1 00:00:02,759 --> 00:00:07,000 Speaker 1: This is Bloomberg Law with June Grossel from Bloomberg Radio. 2 00:00:08,600 --> 00:00:12,479 Speaker 2: Through his executive orders, President Donald Trump is making a 3 00:00:12,520 --> 00:00:17,000 Speaker 2: broad push to reshape the federal government and centralize power 4 00:00:17,120 --> 00:00:18,000 Speaker 2: in the White House. 5 00:00:18,320 --> 00:00:21,880 Speaker 3: Don't forget I got elected on the basis of making 6 00:00:21,920 --> 00:00:25,520 Speaker 3: our government stronger and smaller, because we have millions of 7 00:00:25,520 --> 00:00:30,240 Speaker 3: people that obviously they're paying, millions of people that shouldn't 8 00:00:30,280 --> 00:00:30,640 Speaker 3: be paid. 9 00:00:31,440 --> 00:00:35,839 Speaker 2: And this week, in an unprecedented power grab, Trump issued 10 00:00:35,880 --> 00:00:40,120 Speaker 2: an executive order declaring that he has direct control over 11 00:00:40,159 --> 00:00:44,360 Speaker 2: some of the country's most powerful regulators. Dozens of independent 12 00:00:44,479 --> 00:00:48,360 Speaker 2: agencies like the Securities and Exchange Commission and the Federal 13 00:00:48,400 --> 00:00:52,159 Speaker 2: Trade Commission that were designed by Congress to operate without 14 00:00:52,280 --> 00:00:55,520 Speaker 2: day to day oversight by the White House. But now, 15 00:00:55,640 --> 00:00:58,640 Speaker 2: according to Trump's latest order, we'll have to submit to 16 00:00:58,760 --> 00:01:04,280 Speaker 2: oversight over rulemaking, policy, agenda, spending, and interpretations of the law. 17 00:01:04,680 --> 00:01:07,800 Speaker 2: Like many of Trump's executive orders, it's sure to face 18 00:01:07,920 --> 00:01:12,840 Speaker 2: legal challenges. My guest is regulatory expert Carrie Coliniesi, law 19 00:01:12,920 --> 00:01:16,160 Speaker 2: professor and director of the penn Program on Regulation at 20 00:01:16,160 --> 00:01:20,840 Speaker 2: the University of Pennsylvania. Carrie, the President already appoints the 21 00:01:20,880 --> 00:01:25,679 Speaker 2: heads of these agencies, and a majority of the commissioners 22 00:01:25,720 --> 00:01:30,640 Speaker 2: are members of the Republican Party, So aren't there ideologies 23 00:01:30,880 --> 00:01:33,039 Speaker 2: already aligned with the presidents? 24 00:01:33,640 --> 00:01:36,640 Speaker 1: Once you have the majority control on a commission and 25 00:01:36,680 --> 00:01:40,520 Speaker 1: they're appointed by the president, they are coming in with 26 00:01:40,680 --> 00:01:44,240 Speaker 1: an ideology and a predisposition to do the sorts of 27 00:01:44,280 --> 00:01:48,279 Speaker 1: things that the president wants. Anyway, so as a practical matter, 28 00:01:48,800 --> 00:01:52,880 Speaker 1: these agencies are not as totally independent as maybe the 29 00:01:53,000 --> 00:01:58,320 Speaker 1: label an independent agency might make them seem. This executive order, though, 30 00:01:58,600 --> 00:02:03,600 Speaker 1: eliminates it's claiming to eliminate the kind of hands off 31 00:02:03,640 --> 00:02:07,600 Speaker 1: approach that quite frankly, many presidents have taken with respect 32 00:02:07,640 --> 00:02:13,120 Speaker 1: to some of the very institutionalized review processes, of having 33 00:02:13,160 --> 00:02:16,919 Speaker 1: budgets not reviewed by the White House, of having regulations 34 00:02:17,000 --> 00:02:21,119 Speaker 1: not reviewed by the White House. This administration is now claiming, well, 35 00:02:21,160 --> 00:02:24,440 Speaker 1: we're not only going to have our loyalists heading these agencies, 36 00:02:24,560 --> 00:02:27,720 Speaker 1: but we also want to scrutinize your budgets. We want 37 00:02:27,760 --> 00:02:31,919 Speaker 1: to scrutinize your strategic plans, we want to scrutinize your 38 00:02:32,000 --> 00:02:37,280 Speaker 1: legal decision making. We want to scrutinize your important regulations, 39 00:02:37,440 --> 00:02:41,360 Speaker 1: just like we do the Department of Transportation, just like 40 00:02:41,440 --> 00:02:44,440 Speaker 1: we do the Department of Labor. All of those are 41 00:02:44,720 --> 00:02:47,760 Speaker 1: agencies that are headed by folks that have been appointed 42 00:02:47,760 --> 00:02:51,920 Speaker 1: by the president too right, and share the president's objectives. 43 00:02:51,919 --> 00:02:55,120 Speaker 1: But you know, sometimes, you know, you can get heads 44 00:02:55,120 --> 00:02:58,680 Speaker 1: of these agencies that have viewpoints that do depart a 45 00:02:58,680 --> 00:03:01,560 Speaker 1: little bit from what the White House swans, or heads 46 00:03:01,560 --> 00:03:04,720 Speaker 1: of agencies that are not as vigilant about carrying out 47 00:03:04,760 --> 00:03:09,200 Speaker 1: the president's agenda. And these institutional processes that the Trump 48 00:03:09,280 --> 00:03:12,720 Speaker 1: administration says now it's going to apply to the independence 49 00:03:13,120 --> 00:03:16,160 Speaker 1: are there to try to really put the hammer down 50 00:03:16,280 --> 00:03:19,400 Speaker 1: and make sure that agencies follow what the White House 51 00:03:19,440 --> 00:03:20,200 Speaker 1: wants them to do. 52 00:03:20,639 --> 00:03:23,600 Speaker 2: And how does this order treat the Federal Reserve. 53 00:03:24,200 --> 00:03:28,280 Speaker 1: Well, it brings the Federal Reserve as a regulator under 54 00:03:28,360 --> 00:03:33,800 Speaker 1: the ambit of the executive Order, but it specifically exempts 55 00:03:34,000 --> 00:03:38,640 Speaker 1: the Federal Reserve in its exercise of monetary policy decision 56 00:03:38,720 --> 00:03:43,320 Speaker 1: making from White House scrutiny and oversight and control under 57 00:03:43,360 --> 00:03:46,560 Speaker 1: the Executive Order. So, at least for now, and this 58 00:03:46,720 --> 00:03:50,080 Speaker 1: is a good thing for the country, the Federal Reserve's 59 00:03:50,160 --> 00:03:54,800 Speaker 1: monetary policy is supposed to remain independent and free from 60 00:03:54,920 --> 00:03:59,520 Speaker 1: political interference from the White House, not so with respect 61 00:03:59,560 --> 00:04:03,480 Speaker 1: to the banking regulatory functions of the Federal Reserve, at 62 00:04:03,560 --> 00:04:05,920 Speaker 1: least as this order is now drafted. 63 00:04:06,280 --> 00:04:08,880 Speaker 2: What are some of the dangers of a president taking 64 00:04:09,040 --> 00:04:12,440 Speaker 2: control of independent agencies. 65 00:04:11,840 --> 00:04:15,400 Speaker 1: Like this to the larger issue you know about what 66 00:04:15,680 --> 00:04:19,200 Speaker 1: we're getting and what we're losing. I think all agencies, 67 00:04:19,240 --> 00:04:23,880 Speaker 1: whether they're executive branch agencies or independent regulatory agencies, need 68 00:04:24,040 --> 00:04:28,240 Speaker 1: a degree of autonomy from the kind of raw politics 69 00:04:28,279 --> 00:04:32,200 Speaker 1: that can often be important to presidents, and I think 70 00:04:32,240 --> 00:04:36,039 Speaker 1: are clearly important to this president. We don't want a 71 00:04:36,040 --> 00:04:43,000 Speaker 1: government where agencies are acting on impulses of favoritism retribution, 72 00:04:43,640 --> 00:04:47,200 Speaker 1: and some presidents might want that, this president might want that. 73 00:04:47,560 --> 00:04:50,880 Speaker 1: And if we don't have a degree of autonomy in 74 00:04:50,920 --> 00:04:55,960 Speaker 1: our governmental institutions from that kind of raw politics, we 75 00:04:56,120 --> 00:04:57,520 Speaker 1: really suffer as a country. 76 00:04:57,800 --> 00:05:02,520 Speaker 2: This is all part of the theory of the unitary executive, 77 00:05:03,040 --> 00:05:07,560 Speaker 2: which gives the president sweeping powers sole authority over the 78 00:05:07,560 --> 00:05:12,320 Speaker 2: federal government's executive branch. And the speculation is that the 79 00:05:12,360 --> 00:05:17,080 Speaker 2: Trump administration wants to push the Supreme Court to adopt 80 00:05:17,120 --> 00:05:18,719 Speaker 2: the unitary executive theory. 81 00:05:19,040 --> 00:05:22,960 Speaker 1: Right they're basically acting is if the Court has already 82 00:05:23,800 --> 00:05:29,240 Speaker 1: adopted wholesale the unitary executive theory by in effect overturning 83 00:05:29,320 --> 00:05:33,800 Speaker 1: the nineteen thirty five Supreme Court decision called Humphrey's Executor. 84 00:05:34,080 --> 00:05:38,360 Speaker 1: That decision, the Supreme Court said that Congress can create 85 00:05:38,520 --> 00:05:43,280 Speaker 1: these independent agencies that are headed by officials who have 86 00:05:43,440 --> 00:05:46,760 Speaker 1: some kind of tenure protection and can't be removed at 87 00:05:46,800 --> 00:05:51,400 Speaker 1: will by presidents. You know, this administration is taking action 88 00:05:51,680 --> 00:05:55,080 Speaker 1: that one would expect to see if Humphrey's Executor had 89 00:05:55,080 --> 00:06:00,279 Speaker 1: already been determined to be unconstitutional. They're firing our some 90 00:06:00,400 --> 00:06:04,000 Speaker 1: officials at the NLRB that have had good cause protections, 91 00:06:04,040 --> 00:06:07,120 Speaker 1: and taking other actions like this executive order that are 92 00:06:07,200 --> 00:06:09,640 Speaker 1: very aggressive. And I think they're setting up and hoping 93 00:06:09,680 --> 00:06:13,760 Speaker 1: that they'll get the Supreme Court to overturn Humphrey's Executor. 94 00:06:14,400 --> 00:06:17,520 Speaker 1: It wouldn't be a big stretch to expect the Supreme 95 00:06:17,520 --> 00:06:20,119 Speaker 1: Court will do that. The Supreme Court's been wittling away 96 00:06:20,120 --> 00:06:23,719 Speaker 1: at Humphrey's Executor for easily ten years or so now, 97 00:06:24,080 --> 00:06:28,080 Speaker 1: and you know, it's probably expected by most observers to 98 00:06:28,120 --> 00:06:30,800 Speaker 1: be on the chopping block. The big deal will be 99 00:06:31,279 --> 00:06:35,600 Speaker 1: if Humphrey's Executor goes, will it go big time? That is, 100 00:06:35,680 --> 00:06:39,520 Speaker 1: by sweeping in civil service protections and protections for the 101 00:06:39,560 --> 00:06:43,160 Speaker 1: Federal reserves monetary policy, or will there be some way 102 00:06:43,200 --> 00:06:47,960 Speaker 1: that the Supreme Court says, well, it's unconstitutional for Congress 103 00:06:48,040 --> 00:06:54,039 Speaker 1: to create insulation for every other position in government, but 104 00:06:54,560 --> 00:06:58,520 Speaker 1: we still think it's okay for civil servants to be 105 00:06:58,600 --> 00:07:02,919 Speaker 1: protected with some good cause protections, or for the Federal 106 00:07:02,960 --> 00:07:06,839 Speaker 1: Reserve when it's adopting monetary policy to have that. Hard 107 00:07:06,960 --> 00:07:10,120 Speaker 1: to know exactly how the Supreme Court will decide when 108 00:07:10,120 --> 00:07:13,280 Speaker 1: this case comes before us, but I think it's headed there, 109 00:07:13,320 --> 00:07:17,160 Speaker 1: and this administration I think is already acting in effect 110 00:07:17,280 --> 00:07:21,200 Speaker 1: as if it's been there. And they want do we know. 111 00:07:21,360 --> 00:07:26,720 Speaker 2: Which Supreme Court justices are fully behind the unitary executive theory? 112 00:07:27,280 --> 00:07:30,440 Speaker 1: Well, I think there's probably a good majority that are 113 00:07:30,800 --> 00:07:33,240 Speaker 1: inclined to this. I mean, you know, its chief Justice 114 00:07:33,320 --> 00:07:38,480 Speaker 1: Roberts even has been kind of spearheading decisions to whittle 115 00:07:38,520 --> 00:07:42,880 Speaker 1: away at Humphrey's executor going back to the decisions that 116 00:07:43,200 --> 00:07:46,880 Speaker 1: first started to say that we couldn't have sub agencies 117 00:07:46,920 --> 00:07:50,920 Speaker 1: that have good cause protection if the head agency did 118 00:07:51,400 --> 00:07:54,480 Speaker 1: that was held to be unconstitutional. Then it was held 119 00:07:54,640 --> 00:07:58,160 Speaker 1: that you can't have a single headed body that has 120 00:07:58,480 --> 00:08:02,840 Speaker 1: an administrator that's good cause protection. So there's a clear 121 00:08:02,920 --> 00:08:07,360 Speaker 1: majority that looks suspiciously on these They've just been moving 122 00:08:07,400 --> 00:08:11,760 Speaker 1: incrementally and maybe waiting for the case that we'll take 123 00:08:11,800 --> 00:08:12,720 Speaker 1: it to the next step. 124 00:08:13,360 --> 00:08:17,360 Speaker 2: I don't understand why a judge would want to give 125 00:08:17,720 --> 00:08:20,840 Speaker 2: more power to the head of the executive branch on 126 00:08:21,080 --> 00:08:23,480 Speaker 2: check power. I would think they want to keep more 127 00:08:23,560 --> 00:08:25,920 Speaker 2: balance between the branches of government. 128 00:08:26,240 --> 00:08:28,720 Speaker 1: Yeah, you know, if you look at a lot of 129 00:08:28,760 --> 00:08:31,360 Speaker 1: the cases over the years, and there haven't been that many, 130 00:08:31,480 --> 00:08:34,640 Speaker 1: but when these issues have arisen, the courts have been 131 00:08:34,720 --> 00:08:39,520 Speaker 1: suspicious of Congress's power, believe it or not, and Congress's 132 00:08:39,559 --> 00:08:44,319 Speaker 1: power to kind of interfere with the administration of government 133 00:08:44,800 --> 00:08:49,480 Speaker 1: by putting in place limitations on who can head up 134 00:08:49,520 --> 00:08:52,600 Speaker 1: agencies or how they can be removed. And I think 135 00:08:52,600 --> 00:08:57,160 Speaker 1: there's been some sensible decisions that have said, you know, Congress, 136 00:08:57,440 --> 00:09:00,719 Speaker 1: you can't pick who are the heads of agency, or 137 00:09:00,920 --> 00:09:04,880 Speaker 1: you can't yourself have a role in deciding whether an 138 00:09:04,880 --> 00:09:08,160 Speaker 1: agency head is removed or not. But you know, now 139 00:09:08,240 --> 00:09:11,160 Speaker 1: those cases and the suspicion of Congress is sort of 140 00:09:11,200 --> 00:09:14,480 Speaker 1: going to the extreme, and you know, we do have 141 00:09:14,840 --> 00:09:18,280 Speaker 1: justices on the Court who have spent time like Justice 142 00:09:18,520 --> 00:09:22,839 Speaker 1: Roberts and Justice Kavanaugh and so forth, who have spent 143 00:09:22,960 --> 00:09:26,160 Speaker 1: time working in the White House, and maybe that has 144 00:09:26,280 --> 00:09:31,160 Speaker 1: emboldened them to think in presidentialist terms. There's also I 145 00:09:31,200 --> 00:09:36,320 Speaker 1: think a mindset of sort of formalist, rigid, hierarchical authority 146 00:09:36,400 --> 00:09:39,080 Speaker 1: that some of our justices in the majority seem to 147 00:09:39,400 --> 00:09:42,480 Speaker 1: exhibit that they think that there should be just one 148 00:09:42,559 --> 00:09:45,800 Speaker 1: person at the top of the executive branch who should 149 00:09:45,880 --> 00:09:49,720 Speaker 1: get to say everything that the government does and have 150 00:09:49,840 --> 00:09:53,400 Speaker 1: the ability to shape the course of all policies. Now 151 00:09:53,440 --> 00:09:56,560 Speaker 1: that's not really I think how the text of the 152 00:09:56,640 --> 00:10:01,680 Speaker 1: Constitution is necessarily written. There are actually no provisions in 153 00:10:01,760 --> 00:10:06,640 Speaker 1: the Constitution dealing with the removal of officials. So you know, 154 00:10:06,920 --> 00:10:10,520 Speaker 1: it's not something that's demanded by the text of the Constitution. 155 00:10:10,760 --> 00:10:14,440 Speaker 1: Nor is it really in our history, whether at the 156 00:10:14,440 --> 00:10:17,880 Speaker 1: time of the founding or or subsequently, to say that 157 00:10:18,000 --> 00:10:21,840 Speaker 1: Congress can't create bodies that have some degree of autonomy 158 00:10:21,880 --> 00:10:22,760 Speaker 1: from the president. 159 00:10:23,160 --> 00:10:27,960 Speaker 2: Finally, what about DOGE. It's acting like an agency, but 160 00:10:28,040 --> 00:10:30,640 Speaker 2: it's not an agency. Is there any problem with that? 161 00:10:31,280 --> 00:10:33,920 Speaker 1: Oh? Sure, there's all sorts of problems, but you know, 162 00:10:33,960 --> 00:10:37,000 Speaker 1: there are problems that are kind of unprecedented, and they're 163 00:10:37,040 --> 00:10:40,520 Speaker 1: trying to be real self like with this. We don't 164 00:10:40,559 --> 00:10:43,000 Speaker 1: have a lot of transparency what they're doing, and they're 165 00:10:43,040 --> 00:10:46,200 Speaker 1: moving very quickly. The courts are not prepared to do 166 00:10:46,640 --> 00:10:50,040 Speaker 1: very well with things that are done in secret and 167 00:10:50,360 --> 00:10:52,720 Speaker 1: that are done fast. They're trying to do a lot 168 00:10:52,760 --> 00:10:57,679 Speaker 1: with data and fear tactics, and you know, those are 169 00:10:57,840 --> 00:11:00,960 Speaker 1: very hard to combat through the courts system. But it's 170 00:11:01,040 --> 00:11:05,040 Speaker 1: very unprecedented and it may be hard to resist in 171 00:11:05,040 --> 00:11:08,200 Speaker 1: a real time and this is moving very quickly, so 172 00:11:08,240 --> 00:11:11,640 Speaker 1: that right now the administration's claiming that those is really 173 00:11:11,679 --> 00:11:14,600 Speaker 1: just acting as advisors, but I think, you know it's 174 00:11:14,679 --> 00:11:17,880 Speaker 1: actually speaking that seems not to be at all the case. 175 00:11:18,480 --> 00:11:20,839 Speaker 1: I think one step that litigants will have to do 176 00:11:20,960 --> 00:11:25,400 Speaker 1: is sort of pierce through that characterization and show what's 177 00:11:25,440 --> 00:11:28,640 Speaker 1: really going on. This is what you see if you 178 00:11:28,840 --> 00:11:33,400 Speaker 1: don't really care about making meaningful, smart management decisions. And 179 00:11:33,440 --> 00:11:36,080 Speaker 1: there should be no denying that there's ways we could 180 00:11:36,120 --> 00:11:40,600 Speaker 1: improve government in streamline and make more efficient government processes, 181 00:11:40,840 --> 00:11:44,840 Speaker 1: but there's very little indication that that's really what's motivating 182 00:11:45,160 --> 00:11:48,480 Speaker 1: DOGE or the precedent for that matter, Thanks. 183 00:11:48,240 --> 00:11:51,559 Speaker 2: So much, Carrie. That's Professor Carrey Colinies at the University 184 00:11:51,559 --> 00:11:55,240 Speaker 2: of Pennsylvania Law School. Coming up next. Will the Supreme 185 00:11:55,320 --> 00:11:58,840 Speaker 2: Court have to face its greatest fear? I'm June Grosso 186 00:11:58,840 --> 00:12:04,000 Speaker 2: when you're listening to Blue. Unlike the executive and legislative 187 00:12:04,040 --> 00:12:08,040 Speaker 2: branches of government, the Supreme Court has no real power 188 00:12:08,160 --> 00:12:12,840 Speaker 2: to enforce its decisions, no army or constitutional spending power 189 00:12:13,000 --> 00:12:16,120 Speaker 2: to use as a cudgel. So what happens if the 190 00:12:16,160 --> 00:12:19,800 Speaker 2: President of the United States refuses to comply with a 191 00:12:19,840 --> 00:12:25,200 Speaker 2: Supreme Court order? Basically nothing, something Vice President JD. Vance 192 00:12:25,280 --> 00:12:29,000 Speaker 2: pointed out on the Jack Murphy podcast in twenty twenty one. 193 00:12:29,400 --> 00:12:31,240 Speaker 4: I think that what Trump should do, like if I 194 00:12:31,280 --> 00:12:35,040 Speaker 4: was giving him one piece of advice, fire every single 195 00:12:35,160 --> 00:12:38,280 Speaker 4: mid level bureaucrat, every civil servant in the administrative state. 196 00:12:38,600 --> 00:12:41,240 Speaker 4: Replace them with our people. And when the courts, because 197 00:12:41,240 --> 00:12:44,040 Speaker 4: you will get taken to court. And when the courts stop, 198 00:12:44,120 --> 00:12:47,480 Speaker 4: you stand before the country like Andrew Jackson did, and 199 00:12:47,520 --> 00:12:49,560 Speaker 4: say the Chief Justice has made his ruling, now let 200 00:12:49,600 --> 00:12:50,160 Speaker 4: him enforce it. 201 00:12:50,559 --> 00:12:54,200 Speaker 2: A president hasn't defied a Supreme Court order since the 202 00:12:54,240 --> 00:12:58,400 Speaker 2: Civil War, but Donald Trump seems to be ignoring longstanding 203 00:12:58,520 --> 00:13:02,440 Speaker 2: legal constraints. Testing the limits of his power is the 204 00:13:02,480 --> 00:13:05,800 Speaker 2: next step refusing to comply with a court order. 205 00:13:06,240 --> 00:13:09,560 Speaker 3: The answer is I always abide by the courts, always 206 00:13:09,600 --> 00:13:11,320 Speaker 3: abide by it, and will appeal. 207 00:13:11,720 --> 00:13:15,280 Speaker 2: Though Trump says he'll abide by court orders, his truth, 208 00:13:15,360 --> 00:13:20,120 Speaker 2: social posts and key aids seem to be suggesting defiance. 209 00:13:20,720 --> 00:13:24,480 Speaker 2: Will Trump force the Supreme Court to face its greatest fear, 210 00:13:24,800 --> 00:13:29,080 Speaker 2: What to do when a president says no? Bloomberg Supreme 211 00:13:29,120 --> 00:13:32,720 Speaker 2: Court reporter Greg Storr has written an essay on this question, 212 00:13:32,960 --> 00:13:36,160 Speaker 2: and he joins me, Now, you wrote this article, and 213 00:13:36,200 --> 00:13:39,720 Speaker 2: it's very scholarly, Greg, and it reminds me of being 214 00:13:39,760 --> 00:13:42,199 Speaker 2: in law school in a good way. And you start 215 00:13:42,240 --> 00:13:46,240 Speaker 2: with the history of the landmark case known to every lawyer, 216 00:13:46,640 --> 00:13:51,720 Speaker 2: Marbury versus Madison, which established the principle of judicial review. 217 00:13:52,120 --> 00:13:54,680 Speaker 5: Yeah, this is probably the most important case in the 218 00:13:54,960 --> 00:13:58,400 Speaker 5: history of the country, written by Chief Justice John Marshall. 219 00:13:58,760 --> 00:14:02,319 Speaker 5: As you saidablished that the Court has the power to 220 00:14:02,360 --> 00:14:06,320 Speaker 5: strike down acts of Congress. But what's notable is how 221 00:14:06,480 --> 00:14:10,240 Speaker 5: Marshall got to that conclusion. The case is about when 222 00:14:10,320 --> 00:14:15,200 Speaker 5: John Adams left the presidency after losing reelection on his 223 00:14:15,240 --> 00:14:19,280 Speaker 5: way out the door. In eighteen oh one, he appointed 224 00:14:19,280 --> 00:14:22,320 Speaker 5: a bunch of judges known as Midnight Judges, and kind 225 00:14:22,360 --> 00:14:24,840 Speaker 5: of in the frenzy of doing that, with one of 226 00:14:24,880 --> 00:14:28,160 Speaker 5: them a guy by the name of William Marbury. The 227 00:14:28,200 --> 00:14:31,920 Speaker 5: final step of paperwork didn't happen. The commission didn't get 228 00:14:31,960 --> 00:14:36,640 Speaker 5: delivered to Marbury before Adams left office. Then Jefferson comes 229 00:14:36,680 --> 00:14:40,920 Speaker 5: into office and his Secretary of State James Madison, refuses 230 00:14:40,960 --> 00:14:44,520 Speaker 5: to deliver the paperwork, even though that's a pretty routine step. 231 00:14:44,880 --> 00:14:47,640 Speaker 5: So Marbury goes to the Supreme Court and says, hey, 232 00:14:48,120 --> 00:14:51,760 Speaker 5: order Madison to turn over that commission. He's violating the 233 00:14:51,840 --> 00:14:54,440 Speaker 5: law by not doing that. And so John Marshall has 234 00:14:54,520 --> 00:14:58,680 Speaker 5: this dilemma here. Supreme courts knew hasn't really established itself. 235 00:14:59,040 --> 00:15:01,760 Speaker 5: The question is is the Supreme Court going to order 236 00:15:01,800 --> 00:15:04,960 Speaker 5: Madison and the Jefferson administration to turn over that commission 237 00:15:05,000 --> 00:15:08,600 Speaker 5: to Marbury? And the continuous solution that he came up 238 00:15:08,640 --> 00:15:12,000 Speaker 5: with was, Hey, we don't want to risk the possibility 239 00:15:12,120 --> 00:15:15,680 Speaker 5: that Jefferson and Madison won't comply, So instead we're going 240 00:15:15,760 --> 00:15:18,640 Speaker 5: to say, yes, Marbury is entitled to the commission. But 241 00:15:18,680 --> 00:15:21,160 Speaker 5: as it turns out, we don't actually have jurisdiction to 242 00:15:21,200 --> 00:15:24,640 Speaker 5: decide this case, because this law that Congress passed giving 243 00:15:24,720 --> 00:15:29,720 Speaker 5: US jurisdiction is actually unconstitutional. So Chief Justice John Marshall 244 00:15:30,080 --> 00:15:34,000 Speaker 5: ducked the confrontation with Jefferson while establishing that the Court 245 00:15:34,040 --> 00:15:35,760 Speaker 5: is this very powerful institution. 246 00:15:36,440 --> 00:15:40,440 Speaker 2: Marshall's fear that a president wouldn't comply with the Court's 247 00:15:40,720 --> 00:15:46,600 Speaker 2: order came to fruition during Andrew Jackson's administration. Jackson, who 248 00:15:46,640 --> 00:15:49,400 Speaker 2: by the way, is one of Trump's heroes, refused to 249 00:15:49,560 --> 00:15:53,640 Speaker 2: enforce a Supreme Court ruling basically that the Cherokee Indian 250 00:15:53,760 --> 00:15:56,800 Speaker 2: tribe had a right to live on their land in Georgia, 251 00:15:56,960 --> 00:16:00,640 Speaker 2: leading to the infamous Trail of Tears. But actually it 252 00:16:00,680 --> 00:16:04,520 Speaker 2: was President Abraham Lincoln who went even further than Jackson 253 00:16:05,080 --> 00:16:08,640 Speaker 2: in a clash with the Supreme Court's Chief Justice Roger 254 00:16:08,680 --> 00:16:10,680 Speaker 2: brook Tawny during the Civil War. 255 00:16:11,320 --> 00:16:14,400 Speaker 5: Yeah, this is probably the closest the president has ever 256 00:16:14,440 --> 00:16:17,640 Speaker 5: come to directly define the Supreme Court. The war had 257 00:16:17,720 --> 00:16:20,600 Speaker 5: started precipitated in part by the Supreme Court in Chief 258 00:16:20,680 --> 00:16:24,520 Speaker 5: Justice Roger Broke Tawny issuing the dread Scott decision that 259 00:16:24,800 --> 00:16:28,000 Speaker 5: declared that freed slaves could never be citizens in the 260 00:16:28,120 --> 00:16:31,920 Speaker 5: United States, and the war starts. Abraham Lincoln's very concerned 261 00:16:32,000 --> 00:16:37,640 Speaker 5: about sabotage, and he issues an order that authorized one 262 00:16:37,640 --> 00:16:41,040 Speaker 5: of his generals to suspend the rid of habeas corpus 263 00:16:41,360 --> 00:16:44,280 Speaker 5: near railroad lines in Maryland. And hapeus corpus is this 264 00:16:44,600 --> 00:16:48,000 Speaker 5: notion that if the government holds you, rescue you can 265 00:16:48,040 --> 00:16:50,440 Speaker 5: go to a judge and make the governments defend why 266 00:16:50,480 --> 00:16:53,760 Speaker 5: it's holding you. And Lincoln said, we're going to suspend 267 00:16:53,800 --> 00:16:56,680 Speaker 5: that because of the crisis we face here. Well, the 268 00:16:56,720 --> 00:17:00,400 Speaker 5: guy named John Merriman was arrested, turned to rob brook 269 00:17:00,400 --> 00:17:04,040 Speaker 5: Tawney got a rid of habeas corpose anyway, which demanded 270 00:17:04,240 --> 00:17:07,400 Speaker 5: that the military justify why Merriman had been picked up, 271 00:17:07,560 --> 00:17:11,359 Speaker 5: and Lincoln in his generals essentially ignored the order. Merriman 272 00:17:11,440 --> 00:17:14,800 Speaker 5: did not go before a judge, and Roger brook Tawney 273 00:17:14,840 --> 00:17:17,119 Speaker 5: eventually said, look, I've done all I can do here, 274 00:17:17,400 --> 00:17:19,520 Speaker 5: But he said, my power has been resisted by a 275 00:17:19,560 --> 00:17:22,600 Speaker 5: force too strong for me to overcome. And Lincoln later 276 00:17:22,720 --> 00:17:25,280 Speaker 5: justified what he did, saying, are all the laws but 277 00:17:25,400 --> 00:17:28,119 Speaker 5: one to go on executed, and the government itself to 278 00:17:28,160 --> 00:17:31,480 Speaker 5: go to pieces lest that one be violated. In other words, 279 00:17:31,520 --> 00:17:34,600 Speaker 5: he said he was justified by the exigencies of the circumstance, 280 00:17:34,680 --> 00:17:35,720 Speaker 5: namely the Civil War. 281 00:17:36,000 --> 00:17:41,680 Speaker 2: Since Lincoln, presidents have complied with Supreme Court orders, and 282 00:17:41,840 --> 00:17:46,040 Speaker 2: Richard Nixon turning over the secret White House recordings in 283 00:17:46,119 --> 00:17:49,680 Speaker 2: nineteen seventy two is the most recent incident and probably 284 00:17:50,080 --> 00:17:52,879 Speaker 2: one that people remember most but tell us about some 285 00:17:52,960 --> 00:17:55,840 Speaker 2: of the other presidents who chose not to defy a 286 00:17:55,880 --> 00:17:56,480 Speaker 2: court order. 287 00:17:56,720 --> 00:17:59,000 Speaker 5: So there's a litany of examples. A few of the 288 00:17:59,000 --> 00:18:02,359 Speaker 5: biggest ones because of how high profile the cases were. 289 00:18:02,680 --> 00:18:06,680 Speaker 5: Nineteen fifty two, President Harry Truman seizes the nation's steel 290 00:18:06,720 --> 00:18:09,639 Speaker 5: mills to make sure there's not a work stoppage during 291 00:18:09,680 --> 00:18:13,560 Speaker 5: the Korean War. Supreme Court rules against them, says he 292 00:18:13,600 --> 00:18:17,960 Speaker 5: did that illegally. Truman immediately complies. In nineteen fifty four 293 00:18:18,040 --> 00:18:21,640 Speaker 5: the Brown Versus Board of Education decision and some subsequent rulings, 294 00:18:21,680 --> 00:18:25,600 Speaker 5: President Dwight Eisenhower initially reluctant to get involved, but actually 295 00:18:25,600 --> 00:18:28,760 Speaker 5: helped the Supreme Court enforce those rulings and the lower 296 00:18:28,800 --> 00:18:32,000 Speaker 5: courts enforce those rulings when he sent federal troops to 297 00:18:32,320 --> 00:18:35,840 Speaker 5: escort black students into a high school in Arkansas, and 298 00:18:35,880 --> 00:18:39,080 Speaker 5: then nineteen seventy four Supreme Court orders Richard Nixon to 299 00:18:39,160 --> 00:18:43,120 Speaker 5: turnover secret White House recordings. Nixon complies, days later he 300 00:18:43,359 --> 00:18:44,840 Speaker 5: has to resign the presidency. 301 00:18:45,320 --> 00:18:48,399 Speaker 2: So you asked this question in your piece, and so 302 00:18:48,440 --> 00:18:50,440 Speaker 2: now I'm going to ask you for the answer, why 303 00:18:50,480 --> 00:18:55,040 Speaker 2: are presidents so quick to accept Supreme Court rulings as binding? 304 00:18:55,480 --> 00:18:58,280 Speaker 5: Well, there are both specific answers to each instance and 305 00:18:58,400 --> 00:19:00,560 Speaker 5: kind of a general answer. And the specific answer is 306 00:19:00,600 --> 00:19:03,560 Speaker 5: often than the president is taking a very unpopular position. 307 00:19:03,680 --> 00:19:07,400 Speaker 5: Harry Truman's position, for example, very unpopular at the time, 308 00:19:07,440 --> 00:19:10,399 Speaker 5: and his standing was especially low. But there's also the 309 00:19:10,440 --> 00:19:13,760 Speaker 5: more general dancers, which is that the Court, over the 310 00:19:13,880 --> 00:19:16,760 Speaker 5: years of the decades and centuries, has earned some trust 311 00:19:16,760 --> 00:19:20,240 Speaker 5: with the public. It has institutional standing that, at least 312 00:19:20,320 --> 00:19:24,080 Speaker 5: until recently, was pretty strong and very often stronger than 313 00:19:24,119 --> 00:19:27,760 Speaker 5: the other branches of government, and that goodwill has essentially created, 314 00:19:28,040 --> 00:19:31,440 Speaker 5: with some call the habit of accepting the Supreme Court 315 00:19:31,520 --> 00:19:33,560 Speaker 5: decisions even when folks disagree with them. 316 00:19:33,680 --> 00:19:37,280 Speaker 2: You said, until recently, because the Court has lost its 317 00:19:37,600 --> 00:19:39,200 Speaker 2: high standing with the public. 318 00:19:39,520 --> 00:19:42,480 Speaker 5: It's not quite at a flowest. Now it has recovered somewhat, 319 00:19:42,600 --> 00:19:44,840 Speaker 5: but it did hit bottom just a couple of years ago, 320 00:19:44,920 --> 00:19:47,399 Speaker 5: after the Dobbs really have overturned the test two, so 321 00:19:47,560 --> 00:19:48,159 Speaker 5: right to abortion. 322 00:19:48,480 --> 00:19:52,000 Speaker 2: President Trump has said that he'll obey court orders, and 323 00:19:52,080 --> 00:19:55,400 Speaker 2: he did in his first term, but he also has 324 00:19:55,480 --> 00:19:58,960 Speaker 2: said some things that leave a question mark in the air. 325 00:19:59,000 --> 00:20:02,760 Speaker 2: For example, he posted a quote that's been attributed to 326 00:20:03,040 --> 00:20:07,520 Speaker 2: Napoleon Bonaparte, he who saves his country does not violate 327 00:20:07,680 --> 00:20:11,960 Speaker 2: any law. So is there still a question about whether 328 00:20:12,080 --> 00:20:14,560 Speaker 2: Trump will follow Supreme Court orders? 329 00:20:14,960 --> 00:20:19,720 Speaker 5: Absolutely, there's a question. The administration is clearly sending out 330 00:20:19,800 --> 00:20:21,879 Speaker 5: mixed signals about its intentions. 331 00:20:21,880 --> 00:20:22,120 Speaker 6: Here. 332 00:20:22,359 --> 00:20:24,880 Speaker 5: You talked about some of the things President Trump has said. 333 00:20:25,119 --> 00:20:27,160 Speaker 5: There are also things that some of his top aides 334 00:20:27,240 --> 00:20:31,160 Speaker 5: have said, like Vice President Jade Vance, who actually quoted 335 00:20:31,160 --> 00:20:34,680 Speaker 5: that apocryphal Andrew Jackson in the comment about the Chief 336 00:20:34,800 --> 00:20:37,439 Speaker 5: Justices made is really now let him enforce it? Elon 337 00:20:37,600 --> 00:20:41,280 Speaker 5: Musk has said things that have strongly suggested he would 338 00:20:41,280 --> 00:20:45,680 Speaker 5: be willing to defy the Supreme Court. So that concern 339 00:20:46,080 --> 00:20:48,960 Speaker 5: is in the air in a way it has not 340 00:20:49,040 --> 00:20:52,840 Speaker 5: been in my lifetime, even in those moments of huge 341 00:20:52,960 --> 00:20:55,840 Speaker 5: national crisis, major Supreme Court decisions like the next one 342 00:20:55,880 --> 00:20:59,159 Speaker 5: TAPS case, there wasn't this level of concern that a 343 00:20:59,240 --> 00:21:01,960 Speaker 5: president might FuMB his nose at the Supreme Court. 344 00:21:02,520 --> 00:21:06,560 Speaker 2: And he has issued a lot of executive orders that 345 00:21:06,960 --> 00:21:10,720 Speaker 2: either ignore the law or defy the law. For example, 346 00:21:10,760 --> 00:21:14,720 Speaker 2: the funding freeze and the order to end birthright citizenship, 347 00:21:14,840 --> 00:21:18,760 Speaker 2: which four out of four judges have found unconstitutional. So 348 00:21:19,800 --> 00:21:23,800 Speaker 2: is it almost a deliberate defying of the legal norms. 349 00:21:24,720 --> 00:21:28,960 Speaker 5: So let me separate two things. With birthright citizenship, what 350 00:21:29,000 --> 00:21:32,800 Speaker 5: we have seen this administration do is start off by 351 00:21:33,440 --> 00:21:37,199 Speaker 5: just ignoring what has been the longstanding understanding of the 352 00:21:37,240 --> 00:21:42,440 Speaker 5: fourteenth Amendment and acting as though birthright citizenship is not guaranteed. 353 00:21:42,800 --> 00:21:46,080 Speaker 5: But once court orders have come through, they are complying 354 00:21:46,160 --> 00:21:50,639 Speaker 5: with them. But in other contexts the administration has, for example, 355 00:21:51,119 --> 00:21:57,360 Speaker 5: with an order to unfreeze federal funding, the administration has 356 00:21:57,480 --> 00:22:01,080 Speaker 5: been a little less quick to come apply and in 357 00:22:01,080 --> 00:22:03,919 Speaker 5: one case is prompted a judge to issue a follow 358 00:22:04,000 --> 00:22:07,200 Speaker 5: up order saying, hey, I really expect you to unfreeze 359 00:22:07,200 --> 00:22:09,879 Speaker 5: that funding. So this is putting out in a lot 360 00:22:09,960 --> 00:22:13,240 Speaker 5: of different cases. And we haven't yet got to that 361 00:22:13,320 --> 00:22:17,400 Speaker 5: point where I would say we're at a constitutional crisis, 362 00:22:17,600 --> 00:22:19,600 Speaker 5: but there are at least hints that we could have 363 00:22:19,640 --> 00:22:20,760 Speaker 5: a big issue down the road. 364 00:22:21,280 --> 00:22:24,119 Speaker 2: Greg, I have to say I find some irony here 365 00:22:24,480 --> 00:22:26,960 Speaker 2: in the fact that it seems like the Supreme Court 366 00:22:27,040 --> 00:22:31,800 Speaker 2: has made its own bed with that ruling in Trump 367 00:22:31,920 --> 00:22:36,200 Speaker 2: the United States last term, granting immunity to the president 368 00:22:36,280 --> 00:22:40,760 Speaker 2: for official acts. I mean that ruling was stunning, and 369 00:22:41,160 --> 00:22:46,920 Speaker 2: administration lawyers are now quoting that opinion to demonstrate their 370 00:22:46,960 --> 00:22:48,960 Speaker 2: points about presidential authority. 371 00:22:49,520 --> 00:22:52,920 Speaker 5: Yes, there's a case that the Trump administration's first case 372 00:22:52,960 --> 00:22:56,000 Speaker 5: at the Supreme Court in this new term, asking the 373 00:22:56,040 --> 00:22:58,840 Speaker 5: court to let him immediately fire the head of a 374 00:22:58,840 --> 00:23:04,159 Speaker 5: whistleblower agency. That brief was chock full of citations to 375 00:23:04,520 --> 00:23:06,760 Speaker 5: Trump versus the United States. The case you talk about, 376 00:23:06,800 --> 00:23:11,679 Speaker 5: the immunity case, basically saying that the president has broad authority, 377 00:23:11,960 --> 00:23:15,680 Speaker 5: complete authority over the executive branch of government. And what 378 00:23:15,720 --> 00:23:19,240 Speaker 5: they are arguing is the Supreme Court has said that 379 00:23:19,400 --> 00:23:22,840 Speaker 5: the president is the head of the executive branch and 380 00:23:23,080 --> 00:23:26,800 Speaker 5: can fire people when he deems it to be in 381 00:23:26,800 --> 00:23:30,760 Speaker 5: the country's best interest. And that ruling has put a 382 00:23:31,200 --> 00:23:34,600 Speaker 5: fair amount of wind behind Trump's sales and making that argument. 383 00:23:35,000 --> 00:23:38,639 Speaker 2: That argument didn't get the administration too far because On 384 00:23:38,760 --> 00:23:43,280 Speaker 2: Friday night, the Court declined to let Trump out the 385 00:23:43,320 --> 00:23:46,440 Speaker 2: head of the federal whistleblower agency, but with a bare 386 00:23:46,600 --> 00:23:51,439 Speaker 2: majority of five justices, the Court neither granted nor rejected 387 00:23:51,480 --> 00:23:56,640 Speaker 2: the administration's request to immediately remove him. Instead, the Court 388 00:23:56,720 --> 00:24:00,400 Speaker 2: held the request in abeyance, noting that the order expos 389 00:24:00,440 --> 00:24:03,560 Speaker 2: in just a few days this coming Wednesday. Two of 390 00:24:03,600 --> 00:24:08,960 Speaker 2: the liberal justices Sonya Sotomayor and Kaitanji Brown Jackson said 391 00:24:08,960 --> 00:24:14,160 Speaker 2: they would have rejected Trump's request, while conservative justices Samuel 392 00:24:14,200 --> 00:24:18,360 Speaker 2: Alito and Neil Gorsuch said they would have granted his request. 393 00:24:18,640 --> 00:24:21,520 Speaker 2: The lower court judge has scheduled a hearing for Wednesday 394 00:24:21,960 --> 00:24:25,560 Speaker 2: on whether to extend her order keeping him in the post, 395 00:24:25,960 --> 00:24:29,280 Speaker 2: so the justices could return to the case depending on 396 00:24:29,320 --> 00:24:33,040 Speaker 2: what she decides. So sort of a non ending ending. 397 00:24:33,359 --> 00:24:35,280 Speaker 2: Thanks so much for joining me on the show, Greg, 398 00:24:35,440 --> 00:24:39,399 Speaker 2: That's Bloomberg New Supreme Court reporter. Greg's store Coming up next, 399 00:24:39,920 --> 00:24:43,400 Speaker 2: Johnson and Johnson tries for the third time to use 400 00:24:43,480 --> 00:24:48,239 Speaker 2: bankruptcy to end thousands of lawsuits. I'm June Gross. When 401 00:24:48,280 --> 00:24:52,560 Speaker 2: you're listening to Bloomberg, Johnson and Johnson one of the 402 00:24:52,560 --> 00:24:56,040 Speaker 2: most profitable companies in the world has put a very 403 00:24:56,080 --> 00:24:59,960 Speaker 2: small unit into bankruptcy to drive a ten billion dollar 404 00:25:00,240 --> 00:25:04,080 Speaker 2: settlement of thousands of lawsuits alleging that its baby powder 405 00:25:04,240 --> 00:25:07,840 Speaker 2: caused ovarian cancer. Jay and Jay wants to use special 406 00:25:07,920 --> 00:25:12,600 Speaker 2: rules available only in bankruptcy court that pause all lawsuits. 407 00:25:13,000 --> 00:25:16,320 Speaker 2: The company has tried this twice before, but has been 408 00:25:16,320 --> 00:25:19,920 Speaker 2: stopped by courts in New Jersey. In Pennsylvania, the Third 409 00:25:19,960 --> 00:25:24,520 Speaker 2: Circuit Court of Appeals ruled that bankruptcy wasn't warranted because 410 00:25:24,560 --> 00:25:28,119 Speaker 2: the bankrupt unit ultimately had the backing of its deep 411 00:25:28,160 --> 00:25:31,800 Speaker 2: pocketed parent. Now, in its third try, Jay and Jay 412 00:25:31,960 --> 00:25:35,720 Speaker 2: is betting on a different result from a Houston, Texas court. 413 00:25:35,960 --> 00:25:40,119 Speaker 2: Joining me as Stephen Church Bloomberg bankruptcy reporter. This case 414 00:25:40,160 --> 00:25:43,960 Speaker 2: has a long and complicated history. Tell us how we 415 00:25:44,000 --> 00:25:47,800 Speaker 2: got to this point with a trial in Houston, Texas. 416 00:25:47,960 --> 00:25:51,320 Speaker 6: For the last ten years, Johnson and Johnson has been 417 00:25:51,359 --> 00:25:57,200 Speaker 6: fighting allegations that painted baby powder, something that has asbestos 418 00:25:57,240 --> 00:26:02,199 Speaker 6: in it, allegedly pauses ovarian cana and other gynecological cancers 419 00:26:02,200 --> 00:26:05,760 Speaker 6: in women who use this powder just about every day. 420 00:26:06,119 --> 00:26:09,600 Speaker 6: Those lawsuits have slowly been building. They have been more 421 00:26:09,640 --> 00:26:13,520 Speaker 6: and more than filed. Now there are about sixty thousand 422 00:26:13,640 --> 00:26:16,880 Speaker 6: lawsuits that have been filed and another twenty five thousand 423 00:26:17,040 --> 00:26:19,720 Speaker 6: or so claims that have not yet been filed in 424 00:26:19,840 --> 00:26:23,280 Speaker 6: court but are still being prepared by lawyers. The company 425 00:26:23,320 --> 00:26:28,000 Speaker 6: has fought them throughout the entire time and has refused 426 00:26:28,000 --> 00:26:31,280 Speaker 6: to settle, and has claimed repeatedly that there is no 427 00:26:31,760 --> 00:26:36,040 Speaker 6: scientific link between bata by powder and other CALC based 428 00:26:36,080 --> 00:26:39,160 Speaker 6: products and cancer. The problem is, they've had at least 429 00:26:39,160 --> 00:26:41,639 Speaker 6: one major verdict that went all the way to the 430 00:26:41,720 --> 00:26:45,359 Speaker 6: Supreme Court, forcing Johnson and Johnson to pay out more 431 00:26:45,440 --> 00:26:49,640 Speaker 6: than two billion dollars to about twenty women. That got 432 00:26:49,640 --> 00:26:52,880 Speaker 6: the company's attention, and they tried to find a new 433 00:26:52,880 --> 00:26:55,640 Speaker 6: way to resolve these all at once. That new way, 434 00:26:55,920 --> 00:26:58,640 Speaker 6: just a few years ago, was to go into bankruptcy court. 435 00:26:58,880 --> 00:27:03,240 Speaker 6: They took a small unit and made this unit responsible 436 00:27:03,520 --> 00:27:06,560 Speaker 6: for paying off all the CAUC claims. Then they gave 437 00:27:06,640 --> 00:27:10,000 Speaker 6: this unit a contract that promised that Johnson and Johnson 438 00:27:10,080 --> 00:27:14,199 Speaker 6: would cover all the expenses. They've tried this three times. 439 00:27:14,520 --> 00:27:18,000 Speaker 6: The first two bankruptcy cases of a unit of Johnson 440 00:27:18,040 --> 00:27:21,119 Speaker 6: and Johnson where they tried to create this settlement failed. 441 00:27:21,240 --> 00:27:24,840 Speaker 6: They're now on their third attempt and this third attempt 442 00:27:24,840 --> 00:27:27,199 Speaker 6: has gotten further than the other two. They're after an 443 00:27:27,280 --> 00:27:31,520 Speaker 6: actual trial where a judge will decide whether the plan 444 00:27:31,960 --> 00:27:36,640 Speaker 6: to pay nine billion dollars out is legitimate or has 445 00:27:36,960 --> 00:27:39,200 Speaker 6: fatal flaws that cannot be approved. 446 00:27:39,480 --> 00:27:43,280 Speaker 2: There are many attorneys handling these cases and they're fighting. 447 00:27:43,480 --> 00:27:46,800 Speaker 2: Some want the settlement, some don't want the settlement correct. 448 00:27:47,040 --> 00:27:51,160 Speaker 6: There are about two dozen or so prominent attorneys who 449 00:27:51,200 --> 00:27:55,160 Speaker 6: represent tens of thousands of women who have some sort 450 00:27:55,280 --> 00:27:58,240 Speaker 6: of health issues that they claim came from the baby 451 00:27:58,280 --> 00:28:02,520 Speaker 6: powder or related products. Most of those attorneys have settled 452 00:28:02,520 --> 00:28:06,000 Speaker 6: with Johnson and Johnson in this third effort, and they 453 00:28:06,080 --> 00:28:10,159 Speaker 6: have agreed that a trust fund with nine billion dollars 454 00:28:10,160 --> 00:28:13,120 Speaker 6: in it will be set up to handle almost all 455 00:28:13,200 --> 00:28:15,880 Speaker 6: of the talk related claims. There may be a few 456 00:28:15,960 --> 00:28:19,159 Speaker 6: hundreds that are exempt, but almost all of these claims 457 00:28:19,200 --> 00:28:21,640 Speaker 6: will go to a special trust where they have rules 458 00:28:21,680 --> 00:28:24,560 Speaker 6: set up to decide who gets paid and how much 459 00:28:24,600 --> 00:28:27,880 Speaker 6: they get paid. Holdouts, A handful of attorneys who represent 460 00:28:28,160 --> 00:28:31,760 Speaker 6: several thousand women object. They say there isn't enough money 461 00:28:31,920 --> 00:28:35,880 Speaker 6: and that the plan itself is flawed and legally can't 462 00:28:35,880 --> 00:28:36,639 Speaker 6: be justified. 463 00:28:36,840 --> 00:28:40,280 Speaker 2: What made it different this time around? Was that Johnson 464 00:28:40,320 --> 00:28:44,400 Speaker 2: and Johnson got pre approval from a majority of the claimants. 465 00:28:44,680 --> 00:28:47,400 Speaker 6: Yes, Johnson and Johnson made a couple of changes in 466 00:28:47,520 --> 00:28:51,040 Speaker 6: between their second failure and this third effort. After a 467 00:28:51,080 --> 00:28:55,440 Speaker 6: Philadelphia federal appeals court rejected their second attempt to win 468 00:28:55,480 --> 00:28:59,560 Speaker 6: approval of this trust fund, Johnson and Johnson negotiated heavily 469 00:28:59,640 --> 00:29:03,720 Speaker 6: with many of the plaintiffs firms and got a new deal. 470 00:29:03,840 --> 00:29:07,040 Speaker 6: They added more than a billion dollars on top of 471 00:29:07,160 --> 00:29:10,040 Speaker 6: the original offer, bringing it to nine billion. And they 472 00:29:10,040 --> 00:29:14,720 Speaker 6: also did something that happens in many bankruptcies, big giant bankruptcies, 473 00:29:14,760 --> 00:29:17,600 Speaker 6: where they took a vote of all of the claimants 474 00:29:17,880 --> 00:29:22,240 Speaker 6: in order to prepackage the bankruptcy case. They wrote the plan, 475 00:29:22,520 --> 00:29:25,960 Speaker 6: they developed the trust and they asked more than eighty 476 00:29:26,000 --> 00:29:28,800 Speaker 6: thousand women to vote in favor of it. Many of 477 00:29:28,840 --> 00:29:31,360 Speaker 6: the women did. Most of the women. Johnson and Johnson 478 00:29:31,440 --> 00:29:35,640 Speaker 6: claims that more than seventy five percent voted in favor 479 00:29:35,680 --> 00:29:39,320 Speaker 6: of the plan. The holdouts claim that those numbers are 480 00:29:39,360 --> 00:29:43,160 Speaker 6: not accurate because of some flaws in the way the 481 00:29:43,280 --> 00:29:47,040 Speaker 6: voting took place. They claimed Johnson and Johnson bought votes. 482 00:29:47,160 --> 00:29:49,960 Speaker 6: They claimed Johnson and Johnson counted votes in favor of 483 00:29:50,000 --> 00:29:52,200 Speaker 6: the plan that should have been counted against the plan. 484 00:29:52,480 --> 00:29:56,360 Speaker 6: And so that's a very technical aspect of this trial. 485 00:29:56,840 --> 00:30:00,520 Speaker 6: Was the voting fair was it in compliance with these 486 00:30:00,560 --> 00:30:04,040 Speaker 6: detailed rules that happen in bankruptcy corder. Both sides have 487 00:30:04,160 --> 00:30:06,320 Speaker 6: spent a lot of money fighting on this case. 488 00:30:06,640 --> 00:30:09,040 Speaker 2: Is that the main question that the judge is going 489 00:30:09,080 --> 00:30:13,040 Speaker 2: to decide or is he going to decide the fairness. 490 00:30:12,480 --> 00:30:15,960 Speaker 6: Of this There are two big focuses. The one is 491 00:30:15,960 --> 00:30:18,560 Speaker 6: the voting. Was the voting does correctly? Then once you 492 00:30:18,600 --> 00:30:21,640 Speaker 6: get past the voting there's another set of objections that 493 00:30:21,800 --> 00:30:25,680 Speaker 6: might be even more serious. Those complaints are mostly coming 494 00:30:25,800 --> 00:30:29,320 Speaker 6: from the US Trustee, that's the arm of the US 495 00:30:29,440 --> 00:30:32,640 Speaker 6: Justice Department that is a watchdog in corporate bankruptcies. Some 496 00:30:32,720 --> 00:30:35,200 Speaker 6: of the holdout payments, some of the holdout women who 497 00:30:35,200 --> 00:30:38,520 Speaker 6: are assuming also back this type of argument against the plan, 498 00:30:38,680 --> 00:30:41,200 Speaker 6: And that is Johnson and Johnson is one of the 499 00:30:41,200 --> 00:30:44,960 Speaker 6: world's most profitable companies. How is it possible that they 500 00:30:45,040 --> 00:30:49,680 Speaker 6: can use these special bankruptcy rules that are designed for 501 00:30:49,800 --> 00:30:54,800 Speaker 6: companies in financial distress, companies with serious financial problems, in 502 00:30:54,920 --> 00:30:58,520 Speaker 6: order to cancel a bunch of debt and create this 503 00:30:58,600 --> 00:31:02,040 Speaker 6: new trust nau Chang. Jjohnson argues, well, there's an exception 504 00:31:02,360 --> 00:31:05,280 Speaker 6: under a law that Congress passed many years ago cases 505 00:31:05,360 --> 00:31:09,800 Speaker 6: that are about asbestos. If the company uses asbestos, which 506 00:31:09,840 --> 00:31:13,240 Speaker 6: is a known toxic substance in one of its products, 507 00:31:13,440 --> 00:31:18,760 Speaker 6: and that company files for bankruptcy, then related parties related 508 00:31:18,800 --> 00:31:23,280 Speaker 6: companies can also benefit from that bankruptcy case. So in 509 00:31:23,320 --> 00:31:26,320 Speaker 6: this case, the two big issues are was the voting 510 00:31:26,360 --> 00:31:29,400 Speaker 6: done properly? And then step back, kid Johnson and Johnson 511 00:31:29,480 --> 00:31:32,560 Speaker 6: even be allowed to take advantage of these bankruptcy rules 512 00:31:32,800 --> 00:31:35,680 Speaker 6: if the company itself doesn't go bankrupt and they take 513 00:31:35,680 --> 00:31:38,560 Speaker 6: advantage of this tiny little unit, put it in bankruptcy, 514 00:31:38,720 --> 00:31:41,120 Speaker 6: and then that giant corporation gets the benefit. 515 00:31:41,360 --> 00:31:45,600 Speaker 2: Is the bankruptcy trustee afraid that this would set a 516 00:31:45,640 --> 00:31:48,080 Speaker 2: precedent If Johnson and Johnson's allowed to. 517 00:31:48,040 --> 00:31:51,880 Speaker 6: Do this, There is that argument that this will encourage 518 00:31:51,960 --> 00:31:56,520 Speaker 6: other very profitable companies to use sort of a loophole 519 00:31:56,720 --> 00:32:01,280 Speaker 6: to avoid bankruptcy themselves. You can dump debt and eliminate 520 00:32:01,400 --> 00:32:04,880 Speaker 6: these big lawsuits without actually going bankrupt yourself. 521 00:32:05,160 --> 00:32:08,200 Speaker 2: Was one of the first witnesses, one of the plaintiff's 522 00:32:08,320 --> 00:32:11,120 Speaker 2: lawyers talking about you know the position that some of 523 00:32:11,360 --> 00:32:12,520 Speaker 2: his clients are in. 524 00:32:12,960 --> 00:32:16,680 Speaker 6: Yes. What's unusual about this is that there's only been 525 00:32:16,880 --> 00:32:21,160 Speaker 6: one major victory against Johnson and Johnson that made them 526 00:32:21,240 --> 00:32:24,120 Speaker 6: all the way through the appeal process and that forced 527 00:32:24,200 --> 00:32:27,640 Speaker 6: Johnson Johnson to pay money to victims. What has happened 528 00:32:27,920 --> 00:32:30,760 Speaker 6: until now is many of these cases have been stuck 529 00:32:30,800 --> 00:32:34,320 Speaker 6: on appeal. So some women have won hundreds of millions 530 00:32:34,360 --> 00:32:37,840 Speaker 6: of dollars, but those cases were overturned on appeal, and 531 00:32:37,920 --> 00:32:41,360 Speaker 6: now there are still fights going on in state courts 532 00:32:41,400 --> 00:32:44,880 Speaker 6: and in federal courts over whether some of these cases 533 00:32:45,000 --> 00:32:49,920 Speaker 6: should eventually be upheld or rejected. That has stalled a 534 00:32:49,960 --> 00:32:53,520 Speaker 6: lot of the plaintiffs lawyers from being able to move forward. 535 00:32:53,720 --> 00:32:56,640 Speaker 6: So the net result is that none of these women 536 00:32:57,080 --> 00:33:00,520 Speaker 6: have actually collected money from Johnson and Johnson other than 537 00:33:00,560 --> 00:33:02,800 Speaker 6: that one unusual case of been all the way to 538 00:33:02,800 --> 00:33:06,600 Speaker 6: the Supreme Court. One lawyer testified earlier this week that 539 00:33:06,680 --> 00:33:10,360 Speaker 6: he has at least twenty thousand women that he represents 540 00:33:10,640 --> 00:33:13,520 Speaker 6: who haven't collected to Dine yet, and his argument in 541 00:33:13,600 --> 00:33:17,080 Speaker 6: favor of the case is this is the fastest way 542 00:33:17,120 --> 00:33:19,080 Speaker 6: to get money to them. Put the money in the 543 00:33:19,160 --> 00:33:21,640 Speaker 6: trust and then let the women go to the trust 544 00:33:21,920 --> 00:33:25,400 Speaker 6: explain their situation, fill out a whole lot of incredibly 545 00:33:25,440 --> 00:33:29,160 Speaker 6: complicated forms explaining their health condition, how they got cancer, 546 00:33:29,480 --> 00:33:32,880 Speaker 6: what cancer stage they are in, what types of ailments 547 00:33:32,880 --> 00:33:36,480 Speaker 6: they have, and then a trust board will then decide, 548 00:33:36,840 --> 00:33:40,640 Speaker 6: based on complicated rules, how much may get paid that 549 00:33:41,160 --> 00:33:44,320 Speaker 6: this attorney and many of his allies argue is the 550 00:33:44,400 --> 00:33:48,000 Speaker 6: fastest way to get money into the pockets of women 551 00:33:48,040 --> 00:33:48,880 Speaker 6: who have cancer. 552 00:33:49,240 --> 00:33:53,120 Speaker 2: Is it expected that this decision here would be taken 553 00:33:53,200 --> 00:33:56,320 Speaker 2: up on appeal and then eventually end up at the 554 00:33:56,360 --> 00:33:57,200 Speaker 2: Supreme Court. 555 00:33:57,720 --> 00:34:00,320 Speaker 6: Most of the lawyers in the courtroom in this strial 556 00:34:00,480 --> 00:34:02,760 Speaker 6: have accepted the idea that there will be an appeal 557 00:34:02,800 --> 00:34:05,040 Speaker 6: no matter what. Whether that appeal goes all the way 558 00:34:05,080 --> 00:34:08,560 Speaker 6: to the Supreme Court is an open question. But the 559 00:34:08,600 --> 00:34:13,120 Speaker 6: Federal Appeals Court in Texas has a much different standard 560 00:34:13,560 --> 00:34:18,120 Speaker 6: when it comes to certain kinds of cases and how 561 00:34:18,200 --> 00:34:23,359 Speaker 6: you decide whether a case fits the law than the 562 00:34:23,400 --> 00:34:27,640 Speaker 6: Philadelphia Appeals Court. So the assumption is that when this 563 00:34:27,719 --> 00:34:29,960 Speaker 6: gets appealed, no matter who, when somebody is going to 564 00:34:30,000 --> 00:34:33,320 Speaker 6: go to the appeals court in Texas, the Federal Appeals 565 00:34:33,320 --> 00:34:36,680 Speaker 6: Court in Texas, and that's where a lot of the 566 00:34:36,800 --> 00:34:40,320 Speaker 6: answers will come from. But even that could be appealed 567 00:34:40,320 --> 00:34:43,560 Speaker 6: to the US Supreme Court, and if that happens, we 568 00:34:43,640 --> 00:34:47,640 Speaker 6: could see a precedent that other companies will will try 569 00:34:47,640 --> 00:34:49,080 Speaker 6: to take advantage of, and that. 570 00:34:49,080 --> 00:34:53,160 Speaker 2: Appeals court will be the Fifth Circuit, which is the 571 00:34:53,160 --> 00:34:57,839 Speaker 2: most conservative circuit in the country and has often come 572 00:34:57,920 --> 00:35:01,720 Speaker 2: up with, shall we say, novel theories of the law. 573 00:35:02,000 --> 00:35:04,719 Speaker 2: Thanks so much, Steven. We'll check back with you at 574 00:35:04,719 --> 00:35:09,080 Speaker 2: the end of the trial. That Stephen Church Bloomberg Bankruptcy reporter. 575 00:35:09,320 --> 00:35:12,880 Speaker 2: In other legal news, the saga over the Justice Department's 576 00:35:12,920 --> 00:35:16,479 Speaker 2: attempt to dismiss the corruption case against New York City 577 00:35:16,520 --> 00:35:18,680 Speaker 2: Mayor Eric Adams continues. 578 00:35:19,200 --> 00:35:22,880 Speaker 7: After careful consideration, I have determined that I will not 579 00:35:22,920 --> 00:35:28,759 Speaker 7: commence removal proceedings at this time. My strong belief is 580 00:35:28,800 --> 00:35:31,560 Speaker 7: that the will of the voters and the supremacy and 581 00:35:31,640 --> 00:35:36,359 Speaker 7: sanctity of democratic elections preclude me from any other action. 582 00:35:37,040 --> 00:35:40,280 Speaker 2: New York Governor Kathy Hokeel said she won't remove Adams 583 00:35:40,280 --> 00:35:43,400 Speaker 2: from his office at this time, but she plans to 584 00:35:43,520 --> 00:35:47,279 Speaker 2: increase oversight of the mayor and City Hall, something she'll 585 00:35:47,320 --> 00:35:51,800 Speaker 2: need City Council and legislative approval for the Justice Department's 586 00:35:51,960 --> 00:35:55,360 Speaker 2: order to drop the corruption charges against Adams led to 587 00:35:55,440 --> 00:36:00,000 Speaker 2: the resignation of eight federal prosecutors, including the interim Manhattan 588 00:36:00,239 --> 00:36:04,600 Speaker 2: US Attorney Danielle Sassoon, who raised concerns about a possible 589 00:36:04,680 --> 00:36:09,400 Speaker 2: quid pro quo Adam's cooperation in the Trump administration's immigration 590 00:36:09,640 --> 00:36:13,760 Speaker 2: crackdown in exchange for dropping the case. And after hearing 591 00:36:13,880 --> 00:36:16,800 Speaker 2: last week on the government's motion to dismiss the case, 592 00:36:17,120 --> 00:36:21,080 Speaker 2: Federal Judge Dale Hoe basically said, not so fast. He's 593 00:36:21,120 --> 00:36:26,480 Speaker 2: appointing a prominent conservative lawyer, former US Solicitor General Paul Clement, 594 00:36:26,800 --> 00:36:30,520 Speaker 2: to examine the Trump Justice Department's moved to drop the case, 595 00:36:30,800 --> 00:36:33,800 Speaker 2: saying there has been no testing of the government's position. 596 00:36:34,200 --> 00:36:38,480 Speaker 2: The judge's choice of the conservative Clement is an artful one. 597 00:36:38,719 --> 00:36:42,560 Speaker 2: The former Solicitor General is perhaps most famous for defending 598 00:36:42,600 --> 00:36:45,600 Speaker 2: a law against same sex marriage before the U. S. 599 00:36:45,600 --> 00:36:49,160 Speaker 2: Supreme Court, while Judge Hoe is an appointee of former 600 00:36:49,239 --> 00:36:52,520 Speaker 2: President Joe Biden and was formerly the director of the 601 00:36:52,560 --> 00:36:57,040 Speaker 2: American Civil Liberties Union's Voting Rights Project. The judge asked 602 00:36:57,080 --> 00:37:00,160 Speaker 2: for briefs to be submitted by March seventh, and that 603 00:37:00,200 --> 00:37:03,920 Speaker 2: he'll hold a hearing on March fourteenth, if necessary. And 604 00:37:03,960 --> 00:37:06,120 Speaker 2: that's it for this edition of The Bloomberg Law Show. 605 00:37:06,440 --> 00:37:08,799 Speaker 2: Remember you can always get the latest legal news on 606 00:37:08,840 --> 00:37:13,120 Speaker 2: our Bloomberg Law podcasts. You can find them on Apple Podcasts, Spotify, 607 00:37:13,320 --> 00:37:18,359 Speaker 2: and at www dot bloomberg dot com slash podcast Slash Law, 608 00:37:18,760 --> 00:37:21,320 Speaker 2: And remember to tune into The Bloomberg Law Show every 609 00:37:21,400 --> 00:37:25,280 Speaker 2: weeknight at ten pm Wall Street Time. I'm June Grosso 610 00:37:25,440 --> 00:37:27,040 Speaker 2: and you're listening to Bloomberg