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Speaker 1: This is Bloomberg Law with June grosseol from Bloomberg Radio.

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Speaker 2: In a seven to two decision, the Supreme Court today

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Speaker 2: upheld the federal regulation of build at home ghost gun kits.

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Speaker 2: The decision keeps in force a twenty twenty two rule

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Speaker 2: put in place during the Biden administration that subjects commercially

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Speaker 2: sold gunkits to the same requirements as fully assembled firearms,

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Speaker 2: requiring serial numbers and background checks. Joining me is Bloomberg

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Speaker 2: Supreme Court reporter Greg Store Greg This wasn't a Second

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Speaker 2: Amendment case. What was the issue here?

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Speaker 3: The issue is whether federal regulators, in particular the Bureau

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Speaker 3: of Alcohol, Tobacco, Firearms and Explosives, had the authority to

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Speaker 3: regulate these so called ghost gun kits under the existing

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Speaker 3: gun laws. So, the existing gun laws give the government

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Speaker 3: power to put regulations like background checks, things like that

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Speaker 3: on fully bold firearms. And the question is, well, what

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Speaker 3: if they're not fully assembled?

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Speaker 2: And Justice Neil Gorsich wrote for the majority, the seven

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Speaker 2: justices in the majority, what was the basis of his opinion?

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Speaker 3: Yeah, so it was a pretty technical opinion. And looking

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Speaker 3: he's very much a textualis likes to look at the

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Speaker 3: text of the law, and so he looked at the

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Speaker 3: text of the nineteen sixty eight Gun Control Act, and

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Speaker 3: he said that the regulation that ATF had put in

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Speaker 3: place to regulate these kids met within the definition of

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Speaker 3: a firearm in that nineteen sixty eight law.

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Speaker 2: Not surprising there were descents from Clarence Thomas and Samuel Alito.

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Speaker 3: Yeah, so, at least on the surface, they were mostly

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Speaker 3: focused on the language, and Justice Thomas disagreed with Justice

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Speaker 3: Gorsich on what that nineteen sixty eight law allows. Justice

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Speaker 3: thomas Is dissent was twenty six pages, so it too

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Speaker 3: was very very technical. Justice Alito added his own descent

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Speaker 3: that was a bit shorter and sort of focused on

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Speaker 3: some of the procedural aspects of the case, including criticism

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Speaker 3: that the way the Court decided the case as a

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Speaker 3: so called facial challenge to this regulation wasn't exactly the

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Speaker 3: way it was argued.

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Speaker 2: So is a ruling in favor of gun regulations from

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Speaker 2: this court a surprise to any extent.

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Speaker 3: And it is perhaps a mild surprise, the argument suggested

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Speaker 3: this might be the outcome. But if you go back

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Speaker 3: just a term ago, a similar kind of argument, again

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Speaker 3: having to do a statute or interpretation, not the Second Amendment.

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Speaker 3: The court struck down the Trump administration's ban on so

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Speaker 3: called bump stocks, those devices that convert a semi automatic

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Speaker 3: weapon into something akin to a machine gun, so that

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Speaker 3: decision perhaps voted poorly for this to the extent, both

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Speaker 3: were actually focused on the extent of the federal government's

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Speaker 3: authority over to regulate guns. But there are different statutes

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Speaker 3: and different provisions, and so the cases came out differently.

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Speaker 2: It was also a bit surprising considering that the Court

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Speaker 2: has been so skeptical in the last couple of years

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Speaker 2: of administrative agency powers, and I would say, particularly Justice.

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Speaker 3: Gorsag, yes, he has been. And certainly if you look

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Speaker 3: at that big decision from last term where the Court

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Speaker 3: said we're no longer going to defer to agencies on

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Speaker 3: the meaning of ambiguous statutes, that sort of thing does

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Speaker 3: suggest that, you know, the Court isn't going to let

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Speaker 3: agencies have their way in cases like this. But again,

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Speaker 3: this is about this particular statute, and looking at the

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Speaker 3: words of the statue, a majority of the Court said that,

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Speaker 3: you know, just because a kit isn't fully assembled, if

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Speaker 3: it still has the components of an ir arm, that's

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Speaker 3: that's enough.

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Speaker 2: Do we know how the Trump administration is going to

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Speaker 2: handle this, because this is a rule from the Biden

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Speaker 2: administration and he signed in order requiring the AG to

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Speaker 2: review gun regulations. So is it sort of up in

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Speaker 2: the air.

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Speaker 3: Yeah, that's a really good point, and we don't know. Yes, indeed,

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Speaker 3: it is up in the air. The Trump administration didn't

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Speaker 3: take a position on this. The challengers to this regulation

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Speaker 3: have called on the Attorney General, Pam Bondy, to take

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Speaker 3: another look at this issue and toss out the regulation,

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Speaker 3: and the Justice Department, when I asked them for comment,

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Speaker 3: just said we support people's Second Amendment rights, which of

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Speaker 3: course isn't what this case is about. So we really

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Speaker 3: don't know what they're.

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Speaker 1: Going to do.

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Speaker 2: This was a reversal of the Fifth Circuit, the most

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Speaker 2: conservative circuit in the country, and the oral arguments today

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Speaker 2: regarding the FCC may also result in an overturning of

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Speaker 2: the Fifth Circuit.

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Speaker 3: It might well. The arguments to today are about this

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Speaker 3: program known as the Universal Service Fund, which is a

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Speaker 3: program eight billion dollar program run by the SEC that

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Speaker 3: imposes a charge on your phone bill and uses that

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Speaker 3: money to cover to subsidize phone and internet service for

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Speaker 3: poor people, folks who live in rural areas, schools, libraries,

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Speaker 3: rural hospitals, things like that, And it was a constitutional

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Speaker 3: challenge saying that essentially the core of it was that

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Speaker 3: Congress had delegated too much of its authority, too much

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Speaker 3: of its taxing authority to the FCC to determine how

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Speaker 3: big this fee is on your phone bill. And based

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Speaker 3: on the argument today, it sounds like the Supreme Court

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Speaker 3: isn't buying that that they are going to uphold this program.

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Speaker 2: That would be another win for a federal agency in

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Speaker 2: this term. I'm keeping track. I'm also trying to keep

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Speaker 2: track of the Justice Department fast tracking cases over Trump's

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Speaker 2: efforts to push the boundaries of executive power. Because today

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Speaker 2: they asked for the Supreme Court to intervene in a case.

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Speaker 2: They had already asked for the Supreme Court to intervene

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Speaker 2: in another case on Monday. These are all being done

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Speaker 2: on an emergency basis. Are they up to about six

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Speaker 2: emergency requests in a little over two months.

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Speaker 3: By my countage five times what they're asking for this week. Well,

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Speaker 3: the most recent case has to do with teacher training programs.

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Speaker 3: So the Trump administration is asking the Supreme Court to

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Speaker 3: lift a lower court order, a district disorder that temporarily

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Speaker 3: requires the government, the Education Department, to keep funding teacher

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Speaker 3: training projects in eight states. The Education Department had said

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Speaker 3: that it's canceling one hundred and four out of one

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Speaker 3: hundred and nine grands. A US district judge said that

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Speaker 3: the challengers to that are likely to succeed, that the

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Speaker 3: cancelations are arbitrary and capricious, and so that judge issued

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Speaker 3: a temporary restraining order saying you got got to keep

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Speaker 3: paying those for now, and the Trump administration is now

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Speaker 3: here asking the Supreme Court to lift that order so

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Speaker 3: they can freeze those payments. The one earlier in the

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Speaker 3: week on Monday had to do with efforts to fire

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Speaker 3: a number of people in six different federal agencies, and

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Speaker 3: the Justice Apartment is asking the Supreme Court to let

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Speaker 3: it go ahead and fire those people, or at least

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Speaker 3: not actually bring them back to the workplace, at least

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Speaker 3: to just put them on administratively. This is a case

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Speaker 3: out of California that is similar to another one in Maryland.

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Speaker 3: The Supreme Court so far has not done anything with

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Speaker 3: that one. And I say that they haven't even asked

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Speaker 3: for a response from the nonprofit groups that are challenging this.

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Speaker 3: And it maybe that the Supreme Court in that case

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Speaker 3: wants to hold its fire because there's actually something still

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Speaker 3: pending before the Ninth Circuit in that case. So a

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Speaker 3: lot of stuff going on here.

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Speaker 2: Are the justices perhaps getting numb to these emergency requests?

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Speaker 2: You say five in a little over two months. I mean,

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Speaker 2: has any other administration made so many emergency requests to

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Speaker 2: the court in such a short period of time, and

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Speaker 2: they're calling issues like birthright citizenship and emergency.

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Speaker 3: Certainly, we've never seen anything like this, and of course

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Speaker 3: we've never seen anything like the flurry of Trump executive

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Speaker 3: orders that sparked an awful lot of this. The one

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Speaker 3: thing I would say about the Supreme Court so far

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Speaker 3: is it's pretty clear they are in no rest to

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Speaker 3: get involved. The way they have handled cases up until

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Speaker 3: now has been to sort of kick the can down

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Speaker 3: the road, and I think we see that with you

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Speaker 3: mentioned birthright citizenship. That's the case where the administration came

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Speaker 3: here and said, hey, we need an emergency order at

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Speaker 3: least limiting these lower court injunctions so that we can

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Speaker 3: impose our new birthright citizenship restrictions in much of the country.

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Speaker 3: The administrations that we need an emergency order, and then

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Speaker 3: the Supreme Court gave an unusually long time for the

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Speaker 3: folks on the other side to file a response, gave

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Speaker 3: them three weeks. And that comes on top of some

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Speaker 3: other some earlier stuff that really indicated the Court did

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Speaker 3: not want to dive into these very contentious issues until

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Speaker 3: it absolutely has to.

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Speaker 2: One thing is certain, Greg, you are going to be

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Speaker 2: very very busy over the next few years. Thanks so

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Speaker 2: much for joining me tonight. That's Bloomberg Supreme Court reporter

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Speaker 2: Greg store Well.

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Speaker 4: Our journeys in life are all slightly different. My DNA

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Speaker 4: journey started here with twenty three and meters, and it

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Speaker 4: was all so simple.

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Speaker 2: It may have been simple then, but it's getting complicated

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Speaker 2: now as twenty three and meter file for bankruptcy, raising

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Speaker 2: concerns about the future use of the genetic data it's

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Speaker 2: collected from more than fifteen million customers. The laws provide

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Speaker 2: very little protection for customers, and any future buyer of

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Speaker 2: the trove of genetic data will likely have the last

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Speaker 2: say on how they use it. My guest is Colin Walkee,

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Speaker 2: a partner at hall Estel and leader of the firm

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Speaker 2: cybersecurity and data privacy practice. Before we even get to

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Speaker 2: what's happening now. In September, the company agreed to pay

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Speaker 2: thirty million dollars to settle a class action lawsuit for

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Speaker 2: a data breach that affected six point nine million of

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Speaker 2: its users. Has a lot of their information already been compromised?

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Speaker 4: Yes, And so here's the concerning part about the statistic

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Speaker 4: you just gave about the data breach. That data breach

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Speaker 4: affected roughly six million individuals. However, the vast majority of

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Speaker 4: those individuals were of Osconazi Jewish descent or Chinese descent,

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Speaker 4: meaning that it appears to have been a targeted attack

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Speaker 4: in order to identify who is of Oscanazi heritage or

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Speaker 4: who is of Chinese heritage. And so, yes, those six

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Speaker 4: million individuals information is certainly out there somewhere. The remaining

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Speaker 4: people who.

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Speaker 2: Know twenty three and me's in bankruptcy. So is all

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Speaker 2: the information it has, All the personal and genetic information

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Speaker 2: nation going to be sold with the company.

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Speaker 4: Well, that's the plan as of right now, is that

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Speaker 4: they are looking for a buyer of that. And here's

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Speaker 4: the reality is that our data is an asset, and

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Speaker 4: that's why bought and sold with data brokers, and you know,

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Speaker 4: openly traded. And so the consequence is those assets have value,

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Speaker 4: Our data has values. And so yes, the plan is

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Speaker 4: that in the bankruptcy proceeding, either twenty three and meters

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Speaker 4: gets bought out as a whole entity, or perhaps the

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Speaker 4: assets themselves get purchased, and then only the assets survive bankruptcy,

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Speaker 4: not the entity itself.

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Speaker 2: So the board chair issued a statement saying that twenty

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Speaker 2: three in me is committed to continuing to safeguard customer

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Speaker 2: data and being transparent about the management of user data

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Speaker 2: going forward. Quote, any buyer of twenty three and meter

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Speaker 2: will be required to comply with applicable law with respect

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Speaker 2: to the treatment of customer data. What does that really mean?

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Speaker 5: Not a lot in today's world. And the reason is is,

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Speaker 5: as everyone's been discussing, there really isn't a federal law

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Speaker 5: that governs this sort of circumstance. Even though we're talking

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Speaker 5: about health information. HIPPA is not applicable because.

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Speaker 4: Twenty three and me is not what's called a covered entity.

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Speaker 4: Twenty three and meters is not required to abide by

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Speaker 4: HIPPO rules. And regulations, then you have to ask yourself, Okay, well,

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Speaker 4: what are the state requirements? And as a state requirements

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Speaker 4: first and foremost, not every single state has a data

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Speaker 4: privacy law. So, for example, in Oklahoma, I literally have

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Speaker 4: no right to my data that may be housed within

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Speaker 4: twenty three and me. There is no law that compels

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Speaker 4: them to do anything that I asked them to do.

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Speaker 4: And if I lived in a state, for example, like California,

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Speaker 4: I don't necessarily have to give my consent in advance

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Speaker 4: to the collection of my sensitive information. Versus a state

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Speaker 4: like Colorado, I do have to give my affirmative consent

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Speaker 4: for the collection of my sensitive data. But it then

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Speaker 4: begs the question, if twenty three and me is purchased,

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Speaker 4: do I have to give my consent again? And here's

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Speaker 4: the other really truly concerning part about twenty three and

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Speaker 4: meters statements. The biggest concern has to do with, for example,

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Speaker 4: their terms of service, which they state can be changed

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Speaker 4: at any time. And the same thing applies to their

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Speaker 4: medical record privacy node, which they say may change from

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Speaker 4: time to time. And so for an individual to come

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Speaker 4: out and say that twenty three and meters is still

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Speaker 4: going to continue to comply with the law. It begs

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Speaker 4: the question with the law because in certain circumstances there

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Speaker 4: aren't any laws that govern how they can use our data.

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Speaker 2: Tell us a few ways in which this data could

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Speaker 2: be used against customers in the future.

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Speaker 4: So the biggest concern right now has to do with

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Speaker 4: deep sakes, and we all know about AI technology and

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Speaker 4: those sorts of things. And if an individual is able

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Speaker 4: to identify someone's family tree through the genetic information that's

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Speaker 4: been held by twenty three and meters, then that individual

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Speaker 4: has a better ability to do a deep fake. Not

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Speaker 4: only do I know your name, your address is so

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Speaker 4: security number, but I now know your entire family tree.

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Speaker 4: And so this type of information can be used for

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Speaker 4: what we call synthetic fraud, where there's a real human

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Speaker 4: being but is utilizing fake information. That's one of the

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Speaker 4: major concerns. Another major concern again going back to targeted,

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Speaker 4: hacked and AI. If you think back to the hacking

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Speaker 4: of twenty three and meters in which the six million

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Speaker 4: records were lost, they are identifying individuals with particular racial traits.

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Speaker 4: So we have to be concerned not just about bad

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Speaker 4: actors who have this information, but even quote unquote good

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Speaker 4: actors like insurance companies, healthcare providers, school, any type of

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Speaker 4: governmental agency or private agency. If they're wanting to evaluate

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Speaker 4: you as a human being for credit worthiness, to get

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Speaker 4: a house, to get a loan, one of the things

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Speaker 4: they may look to is your information here genetic data.

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Speaker 4: Do you have, for example, genes that might lead you

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Speaker 4: to get ald time, Do you have genes that will

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Speaker 4: lead to some sort of disease that in the future

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Speaker 4: is going to cost an insurance company a ton of

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Speaker 4: money and therefore they decline to ensure you base solely

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Speaker 4: off of this genetic information. So there's a lot of

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Speaker 4: discriminatory aspects to this, as well as targeted fishing attacks

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Speaker 4: that can result from someone acquiring this data and information.

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Speaker 2: So attorneys general in California, New York, Georgia, North Carolina, Virginia,

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Speaker 2: and Florida to have sent out alerts warning that customers

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Speaker 2: data could be sold in the proceedings and advising customers

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Speaker 2: to delete their accounts and ask for their genetic samples back.

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Speaker 2: So doing that with that you or the problem that

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Speaker 2: customers may face when the information is sold.

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Speaker 4: I would say that it certainly goes a very long way,

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Speaker 4: because if you have asked them to delete their data,

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Speaker 4: and again they're obligated either through their own contractual obligations

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Speaker 4: or a state law to delete that data. That certainly

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Speaker 4: goes a long way. One of the questions, though, that

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Speaker 4: is bagged, is how they actually store that data and

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Speaker 4: that information. So, for example, they may get Colin Walkee's

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Speaker 4: genetic information because I voluntarily supplied it, and then they

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Speaker 4: stored it in what we call an anonymized or to

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Speaker 4: be more accurate, pseudonymized fashion, And what that means is

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Speaker 4: is they block out all of Colin's phi, you know,

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Speaker 4: identifiers to link back to Colin Walkie directly, and then

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Speaker 4: you just have a data set sitting there. The question

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Speaker 4: then is if I have another data set that doesn't

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Speaker 4: have genetic information, right, but if I have a zip

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Speaker 4: code or an address or something along those lines, can

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Speaker 4: I re link that data back to Calin walking specifically,

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Speaker 4: And that's something we don't know. So you may have

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Speaker 4: your information deleted, but on their servers, they still retain

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Speaker 4: a copy that is, for all intents and purposes anonymized.

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Speaker 4: You look at it, you can't see anything. But if

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Speaker 4: you link it to another data set, that might have

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Speaker 4: some additional information, you could potentially reidentify individuals. So it

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Speaker 4: certainly goes a long way. It may not cure the

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Speaker 4: entire problem, but it's certainly the first and best steps

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Speaker 4: to pay.

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Speaker 2: Most states have health information exchanges. Do people have to

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Speaker 2: worry about that as well?

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Speaker 4: That's a very interesting question. I'm glad you brought that up,

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Speaker 4: because health information exchanges are governed by HIPPA. The problem, however,

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Speaker 4: is that many, if not most, if not all, are

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Speaker 4: actually owned by third party right and so for example,

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Speaker 4: idahos HIE a few years ago declared Chapter eleven bankruptcy

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Speaker 4: and they fortunately worked out a plan, but they were

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Speaker 4: kind of in twenty three and me's situation. And for

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Speaker 4: individuals who don't know what an HIE is, it is

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Speaker 4: a database where every time you go to see your doctor,

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Speaker 4: your healthcare information is uploaded into this HIE. And in

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Speaker 4: theory this is good because in theory that means that

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Speaker 4: if you're in one part of the state where your

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Speaker 4: primary care provider is not and you into an accident, well,

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Speaker 4: whoever's taking care of you just logs into the HIE

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Speaker 4: and is able to determine whether or not you have

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Speaker 4: any sort of medical conditions or reactions or something like that,

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Speaker 4: even though they've never treated you. The problem, however, is

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Speaker 4: it increases the threat service for individuals to do cyber attacks.

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Speaker 4: And if you have all four million Oklahomas information sitting

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Speaker 4: in an HIE database, that's a very valuable database to

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Speaker 4: get a hold up. And so hiees have a little

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Speaker 4: bit more protection for consumers because of the Hippo compliance requirement,

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Speaker 4: but they're just as dangerous because they're being held by

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Speaker 4: third parties that are susceptible to hacks just like everybody else.

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Speaker 2: So twenty three and meters has proposed a May fourteenth

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Speaker 2: auction to sell its assets. Will the bankruptcy court be

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Speaker 2: monitoring any aspects of the sale of the genetic.

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Speaker 4: Data that depends. I could certainly see the situation in which,

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Speaker 4: as part of the deal, an agreement is reached to

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Speaker 4: comply with some sort of privacy law, whether that be

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Speaker 4: Hippo or otherwise, and that the court signs off on. However,

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Speaker 4: I don't know that a court can unilaterally make that

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Speaker 4: decision and say you're going to treat the data this way. However,

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Speaker 4: of twenty three and meters is serious about them abiding

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Speaker 4: by the law and that they're going to do everything

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Speaker 4: about board. Then there ought to be an agreement enter

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Speaker 4: into a judicial order as to how these assets are

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Speaker 4: going to be transferred and dealt with in the future.

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Speaker 4: But absence in an agreement, I don't know that the

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Speaker 4: court has the authority to then order them to do

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Speaker 4: certain things with that healthcare data other than comply with

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Speaker 4: state laws.

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Speaker 2: After the assets are sold to a different company. Could

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Speaker 2: the FTC step in or state attorneys general to monitor

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Speaker 2: what's happening.

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Speaker 4: Yes, I absolutely think so. Part of the problem with

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Speaker 4: the state attorney general approach is just funding, right, I mean,

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Speaker 4: if you think about how many tech companies are out

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Speaker 4: there and trying to make sure they're complying with privacy regulations, well,

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Speaker 4: I mean, good luck, right, I mean, we understand that's

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Speaker 4: going to be a huge heavy load. But the flip

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Speaker 4: side of that point is is that they still have

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Speaker 4: to comply with the laws. The question, though, is how so,

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Speaker 4: for example, in Colorado, that you have to get consent

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Speaker 4: in order to process sensitive data such as your genetic information. Okay,

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Speaker 4: twenty three and me got that consent, and now I

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Speaker 4: purchased twenty three and me, do I have to get

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Speaker 4: that consent. Again, it's still the same incity. Probably not

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Speaker 4: if I just buy the asset, just buy the genetic information, well,

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Speaker 4: maybe then I do have to get consent to utilize

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Speaker 4: and further process that data. That's kind of an unknown

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Speaker 4: at this day, but I certainly think that the AGS

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Speaker 4: will have scrutiny, especially over anyone who purchases this. But again,

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Speaker 4: out of the twenty six million people's information that's in

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Speaker 4: that data set, do tell me how many of them

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Speaker 4: live in state or countries with data privacy laws.

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Speaker 2: So let's say someone is still interested in genetic testing,

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Speaker 2: is there anything that they can do if they decide

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Speaker 2: to sign up with one of these companies? Is there

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Speaker 2: anything they can do to protect their data?

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Speaker 4: No, because once you transfer your data into the hands

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Speaker 4: of the third party, absent regulation, they're free to do

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Speaker 4: whatever the heck do they want to with that data.

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Speaker 4: It is truly the wild West, which is why Congress

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Speaker 4: and the states need to get serious about enforcement, because

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Speaker 4: the reality is even the laws on the books are

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Speaker 4: not very strong laws. Every single law on the books

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Speaker 4: is what's called opt out, which means that unless you

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Speaker 4: tell them, don't collect and sell my information. That's what

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Speaker 4: they're doing. And so here, yes, we're dealing with sensitive information.

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Speaker 4: But aside from Colorado and a few other handfuls of tape,

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Speaker 4: there's no rules on what individuals have to do. Just

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Speaker 4: like Fitbit. How many people wear fitbit and are sharing

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Speaker 4: their you know, sensitive biomedical information with fitbit. Millions of

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Speaker 4: people are doing this on a daily basis, and I

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Speaker 4: don't think that people appreciate the harm and the exposures

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Speaker 4: that come from that type of to be frank, cavalier behavior.

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Speaker 4: I appreciate that we all have, you know, an interest

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Speaker 4: in our history and our camelin trees and those sorts

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Speaker 4: of things, but I strongly encourage individuals to be careful

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Speaker 4: with that type of data, to be frank with any

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Speaker 4: of their data. But since we're talking twenty three and me,

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Speaker 4: especially the genetic data, because unlike your social security numbers,

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Speaker 4: unlike your name, unlike pretty much everything else about you,

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Speaker 4: you cannot change your genetics. And if somebody gets a

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Speaker 4: hold of that information, that is something that is immutable

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Speaker 4: and cannot be changed.

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Speaker 2: So this may end up being a sort of wake

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Speaker 2: up call for people.

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Speaker 4: I'm afraid that we've gotten to the point in our

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Speaker 4: country where we care more about convenience than we do

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Speaker 4: about our personal safety. And we see that all the

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Speaker 4: time with the apps that we download and those sorts

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Speaker 4: of things. And I don't think that individuals appreciate how

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Speaker 4: susceptible that makes them to both personal, physical and financial harms.

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Speaker 4: And so anybody that's listening to this, whether it's twenty

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Speaker 4: three and me or wearing a fitbit, I strongly encourage

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Speaker 4: you to rethink whether you truly need that, because it

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Speaker 4: is being bought, sold and bartered on the open market

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Speaker 4: without your knowledge or consent, and all of it is

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Speaker 4: being bought, sold and bartered in order to exploit you

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Speaker 4: until fee your privacy for profits. So this is a

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Speaker 4: day and age that people need to wake up and

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Speaker 4: realize we're being exploited and we need to take control.

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Speaker 2: This case certainly raises a lot of concerns. Thanks so

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Speaker 2: much for being on the show, Colin. That's Colin Walkee,

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Speaker 2: a partner at Hall of Still. A North Dakota jury

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Speaker 2: has found the environmental group Greenpeace liable for defamation, conspiracy,

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Speaker 2: and other claims over its participation in the Dakota Access

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Speaker 2: Pipeline protests that lasted from twenty sixteen to twenty seventeen.

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Speaker 2: The jury awarded the pipeline company, Energy Transfer six hundred

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Speaker 2: and sixty million dollars in damages. Greenpeace says it will appeal,

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Speaker 2: and environmentalists warned that the verdict could chill free speech.

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Speaker 2: I mean's environmental law professor Pat Parento of the Vermont

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Speaker 2: Law and Graduate School. Pat give us the background of

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Speaker 2: this case.

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Speaker 1: So, this was one of the largest protests of a

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Speaker 1: fossil fuel infrastructure project, the Code Access pipeline in the

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Speaker 1: nation's history. In fact, it drew well over I think

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Speaker 1: it was four hundred tribes, not only from the United States,

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Speaker 1: but from Canada, from Mexico, and from other countries. There

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Speaker 1: was a massive protest, and the concern was the impact

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Speaker 1: of the pipeline on the Standing Rock Suit tribes water supply.

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Speaker 1: Pipeline was going to go across the Missouri River right

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Speaker 1: above the intake for their water supply. That's the thing

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Speaker 1: that originally motivated the protests. And then all these other

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Speaker 1: tribes joined with the Standing Rock tribe in solidarity, and

438
00:24:52,440 --> 00:24:55,399
Speaker 1: Standing Rock reached out to Green Peak for help in

439
00:24:56,400 --> 00:24:59,680
Speaker 1: figuring out how do we conduct a protest. The demonstration

440
00:24:59,840 --> 00:25:02,280
Speaker 1: that doesn't run a foul of the law, or at

441
00:25:02,359 --> 00:25:05,560
Speaker 1: least understand where are the lines that we shouldn't cross.

442
00:25:05,920 --> 00:25:10,480
Speaker 1: And green Peace agreed to provide that training on civil disobedience.

443
00:25:10,720 --> 00:25:13,320
Speaker 1: They provided some money, I think about fifteen thousand dollars.

444
00:25:13,400 --> 00:25:17,840
Speaker 1: They provided solar panels to provide some power to the

445
00:25:18,000 --> 00:25:21,399
Speaker 1: encampment because you know, they erected tents, they occupied the

446
00:25:21,520 --> 00:25:24,560
Speaker 1: area where the pipeline was being built. There's allegations that

447
00:25:24,600 --> 00:25:27,600
Speaker 1: they actually encroached on the right of way as part

448
00:25:27,640 --> 00:25:30,919
Speaker 1: of Energy transfers property, and you know that gets into

449
00:25:30,960 --> 00:25:34,320
Speaker 1: the whole trespass issue. So it was a multi year

450
00:25:35,000 --> 00:25:38,679
Speaker 1: massive protest. There were violence. There were incidents where the

451
00:25:38,720 --> 00:25:43,679
Speaker 1: security firm hired by Energy Transfer got into confrontations with

452
00:25:43,840 --> 00:25:47,199
Speaker 1: the protesters, not so much with green Peace itself, but

453
00:25:47,280 --> 00:25:50,200
Speaker 1: with tribal members and other, you know, people that showed

454
00:25:50,280 --> 00:25:53,360
Speaker 1: up and supported the tribe. There was incidents of damage

455
00:25:53,400 --> 00:25:57,359
Speaker 1: to equipment and so forth. So you know that's the

456
00:25:57,480 --> 00:25:58,760
Speaker 1: backdrop to the case.

457
00:25:59,280 --> 00:26:04,880
Speaker 2: So Energy Transfer, the pipeline company, sued Greenpeace for defamation,

458
00:26:05,200 --> 00:26:09,520
Speaker 2: trespassed nuisance, civil conspiracy, and other acts. During the trial,

459
00:26:09,600 --> 00:26:13,960
Speaker 2: the company's attorney argued that Greenpeace had paid outsiders to

460
00:26:14,000 --> 00:26:19,200
Speaker 2: come into the area and protest, sent blockade supplies, organized

461
00:26:19,240 --> 00:26:23,919
Speaker 2: or led protester trainings, and made untrue statements about the project.

462
00:26:24,440 --> 00:26:27,880
Speaker 2: The jury's verdict on the defamation claims are what many

463
00:26:27,920 --> 00:26:29,959
Speaker 2: people have been focusing on in this case.

464
00:26:30,520 --> 00:26:34,560
Speaker 1: Yeah, that's the central claim and the one that probably

465
00:26:34,600 --> 00:26:38,000
Speaker 1: resulted in the largest award. I mean, this was a

466
00:26:38,080 --> 00:26:45,800
Speaker 1: astronomical verdict six and sixty seven million dollars against three

467
00:26:46,000 --> 00:26:51,480
Speaker 1: Greenpeace entities, Greenpeace USA, Greenpeace Fund, and green Peace International.

468
00:26:51,600 --> 00:26:55,399
Speaker 1: The lion's share of the damage is awarded against Greenpeace USA.

469
00:26:55,520 --> 00:26:58,159
Speaker 1: And obviously an amount like that would if it was

470
00:26:58,280 --> 00:27:02,560
Speaker 1: upheld on a field, would bankrupt many times over green Peace,

471
00:27:02,600 --> 00:27:06,439
Speaker 1: even though greenpieace is a major organization. So defamation was

472
00:27:06,480 --> 00:27:10,280
Speaker 1: the heart of it, and it came down to nine statements.

473
00:27:10,600 --> 00:27:13,399
Speaker 1: Of course, you know, to prove a defamation case, you

474
00:27:13,520 --> 00:27:16,400
Speaker 1: have to show that the defendant in this case, Greenpeace,

475
00:27:16,640 --> 00:27:19,800
Speaker 1: made statements that were published to a third party. And

476
00:27:19,840 --> 00:27:21,919
Speaker 1: obviously green Peace had it on their website and in

477
00:27:22,000 --> 00:27:25,000
Speaker 1: press releases, and so there was broad distribution. So you

478
00:27:25,119 --> 00:27:28,000
Speaker 1: have to have a materially false statement. That's the key.

479
00:27:28,080 --> 00:27:29,439
Speaker 1: It's got to be false and it's got to be

480
00:27:29,520 --> 00:27:35,600
Speaker 1: material that actually causes damage. And because Energy Transfer is

481
00:27:35,680 --> 00:27:38,680
Speaker 1: considered a public entity because it's a sort of a

482
00:27:38,760 --> 00:27:42,760
Speaker 1: high profile company under New York Times versus Sullivan, you

483
00:27:42,840 --> 00:27:46,520
Speaker 1: have to prove actual malice, not only that the statements

484
00:27:46,520 --> 00:27:51,320
Speaker 1: are false materially false, but that they were made with

485
00:27:51,600 --> 00:27:57,000
Speaker 1: actual malice or reckless disregard of the truth and the

486
00:27:57,160 --> 00:28:02,240
Speaker 1: consequences to the reputation of Energy Transfer. So these are

487
00:28:02,240 --> 00:28:05,000
Speaker 1: really really high standards that you have to meet for

488
00:28:05,080 --> 00:28:08,000
Speaker 1: a defamation case. And here's the real kicker. If the

489
00:28:08,080 --> 00:28:12,480
Speaker 1: statements in question, even if they were false, were privileged

490
00:28:12,600 --> 00:28:14,960
Speaker 1: in any way. And there are a variety of privileges,

491
00:28:15,000 --> 00:28:17,760
Speaker 1: the most important of which, of course, is the First

492
00:28:17,800 --> 00:28:21,240
Speaker 1: Amendment to the United States Constitution, the right of free speech,

493
00:28:21,359 --> 00:28:23,879
Speaker 1: the right of assembly, the right of petitioning government, the

494
00:28:23,960 --> 00:28:27,199
Speaker 1: right to object and oppose projects that you disapprove of

495
00:28:27,520 --> 00:28:31,280
Speaker 1: whatever reason. Opinion can't be the subject of a defamation action,

496
00:28:31,640 --> 00:28:35,440
Speaker 1: and protected speech cannot be the subject of an action

497
00:28:35,560 --> 00:28:39,080
Speaker 1: for damages. Where it gets tricky, of course, is what's

498
00:28:39,120 --> 00:28:43,320
Speaker 1: protected speech versus what's defamation in this case, because all

499
00:28:43,360 --> 00:28:47,680
Speaker 1: the statements in question were written, the underlying legal doctrine

500
00:28:47,760 --> 00:28:51,120
Speaker 1: is liable. So it's the kind of a stupot of

501
00:28:51,520 --> 00:28:55,600
Speaker 1: different issues and factors that go into calculating was this

502
00:28:55,720 --> 00:29:01,720
Speaker 1: protected speech? If not, was it materially did it green

503
00:29:01,760 --> 00:29:05,600
Speaker 1: Peace know it was false? And did green Peace with

504
00:29:05,800 --> 00:29:08,240
Speaker 1: malice make a materially false statement?

505
00:29:08,440 --> 00:29:12,000
Speaker 4: The jury in this case agreed with energy Transfer.

506
00:29:12,360 --> 00:29:15,120
Speaker 2: What was Greenpeace's defense that it was true, that it

507
00:29:15,560 --> 00:29:18,680
Speaker 2: wasn't malicious, that it didn't meet the standard.

508
00:29:18,760 --> 00:29:22,120
Speaker 1: All of that. The key one that really crystallizes the

509
00:29:22,280 --> 00:29:26,240
Speaker 1: frux of this case has to do with the following scenario.

510
00:29:26,800 --> 00:29:32,520
Speaker 1: The pipeline was crossing historic Sioux Nation lands. Of course,

511
00:29:32,560 --> 00:29:36,160
Speaker 1: these lands have since been transferred by a variety of mechanisms,

512
00:29:36,200 --> 00:29:37,960
Speaker 1: some of which have been found to be illegal to

513
00:29:38,040 --> 00:29:41,800
Speaker 1: private ownership, including energy transfers ownership of the right of way.

514
00:29:41,960 --> 00:29:48,720
Speaker 1: So in crossing these traditionally native lands, the tribal Historic

515
00:29:48,840 --> 00:29:52,840
Speaker 1: Preservation officer This is an official position. It's recognized under

516
00:29:52,880 --> 00:29:56,440
Speaker 1: federal law under the National Historic Preservation Act, and it

517
00:29:56,560 --> 00:30:01,560
Speaker 1: exists to review projects that require federal and the pipeline

518
00:30:01,640 --> 00:30:04,480
Speaker 1: does require federal permits, including a permit from the corp

519
00:30:04,480 --> 00:30:07,680
Speaker 1: of Engineers for the crossing of the Missouri River with

520
00:30:07,800 --> 00:30:12,280
Speaker 1: the pipeline. So the tribal historic preservation officers said, whoa

521
00:30:12,400 --> 00:30:17,320
Speaker 1: Energy Transfer, You're crossing areas that have native graves. We

522
00:30:17,360 --> 00:30:19,560
Speaker 1: don't know exactly where they are, but we know from

523
00:30:19,600 --> 00:30:22,920
Speaker 1: our tradition, both oral and written, that these areas were

524
00:30:22,920 --> 00:30:26,840
Speaker 1: occupied by our people, that people were buried there. And

525
00:30:26,880 --> 00:30:28,600
Speaker 1: we also know that some of the areas that you're

526
00:30:28,640 --> 00:30:33,680
Speaker 1: crossing have historic archaeological remains that are protected under federal law.

527
00:30:34,160 --> 00:30:37,440
Speaker 1: So stop the construction so that we can do a

528
00:30:37,480 --> 00:30:42,160
Speaker 1: careful inventory of where these cultural resources might be and

529
00:30:42,240 --> 00:30:45,000
Speaker 1: what needs to be done to either avoid them ideally

530
00:30:45,320 --> 00:30:48,600
Speaker 1: or mitigate, you know, recover them and protect them. Within

531
00:30:48,880 --> 00:30:53,680
Speaker 1: days of the communication from the tribal Historic Preservation officer,

532
00:30:54,120 --> 00:30:57,920
Speaker 1: Energy Transfer sent the bulldozers out and bulldozed the right

533
00:30:57,960 --> 00:31:02,320
Speaker 1: of way. So green Peace made nine specific statements that

534
00:31:02,440 --> 00:31:05,920
Speaker 1: the court identified as the source of defamation by my

535
00:31:06,040 --> 00:31:08,520
Speaker 1: count I looked at them. Four of them dealt with

536
00:31:08,720 --> 00:31:14,560
Speaker 1: this specific instance of bulldozing these cultural resources. So it

537
00:31:14,600 --> 00:31:16,600
Speaker 1: appeared to me, and of course I wasn't in the

538
00:31:16,600 --> 00:31:19,640
Speaker 1: court room. In fact, you know, the court refused to

539
00:31:19,800 --> 00:31:22,480
Speaker 1: televise the trial even though you know, life streaming of

540
00:31:22,480 --> 00:31:26,560
Speaker 1: trials in North Dakota is allowed, so by my you

541
00:31:26,600 --> 00:31:30,600
Speaker 1: know understanding, it's true that Energy Transfer sent the bulldozers

542
00:31:30,600 --> 00:31:32,920
Speaker 1: in after they were told not to do it. So

543
00:31:33,040 --> 00:31:35,480
Speaker 1: at a minimum, you have to say, you know, did

544
00:31:35,520 --> 00:31:41,120
Speaker 1: green Peace, relying on the tribe's historic preservation officer, knowingly

545
00:31:41,200 --> 00:31:44,760
Speaker 1: make a false statement. They could have been wrong about that,

546
00:31:45,320 --> 00:31:48,080
Speaker 1: but they were relying on the information they were being

547
00:31:48,120 --> 00:31:52,840
Speaker 1: given by the tribe. And secondly, even if they were negligent,

548
00:31:53,120 --> 00:31:55,360
Speaker 1: that's not enough in a case like this. You have

549
00:31:55,520 --> 00:32:00,240
Speaker 1: to show actual malice, not just negligence. So in addition

550
00:32:00,360 --> 00:32:02,840
Speaker 1: to being deliberate, you have to say they did it

551
00:32:02,920 --> 00:32:06,200
Speaker 1: just to be malicious, and that's pretty hard to prove.

552
00:32:06,560 --> 00:32:08,440
Speaker 2: Of course, since neither of us were in the courtroom

553
00:32:08,560 --> 00:32:10,920
Speaker 2: during the course of the trial, we don't know what

554
00:32:11,000 --> 00:32:14,200
Speaker 2: evidence the jury saw, but it was enough to make

555
00:32:14,280 --> 00:32:18,120
Speaker 2: them come back with a whopping verdict against Greenpeace. So

556
00:32:18,440 --> 00:32:22,040
Speaker 2: Greenpeace says it's going to appeal, but one wonders what

557
00:32:22,840 --> 00:32:24,440
Speaker 2: its chances are on appeal.

558
00:32:25,080 --> 00:32:28,440
Speaker 1: I'm sure they're thinking positively, but they can't be sanguine

559
00:32:28,560 --> 00:32:32,920
Speaker 1: about it because there's another point. Green Sea's obviously moved

560
00:32:32,960 --> 00:32:35,680
Speaker 1: to transfer this case this case was being heard in Mandan,

561
00:32:36,160 --> 00:32:38,520
Speaker 1: right in the middle of where the protests were occurring.

562
00:32:38,800 --> 00:32:42,000
Speaker 1: In the Va Deer process of questioning the jurors, that

563
00:32:42,160 --> 00:32:44,560
Speaker 1: came out that most of their nine jurors in this

564
00:32:44,600 --> 00:32:47,880
Speaker 1: particular case, most of them had some connection to the

565
00:32:47,880 --> 00:32:50,760
Speaker 1: oil and gas industry. Either they worked for them, or

566
00:32:50,920 --> 00:32:53,880
Speaker 1: family members work for them. This comes out in questioning, right,

567
00:32:54,280 --> 00:32:56,640
Speaker 1: or they have some kind of economic interest in what's

568
00:32:56,640 --> 00:32:59,760
Speaker 1: going on. This is a major backbone of the economy

569
00:33:00,080 --> 00:33:02,560
Speaker 1: of this part of North Dakota. This is the Bakan,

570
00:33:02,960 --> 00:33:05,320
Speaker 1: you know, where all of this crude oil is that's

571
00:33:05,360 --> 00:33:08,600
Speaker 1: been exported. So you have the fact that the people

572
00:33:08,640 --> 00:33:11,720
Speaker 1: on the panel on the jury had to live with

573
00:33:11,800 --> 00:33:14,719
Speaker 1: these protests for almost two years. That couldn't have been

574
00:33:14,720 --> 00:33:18,440
Speaker 1: an enjoyable experience, right, thousands of people occupying their community

575
00:33:18,680 --> 00:33:22,120
Speaker 1: and protesting. So you know, the sensible thing would have

576
00:33:22,120 --> 00:33:24,280
Speaker 1: been to transfer the case to Fargo, take it all

577
00:33:24,320 --> 00:33:27,600
Speaker 1: the way almost to Minnesota, right, get it out of

578
00:33:27,640 --> 00:33:31,160
Speaker 1: the community that was most affected. But that was refused

579
00:33:31,240 --> 00:33:33,600
Speaker 1: all the way up to the North Dakota Supreme Court,

580
00:33:33,920 --> 00:33:36,400
Speaker 1: which refused to transfer the case. So that tells me,

581
00:33:36,960 --> 00:33:39,840
Speaker 1: you know, you're not going into a particularly friendly forum

582
00:33:40,240 --> 00:33:43,320
Speaker 1: with this appeal. Lots of grounds for the appeal, for

583
00:33:43,400 --> 00:33:47,040
Speaker 1: sure rulings on evidence in the case that went against

584
00:33:47,040 --> 00:33:51,040
Speaker 1: screenpiece and in favor of energy transfer, jury instructions that

585
00:33:51,160 --> 00:33:53,520
Speaker 1: did not call out the First Amendment issues at all.

586
00:33:53,560 --> 00:33:56,240
Speaker 1: I looked at them. It didn't instruct the jury on

587
00:33:56,360 --> 00:33:59,800
Speaker 1: what exactly is protective speech. That's actually a question that

588
00:33:59,840 --> 00:34:03,880
Speaker 1: the court itself should have decided. But certainly the jury

589
00:34:03,920 --> 00:34:07,040
Speaker 1: can't be left to wonder is what was said here

590
00:34:07,120 --> 00:34:11,520
Speaker 1: actually protected by our US Constitution? So lots of ground

591
00:34:11,800 --> 00:34:12,440
Speaker 1: for appeal.

592
00:34:13,239 --> 00:34:16,160
Speaker 2: Would paying this verdict really bankrupt green Peace?

593
00:34:16,920 --> 00:34:19,960
Speaker 1: Oh many times over. I mean, it's a major organization,

594
00:34:20,040 --> 00:34:22,680
Speaker 1: but it doesn't have six hundred and sixty seven million

595
00:34:22,719 --> 00:34:25,520
Speaker 1: dollars lying around, and even if it's cut in half,

596
00:34:26,160 --> 00:34:30,160
Speaker 1: it's going to bankrupt them. This is a high stakes case,

597
00:34:30,800 --> 00:34:34,319
Speaker 1: not just for Greenpeace, but obviously the implications here, the

598
00:34:34,440 --> 00:34:37,640
Speaker 1: chilling effect of this kind of verdict. I mean, if

599
00:34:37,680 --> 00:34:42,120
Speaker 1: you were an NGO, would you seriously consider protesting and

600
00:34:42,239 --> 00:34:46,080
Speaker 1: demonstrating against fossil fuel industry after this?

601
00:34:46,360 --> 00:34:46,560
Speaker 4: Boy?

602
00:34:46,640 --> 00:34:48,600
Speaker 1: You'd have to think long and hard about that, wouldn't you.

603
00:34:48,760 --> 00:34:52,120
Speaker 1: I mean, would you put your own entire organization at risk.

604
00:34:52,160 --> 00:34:55,920
Speaker 1: Even if you're an Audubon Society or National Wildlife Federation.

605
00:34:56,200 --> 00:35:00,239
Speaker 1: They can't afford to risk a judgment like this. And

606
00:35:00,400 --> 00:35:04,600
Speaker 1: just the cost of litigation, again, two different lawsuits that

607
00:35:04,920 --> 00:35:07,360
Speaker 1: Green Piece has had to defend. Just the cost of

608
00:35:07,400 --> 00:35:11,439
Speaker 1: that alone is something that most organizations couldn't absorb. They

609
00:35:11,480 --> 00:35:14,040
Speaker 1: did have some pro bono help in the case, or

610
00:35:14,080 --> 00:35:16,400
Speaker 1: they probably couldn't have mounted a defense at all. But

611
00:35:16,640 --> 00:35:20,080
Speaker 1: I think the chilling effect of this magnitude of verdict

612
00:35:20,480 --> 00:35:23,680
Speaker 1: is hard to measure, but potentially seismic.

613
00:35:24,280 --> 00:35:27,680
Speaker 2: Thanks Pat. That's Professor Pat Parento of Theirmont Law and

614
00:35:27,760 --> 00:35:30,920
Speaker 2: Graduate School. And that's it for this edition of The

615
00:35:30,920 --> 00:35:33,880
Speaker 2: Bloomberg Law Show. Remember you can always get the latest

616
00:35:33,920 --> 00:35:37,040
Speaker 2: legal news on our Bloomberg Law Podcast. You can find

617
00:35:37,080 --> 00:35:41,640
Speaker 2: them on Apple Podcasts, Spotify, and at www dot Bloomberg

618
00:35:41,719 --> 00:35:45,480
Speaker 2: dot com, slash podcast, Slash Law, And remember to tune

619
00:35:45,520 --> 00:35:48,720
Speaker 2: into The Bloomberg Law Show every weeknight at ten pm

620
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Speaker 2: Wall Street Time. I'm June Grosso and you're listening to

621
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