Speaker 1: This is Bloomberg Law with June Grosso from Bloomberg Radio.
Speaker 2: Temperatures dipped into negative numbers Friday morning in Minneapolis, but
Speaker 2: crowds of demonstrators still turned out at the Federal Building
Speaker 2: to protest ICE operations in the state that led to
Speaker 2: the killing of two US citizens by federal immigration agents.
Speaker 2: Also on Friday, in a significant reversal, Deputy Attorney General
Speaker 2: Todd Blanche announced that the Justice Department has opened a
Speaker 2: civil rights investigation into the shooting of alex Pretty by
Speaker 2: two Border patrol agents.
Speaker 3: We're looking at everything that would get shed light on
Speaker 3: what happened that day and in the days and weeks
Speaker 3: leading up to what happened. And that's like any investigation
Speaker 3: that the Department of Justice and the FBI does every day.
Speaker 3: It means we're looking at videos, talking to witnesses, trying
Speaker 3: to understand what happened. I mean, you're talking about an
Speaker 3: incredibly tragic morning.
Speaker 2: Previously, ICE's Homeland Security Investigations Branch had been leading the investigation,
Speaker 2: and investigating law enforcement shootings is not something they're usually
Speaker 2: tasked with. Joining me is former Palm Beach County State
Speaker 2: Attorney Dave Ehrenberg.
Speaker 1: Dave.
Speaker 2: Let's look at the potential legal repercussions for the agents
Speaker 2: involved in these shootings. So the federal government could prosecute
Speaker 2: these agents, but under what circumstances.
Speaker 4: Yes, the federal government has the power to prosecute those
Speaker 4: who act unreasonably in the circumstances if they were reckless
Speaker 4: in discharging their duties. Yes, but the federal government has
Speaker 4: said that they will not even investigate.
Speaker 5: They were in a good shooting.
Speaker 4: Now, when it comes to the Alex Pretty shooting, President
Speaker 4: Trump said that they will have an investigation. So it's
Speaker 4: unsure at this point whether they would move ahead for
Speaker 4: the Pretty shooting, which, by the way, I think has
Speaker 4: a stronger case of a prosecution there. I think that
Speaker 4: the agent's actions there multiple agents are more likely to
Speaker 4: be open to criminal liability than the shooting death of
Speaker 4: Renee Good.
Speaker 2: Explain why the Pretty case is stronger.
Speaker 4: The Renee Good shooting. You had an agent who could
Speaker 4: argue he was in reasonable fear of his life because
Speaker 4: the card did lurch towards him, even though it was
Speaker 4: clear that she was trying to avoid the agent. She
Speaker 4: was pulling her card to the right, the steering wheel
Speaker 4: to the right. But the card did lurch forward. You
Speaker 4: could hear him say WHOA. And because of that, I
Speaker 4: can see how a jury would say, yeah, he was
Speaker 4: in reasonable fear of his life and that's why he shot. Now,
Speaker 4: the problem in that case is that he shot a
Speaker 4: second and third time when he was not in any danger.
Speaker 4: But oftentimes they will look at all the shots together,
Speaker 4: like if you can shoot once, they'll say you can
Speaker 4: continue shooting until the threat is neutralized. Prosecutors in that
Speaker 4: case will slow down the video to make each shot
Speaker 4: unique on its own, as opposed to one quick decision. Now,
Speaker 4: when it comes to Alex Preddy, you had situation where
Speaker 4: he was not engaging in any criminal behavior. He was
Speaker 4: trying to help a woman who had been pushed down
Speaker 4: by an over aggressive border control agent. And then he
Speaker 4: got pepper spray for his troubles, and then he was
Speaker 4: thrown to the ground, and then he had seven different
Speaker 4: agents on top of him. They saw him with a
Speaker 4: phone the entire time, and the gun he had was
Speaker 4: concealed and he had a permit for it, and then
Speaker 4: it was taken away. And after it was taken away,
Speaker 4: then someone yelled that gun and perhaps that gun went off.
Speaker 4: The one that was taken away and ten shots rang
Speaker 4: out in five seconds. He was shot ten times at
Speaker 4: five seconds, so I think that one is going to
Speaker 4: be tougher to defend.
Speaker 5: They may say was a.
Speaker 4: Mistake of fact where they thought that the gun went off,
Speaker 4: but I don't think it's reasonable, based on the videos
Speaker 4: for them to believe that he had a gun in
Speaker 4: his hand that was going off against them.
Speaker 2: The top blow prosecutor in Minneapolis has opened homicide investigations
Speaker 2: into both shootings, but federal officers are generally immune from
Speaker 2: state prosecutions. Explain how the officers would raise that, how
Speaker 2: it would work.
Speaker 4: What's going to happen is that the federal government is
Speaker 4: unlikely to prosecute the cases, and so the state of
Speaker 4: Minnesota will seek a criminal indictment. They can undergo a separate,
Speaker 4: independent investigation, which I think has already begun, and then
Speaker 4: they can seek a grand jury indictment, which I think
Speaker 4: they will. And when that happens, the federal agent, because
Speaker 4: he's a federal agent, will ask to remove the case
Speaker 4: of federal court. Now the case will still be a
Speaker 4: state prosecution. You'll have state prosecutors, you'll have state law
Speaker 4: enforce but the case would be in federal court with
Speaker 4: a federal judge and a federal jury, which means that
Speaker 4: the jury pool will consist of residents of Minnesota from
Speaker 4: all over the state, so advantage to the defendant. But
Speaker 4: when it comes to im unity, the federal judge would
Speaker 4: make that call, and the question is did the agent
Speaker 4: or agents act in furtherance of the duties in a
Speaker 4: way that was necessary and proper to carry out their duties?
Speaker 4: And if the answer is yes, then he gets immunity
Speaker 4: and it's game over. There will be no prosecution. If
Speaker 4: he says no, it'll be appealed, but then it'd be
Speaker 4: game on for a state prosecution in front of that
Speaker 4: federal jury.
Speaker 2: The state's at a disadvantage here in its investigation because
Speaker 2: the federal government is refusing to share the evidence that
Speaker 2: it's collected.
Speaker 4: This case is so unusual because when I was state
Speaker 4: attorney in Palm Beach County for twelve years, we worked
Speaker 4: with the Feds. The Feds would come in and sometimes
Speaker 4: they would say they want to take the case, and
Speaker 4: we would stand down. Normally, if the Feds say we're
Speaker 4: not giving you the evidence, it's because they want to
Speaker 4: preserve the integrity of the evidence so they can do
Speaker 4: their own prosecution, not to prevent a suspect from ever
Speaker 4: being prosecuted. So this is uncharted territory. So this is
Speaker 4: what I think will happen. I think the state is
Speaker 4: going to file a lawsuit in federal court to get
Speaker 4: the federal government to turn over the evidence. I think
Speaker 4: the state is going to ask a federal judge to
Speaker 4: require the federal government to turn over the evidence they have.
Speaker 4: And I think I'll have a good claim here because
Speaker 4: the federal governments may clear that they're not going to
Speaker 4: even investigate they were in a good shooting. And I
Speaker 4: think the federal judge, whoever it is in this case,
Speaker 4: will say, you can't conceal the evidence from state authorities
Speaker 4: for the purpose of protecting a suspect. Only if you
Speaker 4: really have a good faith basis for investigating yourself and
Speaker 4: prosking the case yourself, can you withhold evidence from the state.
Speaker 4: So I think that the federal judge will grant the
Speaker 4: state's motion. But even if they don't, even if the
Speaker 4: state does not get the evidence from the Feds, the
Speaker 4: state prosecutors already started a web portal where they're seeking
Speaker 4: and obtaining videos and witness testimony and other evidence pertain
Speaker 4: to the case, and you could file charges. In this case,
Speaker 4: you can get indictment based on the videos. Al you
Speaker 4: don't need necessarily to have the car because the Feds
Speaker 4: have the car when it comes to Rene Good and
Speaker 4: that would be helpful, but the state doesn't need it
Speaker 4: to seek charges because remember, when you get indictment, you
Speaker 4: just need problem cause once someone's indicted, then discovery begins
Speaker 4: and then you'll get more information and it doesn't do
Speaker 4: the it would be defendants in this case. The agents
Speaker 4: doesn't do them any favors by withholding the evidence from
Speaker 4: the state because the evidence that the federal government has
Speaker 4: can also be exculpatory, meaning it could be to the
Speaker 4: defendant's benefit, especially because the FEDS are a favorable agency
Speaker 4: for these ice and Border control agents. So that's why
Speaker 4: I would think as defendants, they would want the federal
Speaker 4: government to turn over all evidence they have to the
Speaker 4: state or else the state is going to do their
Speaker 4: own investigation, and I think it will result in an indictment.
Speaker 2: And besides the immunity defense, what other defenses could the
Speaker 2: agents raise if they are prosecuted.
Speaker 4: Well, immunity is not even raised a trial. Immunity comes
Speaker 4: before and now would shut it down. That prevents a
Speaker 4: trial to happen in the first place. So if it
Speaker 4: does go to trial, they would say that we acted
Speaker 4: reasonably under the circumstances that their lives were at risk,
Speaker 4: where they had an imminent threat against their lives, and
Speaker 4: the imminent threat in the first case would be the
Speaker 4: car lurching towards the ice agent. In the second case,
Speaker 4: Alex Pretty, they would say mistake of fact, that they
Speaker 4: were in reasonable fear of their life, even though it
Speaker 4: was a mistake, but that mistake was reasonable because this
Speaker 4: guy had a gun and they didn't know it was
Speaker 4: taken away. It was all happening so quickly. And this
Speaker 4: is their defense. I'm putting myself in their shoes. And
Speaker 4: they would say that when someone yelled out gun and
Speaker 4: then they heard a gun shot, they reacted the way
Speaker 4: they were taught to neutralize the threat.
Speaker 5: Now they'll say that whether it's.
Speaker 4: One shot or ten, you shoot to kill, you shoot
Speaker 4: to neutralize the threat. So that's going to be their defense.
Speaker 4: I think it's a tougher defense in the Pretty case
Speaker 4: and in the Renee Good case.
Speaker 2: Does the defense have an advantage if the case is
Speaker 2: tried in federal court even under state law.
Speaker 4: The defendants will certainly remove the case of federal court
Speaker 4: to get a jury pool from the entire state of Minnesota,
Speaker 4: because in federal court, there's one judicial district, and that's
Speaker 4: the entire state. Residents of Minnesota from all over the state, conservative, liberal,
Speaker 4: not just from blue Hennepin County. So instead of getting
Speaker 4: people who are angry about what's happening in Hennepin County,
Speaker 4: you'll get a cross section of the entire state, including Republicans.
Speaker 4: And that's why, even if this does go to trial
Speaker 4: and immunity is rejected, it is still an uphill battle
Speaker 4: for prosecutors because you've got to prove beyond a reasonable
Speaker 4: doubt in front of a unanimous jury that these agents
Speaker 4: committed crimes. And you have a natural inclination of people
Speaker 4: to believe law enforcement, to trust law enforcement, to give
Speaker 4: them the benefit of the doubt. And you have politics
Speaker 4: at play where people can see the same video and
Speaker 4: it's like a warshock test where they interpret it differently,
Speaker 4: And so how are you going to get twelve jurors
Speaker 4: to all agree one way? That's the challenge that prosecutors face, Dave.
Speaker 2: There are so many video already of the pretty shooting
Speaker 2: from different angles. Does that make it easier for the
Speaker 2: prosecutors or perhaps not just more confusing.
Speaker 4: I think the more videos the better, the more transparency,
Speaker 4: the more angles the better, because if you don't have
Speaker 4: the full picture, you're gonna have reasonable doubt.
Speaker 5: So there you go.
Speaker 4: If you're the government, you want to have enough proof
Speaker 4: that you can prove the unreasonable doubt that these officers
Speaker 4: were not in imminent danger and it was not reasonable
Speaker 4: for them to think.
Speaker 5: That their lives were at risk.
Speaker 4: But that's what good lawyering is about, is about deciding
Speaker 4: how to present the videos. For example, in the Rodney
Speaker 4: King case, you remember that the prosecution showed the video
Speaker 4: and I was appalling a horrific video, but the defense
Speaker 4: slowed it down, frame by frame and they showed see
Speaker 4: the officer reacted here because Rodney King was resisting, and
Speaker 4: they showed that in slow motion and he was acquitted
Speaker 4: at the state level. Well, in this case, they're going
Speaker 4: to slow the video down to try to convict the officers.
Speaker 4: It's like the opposite, it's like the reverse Rodney King
Speaker 4: where the government is going to say slow it down,
Speaker 4: and you see that there are a good shooting shots
Speaker 4: two and three were inappropriate, unreasonable, and also they're going
Speaker 4: to slow it down.
Speaker 5: In the Alex Peretty cases.
Speaker 4: See look the gun was removed, it was walked away,
Speaker 4: and then the shots began, even though it happened really quickly.
Speaker 2: A long way to go and many many motions ahead
Speaker 2: before any trial. Thanks so much, Dave. That's Dave Ehrenberg,
Speaker 2: former Palm Beach County State Attorney. Coming up next on
Speaker 2: the Bloomberg Laws Show. A landmark trial on social media
Speaker 2: addiction starts in Los Angeles. I'm June Grosso. When you're
Speaker 2: listening to Bloomberg.
Speaker 6: Mister Zuckerberg, you and the companies before us, I know
Speaker 6: you don't mean it to be so, but you have
Speaker 6: blood on your hands. You have a product, you have
Speaker 6: a product that's killing people.
Speaker 2: That was book and Senator Lindsey Graham during a Senate
Speaker 2: Judiciary Committee hearing two years ago, a rare instance where
Speaker 2: Democrats and Republicans were united in their criticism of social
Speaker 2: media CEOs like Mark Zuckerberg for not protecting kids online.
Speaker 2: The Meta ceo pushed back on some studies that suggested
Speaker 2: social media use is a detriment to the mental health
Speaker 2: of teenagers.
Speaker 7: Mental health is a complex issue, and the existing body
Speaker 7: of scientific work has not shown a cause a link
Speaker 7: between using social media and young people having worse mental
Speaker 7: health outcomes.
Speaker 2: Zuckerberg may make that same claim when he testifies to
Speaker 2: a jury in a landmark trial over claims that the
Speaker 2: top social media companies have deliberately gotten teenagers addicted through
Speaker 2: their design choices. On trial are Meta, the owner of
Speaker 2: Facebook and Instagram, and Google, the owner of YouTube. They
Speaker 2: dispute the claims that their platforms deliberately harmed children and
Speaker 2: cite the safeguards they've added over the years. Snap settled
Speaker 2: the case last week and TikTok settled on the eve
Speaker 2: of trial. Joining me is an expert in cybersecurity and
Speaker 2: data privacy, Colin Walkee, a partner at Holestel. Colin, the
Speaker 2: plaintiff in this case is a California woman who is
Speaker 2: now twenty years old. Tell us about our allegations in
Speaker 2: this lawsuit.
Speaker 8: This is really the first one that's going to trial.
Speaker 8: There are dozens, if not hundreds, of similar lawsuits out there,
Speaker 8: and the basic allegation in this case, in all of
Speaker 8: the cases, is that the algorithms that have been put
Speaker 8: out there by the social media companies, as well as
Speaker 8: all the bells and whistles they put on their social
Speaker 8: media platforms, have made their products addictive. So this is
Speaker 8: very much akin to the tobacco litigation in the nineteen nineties.
Speaker 8: One is it addictive? And then two are there harms
Speaker 8: that flow from it? The jury is ultimately going to
Speaker 8: decide that in this.
Speaker 2: Case, and the plaintiff's theory is a novel one that
Speaker 2: compares social media sites to defective products.
Speaker 8: Yes, and in fact, some of the claims even relate
Speaker 8: back to like a nuisance type claim. But long story
Speaker 8: short is that the way these algorithms operate is they
Speaker 8: get you addicted through casino style techniques. So casinos know,
Speaker 8: for example, that every time that you put a quarter
Speaker 8: in you shouldn't get a reward because then you won't
Speaker 8: come back. So it's the timing with which you see
Speaker 8: and the content that you see it in and then
Speaker 8: what are the consequences that flow from that, So for example,
Speaker 8: mental health harms as a result of that. You could
Speaker 8: think about children in school and the distractions that's some
Speaker 8: of the allegations that have come out in these cases is,
Speaker 8: you know, Instagram started losing teenagers and they were sitting
Speaker 8: there going how do we get back more teenagers? Well,
Speaker 8: let's figure out a way to get our platforms in schools, right,
Speaker 8: And so the harms that flow from this are unique
Speaker 8: to each individual, but you can see how they compound.
Speaker 2: So they're going to try to show that the social
Speaker 2: media companies deliberately made these addictive design choices.
Speaker 8: Correct that that they have done this. And I think
Speaker 8: that there's plenty of testimony out there that probably supports
Speaker 8: the goal of making individuals remain on platforms as long
Speaker 8: as possible, keeping their attention there so that they can
Speaker 8: increase the number of viewers and thereby increase the number
Speaker 8: of advertisements. So I don't think there's really anything new
Speaker 8: about that. But the tech companies are coming in and saying, whoa, whoa.
Speaker 8: We already know based off of the Spring Courts ruling
Speaker 8: on section two thirty that the algorithms themselves are protected speech.
Speaker 8: And so the unique claim in this particular case is, yes,
Speaker 8: that may be speech, but the other bells and whistles
Speaker 8: that you're putting onto this and what you're doing within
Speaker 8: it is not speech, and rather it's conduct that it's
Speaker 8: getting us addicted to your platform.
Speaker 2: The tech companies are also arguing that they're not legally
Speaker 2: responsible for the effect of the content made by users,
Speaker 2: So explain what they're out is here what they're trying
Speaker 2: to get.
Speaker 8: To, right, So, in short, the fact that you're being
Speaker 8: shown what you want to see is your own choice.
Speaker 8: You could choose to see and view different things based
Speaker 8: off of the likes, and you're viewing habits and all
Speaker 8: of that. So they're essentially saying, all we're doing is
Speaker 8: giving you what you want. We're not doing anything to
Speaker 8: make it more enticing than it already is. And you know,
Speaker 8: part of the argument too is how much is your
Speaker 8: cell phone itself addictive versus the platforms themselves. Right, So
Speaker 8: every time you get an iPhone update, for example, it
Speaker 8: becomes a little bit brighter. Why the brighter the screen,
Speaker 8: the more dopamine in the brain. The more dopamine the brain,
Speaker 8: the more you want to look on your screen. That's
Speaker 8: why it's hard for you to figure out without going
Speaker 8: to Google how to set your screen to black and white.
Speaker 8: They don't want you to know that, so part of
Speaker 8: their argument here, too, is is how do you distinguish
Speaker 8: which component of this is addictive.
Speaker 2: The plaintiff in the case, a twenty year old woman
Speaker 2: identified only by the initials KGM, claims that more than
Speaker 2: a decade of social media use left her addicted and depressed.
Speaker 2: The defendants are challenging that narrative, saying she experienced difficult
Speaker 2: family relationships, abuse in bullying at school and that played
Speaker 2: a role in her mental health struggles. I mean, how
Speaker 2: difficult is causation going to be here for her to
Speaker 2: prove that, you know, it was her addiction to the
Speaker 2: platform rather than all the other things happening in her life.
Speaker 8: Well, it's one of the sayings that we have in
Speaker 8: personal injury cases, which is you find your planiffs as
Speaker 8: they are. And so in this particular case, yes, they
Speaker 8: have some pretty good arguments that the mental health harms
Speaker 8: are a result of her history. But the question then
Speaker 8: becomes were they exacerbated by virtue of the negligent conduct?
Speaker 8: And if that's the case, then the approximate cause is
Speaker 8: in fact the social media platform and not the historical
Speaker 8: trauma that she experienced. It is going to be an
Speaker 8: issue for the jury to determine about the mental health harms,
Speaker 8: what was the ultimate cause, what are those damages? And
Speaker 8: on top of that, are punitive damage is something that.
Speaker 9: Could be afforded.
Speaker 2: There is a debate within the mental health field about
Speaker 2: the connection between social media and increasing teenage rates of depression, anxiety,
Speaker 2: suicide ideation. Is that debate going to enter the courtroom
Speaker 2: where we're going to see experts on both sides of
Speaker 2: the issue.
Speaker 8: Absolutely, you will, just like you saw with its Abacko litigation.
Speaker 8: I mean, that's the reality is you're going to find
Speaker 8: experts on both sides of this issue. But at the
Speaker 8: end of the day, the reason why the jury trial
Speaker 8: system is so good here in the United States is
Speaker 8: because our jurors really are good at detecting bs, and
Speaker 8: so they'll be able to figure out pretty quickly not
Speaker 8: just from what the testimony is, but from their own
Speaker 8: personal experiences. I don't think that anyone can ultimately hear
Speaker 8: the testimony of these executives and former executives and decide
Speaker 8: that they didn't at least try to make it more addictive.
Speaker 8: Whether they accomplish that goal maybe a different story, but
Speaker 8: it's pretty clear they at least tried explain.
Speaker 2: What a Bellweather trial is and is this a Bellweather trial.
Speaker 8: This is absolutely a Bellweather trial. It's very similar. Recently,
Speaker 8: for example, you saw a Tesla I actually went to
Speaker 8: trial and won on one of the cases where they're
Speaker 8: automatic driving vehicle injured somebody, and so that is going
Speaker 8: to embolden Tesla into the future. So if you imagine
Speaker 8: a scenario in which the social media companies do win
Speaker 8: this case, they're going to feel emboldened to continue to
Speaker 8: pursue it. On the flip side of that coin, if
Speaker 8: the plaintiffs win this case, then at the end of
Speaker 8: the day, you're going to start seeing a lot more settlements.
Speaker 2: And speaking of settlements, the fact that Snap and TikTok
Speaker 2: settled TikTok on the eve of trial, both for undisclosed sums,
Speaker 2: what does that tell you about how the social media
Speaker 2: companies are evaluating the risk of going to trial.
Speaker 8: I think what most people don't realize is that lawyer's
Speaker 8: jobs are to manage risk. We are risk managers, that
Speaker 8: is it. And so for the plaintiffs in this case,
Speaker 8: if they settled, the reason why is because they know
Speaker 8: that this is going to be taken all the way
Speaker 8: to the Supreme Court, and that's going to take another
Speaker 8: five years, whereas they can get some money today and
Speaker 8: avoid that risk. Right, So there's an incentive for the
Speaker 8: plaintiffs to settle from that regard, and there's an incentive
Speaker 8: for the defendant to settle because they don't want this
Speaker 8: information to get out there in the real world about
Speaker 8: how much you know your privacy is being pilfered for profit.
Speaker 8: They don't want their dirty laundry aired. And so this
Speaker 8: is why settlements happen, is because both sides are incentivized
Speaker 8: to not continue on with the case whether they're right
Speaker 8: or wrong.
Speaker 2: Zuckerberg is expected to be among the first witnesses called.
Speaker 2: He has testified before Congress, But explain how different it
Speaker 2: is to be testifying in a courtroom before a jury
Speaker 2: where you're subject to cross examination.
Speaker 8: Well, it's wildly different, because if you remember back when
Speaker 8: Mark Zuckerberg came and testified in front of Congress, one
Speaker 8: of the congressmen actually thought the reference to a cookie
Speaker 8: was an edible item and not a pixel contained on
Speaker 8: your computer screen. Okay, So the difference is that these
Speaker 8: attorneys in the courtroom know the technology, they know the facts,
Speaker 8: and they're going to be able to effectively cross exams
Speaker 8: and someone about what a cookie is and how they're
Speaker 8: tracking your data from one website to another, and then
Speaker 8: it begs the question, why are you tracking my information
Speaker 8: from my insurance carrier? Oh, well so we can show
Speaker 8: you more ads? Okay, why are you showing more ads? Well,
Speaker 8: so we can get you addicted. So that's how the
Speaker 8: cross examination is going to work that you would have
Speaker 8: never seen in Congress.
Speaker 2: I think Zuckerberg as a tendency to sometimes appear a
Speaker 2: little bit wooden when he talks. How much depends on
Speaker 2: how the jurors view him.
Speaker 8: Well, it goes back to the old saying that you
Speaker 8: know a jury, if they like you, they like your cause.
Speaker 8: And so that's a hurdle that the tech companies are
Speaker 8: going to have to overcome at the start of this trial,
Speaker 8: because they've had enough black eyes already that the jury's
Speaker 8: not going to like them out the.
Speaker 2: Gate and the plaintif here will have to take the stand.
Speaker 8: Yes, the Planoff will have to take the stand. And
Speaker 8: I have no doubt that her mental health history will
Speaker 8: come up and the trauma that she has suffered, and
Speaker 8: all of that is fodder for cross examination. As painful
Speaker 8: as it may be for someone to go through that process,
Speaker 8: it has to occur in order for the jury to
Speaker 8: have a full under standing an appreciation of whether or
Speaker 8: not the trauma in this case was related to addiction
Speaker 8: from social media or prior experiences.
Speaker 2: Jury selections started this week tell us the kind of
Speaker 2: jurors that the plaintiff's lawyer will be looking for and
Speaker 2: the kind of jurors that the defendant's lawyer will be
Speaker 2: looking for.
Speaker 8: So, if I'm the planiff's lawyer, I am looking for
Speaker 8: individuals who are going to be used to using social
Speaker 8: media and find it problematic for themselves or their family members. Right,
Speaker 8: So we all have the uncle or the dad who
Speaker 8: spends all day long on Twitter, and you're rolling your
Speaker 8: eyes like sitting there, going do you not have anything
Speaker 8: else to do? You want somebody who is frustrated about
Speaker 8: the system on there. From the plantiff's perspective and from
Speaker 8: the defendants perspective, you're looking for someone who is willing
Speaker 8: to say, you know what, we live in a capitalistic
Speaker 8: society in which individuals have freedom of choice, and these
Speaker 8: people are choosing to download this app and spend time
Speaker 8: on it. That is a choice that they are making,
Speaker 8: and so you're gonna want someone who is very libertarian
Speaker 8: in their perspectives on life.
Speaker 2: Would you say it's more or less likely that the
Speaker 2: trial is actually going to start after jury selection.
Speaker 8: So, first of all, ninety three percent of all cases
Speaker 8: settle before trial, so only some percent of cases actually
Speaker 8: go to trial. And in that regard, many cases settle
Speaker 8: midway through trial. You get pick your jury, and you
Speaker 8: sit there and you go, I don't really like this,
Speaker 8: let's go talk. So there is still a chance for
Speaker 8: to settle. Although I was recently involved in a case
Speaker 8: where the other side made it to clear this is
Speaker 8: a test case for them. And so if that's the
Speaker 8: position of either the social media company or the plaintiffs,
Speaker 8: and I've got to imagine the plaintiffs have invested enough
Speaker 8: money at this stage they don't have a choice but
Speaker 8: to keep going. Then this is their bell Weather case
Speaker 8: and they're going to figure out the answer a.
Speaker 2: Bell Weather for the more than sixteen hundred other similar
Speaker 2: cases against the tech companies. Thanks so much, Colin. That's
Speaker 2: Colin Walkee of hall Estel coming up next on The
Speaker 2: Bloomberg Law Show. Kid Rock testifies to Congress about ticket
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Speaker 10: Secondary ticketing is driving up prices for the fans with
Speaker 10: absolutely no benefit to the artist.
Speaker 2: Not many fans or artists would dispute that testimony from
Speaker 2: Kid Rock about the skyrocketing costs of concert tickets, whether
Speaker 2: it's BTS, Beyonce or Bruno Mars. If you've tried to
Speaker 2: buy tickets to the concerts of any major artists, you've
Speaker 2: seen not only the astronomical prices, but probably also experience
Speaker 2: the nightmare of trying to buy tickets online, waiting patiently
Speaker 2: in a queue, and then watching the tickets vanish in
Speaker 2: seconds before your eyes, sometimes even after they're in your
Speaker 2: cart for purchase, and then seeing those tickets at three
Speaker 2: or four times the price in the secondary markets. Kid Rock,
Speaker 2: whose real name is Robert James Ritchie, didn't mince words
Speaker 2: when describing the live concert and entertainment industry to the
Speaker 2: Senate Commerce Subcommittee.
Speaker 10: It's no secret none that this industry is full of greedy,
Speaker 10: snakes and scoundrels. Too many suits lining their pockets off
Speaker 10: talent they never had, and fans they mislead. The truth
Speaker 10: is much of this could have been, or still could
Speaker 10: be solved through technology, especially proof of humanity tools. It
Speaker 10: hasn't happened yet because there's just too much money in
Speaker 10: the secondary ticket market.
Speaker 2: But the hearing seemed to raise as many questions as
Speaker 2: it answered. Joining me is an entertainment lawyer in the
Speaker 2: music industry. Ron Beanstock, a partner at Fox Rothschild. Ron
Speaker 2: kid Rock, started out his testimony by reminding the committee
Speaker 2: that Pearl Jam sat before Congress thirty years ago testifying
Speaker 2: against Ticketmaster. I mean, in thirty years, are we in
Speaker 2: the same spot.
Speaker 11: Yes, and no, we are probably not exactly the same spot,
Speaker 11: because there's appearances, there's litigation, there's investigation, But the truth
Speaker 11: is overall, what has not changed and has probably only
Speaker 11: sort of manifestly become more difficult, is that we're talking
Speaker 11: about Live Nation and ticket Master. They're a monopoly. Ticketmasters
Speaker 11: sells what five hundred million tickets in thirty countries, and
Speaker 11: they have eighty percent of the US market. That's where
Speaker 11: your problem lies, is right, you have no competition on this.
Speaker 11: I think where this problem starts is that there's a
Speaker 11: misconception about ticket pricing and bands and artists and how
Speaker 11: this all works. So my clients, yes, they'll set the
Speaker 11: ticket price, but here's how it works. Let's say you've
Speaker 11: set a ticket price, and you want to be reasonable
Speaker 11: and have fans have accessibility to the show, and so
Speaker 11: your ticket price, let's say, is one hundred dollars, and
Speaker 11: we also have to talk about the incredible increase in
Speaker 11: production costs to get an artist on the road. But
Speaker 11: let's say it's one hundred dollars ticket it goes through
Speaker 11: sale through ticket Master. Now it's one hundred and seventy
Speaker 11: with all the tack on items. As many manager as
Speaker 11: I spoke to, I called a few people to get
Speaker 11: some background. Man, there are a lot of epithets being
Speaker 11: tossed around by management. But effectively, when you want to
Speaker 11: offer the artist price at one hundred out to the
Speaker 11: marketplace your fan group, and it comes one hundred and
Speaker 11: seventy when they order with all the tack on stuff,
Speaker 11: your ticket price is up by forty percent. I think
Speaker 11: the problem there is that every artist wants to make
Speaker 11: it accessible to the fan, and they get blamed for
Speaker 11: the extra costs that are tacked on by ticket Master,
Speaker 11: and it's not the artist that's doing that. The artist
Speaker 11: wants their fans to be there. There's a secondary market
Speaker 11: problem where tickets that go on sale and the fans
Speaker 11: are able to gobble up the good tickets, then the
Speaker 11: back of the hall tickets come up, and you know
Speaker 11: what I mean, all the way the back tickets come
Speaker 11: up and people will say, I can still get into
Speaker 11: the show, and those tickets are still at one hundred
Speaker 11: and seventy total or more when they really shouldn't be.
Speaker 11: They're not the primary seats. So the secondary issue comes up.
Speaker 11: There's just so many factors in offering your fans a
Speaker 11: fair price for a ticket, and technically you're supposed to
Speaker 11: have under the face value exchange. Now you're supposed to
Speaker 11: know exactly what you're paying for. But again I don't
Speaker 11: think that's worked out because the monopolistic.
Speaker 2: Situation you talk about, you know, the markup the artists
Speaker 2: won one hundred dollars a ticket and then it goes
Speaker 2: to one hundred and seventy. Who's getting those seventy dollars?
Speaker 11: Those markups are going to ticket Master and other similar
Speaker 11: companies that work with them, Right, you're going to get
Speaker 11: ticket Master and Live Nation are going to because they're
Speaker 11: the same company. They're going to be taking those additional
Speaker 11: cost home with them. That's their profit. While the band
Speaker 11: has more of a difficulty here because they have I
Speaker 11: mean band, it's irrespective of genre.
Speaker 9: I'll just refer to as artists and bands.
Speaker 11: They have the difficulty in trying to get a ticket
Speaker 11: price that allows a fan to get a good seat
Speaker 11: to see them at the same time that they're balancing
Speaker 11: all the additional costs it takes to travel to get
Speaker 11: there to present that show. And that conundrum is faced
Speaker 11: every day by artists. I want to add one little thing.
Speaker 11: I think there's something that everybody's overlooking that increases the costs,
Speaker 11: and that is most artists make up the differential even
Speaker 11: if they ask for a lower ticket price, they make
Speaker 11: up the differential with merchandise sales. Well, that's problematic because
Speaker 11: merchandise sales are fixed. You're paying somebody to go sell.
Speaker 11: You may have a merchandise deal and there'll be a booth, window, table,
Speaker 11: whatever it is, and you're selling your hats, your T shirts,
Speaker 11: your hoodies, whatever it may be. And the fan walks
Speaker 11: up and doesn't understand that when they buy that sweatshirt,
Speaker 11: the venue that the artist is playing in is taking
Speaker 11: twenty five to thirty five percent of that for doing
Speaker 11: literally nothing.
Speaker 2: And those prices have gone up and up. I mean
Speaker 2: you look at a T shirt sometimes it's like forty
Speaker 2: to fifty bucks. It's crazy, the prices.
Speaker 11: Because the hall, the venue what we used to refer
Speaker 11: to as a hall fee, that name is morphed a
Speaker 11: little bit to make it more palatable, but it's still
Speaker 11: money for nothing. To quote Mark Knopflin, it is twenty
Speaker 11: five to thirty five percent additional tack on to the
Speaker 11: merch costs. And you buying that T shirt see that
Speaker 11: and say the band merch is so expensive, But the
Speaker 11: band has to raise the price to make up for
Speaker 11: this hall fee. And that would have taken care of
Speaker 11: any deficit more minor deficit of playing the show for
Speaker 11: a lower ticket price just to have the fans come.
Speaker 11: They make it back on merch but if you're paying
Speaker 11: twenty five to thirty five percent, I've seen forty percent,
Speaker 11: then you ratchet up your merch fees, which is nothing
Speaker 11: to do a ticket master. But you can see how
Speaker 11: it starts with ticket Master, how it starts with the
Speaker 11: expensive ticket prices and you want the fans to come
Speaker 11: out and see you, but now you have this additional cost.
Speaker 11: And I think this is kind of like one of
Speaker 11: these little I don't want to say dirty little secrets,
Speaker 11: but just one of these unknown issues that people don't
Speaker 11: talk about. And you know, I spoke to several managers,
Speaker 11: particularly one client's manager I've worked with for thirty five years,
Speaker 11: and I valued his input, and he had said, you know,
Speaker 11: what I'd really love to have would be the power
Speaker 11: to organize all of the acts together, almost in a
Speaker 11: union fashion, to say to all the venues, we won't
Speaker 11: sell merch here just because you're going to take that cut.
Speaker 9: Now, that's a.
Speaker 11: Bit of you know, spitefulness to the venues, and we
Speaker 11: lose the money as the artist. But you can understand
Speaker 11: the sentiment there, and that is I don't want to
Speaker 11: pay you for doing nothing. I'd rather not bring my
Speaker 11: merch into the room rather just sell it online or
Speaker 11: another methodology.
Speaker 2: The Federal Trade Commission and a bypart is in group
Speaker 2: of state attorneys general did sue Ticketmaster and its parent company,
Speaker 2: Live Nation in September, saying they're I'm for seeing consumers
Speaker 2: to pay more to see live events through a variety
Speaker 2: of illegal tactics. But this month the company's asked a
Speaker 2: federal judge to throw out the case. What's their argument?
Speaker 11: So the defense here is that you have the wrong parties.
Speaker 11: We are not responsible for the resellers. They're blaming the
Speaker 11: bot buyers and the resellers, even though we've had the
Speaker 11: Bock Buyers Act in twenty sixteen. They're saying, don't look
Speaker 11: at us. You know, you're blaming us as being monopolistic here,
Speaker 11: But it's really the bot buyers and resellers who are
Speaker 11: causing the problem, not us.
Speaker 9: You know.
Speaker 11: I want to make one sort of comment here. It's
Speaker 11: a little performative for Kid Rock because he has a
Speaker 11: close relationship with this administration, and I want to take
Speaker 11: slight umbrage to one thing he said when he said,
Speaker 11: you know, I'm a maverick. I don't have to answer
Speaker 11: to anybody. You know, I don't have to answer with
Speaker 11: to a label or anything like this. Let's draw back
Speaker 11: and have an overview about that. Labels have nothing to
Speaker 11: do with this. That's not just red herring, that's just
Speaker 11: not applicable. Labels have nothing to do with ticket prices.
Speaker 11: Nobody at the labels is demanding that the artists set
Speaker 11: ticket prices. They just want them to tour because they
Speaker 11: want to sell product. They want to sell some vinyl
Speaker 11: and hopefully get some downloads out of this. Of course
Speaker 11: why wouldn't they, But it really is Ticketmaster that is
Speaker 11: the problem in terms of monopolistic behavior, nothing to do
Speaker 11: with labels. And I want to throw one more thing,
Speaker 11: and while I'm on my soapbox, is that very few
Speaker 11: artists are really with major labels. Now, so again this
Speaker 11: you know, I'm a rock, I'm an island.
Speaker 9: Look at me.
Speaker 11: I don't answer to anybody, you know. I know that
Speaker 11: fits his self proclaimed position in the industry. But everybody's
Speaker 11: in the same position. Very few people are working with
Speaker 11: major labels, which again nothing to do with ticket prices.
Speaker 11: So almost everybody is in the same world, putting out
Speaker 11: their own material through their own labels and going back
Speaker 11: to their fans and trying to just you know, twice
Speaker 11: a year, get on the road and stay relevant to
Speaker 11: their fans and bring new materials sometimes new material to them.
Speaker 9: But no, he's not the only one speaking up.
Speaker 11: He gets an automatic vibe because he has that relationship
Speaker 11: ship with this president administration.
Speaker 2: If Ticketmaster really is the problem. The Justice Department filed
Speaker 2: a sweeping antitrust lawsuit against ticket Master and Live Nation
Speaker 2: in May of twenty twenty four. It accuses them of
Speaker 2: running an illegal monopoly over live events and ask the
Speaker 2: court to break them up. Trial is schedule for March.
Speaker 2: So if the Justice Department wins, and if the judge
Speaker 2: agrees to a breakup, will that solve some of the
Speaker 2: problems We've been discussing the AT.
Speaker 9: And T breakup. How did that work? Right?
Speaker 2: Oh, don't go back in time.
Speaker 9: I think the AT and.
Speaker 11: T anti monopolistic filings I think are analogous to this,
Speaker 11: because you know, everybody eventually got some choice, and you know,
Speaker 11: the competition in the marketplace for tickets and ticket sales
Speaker 11: is important, and if one company controls that, then they
Speaker 11: get to control the narrative on cost. And you know,
Speaker 11: don't look at us, it's someone else's fault. Right, they
Speaker 11: blame everybody else. But what I don't don't want to
Speaker 11: have happened here, And I think it's really important to
Speaker 11: emphasize it's not the artist.
Speaker 9: I hear it all the time.
Speaker 11: I don't want the artists taking the wrap here for
Speaker 11: and that's upon I suppose, but taking the wrap for Oh,
Speaker 11: these guys are being greedy. They're not selling records anymore,
Speaker 11: so they're raising their ticket prices. That is not entirely
Speaker 11: the case. The ticket prices, which I demonstrated when we
Speaker 11: first started speaking, from one hundred to one hundred and seventy.
Speaker 11: The band's only getting a portion of the one hundred.
Speaker 11: They're not getting that seventy dollars overage. That's all going
Speaker 11: to the ticket sellers and to some extent the venues.
Speaker 11: And when we pile on now with the merch fees
Speaker 11: at the hall, you can see the artist is it's
Speaker 11: very difficult for them to get their ability to stay
Speaker 11: out on the road and pay. You know, sometimes thirty
Speaker 11: people are going to go out with a particular artists
Speaker 11: or more right, we've got all kinds of texts and
Speaker 11: crew and drivers, and you know, it's difficult to keep
Speaker 11: this out there and everybody that I work with, it's
Speaker 11: a bit of a struggle. Want to play for their fans.
Speaker 11: That's the lifeblood of the industry. But if we have
Speaker 11: constant ticket prices and constant raising of costs to get there,
Speaker 11: people are going.
Speaker 9: To stay home.
Speaker 2: What about a law that limits the amount of overcharges
Speaker 2: that you could put on a ticket.
Speaker 11: We have that with credit cards, and I think we've
Speaker 11: attempted that with ticket prices. I don't think it's been successful,
Speaker 11: and I think that it's possible. And this isn't this administration.
Speaker 11: This has been going on, you know since twenty fifteen,
Speaker 11: twenty sixteen, We've got a solid ten years of people
Speaker 11: trying to effectuate change here. It's going to take I think,
Speaker 11: a true meaning of the minds between the ticket sellers,
Speaker 11: ticket companies you know, ticket Master or Live Nation to
Speaker 11: come to the table to say Remember, they're also going
Speaker 11: to say, well, we have we have a right to
Speaker 11: make a profit doing what we're doing. The problem is
Speaker 11: it's like overage on credit card fees. When's the limit right?
Speaker 11: How much is enough? Because eventually it'll strangle the live
Speaker 11: entertainment business and pay per view never worked out. We
Speaker 11: all know that so people still want to see bands
Speaker 11: live and we have to do everything in the industry.
Speaker 11: Everybody has to do everything they can to foster that
Speaker 11: on a regular basis, and I think legislation is going
Speaker 11: to have to be there, and maybe it's going to
Speaker 11: have to be a breakup or culling down of the
Speaker 11: actual cost factors. Maybe there is a cap that has
Speaker 11: to come into being.
Speaker 2: Of the things that Kid Rock suggested some of his solutions,
Speaker 2: allowing artists to control who sells their tickets and how,
Speaker 2: recapping resale ticket prices, enforcing the Bots Act to stop
Speaker 2: brokers and bad actors. Do you see any of them
Speaker 2: as being a real solution.
Speaker 11: Well, no one's really enforced that Bots Act from twenty sixteen.
Speaker 11: You've got ten years now, so he's not wrong. But
Speaker 11: someone has to decide what their priorities are, and if
Speaker 11: there's a prioritization to this, it may occur. But this
Speaker 11: particular Department of Justice is that other priorities.
Speaker 9: So you know this.
Speaker 11: I think it's a lot of lip service to say
Speaker 11: we support that, but I don't see the actions. The
Speaker 11: actions were started long before this because they work their
Speaker 11: way through the courts. If this administration truly wants to
Speaker 11: see this take place. Then they can do that by
Speaker 11: by having a bit of a summit, if you will,
Speaker 11: and bringing people to the table to say we need
Speaker 11: to do this, we need to cap this.
Speaker 9: It's preferable for.
Speaker 11: Business not to force this right, not to force the
Speaker 11: anti monopolistic actions. But we're going to have to get
Speaker 11: some cooperation. And by the way, I want to add
Speaker 11: one thing. I don't know if the artist picking who
Speaker 11: sells their tickets, because then we make it, get that
Speaker 11: same behavior by the next group of people. You know,
Speaker 11: I don't want to be pessimistic, but if the next
Speaker 11: group says I'll handle all this for you people, same
Speaker 11: thing occurs again. So there has to be some independence here,
Speaker 11: non reliance on the same group of people. We don't
Speaker 11: want to have the same thing. You know, I think
Speaker 11: he quoted, you know, the who he did and his presentation.
Speaker 11: Meet the new boss, same as the old boss. Meet
Speaker 11: the new ticket seller, same as the old ticket seller.
Speaker 11: And we really want to have change here, and that
Speaker 11: change requires fortitude by either this administration or the DOJ
Speaker 11: to dismantle an incredibly powerful monopoly.
Speaker 9: You know, eighty percent, that's that's a monopoly.
Speaker 2: I do think a lot depends on the antitrust trial
Speaker 2: coming up in March, and we'll see what happens with
Speaker 2: the FTC suit as well. Thanks for joining me, Ron.
Speaker 2: That's Ron Beanstock, a partner at Fox Rothschild. And that's
Speaker 2: it for this edition of The Bloomberg Law Show. Remember
Speaker 2: you can always get the latest legal news on our
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