Speaker 1: You're listening to Bloomberg Law with June Grosso from Bloomberg Radio.
Speaker 1: For the first time. On Friday, a court overrule the
Speaker 1: FDA's decade old approval of a drug. Texas Federal Judge
Speaker 1: Matthew kis Merrick blocked the FDA's approval of the abortion
Speaker 1: drug miffipristone, a medication approved twenty three years ago and
Speaker 1: used in more than half of abortions. Health and Human
Speaker 1: Services Secretary Javier Bassa said the judge's decision turns the
Speaker 1: FDA approval process upside down. One judge in one court
Speaker 1: in one state turned upside down the FDA's approval process
Speaker 1: for safe and effective medications. First and foremost, when you
Speaker 1: turn upside down the entire FDA approval process, you're not
Speaker 1: talking about just miffipristone. You're talking about every kind of drug.
Speaker 1: You're talking about our vaccines, you're talking about insulin, You're
Speaker 1: talking about the new alsheim drugs that may come on.
Speaker 1: If a judge decides to substitute his preference, his personal opinion,
Speaker 1: for that of scientists and medical professionals, what drug is
Speaker 1: it subject to some kind of legal challenge, So we
Speaker 1: have to go to court, and for America's sake and
Speaker 1: for women's sake, we have to we have to prevail
Speaker 1: on this. But in a legal twist, within an hour
Speaker 1: of Cosmeric's decision, a federal judge in Washington State, Thomas Rice,
Speaker 1: issued a contrary decision, ordering the FDA to preserve the
Speaker 1: status quo and retain access to miff apristone in the
Speaker 1: seventeen Blue states and DC that had sued there. Johnny
Speaker 1: Me is an expert in the area of reproductive legal rights.
Speaker 1: Mary Ziegler a professor at UC Davis Law School. So
Speaker 1: why is he second guessing the FDA's decision two decades ago?
Speaker 1: Tell us what his reasoning is. Well, he has two reasons.
Speaker 1: One is the Kumstock Act, which is the federal law
Speaker 1: Passion eighteen of any three that no one's really thought
Speaker 1: about in a long time, actually fars the mailing of
Speaker 1: missa pristone. He's, you know, ignoring the kind of dominant
Speaker 1: interpretation of the Comstock Act and any kind of constitutional
Speaker 1: concerns that reviving it would have and basically saying it's
Speaker 1: a plain text should apply. He's also arguing that the
Speaker 1: FDA lacked the authority to approve mitho pristone. He's sort of,
Speaker 1: I would say, kind of changing the narrative about how
Speaker 1: the approval of missa pristone went. He's suggesting the FDA
Speaker 1: kind of rushed it through under this regulation called Subpart
Speaker 1: H and made what he sees as unforgivable errors, and
Speaker 1: how it viewed miso pristone, for example, by relying on
Speaker 1: the idea that pregnancy was disease, which tess merit doesn't
Speaker 1: think is true. If if that sounds like it's an
Speaker 1: extremely broad opinion, it's because it is. I mean, he's
Speaker 1: reaching a lot of issues and paying a lot of
Speaker 1: things that wouldn't be strictly necessary to resolve the case.
Speaker 1: So this was not someone trying to avoid creating as
Speaker 1: if anything kind of the opposite. How does he deal
Speaker 1: with the fact that How does Judge Kesmer deal with
Speaker 1: the fact that miffopristone has been shown to be safer
Speaker 1: than some common low risk prescription drugs like penicillin. The
Speaker 1: death rate for this drug is point zero zero zero
Speaker 1: five percent. He just doesn't accept that as a fact, right,
Speaker 1: I mean? In his analysis of standing, for example, he
Speaker 1: explains why the Alliance for Hippocratic medicine, which really doesn't
Speaker 1: say much about treating patients who've had these injuries. There
Speaker 1: are a few passages, but not many. He essentially says
Speaker 1: the reasons why women are not there themselves just because
Speaker 1: they've suffered so much regret and depression and suicidal ideation.
Speaker 1: He mentioned towards the end of the opinion people dying
Speaker 1: from having taken Miffo pristone this year, So he's getting
Speaker 1: more or less accepted the facts is presented to him
Speaker 1: by the Alliance for Hyppocratic Medicine, even if those are not,
Speaker 1: you know, the facts that scientists accept the American Medical
Speaker 1: Association accepts, as the American College of Centersins and Gynecologist success.
Speaker 1: He's sort of living in a different universe when it
Speaker 1: comes to how myth of us don't actually work. Is
Speaker 1: he also using the language of anti abortion activists, like
Speaker 1: talking about the fetus as an unborn human. Yeah, he is.
Speaker 1: He cites, I mean the studies I mentioned about post
Speaker 1: abortion regret were done by an anti abortion activist named
Speaker 1: David Reardon. He refers to doctors to perform abortions as abortionist.
Speaker 1: He refers to people who's kind aborships as post abortive.
Speaker 1: He calls fetus's unborn children or unborn humans. He picks
Speaker 1: up on the idea that's the only kind of benefits
Speaker 1: of abortion access are sort of eugenic. He describes, you know,
Speaker 1: the effort to create uber mentioned with his terms. So
Speaker 1: there's a lot of rhetoric that draws directly from anti
Speaker 1: abortion materials. Also, on Friday, within an hour of this decision,
Speaker 1: federal Judge Thomas Rice in Why Shehington, issued a preliminary
Speaker 1: order blocking the FDA from making any changes to the
Speaker 1: current availability of mif A press Stone. I take it
Speaker 1: this wasn't just coincidence. No, no, probably not. I mean,
Speaker 1: obviously I haven't you know, spoken to Judge Rice. But
Speaker 1: I take it that it was not a coincidence, and
Speaker 1: that this was designed to force the appellate courts to
Speaker 1: give some clarity of sooner other than later, to the
Speaker 1: SBA about what it should be doing. Judge Rice's ruling
Speaker 1: applies to the seventeen states that sued. So what's the
Speaker 1: situation in those states with this conflicting ruling? I mean,
Speaker 1: which judges order applies? Well, I mean the answer is,
Speaker 1: you know, arguably both, right, So I mean I think
Speaker 1: that the question really is how through the FBA do
Speaker 1: you try to square that circle? And best answer seems
Speaker 1: to be that the FDA, using its discretion as to
Speaker 1: how to enforce, you know, orders regarding drugs that are unapproved,
Speaker 1: it should just leave the status quo alone until there's
Speaker 1: clarity prominent felt because you know, even if a drug
Speaker 1: is unapproved, the FDA has some discretion about how vigorously
Speaker 1: it pursues people who are dispensing, prescribing it, etc. And
Speaker 1: given that the FDA here is under directly deplipting orders,
Speaker 1: it would be weird for the FBA to take an
Speaker 1: aggressive position in enforcing Judge Chestmeric's order. And I mean,
Speaker 1: obviously just it's worth saying to Judge Chestmeric's order has
Speaker 1: been kind of paused for seven days pending an appeal,
Speaker 1: So at the moment that you even that isn't really
Speaker 1: an issue. But when it becomes on, we'd expect to
Speaker 1: see the FBA argue that the best way it can
Speaker 1: follow both orders is to wait to do anything until
Speaker 1: it gets clarity from the US Supreme Court. So the
Speaker 1: Biden administration is going to ask the Fifth Circuit for
Speaker 1: an emergency stay in your opinion. How likely is it
Speaker 1: that they'll get that? It's hard to stay right. I mean,
Speaker 1: we know that the Fifth Circuit is very conservative, and
Speaker 1: I think the question really is whether there's any bridge
Speaker 1: too far for the Fifth Circuit or the US Supreme Court.
Speaker 1: I think, you know, Chessmeric's ruling in several steps beyond
Speaker 1: the decision to reverse Rovway. For example, the Court and
Speaker 1: Doobs said, you know, emphatically over and over again that
Speaker 1: this was about giving the aborshion issue back to the people.
Speaker 1: And of course Judge Chessmeric's ruling is about taking the
Speaker 1: a worshion issue away from the people. So I think
Speaker 1: also there's been some irony and the fact that there's
Speaker 1: so much second guessing of scientific authority by Judge Kasmeric
Speaker 1: when many conservatives just event decades criticizing the Rowe Court
Speaker 1: for converting, you know, judges into medical review boards. So
Speaker 1: there's some chance that the Fifth Circuit or the US
Speaker 1: Supreme Court will see this as different from what's come before,
Speaker 1: or too far too fast. But I think again, when
Speaker 1: you're looking at who's on the Fifth Circuit, who's on
Speaker 1: the US Supreme Court, you certainly can't rule out the
Speaker 1: possibility that they'll sign off on what Chests America is doing,
Speaker 1: or at least significant parts of it. An emergency petition
Speaker 1: from the Fifth Circuit would initially go to Justice Samuel Alito,
Speaker 1: who wrote the decision overturning Roe v. Wade. Is he
Speaker 1: likely to decide that himself will refer to the whole Court?
Speaker 1: I would hope you would refer to the full Court,
Speaker 1: given that you know, you have clashing district court rulings
Speaker 1: on matters of national import Again, you know this Supreme
Speaker 1: Court has not behaved like all the others before it.
Speaker 1: But again, I mean I would hope that this issue
Speaker 1: would be of national enough significance that Justice Alito would
Speaker 1: refer it to the Full Court. The thing about this
Speaker 1: ruling is it's not just a bad abortion, but it
Speaker 1: undermines the authority of the FDA. It puts pharmaceutical companies
Speaker 1: in a bad situation. So is it likely to get
Speaker 1: to the Supreme Court? Well, I mean, we can't live
Speaker 1: in a world where the SBA is told to do
Speaker 1: contradictory things on a drug of national significance in a
Speaker 1: major cultural war issue that is untenable, and so sooner
Speaker 1: or later, the US Supreme Court is going to have
Speaker 1: to intervene to just settle what the FDA is supposed
Speaker 1: to do. We've talked before, and you've mentioned and now
Speaker 1: how conservative this court is. If they follow what they
Speaker 1: said in Dabbs, I'd take it they would reverse Judge
Speaker 1: kiz Americ. But we never know if they're going to
Speaker 1: follow what they say or not anymore rights, And I
Speaker 1: think in some ways that's why the Alliance Defending Freedom
Speaker 1: filed this too, right, because the possibilities that are imaginable
Speaker 1: in the US Supreme Court are unimaginable in democratic politics. Right.
Speaker 1: I mean, if you were asking, could you achieve a
Speaker 1: result like this through a statute passed by Congress, assuming
Speaker 1: he's got a Republican in the White House and Republicans
Speaker 1: controlling Congress, the answer is no. Right that it's not
Speaker 1: inconceivable that the US Supreme Court would sign off on,
Speaker 1: you know, something that wouldn't be possible through majority rules. Mary,
Speaker 1: you spoke about irony before, and I'd like you to
Speaker 1: comment on the irony that in the Dabs decision, which
Speaker 1: overturned the constitutional right to abortion, the majority indicated that
Speaker 1: this would merely rich are on the issue of abortion
Speaker 1: to the people and to the democratic process, and basically
Speaker 1: they wouldn't have to deal with anymore. I mean, obviously
Speaker 1: they actually believe that that was naive, and all the
Speaker 1: more so, profess any student of history would know that
Speaker 1: neither supporters of abortion rights nor opponents of abortion have
Speaker 1: been content with letting voters decide, even if that would
Speaker 1: be the more stable thing to do. The anti abortion
Speaker 1: movements Tatmeric alludes to in his opinion, at one point
Speaker 1: has been fighting for fetal personhood, which will make abortion
Speaker 1: unconstitutional and illegal nationwide. And if they can't achieve that,
Speaker 1: they're going to get as close to it as they can.
Speaker 1: And abortion rights supporters, obviously, as Judge rights is ruling
Speaker 1: makes clearer not going to be content with gods either.
Speaker 1: I think it's even more clear that the anti abortion
Speaker 1: movement is going to rely on the federal courts again
Speaker 1: because they've been losing so much, whether it's invalid initiatives
Speaker 1: or in elections, and so if they don't have the
Speaker 1: hearts and minds of voters, they're going to need to
Speaker 1: rely on the federal courts. So this is a reminder
Speaker 1: that either the court was naive or dishonest and telling
Speaker 1: us that the federal courts should be out of the
Speaker 1: abortion business. After dogs. This is just a preliminary stage.
Speaker 1: So even after this stage, it would go back to
Speaker 1: trial before Kazmeric and Judge Rice, right exactly, and then
Speaker 1: it would kind of go back up through the courts again.
Speaker 1: But I mean, I think part of the reason everyone
Speaker 1: has pained so much attention at this stage is, as
Speaker 1: was obviously the case in both Judge Rice and Judge
Speaker 1: Kasmeric's rulings, we had a pretty good preview of what
Speaker 1: they're going to hold after the trial. I mean, I
Speaker 1: don't expect any major surprises coming after the trial, and
Speaker 1: the same thing will be true in the Supreme Court. Ways.
Speaker 1: In at these early preliminary stages, we should have a
Speaker 1: pretty good sense of where they might be going. I mean,
Speaker 1: it doesn't always work that way, but often we get
Speaker 1: pretty strong signals. Some abortion providers have said that if
Speaker 1: FIfF A press Stone is unavailable, they'd switch to missoprostill
Speaker 1: only regiment. So how is that different from FIfF A
Speaker 1: press Stone. Well, there are a couple of things to
Speaker 1: note their right. So on the hand rate that mister
Speaker 1: prostill only abortion has pretty proven it's not as effective,
Speaker 1: at least at the moment as mister Prestone and mister Prostell,
Speaker 1: which is why together, which is why it's not the
Speaker 1: standard of scare. It's also worth emphasizing even though it's
Speaker 1: safe and relatively effective, there's no guarantee that it'll be
Speaker 1: available in the long term either. Because one of Judge
Speaker 1: Casmeric's rulings centered on the Comstock Act, and as I mentioned,
Speaker 1: if you interpret the Comstock Act as broadly as Kasmeric does,
Speaker 1: it would apply to mister Prosteal too. I mean, that
Speaker 1: wasn't the issue before Judge Kasmeric in this case, but
Speaker 1: it doesn't take a lot to recognize that a subsequent
Speaker 1: challenge before Judge Kasmeric based on mister Crostol or really
Speaker 1: any drug intendat or adapted for abortion, could come out
Speaker 1: the same way. So there's no guarantee that if that's
Speaker 1: the way she sees the Comstock Act, and if other
Speaker 1: conservative ports, including the US Supreme Court degree, mister Prosteal
Speaker 1: could be in the crossairs too. So this is going
Speaker 1: forward despite the fact that we've seen in many states
Speaker 1: that voters have not supported anti abortion agendas. Yeah, absolutely,
Speaker 1: I mean, I think there's a clear and ironic conclusion
Speaker 1: that's emerging in the post DODS era, which is that
Speaker 1: essentially anti abortion groups who have spent years railing against
Speaker 1: judicial activism and judicial policymaking are relying on judicial activism
Speaker 1: and judicial policy making because when voters are asked directly
Speaker 1: about these questions, they simply don't want the sweeping abortion
Speaker 1: bands that the anti abortion movement commands. Right, even if
Speaker 1: voters may be okay with abortion restrictions, they're not prepared
Speaker 1: to go nearly as far as the anti worshion movement wants,
Speaker 1: which means the only way you can get to the
Speaker 1: kind of outcome they're looking for to rely on judges
Speaker 1: like as Merit, who you know, are not reflecting where
Speaker 1: American voters are. Would this prevent pharmaceutical companies from making
Speaker 1: the pill? Well, so I would make it unnailable, right,
Speaker 1: it doesn't feel necessarily with it would mean that it's
Speaker 1: unapproved in the United States, And so it would mean
Speaker 1: that in theory, if you're continuing to dispense it or
Speaker 1: distribute it, that you could be in legal jeopardy. But again,
Speaker 1: then how much the FBA actually enforced that issue, right,
Speaker 1: how much the SPA used its discretion to go after
Speaker 1: violators would be up to the f PA, and we
Speaker 1: would expect for the Biden administration that not to be
Speaker 1: a priority. And on the Comstock point, it would make
Speaker 1: it illegal to nail it, which would first affect manufacturers
Speaker 1: and distributors in the sense that any time they actually
Speaker 1: put it in the mail, whether through the US Postal
Speaker 1: Service or FedEx or UPS or whatever, they could be
Speaker 1: violating the federal law. Again, I think what you're likely
Speaker 1: to see if it comes to that as the Biden
Speaker 1: administration essentially signaling, you know, we're not going to use
Speaker 1: whether BOJ or FBA, We're not going to treat this
Speaker 1: as a priority. We're going to kind of look the
Speaker 1: other way. But whether you know, you see drug manufacturers
Speaker 1: and doctors feeling comfortable enough to continue making mitra crestone
Speaker 1: available on the strength of that kind of guarantee, I
Speaker 1: think it's an open question. Yeah, I was just wondering if,
Speaker 1: for example, worst comes to words that there could be
Speaker 1: an underground network and people could get the drug from
Speaker 1: outside the country from Canada. Yeah, I mean we would
Speaker 1: expect to see that. I mean, there's definitely going to
Speaker 1: be some of that. I think because we've already seen,
Speaker 1: for example, women on the Web and aid Access groups
Speaker 1: like that that provide medication access from Europe, and so
Speaker 1: far that would be under the FDA's personal Importation policy.
Speaker 1: And while in theory that's violating that policy, the FDA
Speaker 1: has taken a kind of again non aggressive approach to
Speaker 1: dealing with that. And there's no real realistical way to
Speaker 1: prosecute groups like aid Access simply because they're not going
Speaker 1: to be extradited from countries that approve of abortion as
Speaker 1: you know, protected rights. As there have been a situation before.
Speaker 1: I mean this sort of highlights that one judge in Amarillo,
Speaker 1: Texas can make a ruling that affects the whole country,
Speaker 1: and then another judge now in Washington can make a
Speaker 1: ruling that affects maybe half the country. Has this happened before,
Speaker 1: dueling injunctions like this, I mean, they've definitely seen circuit splits.
Speaker 1: I think what the newer wrinkle here is the spread
Speaker 1: of these nationwide injunctions, and I think the polarization of
Speaker 1: the courts. And it's not a coincidence that we have
Speaker 1: an Obama nominee and a Trump nominee here. So the
Speaker 1: spread of nationwide injunctions, together with the kind of widening
Speaker 1: gap between the kinds of ruling judges or ordering has
Speaker 1: made this kind of it. I mean, the fact that
Speaker 1: you have these two rulings coming out at the same
Speaker 1: time on the same day, giving the FDA directly opposing orders,
Speaker 1: as far as I know, was unprecedented, even if we've
Speaker 1: seen you know, splits and divides between supports and circuits
Speaker 1: in the past. The ruling in Washington, I mean, there's
Speaker 1: no group that will appeal that right because it was
Speaker 1: the FDA and the and the Democratic States. Yeah, I
Speaker 1: mean they may see. You know, the only wrinkle there,
Speaker 1: Judge Ice didn't go as far as the Liberal States wanted.
Speaker 1: They had argued that the FDA FA rules actually preemptied
Speaker 1: contradictory state prohibitions on abortionition meditation. So in theory they
Speaker 1: might appeal to the Ninth Circuit Court of Appeals, which
Speaker 1: is quite progressive, and seek more. But yeah, it's not
Speaker 1: as clear who's going to do what in that situation,
Speaker 1: because you know, the FDA is less supposed to what's
Speaker 1: going on thus far in that case obviously than it
Speaker 1: would be in their TuS Meer's case. Thanks, So much
Speaker 1: for letting your expertise on this subject. That's Professor Mary
Speaker 1: Ziegler of UC Davis Law School, California. Federal jury has
Speaker 1: awarded three point two million dollars to former Tesla contractor
Speaker 1: O and Diaz in a long running racial discrimination case.
Speaker 1: But that's ninety eight percent less than the staggering one
Speaker 1: hundred thirty seven million dollars a different jury awarded to
Speaker 1: Daz two years ago. That was one of the highest
Speaker 1: verdicts ever for someone suing over discrimination in the US.
Speaker 1: This sets the stage for a post trial battle over
Speaker 1: the award. Joining me is Anthony on CD, co chair
Speaker 1: of Proscouer Rose's Labor and Employment law department. Tony start
Speaker 1: by telling us about the original trial and original verdict.
Speaker 1: This case ended up going to trial and verdict in
Speaker 1: October of twenty twenty one, and that's when the original
Speaker 1: jury verdict came out, and it was in the rather
Speaker 1: eye popping amount of one hundred and thirty seven million
Speaker 1: dollars composed of six point nine million dollars in emotional
Speaker 1: distress damages and one hundred and thirty million dollars in
Speaker 1: punitive damages. What mister p as alleged and was able
Speaker 1: to prove at trial, was that he was subjected to
Speaker 1: racial harassment in the workplace. He was a very short
Speaker 1: term employee, worked there for less than a year. He
Speaker 1: worked as an elevator operator at Tesla in its Fremont,
Speaker 1: California plant. I'm not sure what an elevator operator even
Speaker 1: is in the twenty first century, especially at a company
Speaker 1: such as Tesla, but apparently that was the job he
Speaker 1: had there, and the jury obviously was very sympathetic to
Speaker 1: his situation and determined that he did suffer emotional distress
Speaker 1: and that punitive damages were in order. Any idea where
Speaker 1: this six point nine million dollars in emotional distress comes from?
Speaker 1: Where they came up with that number? Sure? So the
Speaker 1: answer is that oftentimes what a jury will do, and
Speaker 1: I suspect that's what happened in this case. If they
Speaker 1: are upset enough about the circumstances that occurred in the workplace,
Speaker 1: and for whatever reason they believe that this employee has
Speaker 1: been wrongly treated or obviously in this case, significantly wrongly treated,
Speaker 1: what will creep into the emotional distress damages award is
Speaker 1: a punitive element, meaning that the jury was only asked
Speaker 1: in that phase of the trial because there are different
Speaker 1: phases of the trial compensatory damages versus punitive damages, and
Speaker 1: the compensatory damages phase of the trial. The jury was
Speaker 1: apparently so upset with what had occurred that although they
Speaker 1: were only supposed to be focusing on making mister Diaz
Speaker 1: whole in the form of emotional distress damages, I believe
Speaker 1: what happened is that at that stage of the proceedings,
Speaker 1: when they were only supposed to be focusing on making
Speaker 1: mister Diaz whole in terms of awarding him damages for
Speaker 1: emotional distress, I suspect what crept in was an element
Speaker 1: of punitive reprisal essentially by the jury against Tesla. That's
Speaker 1: not supposed to happen, but it's not unusual for that
Speaker 1: to happen, and I think that's what happened with the
Speaker 1: six point nine million dollar award that acurred with respect
Speaker 1: emotional distress damages. In California, where this jury verdict occurred,
Speaker 1: there aren't really any guide posts for a jury to
Speaker 1: determine what are the appropriate amount of emotional distress damages. Indeed,
Speaker 1: oftentimes it's what the plaintiffs lawyer asks for the plaintiff
Speaker 1: lawyer oftentimes will put a number out there and tell
Speaker 1: the jury that he or she thinks that's an appropriate
Speaker 1: amount of emotional distress damages. But the jury instructions in
Speaker 1: California are woefully deficient in telling juries what they should
Speaker 1: evaluate and how they should determine the amount of emotional
Speaker 1: distress damages. This is becoming a bigger and bigger problem
Speaker 1: where the employer basically is at the mercy of the
Speaker 1: plaintiff lawyer in terms of what number he or she
Speaker 1: throws out to the jury or whatever the jury may
Speaker 1: come up with, and there's no real standardized way of
Speaker 1: figuring that out. Another problem with the jury instructions in California,
Speaker 1: by the way, are they asked the jury to assess
Speaker 1: and award past emotional distress damages up through and including
Speaker 1: the time of the trial, and then future emotional distress damages.
Speaker 1: I think that second element, at the very least future
Speaker 1: emotional distress damages is nothing but purely asking the jury
Speaker 1: to speculate about something. And so what often happens is
Speaker 1: the jury comes up with a very large number and
Speaker 1: they give half for the past emotional distress damages, and
Speaker 1: they give half for the future emotional distress damages. And
Speaker 1: all of this is just funny money, made up numbers
Speaker 1: that aren't really targeted or in any way correlated to
Speaker 1: anything in reality. So the trial judge gave the plaintiff
Speaker 1: here a tough choice. Tell us about it. Sure. So
Speaker 1: what happened after the verdict came out in October of
Speaker 1: twenty twenty one, TESLA moved the Proud Court judge to
Speaker 1: reduce the one hundred and thirty seven million dollar verdict,
Speaker 1: which was completely in anticipated that clearly the judge would
Speaker 1: seek to do something with that verdict because we've already
Speaker 1: talked about how large the compenstory damages verdict was, that is,
Speaker 1: the emotional dis dress damages, But on top of that,
Speaker 1: there was a one hundred and thirty million dollars punitive
Speaker 1: damages award. And the problem with that part of the
Speaker 1: verdict from October of twenty twenty one is that the
Speaker 1: punitive damages were approximately nineteen times the amount of the
Speaker 1: compensatory damages. And once that happens, then the verdict is
Speaker 1: imperiled because there are constitutional limits that have been defined
Speaker 1: by the United States Supreme Court and have been accepted
Speaker 1: by courts all around the country. They really don't have
Speaker 1: a choice. That a punitive damage award can only be
Speaker 1: at the very highest amount, perhaps nine times the amount
Speaker 1: of compensatory damages, and so in this case, the original
Speaker 1: verdict was nineteen times the amount of the compensatory damages award,
Speaker 1: so that had to be reduced. What the judge did
Speaker 1: in April of twenty twenty two was to reduce both
Speaker 1: the emotional distress damages and the punitive damage. And what
Speaker 1: the judge did, in an attempt to fix this verdict
Speaker 1: was reduced the emotional distress damages from six point nine
Speaker 1: million dollars to one point five million dollars, and then
Speaker 1: he multiplied that one point five times nine to get
Speaker 1: punitive damages in the amount of thirteen point five million,
Speaker 1: for a total verdict of fifteen million dollars. This was
Speaker 1: the best the judge, I think, thought he could do.
Speaker 1: He was also obviously trying to preserve a significant amount
Speaker 1: of punitive damages, which he did by although still reducing
Speaker 1: it obviously significantly from one hundred and thirty million dollars,
Speaker 1: he kept it within that constitutional boundary, meaning that the
Speaker 1: thirteen point five million dollars was within a single digit
Speaker 1: multiple of the one point five But as you can see,
Speaker 1: when you're dealing with these kinds of numbers, these are
Speaker 1: just literally numbers pulled from nowhere, and these are huge, huge,
Speaker 1: huge amounts of money to be considered to be awarded
Speaker 1: against an employer in a situation like this, not to
Speaker 1: mention the fact that the predictability is completely ridiculous if
Speaker 1: you just look at the difference between the October twenty
Speaker 1: one verdict of one hundred and thirty seven million dollars
Speaker 1: and then the corrected verdict by the judge to fifteen
Speaker 1: million dollars. So that swing itself is absolutely breathtaking and huge.
Speaker 1: And then we have another trial that takes place on
Speaker 1: the damages. The reason we had another trial on the
Speaker 1: damages is because the judge offered mister Diaz the opportunity
Speaker 1: to accept that reduced verdict of fifteen million dollars that
Speaker 1: the judge had patched together, and mister Diaz declined it.
Speaker 1: He decided not to accept the fifteen million dollars and
Speaker 1: the alternative indoor number two, was to have another trial
Speaker 1: on damages alone. Now it wasn't another trial on the
Speaker 1: underlying case as to whether he was or was not
Speaker 1: harass that was established and the jury was told that
Speaker 1: that was already established. But importantly they didn't therefore hear
Speaker 1: all the evidence. This next jury that just issued it's
Speaker 1: predict on the third of April of this year, only
Speaker 1: heard evidence about damages and did not hear any of
Speaker 1: the evidence concerning the underlying liability. And I think that
Speaker 1: may not be the best outcome for an employee in
Speaker 1: a situation like this, because the jury, obviously, with the
Speaker 1: first verdict for the first trial, was quite riled up,
Speaker 1: and they were I'm sure mostly riled up by what
Speaker 1: they heard in the liability phase of the case. This
Speaker 1: second jury never heard all of that. They were just
Speaker 1: told to assume that there was harassment, and now their
Speaker 1: job was to figure out what was the basis for
Speaker 1: a damages award. And what this new jury did last
Speaker 1: week was further reduced the verdict significantly. From again that
Speaker 1: the original emotional stress damages award was six point nine million,
Speaker 1: the trial court judge reduced that to one point five million,
Speaker 1: and in the retrial, the new jury comes up with
Speaker 1: one hundred and seventy five thousand dollars, another significant reduction
Speaker 1: in the first two numbers, and then they award a
Speaker 1: punitive damages of three million dollars on top of the
Speaker 1: one hundred and seventy five thousand in emotional distress damages.
Speaker 1: So he chose the wrong door, it sounds like he did. Now.
Speaker 1: I think that if he had chosen the fifteen million,
Speaker 1: it's unclear what Tesla would have done. They may have
Speaker 1: still filed an appeal. I don't think they would have
Speaker 1: been bound by that fifteen million. It's not clear that
Speaker 1: they thought that number was a fair amount from their perspective. Now,
Speaker 1: the interesting part about the latest version of this verdict,
Speaker 1: this one hundred and seventy five thousand dollars three million
Speaker 1: dollars in punitive damages, is now once again the punitive
Speaker 1: damages are out of whack with the compensatory damage. As
Speaker 1: they said earlier, the Supreme Court has said that punitive
Speaker 1: damages can't be more than nine times the compensatory damages. Well,
Speaker 1: now it's seventeen times. Three million dollars is seventeen times
Speaker 1: the amount of the emotional distress damages, so that's got
Speaker 1: to be further reduced. The Trial court judge, no doubt,
Speaker 1: will not increase one hundred and seventy five thousand. He
Speaker 1: may reduce it, but I suspect he won't. But what
Speaker 1: he will probably have to do, or will be called
Speaker 1: upon my tesla to do, is to again evaluate the
Speaker 1: overall outcome of this case and reduce that three million
Speaker 1: dollars to a number that is much closer to one
Speaker 1: hundred and seventy five thousand dollars than it is to
Speaker 1: the current three million. In fact, he would probably have
Speaker 1: to cut it in half or more. So. Juries are
Speaker 1: not told anything about how the punitive damages have to
Speaker 1: be in line with the compensatory by a certain amount exactly,
Speaker 1: and I think that is a failing of the system.
Speaker 1: I think both sides have a reason during the trial
Speaker 1: not to talk about those limits. The plaintiff's lawyer obviously
Speaker 1: is not going to want the jury to hear anything
Speaker 1: about outer limits. So how much the punitive damages might be,
Speaker 1: they would love to have nineteen twenty, thirty forty times
Speaker 1: the amount of the compenstory damages, because that just gives
Speaker 1: them more leverage on a retrial. I'll admit it gives
Speaker 1: them more leverage on appeal. It gives them more leverage,
Speaker 1: perhaps trying to settle the case. The defense, on the
Speaker 1: other hand, however, also doesn't really want to talk about
Speaker 1: those limits because it might suggest to the jury numbers
Speaker 1: multiples of the compensed story damages that they haven't thought of.
Speaker 1: In other words, if the defense says, yes, nine times
Speaker 1: is the maximum, but maybe you should do one or
Speaker 1: two or three times again, that might be something that
Speaker 1: a defense lawyer doesn't want to put out there because
Speaker 1: they're hoping that the jury comes back with a smaller number,
Speaker 1: perhaps even than one times the amount of compensed story damages.
Speaker 1: So they don't want to plant a number usually with
Speaker 1: the jury either. And so there's this bizarre conspiracy of
Speaker 1: silent the way I've put it, and everyone in the courtroom,
Speaker 1: the judge, the lawyers, all know that there's this constitutional
Speaker 1: limit to how much the punitive damages can be, and
Speaker 1: yet nobody tells the most important group of people in
Speaker 1: the courtroom what those limits are, which is the jury.
Speaker 1: The jury is never told about those constitutional limits. And
Speaker 1: I think that going forward, there should be some reform
Speaker 1: here and that there should be a specific jury instruction
Speaker 1: from the judge and admonition from the judge about what
Speaker 1: the scope of those punitive damages can and should be.
Speaker 1: Because when that aspect of the case gets to the jury,
Speaker 1: the plantiff lawyer, they all say the exact same thing.
Speaker 1: They say, this defendant, this employer is a very very
Speaker 1: wealthy company. It makes X amounts of money every single
Speaker 1: day in revenue, it makes why amounts of money every
Speaker 1: single day in profits. There's one thing, there's only one
Speaker 1: thing that they understand, and that is money. And you
Speaker 1: need to send them a message. And the only message
Speaker 1: this company understands is money. And so, ladies and gentlemen,
Speaker 1: the jury, you're going to need to hit them with
Speaker 1: some significant amounts that they will learn their lesson. Every
Speaker 1: single plantiff lawyer in the state of California, and I
Speaker 1: suspect around the country says the exact same thing to juries.
Speaker 1: They don't realize that they're being called the same thing
Speaker 1: that every jury in the country is being told under
Speaker 1: the circumstance, and they're invited to do what they need
Speaker 1: to do to punish the employer. And the numbers that
Speaker 1: they do here, by the way, are revenue numbers and
Speaker 1: profitability numbers. And so the jury is going to be
Speaker 1: told gee, if you only award a million dollars Elon
Speaker 1: Musk makes that in twenty five minutes, that's that's not
Speaker 1: going to stop him. You've got to really do something,
Speaker 1: you know, to send a message. And so that's what
Speaker 1: happens to get the jury riled up. And then no
Speaker 1: one ever comes in and throws any cold water on
Speaker 1: it and says, by the way, don't come back with
Speaker 1: a number that's more than nine times, and maybe you
Speaker 1: should be thinking about a number that's not more than
Speaker 1: two or three times. The compense story damages. Nobody says
Speaker 1: that to the jury, so it's not surprising that they
Speaker 1: come out with these outlandish verdicts. Is the judge able
Speaker 1: to give that kind of instruction orders? They have to
Speaker 1: be in the jury instructions. Typically in a trial such
Speaker 1: as this, the judge gives what are referred to as
Speaker 1: pattern jury instructions, that is, those that have been approved
Speaker 1: by our committees and plaintiest lawyers, defense lawyers who've all
Speaker 1: sort of worked on these and negotiated them. But there
Speaker 1: are also special jury instructions that each side can propose
Speaker 1: to the judge that the judge, within his or her discretion,
Speaker 1: can either read to the jury or not, and some
Speaker 1: judges have their own instructions that they think are appropriate
Speaker 1: for administrative purposes. I just don't know the answer to
Speaker 1: whether anyone's ever suggested this to a judge or whether
Speaker 1: any judges have ever suggested the parties. But I think
Speaker 1: it's high time that somebody started thinking about this, because
Speaker 1: you know, you have the same case and the verdict
Speaker 1: has ranged now from three point one seven five million
Speaker 1: to one hundred and thirty seven million dollars over the
Speaker 1: last year and a half. That is preposterous and it
Speaker 1: breeds disrespect and contempt for our legal system where you
Speaker 1: could have reasonable people, supposedly both in the form of
Speaker 1: the judge and the jury, coming to a conclusion as
Speaker 1: to how much an employee should be recovering under circumstances
Speaker 1: such as this. It is completely ridiculous and it needs
Speaker 1: to be fixed. So this decision, this verdict can be
Speaker 1: appealed by the plaintiff, absolutely, I'm sure it will be appealed.
Speaker 1: That probably will be appealed on both sides. I think
Speaker 1: the plaintiffs lawyer has already said that he believes that
Speaker 1: there was error that occurred during the trial because there
Speaker 1: was a different tack I believe taken. I don't know
Speaker 1: all the details about this, but I believe that there
Speaker 1: was a different tack taken by the defense counsel in
Speaker 1: this case, and they were extremely aggressive in terms of
Speaker 1: challenging the credibility of mister Diaz. I'm sure the original
Speaker 1: lawyers did the same thing, but for perhaps some of
Speaker 1: the reasons I mentioned earlier, which is the jury didn't
Speaker 1: hear all the other evidence about liability. I think it
Speaker 1: landed more solidly with this jury than perhaps in the
Speaker 1: original trial, and they attacked his credibility, and they brought
Speaker 1: up back such as he had recommended each of his
Speaker 1: adult children to apply for jobs at Tesla. The obvious
Speaker 1: question is somebody who is being subjected to this form
Speaker 1: of harassment, such as he had testified about, you wouldn't
Speaker 1: expect that that person would then turn around and recommend
Speaker 1: to family members, close family members with whom he lived.
Speaker 1: I believe that they should also apply for jobs at
Speaker 1: Tesla didn't make a lot of sense. I'm sure the
Speaker 1: planet had explanations for that, and again I don't know
Speaker 1: all the details, but my tacit understanding is the defense
Speaker 1: layers were extremely aggressive in terms of attacking the credibility
Speaker 1: of mister Diaz under these circumstances, which I'm sure tamps
Speaker 1: down significantly the emotional distress component of this verdict. Now,
Speaker 1: there was an arbitration in a similar case what happened there.
Speaker 1: The other thing is really interesting about this case, and
Speaker 1: I think you and I've talked about it before June,
Speaker 1: and that is that this is almost the laboratory condition
Speaker 1: experiment in terms of the arbitration process as compared to
Speaker 1: the jury process in the state of California before the
Speaker 1: original verdict, before one hundred and thirty seven million dollar
Speaker 1: verdict came out in this case, another black employee sued Tesla.
Speaker 1: He was an employee at the exact same location in Fremont, California,
Speaker 1: testified about almost identical circumstances of alleged racial harassment that
Speaker 1: occurred in the workplace. He in fact, was represented by
Speaker 1: the exact same lawyer who prosecuted mister Diaz's. The tale
Speaker 1: of two cities here is that first employee who sued
Speaker 1: and actually got an award had an arbitration agreement. He
Speaker 1: had signed an arbitration agreement, and the arbitrator in that
Speaker 1: case in August of twenty twenty one granted him one
Speaker 1: million dollars, an award no more than one million dollars,
Speaker 1: which at that time was a significantly high amount for
Speaker 1: an arbitrator, because arbitrators are usually fairly careful in terms
Speaker 1: of the amounts of money that they award in these cases.
Speaker 1: That then was followed two months later by again a
Speaker 1: laboratory condition experiment, almost same lawyer, same plant, same allegations,
Speaker 1: just a different employee, and that employee got one hundred
Speaker 1: and thirty seven million dollars. So this is one of
Speaker 1: the reasons why, for example, I think plaintive lawyers would say,
Speaker 1: we hate arbitration, we don't ever want it. It obviously
Speaker 1: is going to result in lower verdicts for our clients
Speaker 1: and less of a participatory element for the plaintiffs lawyer,
Speaker 1: because they usually get forty or fifty percent of whatever
Speaker 1: the underlying verdict is. Defense lawyers, on the other hand,
Speaker 1: are saying arbitration is a perfectly good way of resolving
Speaker 1: these disputes, and that's a much more reasonable outcome that
Speaker 1: can be predicted. Plaintiffs lawyers absolutely don't like arbitration, thanks
Speaker 1: so much, Tony. That's Anthony on CD of Proskauer Rose.
Speaker 1: And that's it for this edition of The Bloomberg Law Show.
Speaker 1: Remember you can always get the latest legal news honor
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Speaker 1: week night at ten pm Wall Street Time. I'm June Grossow,
Speaker 1: and you're listening to Bloomberg