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Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every

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Speaker 1: day we bring you insight and analysis into the most

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Speaker 1: important legal news of the day. You can find more

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Speaker 1: episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud

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Speaker 1: and on Bloomberg dot com Slash podcasts. A T and

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Speaker 1: T is pursuing an unprecedented strategy and it's fight to

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Speaker 1: save it's planned eighty five billion dollar takeover of Time Warner.

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Speaker 1: It's injecting politics into the antitrust case, trying to uncover

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Speaker 1: evidence of political interference from the Trump administration to stop

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Speaker 1: the deal. But A T and T lost the first

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Speaker 1: round this week when the federal trial judge denied its

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Speaker 1: request for communications logs between the Justice Department and the

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Speaker 1: White House about the merger. The White House and the

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Speaker 1: Justice Department have denied Trump had any involvement in the

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Speaker 1: review of the merger. Joining me as Jennifer Ree, senior

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Speaker 1: litigation analyst for Bloomberg Intelligence, Great to have you here, JENK.

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Speaker 1: Give us a little background. What is a T and

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Speaker 1: tease defense here? Well, what they raised was called a

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Speaker 1: selective enforcement defense. They were trying to say that bringing

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Speaker 1: this case was not due to legitimate antitrust concerns, but

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Speaker 1: instead the motive motive was improper because President Trump simply

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Speaker 1: didn't like CNN and the kind of reporting CNN was doing.

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Speaker 1: And because of that, it's it's like retaliatory or punishment

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Speaker 1: rather than truly based on antitrust principles. Trump is the

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Speaker 1: president and the people he chooses to lead his departments

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Speaker 1: would ordinarily be those of similar mind thought to what

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Speaker 1: he has. So why is it wrong for the president

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Speaker 1: to give some input? Is it wrong? Well, it's not

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Speaker 1: wrong for the president to give input, and certainly he

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Speaker 1: hired the head of anti trust division at d J

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Speaker 1: put him in that place. But the issue is the

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Speaker 1: decision needs to be based on antitrust principles and not

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Speaker 1: based on retaliation. It's it's not proper for the president

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Speaker 1: or his administration to retaliate against companies, especially an entity

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Speaker 1: that is involved in free speech and and you know,

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Speaker 1: political speech, to retaliate by using the antitrust laws. And

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Speaker 1: and that's really what a T T is trying to

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Speaker 1: say here. So what kinds of records did A T

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Speaker 1: and T want? What a T T was seeking were

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Speaker 1: privileged logs and these are just summaries basically of communications

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Speaker 1: that are privileged, which is why you can't get the

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Speaker 1: underlying communication. And they were looking for these this these

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Speaker 1: logs of communications between the White House um and the

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Speaker 1: Intrust Division, as well as the White House and the

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Speaker 1: Attorney General's Office about this deal. And in fact they

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Speaker 1: did get some privilege logs. They did get a privileged

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Speaker 1: log with written communications between the White House and the

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Speaker 1: Anti Trust Division they were seeking. More so, what did

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Speaker 1: that log say? Was there anything incriminating that low? We

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Speaker 1: don't know exactly what that log said, other than the

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Speaker 1: judge saying that it didn't it was innocuous, that it

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Speaker 1: didn't really show any kind of bad intent or improper motives.

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Speaker 1: But you know, these logs are really vague and very general.

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Speaker 1: They summarize a privileged communication, and they do it in

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Speaker 1: a very vague way, so it really can be difficult

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Speaker 1: to even understand what that underlying communication was. So why

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Speaker 1: did the judge decide a T and T wasn't entitled

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Speaker 1: to this? So what the judge looked at was a

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Speaker 1: Supreme Court case that set the precedent for this test,

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Speaker 1: and what he said was based on this Supreme Court

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Speaker 1: precedent which really set a high bar. The A T

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Speaker 1: and T and time Warner had to show some evidence,

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Speaker 1: just some sintilla, let's say, a discriminatory effect and discriminatory intent.

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Speaker 1: And to do that they have to show that they

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Speaker 1: were treated differently from a very similarly situated other similarly

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Speaker 1: situated parties, and they weren't able to do that. And

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Speaker 1: you know, in the merger context, that would be a

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Speaker 1: very difficult thing to do because mergers are unique and

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Speaker 1: they are meant to be assessed by the antitrust enforces

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Speaker 1: based on the unique set of facts that apply to

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Speaker 1: those companies. At that time. They did refer to Comcast

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Speaker 1: merger and the accommodations that were made there. Why isn't

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Speaker 1: the Antitrust Division willing to make accommodations here? Well, the

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Speaker 1: Antitrust Division generally has said that in that case, the

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Speaker 1: remedy was all behavioral conditions and not structural, and that

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Speaker 1: they don't believe that they should be doing that, that

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Speaker 1: they're not a regulatory agency, and they don't believe they

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Speaker 1: should have this relationship where they're policing the conduct of

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Speaker 1: a company going forward in the marketplace. That instead it

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Speaker 1: should be a free marketplace Um, they haven't gone. I'm

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Speaker 1: sure there's more to it than that, based on the

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Speaker 1: data and the theory and what they're looking at. There

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Speaker 1: are other reasons, but this is generally what we understand.

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Speaker 1: But the judge didn't believe that that deal was alike

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Speaker 1: enough to this to suggest that there was discriminatory intent,

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Speaker 1: And I think that's not surprising. Judge Leon said, so,

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Speaker 1: while it may indeed be a rare breed of horse,

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Speaker 1: it is not exactly a unicorn, which was a little

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Speaker 1: poetic at least for a judge. So how much of

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Speaker 1: a setback is this for a T and T. Are

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Speaker 1: they changing their trial strategy? You know, I think it's

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Speaker 1: only a minor setback, honestly, because it's a win for

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Speaker 1: the government. It lets them not have the merits of

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Speaker 1: this case, you know, be messed up by or distracted

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Speaker 1: by this this political side of it. Um. But actually,

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Speaker 1: at the end of the day, I just don't really

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Speaker 1: think it matters all that much because let's say, even

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Speaker 1: if this case was brought for improper reasons, improperly motivated,

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Speaker 1: the Department of Justice has the burden of proof to

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Speaker 1: show that this is likely to have an anti competitive

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Speaker 1: effect in the market, i e. Raise prices harm innovation

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Speaker 1: in a market. And if they can't show that, you know,

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Speaker 1: they won't win this case. But if they show that

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Speaker 1: it's an improper murder, it's an unlawful deal, and whether

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Speaker 1: it was improperly motivated or not, then won't really matter.

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Speaker 1: So are they completely dropping this point, you know, June,

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Speaker 1: It's unclear because what the judge did here. The d

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Speaker 1: o J asked for two things, to quash these discovery requests,

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Speaker 1: which the judge agreed to do, and to strike this

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Speaker 1: defense completely. Now the judge didn't strike the defense completely,

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Speaker 1: just quashed the discovery requests, so it sort of left

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Speaker 1: a little bit of a window open. Although the judge

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Speaker 1: did mention that he didn't feel he needed to look

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Speaker 1: into the merits of this as they went board into

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Speaker 1: the trial, that he didn't need to assess the merits

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Speaker 1: of this defense. Well, the decision in this case at

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Speaker 1: the trial stage shape antitrust decisions in the future. Put

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Speaker 1: the Antitrust Division on a different course. I think it could, yes,

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Speaker 1: because this is very unusual for a vertical merger to

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Speaker 1: go to trial. It is not, as the judge said,

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Speaker 1: it's a rare horse and not a unicorn, because certainly

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Speaker 1: there have been vertical deals in the past that have

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Speaker 1: been challenged by the DJ and needed a settlement, even

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Speaker 1: some of which needed a structural a settlement, a divestiture,

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Speaker 1: rather than just behavioral. But we haven't. We don't have

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Speaker 1: legal precedent. We don't have a court decision that addresses

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Speaker 1: when a vertical deal does or doesn't violate the antitrust laws.

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Speaker 1: And I think we might see that here and what

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Speaker 1: kind of remedy might be appropriate. So depending on the

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Speaker 1: way the judge writes this decision, yes it could. And

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Speaker 1: the head of the Antitrust Division has said it would

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Speaker 1: raise costs for consumers and reduce choice and the merger

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Speaker 1: would reshape the media landscape. So does it seem as

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Speaker 1: if they have a solid argument. I will say that

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Speaker 1: that sort of the horn book possibility of harm that

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Speaker 1: can come from a vertical merger. If you look at

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Speaker 1: an anti trust book and you see vertical merger, how

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Speaker 1: might it cause harm? That would be the way, um,

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Speaker 1: But it all depends on the data. It's a bit

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Speaker 1: of an attenuated theory. They have to show that from

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Speaker 1: an economic perspective it makes sense for this merged company

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Speaker 1: to raise the price of its content to other distributors

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Speaker 1: because those distributors will lose subscribers and those subscribers will

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Speaker 1: come over to them them. It's not easy to prove.

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Speaker 1: And this will be a trial for a judge. Yes,

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Speaker 1: just a judge. Just a judge. And that's coming up

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Speaker 1: in March. It's very exciting. It's like a movie coming out.

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Speaker 1: We've been talking about it for so long. It is exciting.

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Speaker 1: It's for us. I think, are we are? We were

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Speaker 1: about this? I thanks jenn That's Jennifer Read, senior litigation

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Speaker 1: analyst for Bloomberg Intelligence. The Supreme Court had down several

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Speaker 1: rulings today, one cutting protections for corporate whistleblowers, joining us

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Speaker 1: to talk about some of the decisions as Bloomberg New

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Speaker 1: Supreme Court reporter Greg's store Greg. The Court unanimously narrowed

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Speaker 1: an anti retaliation provision in the Dodd Frank Act. What

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Speaker 1: was the basis of the Court's decision throwing out a

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Speaker 1: lawsuit by a former company official of Digital Realty Trust

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Speaker 1: fired after complaining about alleged violations of the securities law June.

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Speaker 1: This was about interpreting that Dot Frank Act, which was

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Speaker 1: passed in and in particular, it does have a provision

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Speaker 1: in there that is designed to protect whistleblowers. And the

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Speaker 1: fatute says a whistleblower is someone who files a complaint

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Speaker 1: with the SEC. And Jeffice Ginsburg wrote the court's majority opinion,

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Speaker 1: and she said that language means if you don't UH

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Speaker 1: complain to the SEC, you're not covered by this law.

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Speaker 1: She also took a look at UH some some Senate

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Speaker 1: report that she said backed up that interpretation, and the

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Speaker 1: Supreme Court ruling on it was unanimous. This is one

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Speaker 1: of two major federal protections for corporate whistleblowers. What are

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Speaker 1: the differences with the whistleblower provisions in the Sarbanes Oxley Act. Yes,

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Speaker 1: so the Sarbanes Oxually Act passed before before that in

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Speaker 1: twenty two UH protects. It clearly protects people who whether

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Speaker 1: or not they complain to the SEC. So if you

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Speaker 1: complain internally, if you complain to Congress, you're protected under

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Speaker 1: Sarbanes Oxley. Um. That said, it's not if you're going

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Speaker 1: to eventually try to sue. It doesn't give you as

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Speaker 1: much protection that way. So you have to under Sarbanes

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Speaker 1: Oxley first file complaint with the Labor Department. You have

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Speaker 1: to let that process uh play out. Um. You you

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Speaker 1: have less time to actually file a lawsuit than you

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Speaker 1: would under Dodd Frank. And the damages that you get

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Speaker 1: under Sarbanes Oxley are lesser than you get in Dodd Frank.

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Speaker 1: Dodd Frank, let's you get up to double Uh the

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Speaker 1: amount of money you would sived in in salary uh

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Speaker 1: surveys actually provides less than that. So Uh, there's still

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Speaker 1: a whistle blower protection, just just not as much. So.

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Speaker 1: How big a win is this for corporations? So, no question,

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Speaker 1: it's a win. It does make it harder for some

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Speaker 1: people to sue. It's going to require them to sue

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Speaker 1: more quickly. Um. And so in general company the company's

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Speaker 1: side is happy today about this ruling. One reaction I

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Speaker 1: have seen those that it could actually be counterproductive in

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Speaker 1: some ways because it does give people an incentive to

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Speaker 1: go directly to the SEC and not go through the

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Speaker 1: internal compliance programs that many that that the most publicly

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Speaker 1: traded companies have set up. How are lower courts divided

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Speaker 1: on this issue when it was unanimous with the Supreme

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Speaker 1: Court And it seems like it was, you know, statutory interpretation. Yeah,

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Speaker 1: so so you're right. They were divided on it um.

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Speaker 1: The argument on the other side was that while there

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Speaker 1: is a statutory definition of whistleblower, um that that that

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Speaker 1: definition didn't apply to to this particular section of the law.

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Speaker 1: The argument was looked the common sense that the ordinary

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Speaker 1: meaning of the word whistleblower doesn't mean only somebody who

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Speaker 1: who complained to the SEC. It could be somebody who

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Speaker 1: complains internally. That was the argument on the other side.

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Speaker 1: But the Supreme Court just didn't buy it. So why

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Speaker 1: did Justice Clarence Thomas write a separate opinion that was

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Speaker 1: joined by Justices Samuel Alito and Neil Gorst's. Well, he

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Speaker 1: was sort of channeling the late Justice Scalia here. So,

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Speaker 1: as I mentioned, Justice Ginsburg and her majority opinion looked

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Speaker 1: at the statutory language, and then she went on to

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Speaker 1: talk about what's known as the legislative history of the

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Speaker 1: Senate report that had some language in it that supported

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Speaker 1: her interpretation of the law. And Justice Thomas said, hey,

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Speaker 1: the language of the statute is clear. You should have

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Speaker 1: stopped your opinion right there on page five or whatever

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Speaker 1: it was, and not going on and considered the legislative history.

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Speaker 1: So he just wanted to make that point. Does not

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Speaker 1: like legislative history being considered a strict textual elysis. In

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Speaker 1: another unanimous ruling, though Justice Elina Kagan didn't participate, the

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Speaker 1: Court sided with the Chicago Museum in preventing survivors of

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Speaker 1: a terrorist attack from seizing Persian artifacts to help pay

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Speaker 1: for a default judgment against Iran. Tell us about that. Yeah,

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Speaker 1: so this stems from actually three bombings, suicide bombings in

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Speaker 1: Jerusalem carried up by Hamas. The people suing O our

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Speaker 1: U s citizens they were either injured or they're they're

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Speaker 1: closely related to somebody who was injured. Uh. They sued

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Speaker 1: Iran as you as you said, got a default judgment

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Speaker 1: because Iran didn't defend it, and they're trying to collect

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Speaker 1: the judgment they got, which was about seventy one million dollars.

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Speaker 1: And so what they were trying to do was to

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Speaker 1: to seize uh, these Iranian owned artifacts that are being

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Speaker 1: uh kept uh and displayed at a museum at the

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Speaker 1: University of Chicago. And so the basic question for the

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Speaker 1: Supreme Court was whether those artifacts are protected under sovereign immunity.

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Speaker 1: So Why didn't the court say that, Why did the

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Speaker 1: courts say that this didn't fit within the sovereign the

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Speaker 1: Foreign Sovereign Immunities Act. There's an exception there. Yeah. So

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Speaker 1: so this is the nineteen seventies six law that that

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Speaker 1: basically says, in general, UM UH foreign countries cannot be

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Speaker 1: sued in in the US. But there are a lot

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Speaker 1: of exceptions to it and UH in In two thousand eight,

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Speaker 1: Congress amended that law UM and UH sort of expanded

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Speaker 1: one category of exceptions UH and sort of it made

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Speaker 1: it more clear that that UM just because UH something

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Speaker 1: isn't is just an agency of a foreign government and

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Speaker 1: and and not the you know, the country of Iran itself,

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Speaker 1: that you still might be able to sue them under

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Speaker 1: UH and collect something from them under one of these exceptions. Anyway,

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Speaker 1: the question is whether that and them and actually did

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Speaker 1: something much more than that. And basically set across the board,

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Speaker 1: if it's the property of a foreign government and it's

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Speaker 1: in the UF, then you can go to court to

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Speaker 1: try to collect that property to satisfy. A judgment in

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Speaker 1: the Supreme Court today said no, that wasn't what the

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Speaker 1: law did. It had a more narrow effect dealing with

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Speaker 1: those uh, foreign government agencies, that would have to be

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Speaker 1: a very narrow effect. So just about thirty seconds left.

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Speaker 1: So Greg, are we in the unanimous phase of the

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Speaker 1: opinions where the exciting controversial cases come out late? No, No,

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Speaker 1: we we actually had the other two opinions from today

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Speaker 1: that we didn't talk about. We're actually both divided. One

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Speaker 1: of them was five to four, one of them was

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Speaker 1: six to three, and the we'll just say the breakdowns,

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Speaker 1: and those weren't necessarily the ones you would expect. And

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Speaker 1: one of them just dis course its joined the liberals

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Speaker 1: of the court of the majority. Oh, we'll have to

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Speaker 1: talk about that next time. That's really interesting. As always,

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Speaker 1: you're always interesting, Greg. Thank you so much. That's Bloomberg

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Speaker 1: News Supreme Court reporter Greg's store reporting on some of

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Speaker 1: the cases the Court handed down today. Thanks for listening

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Speaker 1: to the Bloomberg Law Podcast. You can subscribe and listen

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Speaker 1: to the show on Apple Podcasts, SoundCloud, and on Bloomberg

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Speaker 1: dot com slash podcast. I am June Brosso. This is

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Speaker 1: Bloomberg