WEBVTT - Oregon & Illinois Sue Trump & Senior Leaders Exit DOJ

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<v Speaker 1>This is Bloomberg Law with June Grossel from Bloomberg Radio.

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<v Speaker 2>The place is burning down, and they pretend like there's

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<v Speaker 2>nothing happening.

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<v Speaker 3>The facts on the ground and Oregon haven't changed. There's

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<v Speaker 3>no need for military intervention in Oregon. There's no insurrection

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<v Speaker 3>in Portland. There's no threat to national security. Oregon is

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<v Speaker 3>our home. It is not a military target.

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<v Speaker 4>President Trump still maintains that Portland is burning to the

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<v Speaker 4>ground and is war ravaged, despite what the Governor of Oregon,

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<v Speaker 4>Tina Kotek, has said, and despite the fact that a

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<v Speaker 4>federal judge found over the weekend that there were no

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<v Speaker 4>facts to support Trump's claims that anarchists and professional agitators

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<v Speaker 4>were trying to burn the city down. Judge Karen Immergut,

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<v Speaker 4>a Trump appointee, issued two orders in two days. The

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<v Speaker 4>first block the Trump administration from deploying Oregon National Guard

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<v Speaker 4>troops to Portland, but the judge said the administration directly

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<v Speaker 4>contravened that order by calling up the California Guard, so

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<v Speaker 4>she issued a second order, blocking the administration from sending

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<v Speaker 4>any National Guard troops into Portland. Oregon's Attorney General, Dan

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<v Speaker 4>Rayfield described the administration's actions as whack a mole trying

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<v Speaker 4>to use guard units from different states to get around

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<v Speaker 4>court orders and the rule of law. The judge's order

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<v Speaker 4>was not some minor procedural point for the president to

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<v Speaker 4>work around like my fourteen year old does when he

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<v Speaker 4>doesn't like my answers. Judge Immergut's ruling found that the

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<v Speaker 4>Constitution leaves policing powers to state and local governments, while

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<v Speaker 4>granting Congress the power to call up state militias to

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<v Speaker 4>execute federal laws, suppress insurrections, and repel invasions. Quote. This

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<v Speaker 4>is a nation of constitutional law, not martial law. My

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<v Speaker 4>guest is constitutional law expert Harold Krent, a professor at

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<v Speaker 4>the Chicago Kent College of Law. So, how quite an

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<v Speaker 4>opinion from a Trump appoint de and she said the

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<v Speaker 4>administration had violated her order. It seems like this is

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<v Speaker 4>a direct contravention of the order this court issued yesterday.

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<v Speaker 4>Tell us what the Trump administration was trying to do here.

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<v Speaker 5>The Trump administration, somewhat parallel to Los Angeles and perhaps

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<v Speaker 5>to Chicago as well, is trying to send National Guards

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<v Speaker 5>troops into Portland in what they think is an effort

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<v Speaker 5>to restore order, and principally, the judge in Oregon said

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<v Speaker 5>that there's been no basis shown for federalizing the National Guard.

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<v Speaker 5>In other words, that President Trump lacks the authority under

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<v Speaker 5>the statutory scheme to send National Guards into Portland because

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<v Speaker 5>there's no insurrection, there's no invasion, there's no showing that

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<v Speaker 5>there's a failure general law enforcement. And so she then

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<v Speaker 5>decided to ensure that not only was there no troops

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<v Speaker 5>sent from Oregon, no troops sent from California, no troops

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<v Speaker 5>sent from anywhere, in order to ensure that the administration

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<v Speaker 5>did not try to serve invent her order. Whether or

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<v Speaker 5>not the government will comply with her order remains to

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<v Speaker 5>be seen, but we're watching carefully.

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<v Speaker 4>She said it was a direct contravention. But what had

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<v Speaker 4>happened was she ordered that they couldn't send the Oregon

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<v Speaker 4>National Guard troops into Portland. So the Trump administration then

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<v Speaker 4>moved to call up the Texas National Guard and the

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<v Speaker 4>California National Guard. Is that a direct contravention or were

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<v Speaker 4>they trying to use a loophole.

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<v Speaker 5>I think they're trying to use a loophole, and so

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<v Speaker 5>I don't think it was any kind of contemptuous behavior. Certainly,

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<v Speaker 5>it violated the spirit of the Oregon Courts order, but

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<v Speaker 5>not the letter. And indeed, I think that the Oregon

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<v Speaker 5>Court's decision is iffy to put it that way. It's

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<v Speaker 5>true that the prerequisites for federalized in the National Guard

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<v Speaker 5>had not been met statutorily, but the Supreme Court has

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<v Speaker 5>recognized a kind of inherent protective power of the president

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<v Speaker 5>to protect federal facilities at least, and so to the

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<v Speaker 5>extent that the National Guard were used not for general

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<v Speaker 5>law enforcement, certainly, but just to protect federal buildings in Portland,

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<v Speaker 5>I think the president would be on stronger ground. Now,

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<v Speaker 5>of course there's no factual predicate for thinking that the

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<v Speaker 5>federal buildings are in jeopardy in Portland or in Chicago,

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<v Speaker 5>but that at least would be I think put the

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<v Speaker 5>president on the strongest legal ground.

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<v Speaker 4>I mean, the judge made a factual determination. She said

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<v Speaker 4>the president's determination was simply unchathered to the facts. He

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<v Speaker 4>has claimed that the city's overrun with agitators and insurrectionists

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<v Speaker 4>who are responsible for burning the city to the ground,

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<v Speaker 4>and that Portland was war ravaged. So she's found that

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<v Speaker 4>that's not true. Those facts that he suggested are not true.

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<v Speaker 4>So then he doesn't have the power, does he.

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<v Speaker 5>Yeah, the President's overreached, right, and the President should have

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<v Speaker 5>made a much more narrow cabin decision stating that there

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<v Speaker 5>was a potential or a real threaten in his understanding

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<v Speaker 5>to federal facilities in Portland and therefore needed to dispatch

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<v Speaker 5>National Guards troops in order to protect those buildings. But

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<v Speaker 5>instead he is granted about Portland and anarchists for years

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<v Speaker 5>and years, and he's just refreshing those means. And of

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<v Speaker 5>course the court in Oregon was much more familiar with

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<v Speaker 5>what's going on in Oregon, said, you know, if that's

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<v Speaker 5>a factual basis, you're out of court.

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<v Speaker 4>Why do you think that Trump administration is making these

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<v Speaker 4>overbroad arguments about cities burning down and violence on the

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<v Speaker 4>streets everywhere when there's no factual basis for it, and

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<v Speaker 4>there's video that shows there's no basis. Any violence, if

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<v Speaker 4>there is any, seems to be limited to the areas

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<v Speaker 4>around federal buildings with ice facilities. Why not limit it

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<v Speaker 4>to what's provable.

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<v Speaker 5>I mean, there is a political question in underlying your statement,

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<v Speaker 5>and maybe a psychological one as well. Is President Trump

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<v Speaker 5>doing this to inure the American to the site of

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<v Speaker 5>federal troops on their streets. If so, incredibly frightening, because

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<v Speaker 5>it may mean that he's planning to use federal troops

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<v Speaker 5>for other purposes, such as, you know, during I move

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<v Speaker 5>the day, but during the midterms, or alternatively, is this

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<v Speaker 5>just something that he can help his base within by

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<v Speaker 5>suggesting he's strong and he cares about people, and he's

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<v Speaker 5>going to send troops wherever it's needed to protect against lawlessness.

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<v Speaker 5>I don't know which it is, but certainly this has

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<v Speaker 5>been a consistent team with his He wants to send

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<v Speaker 5>troops to be tough, to be seen as the law

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<v Speaker 5>and order president, even if troops aren't needed, and even

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<v Speaker 5>if that violates statutes, and even if it undermines the

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<v Speaker 5>tradition in our country of not having a standing army

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<v Speaker 5>or even the National Guard being used for general law

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<v Speaker 5>enforcement purposes.

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<v Speaker 4>The Oregon Ag described this as a whack a mole,

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<v Speaker 4>with different states Guard units being used to get around

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<v Speaker 4>the court's order. The judge she expressed frustration with the

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<v Speaker 4>Justice Department's lawyer, Eric Hamilton, saying he was missing the

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<v Speaker 4>point of her earlier order, and she said, quote mister Hamilton,

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<v Speaker 4>you're an officer of the court. Do you believe this

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<v Speaker 4>is an appropriate way for you to deal with mind

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<v Speaker 4>order or with an order you disagree with?

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<v Speaker 5>Yeah, I mean, to be fair, I think that the

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<v Speaker 5>Justice Department was reading the order narrowly, which it's entitled

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<v Speaker 5>to do. And the order banned the Oregon National Guard

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<v Speaker 5>from being federalized and didn't talk about the Texas National

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<v Speaker 5>Guard or the California National Guard. And maybe that was

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<v Speaker 5>just a failure of litigation, and that loophole has been

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<v Speaker 5>closed forthwith. Certainly, again, it was against the spirit of

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<v Speaker 5>the rulers, no question about it what the government did.

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<v Speaker 5>But I don't think it's contemptuous.

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<v Speaker 4>And explain the judge's ruling about why the deployment likely

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<v Speaker 4>violated Oregon's Tenth Amendment rights.

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<v Speaker 5>Well, the Oregon Governor isn't put in control of the

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<v Speaker 5>National Guard of Oregon, and so here there is we

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<v Speaker 5>have the president who's ordering the Oregon National Guard into

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<v Speaker 5>active duty, despite the fact that the governor who's in

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<v Speaker 5>charge of it, commander of it, has a client to

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<v Speaker 5>do so. Therein lies the Tenth Amendment struggle, because seemingly

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<v Speaker 5>the president has served the governor's authority to be, in

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<v Speaker 5>effect the head of the troop's National Guard, at least

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<v Speaker 5>within Oregon.

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<v Speaker 4>On Sunday, California Governor Gavin Newsom filed a separate lawsuit

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<v Speaker 4>to prevent Trump from sending his states National Guard to Oregon.

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<v Speaker 4>So the national Guard is under the control of the

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<v Speaker 4>governor of the state. So does the president have the

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<v Speaker 4>authority to take that national Guard out of the control

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<v Speaker 4>of the governor of the state and send them to

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<v Speaker 4>another state.

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<v Speaker 5>Yeah, I mean I think that obviously we don't have

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<v Speaker 5>precedents on that power, and certainly I would think in

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<v Speaker 5>an emergency, perhaps the authority might exist in the president

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<v Speaker 5>to order a state's National Guard into active duty, even

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<v Speaker 5>if the governor didn't want to. And this seems like

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<v Speaker 5>a a far stretch, And that's why the temp amendment

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<v Speaker 5>issue arises, because here there is a claim that the

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<v Speaker 5>California the National Guard is needed in a different state,

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<v Speaker 5>and that seems to directly cut against unless there's a

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<v Speaker 5>national emergency or an insurrection, the idea of ordering one

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<v Speaker 5>state's guard to go into another state, particularly without the

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<v Speaker 5>approval of the governor, seems to be directly contrary to

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<v Speaker 5>the regime of militias, which has long been supervised by

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<v Speaker 5>state governors from the revolutionary time onward.

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<v Speaker 4>Representative Adam Smith, the senior Democrat on the Armed Services Committee,

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<v Speaker 4>has said that he couldn't remember another time when one

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<v Speaker 4>state's national guard was deployed to another state over the

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<v Speaker 4>objections of both governors involved. So no precedent, it's unprecedent.

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<v Speaker 5>It's unprecedent here, and it seems to be directly an

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<v Speaker 5>affront to the Tenth Amendments, which lodgist responsibility in states

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<v Speaker 5>to their governors and to their elected representatives. But there's

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<v Speaker 5>just hasn't been a lot of precedents on point, So

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<v Speaker 5>obviously the court are going to have to weigh in.

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<v Speaker 2>Donald Trump's deranged depiction of Chicago as a hellhole, a

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<v Speaker 2>war zone and the worst and most dangerous city in

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<v Speaker 2>the world was just complete bs. He clearly has decided

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<v Speaker 2>to declare war on a great American city that has

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<v Speaker 2>the lowest homicide rate in sixty years, in a state

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<v Speaker 2>that has record employment and near record tourism.

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<v Speaker 4>That's Governor JB. Pritzker. As Illinois becomes the latest state

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<v Speaker 4>to sue the Trump administration over its plans to send

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<v Speaker 4>National Guard troops into one of its cities against the

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<v Speaker 4>wishes of state and local officials. I've been talking to

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<v Speaker 4>Professor Harold Krant of the Chicago Kent College of Law,

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<v Speaker 4>So how tell us what's happening in your city? Are there?

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<v Speaker 5>I don't think they're there yet. The Attorney General has

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<v Speaker 5>already filed suits. The Mayor of Chicago has made a

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<v Speaker 5>vaguely worded statement like we must resist with all force,

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<v Speaker 5>but no one knows what that means. So tensions are heightened,

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<v Speaker 5>and we will expect to see National Guard troops from

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<v Speaker 5>Texas evidently who will be coming to Chicago in nearboy

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<v Speaker 5>And again, yet there has been problems with some kind

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<v Speaker 5>of ICE enforcement. ICE has killed somebody in in Chicago,

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<v Speaker 5>They've arrested other people and trying to make these raids,

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<v Speaker 5>but there has been no complete falling apart of any

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<v Speaker 5>kind of ordinary law enforcement. And indeed, there's been some

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<v Speaker 5>evidence that ICE itself has instigated the protests by the

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<v Speaker 5>manner in which they are trying to conduct raids. So again,

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<v Speaker 5>this is I think for show. The President wants to

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<v Speaker 5>be seen as tough in it if he wants to

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<v Speaker 5>send troops into Chicago. He's, by god, he's going to

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<v Speaker 5>do it, and Governor Abbott of Texas is willing to comply.

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<v Speaker 5>So there's no Tenth Amendment violation there with using Texas

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<v Speaker 5>National Guard troops.

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<v Speaker 4>What's the basis of Illinois suit against the deployment, and.

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<v Speaker 5>There's several bases, but they first would say that the

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<v Speaker 5>statutory prerequisites are not met in terms of federalizing National Guard,

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<v Speaker 5>in terms of there's no invasion, there's no absence of

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<v Speaker 5>general law enforcement, there's no insurrection. And so then I

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<v Speaker 5>think the issue will likely boil down to whether there

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<v Speaker 5>is some kind of protective power inheriting the presidency that

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<v Speaker 5>can allow the president to send troops, at least for

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<v Speaker 5>the narrow purpose of defending federal facilities. This really gets

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<v Speaker 5>us back to what Judge Bryer said in the California

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<v Speaker 5>of litigation that if there is this protective power, it's

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<v Speaker 5>very limited. It's limited to protecting federal facilities, and it

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<v Speaker 5>cannot be used to justify a broad federal presence in

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<v Speaker 5>terms of general law enforcement, in terms of accompanying ice

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<v Speaker 5>officers on the along the way, et cetera, et cetera.

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<v Speaker 5>So we may get involved in that, But that's that's

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<v Speaker 5>down the road, because first there's a question of authorization.

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<v Speaker 5>And you know, again President Trump is being too broad.

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<v Speaker 5>He's saying there's lawlessness in Chicago, and that justifies him

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<v Speaker 5>using the Texas National Guard. And that's if there's a

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<v Speaker 5>factual predicate there to be decided. I'm sure the judges

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<v Speaker 5>here will hear the evidence and they're very unlikely to

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<v Speaker 5>back President Trump and his broad assertions.

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<v Speaker 4>Did he also call up the Illinois National Guard?

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<v Speaker 5>He has not done that yet to my knowledge, he

0:14:48.200 --> 0:14:51.760
<v Speaker 5>has threatened to, and of course Governor Pritzker has has

0:14:51.840 --> 0:14:54.680
<v Speaker 5>not only said that he would do over his objection,

0:14:55.120 --> 0:14:58.040
<v Speaker 5>but at the same time he also said that the

0:14:58.320 --> 0:15:01.880
<v Speaker 5>President Trump has not even called him to ask for permission,

0:15:02.520 --> 0:15:05.320
<v Speaker 5>So that may happen down the line. Maybe it's already happened,

0:15:05.320 --> 0:15:07.640
<v Speaker 5>but not to my knowledge, has.

0:15:07.480 --> 0:15:11.920
<v Speaker 4>The Supreme Court even come close to resolving something similar

0:15:12.040 --> 0:15:15.680
<v Speaker 4>in this sort of frame or not even close.

0:15:16.160 --> 0:15:19.960
<v Speaker 5>And there are some vague similarities of what's happened under

0:15:19.960 --> 0:15:22.960
<v Speaker 5>the Militia Acts back two hundred years ago, and there

0:15:23.320 --> 0:15:25.360
<v Speaker 5>the Supreme Court has said that there is a protective

0:15:25.400 --> 0:15:28.640
<v Speaker 5>power to some extent in the president to protect federal

0:15:28.680 --> 0:15:32.440
<v Speaker 5>officials federal facilities, but nothing on this order, nothing on

0:15:32.480 --> 0:15:36.320
<v Speaker 5>this extent. So this clash that President Trump was introduced

0:15:36.360 --> 0:15:41.360
<v Speaker 5>in Oregon, Los Angeles and in Chicago is really unprecedented,

0:15:41.920 --> 0:15:44.920
<v Speaker 5>and the course are going to have to make a

0:15:45.040 --> 0:15:47.960
<v Speaker 5>very difficult decision in saying that. It's pretty clear that

0:15:48.000 --> 0:15:51.200
<v Speaker 5>the statutory prerequisites have not been met. So I think

0:15:51.240 --> 0:15:53.600
<v Speaker 5>they'll have to grapple with to what extent there's an

0:15:53.840 --> 0:15:58.520
<v Speaker 5>implicit inherent authority at the president to protect federal officials

0:15:58.960 --> 0:16:03.120
<v Speaker 5>and federal facilities and how far that extends. So very

0:16:03.160 --> 0:16:05.880
<v Speaker 5>difficult issues for the courts to soar through, and obviously

0:16:05.920 --> 0:16:08.960
<v Speaker 5>we've just had a beginning of that with the judges

0:16:08.960 --> 0:16:10.920
<v Speaker 5>in California and Oregon.

0:16:11.560 --> 0:16:15.240
<v Speaker 4>So last Tuesday, Trump said when he was addressing the

0:16:15.280 --> 0:16:20.000
<v Speaker 4>military officers in Quantico that America is under invasion from

0:16:20.040 --> 0:16:24.640
<v Speaker 4>within and he wants to use dangerous American cities run

0:16:24.720 --> 0:16:29.720
<v Speaker 4>by Democrats as training grounds for the armed forces. Besides

0:16:29.800 --> 0:16:33.320
<v Speaker 4>being frightening, does he have any authority.

0:16:32.880 --> 0:16:33.360
<v Speaker 1>To do that?

0:16:33.840 --> 0:16:37.520
<v Speaker 5>Well, what frightens me about that statement is is this

0:16:37.600 --> 0:16:40.520
<v Speaker 5>is a training ground for what? Is this a dress

0:16:40.560 --> 0:16:46.560
<v Speaker 5>rehearsal for a full scale attack on Democratic strongholds. Is

0:16:46.600 --> 0:16:51.200
<v Speaker 5>this a rehearsal for getting us all prepared to see

0:16:51.440 --> 0:16:55.200
<v Speaker 5>federal troops during the midterm elections. I mean, what is

0:16:55.240 --> 0:17:00.240
<v Speaker 5>he actually preparing the military for. I don't know, but

0:17:00.520 --> 0:17:05.160
<v Speaker 5>obviously this definitely cuts against our traditions, our norms about

0:17:05.160 --> 0:17:06.959
<v Speaker 5>not having a standing army. And that's why we were

0:17:07.000 --> 0:17:09.560
<v Speaker 5>afraid of having a standing army, because we've wanted to

0:17:10.000 --> 0:17:14.439
<v Speaker 5>not see federal troops in the streets of all of

0:17:14.480 --> 0:17:18.840
<v Speaker 5>our cities, both because of the respect given to states

0:17:19.000 --> 0:17:21.679
<v Speaker 5>a state law enforcement and because of the dangers of

0:17:21.800 --> 0:17:25.439
<v Speaker 5>having federal troops in civilian rules.

0:17:25.720 --> 0:17:28.520
<v Speaker 4>There's a hearing date in the Illinois case on Thursday.

0:17:28.600 --> 0:17:32.320
<v Speaker 4>We'll see what happens then. Thanks Hall. That's Professor Harold

0:17:32.400 --> 0:17:37.280
<v Speaker 4>Krant of the Chicago Kent College of Law. At least

0:17:37.280 --> 0:17:41.040
<v Speaker 4>a third of senior career leaders have left the Justice

0:17:41.040 --> 0:17:44.920
<v Speaker 4>Department since the start of President Donald Trump's second term,

0:17:45.480 --> 0:17:49.960
<v Speaker 4>taking with them centuries of combined expertise. That's according to

0:17:50.000 --> 0:17:55.240
<v Speaker 4>a Bloomberg Law analysis. The departures, both voluntary and involuntary,

0:17:55.560 --> 0:18:00.359
<v Speaker 4>represent an unprecedented level of departures in recent memory. With

0:18:00.480 --> 0:18:05.200
<v Speaker 4>the divisions enforcing civil rights, immigration, and environmental laws among

0:18:05.240 --> 0:18:08.199
<v Speaker 4>the hardest hit. They include at least one hundred and

0:18:08.240 --> 0:18:12.480
<v Speaker 4>seven career Justice Department senior managers in the span of

0:18:12.560 --> 0:18:15.840
<v Speaker 4>eight months. That's out of roughly three hundred and twenty

0:18:16.000 --> 0:18:21.879
<v Speaker 4>career leadership positions immediately below presidential appointees included in a

0:18:21.920 --> 0:18:26.280
<v Speaker 4>government directory. The loss of so many senior managers, many

0:18:26.359 --> 0:18:29.399
<v Speaker 4>of whom have spent their entire careers rising through the

0:18:29.440 --> 0:18:35.040
<v Speaker 4>department's ranks, could take generations to rebuild. The Justice Department

0:18:35.119 --> 0:18:40.159
<v Speaker 4>is also losing many more trial attorneys and other career employees.

0:18:41.200 --> 0:18:45.560
<v Speaker 4>Joining me is Bloomberg Law reporter Suzanne Monnak. Suzanne tell

0:18:45.640 --> 0:18:47.800
<v Speaker 4>us about all these departures.

0:18:48.640 --> 0:18:51.480
<v Speaker 6>We've seen this an unprecedented amount of attrition of the

0:18:51.520 --> 0:18:54.399
<v Speaker 6>career workforce this year really across the government, but we've

0:18:54.520 --> 0:18:57.400
<v Speaker 6>really seen it in a significant number as the Department

0:18:57.440 --> 0:19:01.359
<v Speaker 6>of Justice. We used a federal director posted by the

0:19:01.400 --> 0:19:04.720
<v Speaker 6>Office of Personnel Management that has, you know, hundreds and

0:19:04.760 --> 0:19:08.320
<v Speaker 6>hundreds of career managers at the Justice Department. We focused

0:19:08.320 --> 0:19:11.040
<v Speaker 6>on those who went through the career appointed process, and

0:19:11.480 --> 0:19:14.000
<v Speaker 6>that's where we found that over a third of those

0:19:14.000 --> 0:19:16.840
<v Speaker 6>who were in place in January and those career leadership

0:19:16.840 --> 0:19:20.440
<v Speaker 6>positions are no longer there, and these include really broad

0:19:20.440 --> 0:19:24.919
<v Speaker 6>types of positions whose include supervisors, you know, lead attorneys,

0:19:24.920 --> 0:19:29.359
<v Speaker 6>managing attorneys, people in higher level positions. That's some senior

0:19:29.359 --> 0:19:32.240
<v Speaker 6>executive service, but some other high level positions as well,

0:19:32.600 --> 0:19:35.560
<v Speaker 6>who've been there for years and years, some of them

0:19:35.640 --> 0:19:38.240
<v Speaker 6>who you know, keep work running at the Justice Department.

0:19:38.680 --> 0:19:41.400
<v Speaker 4>Were these voluntary departures, were they fired?

0:19:42.000 --> 0:19:44.359
<v Speaker 6>It's been a real mix. There have been examples of

0:19:44.520 --> 0:19:47.840
<v Speaker 6>career managers at DJ who have been fully fired, some

0:19:47.920 --> 0:19:51.480
<v Speaker 6>of whom are now contesting those terminations. A number of

0:19:51.520 --> 0:19:54.320
<v Speaker 6>them chose to leave either. Some may have taken the

0:19:54.320 --> 0:19:57.359
<v Speaker 6>deferred resignation policy that fork in the Road offer that

0:19:57.400 --> 0:20:00.440
<v Speaker 6>was available across the government. Others may have just left

0:20:00.440 --> 0:20:03.120
<v Speaker 6>for another job. And some were kind of left under

0:20:03.200 --> 0:20:06.160
<v Speaker 6>what I might I was more dressed. Some people were

0:20:06.200 --> 0:20:09.280
<v Speaker 6>forcibly reassigned or demoted, for example, to positions that they

0:20:09.280 --> 0:20:11.600
<v Speaker 6>didn't want to be in, and so then felt kind

0:20:11.600 --> 0:20:14.640
<v Speaker 6>of moved to leave the department. So, while technically not fired,

0:20:15.040 --> 0:20:18.160
<v Speaker 6>were removed from their positions. One prominent example of that

0:20:18.240 --> 0:20:21.240
<v Speaker 6>was the Sanctuary Cities Task Force that sort of became

0:20:21.480 --> 0:20:24.200
<v Speaker 6>a place where we saw you know, some longtime career

0:20:24.240 --> 0:20:27.880
<v Speaker 6>people get forcibly reassigned into and at this point, all

0:20:27.920 --> 0:20:30.320
<v Speaker 6>of those people who were reassigned into that task force,

0:20:30.359 --> 0:20:32.480
<v Speaker 6>which was you know, for the stated purpose of cracking

0:20:32.560 --> 0:20:35.399
<v Speaker 6>down on so called sanctuary jurisdictions who don't want to

0:20:35.400 --> 0:20:38.159
<v Speaker 6>cooperate with federal immigration authorities, all of the people in

0:20:38.160 --> 0:20:39.400
<v Speaker 6>that task force have since left.

0:20:39.640 --> 0:20:42.600
<v Speaker 4>These are the career officials who get a job at

0:20:42.640 --> 0:20:45.760
<v Speaker 4>the Department of Justice, work their way up, and stay

0:20:45.760 --> 0:20:47.240
<v Speaker 4>at the Department of Justice.

0:20:47.480 --> 0:20:49.639
<v Speaker 6>Yes, it is very uncommon to see this amount of

0:20:49.680 --> 0:20:53.040
<v Speaker 6>attrition when political administrations changed. I spoke to a number

0:20:53.040 --> 0:20:55.560
<v Speaker 6>of former officials for this story, and you know, many

0:20:55.760 --> 0:20:57.960
<v Speaker 6>described through people as the types of people who stay

0:20:58.080 --> 0:21:01.600
<v Speaker 6>across political administration, which is kind of their very purpose.

0:21:01.600 --> 0:21:03.879
<v Speaker 6>When a new administration comes in, they're going to appoint

0:21:03.880 --> 0:21:05.600
<v Speaker 6>a lot of people who are their choices. There's going

0:21:05.680 --> 0:21:08.240
<v Speaker 6>to be a lot of political appointees. But the real

0:21:08.440 --> 0:21:11.320
<v Speaker 6>role of the career civil servants, you know, the career

0:21:11.359 --> 0:21:13.800
<v Speaker 6>work force, the civil servants are to kind of, you know,

0:21:13.880 --> 0:21:15.840
<v Speaker 6>help keep things moving. You know, there's going to be

0:21:15.880 --> 0:21:17.600
<v Speaker 6>a bunch of new people who don't know what they're doing,

0:21:17.920 --> 0:21:20.919
<v Speaker 6>but you'll have that career workforce in place always to

0:21:21.040 --> 0:21:23.240
<v Speaker 6>you know, understand how how the department runs.

0:21:23.800 --> 0:21:26.320
<v Speaker 4>Yeah, you talk to someone who was a political appointee

0:21:26.320 --> 0:21:29.560
<v Speaker 4>who said, we took a lot of our direction from

0:21:29.600 --> 0:21:32.040
<v Speaker 4>the career staff to do our jobs.

0:21:32.560 --> 0:21:35.000
<v Speaker 6>Absolutely, I think that that's exactly the type of example,

0:21:35.000 --> 0:21:37.640
<v Speaker 6>at least when a new political appointee comes in, you know,

0:21:37.760 --> 0:21:39.679
<v Speaker 6>they may be very qualified, but they're just going to

0:21:39.680 --> 0:21:42.200
<v Speaker 6>be new to that work potentially, and if they don't

0:21:42.240 --> 0:21:45.560
<v Speaker 6>have that exact background themselves, and you know, political appointees

0:21:45.560 --> 0:21:47.800
<v Speaker 6>I spoke to former political pointe is really said that

0:21:47.840 --> 0:21:50.600
<v Speaker 6>they relied on that career workforce to have that expertise

0:21:50.840 --> 0:21:52.480
<v Speaker 6>so that you know, they could go to someone and

0:21:52.520 --> 0:21:54.400
<v Speaker 6>be you know, ask them, you know, how something works

0:21:54.440 --> 0:21:55.960
<v Speaker 6>and how to do something, and just to kind of

0:21:55.960 --> 0:21:58.080
<v Speaker 6>know that they have experienced people working for them.

0:21:58.400 --> 0:22:02.439
<v Speaker 4>Tell us how many PEO people left or part of

0:22:02.480 --> 0:22:07.080
<v Speaker 4>their reason was because of the executive order calling to

0:22:07.200 --> 0:22:11.440
<v Speaker 4>prioritize accountability among the Senior Executive Service.

0:22:11.800 --> 0:22:14.320
<v Speaker 6>Sure, so that was an executive order at the beginning

0:22:14.400 --> 0:22:17.240
<v Speaker 6>of this administration that kind of gave us a little

0:22:17.240 --> 0:22:19.159
<v Speaker 6>bit of a signal that the Trump administration was going

0:22:19.200 --> 0:22:21.240
<v Speaker 6>to be taking a hard look at the senior executive

0:22:21.240 --> 0:22:24.640
<v Speaker 6>service that maybe they you know, were distrustful of that

0:22:24.960 --> 0:22:27.560
<v Speaker 6>group of people, even though you know, historically that's just

0:22:27.600 --> 0:22:30.320
<v Speaker 6>been a group of people who've been here in high

0:22:30.400 --> 0:22:33.720
<v Speaker 6>level career leadership potitions that are nonpartisan for many years.

0:22:34.320 --> 0:22:34.520
<v Speaker 1>You know.

0:22:34.600 --> 0:22:36.879
<v Speaker 6>Obviously, you can't say for sure how many you know,

0:22:37.000 --> 0:22:39.800
<v Speaker 6>exactly how many people might have left because they read

0:22:39.840 --> 0:22:43.440
<v Speaker 6>that order and you know, worried for their career trajectory,

0:22:43.520 --> 0:22:45.399
<v Speaker 6>you know, But I think the Trump administration has done

0:22:45.440 --> 0:22:48.520
<v Speaker 6>a lot, you know, very broadly that has made career

0:22:48.520 --> 0:22:51.800
<v Speaker 6>managers you know, think twice about how long they might

0:22:51.800 --> 0:22:54.200
<v Speaker 6>be able to stay in their roles, whether that's pivoting

0:22:54.280 --> 0:22:57.879
<v Speaker 6>priorities of the department in terms of like litigating priorities,

0:22:58.400 --> 0:23:01.159
<v Speaker 6>or just you know, generally making workers feel unstable and

0:23:01.200 --> 0:23:03.240
<v Speaker 6>like they're going to be laid off. I mean, we've

0:23:03.240 --> 0:23:05.920
<v Speaker 6>seen broad reductions and force throughout the government. This year.

0:23:06.359 --> 0:23:09.280
<v Speaker 4>It was the Civil Rights Division that was hit the hardest.

0:23:09.320 --> 0:23:13.080
<v Speaker 4>Seventy six percent of career managers departed.

0:23:13.480 --> 0:23:15.919
<v Speaker 6>Yes, that's what we found them. Going through all of

0:23:15.960 --> 0:23:18.560
<v Speaker 6>the career manager directory, we found that that division within

0:23:18.600 --> 0:23:21.840
<v Speaker 6>the Justice Department had the highest share of career managers

0:23:21.960 --> 0:23:24.600
<v Speaker 6>leaving this year that was similarly a mix. So many

0:23:24.600 --> 0:23:27.240
<v Speaker 6>of those people had been demoted and left after that,

0:23:27.400 --> 0:23:29.439
<v Speaker 6>some did leave on their own, and that was an

0:23:29.440 --> 0:23:31.480
<v Speaker 6>example of a division that really did take a hard

0:23:31.520 --> 0:23:35.240
<v Speaker 6>turn in a different direction ideologically this year. I mean,

0:23:35.240 --> 0:23:38.200
<v Speaker 6>the Civil Rights Division has always somewhat been vulnerable to

0:23:38.280 --> 0:23:41.640
<v Speaker 6>those types of changes as clinical administrations come and go,

0:23:42.080 --> 0:23:45.440
<v Speaker 6>but we really saw quite a significant departure that former

0:23:45.480 --> 0:23:47.439
<v Speaker 6>employees have told me was very different from the way

0:23:47.480 --> 0:23:51.000
<v Speaker 6>it's been in the past in terms of changing ideological priorities.

0:23:51.200 --> 0:23:55.520
<v Speaker 6>For example, instead of focusing on historically marginalized populations, which

0:23:55.640 --> 0:23:58.160
<v Speaker 6>was along the focus of that division it was created

0:23:58.200 --> 0:24:00.800
<v Speaker 6>during the Civil rights movement, we're now seeing a focus

0:24:00.840 --> 0:24:03.480
<v Speaker 6>on gun rights and anti Christian bias. For example.

0:24:03.840 --> 0:24:07.160
<v Speaker 4>What about the trial attorneys you know that are handling

0:24:07.200 --> 0:24:07.840
<v Speaker 4>the cases.

0:24:08.720 --> 0:24:11.200
<v Speaker 6>So the project that we put together does not include

0:24:11.240 --> 0:24:14.280
<v Speaker 6>trial attorneys, and that's only because we don't have access

0:24:14.280 --> 0:24:16.439
<v Speaker 6>to a perfect federal directory with a list of their

0:24:16.520 --> 0:24:19.879
<v Speaker 6>names to draw a statistical and conclusion from that. But

0:24:19.920 --> 0:24:22.560
<v Speaker 6>they that has been a huge source of attrition. I mean,

0:24:22.640 --> 0:24:25.639
<v Speaker 6>certainly more so than at the manager level. We have

0:24:25.720 --> 0:24:29.280
<v Speaker 6>seen trial attorneys basically hemorrhaged out of the Justice Department

0:24:29.320 --> 0:24:32.400
<v Speaker 6>this year. And while this number includes both trial attorneys

0:24:32.400 --> 0:24:35.719
<v Speaker 6>and managers just across the Justice Department, the department itself

0:24:35.720 --> 0:24:38.840
<v Speaker 6>has disclosed and budget documents that around forty five hundred

0:24:38.880 --> 0:24:42.120
<v Speaker 6>employees total have taken to Ford resignation offers this year.

0:24:42.240 --> 0:24:44.679
<v Speaker 6>As a little bit of a look at the amount

0:24:44.680 --> 0:24:45.800
<v Speaker 6>of people who have left.

0:24:46.080 --> 0:24:49.439
<v Speaker 4>Sixty two percent of the managers in the Executive Office

0:24:49.480 --> 0:24:54.760
<v Speaker 4>for Immigration Review left. I'm curious about why that particular

0:24:54.840 --> 0:24:58.320
<v Speaker 4>office when there's so much emphasis now on immigration.

0:24:58.960 --> 0:25:02.399
<v Speaker 6>That may be the very reason. I think that sometimes

0:25:02.440 --> 0:25:05.240
<v Speaker 6>when we see it's the offices, at least in our analysis,

0:25:05.240 --> 0:25:08.119
<v Speaker 6>that sometimes focused on some of those more hot button

0:25:08.200 --> 0:25:11.359
<v Speaker 6>policy issues that this administration has really focused on and

0:25:11.440 --> 0:25:14.800
<v Speaker 6>putting its own stamp on where we saw the most attrition. So,

0:25:14.840 --> 0:25:18.120
<v Speaker 6>while you know, I can't speak for those who decided

0:25:18.119 --> 0:25:20.159
<v Speaker 6>to leave, but we saw a lot of immigration judges

0:25:20.200 --> 0:25:21.480
<v Speaker 6>being pushed out this year.

0:25:21.720 --> 0:25:24.880
<v Speaker 4>How many people are challenging their firings.

0:25:25.400 --> 0:25:28.639
<v Speaker 6>It's hard to get an exact number because challenges that

0:25:28.680 --> 0:25:31.320
<v Speaker 6>the Merit Systems Protections Board, which would handle those types

0:25:31.359 --> 0:25:34.359
<v Speaker 6>of cases, are not public. But we have found a

0:25:34.440 --> 0:25:36.919
<v Speaker 6>number of examples of people doing that, and I think

0:25:37.119 --> 0:25:39.600
<v Speaker 6>some of the challenges from people who were within the

0:25:39.640 --> 0:25:43.920
<v Speaker 6>senior executive service might be, you know, tougher cases for

0:25:44.240 --> 0:25:47.040
<v Speaker 6>the federal government to defend. And we've even seen at

0:25:47.119 --> 0:25:50.240
<v Speaker 6>least one federal court litigation and filed against a number

0:25:50.680 --> 0:25:53.439
<v Speaker 6>a handful of Justice Department employees to say that they

0:25:53.480 --> 0:25:54.760
<v Speaker 6>were terminated unffair.

0:25:54.760 --> 0:25:59.600
<v Speaker 4>I mean, now, let's say the next administration comes in

0:26:00.200 --> 0:26:03.639
<v Speaker 4>is different. Can the Justice Department rebuild its staff and

0:26:03.920 --> 0:26:06.840
<v Speaker 4>sort of pick up where it left off before Trump

0:26:06.880 --> 0:26:07.879
<v Speaker 4>came into office.

0:26:08.080 --> 0:26:10.959
<v Speaker 6>They can certainly try. Former officials I spoke to them

0:26:11.000 --> 0:26:12.639
<v Speaker 6>said that it's going to be quite a challenge that

0:26:12.680 --> 0:26:15.600
<v Speaker 6>they've to lose at least a third of the career

0:26:15.640 --> 0:26:17.680
<v Speaker 6>staff in the span of I mean at this point

0:26:17.680 --> 0:26:20.040
<v Speaker 6>eight or nine months, is a massive hit to a

0:26:20.080 --> 0:26:25.040
<v Speaker 6>department's institutional memory, to their expertise. I think the Trump

0:26:25.080 --> 0:26:27.840
<v Speaker 6>administration might say that they're looking to get those types

0:26:27.880 --> 0:26:30.800
<v Speaker 6>of people out. They refer to certain government employees as

0:26:30.840 --> 0:26:33.240
<v Speaker 6>you know deep state actors, and they talk about wanting

0:26:33.280 --> 0:26:36.000
<v Speaker 6>to pivot the direction of the department, and I think

0:26:36.040 --> 0:26:40.840
<v Speaker 6>that's something we've seen from senior political administration officials during

0:26:40.840 --> 0:26:44.280
<v Speaker 6>the second administration, But certainly, I think indisputably, even if

0:26:44.320 --> 0:26:46.160
<v Speaker 6>the goal is to pivot the direction, that's a lot

0:26:46.160 --> 0:26:49.240
<v Speaker 6>of hiring for this current administration to do, a lot

0:26:49.280 --> 0:26:51.120
<v Speaker 6>of spots to fill, and it's a lot of spots

0:26:51.119 --> 0:26:54.960
<v Speaker 6>and advanced roles from people who maybe were supervising a

0:26:54.960 --> 0:26:58.119
<v Speaker 6>section that they've previously been an attorney in for many years.

0:26:58.160 --> 0:27:01.080
<v Speaker 6>Now trying to fill that spot going to be a

0:27:01.160 --> 0:27:02.600
<v Speaker 6>challenge really for any administration.

0:27:03.040 --> 0:27:05.560
<v Speaker 4>Are they having a hard time hiring new people to

0:27:05.680 --> 0:27:06.480
<v Speaker 4>fill slots.

0:27:07.520 --> 0:27:09.720
<v Speaker 6>It's a little too soon to say. So much of

0:27:09.760 --> 0:27:13.320
<v Speaker 6>these departures have been in the last few months, and

0:27:13.359 --> 0:27:15.280
<v Speaker 6>of course, you know, with the end of the fiscal

0:27:15.359 --> 0:27:18.480
<v Speaker 6>year now those who took the different resignation offer will

0:27:18.520 --> 0:27:21.960
<v Speaker 6>officially be removed from the payroll. So we you know,

0:27:22.280 --> 0:27:24.919
<v Speaker 6>we're still seeing a lot of that hiring ongoing. You know,

0:27:25.000 --> 0:27:27.320
<v Speaker 6>we certainly see that they are actively trying to hire.

0:27:27.359 --> 0:27:29.960
<v Speaker 6>And the Civil Rights Division, for example, we've seen the

0:27:30.040 --> 0:27:32.919
<v Speaker 6>lead political appointee leading the office, you know, posting on

0:27:32.960 --> 0:27:35.840
<v Speaker 6>social media, we're hiring, We're hiring. So we are seeing

0:27:35.840 --> 0:27:38.520
<v Speaker 6>an active effort, but I think it's just a little

0:27:38.560 --> 0:27:41.399
<v Speaker 6>too soon to tell at what speed they're going to

0:27:41.400 --> 0:27:44.320
<v Speaker 6>be able to do so. For career jobs, usually there's

0:27:44.680 --> 0:27:46.919
<v Speaker 6>a bit of a merit based process that has to

0:27:46.920 --> 0:27:48.880
<v Speaker 6>be involved to get these people put in place. It's

0:27:48.880 --> 0:27:50.720
<v Speaker 6>not something that can be done in the day.

0:27:51.119 --> 0:27:54.120
<v Speaker 4>It's a question I keep asking. Thanks so much, Suzanne.

0:27:54.400 --> 0:27:59.280
<v Speaker 4>That's Bloomberg Law reporter Suzanne Monnac. A litigation funder, is

0:27:59.359 --> 0:28:04.639
<v Speaker 4>filing law lawsuits against prediction market platform Calshee in six states,

0:28:05.119 --> 0:28:09.080
<v Speaker 4>using an eighteenth century gambling law in an attempt to

0:28:09.240 --> 0:28:14.480
<v Speaker 4>clawback losses from predictions gone wrong. The suits allege that

0:28:14.560 --> 0:28:19.080
<v Speaker 4>Calshi is violating state and federal law by allowing residents

0:28:19.119 --> 0:28:23.960
<v Speaker 4>to place illegal, unregulated wagers on events such as sports

0:28:24.000 --> 0:28:29.600
<v Speaker 4>and elections. Veritis Management and its chief executive, Maximilian Amster,

0:28:30.040 --> 0:28:34.720
<v Speaker 4>are behind entities that filed suits in Ohio, Kentucky, Illinois,

0:28:34.760 --> 0:28:40.400
<v Speaker 4>South Carolina, Massachusetts, and Georgia. The suits referenced state versions

0:28:40.440 --> 0:28:44.560
<v Speaker 4>of the anti illegal Gambling Statute of Anne, which lets

0:28:44.680 --> 0:28:48.400
<v Speaker 4>losing third parties sue winners for the values of losses

0:28:48.560 --> 0:28:52.320
<v Speaker 4>plus fees. Joining me is Professor M. Todd Henderson of

0:28:52.400 --> 0:28:56.560
<v Speaker 4>the University of Chicago Law School tell us about this

0:28:56.760 --> 0:28:59.760
<v Speaker 4>prediction market platform and these lawsuits.

0:29:00.760 --> 0:29:05.920
<v Speaker 1>So cal She is a company that offers prediction markets

0:29:06.600 --> 0:29:11.040
<v Speaker 1>on a variety of things. And these prediction markets have

0:29:11.720 --> 0:29:15.680
<v Speaker 1>a pretty simple feature, which is they will write a

0:29:15.720 --> 0:29:19.200
<v Speaker 1>contract that says something like, there's a state of the

0:29:19.240 --> 0:29:22.560
<v Speaker 1>world in the future, Trump becomes president, the Chiefs win

0:29:22.640 --> 0:29:25.600
<v Speaker 1>the super Bowl, the Fed lowers interest rates by a

0:29:25.600 --> 0:29:28.680
<v Speaker 1>certain amount, and if that state of the world comes true,

0:29:28.720 --> 0:29:31.480
<v Speaker 1>this contract will pay one dollar, and if this state

0:29:31.520 --> 0:29:33.880
<v Speaker 1>of the world does not come true, they will pay zero.

0:29:34.440 --> 0:29:37.600
<v Speaker 1>And then they will offer those contracts for sale, and

0:29:37.760 --> 0:29:40.560
<v Speaker 1>those contracts will have a price. People will trade them,

0:29:40.880 --> 0:29:44.760
<v Speaker 1>and the idea is that that price will reflect something

0:29:44.920 --> 0:29:47.840
<v Speaker 1>like the market's probability sense of whether this thing is

0:29:47.840 --> 0:29:50.160
<v Speaker 1>going to come true. So if a Trump is going

0:29:50.160 --> 0:29:54.480
<v Speaker 1>to be elected president, contract is trading for fifty six cents.

0:29:54.800 --> 0:29:57.520
<v Speaker 1>That implies a probability that Trump is going to be

0:29:57.560 --> 0:30:00.360
<v Speaker 1>elected president with about a fifty six percent ability, And

0:30:00.400 --> 0:30:02.000
<v Speaker 1>if you think it's much lower than that, you can

0:30:02.080 --> 0:30:04.040
<v Speaker 1>sell that contract. You sort of short it like you

0:30:04.040 --> 0:30:06.600
<v Speaker 1>would in the stock market. So they offer these contracts

0:30:06.640 --> 0:30:09.160
<v Speaker 1>for sale and they're just a market like the New

0:30:09.200 --> 0:30:12.920
<v Speaker 1>York Stock Exchange. That enables buyers and sellers to come

0:30:12.920 --> 0:30:15.160
<v Speaker 1>together and write the particular contracts, just like the New

0:30:15.200 --> 0:30:18.120
<v Speaker 1>York Stock Exchange list Companies for sale and so KALs.

0:30:18.120 --> 0:30:21.400
<v Speaker 1>She's offering these prediction markets in a variety of different places,

0:30:22.400 --> 0:30:25.840
<v Speaker 1>and people have the view and this goes back way

0:30:25.880 --> 0:30:29.800
<v Speaker 1>before these lawsuits that these are gambling, and there's been

0:30:29.840 --> 0:30:33.920
<v Speaker 1>some real hostility in the federal government towards these prediction markets.

0:30:34.360 --> 0:30:38.200
<v Speaker 1>The regulators of these things, like the CFTC has been

0:30:38.320 --> 0:30:40.920
<v Speaker 1>quite hostile to them. There were some limited carve outs

0:30:40.920 --> 0:30:44.480
<v Speaker 1>which we could talk about, but the prediction markets have

0:30:44.800 --> 0:30:47.840
<v Speaker 1>sort of blazed ahead and offered them in a variety

0:30:47.840 --> 0:30:51.320
<v Speaker 1>of states, especially in places where gambling is not legal,

0:30:51.720 --> 0:30:57.240
<v Speaker 1>like Ohio. And there is an Ohio statute that says,

0:30:57.280 --> 0:31:00.640
<v Speaker 1>you know, not only is gambling not allowed here, but

0:31:00.920 --> 0:31:04.320
<v Speaker 1>that people who are not parties to a particular wager

0:31:04.440 --> 0:31:07.719
<v Speaker 1>can sue to enforce our anti gambling ban. And so

0:31:07.760 --> 0:31:09.760
<v Speaker 1>that's what these that's what these suits are. They've got

0:31:09.880 --> 0:31:15.360
<v Speaker 1>litigants which are trying to enforce Ohio's anti gambling ban

0:31:16.280 --> 0:31:18.640
<v Speaker 1>through a meme set up by the Ohio legislature for

0:31:18.720 --> 0:31:22.080
<v Speaker 1>third parties. Again, someone not betting whether Trump's going to

0:31:22.120 --> 0:31:24.120
<v Speaker 1>win or the chiefs or whatever have you. But a

0:31:24.120 --> 0:31:26.440
<v Speaker 1>third party is suing to enforce that ban. So that's

0:31:26.480 --> 0:31:27.280
<v Speaker 1>what these suits are.

0:31:28.120 --> 0:31:31.520
<v Speaker 4>So is it plaintiffs lawyers that are suing on behalf

0:31:31.760 --> 0:31:34.080
<v Speaker 4>of clients who are the plaintiffs?

0:31:34.520 --> 0:31:37.800
<v Speaker 1>Well, no, not, as I understand it. So as I

0:31:37.880 --> 0:31:42.080
<v Speaker 1>understand the statute, it's quite clever, and they have an

0:31:42.120 --> 0:31:46.080
<v Speaker 1>analog going back into our British ancestors. I think it's

0:31:46.120 --> 0:31:48.560
<v Speaker 1>the Statute of ann from seventeen to something or other.

0:31:48.720 --> 0:31:51.000
<v Speaker 1>But the general gist of this is that, you know,

0:31:51.040 --> 0:31:53.800
<v Speaker 1>gambling is illegal in a lot of places, and so

0:31:53.920 --> 0:31:57.280
<v Speaker 1>two people enter into a wager that is illegal under

0:31:57.280 --> 0:31:59.840
<v Speaker 1>state law. So let's just say I've got a bookie.

0:32:00.160 --> 0:32:02.840
<v Speaker 1>I live in Columbus, Ohio, and I say to my bookie,

0:32:02.960 --> 0:32:05.040
<v Speaker 1>I'd really liked it bet on Ohio State to win

0:32:05.080 --> 0:32:08.720
<v Speaker 1>this weekend. You know what's the odds. My bookie tells me,

0:32:08.760 --> 0:32:10.480
<v Speaker 1>I make the bet. There's somebody on the other side

0:32:10.520 --> 0:32:14.120
<v Speaker 1>of that transaction. And let's say that I lose the

0:32:14.160 --> 0:32:17.239
<v Speaker 1>bet and my bookie wants to collect from me, and

0:32:17.320 --> 0:32:20.760
<v Speaker 1>I say, sorry, you can't collect from me. Well, my

0:32:20.800 --> 0:32:23.520
<v Speaker 1>bookie is not going to go into court because the

0:32:23.560 --> 0:32:27.440
<v Speaker 1>contract underlying contract is illegal and courts are not going

0:32:27.480 --> 0:32:32.680
<v Speaker 1>to enforce illegal contracts. So knowing that my booky's going

0:32:32.680 --> 0:32:35.160
<v Speaker 1>to resort to well, let's just call them other means

0:32:35.360 --> 0:32:39.480
<v Speaker 1>it could be you know, kicking me out of the pool.

0:32:39.520 --> 0:32:41.640
<v Speaker 1>I can't use them as my booky again anymore. That'd

0:32:41.680 --> 0:32:46.320
<v Speaker 1>be easy. Maybe uses intimidation or violence against me. That's

0:32:46.320 --> 0:32:49.000
<v Speaker 1>a phenomenon that happens in any kind of black market.

0:32:49.720 --> 0:32:53.520
<v Speaker 1>So in that world where people who are parties to

0:32:53.560 --> 0:32:56.880
<v Speaker 1>illegal contracts will not sue to enforce them. It's a

0:32:56.920 --> 0:32:59.680
<v Speaker 1>drug deal. My drug dealer gave me, you know, baking,

0:32:59.680 --> 0:33:02.080
<v Speaker 1>so instead of the cocaine that I wanted, I'm not

0:33:02.120 --> 0:33:04.760
<v Speaker 1>going to sue him in court because I would be

0:33:04.800 --> 0:33:08.440
<v Speaker 1>revealing myself to be doing something illegal. So I think

0:33:08.480 --> 0:33:10.840
<v Speaker 1>the premise of the statute is that that's also true

0:33:10.880 --> 0:33:14.880
<v Speaker 1>for gambling and here prediction markets. And so the plaintiffs

0:33:14.920 --> 0:33:17.840
<v Speaker 1>are not going to come forward and sue, or at

0:33:17.920 --> 0:33:21.720
<v Speaker 1>least arguably so this plaintiff is a third party, they

0:33:21.760 --> 0:33:24.680
<v Speaker 1>have nothing, they're total strangers to this case. But the

0:33:24.720 --> 0:33:28.400
<v Speaker 1>statue gives them what's called standing, just the right to

0:33:28.480 --> 0:33:32.240
<v Speaker 1>sue even though they haven't been harmed. Normally you have

0:33:32.280 --> 0:33:34.720
<v Speaker 1>to be harmed to bring a lawsuit. But what their

0:33:34.800 --> 0:33:36.800
<v Speaker 1>statue does is sort of set them up as a

0:33:36.840 --> 0:33:40.120
<v Speaker 1>kind of private attorney general. You know, the attorney general

0:33:40.200 --> 0:33:42.760
<v Speaker 1>could bring a suit to shut down the prediction market,

0:33:43.320 --> 0:33:47.920
<v Speaker 1>but we could also outsource that to private plaintiffs lawyers

0:33:48.120 --> 0:33:50.120
<v Speaker 1>to bring the suit on behalf of them. It's a

0:33:50.120 --> 0:33:53.360
<v Speaker 1>little bit like a class action lawsuit in securities fraud

0:33:53.440 --> 0:33:55.800
<v Speaker 1>or something like that, where the lawyers are basically the

0:33:55.840 --> 0:33:58.640
<v Speaker 1>people bringing the case. In that case, you know, they

0:33:58.680 --> 0:34:01.720
<v Speaker 1>do find a plaintiff who who suffered some damage. Here,

0:34:01.920 --> 0:34:04.720
<v Speaker 1>it looks like the statue doesn't require that because of

0:34:04.760 --> 0:34:07.560
<v Speaker 1>this problem about you know, outing yourself as being a criminal.

0:34:08.320 --> 0:34:09.279
<v Speaker 4>It seems odd to me.

0:34:09.520 --> 0:34:13.399
<v Speaker 1>Yeah, it's I should say. One thing that's a very

0:34:13.400 --> 0:34:16.160
<v Speaker 1>cool historical kind of footnote. There was a case in

0:34:16.200 --> 0:34:18.319
<v Speaker 1>England around the time the statue was passed called the

0:34:18.400 --> 0:34:21.840
<v Speaker 1>Highwayman's case. And a highwayman was a sort of robber

0:34:21.880 --> 0:34:24.000
<v Speaker 1>who would you know, hold you up on the on

0:34:24.080 --> 0:34:27.040
<v Speaker 1>the road between you know, Stratford on Avon in London,

0:34:27.560 --> 0:34:32.680
<v Speaker 1>and two criminals had a deal and one of them

0:34:32.680 --> 0:34:35.600
<v Speaker 1>backed out on you know, maybe sharing the proceeds from

0:34:35.600 --> 0:34:38.000
<v Speaker 1>this job that they did. And one sued the other

0:34:38.520 --> 0:34:41.799
<v Speaker 1>and the judge in the court in London ordered both

0:34:41.840 --> 0:34:43.680
<v Speaker 1>men to be hung. And so that was a kind

0:34:43.680 --> 0:34:47.040
<v Speaker 1>of extreme example of you know, do not bring your

0:34:47.680 --> 0:34:50.320
<v Speaker 1>we're both criminals, but we have a contract dispute to court.

0:34:50.880 --> 0:34:53.239
<v Speaker 1>And in that world, something like the statute de Van

0:34:53.320 --> 0:34:55.640
<v Speaker 1>makes a ton of sense because we do want to

0:34:55.680 --> 0:34:58.480
<v Speaker 1>deter like the king or the US government wants to

0:34:58.520 --> 0:35:01.400
<v Speaker 1>deter the bad, say whether it's robbing people in the

0:35:01.480 --> 0:35:04.200
<v Speaker 1>highway or engaging in illegal gambling. But we can't rely

0:35:04.360 --> 0:35:07.120
<v Speaker 1>on plaintips to bring those suits because they'll be complicit,

0:35:07.160 --> 0:35:08.440
<v Speaker 1>and so we need to have a third party.

0:35:08.760 --> 0:35:11.480
<v Speaker 4>And so the third party is the one who recovers

0:35:11.520 --> 0:35:13.360
<v Speaker 4>what they call ill gotten gains.

0:35:13.920 --> 0:35:17.399
<v Speaker 1>I believe. So I'm not an expert on this particular statute.

0:35:17.440 --> 0:35:20.480
<v Speaker 1>I find it completely amazing as someone who teaches a

0:35:20.520 --> 0:35:23.320
<v Speaker 1>law of economics, and you know, it's genius kind of

0:35:23.360 --> 0:35:26.840
<v Speaker 1>statute to mobilize people. It is different than the normal

0:35:27.120 --> 0:35:30.719
<v Speaker 1>kind of bounty that we pay. There are other examples.

0:35:31.120 --> 0:35:35.759
<v Speaker 1>There's a doctrine called key tam qui tam and in

0:35:35.840 --> 0:35:40.759
<v Speaker 1>federal government law that if you are someone who you know,

0:35:40.800 --> 0:35:44.640
<v Speaker 1>let's see, Lockheed Martin is overcharging the federal government for

0:35:44.680 --> 0:35:47.759
<v Speaker 1>the latest stealth fighter, and you work at Lockheed Martin,

0:35:47.880 --> 0:35:50.440
<v Speaker 1>you know they're sending bills that are too high. You

0:35:50.520 --> 0:35:53.879
<v Speaker 1>can tell the government, and the government will sue. And

0:35:54.280 --> 0:35:56.240
<v Speaker 1>you know, let's say they collect one hundred million dollars,

0:35:56.280 --> 0:35:58.879
<v Speaker 1>you get your Lion charity and it's some twenty five

0:35:58.960 --> 0:36:02.000
<v Speaker 1>thirty percent of that. So we pay someone a bounty

0:36:02.120 --> 0:36:05.319
<v Speaker 1>to kind of uncover what we think the government might

0:36:05.360 --> 0:36:07.759
<v Speaker 1>not otherwise be able to uncover. So you can think

0:36:07.800 --> 0:36:09.839
<v Speaker 1>of this statue in high It has been a little

0:36:09.840 --> 0:36:12.880
<v Speaker 1>bit like a key tam suit, except instead of alerting

0:36:12.920 --> 0:36:16.080
<v Speaker 1>the government, right, you could have a system where the

0:36:16.120 --> 0:36:18.360
<v Speaker 1>people who know about the illegal betting go to the

0:36:18.360 --> 0:36:20.440
<v Speaker 1>Attorney General of Ohio and say, I know this stuff's

0:36:20.480 --> 0:36:24.040
<v Speaker 1>going on. Instead of that and taking some percentage like

0:36:24.040 --> 0:36:27.000
<v Speaker 1>a plane of lawyer normally would, they can get the

0:36:27.000 --> 0:36:29.319
<v Speaker 1>whole thing, and the whole thing is the incentive for

0:36:29.360 --> 0:36:30.759
<v Speaker 1>them to bring the suit in the first place. Now,

0:36:30.760 --> 0:36:33.080
<v Speaker 1>I should say, what's a little bit strange about this

0:36:33.200 --> 0:36:37.160
<v Speaker 1>case is it's not exactly a surprise to the Attorney

0:36:37.200 --> 0:36:40.480
<v Speaker 1>General of Ohio that CAW she is offering prediction markets

0:36:40.520 --> 0:36:44.080
<v Speaker 1>in Ohio. So we really didn't need a third party

0:36:44.480 --> 0:36:48.000
<v Speaker 1>to bring this case because everybody knows that CAW she's

0:36:48.040 --> 0:36:50.960
<v Speaker 1>doing this, and so that makes it a little bit strange.

0:36:51.400 --> 0:36:54.400
<v Speaker 4>Is it a litigation funder that's that's driving suits?

0:36:54.640 --> 0:36:59.799
<v Speaker 1>That's my understanding is litigation finance, which you know, we're

0:36:59.840 --> 0:37:03.360
<v Speaker 1>the world of the strange. Let's go even stranger that

0:37:03.480 --> 0:37:08.920
<v Speaker 1>they're the sewer because litigation finance itself is quite controversial.

0:37:09.440 --> 0:37:11.799
<v Speaker 1>They're using a stash van from the seventeen hundreds that's

0:37:11.800 --> 0:37:14.160
<v Speaker 1>been put into a Hio law Well back in the

0:37:14.160 --> 0:37:18.160
<v Speaker 1>seventeen hundreds through to about you know, ten years ago,

0:37:18.640 --> 0:37:23.680
<v Speaker 1>every common law jurisdiction banned lawyers from engaging in the

0:37:23.760 --> 0:37:25.680
<v Speaker 1>kind of practice that these lawyers are engaging, and that

0:37:25.800 --> 0:37:29.439
<v Speaker 1>is a litigation finance arm who will kind of buy

0:37:29.480 --> 0:37:32.360
<v Speaker 1>a claim from someone and bring it. And so this

0:37:32.480 --> 0:37:34.520
<v Speaker 1>is very new. You know, when I was in law

0:37:34.520 --> 0:37:37.879
<v Speaker 1>school so many years ago, lawyers weren't allowed to advertise,

0:37:38.280 --> 0:37:40.279
<v Speaker 1>and of course we've crossed that line and now we've

0:37:40.320 --> 0:37:43.600
<v Speaker 1>got lawyers who are raising money from investors to invest

0:37:43.680 --> 0:37:47.680
<v Speaker 1>in lawsuits and in some jurisdictions. Now, you know, non

0:37:47.760 --> 0:37:50.200
<v Speaker 1>lawyers can own law firms, so they can raise money

0:37:50.280 --> 0:37:53.080
<v Speaker 1>again to sue people, and so that's another kind of

0:37:53.120 --> 0:37:55.680
<v Speaker 1>complication that people might worry about.

0:37:56.320 --> 0:38:02.440
<v Speaker 4>And so they're suing not only Ohio, but kentuckyise South Carolina, Massachusetts,

0:38:02.520 --> 0:38:07.000
<v Speaker 4>and Georgia. If these suits are successful, then does that

0:38:07.080 --> 0:38:11.160
<v Speaker 4>mean these prediction market platforms won't be able to operate

0:38:11.200 --> 0:38:12.520
<v Speaker 4>in those states?

0:38:12.840 --> 0:38:15.640
<v Speaker 1>Well, I'm not in the speculation. I mean, I have

0:38:15.719 --> 0:38:19.839
<v Speaker 1>no idea. Damages are probably pretty substantial. And again I'm

0:38:19.840 --> 0:38:21.320
<v Speaker 1>not an expert on the statute, so I don't know

0:38:21.360 --> 0:38:23.920
<v Speaker 1>if there's limitations on the damages or what the damages

0:38:23.920 --> 0:38:26.759
<v Speaker 1>would be, or their caps. And I should say, you know,

0:38:27.400 --> 0:38:29.719
<v Speaker 1>I kind of have two views about this. On the

0:38:29.760 --> 0:38:34.279
<v Speaker 1>one hand, the prediction markets who are offering things like

0:38:34.360 --> 0:38:37.840
<v Speaker 1>sports betting, Okay, so now let's just stick with the

0:38:37.880 --> 0:38:41.520
<v Speaker 1>Super Bowl. I'm a Steelers fan, so I want to

0:38:41.520 --> 0:38:44.279
<v Speaker 1>bet that the Steelers are going to win the Super Bowl. Well,

0:38:44.320 --> 0:38:48.080
<v Speaker 1>I can do that in some places through legal sports books.

0:38:48.840 --> 0:38:51.920
<v Speaker 1>I can go to Las Vegas. If I'm in certain places,

0:38:51.960 --> 0:38:54.520
<v Speaker 1>I can go on to DraftKings or bets Fair or

0:38:54.680 --> 0:38:57.520
<v Speaker 1>ESPN BAT or whatever where those things are legal and

0:38:57.560 --> 0:39:01.759
<v Speaker 1>I can place that bet. Presumably the states where I

0:39:01.800 --> 0:39:04.279
<v Speaker 1>can't do that don't want me betting on whether the

0:39:04.280 --> 0:39:06.759
<v Speaker 1>Steelers are going to win the Super Bowl. And now Kyle,

0:39:06.840 --> 0:39:10.080
<v Speaker 1>she comes along and says, you know, Ohio, Kentucky, Illinois

0:39:10.120 --> 0:39:15.399
<v Speaker 1>in places, Oh, we're not gambling, We're predicting, And at

0:39:15.440 --> 0:39:20.280
<v Speaker 1>some level you say, Okay, this is absurd. These prediction markets,

0:39:20.320 --> 0:39:25.080
<v Speaker 1>which have a really very clever origin, and I've written

0:39:25.320 --> 0:39:27.680
<v Speaker 1>papers about how cool they are and how useful they

0:39:27.680 --> 0:39:30.640
<v Speaker 1>can be to the public and for businesses to predict

0:39:30.680 --> 0:39:34.680
<v Speaker 1>things and scientists and defense and all sorts of areas.

0:39:34.800 --> 0:39:37.040
<v Speaker 1>I think they should be much more widely used. But

0:39:37.160 --> 0:39:39.680
<v Speaker 1>using them to bet on sports doesn't make a ton

0:39:39.760 --> 0:39:42.600
<v Speaker 1>of sense, because we already have sports betting, and that's

0:39:42.640 --> 0:39:46.040
<v Speaker 1>something that's easy to describe, and we could just, you know,

0:39:46.120 --> 0:39:50.160
<v Speaker 1>recharacterizing it as prediction market is a kind of arbitrage

0:39:50.160 --> 0:39:52.880
<v Speaker 1>around the law that is I think a bad one. So,

0:39:52.960 --> 0:39:57.360
<v Speaker 1>for instance, imagine that a prediction market arose and said,

0:39:57.520 --> 0:40:00.800
<v Speaker 1>we'll let you bet on whether or not Navidia profits

0:40:00.840 --> 0:40:04.600
<v Speaker 1>will be higher next quarter than this quarter. Well, we

0:40:04.640 --> 0:40:07.239
<v Speaker 1>already have that market that's called the stock exchange, and

0:40:07.320 --> 0:40:10.440
<v Speaker 1>so we don't need a prediction market for that. So,

0:40:11.520 --> 0:40:14.560
<v Speaker 1>you know, offering that prediction market would just be arbitrage

0:40:14.600 --> 0:40:16.680
<v Speaker 1>around you know, a bunch of sec rules and things

0:40:16.719 --> 0:40:20.239
<v Speaker 1>like that, and it's not adding something new. So I

0:40:20.239 --> 0:40:25.200
<v Speaker 1>could imagine the prediction market kind of compromise being you

0:40:25.239 --> 0:40:28.480
<v Speaker 1>can offer prediction markets in places where it's not gambling

0:40:28.560 --> 0:40:31.759
<v Speaker 1>on things that are predictions that are valuable, predictions that

0:40:31.800 --> 0:40:35.640
<v Speaker 1>are not sports, and maybe not the stock markets. Those

0:40:35.680 --> 0:40:38.200
<v Speaker 1>are different markets. So if you're predicting on whether or

0:40:38.239 --> 0:40:44.839
<v Speaker 1>not it's going to rain in Ohio, well, farmers might

0:40:44.920 --> 0:40:48.000
<v Speaker 1>really want that information, and that market might be better

0:40:48.080 --> 0:40:51.120
<v Speaker 1>than the weather people's forecasts, and so that would be

0:40:51.120 --> 0:40:53.839
<v Speaker 1>a new thing. It's developing new information, and it's it's

0:40:53.920 --> 0:40:56.359
<v Speaker 1>creating a market where there really isn't one that could

0:40:56.360 --> 0:40:59.240
<v Speaker 1>be really useful, or predicting political outcomes or all kinds

0:40:59.239 --> 0:41:01.279
<v Speaker 1>of you know, is ice going to come to this

0:41:01.840 --> 0:41:04.600
<v Speaker 1>town or whatever? Those things could all be very valuable

0:41:04.640 --> 0:41:08.600
<v Speaker 1>production of social information that isn't just a pure regulatory arbitrage.

0:41:09.120 --> 0:41:13.640
<v Speaker 1>So I'm both quite bullish about the use of prediction markets.

0:41:13.680 --> 0:41:15.200
<v Speaker 1>I've written about this. I think we should use them

0:41:15.200 --> 0:41:18.840
<v Speaker 1>for a lot more stuff. Companies use them internally to

0:41:18.960 --> 0:41:22.080
<v Speaker 1>great success, and I think the world is poorer for

0:41:22.160 --> 0:41:26.040
<v Speaker 1>it that we don't engage markets to predict stuff. Instead,

0:41:26.080 --> 0:41:29.680
<v Speaker 1>we rely on blowhard academics or people on TV or

0:41:29.680 --> 0:41:32.760
<v Speaker 1>whatever to do that. So I want to deploy markets

0:41:32.760 --> 0:41:36.640
<v Speaker 1>in new places. But I think the offering sports betting

0:41:36.719 --> 0:41:38.800
<v Speaker 1>through a prediction market, just because you call it something

0:41:38.840 --> 0:41:40.360
<v Speaker 1>else doesn't make it different.

0:41:41.400 --> 0:41:43.640
<v Speaker 4>These suits have a long way to go, so we'll

0:41:43.680 --> 0:41:46.839
<v Speaker 4>see what happens. Thanks so much for joining me. That's

0:41:46.880 --> 0:41:51.080
<v Speaker 4>Professor M. Todd Henderson of the University of Chicago Law School,

0:41:51.600 --> 0:41:53.920
<v Speaker 4>and that's it for this edition of The Bloomberg Law Show.

0:41:54.239 --> 0:41:56.640
<v Speaker 4>Remember you can always get the latest legal news on

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0:42:01.120 --> 0:42:06.160
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0:42:06.560 --> 0:42:09.160
<v Speaker 4>and remember to tune into The Bloomberg Law Show every

0:42:09.200 --> 0:42:13.120
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<v Speaker 4>and you're listening to Bloomberg