WEBVTT - DOJ `Systemically’ Mishandled Sexual Harassment Claims (Audio) 0:00:03.480 --> 0:00:07.560 Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every 0:00:07.640 --> 0:00:10.440 day we bring you insight and analysis into the most 0:00:10.480 --> 0:00:13.399 important legal news of the day. You can find more 0:00:13.480 --> 0:00:18.040 episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud, 0:00:18.320 --> 0:00:22.520 and on Bloomberg dot com slash podcasts. One place you 0:00:22.600 --> 0:00:26.320 might not expect to find mishandling of sexual harassment complaints 0:00:26.360 --> 0:00:28.760 is at the Justice Department, which is responsible for the 0:00:28.880 --> 0:00:31.920 enforcement of law in the country, but the Inspector General 0:00:31.920 --> 0:00:34.839 says the d o J has systemic problems and how 0:00:34.840 --> 0:00:37.839 it handles such complaints, and that employees found to have 0:00:37.880 --> 0:00:42.240 acted improperly often do not receive the appropriate punishment. According 0:00:42.280 --> 0:00:46.360 to the Washington Post, Justice Department Inspector General Michael Horowitz 0:00:46.479 --> 0:00:49.560 sends his findings about the prevalence and mishandling of sexual 0:00:49.560 --> 0:00:52.480 harassment at the d o J to Deputy Attorney General 0:00:52.560 --> 0:00:56.080 Rod Rosenstein on May thirty one. The case is examined 0:00:56.120 --> 0:00:58.480 by the i G included a U S Attorney, a 0:00:58.600 --> 0:01:02.680 Chief Deputy U. S. Marshall, and SBI Special Agents in Charge, 0:01:02.840 --> 0:01:06.520 among others. Joining me is Debora Cat's founding partner as Cats, 0:01:06.640 --> 0:01:10.640 Marshall and Banks excuse me, Debora. Some of these cases 0:01:10.720 --> 0:01:14.560 involved senior Justice Department officials across the country, not just 0:01:14.640 --> 0:01:18.360 senior attorneys, but even a U. S attorney. What's your 0:01:18.400 --> 0:01:23.479 initial reaction to hearing this, Well, my initial reaction is 0:01:23.640 --> 0:01:27.440 one of horror, of course, but not surprised. Sexual harassment 0:01:27.560 --> 0:01:32.679 is endemic in every sector of our workforce, and you 0:01:32.760 --> 0:01:35.680 know it's it takes place in the judiciary, we know 0:01:35.720 --> 0:01:38.840 it takes place in Congress, and certainly it's no surprise 0:01:38.880 --> 0:01:41.120 that it takes place at Department of Justice. What is 0:01:41.200 --> 0:01:45.160 really falling to me in reading the Washington Post report 0:01:45.600 --> 0:01:51.360 is how long UH Rod Rosenstein, Deputy Attorney General Rod Rosenstein, 0:01:51.440 --> 0:01:53.960 has been sitting on this issue. He received the report 0:01:54.040 --> 0:01:59.800 from Sector General Michael Horowitz in May detailing extremely agreed 0:01:59.840 --> 0:02:04.120 to cases of sexual harassment, and more than that that 0:02:04.240 --> 0:02:07.800 the people who properpetrated the harassment went on to win 0:02:08.320 --> 0:02:13.280 bonuses and awards with no kind of disciplinary action. That's 0:02:13.320 --> 0:02:17.799 just absolutely shocking. And now uh we now know that, 0:02:18.040 --> 0:02:20.839 uh Lessina saying he's going to convene a task force 0:02:20.880 --> 0:02:22.760 to look at this. There's something to look at here. 0:02:23.200 --> 0:02:26.000 We know the laws, they're well established. It's time to 0:02:26.080 --> 0:02:30.280 take appropriate decisive action. If we really want to your 0:02:30.280 --> 0:02:34.120 intolerance of sexual harassment, it's times ahead to roll. The 0:02:34.240 --> 0:02:39.600 cases involved charges of growthing, stalking, peeping at sexual comments, 0:02:39.639 --> 0:02:43.679 among other things, and at times a perpetrator was transferred 0:02:43.680 --> 0:02:49.000 to another division without anything being said. Is that similar 0:02:49.040 --> 0:02:54.919 to what happens in in corporations and companies across the country. 0:02:55.120 --> 0:02:58.440 You get transferred and no one knows what happened. Yes, 0:02:58.800 --> 0:03:02.280 and this is exactly sexual harassment is allowed to uh 0:03:02.480 --> 0:03:07.480 continue as it has uh where there Uh the individuals 0:03:07.520 --> 0:03:12.919 whore victimized suffered severe career ramifications. I mean their their 0:03:13.040 --> 0:03:16.040 their careers are really painted. But the people who are 0:03:16.080 --> 0:03:19.440 perpetrating harassments just get moved on elsewhere, like we saw 0:03:19.480 --> 0:03:23.560 in the priest abuse cases and elsewhere. Um and that 0:03:23.760 --> 0:03:26.800 Department of Justice has not seen fit even with this 0:03:26.919 --> 0:03:30.880 Inspector General report, to crack down hard and decisively on 0:03:31.000 --> 0:03:33.720 these individuals who are fans to have engaged in this 0:03:33.919 --> 0:03:38.040 kind of unlawful behavior. To shocking. We're talking eight months 0:03:38.080 --> 0:03:41.640 that d J has had this Inspector General report and 0:03:41.720 --> 0:03:46.480 in August UH wasn't seen had received a letter from 0:03:46.840 --> 0:03:49.520 women in Department of Justice who also detailed that they 0:03:49.600 --> 0:03:52.240 themselves have been subjected to sexual harassment and that the 0:03:52.280 --> 0:03:55.920 problems in fact are systemic. And again no action has 0:03:55.960 --> 0:03:58.280 been taken other than saying we're going to contain a 0:03:58.360 --> 0:04:01.320 workforce to look at this. That's rights. He so, he 0:04:01.320 --> 0:04:04.280 said he's going to convene, he told. The Justice Department 0:04:04.360 --> 0:04:07.640 spokesman told the Post that rosen Stein had convened a 0:04:07.680 --> 0:04:10.600 working group to look at the issues raised by the report. 0:04:11.160 --> 0:04:15.040 Can this be investigated from inside the department or do 0:04:15.120 --> 0:04:18.760 you need someone outside the department looking in? Well, it's 0:04:18.760 --> 0:04:23.320 already been investigated. That's the purpose of the Inspector General report. Uh. 0:04:23.560 --> 0:04:26.000 The issue is that only the Department of Justice can 0:04:26.040 --> 0:04:29.479 meet at the appropriate discipline. Uh. The IGIEF Office has 0:04:29.520 --> 0:04:32.640 already detailed the egregious abuses. Now it's time for the 0:04:32.720 --> 0:04:36.400 Justice Department to take appropriate disciplinary action. And given the 0:04:36.440 --> 0:04:39.960 gravity of these offenses, it would be shocking to me 0:04:40.240 --> 0:04:44.360 if the appropriate discipline wasn't removal. These are high level 0:04:44.400 --> 0:04:48.159 officials who have significant positions of trust, who are there 0:04:48.200 --> 0:04:51.480 to enforce our nurstion's laws and are victimizing women. This 0:04:51.560 --> 0:04:54.839 is just unacceptable. So the i g S Office said, 0:04:54.880 --> 0:04:59.440 it published summaries of nineteen substantiate allegations of sexual harassment 0:04:59.480 --> 0:05:04.920 and miscon duct from through two sixteen. So they're saying 0:05:05.000 --> 0:05:07.960 that's a small number, but it's the handling of the 0:05:08.000 --> 0:05:11.240 allegations that the i G found troubling. So expand upon 0:05:11.279 --> 0:05:14.400 that a little. Sure, Well, if you have a system 0:05:14.520 --> 0:05:18.800 where people who come forward with meritorious cases find that 0:05:18.880 --> 0:05:22.800 the perpetrators suffer no consequences, it sets a tone where 0:05:22.839 --> 0:05:25.920 other individuals will not risk their careers, will not stick 0:05:25.960 --> 0:05:28.240 their next up, next out, because they know that doing 0:05:28.279 --> 0:05:31.960 so will be futile. And if you have a system, 0:05:32.080 --> 0:05:36.479 a system where meritorious cases like these just get swept 0:05:36.560 --> 0:05:39.599 under the carpet, you will create an environment where people 0:05:39.600 --> 0:05:42.839 don't report. So while Rosenstein said he's hardened by the 0:05:42.880 --> 0:05:47.120 small number of UH substantiated cases, that's really not the 0:05:47.120 --> 0:05:49.559 appropriate way to look at it. It's just like saying 0:05:49.560 --> 0:05:52.200 that there were no there were no complaints actually brought 0:05:52.200 --> 0:05:55.960 against Harvey Weinstein. If you have a system, an HR 0:05:56.080 --> 0:05:59.719 system that is ineffective that protects harasses, you're gonna have 0:05:59.760 --> 0:06:02.440 people who don't report. And we don't know what the 0:06:02.440 --> 0:06:05.320 actual number or the actual incidents of sexual harassment is 0:06:05.360 --> 0:06:07.719 its Department of Justice, because we have a system in 0:06:07.760 --> 0:06:12.280 place that doesn't punish perpetrators. Well, also, this was before 0:06:12.480 --> 0:06:18.000 the Weinstein allegations. Those allegations have encouraged women to come forward, 0:06:18.600 --> 0:06:23.360 so there might be more allegations than we're reported in 0:06:23.400 --> 0:06:27.159 the Inspector General's report. Oh, absolutely right. We are at 0:06:27.160 --> 0:06:29.919 a moment where people are coming forward in record numbers 0:06:29.960 --> 0:06:32.880 because the presumption now is that victims are telling the 0:06:32.920 --> 0:06:37.920 truth and that perpetrators are typically recentivious, serial harasses, and 0:06:38.040 --> 0:06:40.839 more women are coming forward. But the problem is when 0:06:40.839 --> 0:06:44.039 you have something like the Department of Justice, which is 0:06:44.080 --> 0:06:50.240 a large bureaucracy, and people go into believing that filing 0:06:50.240 --> 0:06:54.520 a claim would be career derailing, they're not going to 0:06:54.560 --> 0:06:57.800 do it when they see that the harassers suffer no ramification. 0:06:58.000 --> 0:07:01.000 So that's why it is crucial that Department of Justice 0:07:01.080 --> 0:07:04.080 act decisively now if they want other people to come forward, 0:07:04.520 --> 0:07:07.400 and they have to be a model employer and not 0:07:07.560 --> 0:07:10.480 allow this kind of very egregious I mean, this is 0:07:10.600 --> 0:07:14.080 horrible conduct and the fact that no one suffered any 0:07:14.080 --> 0:07:19.160 consequences is really shocking. And Deborah speaking about the lawyers 0:07:19.200 --> 0:07:24.840 that were seen as um sexual harassers. Is there additional 0:07:25.640 --> 0:07:27.360 Are there additional things that need to be done, for 0:07:27.400 --> 0:07:33.440 example reporting that to the Office of Professional Responsibility to yes, 0:07:33.600 --> 0:07:36.720 So that's an excellent point. And also the Inspector General's 0:07:36.760 --> 0:07:40.040 report noted that some of these maybe criminal offenses. There 0:07:40.040 --> 0:07:42.520 could be you know, these faults or criminal offenses. So 0:07:42.600 --> 0:07:45.360 certainly to the extent that these people are lawyers, the 0:07:45.440 --> 0:07:48.480 Office of Professional Responsibility within d J should have a 0:07:48.600 --> 0:07:52.520 role in taking appropriate action, assuming that the individuals remain 0:07:52.600 --> 0:07:56.120 employed at Department of Justice, and also that these cases 0:07:56.120 --> 0:08:01.080 should be referred for criminal uh prosecution and what what 0:08:01.200 --> 0:08:05.400 has been uh confirmed? They're substantiated by the I is 0:08:05.400 --> 0:08:09.240 assault in a number of these sank. Thank you so much, Deborah. 0:08:09.280 --> 0:08:17.080 That's Deborah Cats of Cats, Marshal and Banks. The Trump 0:08:17.120 --> 0:08:21.760 administration is about rolling back regulations. Remember when President Trump 0:08:21.840 --> 0:08:24.960 issued the two old rules for one new rule executive 0:08:25.040 --> 0:08:28.800 order in February. Well, some states are not following suit. 0:08:29.200 --> 0:08:32.680 New York's top financial watchdog has proposed regulations that would 0:08:32.720 --> 0:08:35.960 require sellers of life insurance and annuities to act in 0:08:36.000 --> 0:08:39.400 the best interests of clients, joining states such as Nevada 0:08:39.440 --> 0:08:42.600 that have raised standards even as the US government delays 0:08:42.600 --> 0:08:45.920 its fiduciary rule. Joining me is Robert Hockett, a professor 0:08:45.960 --> 0:08:50.000 at Cornell Law School. Bob, the Trump administration has delayed 0:08:50.080 --> 0:08:53.800 implementation of parts of the Department of Labors fiduciary rule 0:08:53.840 --> 0:08:58.520 that was created during President Barack Obama's presidency. Tell us 0:08:58.559 --> 0:09:02.960 about that rule and where it stands? Now? Sure? Yes? So. 0:09:03.040 --> 0:09:05.160 The idea here is that there are certain products that 0:09:05.160 --> 0:09:07.840 are sold in the financial markets h that are thought 0:09:07.880 --> 0:09:11.040 to be so sensitive and so important to the buyers, 0:09:11.400 --> 0:09:14.400 and at the same time, the transactions and those instruments 0:09:14.480 --> 0:09:19.199 are thought to be so vulnerability raising or vulnerability causing 0:09:19.720 --> 0:09:23.360 UH to buyers that some sort of special obligation should 0:09:23.360 --> 0:09:26.120 be imposed upon the seller to make a point of 0:09:26.280 --> 0:09:30.080 ensuring that whatever product is sold to a given client 0:09:30.679 --> 0:09:33.839 is indeed in the best interest of the client, right uh. 0:09:33.880 --> 0:09:37.240 And we call that the fiduciary rule. The word fiduciary, 0:09:37.280 --> 0:09:39.320 of course, comes from the Latin fee day for faith, 0:09:39.920 --> 0:09:44.280 as in good faith or confidant um. The idea is that, again, 0:09:44.320 --> 0:09:46.240 we want those who buy these products to be able 0:09:46.280 --> 0:09:49.640 to trust seller is kind of more like a close 0:09:49.720 --> 0:09:52.280 friend in selling it to them. Than like an arms 0:09:52.559 --> 0:09:57.679 length uh competitive seller in the market where anything goes. Now, 0:09:57.760 --> 0:10:01.839 that rule was developed um uh in the late in 0:10:01.880 --> 0:10:03.599 the very sort of last months, you might say, of 0:10:03.679 --> 0:10:07.640 the Obama administration. It was to go into effect shortly 0:10:07.679 --> 0:10:11.480 after Mr Trump took office, but his administration immediately delayed 0:10:11.960 --> 0:10:15.120 implementation of the rule, and ever since then it's been 0:10:15.160 --> 0:10:16.880 sort of in abeyance. It's been a in a state 0:10:16.880 --> 0:10:19.320 of limbo um and that's one reason I think the 0:10:19.320 --> 0:10:21.040 State of New York has decided to move forward with 0:10:21.080 --> 0:10:24.200 its own version of the rule. How similar is New 0:10:24.280 --> 0:10:28.439 York's version to the federal version, It seems to be 0:10:28.520 --> 0:10:32.920 essentially identical. The real key point here in both cases 0:10:33.400 --> 0:10:36.680 is that you're you're essentially imposing an obligation or a 0:10:36.760 --> 0:10:40.320 standard on a seller that's actually quite familiar to our law. 0:10:40.480 --> 0:10:42.480 It's quite often imposed in the case of say a 0:10:42.559 --> 0:10:46.200 trustee with in regard to or in relation to the 0:10:46.200 --> 0:10:49.679 beneficiaries of the trust. It's uh. It's commonly placed and 0:10:49.840 --> 0:10:52.440 sort of by operation of law, the managers and the 0:10:52.440 --> 0:10:55.199 board members of corporations when the interests of the shareholders 0:10:55.240 --> 0:10:58.160 were at stake. So essentially, what this rule does both 0:10:58.200 --> 0:11:00.000 at the federal level and here at the New York's 0:11:00.000 --> 0:11:02.839 eight level, is to sort of import into the matter 0:11:03.000 --> 0:11:07.520 of life insurance sales and annuity sales, this very familiar 0:11:07.520 --> 0:11:10.240 standard that's been with us for centuries. In these other 0:11:10.280 --> 0:11:12.520 contexts that are where where trust is thought to be 0:11:12.640 --> 0:11:16.800 especially important. The rule is expected to add to compliance 0:11:16.840 --> 0:11:20.040 costs for firms and life Insurance Council of New York 0:11:20.040 --> 0:11:23.000 and industry groups said that any implemented regulation should be 0:11:23.120 --> 0:11:27.400 uniform across the country, so companies don't face different standards 0:11:27.440 --> 0:11:31.480 in different states. Is that real concern to you? It's 0:11:31.559 --> 0:11:34.880 it's actually a ridiculous claim, um for for two reasons. Right, 0:11:34.920 --> 0:11:37.680 First of all, the compliance cost claim is ridiculous because 0:11:37.720 --> 0:11:40.400 of course, anytime you impose any regulation, there's a compliance cost. 0:11:40.440 --> 0:11:44.280 By definition, right, we make murder very costly by prohibiting it. Right, 0:11:44.559 --> 0:11:47.680 we make fraud very costly by prohibiting it. A compliance 0:11:47.720 --> 0:11:49.640 To say that there's a compliance cost is just to 0:11:49.720 --> 0:11:52.080 say that, you know, of regulation is a regulation that 0:11:52.160 --> 0:11:54.240 it actually says, it's no longer the case that anything 0:11:54.320 --> 0:11:57.240 goes as far as the uniformity matter goes. That's particularly 0:11:57.280 --> 0:11:59.960 comic call. Because we have a statute a federal stat 0:12:00.000 --> 0:12:02.160 stood in place, called the mccare and Ferguson Act that 0:12:02.280 --> 0:12:05.640 actually reserves the regulation of insurance companies to the states. 0:12:05.640 --> 0:12:09.120 That's to say, we have abjured UH federal regulation of 0:12:09.120 --> 0:12:11.880 the insurance industry ever since the mid nineteen forties. If 0:12:11.880 --> 0:12:14.600 the industry is actually interested in uniformity, it should be 0:12:14.640 --> 0:12:17.560 calling for a national system or a federal system of 0:12:17.600 --> 0:12:20.560 insurance regulation instead of opposing that which they have roots 0:12:20.640 --> 0:12:24.280 kemely done over the last several decades. But how important 0:12:24.679 --> 0:12:28.520 is this rule for consumers? It's I think very important 0:12:28.520 --> 0:12:31.320 for consumers because the problem is that life insurance is 0:12:31.400 --> 0:12:33.680 like many things, like a bank account, some something that 0:12:33.760 --> 0:12:37.160 pretty much every ordinary middle class or you know, non 0:12:37.440 --> 0:12:41.640 actually pretty much every ordinary American needs or or wants, 0:12:41.920 --> 0:12:44.360 And yet the terms of insurance contracts can be quite 0:12:44.360 --> 0:12:47.120 complicated and quite difficult for ordinary people to make sense 0:12:47.200 --> 0:12:50.000 of UH. And for that reason, it's particularly important that 0:12:50.000 --> 0:12:53.440 we hold the sellers of that product to a higher 0:12:53.480 --> 0:12:56.959 standard of behavior, a higher standard of cussworthiness then perhaps, 0:12:57.040 --> 0:13:01.160 say the sellers of used cars. No, the proposed rules 0:13:01.160 --> 0:13:04.280 are subject to a sixty day comment period before they're 0:13:04.280 --> 0:13:07.680 officially issued. Is there anything that seems to stand in 0:13:07.679 --> 0:13:10.600 their way. I don't think there is. I mean, the 0:13:10.640 --> 0:13:14.000 comment period is typically just it's meant to enable those 0:13:14.040 --> 0:13:16.600 who are thinking you're putting a rule in place, to 0:13:16.640 --> 0:13:19.240 take account of the various arguments that might be raised 0:13:19.280 --> 0:13:21.280 for it or against it, essentially to make sure that 0:13:21.320 --> 0:13:25.240 they don't overlook any important considerations. In one sense, it's 0:13:25.240 --> 0:13:28.360 the formality, right, It's you basically have to observe that 0:13:28.480 --> 0:13:31.800 particular waiting period. On the other hand, it's subsidificus the 0:13:31.840 --> 0:13:35.160 sense that you know, if people actually make sensible uh 0:13:35.200 --> 0:13:39.040 comments or recommendations or raised legitimate concerns, it gives the 0:13:39.040 --> 0:13:41.680 regulators a chance to sort of reformulate the rule or 0:13:41.760 --> 0:13:44.360 to put in place sort of special safeguards for the 0:13:44.400 --> 0:13:47.040 implementation of the rule or whatever. New York is simply 0:13:47.400 --> 0:13:50.000 going through that standard process that's gone through. You know 0:13:50.040 --> 0:13:52.280 that process has gone through in connection with every regulation. 0:13:52.520 --> 0:13:55.280 I don't think there's any specific hold up that's foreseen 0:13:55.440 --> 0:14:00.360 or expected here. And as far as the fiduciary rule 0:14:00.440 --> 0:14:06.880 that the Labor Department has or is watching over, is 0:14:06.880 --> 0:14:09.560 there any likelihood that that will be put into effect? 0:14:10.840 --> 0:14:13.480 So it's so hard to tell. I mean, the way 0:14:13.480 --> 0:14:16.480 this administration seems to be operating thus far is just 0:14:16.559 --> 0:14:18.720 to put things sort of on hold or on the 0:14:18.720 --> 0:14:21.680 back burner, with no indication at all as to whether 0:14:21.800 --> 0:14:24.200 or when the thing might be brought back to the 0:14:24.200 --> 0:14:27.080 front burner. So it's hard to tell what might happen. 0:14:27.200 --> 0:14:29.400 Maybe if Mr Trump notices that his poll members are 0:14:29.440 --> 0:14:33.000 declining among laboring Americans, he'll suddenly play the populist game 0:14:33.000 --> 0:14:35.720 again as he did during the election season. Uh and 0:14:35.720 --> 0:14:37.800 and say, okay, let's put that thing to place. If 0:14:37.800 --> 0:14:40.040 it looks as though he's not suffering any consequences from 0:14:40.120 --> 0:14:44.280 leaving it in advance, and thereby satisfying his real constituents 0:14:44.520 --> 0:14:47.120 the industries that would be regulated, then I can imagine 0:14:47.120 --> 0:14:50.240 that thing sitting there unfold indefinitely. Thanks for listening to 0:14:50.240 --> 0:14:53.560 the Bloomberg Law Podcast. You can subscribe and listen to 0:14:53.600 --> 0:14:57.360 the show on Apple Podcasts, SoundCloud, and on Bloomberg dot 0:14:57.360 --> 0:15:02.720 com slash podcasts. I'm June Bass. How this is bloombergom 0:15:03.640 --> 0:15:07.840 or doctor m hm.