Speaker 1: This is Bloomberg Law with June Grossel from Bloomberg Radio.
Speaker 2: The place is burning down, and they pretend like there's
Speaker 2: nothing happening.
Speaker 3: The facts on the ground and Oregon haven't changed. There's
Speaker 3: no need for military intervention in Oregon. There's no insurrection
Speaker 3: in Portland. There's no threat to national security. Oregon is
Speaker 3: our home. It is not a military target.
Speaker 4: President Trump still maintains that Portland is burning to the
Speaker 4: ground and is war ravaged, despite what the Governor of Oregon,
Speaker 4: Tina Kotek, has said, and despite the fact that a
Speaker 4: federal judge found over the weekend that there were no
Speaker 4: facts to support Trump's claims that anarchists and professional agitators
Speaker 4: were trying to burn the city down. Judge Karen Immergut,
Speaker 4: a Trump appointee, issued two orders in two days. The
Speaker 4: first block the Trump administration from deploying Oregon National Guard
Speaker 4: troops to Portland, but the judge said the administration directly
Speaker 4: contravened that order by calling up the California Guard, so
Speaker 4: she issued a second order, blocking the administration from sending
Speaker 4: any National Guard troops into Portland. Oregon's Attorney General, Dan
Speaker 4: Rayfield described the administration's actions as whack a mole trying
Speaker 4: to use guard units from different states to get around
Speaker 4: court orders and the rule of law. The judge's order
Speaker 4: was not some minor procedural point for the president to
Speaker 4: work around like my fourteen year old does when he
Speaker 4: doesn't like my answers. Judge Immergut's ruling found that the
Speaker 4: Constitution leaves policing powers to state and local governments, while
Speaker 4: granting Congress the power to call up state militias to
Speaker 4: execute federal laws, suppress insurrections, and repel invasions. Quote. This
Speaker 4: is a nation of constitutional law, not martial law. My
Speaker 4: guest is constitutional law expert Harold Krent, a professor at
Speaker 4: the Chicago Kent College of Law. So, how quite an
Speaker 4: opinion from a Trump appoint de and she said the
Speaker 4: administration had violated her order. It seems like this is
Speaker 4: a direct contravention of the order this court issued yesterday.
Speaker 4: Tell us what the Trump administration was trying to do here.
Speaker 5: The Trump administration, somewhat parallel to Los Angeles and perhaps
Speaker 5: to Chicago as well, is trying to send National Guards
Speaker 5: troops into Portland in what they think is an effort
Speaker 5: to restore order, and principally, the judge in Oregon said
Speaker 5: that there's been no basis shown for federalizing the National Guard.
Speaker 5: In other words, that President Trump lacks the authority under
Speaker 5: the statutory scheme to send National Guards into Portland because
Speaker 5: there's no insurrection, there's no invasion, there's no showing that
Speaker 5: there's a failure general law enforcement. And so she then
Speaker 5: decided to ensure that not only was there no troops
Speaker 5: sent from Oregon, no troops sent from California, no troops
Speaker 5: sent from anywhere, in order to ensure that the administration
Speaker 5: did not try to serve invent her order. Whether or
Speaker 5: not the government will comply with her order remains to
Speaker 5: be seen, but we're watching carefully.
Speaker 4: She said it was a direct contravention. But what had
Speaker 4: happened was she ordered that they couldn't send the Oregon
Speaker 4: National Guard troops into Portland. So the Trump administration then
Speaker 4: moved to call up the Texas National Guard and the
Speaker 4: California National Guard. Is that a direct contravention or were
Speaker 4: they trying to use a loophole.
Speaker 5: I think they're trying to use a loophole, and so
Speaker 5: I don't think it was any kind of contemptuous behavior. Certainly,
Speaker 5: it violated the spirit of the Oregon Courts order, but
Speaker 5: not the letter. And indeed, I think that the Oregon
Speaker 5: Court's decision is iffy to put it that way. It's
Speaker 5: true that the prerequisites for federalized in the National Guard
Speaker 5: had not been met statutorily, but the Supreme Court has
Speaker 5: recognized a kind of inherent protective power of the president
Speaker 5: to protect federal facilities at least, and so to the
Speaker 5: extent that the National Guard were used not for general
Speaker 5: law enforcement, certainly, but just to protect federal buildings in Portland,
Speaker 5: I think the president would be on stronger ground. Now,
Speaker 5: of course there's no factual predicate for thinking that the
Speaker 5: federal buildings are in jeopardy in Portland or in Chicago,
Speaker 5: but that at least would be I think put the
Speaker 5: president on the strongest legal ground.
Speaker 4: I mean, the judge made a factual determination. She said
Speaker 4: the president's determination was simply unchathered to the facts. He
Speaker 4: has claimed that the city's overrun with agitators and insurrectionists
Speaker 4: who are responsible for burning the city to the ground,
Speaker 4: and that Portland was war ravaged. So she's found that
Speaker 4: that's not true. Those facts that he suggested are not true.
Speaker 4: So then he doesn't have the power, does he.
Speaker 5: Yeah, the President's overreached, right, and the President should have
Speaker 5: made a much more narrow cabin decision stating that there
Speaker 5: was a potential or a real threaten in his understanding
Speaker 5: to federal facilities in Portland and therefore needed to dispatch
Speaker 5: National Guards troops in order to protect those buildings. But
Speaker 5: instead he is granted about Portland and anarchists for years
Speaker 5: and years, and he's just refreshing those means. And of
Speaker 5: course the court in Oregon was much more familiar with
Speaker 5: what's going on in Oregon, said, you know, if that's
Speaker 5: a factual basis, you're out of court.
Speaker 4: Why do you think that Trump administration is making these
Speaker 4: overbroad arguments about cities burning down and violence on the
Speaker 4: streets everywhere when there's no factual basis for it, and
Speaker 4: there's video that shows there's no basis. Any violence, if
Speaker 4: there is any, seems to be limited to the areas
Speaker 4: around federal buildings with ice facilities. Why not limit it
Speaker 4: to what's provable.
Speaker 5: I mean, there is a political question in underlying your statement,
Speaker 5: and maybe a psychological one as well. Is President Trump
Speaker 5: doing this to inure the American to the site of
Speaker 5: federal troops on their streets. If so, incredibly frightening, because
Speaker 5: it may mean that he's planning to use federal troops
Speaker 5: for other purposes, such as, you know, during I move
Speaker 5: the day, but during the midterms, or alternatively, is this
Speaker 5: just something that he can help his base within by
Speaker 5: suggesting he's strong and he cares about people, and he's
Speaker 5: going to send troops wherever it's needed to protect against lawlessness.
Speaker 5: I don't know which it is, but certainly this has
Speaker 5: been a consistent team with his He wants to send
Speaker 5: troops to be tough, to be seen as the law
Speaker 5: and order president, even if troops aren't needed, and even
Speaker 5: if that violates statutes, and even if it undermines the
Speaker 5: tradition in our country of not having a standing army
Speaker 5: or even the National Guard being used for general law
Speaker 5: enforcement purposes.
Speaker 4: The Oregon Ag described this as a whack a mole,
Speaker 4: with different states Guard units being used to get around
Speaker 4: the court's order. The judge she expressed frustration with the
Speaker 4: Justice Department's lawyer, Eric Hamilton, saying he was missing the
Speaker 4: point of her earlier order, and she said, quote mister Hamilton,
Speaker 4: you're an officer of the court. Do you believe this
Speaker 4: is an appropriate way for you to deal with mind
Speaker 4: order or with an order you disagree with?
Speaker 5: Yeah, I mean, to be fair, I think that the
Speaker 5: Justice Department was reading the order narrowly, which it's entitled
Speaker 5: to do. And the order banned the Oregon National Guard
Speaker 5: from being federalized and didn't talk about the Texas National
Speaker 5: Guard or the California National Guard. And maybe that was
Speaker 5: just a failure of litigation, and that loophole has been
Speaker 5: closed forthwith. Certainly, again, it was against the spirit of
Speaker 5: the rulers, no question about it what the government did.
Speaker 5: But I don't think it's contemptuous.
Speaker 4: And explain the judge's ruling about why the deployment likely
Speaker 4: violated Oregon's Tenth Amendment rights.
Speaker 5: Well, the Oregon Governor isn't put in control of the
Speaker 5: National Guard of Oregon, and so here there is we
Speaker 5: have the president who's ordering the Oregon National Guard into
Speaker 5: active duty, despite the fact that the governor who's in
Speaker 5: charge of it, commander of it, has a client to
Speaker 5: do so. Therein lies the Tenth Amendment struggle, because seemingly
Speaker 5: the president has served the governor's authority to be, in
Speaker 5: effect the head of the troop's National Guard, at least
Speaker 5: within Oregon.
Speaker 4: On Sunday, California Governor Gavin Newsom filed a separate lawsuit
Speaker 4: to prevent Trump from sending his states National Guard to Oregon.
Speaker 4: So the national Guard is under the control of the
Speaker 4: governor of the state. So does the president have the
Speaker 4: authority to take that national Guard out of the control
Speaker 4: of the governor of the state and send them to
Speaker 4: another state.
Speaker 5: Yeah, I mean I think that obviously we don't have
Speaker 5: precedents on that power, and certainly I would think in
Speaker 5: an emergency, perhaps the authority might exist in the president
Speaker 5: to order a state's National Guard into active duty, even
Speaker 5: if the governor didn't want to. And this seems like
Speaker 5: a a far stretch, And that's why the temp amendment
Speaker 5: issue arises, because here there is a claim that the
Speaker 5: California the National Guard is needed in a different state,
Speaker 5: and that seems to directly cut against unless there's a
Speaker 5: national emergency or an insurrection, the idea of ordering one
Speaker 5: state's guard to go into another state, particularly without the
Speaker 5: approval of the governor, seems to be directly contrary to
Speaker 5: the regime of militias, which has long been supervised by
Speaker 5: state governors from the revolutionary time onward.
Speaker 4: Representative Adam Smith, the senior Democrat on the Armed Services Committee,
Speaker 4: has said that he couldn't remember another time when one
Speaker 4: state's national guard was deployed to another state over the
Speaker 4: objections of both governors involved. So no precedent, it's unprecedent.
Speaker 5: It's unprecedent here, and it seems to be directly an
Speaker 5: affront to the Tenth Amendments, which lodgist responsibility in states
Speaker 5: to their governors and to their elected representatives. But there's
Speaker 5: just hasn't been a lot of precedents on point, So
Speaker 5: obviously the court are going to have to weigh in.
Speaker 2: Donald Trump's deranged depiction of Chicago as a hellhole, a
Speaker 2: war zone and the worst and most dangerous city in
Speaker 2: the world was just complete bs. He clearly has decided
Speaker 2: to declare war on a great American city that has
Speaker 2: the lowest homicide rate in sixty years, in a state
Speaker 2: that has record employment and near record tourism.
Speaker 4: That's Governor JB. Pritzker. As Illinois becomes the latest state
Speaker 4: to sue the Trump administration over its plans to send
Speaker 4: National Guard troops into one of its cities against the
Speaker 4: wishes of state and local officials. I've been talking to
Speaker 4: Professor Harold Krant of the Chicago Kent College of Law,
Speaker 4: So how tell us what's happening in your city? Are there?
Speaker 5: I don't think they're there yet. The Attorney General has
Speaker 5: already filed suits. The Mayor of Chicago has made a
Speaker 5: vaguely worded statement like we must resist with all force,
Speaker 5: but no one knows what that means. So tensions are heightened,
Speaker 5: and we will expect to see National Guard troops from
Speaker 5: Texas evidently who will be coming to Chicago in nearboy
Speaker 5: And again, yet there has been problems with some kind
Speaker 5: of ICE enforcement. ICE has killed somebody in in Chicago,
Speaker 5: They've arrested other people and trying to make these raids,
Speaker 5: but there has been no complete falling apart of any
Speaker 5: kind of ordinary law enforcement. And indeed, there's been some
Speaker 5: evidence that ICE itself has instigated the protests by the
Speaker 5: manner in which they are trying to conduct raids. So again,
Speaker 5: this is I think for show. The President wants to
Speaker 5: be seen as tough in it if he wants to
Speaker 5: send troops into Chicago. He's, by god, he's going to
Speaker 5: do it, and Governor Abbott of Texas is willing to comply.
Speaker 5: So there's no Tenth Amendment violation there with using Texas
Speaker 5: National Guard troops.
Speaker 4: What's the basis of Illinois suit against the deployment, and.
Speaker 5: There's several bases, but they first would say that the
Speaker 5: statutory prerequisites are not met in terms of federalizing National Guard,
Speaker 5: in terms of there's no invasion, there's no absence of
Speaker 5: general law enforcement, there's no insurrection. And so then I
Speaker 5: think the issue will likely boil down to whether there
Speaker 5: is some kind of protective power inheriting the presidency that
Speaker 5: can allow the president to send troops, at least for
Speaker 5: the narrow purpose of defending federal facilities. This really gets
Speaker 5: us back to what Judge Bryer said in the California
Speaker 5: of litigation that if there is this protective power, it's
Speaker 5: very limited. It's limited to protecting federal facilities, and it
Speaker 5: cannot be used to justify a broad federal presence in
Speaker 5: terms of general law enforcement, in terms of accompanying ice
Speaker 5: officers on the along the way, et cetera, et cetera.
Speaker 5: So we may get involved in that, But that's that's
Speaker 5: down the road, because first there's a question of authorization.
Speaker 5: And you know, again President Trump is being too broad.
Speaker 5: He's saying there's lawlessness in Chicago, and that justifies him
Speaker 5: using the Texas National Guard. And that's if there's a
Speaker 5: factual predicate there to be decided. I'm sure the judges
Speaker 5: here will hear the evidence and they're very unlikely to
Speaker 5: back President Trump and his broad assertions.
Speaker 4: Did he also call up the Illinois National Guard?
Speaker 5: He has not done that yet to my knowledge, he
Speaker 5: has threatened to, and of course Governor Pritzker has has
Speaker 5: not only said that he would do over his objection,
Speaker 5: but at the same time he also said that the
Speaker 5: President Trump has not even called him to ask for permission,
Speaker 5: So that may happen down the line. Maybe it's already happened,
Speaker 5: but not to my knowledge, has.
Speaker 4: The Supreme Court even come close to resolving something similar
Speaker 4: in this sort of frame or not even close.
Speaker 5: And there are some vague similarities of what's happened under
Speaker 5: the Militia Acts back two hundred years ago, and there
Speaker 5: the Supreme Court has said that there is a protective
Speaker 5: power to some extent in the president to protect federal
Speaker 5: officials federal facilities, but nothing on this order, nothing on
Speaker 5: this extent. So this clash that President Trump was introduced
Speaker 5: in Oregon, Los Angeles and in Chicago is really unprecedented,
Speaker 5: and the course are going to have to make a
Speaker 5: very difficult decision in saying that. It's pretty clear that
Speaker 5: the statutory prerequisites have not been met. So I think
Speaker 5: they'll have to grapple with to what extent there's an
Speaker 5: implicit inherent authority at the president to protect federal officials
Speaker 5: and federal facilities and how far that extends. So very
Speaker 5: difficult issues for the courts to soar through, and obviously
Speaker 5: we've just had a beginning of that with the judges
Speaker 5: in California and Oregon.
Speaker 4: So last Tuesday, Trump said when he was addressing the
Speaker 4: military officers in Quantico that America is under invasion from
Speaker 4: within and he wants to use dangerous American cities run
Speaker 4: by Democrats as training grounds for the armed forces. Besides
Speaker 4: being frightening, does he have any authority.
Speaker 1: To do that?
Speaker 5: Well, what frightens me about that statement is is this
Speaker 5: is a training ground for what? Is this a dress
Speaker 5: rehearsal for a full scale attack on Democratic strongholds. Is
Speaker 5: this a rehearsal for getting us all prepared to see
Speaker 5: federal troops during the midterm elections. I mean, what is
Speaker 5: he actually preparing the military for. I don't know, but
Speaker 5: obviously this definitely cuts against our traditions, our norms about
Speaker 5: not having a standing army. And that's why we were
Speaker 5: afraid of having a standing army, because we've wanted to
Speaker 5: not see federal troops in the streets of all of
Speaker 5: our cities, both because of the respect given to states
Speaker 5: a state law enforcement and because of the dangers of
Speaker 5: having federal troops in civilian rules.
Speaker 4: There's a hearing date in the Illinois case on Thursday.
Speaker 4: We'll see what happens then. Thanks Hall. That's Professor Harold
Speaker 4: Krant of the Chicago Kent College of Law. At least
Speaker 4: a third of senior career leaders have left the Justice
Speaker 4: Department since the start of President Donald Trump's second term,
Speaker 4: taking with them centuries of combined expertise. That's according to
Speaker 4: a Bloomberg Law analysis. The departures, both voluntary and involuntary,
Speaker 4: represent an unprecedented level of departures in recent memory. With
Speaker 4: the divisions enforcing civil rights, immigration, and environmental laws among
Speaker 4: the hardest hit. They include at least one hundred and
Speaker 4: seven career Justice Department senior managers in the span of
Speaker 4: eight months. That's out of roughly three hundred and twenty
Speaker 4: career leadership positions immediately below presidential appointees included in a
Speaker 4: government directory. The loss of so many senior managers, many
Speaker 4: of whom have spent their entire careers rising through the
Speaker 4: department's ranks, could take generations to rebuild. The Justice Department
Speaker 4: is also losing many more trial attorneys and other career employees.
Speaker 4: Joining me is Bloomberg Law reporter Suzanne Monnak. Suzanne tell
Speaker 4: us about all these departures.
Speaker 6: We've seen this an unprecedented amount of attrition of the
Speaker 6: career workforce this year really across the government, but we've
Speaker 6: really seen it in a significant number as the Department
Speaker 6: of Justice. We used a federal director posted by the
Speaker 6: Office of Personnel Management that has, you know, hundreds and
Speaker 6: hundreds of career managers at the Justice Department. We focused
Speaker 6: on those who went through the career appointed process, and
Speaker 6: that's where we found that over a third of those
Speaker 6: who were in place in January and those career leadership
Speaker 6: positions are no longer there, and these include really broad
Speaker 6: types of positions whose include supervisors, you know, lead attorneys,
Speaker 6: managing attorneys, people in higher level positions. That's some senior
Speaker 6: executive service, but some other high level positions as well,
Speaker 6: who've been there for years and years, some of them
Speaker 6: who you know, keep work running at the Justice Department.
Speaker 4: Were these voluntary departures, were they fired?
Speaker 6: It's been a real mix. There have been examples of
Speaker 6: career managers at DJ who have been fully fired, some
Speaker 6: of whom are now contesting those terminations. A number of
Speaker 6: them chose to leave either. Some may have taken the
Speaker 6: deferred resignation policy that fork in the Road offer that
Speaker 6: was available across the government. Others may have just left
Speaker 6: for another job. And some were kind of left under
Speaker 6: what I might I was more dressed. Some people were
Speaker 6: forcibly reassigned or demoted, for example, to positions that they
Speaker 6: didn't want to be in, and so then felt kind
Speaker 6: of moved to leave the department. So, while technically not fired,
Speaker 6: were removed from their positions. One prominent example of that
Speaker 6: was the Sanctuary Cities Task Force that sort of became
Speaker 6: a place where we saw you know, some longtime career
Speaker 6: people get forcibly reassigned into and at this point, all
Speaker 6: of those people who were reassigned into that task force,
Speaker 6: which was you know, for the stated purpose of cracking
Speaker 6: down on so called sanctuary jurisdictions who don't want to
Speaker 6: cooperate with federal immigration authorities, all of the people in
Speaker 6: that task force have since left.
Speaker 4: These are the career officials who get a job at
Speaker 4: the Department of Justice, work their way up, and stay
Speaker 4: at the Department of Justice.
Speaker 6: Yes, it is very uncommon to see this amount of
Speaker 6: attrition when political administrations changed. I spoke to a number
Speaker 6: of former officials for this story, and you know, many
Speaker 6: described through people as the types of people who stay
Speaker 6: across political administration, which is kind of their very purpose.
Speaker 6: When a new administration comes in, they're going to appoint
Speaker 6: a lot of people who are their choices. There's going
Speaker 6: to be a lot of political appointees. But the real
Speaker 6: role of the career civil servants, you know, the career
Speaker 6: work force, the civil servants are to kind of, you know,
Speaker 6: help keep things moving. You know, there's going to be
Speaker 6: a bunch of new people who don't know what they're doing,
Speaker 6: but you'll have that career workforce in place always to
Speaker 6: you know, understand how how the department runs.
Speaker 4: Yeah, you talk to someone who was a political appointee
Speaker 4: who said, we took a lot of our direction from
Speaker 4: the career staff to do our jobs.
Speaker 6: Absolutely, I think that that's exactly the type of example,
Speaker 6: at least when a new political appointee comes in, you know,
Speaker 6: they may be very qualified, but they're just going to
Speaker 6: be new to that work potentially, and if they don't
Speaker 6: have that exact background themselves, and you know, political appointees
Speaker 6: I spoke to former political pointe is really said that
Speaker 6: they relied on that career workforce to have that expertise
Speaker 6: so that you know, they could go to someone and
Speaker 6: be you know, ask them, you know, how something works
Speaker 6: and how to do something, and just to kind of
Speaker 6: know that they have experienced people working for them.
Speaker 4: Tell us how many PEO people left or part of
Speaker 4: their reason was because of the executive order calling to
Speaker 4: prioritize accountability among the Senior Executive Service.
Speaker 6: Sure, so that was an executive order at the beginning
Speaker 6: of this administration that kind of gave us a little
Speaker 6: bit of a signal that the Trump administration was going
Speaker 6: to be taking a hard look at the senior executive
Speaker 6: service that maybe they you know, were distrustful of that
Speaker 6: group of people, even though you know, historically that's just
Speaker 6: been a group of people who've been here in high
Speaker 6: level career leadership potitions that are nonpartisan for many years.
Speaker 1: You know.
Speaker 6: Obviously, you can't say for sure how many you know,
Speaker 6: exactly how many people might have left because they read
Speaker 6: that order and you know, worried for their career trajectory,
Speaker 6: you know, But I think the Trump administration has done
Speaker 6: a lot, you know, very broadly that has made career
Speaker 6: managers you know, think twice about how long they might
Speaker 6: be able to stay in their roles, whether that's pivoting
Speaker 6: priorities of the department in terms of like litigating priorities,
Speaker 6: or just you know, generally making workers feel unstable and
Speaker 6: like they're going to be laid off. I mean, we've
Speaker 6: seen broad reductions and force throughout the government. This year.
Speaker 4: It was the Civil Rights Division that was hit the hardest.
Speaker 4: Seventy six percent of career managers departed.
Speaker 6: Yes, that's what we found them. Going through all of
Speaker 6: the career manager directory, we found that that division within
Speaker 6: the Justice Department had the highest share of career managers
Speaker 6: leaving this year that was similarly a mix. So many
Speaker 6: of those people had been demoted and left after that,
Speaker 6: some did leave on their own, and that was an
Speaker 6: example of a division that really did take a hard
Speaker 6: turn in a different direction ideologically this year. I mean,
Speaker 6: the Civil Rights Division has always somewhat been vulnerable to
Speaker 6: those types of changes as clinical administrations come and go,
Speaker 6: but we really saw quite a significant departure that former
Speaker 6: employees have told me was very different from the way
Speaker 6: it's been in the past in terms of changing ideological priorities.
Speaker 6: For example, instead of focusing on historically marginalized populations, which
Speaker 6: was along the focus of that division it was created
Speaker 6: during the Civil rights movement, we're now seeing a focus
Speaker 6: on gun rights and anti Christian bias. For example.
Speaker 4: What about the trial attorneys you know that are handling
Speaker 4: the cases.
Speaker 6: So the project that we put together does not include
Speaker 6: trial attorneys, and that's only because we don't have access
Speaker 6: to a perfect federal directory with a list of their
Speaker 6: names to draw a statistical and conclusion from that. But
Speaker 6: they that has been a huge source of attrition. I mean,
Speaker 6: certainly more so than at the manager level. We have
Speaker 6: seen trial attorneys basically hemorrhaged out of the Justice Department
Speaker 6: this year. And while this number includes both trial attorneys
Speaker 6: and managers just across the Justice Department, the department itself
Speaker 6: has disclosed and budget documents that around forty five hundred
Speaker 6: employees total have taken to Ford resignation offers this year.
Speaker 6: As a little bit of a look at the amount
Speaker 6: of people who have left.
Speaker 4: Sixty two percent of the managers in the Executive Office
Speaker 4: for Immigration Review left. I'm curious about why that particular
Speaker 4: office when there's so much emphasis now on immigration.
Speaker 6: That may be the very reason. I think that sometimes
Speaker 6: when we see it's the offices, at least in our analysis,
Speaker 6: that sometimes focused on some of those more hot button
Speaker 6: policy issues that this administration has really focused on and
Speaker 6: putting its own stamp on where we saw the most attrition. So,
Speaker 6: while you know, I can't speak for those who decided
Speaker 6: to leave, but we saw a lot of immigration judges
Speaker 6: being pushed out this year.
Speaker 4: How many people are challenging their firings.
Speaker 6: It's hard to get an exact number because challenges that
Speaker 6: the Merit Systems Protections Board, which would handle those types
Speaker 6: of cases, are not public. But we have found a
Speaker 6: number of examples of people doing that, and I think
Speaker 6: some of the challenges from people who were within the
Speaker 6: senior executive service might be, you know, tougher cases for
Speaker 6: the federal government to defend. And we've even seen at
Speaker 6: least one federal court litigation and filed against a number
Speaker 6: a handful of Justice Department employees to say that they
Speaker 6: were terminated unffair.
Speaker 4: I mean, now, let's say the next administration comes in
Speaker 4: is different. Can the Justice Department rebuild its staff and
Speaker 4: sort of pick up where it left off before Trump
Speaker 4: came into office.
Speaker 6: They can certainly try. Former officials I spoke to them
Speaker 6: said that it's going to be quite a challenge that
Speaker 6: they've to lose at least a third of the career
Speaker 6: staff in the span of I mean at this point
Speaker 6: eight or nine months, is a massive hit to a
Speaker 6: department's institutional memory, to their expertise. I think the Trump
Speaker 6: administration might say that they're looking to get those types
Speaker 6: of people out. They refer to certain government employees as
Speaker 6: you know deep state actors, and they talk about wanting
Speaker 6: to pivot the direction of the department, and I think
Speaker 6: that's something we've seen from senior political administration officials during
Speaker 6: the second administration, But certainly, I think indisputably, even if
Speaker 6: the goal is to pivot the direction, that's a lot
Speaker 6: of hiring for this current administration to do, a lot
Speaker 6: of spots to fill, and it's a lot of spots
Speaker 6: and advanced roles from people who maybe were supervising a
Speaker 6: section that they've previously been an attorney in for many years.
Speaker 6: Now trying to fill that spot going to be a
Speaker 6: challenge really for any administration.
Speaker 4: Are they having a hard time hiring new people to
Speaker 4: fill slots.
Speaker 6: It's a little too soon to say. So much of
Speaker 6: these departures have been in the last few months, and
Speaker 6: of course, you know, with the end of the fiscal
Speaker 6: year now those who took the different resignation offer will
Speaker 6: officially be removed from the payroll. So we you know,
Speaker 6: we're still seeing a lot of that hiring ongoing. You know,
Speaker 6: we certainly see that they are actively trying to hire.
Speaker 6: And the Civil Rights Division, for example, we've seen the
Speaker 6: lead political appointee leading the office, you know, posting on
Speaker 6: social media, we're hiring, We're hiring. So we are seeing
Speaker 6: an active effort, but I think it's just a little
Speaker 6: too soon to tell at what speed they're going to
Speaker 6: be able to do so. For career jobs, usually there's
Speaker 6: a bit of a merit based process that has to
Speaker 6: be involved to get these people put in place. It's
Speaker 6: not something that can be done in the day.
Speaker 4: It's a question I keep asking. Thanks so much, Suzanne.
Speaker 4: That's Bloomberg Law reporter Suzanne Monnac. A litigation funder, is
Speaker 4: filing law lawsuits against prediction market platform Calshee in six states,
Speaker 4: using an eighteenth century gambling law in an attempt to
Speaker 4: clawback losses from predictions gone wrong. The suits allege that
Speaker 4: Calshi is violating state and federal law by allowing residents
Speaker 4: to place illegal, unregulated wagers on events such as sports
Speaker 4: and elections. Veritis Management and its chief executive, Maximilian Amster,
Speaker 4: are behind entities that filed suits in Ohio, Kentucky, Illinois,
Speaker 4: South Carolina, Massachusetts, and Georgia. The suits referenced state versions
Speaker 4: of the anti illegal Gambling Statute of Anne, which lets
Speaker 4: losing third parties sue winners for the values of losses
Speaker 4: plus fees. Joining me is Professor M. Todd Henderson of
Speaker 4: the University of Chicago Law School tell us about this
Speaker 4: prediction market platform and these lawsuits.
Speaker 1: So cal She is a company that offers prediction markets
Speaker 1: on a variety of things. And these prediction markets have
Speaker 1: a pretty simple feature, which is they will write a
Speaker 1: contract that says something like, there's a state of the
Speaker 1: world in the future, Trump becomes president, the Chiefs win
Speaker 1: the super Bowl, the Fed lowers interest rates by a
Speaker 1: certain amount, and if that state of the world comes true,
Speaker 1: this contract will pay one dollar, and if this state
Speaker 1: of the world does not come true, they will pay zero.
Speaker 1: And then they will offer those contracts for sale, and
Speaker 1: those contracts will have a price. People will trade them,
Speaker 1: and the idea is that that price will reflect something
Speaker 1: like the market's probability sense of whether this thing is
Speaker 1: going to come true. So if a Trump is going
Speaker 1: to be elected president, contract is trading for fifty six cents.
Speaker 1: That implies a probability that Trump is going to be
Speaker 1: elected president with about a fifty six percent ability, And
Speaker 1: if you think it's much lower than that, you can
Speaker 1: sell that contract. You sort of short it like you
Speaker 1: would in the stock market. So they offer these contracts
Speaker 1: for sale and they're just a market like the New
Speaker 1: York Stock Exchange. That enables buyers and sellers to come
Speaker 1: together and write the particular contracts, just like the New
Speaker 1: York Stock Exchange list Companies for sale and so KALs.
Speaker 1: She's offering these prediction markets in a variety of different places,
Speaker 1: and people have the view and this goes back way
Speaker 1: before these lawsuits that these are gambling, and there's been
Speaker 1: some real hostility in the federal government towards these prediction markets.
Speaker 1: The regulators of these things, like the CFTC has been
Speaker 1: quite hostile to them. There were some limited carve outs
Speaker 1: which we could talk about, but the prediction markets have
Speaker 1: sort of blazed ahead and offered them in a variety
Speaker 1: of states, especially in places where gambling is not legal,
Speaker 1: like Ohio. And there is an Ohio statute that says,
Speaker 1: you know, not only is gambling not allowed here, but
Speaker 1: that people who are not parties to a particular wager
Speaker 1: can sue to enforce our anti gambling ban. And so
Speaker 1: that's what these that's what these suits are. They've got
Speaker 1: litigants which are trying to enforce Ohio's anti gambling ban
Speaker 1: through a meme set up by the Ohio legislature for
Speaker 1: third parties. Again, someone not betting whether Trump's going to
Speaker 1: win or the chiefs or whatever have you. But a
Speaker 1: third party is suing to enforce that ban. So that's
Speaker 1: what these suits are.
Speaker 4: So is it plaintiffs lawyers that are suing on behalf
Speaker 4: of clients who are the plaintiffs?
Speaker 1: Well, no, not, as I understand it. So as I
Speaker 1: understand the statute, it's quite clever, and they have an
Speaker 1: analog going back into our British ancestors. I think it's
Speaker 1: the Statute of ann from seventeen to something or other.
Speaker 1: But the general gist of this is that, you know,
Speaker 1: gambling is illegal in a lot of places, and so
Speaker 1: two people enter into a wager that is illegal under
Speaker 1: state law. So let's just say I've got a bookie.
Speaker 1: I live in Columbus, Ohio, and I say to my bookie,
Speaker 1: I'd really liked it bet on Ohio State to win
Speaker 1: this weekend. You know what's the odds. My bookie tells me,
Speaker 1: I make the bet. There's somebody on the other side
Speaker 1: of that transaction. And let's say that I lose the
Speaker 1: bet and my bookie wants to collect from me, and
Speaker 1: I say, sorry, you can't collect from me. Well, my
Speaker 1: bookie is not going to go into court because the
Speaker 1: contract underlying contract is illegal and courts are not going
Speaker 1: to enforce illegal contracts. So knowing that my booky's going
Speaker 1: to resort to well, let's just call them other means
Speaker 1: it could be you know, kicking me out of the pool.
Speaker 1: I can't use them as my booky again anymore. That'd
Speaker 1: be easy. Maybe uses intimidation or violence against me. That's
Speaker 1: a phenomenon that happens in any kind of black market.
Speaker 1: So in that world where people who are parties to
Speaker 1: illegal contracts will not sue to enforce them. It's a
Speaker 1: drug deal. My drug dealer gave me, you know, baking,
Speaker 1: so instead of the cocaine that I wanted, I'm not
Speaker 1: going to sue him in court because I would be
Speaker 1: revealing myself to be doing something illegal. So I think
Speaker 1: the premise of the statute is that that's also true
Speaker 1: for gambling and here prediction markets. And so the plaintiffs
Speaker 1: are not going to come forward and sue, or at
Speaker 1: least arguably so this plaintiff is a third party, they
Speaker 1: have nothing, they're total strangers to this case. But the
Speaker 1: statue gives them what's called standing, just the right to
Speaker 1: sue even though they haven't been harmed. Normally you have
Speaker 1: to be harmed to bring a lawsuit. But what their
Speaker 1: statue does is sort of set them up as a
Speaker 1: kind of private attorney general. You know, the attorney general
Speaker 1: could bring a suit to shut down the prediction market,
Speaker 1: but we could also outsource that to private plaintiffs lawyers
Speaker 1: to bring the suit on behalf of them. It's a
Speaker 1: little bit like a class action lawsuit in securities fraud
Speaker 1: or something like that, where the lawyers are basically the
Speaker 1: people bringing the case. In that case, you know, they
Speaker 1: do find a plaintiff who who suffered some damage. Here,
Speaker 1: it looks like the statue doesn't require that because of
Speaker 1: this problem about you know, outing yourself as being a criminal.
Speaker 4: It seems odd to me.
Speaker 1: Yeah, it's I should say. One thing that's a very
Speaker 1: cool historical kind of footnote. There was a case in
Speaker 1: England around the time the statue was passed called the
Speaker 1: Highwayman's case. And a highwayman was a sort of robber
Speaker 1: who would you know, hold you up on the on
Speaker 1: the road between you know, Stratford on Avon in London,
Speaker 1: and two criminals had a deal and one of them
Speaker 1: backed out on you know, maybe sharing the proceeds from
Speaker 1: this job that they did. And one sued the other
Speaker 1: and the judge in the court in London ordered both
Speaker 1: men to be hung. And so that was a kind
Speaker 1: of extreme example of you know, do not bring your
Speaker 1: we're both criminals, but we have a contract dispute to court.
Speaker 1: And in that world, something like the statute de Van
Speaker 1: makes a ton of sense because we do want to
Speaker 1: deter like the king or the US government wants to
Speaker 1: deter the bad, say whether it's robbing people in the
Speaker 1: highway or engaging in illegal gambling. But we can't rely
Speaker 1: on plaintips to bring those suits because they'll be complicit,
Speaker 1: and so we need to have a third party.
Speaker 4: And so the third party is the one who recovers
Speaker 4: what they call ill gotten gains.
Speaker 1: I believe. So I'm not an expert on this particular statute.
Speaker 1: I find it completely amazing as someone who teaches a
Speaker 1: law of economics, and you know, it's genius kind of
Speaker 1: statute to mobilize people. It is different than the normal
Speaker 1: kind of bounty that we pay. There are other examples.
Speaker 1: There's a doctrine called key tam qui tam and in
Speaker 1: federal government law that if you are someone who you know,
Speaker 1: let's see, Lockheed Martin is overcharging the federal government for
Speaker 1: the latest stealth fighter, and you work at Lockheed Martin,
Speaker 1: you know they're sending bills that are too high. You
Speaker 1: can tell the government, and the government will sue. And
Speaker 1: you know, let's say they collect one hundred million dollars,
Speaker 1: you get your Lion charity and it's some twenty five
Speaker 1: thirty percent of that. So we pay someone a bounty
Speaker 1: to kind of uncover what we think the government might
Speaker 1: not otherwise be able to uncover. So you can think
Speaker 1: of this statue in high It has been a little
Speaker 1: bit like a key tam suit, except instead of alerting
Speaker 1: the government, right, you could have a system where the
Speaker 1: people who know about the illegal betting go to the
Speaker 1: Attorney General of Ohio and say, I know this stuff's
Speaker 1: going on. Instead of that and taking some percentage like
Speaker 1: a plane of lawyer normally would, they can get the
Speaker 1: whole thing, and the whole thing is the incentive for
Speaker 1: them to bring the suit in the first place. Now,
Speaker 1: I should say, what's a little bit strange about this
Speaker 1: case is it's not exactly a surprise to the Attorney
Speaker 1: General of Ohio that CAW she is offering prediction markets
Speaker 1: in Ohio. So we really didn't need a third party
Speaker 1: to bring this case because everybody knows that CAW she's
Speaker 1: doing this, and so that makes it a little bit strange.
Speaker 4: Is it a litigation funder that's that's driving suits?
Speaker 1: That's my understanding is litigation finance, which you know, we're
Speaker 1: the world of the strange. Let's go even stranger that
Speaker 1: they're the sewer because litigation finance itself is quite controversial.
Speaker 1: They're using a stash van from the seventeen hundreds that's
Speaker 1: been put into a Hio law Well back in the
Speaker 1: seventeen hundreds through to about you know, ten years ago,
Speaker 1: every common law jurisdiction banned lawyers from engaging in the
Speaker 1: kind of practice that these lawyers are engaging, and that
Speaker 1: is a litigation finance arm who will kind of buy
Speaker 1: a claim from someone and bring it. And so this
Speaker 1: is very new. You know, when I was in law
Speaker 1: school so many years ago, lawyers weren't allowed to advertise,
Speaker 1: and of course we've crossed that line and now we've
Speaker 1: got lawyers who are raising money from investors to invest
Speaker 1: in lawsuits and in some jurisdictions. Now, you know, non
Speaker 1: lawyers can own law firms, so they can raise money
Speaker 1: again to sue people, and so that's another kind of
Speaker 1: complication that people might worry about.
Speaker 4: And so they're suing not only Ohio, but kentuckyise South Carolina, Massachusetts,
Speaker 4: and Georgia. If these suits are successful, then does that
Speaker 4: mean these prediction market platforms won't be able to operate
Speaker 4: in those states?
Speaker 1: Well, I'm not in the speculation. I mean, I have
Speaker 1: no idea. Damages are probably pretty substantial. And again I'm
Speaker 1: not an expert on the statute, so I don't know
Speaker 1: if there's limitations on the damages or what the damages
Speaker 1: would be, or their caps. And I should say, you know,
Speaker 1: I kind of have two views about this. On the
Speaker 1: one hand, the prediction markets who are offering things like
Speaker 1: sports betting, Okay, so now let's just stick with the
Speaker 1: Super Bowl. I'm a Steelers fan, so I want to
Speaker 1: bet that the Steelers are going to win the Super Bowl. Well,
Speaker 1: I can do that in some places through legal sports books.
Speaker 1: I can go to Las Vegas. If I'm in certain places,
Speaker 1: I can go on to DraftKings or bets Fair or
Speaker 1: ESPN BAT or whatever where those things are legal and
Speaker 1: I can place that bet. Presumably the states where I
Speaker 1: can't do that don't want me betting on whether the
Speaker 1: Steelers are going to win the Super Bowl. And now Kyle,
Speaker 1: she comes along and says, you know, Ohio, Kentucky, Illinois
Speaker 1: in places, Oh, we're not gambling, We're predicting, And at
Speaker 1: some level you say, Okay, this is absurd. These prediction markets,
Speaker 1: which have a really very clever origin, and I've written
Speaker 1: papers about how cool they are and how useful they
Speaker 1: can be to the public and for businesses to predict
Speaker 1: things and scientists and defense and all sorts of areas.
Speaker 1: I think they should be much more widely used. But
Speaker 1: using them to bet on sports doesn't make a ton
Speaker 1: of sense, because we already have sports betting, and that's
Speaker 1: something that's easy to describe, and we could just, you know,
Speaker 1: recharacterizing it as prediction market is a kind of arbitrage
Speaker 1: around the law that is I think a bad one. So,
Speaker 1: for instance, imagine that a prediction market arose and said,
Speaker 1: we'll let you bet on whether or not Navidia profits
Speaker 1: will be higher next quarter than this quarter. Well, we
Speaker 1: already have that market that's called the stock exchange, and
Speaker 1: so we don't need a prediction market for that. So,
Speaker 1: you know, offering that prediction market would just be arbitrage
Speaker 1: around you know, a bunch of sec rules and things
Speaker 1: like that, and it's not adding something new. So I
Speaker 1: could imagine the prediction market kind of compromise being you
Speaker 1: can offer prediction markets in places where it's not gambling
Speaker 1: on things that are predictions that are valuable, predictions that
Speaker 1: are not sports, and maybe not the stock markets. Those
Speaker 1: are different markets. So if you're predicting on whether or
Speaker 1: not it's going to rain in Ohio, well, farmers might
Speaker 1: really want that information, and that market might be better
Speaker 1: than the weather people's forecasts, and so that would be
Speaker 1: a new thing. It's developing new information, and it's it's
Speaker 1: creating a market where there really isn't one that could
Speaker 1: be really useful, or predicting political outcomes or all kinds
Speaker 1: of you know, is ice going to come to this
Speaker 1: town or whatever? Those things could all be very valuable
Speaker 1: production of social information that isn't just a pure regulatory arbitrage.
Speaker 1: So I'm both quite bullish about the use of prediction markets.
Speaker 1: I've written about this. I think we should use them
Speaker 1: for a lot more stuff. Companies use them internally to
Speaker 1: great success, and I think the world is poorer for
Speaker 1: it that we don't engage markets to predict stuff. Instead,
Speaker 1: we rely on blowhard academics or people on TV or
Speaker 1: whatever to do that. So I want to deploy markets
Speaker 1: in new places. But I think the offering sports betting
Speaker 1: through a prediction market, just because you call it something
Speaker 1: else doesn't make it different.
Speaker 4: These suits have a long way to go, so we'll
Speaker 4: see what happens. Thanks so much for joining me. That's
Speaker 4: Professor M. Todd Henderson of the University of Chicago Law School,
Speaker 4: and that's it for this edition of The Bloomberg Law Show.
Speaker 4: Remember you can always get the latest legal news on
Speaker 4: our Bloomberg Law Podcast. You can find them on Apple podcast, Spotify,
Speaker 4: and at www dot Bloomberg dot com, slash podcast Slash Law,
Speaker 4: and remember to tune into The Bloomberg Law Show every
Speaker 4: weeknight at ten pm Wall Street Time. I'm June Grosso,
Speaker 4: and you're listening to Bloomberg