WEBVTT - SCOTUS Skeptical of Another Public Corruption Law 0:00:03.200 --> 0:00:08.000 This is Bloomberg Law with June Brusso from Bloomberg Radio. 0:00:10.039 --> 0:00:13.080 A jury of seven men and five women has been 0:00:13.200 --> 0:00:17.119 sworn in to hear Donald Trump's hush money case. One 0:00:17.280 --> 0:00:21.360 alternate juror has also been selected. That means five more 0:00:21.400 --> 0:00:24.640 alternates have to be selected to round out the panel 0:00:24.680 --> 0:00:27.720 that will decide the first ever criminal case against a 0:00:27.760 --> 0:00:31.480 former US president. Jury selection got off to a slow 0:00:31.600 --> 0:00:36.440 start this morning after two previously sworn in jurors were dismissed, 0:00:37.120 --> 0:00:40.040 one because she expressed doubts about her ability to be 0:00:40.159 --> 0:00:43.879 fair and impartial after some of her personal information had 0:00:43.880 --> 0:00:48.040 been made public, the second because prosecutors told the judge 0:00:48.159 --> 0:00:51.040 they had information that the man was arrested in the 0:00:51.120 --> 0:00:56.760 nineteen nineties for tearing down conservative political advertisements. Judge One 0:00:56.840 --> 0:01:00.320 Mreshan says he's hopeful the jury selection process will be 0:01:00.320 --> 0:01:04.560 wrapped up tomorrow and opening statements can take place on Monday. 0:01:05.080 --> 0:01:07.960 Turning down to legal news on the Supreme Court, the 0:01:08.040 --> 0:01:12.240 facts are undisputed. James Snyder, the former mayor of a 0:01:12.319 --> 0:01:16.920 Northwest Indiana town, received thirteen thousand dollars from a trucking 0:01:17.000 --> 0:01:21.440 company one month after was awarded city contracts worth more 0:01:21.480 --> 0:01:25.040 than one point one million dollars in a bidding process 0:01:25.040 --> 0:01:28.880 he oversaw. Snyder was convicted by a jury of bribery, 0:01:29.400 --> 0:01:32.679 and then convicted by a second jury in a retrial. 0:01:33.160 --> 0:01:35.720 But the Supreme Court, which has been having its own 0:01:35.840 --> 0:01:40.319 problems of late with unreported gifts to justices, seem to 0:01:40.319 --> 0:01:44.040 think that thirteen thousand dollars was like taking a teacher 0:01:44.120 --> 0:01:47.520 to the cheesecake factory as a thank you or buying 0:01:47.560 --> 0:01:51.760 a gift card to Starbucks. Here's Justice Neil gorsicch. 0:01:52.120 --> 0:01:53.800 It can mean something more than that. It can mean 0:01:53.840 --> 0:01:57.080 a venal sin, It can mean a mortal sin. How 0:01:57.120 --> 0:02:01.320 does somebody who accepts the cheesecake factory no a trip 0:02:01.360 --> 0:02:04.600 to the cheesecake factory for nice treatment at the hospital, 0:02:05.000 --> 0:02:10.360 for treating my child well in school, for an arrest made? 0:02:11.000 --> 0:02:13.480 How does that person know whether that falls on the 0:02:13.760 --> 0:02:17.840 what you call the wrongfulness side of the equation or not. 0:02:18.320 --> 0:02:21.520 For the Justices, the question was whether the bribery law 0:02:21.919 --> 0:02:26.320 covers gratuities paid after the fact or only covers bribes 0:02:26.520 --> 0:02:30.359 before the fact, meaning a tit for town agreement. Joining 0:02:30.360 --> 0:02:33.600 me to answer this question and others is business law 0:02:33.639 --> 0:02:38.519 professor Eric Tally of Columbia Law School Law School Eric. 0:02:38.560 --> 0:02:43.200 This case centers on the scope of eighteen USC. Six 0:02:43.360 --> 0:02:47.080 sixty six, a federal bribery law which has been in 0:02:47.120 --> 0:02:49.080 effect for a long time. 0:02:49.960 --> 0:02:52.680 Oh yeah, this antibribery law has been around for a 0:02:52.760 --> 0:02:56.480 long time. There have been very many prosecutions under it 0:02:56.600 --> 0:03:00.880 and prior situations involving this that this has not been 0:03:00.919 --> 0:03:03.040 an issue. So it's no or at least it hasn't been 0:03:03.040 --> 0:03:05.160 thought to be at issue by the judges that are 0:03:05.160 --> 0:03:06.919 hearing these cases. So this is in some ways kind 0:03:06.919 --> 0:03:10.320 of a novel legal argument applied to a pretty old statue. 0:03:10.720 --> 0:03:13.720 The law makes it a crime for certain state or 0:03:13.760 --> 0:03:18.480 local officials to corruptly accept anything of value over five 0:03:18.560 --> 0:03:22.440 thousand dollars. The word corruptly seemed to be a problem 0:03:22.520 --> 0:03:23.399 for the justices. 0:03:24.040 --> 0:03:27.880 Yes, and the key issue on the question of corruptly 0:03:28.280 --> 0:03:31.360 seems to be, at least in part, circulating around a 0:03:31.480 --> 0:03:35.480 question of timing, and a lot of the Q and 0:03:35.520 --> 0:03:39.760 A during the oral argument was all about, you know, 0:03:40.080 --> 0:03:43.240 the timing of a payment that, let's just say, for 0:03:43.440 --> 0:03:48.480 argument's sake, exceeds five thousand dollars. But the hypotheticals that 0:03:48.520 --> 0:03:52.840 were being bandied about involved situations like taking someone out 0:03:52.880 --> 0:03:55.520 to dinner at the cheesecake factory. I don't know if 0:03:55.560 --> 0:03:58.280 you've been to the cheesecake factory lately, but lately I've 0:03:58.320 --> 0:04:00.840 never run up anything like a five one hundred dollars 0:04:00.840 --> 0:04:03.440 bill of the cheesecake factory. So it wouldn't actually hit 0:04:03.480 --> 0:04:04.840 that status tarror threshold. 0:04:05.200 --> 0:04:08.360 Well, Kavanaugh said, you don't know if the concert tickets, 0:04:08.400 --> 0:04:12.320 the game tickets, the gift card to Starbucks, whatever, where 0:04:12.400 --> 0:04:15.440 is the line? So there's that vagueness. I mean, are 0:04:15.480 --> 0:04:18.960 they really talking about a more than five thousand dollars 0:04:19.200 --> 0:04:21.200 gift card to Starbucks? 0:04:21.200 --> 0:04:23.280 Super odd? I mean, just so of my or brought 0:04:23.279 --> 0:04:25.640 this up, but it ended up sort of, this question 0:04:25.680 --> 0:04:29.760 of corruptly ended up floating around in its own mist right, 0:04:29.839 --> 0:04:32.839 independent of the dollar amount. Look, a lot of times 0:04:32.839 --> 0:04:37.120 in these situations there will be either inside the statute 0:04:37.240 --> 0:04:40.320 or kind of a reasonable construction of statute, a judge 0:04:40.320 --> 0:04:43.279 will come in and say, listen, we're going to impose 0:04:43.440 --> 0:04:46.920 a you know, it's sometimes called a materiality threshold or 0:04:46.960 --> 0:04:50.760 a materiality test on some sort of suspect payment. And 0:04:50.800 --> 0:04:54.320 the definition of materiality is itself. It's a little foggy. 0:04:54.400 --> 0:04:56.760 It usually circulates around and you know what a reasonable 0:04:56.760 --> 0:04:59.000 person think, this is a big payment that would change 0:04:59.000 --> 0:05:01.719 someone's judgment. But that has worked all over the place 0:05:01.760 --> 0:05:04.720 and all types of financial crimes and financial civil actions. 0:05:04.920 --> 0:05:09.240 Materiality is a very very common workhorse. That was oddly, 0:05:09.600 --> 0:05:12.440 it wasn't quite absent, but it seemed to be suppressed 0:05:12.480 --> 0:05:14.800 pretty far down the list in the oral argument. 0:05:15.200 --> 0:05:20.280 Was there a division between the liberal and the conservatives, because, 0:05:20.400 --> 0:05:23.039 I know, Brett Kavanaugh at one point said that he 0:05:23.160 --> 0:05:26.559 was concerned about ensnaring the nineteen million state and local 0:05:26.600 --> 0:05:28.680 officials who are subject to the law, and then Alena 0:05:28.760 --> 0:05:33.480 Kagan chimed in that includes employees of public hospitals and universities. 0:05:34.080 --> 0:05:36.599 Was there a split ideological Well. 0:05:37.080 --> 0:05:39.320 Yeah, maybe, or maybe not. Like usually you would think 0:05:39.360 --> 0:05:42.200 that Kagan is, you know, sort of coming down on 0:05:42.760 --> 0:05:45.919 plausibly different sides than Kavani is, though they're both a 0:05:45.920 --> 0:05:49.000 little bit more centrist in the approach that they have. 0:05:49.440 --> 0:05:52.760 You know, Atlanta Kagan put a hypothetical forward about providing 0:05:52.800 --> 0:05:55.560 some life saving you know, a university hospital deciding to 0:05:55.800 --> 0:05:58.640 provide some life saving operation or service to a billionaire 0:05:58.640 --> 0:06:00.960 in the hopes that they would later get a big 0:06:01.080 --> 0:06:04.839 charitable donation to the university. Wouldn't that be a problem. 0:06:04.839 --> 0:06:07.839 So that much of the oral argument seems to devolve 0:06:07.880 --> 0:06:12.120 into like kind of a non stop set of hypotheticals, 0:06:12.160 --> 0:06:16.760 each somewhat more extraordinary than the others. And you know, 0:06:16.839 --> 0:06:19.200 that kind of is where the two lawyers had to go. Now, 0:06:19.240 --> 0:06:21.559 I think the lawyer for mister Snyder was quite happy 0:06:21.560 --> 0:06:24.400 to go there, because the entire theory on the case 0:06:24.560 --> 0:06:27.720 is it's just impossible to draw lines in this type 0:06:27.760 --> 0:06:30.600 of a situation. And the government's attorneys pretty much had 0:06:30.640 --> 0:06:33.640 to say, now, line drawing is hard, but it's always hard, 0:06:33.680 --> 0:06:35.800 and the government's going to only, you know, bring these 0:06:35.839 --> 0:06:38.400 cases when it feels like it's a good case that's 0:06:38.400 --> 0:06:41.359 consistent with you know, public policy associated with the anti 0:06:41.400 --> 0:06:44.279 bribery Statute. But that itself, you know, at least to 0:06:44.320 --> 0:06:47.280 some judges and maybe to some observers, is a type 0:06:47.279 --> 0:06:50.080 of assurance that's really hard to check later on. And 0:06:50.160 --> 0:06:51.760 so you know, I think, you know, the court is 0:06:51.800 --> 0:06:54.320 probably going to have to be forced into some sort 0:06:54.360 --> 0:06:57.599 of a line drawing exercise here. The big issue that 0:06:57.720 --> 0:07:01.480 was brought up in the case was in this particular scenario, 0:07:01.640 --> 0:07:04.200 and even Kavanaugh said the facts were really good for 0:07:04.279 --> 0:07:08.080 the government prosecutors. In this case, a mister Snyder had 0:07:08.360 --> 0:07:12.080 had allegedly sort of rigged a contract bidding process when 0:07:12.080 --> 0:07:15.400 he was mayor of Portage, Indiana, and the company that 0:07:15.520 --> 0:07:19.040 won that bidding process he had been in consistent contact with, 0:07:19.240 --> 0:07:22.880 and then pretty shortly after the contract was awarded to them, 0:07:23.280 --> 0:07:27.120 they handed over a thirteen thousand dollars check, ostensibly for 0:07:27.440 --> 0:07:30.480 consulting services to be provided in the future. And so 0:07:30.880 --> 0:07:34.440 the line drawing exercise between his administration of the bidding 0:07:34.480 --> 0:07:37.920 process and the thirteen thousand dollars check seems pretty direct. 0:07:37.960 --> 0:07:40.480 But the point that his attorneys were making, they were 0:07:40.480 --> 0:07:43.040 making quite vehemently at the court, is that, well, no, 0:07:43.400 --> 0:07:46.720 this would have to be payments that are made before 0:07:47.000 --> 0:07:50.840 the favor is granted and not after. And this came afterwards. 0:07:50.920 --> 0:07:53.880 And there are too many hypothetical situations that would lead 0:07:53.960 --> 0:07:56.960 us on lawyers like to talk about slippery slopes to hell, 0:07:57.080 --> 0:07:59.160 and this was one, and that's what caused us to 0:07:59.200 --> 0:08:01.520 go into the dinner out of gratitude for your high 0:08:01.520 --> 0:08:04.040 school English teacher at the cheesecake factories. And is that 0:08:04.120 --> 0:08:04.760 a bribe. 0:08:05.160 --> 0:08:09.080 So the government's attorney suggested that the government typically wouldn't 0:08:09.160 --> 0:08:14.120 prosecute fringe cases, but Chief Justice Roberts noted that in 0:08:14.200 --> 0:08:17.880 recent cases, the Court has been skeptical of prosecutors trust 0:08:17.920 --> 0:08:21.080 us arguments. We've had several cases where we've made the 0:08:21.200 --> 0:08:23.280 very clear point that we don't rely on the good 0:08:23.280 --> 0:08:27.000 faith of the prosecutors in deciding cases like this, And 0:08:27.080 --> 0:08:30.360 that sort of came up in the argument for the 0:08:30.440 --> 0:08:35.520 January sixth obstruction charge, where the Solicitor General was arguing 0:08:35.559 --> 0:08:39.600 about how prosecutors would charge under that statute and they 0:08:39.640 --> 0:08:43.760 would require all these different elements. What are the justices 0:08:43.800 --> 0:08:44.640 afraid of here? 0:08:45.559 --> 0:08:49.240 Well, I think there is a justified caution or skepticism 0:08:49.400 --> 0:08:55.720 about statutory authorizations that give prosecutors too much of a 0:08:55.720 --> 0:08:58.440 blank check and what they're going to go forward on 0:08:58.880 --> 0:09:01.600 and charge people with. If the check is too much 0:09:01.600 --> 0:09:05.439 of a blank check, then it's not inconceivable that political 0:09:05.480 --> 0:09:09.400 calculations may end up either entering or being perceived to 0:09:09.520 --> 0:09:13.320 have entered into a prosecutor's decision about whom to go 0:09:13.400 --> 0:09:15.680 after and whom to leave alone. And so I think 0:09:15.679 --> 0:09:18.079 that that's part of what the Court has been trying 0:09:18.080 --> 0:09:20.440 to grapple with and you know, in fairness, there have 0:09:20.640 --> 0:09:26.439 been several high profile cases involving various types of applications 0:09:26.280 --> 0:09:29.720 of this and other anti bribery or anti corruption statutes 0:09:29.960 --> 0:09:32.559 in which politics is pretty hard to ignore. There was 0:09:32.600 --> 0:09:36.880 a twenty twenty case that involved the infamous Bridgegate scenario 0:09:37.120 --> 0:09:40.679 in which Chris Christy was alleged to have had his 0:09:41.080 --> 0:09:44.400 subordinates closed down the GW Bridge in order to punish 0:09:44.400 --> 0:09:48.120 his political foes. And then the prosecution was brought at 0:09:48.160 --> 0:09:51.960 least allegedly for political reasons, sort of anti Chris Christy, 0:09:52.000 --> 0:09:55.320 anti Republican reasons, and the Supreme Court ended up actually 0:09:55.360 --> 0:09:58.319 reversing that conviction, but on kind of weird technical grounds 0:09:58.360 --> 0:10:01.640 about what was motivating the these operatives. So they sort 0:10:01.679 --> 0:10:05.160 of found kind of maybe even unrelated fault reasons to 0:10:05.280 --> 0:10:07.720 reverse in some of these cases. And you know that 0:10:07.880 --> 0:10:10.280 maybe what is being put forward here this kind of 0:10:10.280 --> 0:10:14.040 idea that well, if the payment happens after the political 0:10:14.040 --> 0:10:16.679 favor is given, then that can't possibly be corruption. That's 0:10:16.720 --> 0:10:19.440 a nice bright line rule, you know, as the government 0:10:19.520 --> 0:10:22.800 lawyers were bringing up, probably correctly, is that if if 0:10:22.840 --> 0:10:25.439 you established that as a bright line rule that will 0:10:25.480 --> 0:10:28.040 be kind of a gold embossed invitation for how you 0:10:28.080 --> 0:10:32.160 should structure corruption payments in the future. Right that, you know, 0:10:32.240 --> 0:10:35.439 you always have the political actor go first, wait some 0:10:35.640 --> 0:10:37.480 you know, requisite short amount of time, and then the 0:10:37.480 --> 0:10:40.000 payment comes second. And you know, in some ways, the 0:10:40.160 --> 0:10:43.559 ease with which one could engineer around that type of 0:10:43.640 --> 0:10:46.000 a definition, I think it's going to make it difficult 0:10:46.200 --> 0:10:49.360 for a majority of the judges to ignore that as 0:10:49.400 --> 0:10:52.240 a kind of an obvious sort of response from the 0:10:52.280 --> 0:10:53.559 other side. 0:10:53.360 --> 0:10:56.600 The Supreme Court over the years has made it harder 0:10:56.679 --> 0:11:02.120 and harder to prosecute politicians and other public officials for corruption, 0:11:02.760 --> 0:11:04.280 starting in twenty sixteen. 0:11:04.480 --> 0:11:08.480 Right, Yeah, the skepticism goes at least back to a 0:11:08.559 --> 0:11:11.760 twenty sixteen case, and there have been several others, both 0:11:11.800 --> 0:11:15.200 at the federal level and the state level, and so 0:11:15.440 --> 0:11:18.760 there is on some level a little bit of a 0:11:19.080 --> 0:11:21.320 I guess it's sort of a trend here where the 0:11:21.400 --> 0:11:25.360 judges have become, i don't know, increasingly worried about the 0:11:25.400 --> 0:11:30.440 possibility that these antibribery or anti corruption statutes are being 0:11:30.559 --> 0:11:33.760 used for political reasons, and therefore, you know, they're trying 0:11:33.760 --> 0:11:36.240 to carve back on them you know, I guess another 0:11:36.559 --> 0:11:40.400 factor of this is sort of almost a meta factor June, 0:11:40.400 --> 0:11:43.200 which is that one of the bodies of the federal 0:11:43.280 --> 0:11:46.800 government that has come under immense scrutiny recently is the 0:11:46.800 --> 0:11:50.479 Supreme Court itself for whether there are you know, friends 0:11:50.559 --> 0:11:54.320 of justices of the Supreme Court who bestow all kinds 0:11:54.360 --> 0:11:57.439 of valuable gifts on them out of friendship or for 0:11:57.600 --> 0:12:01.000 people they care about, and whether that itself is something 0:12:01.040 --> 0:12:05.600 that should trigger at least suspicion, if not considerable hand 0:12:05.640 --> 0:12:08.560 ringing amongst people who are trying to regularly court. There's 0:12:08.720 --> 0:12:11.760 big separation of powers issues, and the Supreme Court itself 0:12:11.800 --> 0:12:14.319 basically decided to promulgate its own ethics guideline. But a 0:12:14.360 --> 0:12:17.080 lot of people think it's somewhat toothless. It is not 0:12:17.520 --> 0:12:20.880 a subtle fact that Justice Thomas, who's been one of 0:12:20.880 --> 0:12:23.160 the people who's been at the center of this Maelstrom, 0:12:23.320 --> 0:12:26.000 decided not to even participate in the oral argument, but 0:12:26.040 --> 0:12:28.840 he is going to participate in the judgment through briefs 0:12:28.960 --> 0:12:31.199 and through reading the transcript. That was sort of an 0:12:31.200 --> 0:12:34.240 odd decision that didn't really have much of an explanation. So, 0:12:34.520 --> 0:12:37.440 you know, I think all aspects of this are in 0:12:37.520 --> 0:12:40.480 some ways delicate, and I think the fact that the 0:12:40.520 --> 0:12:43.839 Supreme Court itself has gotten dragged a little bit into 0:12:43.880 --> 0:12:48.960 its own kerfuffles around when are expressions of gratitude that 0:12:49.040 --> 0:12:52.280 may have significant monetary value, when of the appropriate and 0:12:52.000 --> 0:12:56.600 when do they trigger considerations and concerns about corruption and bribery? 0:12:57.160 --> 0:12:59.360 Coming up next on the Bloomberg Law Show, I'll continue 0:12:59.400 --> 0:13:03.000 this conference as with Professor Eric Tally of Columbia Law School. 0:13:03.400 --> 0:13:06.880 How might the Justice's rule in this case? And Tesla's 0:13:06.920 --> 0:13:11.200 shareholders will be voting on that Elon Musk pay package 0:13:11.480 --> 0:13:15.359 that was thrown out by a Delaware court. This is Bloomberg. 0:13:18.320 --> 0:13:22.400 The Supreme Court seemed skeptical of another public corruption law. 0:13:22.679 --> 0:13:25.559 The Justice has appeared likely to side with a former 0:13:25.600 --> 0:13:30.000 Indiana mayor convicted of receiving a thirteen thousand dollars bribe 0:13:30.000 --> 0:13:33.760 from a trucking company after it was awarded city contracts. 0:13:34.240 --> 0:13:37.440 I've been talking to Professor Eric Tally of Columbia Law School, 0:13:38.120 --> 0:13:41.840 and Eric, these public corruption cases are hard to prosecute, 0:13:41.880 --> 0:13:45.079 aren't they. You know, public officials and these kind of bribes, 0:13:45.120 --> 0:13:48.520 they don't leave notes or emails saying thanks so much 0:13:48.559 --> 0:13:50.360 for that. I was happy to. 0:13:50.280 --> 0:13:54.040 Help you out. Yet typically they don't. There have been 0:13:54.080 --> 0:13:56.480 some cases in which, you know that have larga been 0:13:56.520 --> 0:13:58.480 overturned that sort of said, well, you have to have 0:13:58.520 --> 0:14:01.560 a written contract on bribery. I think everyone realizes that 0:14:01.559 --> 0:14:03.720 that's an easy one to engineer your way around. So 0:14:03.960 --> 0:14:07.760 you have to demonstrate either a conversation or a set 0:14:07.760 --> 0:14:11.600 of conversations that establishes this understanding, or a set of 0:14:11.640 --> 0:14:17.160 patterns and practices of behavior whose only reasonable construction or 0:14:17.200 --> 0:14:20.680 interpretation would be Yeah, these folks are acting as though 0:14:20.720 --> 0:14:23.200 they are in a quid pro quo that they are 0:14:23.240 --> 0:14:28.640 recognizing through either their communicative acts or hard to misinterpret actions, 0:14:28.640 --> 0:14:31.640 and that makes it tough. Right, everyone is on notice 0:14:31.720 --> 0:14:34.880 that this is an issue in involving any public official. 0:14:35.080 --> 0:14:35.200 You know. 0:14:35.280 --> 0:14:37.840 The possible irony about this case is if the court 0:14:37.880 --> 0:14:41.560 decides to go with this timing argument. I think it's unlikely, 0:14:41.600 --> 0:14:44.160 but they might. Then in fact, it sort of sets 0:14:44.240 --> 0:14:47.080 up a formula in which the payment just gets made 0:14:47.120 --> 0:14:49.480 after the fact, and it's possible that people will just 0:14:49.520 --> 0:14:51.120 be much more upfront about it now that they know 0:14:51.120 --> 0:14:53.720 they've got a safe harbor, because they're not gonna We're 0:14:53.720 --> 0:14:56.000 gonna wait, you know, we're gonna set the alarm clock 0:14:56.040 --> 0:14:58.120 after the political favor and just wait for the payment 0:14:58.160 --> 0:15:00.880 until it's seemed to sit with it the Supreme Court process. 0:15:00.960 --> 0:15:03.320 That's one of the reasons why I doubt they're going 0:15:03.360 --> 0:15:05.640 to go in that direction. It's it's not rocket science 0:15:05.640 --> 0:15:07.720 to predict that that would be a response to this 0:15:07.800 --> 0:15:11.240 kind of bright line rule that mister Snyder's lawyers were 0:15:11.280 --> 0:15:11.760 asking for. 0:15:12.040 --> 0:15:15.520 What other way could they go considering their concerns about 0:15:15.640 --> 0:15:16.880 the Starbucks cards. 0:15:17.320 --> 0:15:20.880 Yeah, I think that most of the absurd situations involved 0:15:21.040 --> 0:15:24.800 little perks that are kind of pocket change type perks, 0:15:25.240 --> 0:15:28.160 and that once things got large, including the five thousand 0:15:28.200 --> 0:15:33.080 dollars trigger in this situation, then that would be large 0:15:33.160 --> 0:15:36.760 enough to trigger not only the explicit trigger, but also 0:15:37.360 --> 0:15:40.960 a judicial interpretation that yes, this is large enough that 0:15:41.000 --> 0:15:43.480 it could affect someone's judgment. And that's one of the 0:15:43.520 --> 0:15:46.720 reasons why I feel like the Court may well end 0:15:46.800 --> 0:15:50.200 up borrowing from a half dozen, if not more than 0:15:50.240 --> 0:15:53.800 a dozen other areas of you know, financial fraud and 0:15:54.040 --> 0:15:59.000 white collar crime that all sort of turns on materiality. So, 0:15:59.120 --> 0:16:01.680 for instance, if I decide I'm going to trade on 0:16:01.840 --> 0:16:05.440 inside information because I've gotten some kind of an insider 0:16:05.560 --> 0:16:07.800 tip that I'm not really authorized to trade on, but 0:16:07.840 --> 0:16:10.600 I trade one share and I make a buck seventy five, 0:16:10.880 --> 0:16:14.480 that may not be prosecuted. Or if the nature of 0:16:14.520 --> 0:16:18.480 the information I've gotten is just not probabilistically as helpful 0:16:18.520 --> 0:16:21.240 as it might otherwise, be sure, it's inside information, but 0:16:21.320 --> 0:16:24.920 it's not material enough to matter, And that may end 0:16:25.000 --> 0:16:28.120 up being a helpful lever for the Supreme Court when 0:16:28.120 --> 0:16:30.240 they try to decide this case. If they don't go 0:16:30.320 --> 0:16:31.920 with the timing part, they're going to have to have 0:16:32.000 --> 0:16:35.080 some sort of a cutoff, and a materiality cutoff is 0:16:35.120 --> 0:16:36.920 not a crazy place to put it. That's why you 0:16:36.960 --> 0:16:38.840 see it so many other areas of law. 0:16:39.320 --> 0:16:43.320 Speaking of a buck seventy five, what's happening with Elon 0:16:43.560 --> 0:16:48.280 Musk and his Tesla pay package that was fifty six 0:16:48.320 --> 0:16:49.160 billion dollars. 0:16:49.840 --> 0:16:53.040 Well, our friend mister Musk is definitely added again. It's 0:16:53.120 --> 0:16:57.480 not surprising that he has, you know, you know, basically 0:16:57.520 --> 0:17:02.440 been planning a formal response to his you know, pretty 0:17:02.480 --> 0:17:06.520 significant loss in the Delaware Chancery Court in January of 0:17:06.560 --> 0:17:10.840 twenty twenty four invalidating his at the time, fifty five 0:17:10.960 --> 0:17:15.240 fifty six billion dollar compensation contract. I think a lot 0:17:15.280 --> 0:17:17.480 of people were sort of betting on one of two 0:17:17.640 --> 0:17:20.439 things to happen. One possibility is that he would, you know, 0:17:20.480 --> 0:17:23.640 wait for a final judgment and appeal, and there's every 0:17:23.640 --> 0:17:27.240 indication that he intends to do that. But another possibility 0:17:27.720 --> 0:17:32.520 is that, you know, having had his compensation contract thrown 0:17:32.560 --> 0:17:37.000 out by the judge because of a defective process by 0:17:37.000 --> 0:17:39.920 which it was approved both the board level and the shareholders, 0:17:40.359 --> 0:17:43.800 they've decided in a public filing they made the other 0:17:43.880 --> 0:17:46.760 day to go out to the shareholders and ask them 0:17:46.800 --> 0:17:52.200 to quote ratify unquote his twenty eighteen package. And they've 0:17:52.200 --> 0:17:55.040 done so in kind of a clever way, but it 0:17:55.080 --> 0:17:59.280 effectively is trying to fix one of the infirmities in 0:17:59.400 --> 0:18:03.040 the in the that the package got approved. They're not 0:18:03.119 --> 0:18:05.680 really redoing anything at the board level, but they are 0:18:05.720 --> 0:18:09.320 going out to get a shareholder approval this time with 0:18:09.480 --> 0:18:11.679 full information because we've got a case out there and 0:18:11.720 --> 0:18:15.400 there's a long, copious disclosure about what the judge found 0:18:15.520 --> 0:18:17.480 in that case. And I think that they are hoping 0:18:17.560 --> 0:18:21.600 that if they got a vote from their stockholders, they 0:18:21.640 --> 0:18:24.639 could either go back and try to use that on 0:18:24.760 --> 0:18:28.359 appeal or possibly say well, listen, we're just going to 0:18:28.480 --> 0:18:32.840 award once again a big options award to mister Musk 0:18:32.880 --> 0:18:36.280 because it's been authorized by the stockholders with their eyes 0:18:36.560 --> 0:18:39.719 wide open. And so that is going out to the 0:18:40.040 --> 0:18:44.200 to the stockholders of Tesla at the next annual meeting. 0:18:44.320 --> 0:18:48.119 And they decided to include another thing, which is almost 0:18:48.160 --> 0:18:53.040 a direct channel from one of Elon Musk's tweets after 0:18:53.080 --> 0:18:56.960 the opinion saying, you know, we're going to reincorporate out 0:18:57.000 --> 0:19:00.560 of Delaware and into Texas. Sure enough, that's another proposal 0:19:00.640 --> 0:19:03.520 is being put in front of the shareholders to reincorporate 0:19:03.640 --> 0:19:08.960 away from Delaware and into Texas with the thought, at 0:19:09.000 --> 0:19:11.920 least this is what's in the proxy materials, is that 0:19:12.240 --> 0:19:14.480 Texas is going to be a more friendly place and 0:19:14.560 --> 0:19:18.320 more predictable place to know what's going on in terms 0:19:18.359 --> 0:19:22.600 of corporate law and fiduciary duty lawsuits. Now, I will 0:19:22.640 --> 0:19:25.560 tell you June that you know this, this kind of 0:19:25.640 --> 0:19:28.800 you know, possibility has been floating around for months. A 0:19:28.840 --> 0:19:31.040 lot of the you know, corporate law junkies that I 0:19:31.160 --> 0:19:33.400 run around with have been, you know, I've been sort 0:19:33.440 --> 0:19:35.359 of talking about this and these are folks that you know, 0:19:35.359 --> 0:19:38.040 they've been teaching corporate law for decades, and one of 0:19:38.119 --> 0:19:40.240 the things I always like to ask them is, quick, 0:19:40.520 --> 0:19:44.920 name your five favorite Texas corporate law cases. And usually 0:19:45.000 --> 0:19:48.560 people can get two, maybe three into that list, and 0:19:48.600 --> 0:19:50.040 then they run out of it. The fact of the 0:19:50.080 --> 0:19:52.920 matter is Texas really doesn't have that much of an 0:19:53.400 --> 0:19:57.119 of a developed set of corporate law precedents, and the 0:19:57.160 --> 0:20:00.560 ones that they do have often a seek guy from 0:20:00.600 --> 0:20:05.080 guessware from Delaware. So it's kind of an odd situation 0:20:05.240 --> 0:20:10.440 to make that statement to stockholders. Weirdly enough, there have 0:20:10.520 --> 0:20:15.080 been a whole spate of cases in Delaware that in 0:20:15.080 --> 0:20:17.560 which the judges seem to have been receptive to them, 0:20:18.160 --> 0:20:22.440 in which a shareholder says the very act of putting 0:20:22.840 --> 0:20:26.760 to the shareholders a vote to reincorporate itself can be 0:20:26.920 --> 0:20:31.679 a conflicted at a financially conflicted transaction, and therefore should 0:20:31.680 --> 0:20:34.720 be analyzed under exactly the same test that got used 0:20:35.000 --> 0:20:40.200 to analyze Elon Musk's compensation contract. So there's a kind 0:20:40.200 --> 0:20:43.920 of an interesting meta story here, which is that both 0:20:43.960 --> 0:20:47.320 of these stockholder votes themselves might be thought of as 0:20:47.400 --> 0:20:50.440 independent new actions that each of each of which could 0:20:50.480 --> 0:20:54.680 be potentially challenged by stockholder litigation, and I have every 0:20:54.720 --> 0:20:56.320 reason to think at some point they will. 0:20:57.280 --> 0:21:00.840 And this is pretty aggressive and nervy even for him, 0:21:01.160 --> 0:21:04.520 since he's laid off ten percent of Tesla's workforce. 0:21:05.119 --> 0:21:07.480 Yeah, I mean, this is not the greatest time to 0:21:07.520 --> 0:21:10.800 be sort of selling the narrative that Tesla can do 0:21:11.119 --> 0:21:13.680 no wrong so long as Elon is at the helm, right, 0:21:13.720 --> 0:21:16.680 that was a pretty saleable story two or three years ago. 0:21:16.720 --> 0:21:18.439 And I think there were a lot more of the 0:21:18.760 --> 0:21:20.720 I don't know what to call them, the Elon stands 0:21:20.760 --> 0:21:23.800 that were basically going to, you know, back him under 0:21:24.440 --> 0:21:27.800 any circumstances. There are still many of those out there, 0:21:27.800 --> 0:21:30.520 and many of them hold Tesla shares. But I think 0:21:30.520 --> 0:21:32.720 a lot of folks are looking at their portfolio and say, well, 0:21:32.760 --> 0:21:35.760 I went and really overweight in Tesla because I believed 0:21:35.760 --> 0:21:38.280 in Elon Musk and I guess I still do. But 0:21:38.400 --> 0:21:41.120 these these shares are not doing as well. And maybe 0:21:41.119 --> 0:21:42.960 I can tell myself a story that the whole reason 0:21:42.960 --> 0:21:45.280 they're not doing well is because, you know, Delaware is 0:21:45.320 --> 0:21:49.280 treating mister Musk, you know, poorly. But the fact of 0:21:49.280 --> 0:21:52.000 the matter is, if you're paying attention to the electronic 0:21:52.080 --> 0:21:54.840 vehicle segment. You will realize that this is you know, 0:21:54.920 --> 0:21:57.920 this is definitely at least a correction within that segment. 0:21:58.760 --> 0:22:01.280 The you know, sales across the board have cooled, It's 0:22:01.320 --> 0:22:05.680 not just Tesla or sales cooled. And as a result, 0:22:05.800 --> 0:22:08.159 you know that you just can't expect this type of 0:22:08.320 --> 0:22:12.919 high velocity growth trajectory going forward, even under Elon Musk. 0:22:12.960 --> 0:22:15.600 I think some people might might come to the really 0:22:15.680 --> 0:22:18.800 realization of and then at that point, if that's where 0:22:18.880 --> 0:22:21.840 you get in terms of thinking through this, well, then 0:22:21.880 --> 0:22:24.720 we've got a CEO who's you know, basically trying to 0:22:24.720 --> 0:22:27.120 claim a big chunk of stock of the company by 0:22:27.200 --> 0:22:33.160 basically resurrecting an options award that's been nullified, and wants 0:22:33.200 --> 0:22:37.200 to move the entire company to Texas, where we don't 0:22:37.240 --> 0:22:39.640