Speaker 1: This is Bloomberg Law with June Grasso from Bloomberg Radio.
Speaker 1: The most famous nominal damages case I know in recent times,
Speaker 1: which is Taylor Swift sexual assault case. Do you know
Speaker 1: that one Taylor Swift did not have a case at
Speaker 1: the Supreme Court, but a case before the Court on
Speaker 1: campus speech rights. Reminded Justice Elina Kagan of Swift's successful
Speaker 1: student against a Denver radio host for sexual harassment, where
Speaker 1: the pop star asked for only a dollar in damages,
Speaker 1: and she said, I'm not really interested in your money.
Speaker 1: I just want a dollar, and that dollar is going
Speaker 1: to represent something both to me and to the world
Speaker 1: of women who have experienced what I've experienced. Kagan said
Speaker 1: Swift's case was similar to the case before the Court
Speaker 1: where two former students are suing Georgia Gwinnette College for
Speaker 1: nominal damages for violating their First Amendment rights. And Justice
Speaker 1: Amy Coney Barrett seemed to agree and just as Kagan's
Speaker 1: questions suggested that really what Taylor Swift wanted was, you know,
Speaker 1: vindication of the moral right, the legal right that sexual
Speaker 1: assault is reprehensible and wrong. My guest is Harold Crent,
Speaker 1: a professor at the Chicago, Kent College of Law. How first,
Speaker 1: tell us a little bit about the case. The case
Speaker 1: is a First Amendment challenged by students to their college
Speaker 1: administrators for limiting the right of free speech. They had
Speaker 1: to do with someone who's a evangelical Christian who wanted
Speaker 1: to talk about he preaches Saith, and the university quenched
Speaker 1: the speech. Therefore, you have precipitated a First Amendment challenge
Speaker 1: in court, and before it could be finally resolved, their
Speaker 1: college changed where duties could make speeches and broaden the
Speaker 1: opportunity for students, so in essence handing the plaintiffs of victory.
Speaker 1: But then the question was could they continue to get
Speaker 1: a court resolution that they were right under the Constitution
Speaker 1: and would be entitled at least two nominal damages and
Speaker 1: the atorney's fees. And so far the Eleventh Circuit had
Speaker 1: held that the case was moved because there's no longer
Speaker 1: a continuing controversy because the university had changed his policy
Speaker 1: and that the idea of just the tourny's fee and
Speaker 1: normal damages would not be enough to keep the case alive,
Speaker 1: so they refused to address the merits. Does the government
Speaker 1: or government ended these often changed policy following lawsuits. The
Speaker 1: government does not infrequently change his policies, and indeed, a
Speaker 1: great example that came up recently when New York City
Speaker 1: had an active, very tight gun controlled legislation which was challenging,
Speaker 1: and they fought it tooth and nail, But as it
Speaker 1: was getting close to the Supreme Court, New York City
Speaker 1: backed down and said, well, maybe this was too restrictive,
Speaker 1: and therefore, in essence mooted out the controversy, giving plaintiffs
Speaker 1: all that they wanted, And the Supreme Court in that
Speaker 1: case refused to entertain the case by saying it was
Speaker 1: moved because New York changes policies, it was not likely
Speaker 1: to go back. So this in some ways to a
Speaker 1: cousin case in the sense that it asks what happens
Speaker 1: when a government changes its policy not likely to revert
Speaker 1: to the older policy. Can a core nonetheless continue to
Speaker 1: hear the substance of the claim because it's kept alive
Speaker 1: by this notion of nominal damages. So it's a narrow
Speaker 1: case focusing on what really is nominal damages and should
Speaker 1: the judges have power to consider more constitutional claims, In particular,
Speaker 1: if nominal damages are alleged in the case. Before we
Speaker 1: get back to nominal damages, people might ask, well, why
Speaker 1: doesn't that case from last term where the justices said
Speaker 1: it was moot, why doesn't that control here? It's going
Speaker 1: to be in the justice's mind. In that case, nominal
Speaker 1: damages were not sought, and so there was not an
Speaker 1: argument that the case was still alive because of the
Speaker 1: nonminal damages as there are in the Georgia case. But
Speaker 1: certainly what this case is about, it's about judicial power.
Speaker 1: Should judges be able to second guests and scrutinize more
Speaker 1: governmental bodies actions than otherwise would be able to the
Speaker 1: problem is, it's hard to quantify First Amendment speech in
Speaker 1: our case, and the plaintiff wasn't allowed to speak. How
Speaker 1: do you put a dollar value on that? Maybe you
Speaker 1: could say he had to walk fifteen minutes to a
Speaker 1: different forum and that would cost time, and time is money,
Speaker 1: and maybe he should have said it costs me thirty
Speaker 1: five dollars that I could otherwise be making in order
Speaker 1: to go to the other forum to give my speech,
Speaker 1: and the courts would entertain that they'd have to It's
Speaker 1: a traditional thirty five injury, isn't it more practical to say,
Speaker 1: we know that the restriction on speech damaged you, you
Speaker 1: couldn't speak. It's hard to put dollar figure on that,
Speaker 1: So vindicate your claim by just saying its phenominal damages.
Speaker 1: And that's why this has become really a very intriguing
Speaker 1: case because it doesn't fall really on a conservative versus
Speaker 1: liberal lines exactly. It falls with the question of how
Speaker 1: much power should judges have to second guests and administration.
Speaker 1: So I think that's the axis under which the position
Speaker 1: we reached in the case. The school officials basically said, look,
Speaker 1: there's nothing left for the court to do. Is that
Speaker 1: a strong argument? In one sense, it's true. The only
Speaker 1: thing left for the court to do is to decide
Speaker 1: the constitutional question and decide to give the planets a
Speaker 1: dollar each if they agree that their First Amendment rights
Speaker 1: were violated. Um. That is, on the one hand, you
Speaker 1: can say this is not with the need to address
Speaker 1: the constitutional issue in that context, and that's what Chief
Speaker 1: Justice Roberts seems to be saying. But on the other hand,
Speaker 1: there was a very arguably serious First Amendment violation, and
Speaker 1: we may wonder what courts should arguably address that in
Speaker 1: order to give guidance for the future and to compensate
Speaker 1: the individual through nominal damages in light of the fact
Speaker 1: that their First Amendment rights allegedly were violated. In this
Speaker 1: case has groups that are often on opposite sides of issues,
Speaker 1: like the Americans Civil Liberties Union and the U S
Speaker 1: Conference of Catholic Bishops uniting. And there were just two
Speaker 1: amiquest briefs in support of the College. How odd is
Speaker 1: that it's very unusual. And I think that any kind
Speaker 1: of interest group that challenges governmental action knows that its
Speaker 1: ability to get cases heard before the court depend upon
Speaker 1: a vehicle for keeping a case alive and normal damages
Speaker 1: is such a vehicle because it recognizes that there are
Speaker 1: dignitary harms caused by when the government violates your constitutional rights,
Speaker 1: even if they're not quantifiable. I mean, there are dignitary
Speaker 1: harms that common laws trespassed, the violation of someone's trademark,
Speaker 1: and private individuals would get some kind of damages even
Speaker 1: if you couldn't prove actual damages. And that's in essence
Speaker 1: what the claim is here, supported by many Friends of
Speaker 1: the Court's briefs. And also I think it's a recognition
Speaker 1: that we somehow don't trust government when they change policies
Speaker 1: that they're not doing it for the wrong reason, namely
Speaker 1: to avoid a judicial decision as to right or wrong.
Speaker 1: Taylor Swift came up in the oral arguments. I think
Speaker 1: it was a little bit of a surprise. Tell us
Speaker 1: how her name came up. She relatively famously sued a
Speaker 1: Denver talk show host for sexual proprieties when he had
Speaker 1: her on the air, and she said, look, I'm not
Speaker 1: going to try to quantify the kind of damages that
Speaker 1: you caused me. All I want is a vindication in
Speaker 1: court that you acted inappropriately, and I'm going to do
Speaker 1: that by just asking phenomenal damages. She could have tried
Speaker 1: to characterize her injuries in terms of money figure, but
Speaker 1: she saw instead to say, I'm suing because of principle.
Speaker 1: I want to be validated regally in that you evaded
Speaker 1: my autonomy, and she won't. So it's become one of
Speaker 1: the more famous recent cases phenomenal damages. And so the
Speaker 1: reason why Justice Kagan suggested this is to show that
Speaker 1: normal damages can play a very important role to vindicate
Speaker 1: the individual's injuries, even if it doesn't look like a
Speaker 1: traditional compensatory harm. Such as I have a broken bone,
Speaker 1: how much does it cost me to get to a doctor?
Speaker 1: Or my house has been ruined by a flood, how
Speaker 1: much will cost to repair it. This instead is a
Speaker 1: notion that, yes, there's been an invasion of illegal wrong
Speaker 1: and that should be sufficient to continue a case. Even
Speaker 1: if it's otherwise it would be mooted out because of
Speaker 1: the change of policy of a government defendant. Now, some
Speaker 1: of the justice has expressed concerns that this could lead
Speaker 1: to a flood of litigation. If you allow these kinds
Speaker 1: of claims. There is no question that a ruling in
Speaker 1: favor of the plaintiffs in Georgia will result in increased
Speaker 1: claims against government action. I don't think there'll be a flood.
Speaker 1: There's been no showing that there'll be a flood, but
Speaker 1: absolutely because they'll be more because, as you suggested earlier,
Speaker 1: there are a not insignificant number of times when government
Speaker 1: is sued, they realize that they have taken an untenable
Speaker 1: legal position, they'll change course. And if changing course will
Speaker 1: not get with the lawsuits, then course will more frequently
Speaker 1: be invited into the dispute. So, yes, that the margin
Speaker 1: there will definitely be more suits that are brought. And indeed,
Speaker 1: because of the fact that nominal damages in some contexts
Speaker 1: will support an attorney's fees award, a decision in favor
Speaker 1: of the Georgia plantiffs would give plainests attorneys more incentive
Speaker 1: defined plainists to challenge government action that they think is
Speaker 1: illegal because they may, at the end of the day
Speaker 1: recover a handsome attorney's FASA award. Now Chief Justice John
Speaker 1: Robert's question whether it would make a mockery of the
Speaker 1: courts mutinous doctrine if a plaintiff could stop a judge
Speaker 1: from throwing out a case by simply asking for a
Speaker 1: dollar in damages and he says, well, then you don't
Speaker 1: have standing of got to throw the case out. You said, oh,
Speaker 1: well throw me throwing a buck, and then the judge
Speaker 1: is supposed say, yeah, well everything's fine now, doesn't that
Speaker 1: Doesn't that make a mockery of our Article three requirements.
Speaker 1: What he is considering is that it would limit the
Speaker 1: moutenous doctor And I think that Chief Justice Roberts is
Speaker 1: right about that, but not totally. What you're saying is
Speaker 1: that an individual's right to go to court and say
Speaker 1: I want you to say that I was injured, just
Speaker 1: so I can have the satisfaction that you say that
Speaker 1: I was injured. You know, that is one way to
Speaker 1: frame the issue. And if you believe in a strong
Speaker 1: moutenous doctor and to limit the courts, that you only
Speaker 1: want to have the courts opine on these issues of
Speaker 1: great constitution moment when they actually have to. Then you
Speaker 1: want to get rid of this case because there is
Speaker 1: no continuing dispute. So Chief Justice Roberts is right. And
Speaker 1: this goes to the whole question of judicial power. Judges
Speaker 1: will be brought into more controversies if they decide that
Speaker 1: a normal damages is sufficient to keep a case alive,
Speaker 1: probably not as many as the court fears, but at
Speaker 1: least at the margin, more controversies. And so that's why
Speaker 1: this becomes a question really about judicial power and about
Speaker 1: how much you trust administrative and bureaucratic governmental entities. And
Speaker 1: I think that we may see an unusual alliance here.
Speaker 1: So what kind of alliance of the justices might we see? So,
Speaker 1: for instance, we might see Justice Comy and Justice Corsets
Speaker 1: deciding in favor of sympathetic plainmus here because of their
Speaker 1: mistrust of government entities and their sympathy for individuals who
Speaker 1: might be harmed by a Biden administration, for instance, or
Speaker 1: who might be harmed because entities are not respecting the
Speaker 1: religious interests. So it may be some traditional liberals such
Speaker 1: as Briar taken and so to my or that may
Speaker 1: make a pact or alliance in this case with some
Speaker 1: of the more conservative justices, because at the end of
Speaker 1: the day, this is about do you want these cases
Speaker 1: to go to court? And if you're the court, you
Speaker 1: may trust the court more than the political branches to
Speaker 1: get these issues right. Let's say that the plaintiffs do
Speaker 1: win here with the opinion by the court, have to
Speaker 1: explain how this differs from the Second Amendment case we're
Speaker 1: talking about. The Second Amendment case did not squarely raised
Speaker 1: this issue. It is as a kind of a cousin
Speaker 1: of it. It could have raised the issue, but that's
Speaker 1: not what the court was focusing on um or the
Speaker 1: parties we're focusing on uh in the procedural posture before
Speaker 1: the court. But there will be My prediction is that
Speaker 1: there will be discussion of that situation because the Court
Speaker 1: will want to explain or give guidance to what should
Speaker 1: happen if that Second Amendment challenge is raised again. Thanks
Speaker 1: Hal that's Harold Crant to the Chicago Kent College of Law.
Speaker 1: The Supreme Court has vacated the convictions of four men,
Speaker 1: including the one time King of Political Intelligence, in an
Speaker 1: insider trading case involving a scheme to profit from government secrets.
Speaker 1: The Justice has sent the case back to the Second
Speaker 1: Circuit Federal Court of Appeals to take another look at
Speaker 1: its ruling in light of the Supreme courts so called
Speaker 1: Bridgegate case. You may remember the case that drew headlines
Speaker 1: and the scandal that helped to derail former New Jersey
Speaker 1: Governor Chris Christie's run for president, a politically motivated scheme
Speaker 1: that caused a traffic nightmare on the George Washington Bridge
Speaker 1: in and led to two of Christie's aids being convicted
Speaker 1: of fraud. Bridget Kelly blamed Christie. Just because someone has
Speaker 1: the title of governor doesn't give them the right to
Speaker 1: mislead others. It's dishonorable and it only shows that person
Speaker 1: for the coward he is. The Supreme Court reversed those
Speaker 1: convictions last May. But what does that have to do
Speaker 1: with an insider trading case? Here to answer that question
Speaker 1: is John Coffee, a professor at Columbia Law School. Jack
Speaker 1: tell us about the so called King of Political Intelligence.
Speaker 1: David Blazak was a former employee of the Center for
Speaker 1: Medicare and Medicaid Services, and when he left that agency,
Speaker 1: he became a consultant for Hedge Funds because Hedge Funds
Speaker 1: follow what that agency does, because it determines the profitability
Speaker 1: of all kinds of treatments that various medical and pharmaceutical
Speaker 1: companies provide. Now he learns that the agency is going
Speaker 1: to cut back on the amount that will pay for
Speaker 1: certain kind of cancer treatments. He tells that to his
Speaker 1: Hedge fund clients. They sell short the companies that will
Speaker 1: be most adversely affected by that new ruling. They make
Speaker 1: a lot of money, They pay him a lot of money,
Speaker 1: and he gets convicted under a priority of charges. What
Speaker 1: was the essence of the prosecution's case against him and
Speaker 1: three others? The conduct would look to most people like
Speaker 1: pretty egregious insider trading. Well, you have misappropriated material, non
Speaker 1: public information that is known at that agency. Believe they
Speaker 1: could just really give this information to people who might
Speaker 1: want to trade on it. There's all kinds of governmental
Speaker 1: information that has a dramatic impact on the price of securities.
Speaker 1: If you know in advance that the Federal Reserve is
Speaker 1: going to raise or lower interest rates, you can make billions.
Speaker 1: And thus the Fedal Reserve probably to keep that very
Speaker 1: very confidential. And this agency basically had similar rules. But
Speaker 1: the guys who were friends and sort of alumni that
Speaker 1: agency had a way of lunching with their old colleagues
Speaker 1: and learning what was going on, and they got very
Speaker 1: valuable information. In the view of the prosecution, they were stealing, embezzling,
Speaker 1: or misappropriating that information from the agency. But then the
Speaker 1: big surprise occurs. The Supreme Court decides what's called the
Speaker 1: bridge Gate case, and that says the government may not
Speaker 1: have any property interest any right to hold its confidential
Speaker 1: information private. So if you don't have a property interest,
Speaker 1: there can't be a property charge. And the case he'll
Speaker 1: go back to the second Circuit to see if a
Speaker 1: different theory can be worked out that does not offend
Speaker 1: the bridge Gate decision. Just to be clear, the bridge
Speaker 1: Gate case did not involve insider trading of any kind involved,
Speaker 1: really just corrupt governmental action that was in a form
Speaker 1: of retaliation against the mayor of Fort Lee because he
Speaker 1: had not endorsed Governor Christie, and the Supreme Court said,
Speaker 1: that's not fraud, that's just politics. Explain why the federal
Speaker 1: prosecutors saw the Bridgegate decision and took the unusual step
Speaker 1: of asking the Supreme Court to remand the case that
Speaker 1: they won. They saw the Kelly decision, and they saw
Speaker 1: the briefs come in from the party that sought sociary.
Speaker 1: The Supreme Court granted sociary on the defendants theory that
Speaker 1: Kelly controlled this case. So because the government has suddenly
Speaker 1: seen the theory of property being narrowed, they know this
Speaker 1: case is in danger, and the government that rather than
Speaker 1: fight on that line of battle, let's get the case
Speaker 1: for Amanda down to the Second Circuit and they can
Speaker 1: write a revised opinion that ducks that problem. So what's
Speaker 1: likely to happen at the second Circuit? Specifically, the key
Speaker 1: charge here is something called securities fraud under section and
Speaker 1: that has two prongs, and one of those problems involves
Speaker 1: a deprivation of property and the other prong involves defrauding
Speaker 1: any person. I would suspect that the Second Circuit panel
Speaker 1: they've already did convict. This guy will say, well, he's
Speaker 1: also guilty of that other prong in which you are
Speaker 1: defrauding some person even though you're not obtaining money or property.
Speaker 1: So that's just a prediction. I'm not certain that I'm right,
Speaker 1: but I think the government asked the case to be
Speaker 1: remanded even though they had one, because they thought a
Speaker 1: stronger theory could be written now that Kelly was the lord.
Speaker 1: And so the Second Circuit will have no choice but
Speaker 1: to reverse itself rewrite a decision, because they are if
Speaker 1: the Supreme Court tells you to reconsider, you better reconsider seriously.
Speaker 1: Has a Supreme Court limited the take on the expanse
Speaker 1: of insider trading? Over the years now, the Supreme Court
Speaker 1: has been very much expansive and basically quite supportive of
Speaker 1: the prosecution. They do require that you have show a
Speaker 1: proof of a fiduciary breach if this is going to
Speaker 1: be done under rule ten B five. And that's sort
Speaker 1: of the irony of this case because the prosecutors, while
Speaker 1: they used Rule ten B five, use several other theories
Speaker 1: that allow them to outflank the need for showing a
Speaker 1: breach of fiduciary duty. And now those other theories are
Speaker 1: shown to have a problem because you've got to show
Speaker 1: at least some deprivation of property, and right now the
Speaker 1: government is not going to be able to convince the
Speaker 1: Supreme Court the confidential information of a government agency about
Speaker 1: what it's about to do amounts to property that can
Speaker 1: can have stolen. Norm Biddle, do you agree with that
Speaker 1: that confidential you know, government information shouldn't be considered. I
Speaker 1: think we have to protect that so it will be
Speaker 1: protected if you get it through computer hacking or if
Speaker 1: you violate the espionage Statute by the stealing defense secrets.
Speaker 1: But I think lots of information is extremely valuable and
Speaker 1: would wreck havoc with the government. Think of the Federal
Speaker 1: Reserve Board. If people could find out a week early
Speaker 1: that Federal Reserve we're going to raise or lower interest
Speaker 1: rates by defined amount, there would be a phenomenal amount
Speaker 1: of informed trading by people who would know information that
Speaker 1: the rest of the market would not know. You know,
Speaker 1: when Free Berrara was U S Attorney for the Southern District,
Speaker 1: we saw crackdown insider trading. How has that fared under
Speaker 1: the Trump administration. Well, the U S Attorneys have still
Speaker 1: one cases the Southern District. It's a sort of independent agency.
Speaker 1: It called itself the Sovereign District in New York, and
Speaker 1: they haven't let the government in Washington directly control everything
Speaker 1: they do. Uh. And this was a case that was
Speaker 1: prosecuted years ago. The decision came down from the Second
Speaker 1: Circuit on the last day of two thousand nineteen. So
Speaker 1: this was a prosecution that we brought before Trump. The
Speaker 1: Trump administration has not been particularly vocal about not bringing
Speaker 1: inside a trading cases, other kind of cases that they're
Speaker 1: much more conservative about. So I think the Southern District
Speaker 1: has persisted in bringing some inside writer trading cases, but
Speaker 1: not nearly as many as were brought under President Obama.
Speaker 1: Do you have any expectations about what will happen under
Speaker 1: a President Biden. I think we've got to go back
Speaker 1: to the old pattern. I think the Democrats and most
Speaker 1: of the country doesn't see any value and insider trading,
Speaker 1: and they wanted those cases prosecuted, or at least the
Speaker 1: big cases prosecuted. And this was a case in which
Speaker 1: an awful lot of money was made and just to
Speaker 1: summon up you think that Blazac will end up with
Speaker 1: a prison sentence, even after the second Circuits. Well, I'm
Speaker 1: not going to predict the sentencing, but that is the
Speaker 1: normal sentence that even first defenders usually get a prison
Speaker 1: term when they are convicted of inside the trading. I
Speaker 1: think that the Second Circuit can write a decision that
Speaker 1: skirts around the problems in the Kelly case and the
Speaker 1: RidgeGate case because they can find something not involving property
Speaker 1: was violated, such as a defrauding of an individual. You
Speaker 1: can say the agency was defrauded and cheated because they
Speaker 1: weren't allowed to persist in keeping their internal processes secret.
Speaker 1: Even though it wasn't property. You could say you devoted
Speaker 1: the agency. I will see how they write it. I mean,
Speaker 1: maybe they decide they can't write a decision, but I
Speaker 1: think they've been giving the opportunity, and the U S
Speaker 1: attorneys Upice thought if they got a second chance, they
Speaker 1: would be able to write a decision that would would
Speaker 1: withstand an appeal based on Kelly. In the bridge Gate case,
Speaker 1: what about the three other people who were involved, Well,
Speaker 1: some of them have said guilty already, but they're all
Speaker 1: in the same boat. Those that are up there in
Speaker 1: the Supreme Court are all in the same boat. Blaizac
Speaker 1: was the critical person because he was the person who
Speaker 1: got the information from the agency and gave it to
Speaker 1: the hedge funds. The hedge funds are basically doing that
Speaker 1: they're usually doing, trying to pay experts to get them
Speaker 1: information that the public doesn't know. So the case now
Speaker 1: returns to the Second Circuit Court of Appeals. We'll keep
Speaker 1: you updated on what happens there. Thanks so much for
Speaker 1: being on the Bloomberg Laws Show. Jack. That's Professor John
Speaker 1: Coffee of Columbia Law School. And that's it for the
Speaker 1: edition of the Bloomberg Lawn Podcast. I'm June Grosso. Thanks
Speaker 1: so much for listening, and remember you can always get
Speaker 1: the latest legal news on our Bloomberg Lawn podcast. You
Speaker 1: can find them on Apple podcast and Spotify and wherever
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