WEBVTT - High Stakes Battle: Epic Games v. Apple 0:00:03.200 --> 0:00:16.600 This is Bloomberg Law with June Brussel from Bloomberg Radio 0:00:16.480 --> 0:00:32.479 for years in exchange. Epic Game's parody of Apple's famous 0:00:33.560 --> 0:00:37.320 commercial was only part of the massive pr campaign it 0:00:37.479 --> 0:00:41.800 launched in addition to suing Apple for antitrust violations, and 0:00:41.840 --> 0:00:45.200 the high stakes battle taking place in a California courtroom 0:00:45.360 --> 0:00:49.280 is worthy of epics popular Fortnite game. Joining me is 0:00:49.360 --> 0:00:52.400 Joshua Davis, a professor at the University of San Francisco 0:00:52.520 --> 0:00:55.680 Law School. So tell us what Epic is complaining about. 0:00:56.360 --> 0:01:01.000 So epics complaint against Apple is that pule is forcing 0:01:01.040 --> 0:01:06.240 people to pay Apple rather than just Epic when it purchases, 0:01:06.720 --> 0:01:10.160 specifically in regard to Fortnite, which is a popular game, 0:01:10.560 --> 0:01:14.160 and Epic says not only does Apple force those customers 0:01:14.200 --> 0:01:18.080 to pay Apple in order to operate on the Apple system, 0:01:18.120 --> 0:01:21.680 but also that Apple charges much higher prices than it 0:01:21.760 --> 0:01:24.959 should of those users. So the Epic basically doesn't want 0:01:24.959 --> 0:01:26.920 to have to give up some of its profits to 0:01:27.000 --> 0:01:30.440 Apple when people play Fortnite on an iPhone. So in 0:01:30.520 --> 0:01:34.280 deciding whether Apple has monopoly power, the first question is 0:01:34.280 --> 0:01:37.400 going to be what's the market? How is that determined? 0:01:37.880 --> 0:01:40.640 They're claiming that Apple has monopoly power, which is the 0:01:40.840 --> 0:01:43.760 power to charge higher prices than it could in the 0:01:43.800 --> 0:01:48.960 competitive market. And so how can Epic prove monopoly power 0:01:49.160 --> 0:01:51.320 is a really big issue, not only in this case, 0:01:51.600 --> 0:01:54.640 but in the future resolution of tech cases against Google 0:01:54.880 --> 0:01:58.920 and Apple and in that space generally, you know, big picture, 0:01:58.960 --> 0:02:02.160 there's two ways pretende to prove that Apple does in 0:02:02.240 --> 0:02:05.840 fact have monopoly power. One is called through direct evidence, 0:02:06.080 --> 0:02:09.600 and monopoly power is just the power to charge prices 0:02:09.600 --> 0:02:11.640 that are higher than what happened in the competitive market. 0:02:12.160 --> 0:02:15.200 And Epic wants to say the lifts look at your 0:02:15.200 --> 0:02:18.160 profits and we'll see that they're much too high for 0:02:18.280 --> 0:02:21.280 a competitive market. Clearly, you have the ability to charge 0:02:21.480 --> 0:02:24.320 super competitive prices because you did. You're charging much more 0:02:24.320 --> 0:02:26.800 than your costs, and this is really profitable for you. 0:02:26.880 --> 0:02:30.639 For that reason, that's somewhat controversial, as strange as it sounds, 0:02:30.680 --> 0:02:33.720 to show that Apple actually did cards really high prices 0:02:33.760 --> 0:02:35.799 and that shows it has the power to charge really 0:02:35.840 --> 0:02:38.520 high prices. But sometimes courts say, no, no, no, you 0:02:38.560 --> 0:02:41.919 can't use direct evidence. You have to use circumstantial evidence. 0:02:41.960 --> 0:02:43.959 You have to define a market and show that Apple 0:02:43.960 --> 0:02:46.760 has a really high percentage of that market, And so 0:02:47.040 --> 0:02:50.200 under that approach, Apple gets to argue, well, the markets 0:02:50.240 --> 0:02:53.959 not just us and our iPhones or iPhones and our computers. 0:02:54.120 --> 0:02:59.000 It's other smartphones, it's other computers or similar devices, and 0:02:59.080 --> 0:03:01.720 we have a relative LEAs small percentage if you define 0:03:01.760 --> 0:03:04.120 the market that broadly. So that's one of the really 0:03:04.120 --> 0:03:07.079 big battles will be Does Ethic get to prove its 0:03:07.120 --> 0:03:09.799 case through direct evidence, Hey, you actually did charge really 0:03:09.880 --> 0:03:14.280 high prices, much higher than can be explained through competitive forces, 0:03:14.400 --> 0:03:16.720 or do they have to go through this other process 0:03:16.760 --> 0:03:19.440 of saying, well, let's define the market, what products are 0:03:19.760 --> 0:03:24.280 in theory substitute herbal for Apple's iPhones in regard to Fortnite, 0:03:24.280 --> 0:03:27.120 and what percentage does Apple have of that market. That's 0:03:27.160 --> 0:03:29.160 going to be one of the really hotly contested issues, 0:03:29.200 --> 0:03:32.000 not only in this case, but in the related or 0:03:32.120 --> 0:03:36.280 similar antitrust tech cases that have already started and more. 0:03:36.280 --> 0:03:38.560 There are no doubt coming down the pipe. Who do 0:03:38.600 --> 0:03:41.000 you think has the better argument on the market what 0:03:41.160 --> 0:03:45.920 constitutes the market here? I think as a matter of economics, 0:03:46.080 --> 0:03:49.840 ethic has the better position that direct evidence should be 0:03:49.920 --> 0:03:52.800 enough by itself. You know, I think they're right as 0:03:52.800 --> 0:03:55.240 a matter of economic theory, which is what the law 0:03:55.520 --> 0:03:59.040 is supposed to incorporate. That if Apple did in fact 0:03:59.160 --> 0:04:02.760 charge super competitive prices, prices above competitive levels and and 0:04:02.880 --> 0:04:05.960 surely had the power to do so. Now I don't know. 0:04:06.440 --> 0:04:08.760 I haven't seen the information to say whether Apple in 0:04:08.880 --> 0:04:11.400 fact does that. I suspect it does, but I think 0:04:11.440 --> 0:04:13.640 that would be a matter of evidence, you know, the 0:04:13.680 --> 0:04:16.640 evidence that's become. And as a matter of law, it 0:04:16.680 --> 0:04:19.200 gets mess here because there is a case actually that's 0:04:19.240 --> 0:04:22.400 in the Ninth Circuit that may be binding that says 0:04:22.800 --> 0:04:26.520 direct evidences enough, but there's been more recent Supreme Court 0:04:26.560 --> 0:04:28.560 case law that muddies those waters. So as a matter 0:04:28.560 --> 0:04:31.279 of law, it's a little tricky. I mean, honestly, I 0:04:31.279 --> 0:04:35.920 think lawyers sometimes mess up the economics on which they're 0:04:35.920 --> 0:04:38.680 supposed to be relied, and that this that's created some 0:04:38.680 --> 0:04:42.080 confusion in this area. So the question is whether Apple 0:04:42.360 --> 0:04:47.280 had monopoly power, and then whether Apple abused its monopoly 0:04:47.400 --> 0:04:51.800 power in violation of the antitrust laws. What kind of 0:04:51.880 --> 0:04:56.080 evidence will be introduced by EPIC to prove that Apple 0:04:56.120 --> 0:04:59.960 abused its monopoly power? So having a monopoly by its 0:05:00.040 --> 0:05:03.960 shelf is not illegal, but there are various sorts of 0:05:04.000 --> 0:05:07.320 ways of acquiring or maintaining or abusing market power that 0:05:07.360 --> 0:05:09.680 would be. And one of the arguments that Epic has 0:05:09.760 --> 0:05:14.719 made is that Apple has tied accessing Fortnite through the 0:05:14.760 --> 0:05:18.680 Apple App Store with paying for that service. And so 0:05:18.960 --> 0:05:21.360 that's one kind of argument that could be an abusive 0:05:21.360 --> 0:05:25.880 market power trying together one service or good, which defend 0:05:25.920 --> 0:05:29.559 it has monopoly power to another one to force people 0:05:29.560 --> 0:05:31.640 to pay more than they would in a competitive market. 0:05:32.279 --> 0:05:35.080 And Apple's response, in part is no, no, no, that's 0:05:35.120 --> 0:05:37.920 one service. Those two are not separable, and therefore there 0:05:37.960 --> 0:05:39.919 can't be a tie. And we'll have to see if 0:05:39.960 --> 0:05:42.240 that or any of the other arguments Epic makes are 0:05:42.600 --> 0:05:46.280 persuasive to the court. Couple also says that it has 0:05:46.360 --> 0:05:51.280 business reasons, and one of those reasons being ensuring security 0:05:51.640 --> 0:05:57.520 on its platform, right, and so um, now there is 0:05:57.560 --> 0:06:00.240 some evidence that's come to light. That's the jet that 0:06:00.760 --> 0:06:05.400 Apple really can't provide the kind of security um that 0:06:05.520 --> 0:06:10.239 it claims is a justification for its conduct. And Epics 0:06:10.360 --> 0:06:14.279 presumably will try to prove that security can be maintained 0:06:14.680 --> 0:06:19.000 just as well through an alternative approach to payment. And 0:06:19.040 --> 0:06:22.520 so I would imagine that's another factual or evidentiary issue 0:06:22.839 --> 0:06:25.760 that will be important in the case. Ethic will argue 0:06:25.800 --> 0:06:29.359 that's a pretext, that security is the pretext apples offering 0:06:29.400 --> 0:06:33.400 an Apple will say no is a legitimate business justification 0:06:33.760 --> 0:06:37.680 for its conduct. So something that seems sort of odd 0:06:37.720 --> 0:06:41.560 to me is that Apple wants the courtroom closed when 0:06:41.600 --> 0:06:46.280 EPIC calls an expert witness to testify about the profitability 0:06:46.320 --> 0:06:50.040 of the app store. Also, even I think in papers, 0:06:50.160 --> 0:06:53.920 when Epic reference the profitability of the app store that 0:06:54.000 --> 0:06:57.279 was redacted for the public. Why shouldn't the public hear 0:06:57.320 --> 0:07:00.640 those numbers? Why should that be a secret? This is 0:07:00.680 --> 0:07:03.599 a larger issue as well, and it's pretty much standard 0:07:03.680 --> 0:07:09.440 operating procedures for antitrust defendants pre trial and even sometimes 0:07:09.520 --> 0:07:12.200 during trial. They really want to keep it much of 0:07:12.200 --> 0:07:16.600 their information secret as possible, and they would say that 0:07:17.440 --> 0:07:21.400 this is proprietary information that if others competitors have it, 0:07:21.400 --> 0:07:24.760 it will place them at a competitive disadvantage. They may 0:07:24.760 --> 0:07:27.480 even say that sharing this sort of information could facilitate 0:07:27.560 --> 0:07:31.560 anti competitive conduct, and you know, there can sometimes sometimes 0:07:31.560 --> 0:07:33.840 there is truth to that. You know, sometimes there are 0:07:33.920 --> 0:07:37.120 trade secrets or special sauce that they don't want everyone 0:07:37.160 --> 0:07:40.400 to know. The recipe too. On the other hand, a 0:07:40.480 --> 0:07:44.280 lot of times this is really an effort to prevent 0:07:44.480 --> 0:07:47.960 other potential plaintiffs from gaining access to the evidence that 0:07:48.040 --> 0:07:50.960 they would use in their own litigation. And it really 0:07:51.040 --> 0:07:56.040 isn't justified in any legitimate way. And the closer you 0:07:56.120 --> 0:08:00.200 get to a final decision when your trial, for example, well, 0:08:00.520 --> 0:08:03.880 the more reluctant courts tend to be to keep this 0:08:04.000 --> 0:08:06.440 information secret. That burden is going to be pretty high 0:08:06.440 --> 0:08:09.160 in Apple to persuade the court that this information should 0:08:09.160 --> 0:08:12.160 be kept from the public. Because trials are not only 0:08:12.400 --> 0:08:15.679 a private dispute resolution mechanism. There are a public event 0:08:15.800 --> 0:08:20.920 and a democracy like ours, and citizens and elected officials 0:08:21.000 --> 0:08:23.840 who are paying very close attention to the various high 0:08:23.880 --> 0:08:26.400 tech markets right now are very interested in and so 0:08:26.440 --> 0:08:30.480 the court may be reluctant kees information from them. Why 0:08:30.560 --> 0:08:33.240 is the amount of profit that Apple gets Why is 0:08:33.280 --> 0:08:37.640 that information important in this case? When you know Apple 0:08:37.679 --> 0:08:41.719 developed the system and the app store, and people buy 0:08:41.840 --> 0:08:44.920 its iPhone because they like its product, Why shouldn't they 0:08:44.920 --> 0:08:47.600 be able to charge what they want to charge and 0:08:47.640 --> 0:08:51.120 make as much profit as they can. So the short 0:08:51.160 --> 0:08:56.000 answer is, monopoly power is not itself an antitrust violation, 0:08:56.480 --> 0:09:00.079 and so um, the mere fact that they're charge in 0:09:01.080 --> 0:09:04.000 let's say they have very high profits would not itself 0:09:04.440 --> 0:09:07.200 be illegal, but it is relevant to the case in 0:09:07.240 --> 0:09:11.360 a couple of ways. One is, if Apple has really 0:09:11.440 --> 0:09:14.400 high profits, that can be an indication that it has 0:09:14.720 --> 0:09:18.240 monopoly power, that is, it has the ability to charge 0:09:18.720 --> 0:09:22.400 much higher prices than are competitive. Now, that wouldn't be illegal, 0:09:22.440 --> 0:09:24.160 but it would be one of the things that FIC 0:09:24.240 --> 0:09:27.160 has to prove that Apple, if it engaged in anti 0:09:27.160 --> 0:09:31.280 competitive conduct, has the power to cause the real harm. 0:09:31.360 --> 0:09:34.000 And a second issue to which it can be relevant, 0:09:34.400 --> 0:09:37.320 uh that is Apple's profits can be relevant is Ethic 0:09:37.360 --> 0:09:39.000 is going to argue that not only did it have 0:09:39.080 --> 0:09:41.520 the power to cause this anti competitive harm, and not 0:09:41.559 --> 0:09:44.840 only did it act in violation of the anti trust laws, 0:09:44.880 --> 0:09:49.680 but it in fact did harm Epics and the purchasers 0:09:49.800 --> 0:09:52.679 from Ethics And so there's real antitrust harm here. And 0:09:52.760 --> 0:09:56.720 so those really high profits that they exist can speak 0:09:56.760 --> 0:09:59.559 to two of three kind of central issues in the case. 0:10:00.120 --> 0:10:03.240 One is, does Apple have market power? Is it capable 0:10:03.240 --> 0:10:05.679 of causing the kind of harm the antitrust laws are 0:10:05.720 --> 0:10:08.640 meant to prevent? And if Apple has really high profits 0:10:08.679 --> 0:10:11.680 that could support the conclusion yes, it has those power 0:10:11.920 --> 0:10:16.040 that power. And then second, if Apple engage in anti 0:10:16.080 --> 0:10:18.280 competitive conduct, did it? Did it? Did it in fact 0:10:18.320 --> 0:10:22.240 cause harm? And here too, the Apple's really high profits 0:10:22.280 --> 0:10:24.920 could show yeah, it really did cause harm if it 0:10:25.000 --> 0:10:28.720 engaged in anti competitive behavior, but those profits wouldn't address 0:10:28.800 --> 0:10:32.679 that you suggested. The third issue of did Apple engage 0:10:32.679 --> 0:10:35.480 in anti competitive behavior? Their epic has to rely on 0:10:35.520 --> 0:10:38.680 other epics. So the high profits are relevant to keep 0:10:38.720 --> 0:10:41.400 parts of the case, but they don't necessarily resolve They 0:10:41.400 --> 0:10:45.240 shouldn't resolve the entire case. Ethics still needs to show 0:10:45.600 --> 0:10:48.840 that not only does Apple have monopoly power, and not 0:10:48.840 --> 0:10:51.360 only did it use it to charge higher prices, but 0:10:51.520 --> 0:10:55.160 that it either acquired or maintained or abused that monopoly 0:10:55.240 --> 0:11:01.040 power um through inappropriate and a competitive means. Epic has 0:11:01.520 --> 0:11:04.320 engaged in a PR campaign, and I'm wondering what the 0:11:04.360 --> 0:11:07.920 point of that is. When you have one judge making 0:11:07.960 --> 0:11:12.360 the decision, it's not a jury, right, Well, so you 0:11:12.480 --> 0:11:16.400 have one judge making the decision, but there's two points. 0:11:16.960 --> 0:11:20.600 One reason to engage in that PR campaign is that 0:11:20.679 --> 0:11:24.880 the judge is probably not the only audience for EPICS 0:11:25.000 --> 0:11:29.800 litigation and for its pr right now, Congress is considering 0:11:30.559 --> 0:11:34.880 amending the antitrust laws, especially as they pertain or maybe exclusively, 0:11:34.920 --> 0:11:38.559 as they pertain to the high tech sector. And so 0:11:38.920 --> 0:11:41.480 you do have these strange times where there is a 0:11:41.520 --> 0:11:46.040 sort of bipartisan skepticism of big tech and its market power. 0:11:46.559 --> 0:11:49.560 I think that comes from the Democrat side because of 0:11:49.600 --> 0:11:53.600 a general, at least right now, a general concern about 0:11:53.640 --> 0:11:55.720 that kind of market power. And it comes from the 0:11:55.760 --> 0:11:58.360 Publican side in part because I think the Republicans feel 0:11:58.440 --> 0:12:02.520 like big tech has been um political in the way 0:12:02.520 --> 0:12:07.120 they don't like. And so there's a possibility of congressional action. 0:12:07.360 --> 0:12:10.600 So EPIC is not only talking to this judge, So 0:12:10.840 --> 0:12:13.920 EPIC is also talking to Congress saying, you know, so 0:12:14.280 --> 0:12:17.160 EPIC could lose this case, win in Congress, and bring 0:12:17.200 --> 0:12:21.280 this case again and win depending on if Congress and 0:12:21.360 --> 0:12:25.480 actual net legislation and what that legislation might look like. 0:12:25.679 --> 0:12:28.080 And then the other thing is, you know, judges um 0:12:29.320 --> 0:12:33.120 that they are not completely oblivious to or indifferent to 0:12:34.400 --> 0:12:38.040 public reaction. And so I'm not you know, this judge 0:12:38.080 --> 0:12:39.880 is a very good judge. I'm sure she will exercise 0:12:39.920 --> 0:12:42.840 her independent judgment. But you know, there's a possibility that 0:12:42.920 --> 0:12:46.240 Epic is hoping that um PR can have some influence 0:12:46.240 --> 0:12:50.280 in court as well, So that's another possibility. There's a 0:12:50.280 --> 0:12:52.959 lot of gloom and doom from Apple about what would 0:12:52.960 --> 0:12:57.839 happen if it loses the case. That would threaten iOS security, 0:12:58.040 --> 0:13:00.800 turn the app store into a flea mark it. What 0:13:00.880 --> 0:13:05.000 do you think about the possibilities if Apple loses, It's 0:13:05.040 --> 0:13:08.760 really hard to know. I suspect that the result would 0:13:08.760 --> 0:13:13.320 be that the market would reconfigure. I also suspect that 0:13:13.520 --> 0:13:16.760 the sky would not fall. I mean, it's standard standard 0:13:16.800 --> 0:13:19.920 operating procedure for defend in the case like this to 0:13:20.120 --> 0:13:22.920 argue the sky will fall. And that's smart as a 0:13:22.920 --> 0:13:26.000 matter of law because it is relevant. Right if in 0:13:26.120 --> 0:13:28.880 fact there are pro competitive benefits to what Apple is doing, 0:13:29.360 --> 0:13:32.760 that then those could be destroyed by an adverse ruling 0:13:32.800 --> 0:13:35.240 against Apple, and that's relevant as a matter of law. 0:13:35.679 --> 0:13:37.760 It also will make a judge nervous. I mean, judges 0:13:38.000 --> 0:13:42.080 in antitrust cases do tend to be very nervous about 0:13:42.120 --> 0:13:44.959 the possibilities they'll rule in such a way that they'll 0:13:44.960 --> 0:13:48.080 destroy the market that they're trying to protect, because you know, 0:13:48.120 --> 0:13:51.240 it's hard to predict what exactly the economic effects of 0:13:51.640 --> 0:13:54.800 a strong judicial ruling might be, and so Apple is 0:13:54.920 --> 0:13:57.839 understandably playing into that. And of course Apple may be right. 0:13:58.120 --> 0:14:01.400 I myself, I'm skeptical. I think Apple has an extraordinarily 0:14:01.600 --> 0:14:05.760 profitable company. Many aspects of how it was business are profitable, 0:14:06.160 --> 0:14:09.040 and I suspect that while it would lose some profits, 0:14:09.240 --> 0:14:13.000 even significant profits, if Epic were to win, I think 0:14:13.040 --> 0:14:16.760 the market would be able to function just fine. And so, 0:14:17.120 --> 0:14:19.280 but it's hard to know. And you know, I don't 0:14:19.360 --> 0:14:22.040 envy the judge having to make that decision. Do you 0:14:22.120 --> 0:14:25.520 have an opinion about which side has a stronger case? 0:14:26.480 --> 0:14:29.960 I don't at this point. Really, as the evidence comes out, 0:14:30.120 --> 0:14:33.520 I think we'll have a much better sense. For me, 0:14:33.600 --> 0:14:36.400 it's it's pretty speculative at this point. I'm not I 0:14:36.440 --> 0:14:39.080 don't have any sort of special access. You know, the 0:14:39.120 --> 0:14:42.440 burden is pretty heavy for Epics for the reasons I've said, 0:14:42.920 --> 0:14:47.680 I just tend to be pretty cautious about disrupting existing markets, 0:14:47.920 --> 0:14:50.760 established markets, and so I think that, you know, a 0:14:50.800 --> 0:14:52.920 heavy burden for Epic to carry. But we're at a 0:14:52.920 --> 0:14:56.360 funny moment historically in this country where folks of a 0:14:56.360 --> 0:15:00.080 lot of different political persuasions think that maybe we have 0:15:00.160 --> 0:15:03.360 not been aggressive enough in enforcing our antitrust laws when 0:15:03.400 --> 0:15:05.520 it comes to big tech, and I think, for me, 0:15:05.600 --> 0:15:08.600 i'd need to see the evidence to form a consider 0:15:08.680 --> 0:15:12.840 judgment about how this case should come out. If Epic wins, 0:15:12.880 --> 0:15:15.840 that might mean that consumers have to pay less for 0:15:16.000 --> 0:15:21.040 the apps. Does that play anywhere in this trial? Absolutely? Absolutely. So. 0:15:21.320 --> 0:15:24.120 It's the standard principle of antitrust law in this country 0:15:24.520 --> 0:15:29.120 that the antitrust laws are not designed to protect competitors. 0:15:29.160 --> 0:15:32.760 They're designed to protect competition. And what that means is, 0:15:33.160 --> 0:15:35.840 you know, whether Epic makes more or less or Apple 0:15:35.920 --> 0:15:38.480 makes more or less, it's not really ultimately the point. 0:15:38.840 --> 0:15:42.240 The point is what about consumers? And so this is 0:15:42.240 --> 0:15:45.120 the case in some ways best understood as with the 0:15:45.160 --> 0:15:49.000 market function perfectly well. Eth Epic wins, and in fact 0:15:49.040 --> 0:15:52.160 better so that consumers still get the products they want, 0:15:52.240 --> 0:15:54.600 but they get them at a cheaper price. If that's 0:15:54.600 --> 0:15:57.720 what the court ultimately concludes, then it really should rule 0:15:57.760 --> 0:16:01.600 for Epic. If, on the other hand, Apple's right, and 0:16:01.800 --> 0:16:05.280 either prices wouldn't go down or they would, but the 0:16:05.400 --> 0:16:07.680 change in the market structure would cause all sorts of 0:16:07.680 --> 0:16:11.280 new problems, which is a loss of security or certain 0:16:11.320 --> 0:16:15.880 products games not being available anymore, where consumers becoming frustrated 0:16:15.920 --> 0:16:18.320 and having a difficult time doing what they were able 0:16:18.360 --> 0:16:21.520 to do in the past, than Apple Cannon should win. Really, 0:16:21.520 --> 0:16:25.280 the consumer perspective tends to be dominant in antitrust law, 0:16:25.480 --> 0:16:28.800 and so yet it's very important whether consumers would pay 0:16:28.800 --> 0:16:32.320 more or less, and also whether the same services and 0:16:32.440 --> 0:16:35.560 goods would be available to consumers if the Court were 0:16:35.600 --> 0:16:37.560 to rule in favor of Epics. Thanks for being on 0:16:37.560 --> 0:16:40.600 the Bloomberg Law Show. That's Professor Joshua Davis at the 0:16:40.680 --> 0:16:45.520 University of San Francisco Law School. As the Supreme Court 0:16:45.600 --> 0:16:48.360 waited into the War on drugs this week, there was 0:16:48.360 --> 0:16:52.400 an unusually lopsided set of litigants, so lopsided that the 0:16:52.440 --> 0:16:55.480 Court had to appoint an outside lawyer to argue to 0:16:55.600 --> 0:16:59.840 uphold the Lawn issue after the Biden administration Swiss sides 0:17:00.000 --> 0:17:03.200 and back the defendant. The question was whether the lowest 0:17:03.280 --> 0:17:07.159 level drug offenders are eligible for retroactive relief under the 0:17:07.200 --> 0:17:12.359 First Step Act and can seek resentencing. Lawmakers from both parties, 0:17:12.400 --> 0:17:16.320 both conservative and liberal groups, and the Biden Administration say, 0:17:16.400 --> 0:17:20.560 Congress intended for the law to encompass low level offenders, 0:17:20.560 --> 0:17:24.600 but many of the justices sounded skeptical that the statutory 0:17:24.720 --> 0:17:28.679 language would allow that interpretation. Kara Johnson says Stephen Bryer 0:17:28.760 --> 0:17:33.200 and Brett Kavanaugh, But I can't get away from this statute. 0:17:35.000 --> 0:17:39.879 Why didn't Congress just say everyone who's been sentenced for 0:17:39.960 --> 0:17:46.320 crack offenses under one is eligible for resentencing? Something simple 0:17:46.400 --> 0:17:49.359 like that. Joining me is Mark Ostler, a professor at 0:17:49.359 --> 0:17:52.560 the University of St. Thomas School of Law who specializes 0:17:52.640 --> 0:17:55.560 in sentencing policy. So Mark, tell us a little bit 0:17:55.560 --> 0:17:59.000 about the First Step Act. Sure, the First Step Act 0:17:59.000 --> 0:18:02.960 that was tasked to it had a number of provisions. UM. 0:18:03.119 --> 0:18:07.359 It was it was created new metrics of data within 0:18:07.400 --> 0:18:12.800 the Bureau of Prisons UM and handsome reentry provisions. But 0:18:12.920 --> 0:18:16.480 one of the primary things that did was make retroactive 0:18:17.440 --> 0:18:21.679 prior law the Fair Sentencing Acts in and what that 0:18:21.760 --> 0:18:27.320 did was changed the hundred to one ratio between powder 0:18:27.400 --> 0:18:30.720 and crack cocaine. In other words, in both the sentencing 0:18:30.760 --> 0:18:35.440 guidelines and the statutes that created mandatory minimums, you were 0:18:36.000 --> 0:18:39.280 sentenced the same for five grams of crack because you 0:18:39.280 --> 0:18:42.760 were for five grams of powder cocaine. And this had 0:18:42.840 --> 0:18:47.919 really disparate impacts in terms of race. And I was 0:18:47.960 --> 0:18:50.399 a thorough prosector in the Detroit. There were a lot 0:18:50.440 --> 0:18:52.760 of crack cases coming through that office, and of course 0:18:53.240 --> 0:18:56.760 it was all or almost all um, black defendants in 0:18:56.800 --> 0:19:03.160 those cases. And in time that noticed and in they 0:19:03.240 --> 0:19:06.880 changed the law, but they didn't make it retroactive. And 0:19:07.119 --> 0:19:10.080 that was a continuing problem because you had people who 0:19:10.080 --> 0:19:14.280 were sentenced under the old law who didn't have the 0:19:14.320 --> 0:19:17.960 advantage of the change and attitude and the adjustment that 0:19:17.920 --> 0:19:21.640 had been made, and that festered for a long time. Um. 0:19:21.680 --> 0:19:24.239 You know, the Obama administration wasn't able to fix it. 0:19:24.800 --> 0:19:29.800 And eventually there was a bipartisan movement in uh Congress 0:19:29.840 --> 0:19:34.400 that pushed for that change, among others, and it came 0:19:34.400 --> 0:19:37.320 through in the first step Act of that was signed 0:19:37.359 --> 0:19:42.040 by Donald Trump. Um, you know, notably the name indicated. 0:19:42.080 --> 0:19:45.960 It was supposed to be one of a series of bills, 0:19:45.960 --> 0:19:48.200 but it was the only one to get through. Mark 0:19:48.280 --> 0:19:51.440 the issue here is a bit technical tell us about it. Yeah, 0:19:51.440 --> 0:19:54.919 it's a little bit complicated. But the original law, the 0:19:54.960 --> 0:19:59.160 mandatory minimum that regards crack and a number of other drugs. 0:19:59.320 --> 0:20:04.280 That's three different tiers. And the top tier previously was 0:20:04.480 --> 0:20:07.960 over fifty grams of cracks and over five grams of 0:20:08.000 --> 0:20:10.680 cracks for the middle tier, and then the bottom tier 0:20:10.720 --> 0:20:13.720 was under five grams. And then those thresholds all went 0:20:13.880 --> 0:20:17.560 up under the Fair Sentencing Act. And that's what the 0:20:17.680 --> 0:20:21.360 First Step Act made retroactive. And so in other words, 0:20:21.640 --> 0:20:23.920 people could go back and say, I want to be 0:20:24.000 --> 0:20:28.120 resentenced under the current law, and that meant that, let's say, 0:20:28.160 --> 0:20:30.960 if you had been sentenced under the top tier for 0:20:31.400 --> 0:20:34.400 you know, sixty grams of craft, now you're not meaning 0:20:34.440 --> 0:20:36.960 that threshold, and so they could be resent now. The 0:20:37.040 --> 0:20:41.560 problem was that the First Step Act said explicitly that 0:20:41.800 --> 0:20:46.480 it applied to sentences in menta minums have been modified 0:20:46.920 --> 0:20:50.560 by the Fair Sentencing Act. And the argument from the 0:20:50.640 --> 0:20:54.040 government under the Trump administration was that that meant that 0:20:54.119 --> 0:20:58.280 the top two tiers, which had been changed explicitly that 0:20:58.400 --> 0:21:00.760 people who have been sentenced under those was got relieved, 0:21:00.760 --> 0:21:04.760 but people for whom they weren't charged with a threshold 0:21:04.800 --> 0:21:07.879 of over five grams of crack, that they didn't have 0:21:08.000 --> 0:21:11.520 the benefit of this change. That's an argument that doesn't 0:21:11.520 --> 0:21:14.080 make much sense. In terms of policy, why you would 0:21:14.119 --> 0:21:16.480 give relief to people that were more culpable but not 0:21:16.560 --> 0:21:19.879 people who are less culpable. But that's what is the 0:21:19.880 --> 0:21:22.640 heart of this is the Eleventh Circuit upheld the decision 0:21:22.680 --> 0:21:26.720 below that Mr Terry, the petitioner, did not have the 0:21:26.760 --> 0:21:29.760 ability to have his sentence reviewed under the First Step 0:21:29.760 --> 0:21:32.840 Act because he wasn't in those top two tiers. On 0:21:32.880 --> 0:21:35.800 the date when the government's main brief in the case 0:21:35.920 --> 0:21:39.760 was due, the Biden administration informed the court that it 0:21:39.840 --> 0:21:43.760 was changing positions from the Trump administration and now siding 0:21:43.760 --> 0:21:46.560 with the defendant in the case. So the court appointed 0:21:46.600 --> 0:21:50.520 an outside lawyer to argue the case against the defendant 0:21:50.600 --> 0:21:54.320 and the reduced sentence. Why did the Biden administration change 0:21:54.400 --> 0:21:57.360 positions at the last minute. I think that they had 0:21:57.400 --> 0:22:00.639 pressure from reformers certainly that they should do so. That 0:22:00.720 --> 0:22:03.160 there are a number of people, including myself, who had 0:22:03.160 --> 0:22:05.960 taken up these First Step Back cases pro bono and 0:22:06.000 --> 0:22:08.960 it had noticed the problems with them, and frankly, it 0:22:09.000 --> 0:22:13.320 was inconsistent with the very bipartisan spirit that was behind 0:22:13.359 --> 0:22:15.679 the First Step Back in the first place. You know, 0:22:15.720 --> 0:22:18.600 one thing that fascinates me about this, especially in our 0:22:18.600 --> 0:22:21.720 current political climate is that there was amacust brief that 0:22:21.760 --> 0:22:25.600 was submitted in support of the first step back applying 0:22:25.640 --> 0:22:29.800 to Mr Terry, that was submitted by four Senators Durban Booker, 0:22:30.000 --> 0:22:32.920 Grass Lake against Senator Mike Lee. Now that's a pretty 0:22:32.920 --> 0:22:36.160 incredible lineup, I mean, from one end of the ideological 0:22:36.200 --> 0:22:39.560 spectrum to the other, and it really reflects the Biparsan 0:22:39.640 --> 0:22:42.640 consensus that was behind the first step back. Was there 0:22:42.640 --> 0:22:46.399 more questioning about the intent of the act or about 0:22:46.480 --> 0:22:50.800 the statutory language? The justices were interested both in what 0:22:50.960 --> 0:22:54.680 the intent was, but also you know what injustices does 0:22:54.720 --> 0:22:58.520 this create? And underneath it all is you look at 0:22:58.600 --> 0:23:01.600 what Mr Terry was sentenced to fifteen and a half 0:23:01.680 --> 0:23:05.920 years in prison for four grams of craft. It's shocking. 0:23:06.400 --> 0:23:08.439 And you know, I'll say, I'm talking to you right 0:23:08.480 --> 0:23:11.440 now from downtown Minneapolis. I'm about a mile away from 0:23:11.480 --> 0:23:15.479 where Derek Chauvin is, a police officer who killed George Floyd, 0:23:15.680 --> 0:23:18.280 is going to be sentenced shortly, and most people are 0:23:18.320 --> 0:23:21.359 saying that what he'll get for that whole blooded killing 0:23:21.400 --> 0:23:24.960 that America saw is going to be about fifteen years. 0:23:25.480 --> 0:23:28.359 And that's the same as Mr Terry got for having 0:23:28.359 --> 0:23:31.520 the four grams of craft. Some of the justices seemed 0:23:31.560 --> 0:23:38.280 sympathetic to Terry's plight to his sentence being excessive, but 0:23:38.760 --> 0:23:42.000 for example, Justice Brier said, I can't get away from 0:23:42.000 --> 0:23:46.600 this statute. And even Justice Sonia Soto Mayor, who is 0:23:46.680 --> 0:23:50.760 considered one of the justices who is more sympathetic to 0:23:50.840 --> 0:23:54.600 criminal defendants, even she seemed to indicate that you just 0:23:54.680 --> 0:23:58.720 can't get around the words of the statute. Yeah, and 0:23:58.760 --> 0:24:01.240 I'm hoping that you know, the argument will prevail in 0:24:01.359 --> 0:24:04.399 mes that you know what's in the statute is is 0:24:04.480 --> 0:24:08.879 modified and what you know, the parties and this is 0:24:08.920 --> 0:24:11.760 something that the Senator said was their intent was that 0:24:11.760 --> 0:24:15.879