.640 going to find against them that they've monopolized this market 0:11:06.960 --> 0:11:09.880 and then strong relief is going to follow. 0:11:10.920 --> 0:11:13.400 But if a jury would get it, wouldn't a judge 0:11:13.440 --> 0:11:16.040 get it as well? And you know, get it faster 0:11:16.200 --> 0:11:18.319 and with more background information. 0:11:18.720 --> 0:11:23.280 I do wonder about that. Judge Brinkhama is a really 0:11:23.320 --> 0:11:28.200 good district court judge. She's moved this case along pretty quickly. 0:11:28.320 --> 0:11:33.080 She doesn't seem disposed to, you know, to Google's efforts 0:11:33.120 --> 0:11:35.920 to get out of her court to do various things. 0:11:36.160 --> 0:11:39.520 She hasn't dismissed the complaint, So I wonder why they 0:11:39.600 --> 0:11:43.240 think they'd have a better chance with her when it 0:11:43.280 --> 0:11:46.760 comes to tactics. These are judgment called. You know, those 0:11:46.840 --> 0:11:49.960 lawyers may know things about their case, may feel that 0:11:50.440 --> 0:11:54.120 she could understand better why they're on both sides of 0:11:54.160 --> 0:11:57.400 the transaction, how these marketplaces work. I don't know. That's 0:11:57.440 --> 0:12:02.000 a decision they have made, though they don't want twelve 0:12:02.360 --> 0:12:04.240 people judging their behavior. 0:12:05.320 --> 0:12:08.160 Some of the plaintiff states that had joined the Justice 0:12:08.160 --> 0:12:11.600 Department suit said the court to deny Google's motion for 0:12:11.679 --> 0:12:14.160 some rejudgment allow the case to procedure trial. 0:12:14.280 --> 0:12:14.640 Quote. 0:12:14.840 --> 0:12:18.640 Google argues that it lacks monopoly power along every dimension 0:12:18.800 --> 0:12:21.800 except the one that matters most under the law, whether 0:12:21.840 --> 0:12:25.080 it has the power to control price or output, and 0:12:25.120 --> 0:12:28.440 it does. Which side do you think has the easier 0:12:28.640 --> 0:12:31.160 case here? Because you know, it sounds like Google will 0:12:31.160 --> 0:12:34.040 have a hard time defending well. 0:12:34.200 --> 0:12:37.120 As I said, you know, just as in the epic 0:12:37.200 --> 0:12:40.640 litigation with Fortnite. Yeah, don't look over here that we 0:12:40.679 --> 0:12:43.920 have a monopoly, look over there, that we compete for 0:12:44.200 --> 0:12:47.280 lots of other advertising and so forth. And a lot 0:12:47.320 --> 0:12:51.000 of this does turn on some sort of technical concepts 0:12:51.040 --> 0:12:54.440 about how we define markets and what the market share is. 0:12:55.000 --> 0:12:58.000 And the state's position, which I assume will come out 0:12:58.000 --> 0:13:01.720 in litigation as well, is that we can figure out 0:13:01.720 --> 0:13:04.880 whether someone is a monopoly, not just buy or even 0:13:04.960 --> 0:13:08.640 exclusively by defining a market and seeing whether they have 0:13:08.800 --> 0:13:11.880 most of it. We look and see whether they can 0:13:11.920 --> 0:13:14.680 do what monopolists do. You know, does it walk like 0:13:14.720 --> 0:13:16.960 a duck and talk like a duck. It is a duck. 0:13:17.280 --> 0:13:20.840 So monopolist control price, they raise it, and they restrict output. 0:13:21.280 --> 0:13:24.720 And that's what you know, they want to show in 0:13:24.760 --> 0:13:28.360 their case that they control the output of advertising and 0:13:28.520 --> 0:13:32.400 these advertising services, and that leads to higher prices. And 0:13:32.400 --> 0:13:36.440 that's sort of what's behind the damages claim, which is 0:13:36.480 --> 0:13:40.400 why the government shouldn't abandon it so quickly, because they 0:13:40.440 --> 0:13:43.200 want to show harm that prices have gone up, and 0:13:43.600 --> 0:13:45.400 you know, there's a direct way of doing it. They 0:13:45.400 --> 0:13:48.800 bring in a buyer and says, heck, you know, if 0:13:48.840 --> 0:13:51.920 things were right, I would add to pay less for 0:13:52.160 --> 0:13:55.520 my ads, and I don't really have a choice but 0:13:55.640 --> 0:13:58.800 to go through Google, and you know they sack their 0:13:58.840 --> 0:14:02.200 tolls and if I've got use their platform. So you know, 0:14:02.320 --> 0:14:05.160 I think they're still going to want to present that 0:14:05.160 --> 0:14:07.920 that evidence, assuming that they can muster it from their 0:14:08.080 --> 0:14:11.280 own buyers, which is the federal government. 0:14:11.760 --> 0:14:15.240 Maybe Google will have a change of heart if Judge Meta, 0:14:15.679 --> 0:14:21.240 the DC trial judge who's still weighing allegations that Google 0:14:21.480 --> 0:14:25.680 unlawfully stifled competition for web search, comes out with a 0:14:25.800 --> 0:14:27.280 ruling against Google. 0:14:28.880 --> 0:14:32.600 You mean, dropping another shoe might not miss their feet. Yeah, 0:14:32.680 --> 0:14:34.840 you are right, there's one way or the other. They're 0:14:34.840 --> 0:14:38.200 in the fire. And the question is, you know, I 0:14:38.240 --> 0:14:40.840 don't want to pursue the metaphor, but you're right. It's 0:14:40.840 --> 0:14:43.960 a great point. As this is going along before trial, 0:14:44.080 --> 0:14:46.880 Judge Meta comes down with the decision, which I think 0:14:46.920 --> 0:14:49.160 you will that just at least to some degree, they 0:14:49.160 --> 0:14:55.160 have monopoly and they've engaged in monopolizing conduct, any competitive conduct. Yeah, 0:14:55.360 --> 0:14:58.280 that may make them say, well, yes, we didn't do 0:14:58.360 --> 0:15:02.240 so well necessarily before judge. But you know, in some 0:15:02.280 --> 0:15:06.000 way least they get a cleaner opinion to appeal from 0:15:06.120 --> 0:15:08.480 as a judgester right, an opinion, so it's going to 0:15:08.520 --> 0:15:09.040 look different. 0:15:09.600 --> 0:15:11.760 I hadn't thought about that. That's a good point, Harry. 0:15:12.040 --> 0:15:14.160 Of course, of course you make a good point, Harry, 0:15:15.320 --> 0:15:18.040 and that's why I so enjoy having you on the show. 0:15:18.640 --> 0:15:22.600 Thanks so much. That's Professor Harry First of NYU Law School. 0:15:23.040 --> 0:15:27.600 Conservatives have targeted the Consumer Financial Protection Bureau since its 0:15:27.640 --> 0:15:30.600 creation in two thousand and eight, part of the attack 0:15:30.760 --> 0:15:34.280 on the so called administrative state, but a Supreme Court 0:15:34.360 --> 0:15:39.200 decision last week upholding the bureau's funding system has vaporized 0:15:39.240 --> 0:15:44.880 the legal threat to the CFPB, Senator Elizabeth Warren's brainchild. 0:15:44.760 --> 0:15:48.280 The CFPB is here to stay. And this is really 0:15:48.320 --> 0:15:52.640 important because you know, it's all about a level playing field. 0:15:52.640 --> 0:15:55.640 The CFPB is out there fighting every time somebody gets 0:15:55.720 --> 0:15:58.560 cheated by a bank, every time somebody gets tricked by 0:15:58.560 --> 0:15:59.600 a mortgage company. 0:16:00.120 --> 0:16:04.400 Seven to two vote, which divided the justices along unusual lines, 0:16:04.840 --> 0:16:08.200 was a rare victory for regulation at the Court, which 0:16:08.240 --> 0:16:12.320 has been slowly chipping away at the power of administrative agencies. 0:16:12.720 --> 0:16:15.560 The question is whether this ruling is a sign that 0:16:15.640 --> 0:16:19.000 a majority of the Justice says will reject challenges to 0:16:19.080 --> 0:16:23.800 agencies in three key decisions yet to be decided this term. 0:16:24.200 --> 0:16:26.960 Joining me is Andrew Kim, a partner in the Appellate 0:16:27.000 --> 0:16:31.360 and Supreme Court litigation practice at Goodwin Proctor. The case 0:16:31.640 --> 0:16:35.880 divided the Court along unusual lines in the concurrence and 0:16:36.000 --> 0:16:40.160 also with Justice Clarence Thomas writing the majority opinion and 0:16:40.240 --> 0:16:44.960 his fellow i'll say ultra conservatives Samuel Alito and Neil 0:16:45.000 --> 0:16:46.400 Gorsich dissenting. 0:16:47.080 --> 0:16:50.160 I think if this opinion shows anything, the majority opinion 0:16:50.160 --> 0:16:52.560 shows anything, it's something that we've known all along, which 0:16:52.600 --> 0:16:55.480 is Justice Thomas marches to the beat of his own drum. 0:16:55.840 --> 0:16:59.480 And I think most individuals who are watching this decision 0:16:59.560 --> 0:17:03.440 were expecting some alignment amongst the conservatives on this issue. 0:17:03.480 --> 0:17:07.439 But I think Justice Kavanaugh, for example, Justice Barrett, you 0:17:07.480 --> 0:17:10.440 saw that in the concurrence that they joined. I think 0:17:10.880 --> 0:17:13.720 those two justices and Justice Thomas as well, might have 0:17:13.840 --> 0:17:18.320 had serious concerns about the more sweeping implications of what 0:17:18.359 --> 0:17:22.200 it means to defund the entire agency on this novel 0:17:22.240 --> 0:17:25.399 constitutional theory. And I think Justice Thomas staked out his 0:17:25.480 --> 0:17:27.879 position in a way that was faithful to what he 0:17:27.960 --> 0:17:31.080 believed in with respect to the text of the Constitution 0:17:31.240 --> 0:17:34.520 and the history and tradition of that provision. Obviously, there 0:17:34.600 --> 0:17:37.200 is a divide now, and it'd be interesting to see 0:17:37.200 --> 0:17:40.160 how this plays out. How do you apply a history 0:17:40.200 --> 0:17:44.440 and tradition going forward, especially with Justice's Kavanaugh and Barrett 0:17:44.680 --> 0:17:47.720 joining Justice Kagan's concurrence, and can you look to a 0:17:47.760 --> 0:17:50.000 continuing tradition. I think that will be an interesting question 0:17:50.080 --> 0:17:53.960 going forward. But for at least this case, Justice Thomas 0:17:54.119 --> 0:17:56.760 stuck to his principles and came out in a way 0:17:56.800 --> 0:17:59.159 that surprised a lot of people, I think, but I 0:17:59.160 --> 0:18:03.360 think is also a faitful to his vision of what 0:18:03.400 --> 0:18:07.560 it means to interpret constitutional provisions with respect to the 0:18:07.640 --> 0:18:10.679 structure of government and how the government is still to 0:18:10.680 --> 0:18:13.800 function going forward. And obviously there is a divide between 0:18:14.080 --> 0:18:17.840 him and Justice's Alito and Gorsag and we'll see going 0:18:17.880 --> 0:18:22.159 forward whether that division plays a role in future cases, 0:18:22.200 --> 0:18:26.920 in future structural constitutional challenges that have separations power implications. 0:18:26.960 --> 0:18:30.320 But if anything, at the end of the day, Justice 0:18:30.359 --> 0:18:33.639 Thomas sticks to his guns and he decided, and I 0:18:33.640 --> 0:18:35.560 don't mean to quote Fank Sinatra, but he did it 0:18:35.560 --> 0:18:38.600 his way, and I think this should surprise in some ways, 0:18:38.680 --> 0:18:39.920 should surprise nobody. 0:18:40.359 --> 0:18:44.840 You mentioned Justice Elena Kagan's concurrence, which was joined by 0:18:44.840 --> 0:18:49.359 liberal Justice Sonya Sotomayor and conservatives Brett Kavanaugh and Amy 0:18:49.440 --> 0:18:54.240 Coney Barrett. She wrote to emphasize the importance of continuing 0:18:54.359 --> 0:18:59.040 tradition in interpreting the Constitution's meaning. Quote the founding error 0:18:59.119 --> 0:19:03.600 practice that Theourt relates became the nineteenth century practice, which 0:19:03.680 --> 0:19:08.439 became the twentieth century practice, which became today's. If you 0:19:08.520 --> 0:19:11.760 read between the lines, what do you see in her concurrence? 0:19:12.320 --> 0:19:17.440 My sense from Justice Kaigan's concurrence is that the Court bipartisan, 0:19:17.640 --> 0:19:19.160 for lack of a better way of putting it, although 0:19:19.160 --> 0:19:21.240 there are no parties in the Court, but a combination 0:19:21.320 --> 0:19:25.320 of liberal and conservative justices are signaling that they don't 0:19:25.440 --> 0:19:30.120 want novel constitutional arguments that would upturn our system of government, 0:19:30.560 --> 0:19:33.320 turn over the table, so to speak, and those won't 0:19:33.359 --> 0:19:36.280 be welcome under this approach to or at least their 0:19:36.320 --> 0:19:40.240 approach to history and tradition. I think it is a 0:19:40.400 --> 0:19:42.760 bit of a warning that the Court is not going 0:19:42.800 --> 0:19:46.199 to entertain every novel argument drawn under the Constitution to 0:19:46.200 --> 0:19:49.640 try to curb the administrative state, and that there are 0:19:49.960 --> 0:19:52.360 certain things that are essential to the function of government, 0:19:52.480 --> 0:19:55.359 like how agencies are funded. So long as there is 0:19:55.400 --> 0:19:57.800 a long standing tradition of it, the court is going 0:19:57.840 --> 0:20:00.600 to be very hesitant to overturn that going forward. 0:20:00.359 --> 0:20:03.040 And explain the novel argument suggested here. 0:20:03.320 --> 0:20:06.439 Yeah, before this particular case, I think the notion that 0:20:06.480 --> 0:20:10.200 the Appropriation's clause had much teeth to it in terms 0:20:10.240 --> 0:20:15.160 of being a check on executive power. I think Appropriation's 0:20:15.160 --> 0:20:18.840 clause generally had only been litigated only a handful of times. 0:20:19.040 --> 0:20:22.159 I think opm versus Richmond comes to mind. It's not 0:20:22.240 --> 0:20:26.800 a constitutional provision that one would think serves as affirmative 0:20:26.920 --> 0:20:30.200 check on the executive branch in the way that other 0:20:30.240 --> 0:20:33.800 constitutional provisions might be. Or for example, a recent issue 0:20:33.800 --> 0:20:36.480 of litigation has been over the take care clause and 0:20:36.520 --> 0:20:39.760 making sure that the president has the ability to oversee 0:20:39.880 --> 0:20:43.639 executive officers, especially those who are heads of agencies. The 0:20:43.680 --> 0:20:47.680 Appropriation's clause is one of those constitutional provisions that rarely 0:20:47.680 --> 0:20:50.840 gets litigated, and all it serves by its text is 0:20:50.920 --> 0:20:53.320 it gives power to the Congress the power of the 0:20:53.320 --> 0:20:56.440 person to speak to ensure that appropriations are made by 0:20:56.520 --> 0:20:59.320 law and says no money shall be drawn otherwise. It's 0:20:59.359 --> 0:21:02.320 not a provision that one would think serves as an 0:21:02.440 --> 0:21:06.960 essential you know, often litigated check on the federal government. 0:21:07.000 --> 0:21:10.679 But the proponents of this litigation, the Community Financial Services 0:21:10.680 --> 0:21:13.199 Association of America, they try to turn it into that, 0:21:13.240 --> 0:21:17.359 they try to weaponize a little used constitutional provision, little 0:21:17.440 --> 0:21:20.600 use at least in terms of active litigation constitutional litigation. 0:21:20.680 --> 0:21:22.440 Then they try to turn it into something that could 0:21:22.480 --> 0:21:27.439 uproot an entire federal agency, citing the admittedly novel although 0:21:27.800 --> 0:21:32.399 has the majority found grounded, but novel approach to funding 0:21:32.440 --> 0:21:35.199 a federal agency that we see with the CFPB. So 0:21:35.240 --> 0:21:38.080 that's what I meant by novel constitution oral argument. You know, 0:21:38.800 --> 0:21:42.560 we don't see a lot of appropriation's clause litigation, and 0:21:43.240 --> 0:21:45.600 it is certainly a creative argument. There have been other 0:21:45.760 --> 0:21:48.800 similar arguments that raised against other federal agencies, but at 0:21:48.840 --> 0:21:51.400 the end of the day, it is rare to see 0:21:51.400 --> 0:21:53.359 an argument like this one drawn up in the grand 0:21:53.359 --> 0:21:55.520 scheme of things when you're talking about separation of power. 0:21:55.880 --> 0:21:58.080 Coming up next on the Bloomberg Law Show, I'll continue 0:21:58.080 --> 0:22:01.560 this discussion with Andrew Kim, and we'll talk about what 0:22:01.680 --> 0:22:05.560 this decision means for the CFPB as it tries to 0:22:05.720 --> 0:22:09.679 enforce new regulations. I'm June Grosse. When you're listening to Bloomberg, 0:22:10.600 --> 0:22:13.640 I've been talking to Andrew Kim, a partner at Goodwin Proctor, 0:22:13.880 --> 0:22:18.280 about the Supreme Court's decision upholding the CFPB's funding system. 0:22:18.720 --> 0:22:21.639 You know, I've done many segments on the Roberts Court 0:22:21.800 --> 0:22:25.520 chipping away at the power of the so called administrative state, 0:22:26.240 --> 0:22:29.160 and this term there are still other cases out there 0:22:29.200 --> 0:22:33.080 where agency powers are on the chopping block. Shall we say? 0:22:33.440 --> 0:22:36.879 There are cases involving the Security Exchange Commission, the National 0:22:36.880 --> 0:22:41.080 Marine Fishery Service, the Environmental Protection Agency, and one of those, 0:22:41.119 --> 0:22:44.720 the Chevron doctrine is on the chopping block. Can you 0:22:44.760 --> 0:22:47.800 look at this case and say, well, there'll be a 0:22:47.840 --> 0:22:51.120 similar result in the other cases and the agencies will 0:22:51.160 --> 0:22:54.399 be in the winning column. Or is it too soon 0:22:54.560 --> 0:22:56.000 or are the cases too different? 0:22:56.720 --> 0:22:58.840 I think you might see some flavor of this in 0:22:58.920 --> 0:23:02.040 the Jarcacy case, for example, which involves you know, the 0:23:02.080 --> 0:23:07.120 Seventh Amendments and the non delegation doctrine and the use 0:23:07.119 --> 0:23:10.920 of aljs because there are still separation of powers concerns raised. 0:23:10.960 --> 0:23:12.879 And that's what I meant when I said, you know, 0:23:12.960 --> 0:23:16.400 for example, the ALJA issue, the administrative law judge issue. 0:23:16.640 --> 0:23:20.920 In jocacy, that's more the kind of structural constitutional challenge 0:23:20.920 --> 0:23:23.639 that you see. You don't see something like that, you know, 0:23:23.760 --> 0:23:26.080 the CFPV case where you're trying to challenge the very 0:23:26.080 --> 0:23:29.040 existence of the agency. I think you may see these 0:23:29.080 --> 0:23:33.040