Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio
Speaker 1: to reflect who we are and what we hope to build.
Speaker 1: I am proud to announce that starting today our company
Speaker 1: is now Meta. Our mission remains the same. It's still
Speaker 1: about bringing people together our apps and their brands. They're
Speaker 1: not changing either, and we are still the company the
Speaker 1: designs technology around people. Facebook may have changed its name,
Speaker 1: but the Federal Trade Commission says it's still up to
Speaker 1: the same game, not designing its own technology, but buying
Speaker 1: up a smaller company with the technology it needs and
Speaker 1: eliminating any competition. Meta announced its deal to buy Within Unlimited,
Speaker 1: a virtual reality fitness app, just one day after Mark
Speaker 1: Zuckerberg announced its name change. The FTC is suing to
Speaker 1: stop the deal, saying Meta is trying to create a
Speaker 1: monopoly in virtual reality in the same way that Facebook
Speaker 1: brought up Instagram and WhatsApp to extend its dominance in
Speaker 1: social networking. Joining me is Bloomberg Intelligence Senior litigation analyst
Speaker 1: Jennifer Ree. Why is the FTC trying to stop Meta
Speaker 1: from buying Within? What they're trying to do, I think
Speaker 1: is not make the same mistake that they believe they
Speaker 1: made in the past when they cleared FTCs acquisitions of
Speaker 1: Instagram and WhatsApp. They're looking at Meta as a company
Speaker 1: that's trying to sort of take over this burgeoning virtual
Speaker 1: reality space, and they see this acquisition as part of that.
Speaker 1: Within makes virtual reality apps. It has a very popular
Speaker 1: one for fitness called Supernatural. And what the FTC claims
Speaker 1: is that if Meta didn't buy Within, they would be
Speaker 1: competing on their own because they have the resources, and
Speaker 1: they have the wherewithal and the interest in developing their
Speaker 1: own fitness app that would compete, and it would be
Speaker 1: better for them to compete than to buy Within and
Speaker 1: go forward in virtual reality fitness that way. So the
Speaker 1: allegations here is of potential competition that if it didn't
Speaker 1: buy Within, Meta would compete with them in the future,
Speaker 1: even though it doesn't today. Has that theory of potential
Speaker 1: competition been used frequently. It hasn't been used frequently. It
Speaker 1: has been used before. Most of the cases that the
Speaker 1: FTC is relying on here are from the nineteen seventies,
Speaker 1: because the more recent limited use in court hasn't been successful.
Speaker 1: I mean, one of the mergers that was challenged on
Speaker 1: this basis was between two companies called Steris and Synergy,
Speaker 1: and the etc failed to succeed in that challenge in
Speaker 1: court because it's very very difficult to prove, you know,
Speaker 1: you have to show that the company actually had a
Speaker 1: serious interest in entering the market and was well on
Speaker 1: its way to do so and probably would have been
Speaker 1: able to do so and been successful. So MENA has
Speaker 1: bought more than a hundred smaller companies, including nine virtual
Speaker 1: reality apps studios, over the last three years. This is
Speaker 1: the first time the FTC has challenged a deal before
Speaker 1: it takes place. Why now, is it the timing when
Speaker 1: the FTC is on this aggressive path, or is it
Speaker 1: the deal in particular? You know, I think it's a
Speaker 1: combination of things. It's certainly the timing, but also some
Speaker 1: of those past acquisitions may have been too small to
Speaker 1: have to be filed under the heart Scot Rodino Act,
Speaker 1: and they just may have fallen under the radar, you know,
Speaker 1: not been noticed, gone ahead, enclosed without the FTC having
Speaker 1: a chance to take a look at them. But the
Speaker 1: FTC in particular, as I said, I think regrets some
Speaker 1: of the past acquisition activity of big tech platforms in general,
Speaker 1: and particularly Meta that have allowed them to kind of
Speaker 1: take over full spaces, and they see that Meta has
Speaker 1: this goal to move forward and to try to become
Speaker 1: dominant in virtual reality, and what they're trying to do
Speaker 1: is just nip it in the button. They see this
Speaker 1: as one step towards that goal. You know, Meta already
Speaker 1: has through its acquisition of Oculus, the hardware that people
Speaker 1: use for virtual reality gaming and virtual reality apps, and
Speaker 1: it has a content store where it's creating some of
Speaker 1: its own virtual reality apps, and now it's trying to
Speaker 1: buy up more content. So the FTC bus this is
Speaker 1: just one more step towards Meta taking over that space,
Speaker 1: kind of becoming the Apple of that space. You know,
Speaker 1: these are all the allegations with Apple and its app
Speaker 1: store and how it controls access to apps on iOS
Speaker 1: mobile devices, and I think what they're doing here is
Speaker 1: trying to prevent Meta from getting to that place. What
Speaker 1: is Meta's defense here? What is its response? Well, first
Speaker 1: of all, that it doesn't compete with this company, and
Speaker 1: that it's a very small company and buying you know,
Speaker 1: a small virtual reality app company in this very burgeoning
Speaker 1: new nascent industry. You know, nobody really knows what's going
Speaker 1: to happen with it. It's really it's very beginning stages
Speaker 1: that this is a very small app and it's a
Speaker 1: small fitness app and really can't have an impact on competition.
Speaker 1: I mean, a merger has to have an anti competitive
Speaker 1: impact on competition to violate the antitrust laws. And so
Speaker 1: Meta would say, well, this just doesn't. And secondly, it
Speaker 1: would say, look, we didn't have plans to develop our
Speaker 1: own fitness SAP, even if we talked about it or
Speaker 1: thought about it. You know, we talk about and think
Speaker 1: about a lot of things, and then we end up
Speaker 1: nixing those plans and we didn't have any plan to
Speaker 1: go forward with this, so we wouldn't have been a
Speaker 1: potential competitor, and we aren't buying this company so that
Speaker 1: we can buy up a potential competitor. Meta seems to
Speaker 1: have this growth by acquisition strategy. Is there anything wrong
Speaker 1: with that from an antitrust point of view, Well, there
Speaker 1: are two ways that there could be something wrong with that.
Speaker 1: The first way is if you have your own products
Speaker 1: and you see this new up and coming nascent competitor
Speaker 1: and you have concerns about that company, you think it
Speaker 1: actually could really get big and th threaten your position
Speaker 1: with the product that you already have in the market.
Speaker 1: I mean, this is what the allegations are today with
Speaker 1: respect why Facebook but Instagram. So instead of trying to compete, Hey,
Speaker 1: let's do better, let's lower our prices, let's innovate more
Speaker 1: so consumers stick with our product. Even if we face
Speaker 1: competition from this nascent entity. Let's buy it instead, because
Speaker 1: buying it just vanquished that threat, so that can be
Speaker 1: anti competitive. Then the second way could be the way
Speaker 1: the FTC leads that Meta is harming competition with the
Speaker 1: Within acquisition. It's they don't compete today and Meta doesn't
Speaker 1: necessarily view Within as a nascent competitor that threatens it
Speaker 1: down the road. But the concept is that Meta would
Speaker 1: have enter this market and competed if it didn't buy
Speaker 1: the entity, and it's better to have two competitors than one.
Speaker 1: What will the judge be looking at here? I think
Speaker 1: that the judge will be looking at a couple of things.
Speaker 1: The first thing is if the FTC has defined what
Speaker 1: we call a relevant antitrust market correctly. So, what the
Speaker 1: FTC has said is that a virtual reality fitness apps,
Speaker 1: dedicated fitness apps sit in their own relevant market that
Speaker 1: they don't compete against anything else other than other virtual
Speaker 1: reality fitness apps, So they don't compete, let's say, with
Speaker 1: other in home fitness potentials out there, like Peloton or
Speaker 1: Apple Fitness, you know, or any other kind of at
Speaker 1: home guided fitness experienced that a consumer can have. So
Speaker 1: they've defined this narrow market, and the judge will be asking, well,
Speaker 1: should that market really be broader? Do consumers actually view
Speaker 1: let's say Peloton as a substitute for this virtual reality
Speaker 1: fitness Do they price constrained against each other? Is one
Speaker 1: constraining against the other? Do they compete? So that's one issue,
Speaker 1: and I think the second issue is this whole concept
Speaker 1: of whether Meta actually would have been a potential competitor.
Speaker 1: They'll look at what metas plans, say, had the company
Speaker 1: devoted capital toward developing its own virtual reality fitness app,
Speaker 1: you know, were there approved plans to go forward with
Speaker 1: something like that that then got mixed when the company
Speaker 1: decided to buy Within instead. I mean, the proof of
Speaker 1: that will be in their documents and what their documents say,
Speaker 1: and the judge is going to have to look at
Speaker 1: that as well. And you think it's an uphill battle
Speaker 1: for the FTC. I think it's difficult because I think
Speaker 1: it's very speculative. Again, if the documents show that there
Speaker 1: were no plans to develop a virtual reality fitness app,
Speaker 1: or there might have been plans that were nixed, but
Speaker 1: nixed not because of the purchase of within, but for
Speaker 1: other reasons, you know, that kind of neutralizes this argument
Speaker 1: that they would have been a potential competitor. And I
Speaker 1: think that it's really hard to say, Hey, this company
Speaker 1: was going to enter and you know what, if they had,
Speaker 1: they would have been a vibrant competitor within very popular
Speaker 1: fitness app. I think that's difficult to prove in court.
Speaker 1: And I also think there could be some problems with
Speaker 1: the defined relevant market here um limiting it to just
Speaker 1: these virtual reality fitness apps. Is this a test case
Speaker 1: for the FTC for its more aggressive strategy on mergers,
Speaker 1: especially by the Silicon Valley giants. I think it can
Speaker 1: be thought of that way, absolutely, not just the test
Speaker 1: case to try to expand the boundaries of antitrust law
Speaker 1: and try to push some of these novel theories and
Speaker 1: have some success in court with novel theories that might
Speaker 1: open the way, open the road in the future to
Speaker 1: more easily challenge other deals. And I think it's also
Speaker 1: part of trying to prevent big tech platforms from continually
Speaker 1: growing through acquisition. You know, there's nothing on with growing organically,
Speaker 1: but just trying to prevent this growth that's happened over
Speaker 1: the last ten years through acquisition. So it's sort of twofold.
Speaker 1: Meta has said that if the judge rules against them,
Speaker 1: it will abandon the deal. If the judge rules against
Speaker 1: the FTC might have taken appeal, absolutely it could. So
Speaker 1: what happens there is if the judge rules against the FTC,
Speaker 1: technically the companies are free to go ahead and close
Speaker 1: their deal and integrate. What the FTC would do if
Speaker 1: they chose to appeal, if they'd likely seek an emergency
Speaker 1: order from the court to prevent the companies from closing
Speaker 1: just pending that appeal, and sometimes they win those. More
Speaker 1: recently in the last couple of years, they haven't been
Speaker 1: winning those orders, and then it makes more difficult for
Speaker 1: them to go through with the appeal because the companies
Speaker 1: at that point would probably go ahead and close and integrate.
Speaker 1: And now it's more difficult even if they wanted court
Speaker 1: to get a judge to require the companies to unwind
Speaker 1: the deal. Is the FTC still trying to unwind the
Speaker 1: Instagram and What'sapp purchase? Yes, there's still that litigation is
Speaker 1: still ongoing. I believe it is set to go to
Speaker 1: trial next year, either unwind or get some other kind
Speaker 1: of injunctive remedy like required interoperability or something like that
Speaker 1: that's short of unwinding the deals, but does require Facebook
Speaker 1: to allow for you know, better interoperability with other rivals
Speaker 1: and allowing users to migrate their history and their content
Speaker 1: to other platforms. So the FTC is very busy with
Speaker 1: Silicon values platforms. The Commission has voted to block Microsoft's
Speaker 1: sixty nine billion dollar acquisition of Activision, which is I
Speaker 1: was surprised at this one of the thirty biggest acquisitions
Speaker 1: of all time. What's the reason they're so that's a
Speaker 1: little bit different than the challenge to Meta and within
Speaker 1: this deal is called a vertical theory deal. So what
Speaker 1: they're objecting to here is the vertical integration between Microsoft
Speaker 1: and Activision. So in other words, Microsoft has consoles and
Speaker 1: PCs on which people can play mobile games, and Activision
Speaker 1: creates that mobile content. So there are at different levels
Speaker 1: of distribution for an entire industry of mobile game playing.
Speaker 1: And what the FTC is saying is, look, once Microsoft
Speaker 1: controls this activision content, it's going to have an increased
Speaker 1: incentive and the ability to withhold or degrade that content,
Speaker 1: and weighs that less in competition. In other words, that
Speaker 1: hurt its competitors, primarily it's competitors and consoles, which is
Speaker 1: really mostly just Sony. Sony, which is a competitor for Microsoft,
Speaker 1: is objecting because it's concerned that Microsoft could make games
Speaker 1: like Call of Duty exclusive. And apparently Microsoft has something
Speaker 1: of a history here. Well, you know, yes and no.
Speaker 1: I'll start by saying it has actually been fairly typical
Speaker 1: for console companies to have exclusive games. Sony itself, which
Speaker 1: has the PlayStation console, has games that are exclusive to PlayStation.
Speaker 1: It does that, and Microsoft has some exclusive games as well.
Speaker 1: So Microsoft a couple of years ago acquired Zenemax, and
Speaker 1: when they did, they were cleared by the European Commission
Speaker 1: which took a look at the deal, and the European
Speaker 1: Commission cleared it without any commitments. So Microsoft didn't make
Speaker 1: any commitments to the Commission that it would not make
Speaker 1: certain games exclusive. Now, we did tell the Commission, we
Speaker 1: don't have an incentive to take these games as exclusives,
Speaker 1: but it later did do so. And this is what
Speaker 1: the FTC has mentioned in its complaints, saying that, well,
Speaker 1: even if Microsoft says we have no incentive to go
Speaker 1: exclusive with these games, hey, that's what it said that
Speaker 1: the European Commission when it acquired Dnomax. But it went
Speaker 1: ahead and did that. But the European Commission is actually saying,
Speaker 1: you know, it's not exactly right. You know, we cleared
Speaker 1: it because we actually just didn't think the deal was problematic,
Speaker 1: and even if they took the games exclusive, we didn't
Speaker 1: think that was problematic or could harm competition. So it
Speaker 1: really wasn't an issue, and we weren't telling them you
Speaker 1: shouldn't or can't take these games exclusive. And it only
Speaker 1: took some of the Zenmax games exclusive, not all of them.
Speaker 1: So you know, it's maybe lightly disingenuous to rely on
Speaker 1: that conduct and compare that conduct to what might happen here,
Speaker 1: particularly because Microsoft has been very open about the fact
Speaker 1: that it's willing to extend a ten year license to
Speaker 1: Sony for the Call of Duty games. Now, I think
Speaker 1: it might have to do a little bit better than that.
Speaker 1: It might have to include other activision games within that
Speaker 1: license and not just Call of Duty. But it's been
Speaker 1: fairly open about willing to enter into a legally binding contract,
Speaker 1: you know, a license to you know, not foreclosed Sony
Speaker 1: and to provide Call of Duty to Sony for PlayStation
Speaker 1: players to go ahead and play. So I think that again,
Speaker 1: this deal might be a little bit difficult also in
Speaker 1: court for the FTC, because you know, you have that
Speaker 1: promise out there by Microsoft which is more than just work.
Speaker 1: You know, it would be legally binding if it entered
Speaker 1: a license. Clarify, what is Microsoft's defense, Well, I mean
Speaker 1: it is saying that it doesn't have the incentive or
Speaker 1: the ability to take these games exclusive. And and the
Speaker 1: reasoning behind this, the theory, let's behind this that the
Speaker 1: FDC would have to prove in court is that Microsoft
Speaker 1: would take these games exclusive or particularly Call of Duty,
Speaker 1: and by doing so, it would not get the licensing fees,
Speaker 1: the licensing that would have been paid to it, you know,
Speaker 1: the revenue it would have achieved from licensing fees from
Speaker 1: other companies because it's now taken the game exclusive. But
Speaker 1: that ultimately it will be more profitable from Microsoft to
Speaker 1: forgo those fees because down the road, it would drive
Speaker 1: more consumers to its console, It's Xbox over the PlayStation,
Speaker 1: and it would recoup revenues by selling the Xbox to consumers.
Speaker 1: And Microsoft saying no, that's just not really the case,
Speaker 1: that the math doesn't work out that way for us.
Speaker 1: It's actually more profitable for us to make these games
Speaker 1: widely available, to collect these licensing fees, and to continue
Speaker 1: to sell our console, which I believe they sell at
Speaker 1: a very low margin. So the proof is going to
Speaker 1: be in the math. I mean, there will be complicated
Speaker 1: analytics that are presented to the judge by economic experts
Speaker 1: on both sides showing whether or not a strategy like
Speaker 1: that would be profitable to Microsoft down the road or wouldn't.
Speaker 1: And that's really very difficult to show, June Um. This
Speaker 1: is very similar to what the Department of Justice tried
Speaker 1: to do when it suits to block a T and
Speaker 1: T from acquiring Time Warner. Very similar concept and and
Speaker 1: similar analytics. And you know, you had to go in
Speaker 1: there and prove that this kind of strategy would be
Speaker 1: profitable for the company, and it just didn't work. You know,
Speaker 1: the model that the economists presented had a lot of
Speaker 1: problems with it, had a lot of weaknesses in it
Speaker 1: that the judge pointed out, and he had some issues
Speaker 1: with it, and he just simply didn't feel that they
Speaker 1: proved that it would have been profitable for the companies
Speaker 1: to engage in that kind of strategy. And so there
Speaker 1: could be the same kind of challenge here, and Microsoft,
Speaker 1: of course will have their own experts showing how it's
Speaker 1: not profitable and wouldn't make sense for Microsoft to take
Speaker 1: these games exclusive. This is an in house trial with
Speaker 1: an administrative law judge. Oftentimes defended say that in those
Speaker 1: cases the in house law judge, the administrative law judge,
Speaker 1: favors the agency. So I have a couple of theories
Speaker 1: about this. I think, first of all, there has been
Speaker 1: a pattern if you look at the last ten fifteen
Speaker 1: years of the FDC winning those few we call it
Speaker 1: apart three when you go through these proceedings internally, very
Speaker 1: few actually go through to the finish. But for the
Speaker 1: few that have gone through the finish, we have seen
Speaker 1: that the FTC is a good track record. But I
Speaker 1: tend to think that that could be because at least
Speaker 1: in the past until this administration, the FTC would bring
Speaker 1: cases that were easier to win, that they had better
Speaker 1: evidence on their side, They had stronger, more traditional antitrust theories,
Speaker 1: so it was more likely they were going to win.
Speaker 1: This judge, in fact, has recently ruled against the FTC
Speaker 1: in two recent Part three proceedings. One was the merger
Speaker 1: of Alumina and Grail that challenge and the other one
Speaker 1: was a challenge to all Trea's investment in Jewel. These
Speaker 1: were both in the last couple years. Same administrative law
Speaker 1: judge that would oversee this hearing, and he ruled against
Speaker 1: the FTC. I tend to believe he actually is quite
Speaker 1: independent and doesn't really essentially favor the FTC going in now.
Speaker 1: I'm a little confused about the timing because the trial
Speaker 1: is set for August two, but the deal is set
Speaker 1: to close by June. That's a problem for the company. Yeah,
Speaker 1: So the timing is very complicated here because right now
Speaker 1: the companies cannot close because there are anti trust investigations
Speaker 1: that are still outstanding in the UK and in Europe
Speaker 1: before the European Commission, and those reviews keep the companies
Speaker 1: from being able to close their deal. Now both of
Speaker 1: those right now have decision dates in the first quarter,
Speaker 1: one of them in March and one of them in
Speaker 1: April if they clear. If the both the UK and
Speaker 1: Europe clear Microsoft in activision to close their deal, technically
Speaker 1: they can even though this Part three procedure is pending.
Speaker 1: So what will have to happen is the FTC, in
Speaker 1: communication with Europe and with the UK, will know if
Speaker 1: that's coming, and they'll have to actually sue the companies
Speaker 1: for a preliminary injunction in federal court in the United
Speaker 1: States to get a temporary block not permanent, but just
Speaker 1: a temporary block on the closing pending their Part three. Otherwise,
Speaker 1: even though the Part three is ongoing, the companies would
Speaker 1: still be able to close. So I think that that's
Speaker 1: what they will do if those approvals are forthcoming. So
Speaker 1: we might see a filing in federal court sometime in
Speaker 1: February or maybe in March by the FTC, and that
Speaker 1: process will finish up if it happens more quickly than
Speaker 1: the Part three. Now, if there aren't approvals in the
Speaker 1: UK and Europe and Microsoft has to fight those as well,
Speaker 1: they're either going to have to abandon the deal or
Speaker 1: the companies are going to have to agree to extend
Speaker 1: that ending. What's FTC Chair Lena Kahn's records so far, Yeah,
Speaker 1: you know, it's a little bit mixed. Yeah. She she
Speaker 1: was really kind of hobbled for quite a long time
Speaker 1: when she first took on the chairpersonship because it was
Speaker 1: a split FTC. There were two Republican commissioners and two
Speaker 1: Democratic commissioners. One of them was Lena Khan. You know,
Speaker 1: there was some trouble because there were some split vote
Speaker 1: two to two and when the commission ties they can't
Speaker 1: take action, it would mean no lawsuit against the deal,
Speaker 1: and and that kind of stopped her for a while.
Speaker 1: But once the final commissioner was appointed and confirmed that
Speaker 1: was al Vero Badoya, she's been able to do a
Speaker 1: little bit more. And I say it's mixed because she's
Speaker 1: been able to get some abandonments of deals with which
Speaker 1: the FTC would look at as a success when they
Speaker 1: sue and instead of having to go through litigation and
Speaker 1: when in court, the companies too, you know, just to
Speaker 1: walk away. So they did manage that with Lockheed Arrow Jet,
Speaker 1: and they also managed that within Video Arm and there
Speaker 1: were several hospital deal three of them in fact, in
Speaker 1: two thousand and twenty two that all abandoned their deal.
Speaker 1: And and those are successes, even though it's not necessarily
Speaker 1: a court success. But there were the two losses in
Speaker 1: their own internal court. I just mentioned the Illuminate Grail
Speaker 1: and the Ultria Jewel losses. So those weren't great. And
Speaker 1: now we'll see what happens. You've got to outstanding right
Speaker 1: now with Microsoft Activision and with Meta Within. And it's
Speaker 1: unclear whether Microsoft Activision will get all the way to
Speaker 1: a court decision, but clearly Meta Within will that. We
Speaker 1: expect the decision in that one in December, So we'll
Speaker 1: see what happens there because that'll show us at the
Speaker 1: beginning of her record and actually in federal court. Thanks
Speaker 1: so much, Jan, that's Bloomberg Intelligence Senior litigation analyst Jennifer Ree.
Speaker 1: A New York law temporarily lifts the statute of limitations
Speaker 1: on civil sexual abuse and harassment claims and is expected
Speaker 1: to lead to a flood of lawsuits. In fact, lawsuits
Speaker 1: have already been filed against former President Donald Trump, comedian
Speaker 1: Bill Cosby, and billionaire Leon Black over allegations they assaulted
Speaker 1: women decades ago. Which their lawyers deny joining me is
Speaker 1: Bloomberg Legal reporter Eric Larson tell us more about this law.
Speaker 1: So the law called the New York Adult Survivor's apt
Speaker 1: It was signed into law in May and it took
Speaker 1: effect last month on Thanksgiving Day. And what it does
Speaker 1: is it lists temporarily for one year, lists the statute
Speaker 1: of limitations on civil claims over sexual offenses like sexual
Speaker 1: abuse and harassments. So it's a fairly new type of law.
Speaker 1: It just took effects. So what we're expecting is that
Speaker 1: is quite a few lawsuits to be filed in the
Speaker 1: next year. Was this in response to the me too movement?
Speaker 1: It was definitely related to that. In two thousand nineteen,
Speaker 1: the New York State legislature actually changed to the statute
Speaker 1: of limitations for sexual offenses from one year to twenty years,
Speaker 1: so really acknowledging that, you know, there's a unique circumstances
Speaker 1: here where victims they're not necessarily able to process what
Speaker 1: has happened and seek the help that they need that quickly,
Speaker 1: just because of the nature of the ascent. And so
Speaker 1: this change acknowledged that gave victims twenty years of statutes
Speaker 1: of limitations to file claims, but it wasn't retroactive. So
Speaker 1: if you look back at the decade of alleged abuse
Speaker 1: out there, there was still no way to do UM
Speaker 1: over that conduct. So what they did was passed this
Speaker 1: law to sort of fill in that gap and say, Okay,
Speaker 1: you've got a year to file these civil claims now.
Speaker 1: And it's also should be noted that it's similar law
Speaker 1: was passed for child's victims of abuse, that that window
Speaker 1: already had passed. That law was passed earlier and it
Speaker 1: was seen as very successful. So now this new law
Speaker 1: is to allow adults, and I actually mentioned that it's
Speaker 1: victims who were adults at the time that they were abused.
Speaker 1: That's what this law is geared toward, and that's what
Speaker 1: it's just taken affect. Are there any challenges expected to
Speaker 1: this law? You can expect there will definitely be challenged
Speaker 1: to these lawsuits and they're going to be very strongly defended,
Speaker 1: you know, both with lawyers on both sides here. I
Speaker 1: spoke with played this lawyers who are out there looking
Speaker 1: for clients or who have already filed these lawsuits. And
Speaker 1: I spoke with lawyers who are representing companies UM that
Speaker 1: are looking into this who expects that they might be
Speaker 1: sued or have been sued already, And so there are
Speaker 1: plenty of defenses that are going to be deployed here
Speaker 1: very strongly. But when it came to the law actually
Speaker 1: being debated, there wasn't quite the outpouring of lobbying against
Speaker 1: the law publicly. You know, I spoke with some people
Speaker 1: involved in the passage of the laws. They really couldn't
Speaker 1: say who is publicly coming out against it. When that
Speaker 1: Child Victims Act passed, By comparison, there were groups coming
Speaker 1: out publicly against it related to the Catholic Church and
Speaker 1: Boy Scout to America and organizations that were worried about
Speaker 1: getting hit with lots of lawsuits. They've lobbied against it.
Speaker 1: But there wasn't that same lobbying against this law publicly.
Speaker 1: But what you can expect to see is that these
Speaker 1: individual lawsuits will be challenged in court and also out
Speaker 1: of court before they're filed. But I think there will
Speaker 1: be a lot of settlements that are reached that we
Speaker 1: never hear about. What big names have already been sued. Well,
Speaker 1: Former President Donald Trump was one of the first people
Speaker 1: to be sued under this law, eating Carol and New
Speaker 1: York writer who had previously accused Trump of raping her
Speaker 1: over two decades ago, and then in two thousand nineteen
Speaker 1: sued him for defamation when he denied it and said
Speaker 1: she was lying. She would have had filed a claim
Speaker 1: the first day of this lawsop effect, she sued Trump
Speaker 1: for battery. You know, five women have come forward and
Speaker 1: sued Bill Cosby last week. You know, victims who had
Speaker 1: already accused him of wrongdoing previously, but now sued under
Speaker 1: this law, now that it has taken an effect, billing
Speaker 1: Leon Black, He was also sued over allegedly assaulting women
Speaker 1: decades ago. All of these men have denied these allegations
Speaker 1: when the lawyers said that they planned to fight these cases.
Speaker 1: So clearly there's all already some high profile lawsuits being filed.
Speaker 1: Canna plaintive sue a company to hold them accountable for
Speaker 1: alleged abuse, even if the alleged abuser is deceased. Yes,
Speaker 1: in fact, that has already happened. In the case of
Speaker 1: Atlantic Records, part of Warner Music group. Warner Music is
Speaker 1: being sued because the Atlantic Records founder allegedly decades ago,
Speaker 1: more than forty years ago, sexually abused women. So now
Speaker 1: the company and you know, saying that they're looking into
Speaker 1: these allegations, interviewing people who may have been around back then,
Speaker 1: saying that many of the individuals who would have been
Speaker 1: witnessing are deceased or in their eighties or nineties. So
Speaker 1: clearly that this case against the Warner Music Group is
Speaker 1: a good illustration of how difficult it might be for
Speaker 1: some of these defendants to defend themselves. Notably the suit
Speaker 1: against Bill Cosby, you know, it also named NBC Universal
Speaker 1: Media as a defendant because it aired the Cosby Show
Speaker 1: in a Different World, you know, to which was a
Speaker 1: the starting that allegedly, uh he used these shows in
Speaker 1: his popularity around these shows to lure women onto the
Speaker 1: sets of the shows in his circles and then abuse them,
Speaker 1: you know, allegedly drugging and raping them in some cases.
Speaker 1: So NBC Universal is accused of essentially turning a blind
Speaker 1: eye to cause these conducts for years, a similar claim
Speaker 1: made against Warner Music Groups. Of course, both companies are
Speaker 1: expected to fit those very strongly in court. This law,
Speaker 1: you know, the the effect it seems like fundamental unfairness
Speaker 1: to the companies. How do you defend against a suit
Speaker 1: when the person accused is dead, I mean, you're you're
Speaker 1: You're definitely going to hear arguments like this in court,
Speaker 1: and I'm personally very curious to see how these arguments
Speaker 1: are made because it is very unusual set of circumstances here.
Speaker 1: That is a pretty unique law. So any companies even
Speaker 1: now can be accused of turning a blind eye to
Speaker 1: conduct that end sued for negligence. So the civil fact
Speaker 1: is that this law has a raised the statute of limitations.
Speaker 1: So even if you know the allegation, since they're very old,
Speaker 1: anyone can can bring these claims in court. But that
Speaker 1: doesn't mean that they're automatically going to win, right, So
Speaker 1: if you have a victim coming in and they're only
Speaker 1: evidence is essentially their testimony and their statement of what happens,
Speaker 1: it may seem like it's unfair to the company that
Speaker 1: has been too but it also may make it fairly
Speaker 1: easy for that company to win the case and just
Speaker 1: say I'm sorry, but you don't have any evidence here.
Speaker 1: But I think what we'll see is a lot of
Speaker 1: these cases do have some additional evidence where you might
Speaker 1: have witnesses who have victims confided in at the time,
Speaker 1: who could testify about what they were told at the time,
Speaker 1: could have a document um internal corporate documents or employment
Speaker 1: records that placed the plaintiffs and they accused of user
Speaker 1: in the same place at the same time. And you
Speaker 1: may also be able to show a pattern of conduct
Speaker 1: by interviewing other victims. So there's a lot of different
Speaker 1: ways that the planets are going to make their case here.
Speaker 1: But as you say that, some of these claims are
Speaker 1: going to be very old, and it doesn't automatically mean
Speaker 1: the jury is going to accept them. As you said,
Speaker 1: you talked to a lot of lawyers, and one told
Speaker 1: you that plaintiff lawyers best chance is before they even
Speaker 1: file the suit. That's right. That's why I see as
Speaker 1: the lawyers I suppose to said that what we end
Speaker 1: up seeing in court, actual lawsuits that are filed are
Speaker 1: really just going to be the tip of the iceberg,
Speaker 1: and that a lot of these claims are and are
Speaker 1: going to be resolved before anything becomes public, and that
Speaker 1: as these plaintiff lawyers know, you know, some of these
Speaker 1: claims may be so serious that a company will simply
Speaker 1: want to settle them just to keep them from becoming
Speaker 1: public that they can use that as part of their
Speaker 1: settlement strategy. So I'm not sure if that increases the
Speaker 1: amount of money that they get paid or whatnot. I'm
Speaker 1: sure that every settlement is going to be handled a
Speaker 1: little bit differently, but clearly the reputational damage is potentially
Speaker 1: significant for some of these employers, as you can imagine.
Speaker 1: Are there any estimates of how many lawsuits might be filed?
Speaker 1: You know, nobody really knows for sure, and because so
Speaker 1: many of the claims could be out of court, we
Speaker 1: might not hear about. But one lawyer at least pointed
Speaker 1: to the child victims ask that I mentioned earlier and
Speaker 1: said that in their estimation, there has been tens of
Speaker 1: thousands of lawsuits resulting in hundreds of millions of dollars
Speaker 1: in settlements and damages awards. So you could easily see
Speaker 1: something like that happening here. I mean, as we know
Speaker 1: this conduct is real, and you can't say in specific
Speaker 1: case whether it's real or not because we haven't seen
Speaker 1: them all yet, but we do know that this conduct
Speaker 1: did occur, and we do know I think it's pretty
Speaker 1: well established that a lot of employers and industries did
Speaker 1: turn a blind eye to the conduct for a long time,
Speaker 1: which is exactly why the these two movements was such
Speaker 1: a watershed moment. So it is more likely now, as
Speaker 1: some of these lawyers said, that juries are going to
Speaker 1: take these claims more seriously, just because people seem to
Speaker 1: be looking at these allegations in a different way now.
Speaker 1: So that's another potential benefit here for plainest lawyers. And
Speaker 1: I should also point out that yes, their lawyers and
Speaker 1: and they do stand to make quite a bit of
Speaker 1: money from these claims, but they also some of these lawyers,
Speaker 1: they've been working on these types of cases for years,
Speaker 1: since long before this law was around. So this is
Speaker 1: also something that a lot of some of these lawyers
Speaker 1: really deeply believe in and have a sense of justice around.
Speaker 1: So that's another element to it too. There's a very
Speaker 1: human element to this, and it it isn't just all
Speaker 1: about the money. You spoke to a former prosecute who
Speaker 1: said that Wall Street employers are especially at risk. Yeah,
Speaker 1: you know, and I wasn't too surprised to hear that,
Speaker 1: because as all the lawyers point out, and as you noted,
Speaker 1: there is a lot of money involved here, and not
Speaker 1: all of these claims are going to be taken on
Speaker 1: by plainest lawyers simply because there may not be a
Speaker 1: big enough financial payout at the end to make it
Speaker 1: worth anyone's time and energy. So when you're looking at
Speaker 1: companies with the deep pockets that are based in New York,
Speaker 1: you know, financial institutions just to do come to mind.
Speaker 1: And uh, you know, we know from past litigation and
Speaker 1: testimonials that this kind of conduct was rampant in the
Speaker 1: industry for a long time. And we're talking about something
Speaker 1: that might have happened to a woman in you know,
Speaker 1: the eighties or early nineties, something that you know, all
Speaker 1: of that sort of ancient history. But then they now
Speaker 1: have a chance to bring it up here in a lawsuit,
Speaker 1: and they might and they might see it as a
Speaker 1: way to get some financial conversation to make up for
Speaker 1: whatever was that allegedly happened. So the word deep pockets
Speaker 1: did come up a lot in these interviews, and I
Speaker 1: think that they do spect to see lawsuits against Wall
Speaker 1: Street fans speak of deep pockets. I understand suits have
Speaker 1: already been filed against the New York prison system. Yeah,
Speaker 1: you know, that was a really interesting element to its
Speaker 1: whole issue here. When I spoke with a lawyer who
Speaker 1: noted that she had already received hundreds of inquiries from
Speaker 1: clients that you know that she and she was taking
Speaker 1: their cases and had already filed ten suits by the
Speaker 1: time I talked to her, But so that she already
Speaker 1: she had hundreds more kind And the reason that the
Speaker 1: New York prison system or or any prison system is
Speaker 1: so unique of courses you have, for example, you know,
Speaker 1: these women's prisons where according to this lawyer, there's been
Speaker 1: a long history of sexual abuse and rape in the
Speaker 1: prison system, involving the correctional officers and other you know,
Speaker 1: employees at the prison who have this complete control over
Speaker 1: this female population. So according to this lawyer, um, when
Speaker 1: it's similar law like this pass in California recently, it
Speaker 1: didn't totally lift the statute of limitations, that it only
Speaker 1: went back to two thousand nine temporarily. But even in
Speaker 1: that case, she said that she had foilved hundreds you know,
Speaker 1: there were hundreds of claimants for involving the prison systems,
Speaker 1: and so she's expecting that here in New York. And
Speaker 1: you know, she told me some of the stories and
Speaker 1: they were they were pretty awful, some of them, and
Speaker 1: some of the alleged conducts that occurred. So I think
Speaker 1: that's something that will probably see some big lawsuits and
Speaker 1: some big potential damage awards, maybe a trial come out
Speaker 1: of that. And you mentioned a gene Carol. Her case
Speaker 1: has been going on it seems like forever. So now
Speaker 1: she suited under this law. But tell us what's happening
Speaker 1: with the rest of her case. I mean part of
Speaker 1: it is now in d C. Yeah, that's right. This
Speaker 1: law really, you know, I guess the simple way of
Speaker 1: looking at it is this, if she loses her defamation
Speaker 1: case for whatever reason, if it gets dismissed, she will
Speaker 1: still have this case now to go forward on because
Speaker 1: her new lawsuit alleged battery. So the specific facts are
Speaker 1: around the alleged rate, whereas the earlier case that we've
Speaker 1: been talking about for so long is the defamation suit
Speaker 1: related to the best same alleged rates. So you know,
Speaker 1: right now next month in the DC Court of Appeals
Speaker 1: is going to hear arguments. The DC local courts or
Speaker 1: highest appeals court is going to determine whether or not
Speaker 1: Donald Trump's alleged defamation the words that he said about
Speaker 1: eating Carroll back and she dousand nineteen qualified as an
Speaker 1: employment do Essentially, it's come down to a matter of
Speaker 1: DC employment law. So if Eging Carroll prevails improved that
Speaker 1: his comments about her did not qualify as an official duty,
Speaker 1: then the case will get kicked back to federal court
Speaker 1: in New York where it's been for a while, and
Speaker 1: it will go to trial in April. And despite this
Speaker 1: litigation over the litigation, Donald Trump did give a deposition
Speaker 1: in that case. He did, He did fit for a
Speaker 1: deposition and according to his lawyer, answered all the questions
Speaker 1: of her asked of him. As she put it, he
Speaker 1: set the record straight. You know, a lot of people
Speaker 1: were deposed in that case, including Eging Carroll, and so
Speaker 1: we don't know what exactly was asked or said in
Speaker 1: those but that's potentially some of those details could come
Speaker 1: out at trial. Thanks so much, Eric. That's Eric Lawson,
Speaker 1: Bloomberg Legal Reporter, and that's it for this edition of
Speaker 1: The Bloomberg Law Show. Remember you can always get the
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