1 00:00:03,200 --> 00:00:08,360 Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio. 2 00:00:10,360 --> 00:00:14,960 Speaker 2: These defendants took advantage of mister Perry's addiction issues to 3 00:00:15,120 --> 00:00:18,280 Speaker 2: enrich themselves. They knew what they were doing was wrong. 4 00:00:18,880 --> 00:00:22,599 Speaker 2: They knew what they were doing was risking great danger 5 00:00:22,680 --> 00:00:24,919 Speaker 2: to mister Perry, but they did it anyways. 6 00:00:25,120 --> 00:00:29,600 Speaker 1: Federal prosecutors have charged five people, including two doctors, in 7 00:00:29,680 --> 00:00:33,680 Speaker 1: the ketamine drug overdose death of friend Star Matthew Perry 8 00:00:33,920 --> 00:00:38,680 Speaker 1: last October. US attorney Martine Estrada said their seven month 9 00:00:38,720 --> 00:00:42,400 Speaker 1: investigation revealed a vast criminal network. 10 00:00:42,760 --> 00:00:49,080 Speaker 2: That investigation has revealed a broad, underground criminal network responsible 11 00:00:49,120 --> 00:00:55,040 Speaker 2: for distributing large quantities of ketamine to mister Perry and others. 12 00:00:55,400 --> 00:00:59,680 Speaker 1: Three defendants have already pled guilty, Perry's live in assistant, 13 00:01:00,040 --> 00:01:03,080 Speaker 1: one of the doctors, and a middleman. The case will 14 00:01:03,080 --> 00:01:06,000 Speaker 1: now focus on the two who have pleaded not guilty, 15 00:01:06,520 --> 00:01:10,880 Speaker 1: Jazzvin's Sanga, an alleged drug trafficker known as the Ketamine Queen, 16 00:01:11,280 --> 00:01:15,680 Speaker 1: and doctor Salvador Placentia. His attorney says the doctor sold 17 00:01:15,760 --> 00:01:19,120 Speaker 1: ketamine to Perry, but insists he did not break the law. 18 00:01:19,640 --> 00:01:20,520 Speaker 3: He was a patient. 19 00:01:20,600 --> 00:01:22,560 Speaker 2: He did receive ketymine treatment therapy. 20 00:01:23,240 --> 00:01:26,720 Speaker 1: Joining me is healthcare attorney Harry Nelson of Nelson Hardiman. 21 00:01:27,240 --> 00:01:30,160 Speaker 1: Harry tell us about ketamine and what it's used for. 22 00:01:30,760 --> 00:01:34,520 Speaker 4: It was originally developed as a tranquilizer for veterinarians, for 23 00:01:34,600 --> 00:01:38,680 Speaker 4: large animals like horses, but it's been used increasingly, you know, 24 00:01:38,760 --> 00:01:42,279 Speaker 4: for human beings as a sedative, and in the last 25 00:01:42,680 --> 00:01:46,160 Speaker 4: twenty five years or so, there's been a growing body 26 00:01:46,200 --> 00:01:50,560 Speaker 4: of research that it can be an effective alternative for 27 00:01:50,680 --> 00:01:54,920 Speaker 4: treatment resistant depression, meaning when people are not successful in 28 00:01:55,000 --> 00:01:59,000 Speaker 4: managing clinical depression with the sort of standard more conventional 29 00:01:59,040 --> 00:02:04,120 Speaker 4: treatments like SESSR, high sterotonin reuptake inhibitors like prozac most famously, 30 00:02:04,400 --> 00:02:07,040 Speaker 4: and also for post traumatic stress disorders. Those are awful 31 00:02:07,080 --> 00:02:10,400 Speaker 4: labeled uses, but those are the widespread uses that have 32 00:02:10,560 --> 00:02:14,200 Speaker 4: really led to this massive growth in ketymine the last 33 00:02:14,240 --> 00:02:16,760 Speaker 4: couple of years. So we've been seeing some ketamine used 34 00:02:16,800 --> 00:02:21,640 Speaker 4: in some detox situations, but primarily depression and PTSD are 35 00:02:21,680 --> 00:02:24,640 Speaker 4: the primary uses that we're seeing for it in the United. 36 00:02:24,360 --> 00:02:28,919 Speaker 1: States today, Matthew Perry was getting ketamine infusion therapy. 37 00:02:29,520 --> 00:02:34,000 Speaker 4: Matthew Perry was getting ketamine infusion therapy and then at 38 00:02:34,000 --> 00:02:37,200 Speaker 4: some point one of the doctors who has been arrested 39 00:02:37,240 --> 00:02:41,320 Speaker 4: here basically started allowing him to self administer the keademine. 40 00:02:41,360 --> 00:02:45,359 Speaker 4: At least that's the allegation, and the self administration, it appears, 41 00:02:45,600 --> 00:02:49,400 Speaker 4: may have come in both the form of infusion at home, 42 00:02:49,600 --> 00:02:52,360 Speaker 4: meaning through like putting it in an interveneous line, or 43 00:02:52,480 --> 00:02:54,840 Speaker 4: more commonly, what we've seen and what's grown in popularity 44 00:02:54,840 --> 00:02:57,799 Speaker 4: in the last few years has been ketamine taken by 45 00:02:58,080 --> 00:03:00,720 Speaker 4: a trophy, which is essentially like a lot and so 46 00:03:00,800 --> 00:03:04,200 Speaker 4: people basically just suck on a ketamine lozenge and get 47 00:03:04,280 --> 00:03:07,040 Speaker 4: the same effect metabolized by doing so. 48 00:03:07,160 --> 00:03:13,080 Speaker 1: The defendants here range from his live in assistant, two doctors, 49 00:03:13,440 --> 00:03:16,640 Speaker 1: an acquaintance to acted as a middleman and a drug 50 00:03:16,680 --> 00:03:20,799 Speaker 1: dealer known as the ketamine Queen. Is the prosecution out 51 00:03:20,800 --> 00:03:23,080 Speaker 1: to prove a criminal. 52 00:03:22,639 --> 00:03:25,720 Speaker 4: Network here, You know, it's not clear from what we've 53 00:03:25,720 --> 00:03:29,119 Speaker 4: seen so far how much this was a coordinated criminal 54 00:03:29,160 --> 00:03:34,359 Speaker 4: network as opposed to various individuals being prosecuted for their 55 00:03:34,400 --> 00:03:37,240 Speaker 4: own personal violations of the laws. So you had a 56 00:03:37,280 --> 00:03:40,120 Speaker 4: lot of different people with different responsibilities. In the case 57 00:03:40,120 --> 00:03:44,080 Speaker 4: of the doctors, their writing of prescriptions and their instructions 58 00:03:44,120 --> 00:03:47,600 Speaker 4: and their sort of permissiveness about giving Matthew Perry the 59 00:03:47,640 --> 00:03:50,280 Speaker 4: drug is leading to one set of charges similar to 60 00:03:50,640 --> 00:03:53,040 Speaker 4: you know things we've seen with doctors and other celebrities, 61 00:03:53,080 --> 00:03:55,520 Speaker 4: where essentially there's like a gross negligence because they own 62 00:03:55,520 --> 00:03:58,720 Speaker 4: a duty, as opposed to some of the hangers on 63 00:03:58,920 --> 00:04:02,160 Speaker 4: and the entourage who are directly violating drug laws by 64 00:04:02,160 --> 00:04:05,520 Speaker 4: handling controlled substances, which ketamine is a Schedule three controlled 65 00:04:05,560 --> 00:04:08,840 Speaker 4: substance without any authorization to do so, so they're effectively 66 00:04:08,880 --> 00:04:10,280 Speaker 4: being charged as drug dealers. 67 00:04:10,640 --> 00:04:14,680 Speaker 1: One of the defendants who pleaded guilty was Perry's living assistant, 68 00:04:15,280 --> 00:04:19,520 Speaker 1: and according to the documents, he gave Perry ketamine three 69 00:04:19,600 --> 00:04:23,080 Speaker 1: times on the day he died, and before the third dose, 70 00:04:23,640 --> 00:04:27,600 Speaker 1: according to the documents, Perry asked his assistant to quote, 71 00:04:27,680 --> 00:04:30,920 Speaker 1: shoot me up with a big one. I'm sort of wondering, 72 00:04:31,279 --> 00:04:33,599 Speaker 1: you have someone who works for you and you're giving 73 00:04:33,640 --> 00:04:37,280 Speaker 1: them orders. How much is that person responsible and how 74 00:04:37,320 --> 00:04:38,640 Speaker 1: much are you responsible? 75 00:04:39,560 --> 00:04:44,640 Speaker 4: It's a good question. Look, Matthew Perry certainly was being 76 00:04:44,640 --> 00:04:48,760 Speaker 4: irresponsible and kind of assigning this responsibility and thinking that 77 00:04:48,920 --> 00:04:53,560 Speaker 4: somehow he could safely allow a person with no training, 78 00:04:53,680 --> 00:04:57,600 Speaker 4: no license, no authorization, legally to do this, to do it, 79 00:04:57,640 --> 00:04:59,520 Speaker 4: and the person himself in the eyes of the law. 80 00:04:59,520 --> 00:05:03,200 Speaker 4: We only have one person who's alive and here to 81 00:05:03,240 --> 00:05:05,919 Speaker 4: point a finger at and to hold it accountable. But 82 00:05:06,160 --> 00:05:11,039 Speaker 4: there's certainly no question that Matthew Perry was complicit in 83 00:05:11,240 --> 00:05:16,360 Speaker 4: these completely you know, outside the bound therapeutic relationships, as 84 00:05:16,440 --> 00:05:19,479 Speaker 4: is always the case when you have situations like this 85 00:05:19,520 --> 00:05:23,200 Speaker 4: where you have you know, famous, powerful people who are 86 00:05:23,800 --> 00:05:27,480 Speaker 4: managing to hold sway enough over people around them that 87 00:05:27,920 --> 00:05:31,919 Speaker 4: judgments that most people wouldn't make around their peers, you know, 88 00:05:32,040 --> 00:05:33,800 Speaker 4: all of a sudden goes out the windows. So people 89 00:05:33,880 --> 00:05:36,960 Speaker 4: do things for celebrities and agree to do things as 90 00:05:37,000 --> 00:05:39,560 Speaker 4: this assistant did in administering the Keademy in this way 91 00:05:39,760 --> 00:05:42,320 Speaker 4: that he probably wouldn't have done, you know, had a 92 00:05:42,360 --> 00:05:46,000 Speaker 4: friend asked him simply based on his relationship and you know, 93 00:05:46,120 --> 00:05:49,520 Speaker 4: his willingness to go so far beyond ordinary boundaries with 94 00:05:49,560 --> 00:05:51,960 Speaker 4: Matthew Perry. Yeah, it's an interesting question, but we only 95 00:05:52,000 --> 00:05:53,560 Speaker 4: as a practical matter, we have the people who are 96 00:05:53,640 --> 00:05:56,240 Speaker 4: left to hold accountable and hopefully to send a message 97 00:05:56,360 --> 00:05:59,480 Speaker 4: that makes other people think twice about playing similar roles. 98 00:06:00,040 --> 00:06:03,520 Speaker 1: So the two who have pleaded not guilty are the 99 00:06:03,600 --> 00:06:08,440 Speaker 1: alleged drug trafficker known as the ketamine Queen, and one 100 00:06:08,440 --> 00:06:12,680 Speaker 1: of the doctors who allegedly taught Perry's live an assistant 101 00:06:12,760 --> 00:06:16,080 Speaker 1: how to inject the drug and injected it himself as well. 102 00:06:16,279 --> 00:06:19,240 Speaker 1: Does it seem like prosecutors gave the deals to those 103 00:06:19,240 --> 00:06:21,360 Speaker 1: who appeared less culpable. 104 00:06:21,160 --> 00:06:23,560 Speaker 4: So it's clear that the government was looking for cooperation 105 00:06:23,720 --> 00:06:29,120 Speaker 4: from some of the people who were considered lower level participants. 106 00:06:29,240 --> 00:06:32,760 Speaker 4: It's always the case that the doctors are viewed as 107 00:06:32,800 --> 00:06:36,240 Speaker 4: the most serious target, I think, in part to send 108 00:06:36,240 --> 00:06:39,400 Speaker 4: a message to other doctors, because doctors have a unique 109 00:06:39,400 --> 00:06:43,080 Speaker 4: privilege in terms of their proximity and access and ability 110 00:06:43,160 --> 00:06:45,960 Speaker 4: to put the drugs in the place where they caused 111 00:06:46,000 --> 00:06:49,159 Speaker 4: harm and where this tragedy happens. So I think the 112 00:06:49,240 --> 00:06:53,600 Speaker 4: focus in these cases is consistently to make an example 113 00:06:53,640 --> 00:06:56,479 Speaker 4: of the doctors, because as we see here, we have 114 00:06:56,680 --> 00:07:01,120 Speaker 4: these doctors who just completely go outside the requirements of 115 00:07:01,160 --> 00:07:05,320 Speaker 4: the law, outside the bounds of safe practice, and essentially 116 00:07:05,680 --> 00:07:09,200 Speaker 4: set up the circumstances in which this death occurred. So 117 00:07:09,240 --> 00:07:12,320 Speaker 4: that's always going to be the top level goal of prosecutors, 118 00:07:12,600 --> 00:07:13,240 Speaker 4: and they. 119 00:07:13,120 --> 00:07:17,040 Speaker 1: Have text messages and I think this helps also to 120 00:07:17,160 --> 00:07:21,320 Speaker 1: paint the doctors in a bad light, because the doctor 121 00:07:21,360 --> 00:07:25,280 Speaker 1: who's pleaded not guilty texted the other doctor about how 122 00:07:25,360 --> 00:07:27,840 Speaker 1: much to charge, and he wrote, I wonder how much 123 00:07:27,880 --> 00:07:32,360 Speaker 1: this moron will pay. Let's find out. So they charged 124 00:07:32,440 --> 00:07:36,760 Speaker 1: him exorbit in amounts, like twelve dollars worth of ketamine. 125 00:07:36,800 --> 00:07:38,600 Speaker 1: They charged him two thousand dollars. 126 00:07:39,160 --> 00:07:42,200 Speaker 4: Look, it doesn't get any worse than that. We hold 127 00:07:42,280 --> 00:07:46,680 Speaker 4: doctors responsible for following the hippocratic oath right to take 128 00:07:46,720 --> 00:07:50,000 Speaker 4: care of patients, to do no harm. And it's a 129 00:07:50,280 --> 00:07:55,640 Speaker 4: tricky subject. Money and healthcare is inherently a fraud topic 130 00:07:55,800 --> 00:07:59,600 Speaker 4: because doctors are entitled to make a living. But when 131 00:07:59,640 --> 00:08:04,080 Speaker 4: you see the kind of naked greed here and the 132 00:08:04,160 --> 00:08:07,720 Speaker 4: dehumanizing language, you know how much you know will this 133 00:08:07,840 --> 00:08:11,240 Speaker 4: more on pay? Where a doctor was so contemptuous of 134 00:08:11,640 --> 00:08:13,800 Speaker 4: the patient he was responsible for that he had a 135 00:08:13,880 --> 00:08:17,520 Speaker 4: duty to, it's really like heartbreaking, and I think it 136 00:08:17,600 --> 00:08:21,680 Speaker 4: shows a level of dehumanization and disregard for responsibility that 137 00:08:22,280 --> 00:08:24,280 Speaker 4: is not likely to sit well with a jury or 138 00:08:24,320 --> 00:08:28,000 Speaker 4: a judge and probably spells not just losing a license, 139 00:08:28,040 --> 00:08:31,320 Speaker 4: but spending some significant time and custody. 140 00:08:30,880 --> 00:08:34,000 Speaker 1: For this doctor is the cause of death a possible 141 00:08:34,240 --> 00:08:38,680 Speaker 1: defense because the La County Medical Examiner's Office said that 142 00:08:38,720 --> 00:08:42,200 Speaker 1: he died of the acute effects of ketamine, but that 143 00:08:42,400 --> 00:08:48,280 Speaker 1: contributing factors included drowning, coronary artery disease, and the effects 144 00:08:48,320 --> 00:08:49,400 Speaker 1: of buff and orphan. 145 00:08:49,920 --> 00:08:52,600 Speaker 4: Yeah. Buf and orphan is a drug that's become the 146 00:08:52,600 --> 00:08:56,439 Speaker 4: most popular and widespread sort of drug to keep people 147 00:08:56,920 --> 00:09:01,360 Speaker 4: from craving opioids, So it's been used widely after prescription 148 00:09:01,440 --> 00:09:04,439 Speaker 4: opioids and other kind of opioid addictions. It's a partial 149 00:09:04,520 --> 00:09:08,320 Speaker 4: antagonist that basically sort of satisfies that craving without getting 150 00:09:08,320 --> 00:09:10,880 Speaker 4: people high, and it's safe, people don't die from it. 151 00:09:11,040 --> 00:09:14,400 Speaker 4: But your question raises a really interesting sort of set 152 00:09:14,440 --> 00:09:17,400 Speaker 4: of possibilities. Matt Perry was known, I think widely at 153 00:09:17,520 --> 00:09:19,760 Speaker 4: least from either heard over the years, to be in 154 00:09:19,840 --> 00:09:21,839 Speaker 4: really poor health as a result of his drug use, 155 00:09:21,840 --> 00:09:24,000 Speaker 4: which is often the case. So the question is was 156 00:09:24,040 --> 00:09:27,600 Speaker 4: that possibly a factor. Maybe this isn't what actually killed him. 157 00:09:28,040 --> 00:09:30,240 Speaker 4: And first of all, when we talk about the doctors 158 00:09:30,240 --> 00:09:33,840 Speaker 4: and the responsibility that they played, they owed separate duties, 159 00:09:33,960 --> 00:09:37,880 Speaker 4: so they're falling below standards of practice. So extremely is 160 00:09:37,880 --> 00:09:40,320 Speaker 4: a problem for them, irrespective of what happened, but for 161 00:09:40,440 --> 00:09:42,920 Speaker 4: everybody in this case who's charged. You know, there's a 162 00:09:42,920 --> 00:09:45,720 Speaker 4: fundamental principle that you learn when you start law school 163 00:09:46,240 --> 00:09:49,440 Speaker 4: and you take first year fourth which is that you 164 00:09:49,600 --> 00:09:52,640 Speaker 4: kind of take the person who's harmed as you find them. So, 165 00:09:53,120 --> 00:09:54,880 Speaker 4: you know, in law school there's a classic case of 166 00:09:54,920 --> 00:09:58,240 Speaker 4: the eggshell skull, right of a person who has a 167 00:09:58,440 --> 00:10:02,200 Speaker 4: very thin skull and accidents, you know, someone hitting them 168 00:10:02,200 --> 00:10:05,480 Speaker 4: on the head, which which ordinarily would not have harmed 169 00:10:05,480 --> 00:10:08,600 Speaker 4: a normal person. It's sort of your bad luck that 170 00:10:08,640 --> 00:10:11,720 Speaker 4: you've chose to hit this person, and none of us knows, 171 00:10:11,960 --> 00:10:14,400 Speaker 4: you know, what are the vulnerabilities of the people around us. 172 00:10:14,480 --> 00:10:17,240 Speaker 4: So unfortunately for all of these people who have been charged, 173 00:10:17,559 --> 00:10:20,360 Speaker 4: you know, the condition that Matthew Perry was in wasn't 174 00:10:20,360 --> 00:10:22,760 Speaker 4: a risk that they were taking, and they didn't have 175 00:10:22,800 --> 00:10:25,760 Speaker 4: to know exactly how bad his physical health was, and 176 00:10:25,800 --> 00:10:28,679 Speaker 4: it doesn't really matter if his death would have been 177 00:10:28,679 --> 00:10:31,240 Speaker 4: preventable had he been in better health. It sort of 178 00:10:31,360 --> 00:10:34,520 Speaker 4: goes out the window, and they take him as they 179 00:10:34,520 --> 00:10:36,240 Speaker 4: found him and are responsible. 180 00:10:36,720 --> 00:10:40,680 Speaker 1: So the doctor who pled not guilty to the charges, 181 00:10:41,080 --> 00:10:44,240 Speaker 1: his attorney says, his clients sold ketamine to Perry, but 182 00:10:44,280 --> 00:10:46,480 Speaker 1: he insists he did not break the law. The attorney 183 00:10:46,520 --> 00:10:51,040 Speaker 1: said he was a patient, he did receive ketamine treatment therapy. 184 00:10:51,800 --> 00:10:54,559 Speaker 4: Right, So this is going to be probably the hardest case, 185 00:10:54,800 --> 00:10:57,079 Speaker 4: the case that does not involve the sort of gross 186 00:10:57,160 --> 00:11:01,839 Speaker 4: profiteering motive. But this case still involved a doctor who 187 00:11:02,120 --> 00:11:06,200 Speaker 4: gave the ketamine for self administration without monitoring. And part 188 00:11:06,200 --> 00:11:10,000 Speaker 4: of what happened here is something fundamentally unsafe, i e. 189 00:11:10,120 --> 00:11:12,760 Speaker 4: A person taking ketamine and getting into a hot tub 190 00:11:13,160 --> 00:11:19,040 Speaker 4: where they were susceptible of drowning just because ketamine causes disassociation. 191 00:11:19,360 --> 00:11:21,760 Speaker 4: You're not sharp, right. We have all these settings where 192 00:11:22,040 --> 00:11:24,240 Speaker 4: you take over the counter medication and the warning on 193 00:11:24,240 --> 00:11:27,319 Speaker 4: the label says, don't operate machinery, don't get behind the 194 00:11:27,360 --> 00:11:30,360 Speaker 4: wheel of a car, and so too here you have 195 00:11:30,480 --> 00:11:34,640 Speaker 4: to wonder what this doctor thought. I can certainly tell you, 196 00:11:34,640 --> 00:11:38,920 Speaker 4: you know, in advising practices that use ketamine, we consistently 197 00:11:39,040 --> 00:11:42,400 Speaker 4: advise that people should be monitored to make sure they're 198 00:11:42,440 --> 00:11:45,679 Speaker 4: not having a negative effect. Ketamine can have dangerous effects, 199 00:11:45,840 --> 00:11:50,760 Speaker 4: most commonly disassociation and panic attacks. And so we don't 200 00:11:50,760 --> 00:11:52,800 Speaker 4: know exactly what happened here yet, And I don't know 201 00:11:52,840 --> 00:11:55,280 Speaker 4: if we ever will, but I think the doctor still 202 00:11:55,280 --> 00:11:59,880 Speaker 4: bears responsibility for unsafe administration of ketamine and not make 203 00:12:00,200 --> 00:12:02,480 Speaker 4: sure that it was being used in the setting where 204 00:12:02,520 --> 00:12:05,560 Speaker 4: there was oversight by a person who was knowledgeable and 205 00:12:05,760 --> 00:12:07,680 Speaker 4: able to do what needed to be done if something 206 00:12:07,720 --> 00:12:08,160 Speaker 4: went wrong. 207 00:12:08,360 --> 00:12:12,280 Speaker 1: Coming up next, Why are federal prosecutors involved in what 208 00:12:12,320 --> 00:12:16,040 Speaker 1: would normally be a state case? This is Bloomberg. 209 00:12:17,200 --> 00:12:19,440 Speaker 3: Video. 210 00:12:19,840 --> 00:12:24,040 Speaker 1: Federal prosecutors have charged five people, including two doctors, in 211 00:12:24,080 --> 00:12:28,199 Speaker 1: the ketamine drug overdose of actor Matthew Perry last October. 212 00:12:28,520 --> 00:12:31,960 Speaker 1: All five were charged with conspiracy to distribute the drug 213 00:12:32,200 --> 00:12:35,440 Speaker 1: and some with other charges as well. Three defendants have 214 00:12:35,520 --> 00:12:39,640 Speaker 1: already pleaded guilty. Perry's live an assistant, one of the doctors, 215 00:12:39,720 --> 00:12:42,600 Speaker 1: and a middleman. One of the doctors, and the alleged 216 00:12:42,640 --> 00:12:46,360 Speaker 1: drug trafficker have pleaded not guilty. I've been talking to 217 00:12:46,440 --> 00:12:50,360 Speaker 1: healthcare attorney Harry Nelson of Nelson Hardiman. Harry, I'm not 218 00:12:50,559 --> 00:12:54,280 Speaker 1: clear on why the doctors didn't just give him the 219 00:12:54,480 --> 00:12:59,520 Speaker 1: ketamine infusion shots themselves and where the drug dealer came 220 00:12:59,559 --> 00:12:59,880 Speaker 1: into this. 221 00:13:00,480 --> 00:13:03,880 Speaker 4: My sense, just from reading this case and looking at 222 00:13:03,880 --> 00:13:07,880 Speaker 4: the investigation is that Matthew Perry had a persistent and 223 00:13:08,360 --> 00:13:13,720 Speaker 4: significant interest in ketamine that went beyond what most doctors 224 00:13:13,760 --> 00:13:18,240 Speaker 4: who are responsibly prescribing and administering ketamine will do. And 225 00:13:18,320 --> 00:13:20,800 Speaker 4: so there was this constant pressure. And there are a 226 00:13:20,840 --> 00:13:24,600 Speaker 4: lot of questions because ketamine has been a relatively new treatment, 227 00:13:24,760 --> 00:13:28,040 Speaker 4: we are frequently getting questions from all kinds of practices 228 00:13:28,040 --> 00:13:31,720 Speaker 4: about how many times ketamine can be administered to the 229 00:13:31,720 --> 00:13:35,280 Speaker 4: same patient, you know, over what period of time, you know. 230 00:13:35,400 --> 00:13:37,800 Speaker 4: And so it's my sense is that there was this 231 00:13:37,960 --> 00:13:41,520 Speaker 4: constant effort to find the drug that looks more and 232 00:13:41,559 --> 00:13:44,240 Speaker 4: more like the way that people sort of behave around 233 00:13:44,280 --> 00:13:47,719 Speaker 4: illegal drugs, where someone who's addicted is constantly looking for 234 00:13:47,800 --> 00:13:50,640 Speaker 4: a source and a supply and not sort of counting 235 00:13:50,640 --> 00:13:54,520 Speaker 4: on the fact that routine prescribing through physicians and sticking 236 00:13:54,559 --> 00:13:57,280 Speaker 4: up at pharmacies and so on, or administration in doctor's 237 00:13:57,320 --> 00:13:59,480 Speaker 4: offices is going to take care of it. So I 238 00:13:59,559 --> 00:14:02,880 Speaker 4: just think there was clearly a pressure, you know, in 239 00:14:02,920 --> 00:14:06,160 Speaker 4: the way that the ketamine was procured that led to 240 00:14:06,400 --> 00:14:09,080 Speaker 4: all these different sources. This is not what good healthcare 241 00:14:09,120 --> 00:14:12,560 Speaker 4: looks like. This is what drug dealing and illegal you know, 242 00:14:12,880 --> 00:14:15,559 Speaker 4: misuse of drugs looks like, and so I think it's 243 00:14:15,559 --> 00:14:18,960 Speaker 4: giving us a really troubling picture of how this happened. 244 00:14:19,440 --> 00:14:24,840 Speaker 1: And you've represented physicians with celebrity clients dealing with drug addictions. 245 00:14:25,600 --> 00:14:27,840 Speaker 4: We've had a lot of cases over the years, Unfortunately, 246 00:14:28,320 --> 00:14:31,200 Speaker 4: many cases where we didn't get involved until after a 247 00:14:31,240 --> 00:14:35,560 Speaker 4: physician called us in a death. Inevitably, because celebrity deaths 248 00:14:35,640 --> 00:14:38,120 Speaker 4: hit the media and make headlines, there's a lot more 249 00:14:38,160 --> 00:14:41,480 Speaker 4: pressure on both local law enforcement, on the medical board, 250 00:14:41,880 --> 00:14:45,080 Speaker 4: and in this case, on federal authorities you know, to investigate. 251 00:14:45,120 --> 00:14:47,680 Speaker 4: So I've been involved in over a dozen cases involving 252 00:14:47,680 --> 00:14:52,479 Speaker 4: celebrity deaths and plenty of cases where addiction treatment programs 253 00:14:52,480 --> 00:14:56,200 Speaker 4: and physicians you know, are managing celebrity patients. And it's 254 00:14:56,280 --> 00:15:00,960 Speaker 4: challenging because there are some legitimate challenges. Right people's privacy 255 00:15:01,040 --> 00:15:04,320 Speaker 4: of celebrity has a much narrower zone of privacy, so 256 00:15:04,840 --> 00:15:08,120 Speaker 4: inevitably that can be something that creates a little more 257 00:15:08,160 --> 00:15:12,560 Speaker 4: complication to get effective treatment. But the most common thread 258 00:15:13,040 --> 00:15:15,880 Speaker 4: for me throughout all these cases is that you had 259 00:15:16,040 --> 00:15:19,600 Speaker 4: someone whose celebrity led them to feel somewhat entitled to 260 00:15:19,760 --> 00:15:24,440 Speaker 4: easier access to drugs and medications that we normally make 261 00:15:24,640 --> 00:15:27,440 Speaker 4: very challenging. We put some hurdles to people getting them 262 00:15:27,800 --> 00:15:30,080 Speaker 4: and those go out the window, and we just constantly 263 00:15:30,120 --> 00:15:35,200 Speaker 4: see physicians and other health professionals making compromises in standards 264 00:15:35,640 --> 00:15:38,360 Speaker 4: to make things easier. And whether it's out of greed, 265 00:15:38,400 --> 00:15:40,760 Speaker 4: whether it's out of some kind of like you know, 266 00:15:41,000 --> 00:15:45,560 Speaker 4: romantic idea of your own power being as close to 267 00:15:45,600 --> 00:15:48,200 Speaker 4: these people, whether it's out of respect for their privacy. 268 00:15:48,600 --> 00:15:51,920 Speaker 4: It's definitely a different world of medicine and certainly a 269 00:15:51,960 --> 00:15:55,320 Speaker 4: part of practicing in southern California where this is such 270 00:15:55,360 --> 00:15:58,880 Speaker 4: an epicenter of this. But yeah, unfortunately, this case feels 271 00:15:58,880 --> 00:16:01,120 Speaker 4: too much to me, like so many of the ones 272 00:16:01,160 --> 00:16:03,320 Speaker 4: that have come before it, and that I'm sure we're 273 00:16:03,320 --> 00:16:04,520 Speaker 4: going to be seeing after who. 274 00:16:05,080 --> 00:16:07,640 Speaker 1: Most of these cases settled before trial, or have some 275 00:16:07,720 --> 00:16:08,480 Speaker 1: gone to trial. 276 00:16:08,800 --> 00:16:12,200 Speaker 4: It's very unusual that positions get charged criminally. You know, 277 00:16:12,280 --> 00:16:14,760 Speaker 4: one of the most famous cases back a few years 278 00:16:14,800 --> 00:16:17,400 Speaker 4: ago was the Michael Jackson case where doctor Conrad Murray 279 00:16:17,600 --> 00:16:21,960 Speaker 4: was criminally tried. You know, most doctors who are facing 280 00:16:22,160 --> 00:16:25,000 Speaker 4: a risk of jail time along with of course their 281 00:16:25,040 --> 00:16:30,280 Speaker 4: loss of licensure, fight these cases much more aggressively than 282 00:16:30,360 --> 00:16:34,520 Speaker 4: non physicians, so I would say that when criminal charges 283 00:16:34,560 --> 00:16:37,640 Speaker 4: are at stake, these cases have a very high tendency 284 00:16:38,080 --> 00:16:41,320 Speaker 4: to go to trial. When it's just a licensing issue, 285 00:16:41,720 --> 00:16:45,440 Speaker 4: sometimes doctors being put on probation or having a suspension 286 00:16:45,480 --> 00:16:48,400 Speaker 4: on their license, or even in some cases just giving 287 00:16:48,440 --> 00:16:51,360 Speaker 4: up their license temporarily with an intention to reapply in 288 00:16:51,400 --> 00:16:54,480 Speaker 4: a few years. It's more likely that extreme cases will settle, 289 00:16:54,600 --> 00:16:56,280 Speaker 4: But I think it becomes a life and death thing 290 00:16:56,320 --> 00:16:59,280 Speaker 4: for doctors when they're threatened with jail time and the 291 00:16:59,320 --> 00:17:00,920 Speaker 4: possibility of no, we're practicing again. 292 00:17:01,280 --> 00:17:04,240 Speaker 1: Did you actually talk to investigators about this case? 293 00:17:04,840 --> 00:17:05,320 Speaker 3: We did. 294 00:17:05,640 --> 00:17:08,359 Speaker 4: We had contact with investigators in this case, not for 295 00:17:08,400 --> 00:17:11,440 Speaker 4: anybody who was ultimately charged, but you know, anytime these 296 00:17:11,480 --> 00:17:15,879 Speaker 4: investigations are going on, there are plenty of people, you know, 297 00:17:15,880 --> 00:17:17,959 Speaker 4: who are in the background, and so we did have 298 00:17:18,000 --> 00:17:20,680 Speaker 4: contact and knew that this investigation was going on for 299 00:17:21,080 --> 00:17:24,639 Speaker 4: quite a while. It was an unusual investigation because we 300 00:17:24,680 --> 00:17:28,159 Speaker 4: don't often see federal investigations in celebrity debts, right that 301 00:17:28,200 --> 00:17:31,320 Speaker 4: most of the federal investigations involved sort of broader problems 302 00:17:31,320 --> 00:17:35,280 Speaker 4: of controlled substance distribution on a wider scale, so that 303 00:17:35,359 --> 00:17:36,960 Speaker 4: this case was unusual in that respect. 304 00:17:37,200 --> 00:17:39,639 Speaker 1: Why were federal charges brought here. 305 00:17:40,160 --> 00:17:42,800 Speaker 4: I think what was happening here is that the media 306 00:17:42,840 --> 00:17:48,280 Speaker 4: attention led to enormous pressure on the DEA as the 307 00:17:48,320 --> 00:17:52,240 Speaker 4: agency responsible for controlled substances, and we have not seen 308 00:17:52,840 --> 00:17:56,679 Speaker 4: a significant number of DEA cases involving ketamine, and I 309 00:17:56,720 --> 00:17:59,800 Speaker 4: think there was a conscious decision to make an example 310 00:18:00,160 --> 00:18:04,399 Speaker 4: of the loose practices around ketamine in this case that 311 00:18:04,520 --> 00:18:07,680 Speaker 4: led to this unusual decision to go so deep on 312 00:18:07,720 --> 00:18:11,520 Speaker 4: this investigation. It's interesting because one of the other big 313 00:18:11,600 --> 00:18:14,560 Speaker 4: cases that we've been involved in recently, also involving a 314 00:18:14,560 --> 00:18:19,479 Speaker 4: federal Department of Justice investigation driven by DEA concerns, was 315 00:18:19,560 --> 00:18:23,960 Speaker 4: related to websites and during the pandemic loosening standards for 316 00:18:24,080 --> 00:18:27,960 Speaker 4: ADHD meds like adderall, we were kind of wondering, you know, 317 00:18:28,000 --> 00:18:31,760 Speaker 4: there had been a number of ketamine telemedicine sights that 318 00:18:31,840 --> 00:18:34,560 Speaker 4: took off during the pandemic, and a lot of wonder 319 00:18:34,880 --> 00:18:37,439 Speaker 4: whether the Department of Justice was also going to turn 320 00:18:37,480 --> 00:18:39,600 Speaker 4: its attention to ketymine and we did not see that 321 00:18:39,960 --> 00:18:43,159 Speaker 4: same kind of response. And I almost read this case 322 00:18:43,480 --> 00:18:47,320 Speaker 4: and the federal resources here as sort of a makeup 323 00:18:47,359 --> 00:18:51,200 Speaker 4: in a way of trying to devote attention to ketamine 324 00:18:51,359 --> 00:18:54,080 Speaker 4: out of concern that it's being misused and being given 325 00:18:54,119 --> 00:18:56,800 Speaker 4: out to loosely. So I'm not sure that's just my 326 00:18:57,000 --> 00:18:59,160 Speaker 4: personal theory, but I'm sure we'll learn more ahead. 327 00:18:59,359 --> 00:19:03,119 Speaker 1: What strikes me is that it takes a celebrity for 328 00:19:03,240 --> 00:19:06,800 Speaker 1: them to spend so much time on investigation and actually 329 00:19:06,800 --> 00:19:09,760 Speaker 1: come up with with charges when you know how many 330 00:19:10,080 --> 00:19:13,639 Speaker 1: cases are there out there not involving a celebrity. 331 00:19:14,160 --> 00:19:17,400 Speaker 4: Yeah, it certainly makes you wonder if Look, the reality 332 00:19:17,480 --> 00:19:22,560 Speaker 4: is that our media becomes an enormous source of pressure 333 00:19:22,600 --> 00:19:26,560 Speaker 4: and accountability on our government. And so the irony is 334 00:19:26,600 --> 00:19:30,960 Speaker 4: that there are undoubtedly other, many, sort of anonymous people 335 00:19:31,000 --> 00:19:35,800 Speaker 4: out there who also you know, died unnecessarily or were 336 00:19:35,840 --> 00:19:39,760 Speaker 4: harmed by unsafe practices around ketamine. And it takes a 337 00:19:39,800 --> 00:19:43,040 Speaker 4: case like this to get attention. And it's a strange 338 00:19:43,080 --> 00:19:46,080 Speaker 4: aspect of our celebrity culture that drives so much media 339 00:19:46,119 --> 00:19:49,000 Speaker 4: attention in this case. I just hope it ends up 340 00:19:49,000 --> 00:19:53,119 Speaker 4: being Forgod in calling more attention to a serious problem. 341 00:19:53,160 --> 00:19:56,399 Speaker 1: In light of that, do you think that the prosecution 342 00:19:56,640 --> 00:19:58,399 Speaker 1: is not going to want to make a deal with 343 00:19:58,480 --> 00:20:01,520 Speaker 1: the remaining two and bring this to trial. 344 00:20:02,240 --> 00:20:05,240 Speaker 4: Prosecutors will always make a deal. Prosecutors will never insist 345 00:20:05,320 --> 00:20:09,680 Speaker 4: on going to trial if the defense, then the defendants 346 00:20:09,680 --> 00:20:14,520 Speaker 4: capitulate and acknowledge wrongdoing. The problem here is that I 347 00:20:14,560 --> 00:20:20,080 Speaker 4: think the consequences are so extreme for the remaining defendants 348 00:20:20,200 --> 00:20:22,560 Speaker 4: that there's a pretty good chance these cases will go 349 00:20:22,640 --> 00:20:24,800 Speaker 4: to trial and there will be attempt to make it 350 00:20:24,800 --> 00:20:27,720 Speaker 4: look like there might have been something less than you know, 351 00:20:27,800 --> 00:20:30,680 Speaker 4: kind of a wanton sort of disregard for human life, 352 00:20:30,720 --> 00:20:33,320 Speaker 4: and to make their conduct look better. So I'm not 353 00:20:33,400 --> 00:20:35,560 Speaker 4: ruling out the possibilities they'll be a guilty plea here. 354 00:20:35,600 --> 00:20:40,160 Speaker 4: I think, you know, there's always the advantage of negotiating 355 00:20:40,320 --> 00:20:44,080 Speaker 4: shorter sentencing, but it's very serious. This is a career 356 00:20:44,200 --> 00:20:46,280 Speaker 4: ending for these doctors, and so there's a pretty good 357 00:20:46,320 --> 00:20:47,119 Speaker 4: chance they'll go to trial. 358 00:20:47,520 --> 00:20:50,000 Speaker 1: Not only that, but if convicted, I mean, if you 359 00:20:50,040 --> 00:20:52,199 Speaker 1: add up everything, not that a judge would do that, 360 00:20:52,240 --> 00:20:54,600 Speaker 1: but if you add everything up, they could spend their 361 00:20:54,600 --> 00:20:56,120 Speaker 1: life in prison, both of them. 362 00:20:56,680 --> 00:21:00,320 Speaker 4: Yes, that's constantly the calculus for people facing charge, just 363 00:21:00,440 --> 00:21:04,880 Speaker 4: from federal authorities, in particular, because when you're facing federal charges, 364 00:21:05,240 --> 00:21:09,120 Speaker 4: the standards for time off for good behavior and reduction 365 00:21:09,160 --> 00:21:13,959 Speaker 4: of sentences are much narrower. So the big advantage here 366 00:21:14,480 --> 00:21:18,199 Speaker 4: of some degree of cooperation and a plea would be 367 00:21:19,200 --> 00:21:22,919 Speaker 4: what kind of sentencing recommendations prosecutors will make. So I 368 00:21:22,960 --> 00:21:25,440 Speaker 4: do think that that would not be a surprising way 369 00:21:25,520 --> 00:21:26,160 Speaker 4: for this to go. 370 00:21:26,960 --> 00:21:30,600 Speaker 1: Are we assuming that the people who pled have some 371 00:21:30,720 --> 00:21:33,920 Speaker 1: kind of a deal in place about prison terms. 372 00:21:34,400 --> 00:21:38,280 Speaker 4: That's a pretty safe assumption that anybody who is cooperating 373 00:21:38,359 --> 00:21:42,640 Speaker 4: and entered into a plea has had conversations and reached 374 00:21:42,760 --> 00:21:48,320 Speaker 4: some kind of agreement on sentencing. Typically, the prosecutors don't 375 00:21:48,320 --> 00:21:52,440 Speaker 4: decide sentencing, they just make recommendations to judges. But there's 376 00:21:52,480 --> 00:21:55,359 Speaker 4: a fairly high degree of confidence that judges are going 377 00:21:55,400 --> 00:22:00,159 Speaker 4: to be responsive and acknowledge the cooperation is. It's not 378 00:22:00,440 --> 00:22:03,320 Speaker 4: like an open and shut sort of topic where someone 379 00:22:03,400 --> 00:22:05,920 Speaker 4: gets a written guarantee that you know of what their 380 00:22:06,119 --> 00:22:09,080 Speaker 4: sentence is going to be for cooperation. But there's enough 381 00:22:09,119 --> 00:22:12,560 Speaker 4: confidence in the way that our system operates to continue 382 00:22:12,560 --> 00:22:14,960 Speaker 4: to motivate people to enter into these kind of pleas. 383 00:22:14,960 --> 00:22:16,600 Speaker 4: It's a safe bet that that happened here. 384 00:22:17,000 --> 00:22:19,679 Speaker 1: Is a doctor ever allowed to prescribe ketamine to be 385 00:22:19,760 --> 00:22:23,320 Speaker 1: taken at home, In other words, not in the office 386 00:22:23,359 --> 00:22:24,320 Speaker 1: under supervision. 387 00:22:24,840 --> 00:22:29,400 Speaker 4: Trochies these lozenges have become popular with ketymine and they're 388 00:22:29,440 --> 00:22:33,239 Speaker 4: perfectly legal and doctors can prescribe them. The question of 389 00:22:33,359 --> 00:22:38,480 Speaker 4: what's appropriate supervision is a really important one, I will 390 00:22:38,480 --> 00:22:42,560 Speaker 4: tell you personally, we have recommended that even if it's 391 00:22:42,560 --> 00:22:45,879 Speaker 4: happening you know, by video essentially by like a telehealth 392 00:22:46,400 --> 00:22:50,840 Speaker 4: means that there be a requirement of observation, that somebody 393 00:22:50,880 --> 00:22:54,800 Speaker 4: a nurse for example, be watching the person and they 394 00:22:54,880 --> 00:22:57,040 Speaker 4: be visible on a camera so that we can make 395 00:22:57,040 --> 00:22:59,960 Speaker 4: sure that they're safe and that there be immediate people 396 00:23:00,040 --> 00:23:03,440 Speaker 4: who can step in immediately if something goes wrong. So 397 00:23:03,600 --> 00:23:06,040 Speaker 4: the law is slightly different from state to state about 398 00:23:06,040 --> 00:23:10,640 Speaker 4: what the degree of supervision necessary is for safe administration 399 00:23:11,040 --> 00:23:15,400 Speaker 4: of ketamine lozenges, but it's definitely my belief and recommendation 400 00:23:15,760 --> 00:23:18,640 Speaker 4: as just a matter of good safety practices, that somebody 401 00:23:18,680 --> 00:23:21,399 Speaker 4: be observed and that there'd be someone who can step 402 00:23:21,440 --> 00:23:24,320 Speaker 4: in and a doctor or a physician assistant or nurse 403 00:23:24,359 --> 00:23:28,680 Speaker 4: practitioner immediately available to give instructions about how to handle 404 00:23:28,880 --> 00:23:31,520 Speaker 4: whatever is happening, whether it's dissociation, which is the most 405 00:23:31,520 --> 00:23:34,240 Speaker 4: common thing, or some kind of panic attack and kettymine 406 00:23:34,240 --> 00:23:37,040 Speaker 4: infusion should not be happening outside of medical facilities. That 407 00:23:37,119 --> 00:23:38,760 Speaker 4: seems pretty black and white to me. 408 00:23:39,080 --> 00:23:42,040 Speaker 1: Well, we'll see if the two remaining defendants strike a 409 00:23:42,119 --> 00:23:45,639 Speaker 1: deal with prosecutors before the trial. Thanks so much, Harry. 410 00:23:45,960 --> 00:23:50,680 Speaker 1: That's Harry Nelson of Nelson Hardiman coming up. The Delaware 411 00:23:50,760 --> 00:23:55,879 Speaker 1: Supreme Court approves a nearly three hundred million dollar lawyer's fee. 412 00:23:56,119 --> 00:24:01,320 Speaker 1: I'm June Grosso and you're listening to Bloomberg. We're used 413 00:24:01,320 --> 00:24:05,000 Speaker 1: to big numbers. That's what Chief Justice Colin Seitz wrote 414 00:24:05,119 --> 00:24:09,240 Speaker 1: in an opinion affirming certainly a very big number for 415 00:24:09,359 --> 00:24:13,399 Speaker 1: attorney's fees, a two hundred and sixty seven million dollar 416 00:24:13,480 --> 00:24:17,240 Speaker 1: fee award for the attorneys who negotiated a one billion 417 00:24:17,280 --> 00:24:22,240 Speaker 1: dollar settlement in a lawsuit over an acquisition involving Dell Technologies. 418 00:24:22,520 --> 00:24:25,360 Speaker 1: It's the second highest fee award in the Court's history. 419 00:24:25,880 --> 00:24:29,320 Speaker 1: The ruling may be a concern for Tesla, which faces 420 00:24:29,440 --> 00:24:34,920 Speaker 1: unusually large fee applications in two separate lawsuits involving CEO 421 00:24:35,080 --> 00:24:39,560 Speaker 1: Elon Musk's pay package and compensation for the electric vehicle 422 00:24:39,600 --> 00:24:43,520 Speaker 1: maker's board. Joining me is business law professor Eric Tally 423 00:24:43,720 --> 00:24:47,720 Speaker 1: of Columbia Law School so the Delaware Supreme Court ruled 424 00:24:47,720 --> 00:24:50,720 Speaker 1: that five firms should receive two hundred and sixty seven 425 00:24:50,800 --> 00:24:54,160 Speaker 1: million in legal fees for securing this billion dollar settlement. 426 00:24:54,600 --> 00:24:58,480 Speaker 1: That's twenty seven percent. Would you consider that normal for 427 00:24:58,560 --> 00:24:59,680 Speaker 1: a settlement like this. 428 00:24:59,760 --> 00:25:03,920 Speaker 3: Or as that above, Well, I guess it suggests once again, Jimmy, 429 00:25:04,000 --> 00:25:05,600 Speaker 3: you and I are both in the wrong business. But 430 00:25:06,480 --> 00:25:11,560 Speaker 3: this is an interesting area of law involving situations where 431 00:25:11,760 --> 00:25:15,920 Speaker 3: a law firm, without any promise of compensation if they 432 00:25:16,119 --> 00:25:20,320 Speaker 3: lose outright, brings a case forward and then petitions the 433 00:25:20,359 --> 00:25:23,600 Speaker 3: court for some fraction of the award. In this case, 434 00:25:23,920 --> 00:25:28,160 Speaker 3: it was a mediated settlement, and so the idea behind 435 00:25:28,480 --> 00:25:31,200 Speaker 3: how to come up with that amount has always been 436 00:25:31,520 --> 00:25:35,000 Speaker 3: somewhat controversial. But the way that Delaware has generally done 437 00:25:35,000 --> 00:25:39,320 Speaker 3: this is to partially recognize the idea that, you know, 438 00:25:39,400 --> 00:25:43,520 Speaker 3: these cases can sometimes be risky to bring forward, and 439 00:25:43,600 --> 00:25:45,399 Speaker 3: as a result, a lot of them are going to 440 00:25:45,480 --> 00:25:49,560 Speaker 3: end up being losers. The situations where you win are 441 00:25:49,560 --> 00:25:51,960 Speaker 3: the ones where you actually make any money at all, 442 00:25:52,520 --> 00:25:54,760 Speaker 3: end up sort of having to sort of compensate for 443 00:25:54,840 --> 00:25:59,040 Speaker 3: that overall chanciness or riskiness of a set of cases 444 00:25:59,080 --> 00:26:04,480 Speaker 3: you pry forward the idea behind allowing something in the 445 00:26:04,520 --> 00:26:08,720 Speaker 3: fifteen to thirty percent rate is just not that unconventional. 446 00:26:08,760 --> 00:26:12,600 Speaker 3: What makes this case an interesting one is that this 447 00:26:12,680 --> 00:26:15,800 Speaker 3: settlement amount was so large. There really aren't that many 448 00:26:15,840 --> 00:26:21,120 Speaker 3: cases that are either adjudicated or settle at numbers beginning. 449 00:26:20,760 --> 00:26:21,040 Speaker 4: With a B. 450 00:26:21,240 --> 00:26:23,480 Speaker 3: In this case, it was a one billion dollars settlement. 451 00:26:23,520 --> 00:26:28,320 Speaker 3: So once you apply that conventional formula to the percentage, 452 00:26:28,480 --> 00:26:30,840 Speaker 3: you end up with a number that looks like it's 453 00:26:30,840 --> 00:26:34,439 Speaker 3: about two hundred and seventy million dollars. And that just 454 00:26:34,600 --> 00:26:37,919 Speaker 3: is an absolute matter can be jaw dropping to people 455 00:26:38,040 --> 00:26:40,440 Speaker 3: unless you put it against the context in which these 456 00:26:40,480 --> 00:26:42,600 Speaker 3: cases generally are decided. 457 00:26:43,040 --> 00:26:48,199 Speaker 1: So the investors, led by Pentwater Capital Management, as Delaware's 458 00:26:48,240 --> 00:26:50,720 Speaker 1: Supreme Court to reduce the fee, and they proposed a 459 00:26:50,720 --> 00:26:56,160 Speaker 1: federal court model where attorney's fees generally decrease as settlement 460 00:26:56,280 --> 00:27:00,560 Speaker 1: sizes increase. So they said that under that mind would 461 00:27:00,640 --> 00:27:03,600 Speaker 1: justify around a fifteen percent ratio. 462 00:27:04,080 --> 00:27:06,520 Speaker 3: Yeah, the federal approach to this has been a little 463 00:27:06,520 --> 00:27:08,880 Speaker 3: bit more along the lines of just trying to come 464 00:27:09,000 --> 00:27:13,000 Speaker 3: up with an hourly amount, maybe scale out a little 465 00:27:13,000 --> 00:27:15,760 Speaker 3: bit by risk, and then apply it to the case 466 00:27:16,280 --> 00:27:21,000 Speaker 3: that Delaware approach has rejected that years ago in a 467 00:27:21,080 --> 00:27:25,359 Speaker 3: pretty well known case that Delaware Court's decided, no, we're 468 00:27:25,400 --> 00:27:28,040 Speaker 3: actually going to use what's known as a percentage of 469 00:27:28,080 --> 00:27:32,000 Speaker 3: the fund approach, in which depending on how deeply into 470 00:27:32,080 --> 00:27:35,800 Speaker 3: the case you get, how far towards the finished line 471 00:27:35,800 --> 00:27:38,880 Speaker 3: of actually litigating the case in court you get, you're 472 00:27:38,880 --> 00:27:42,080 Speaker 3: going to get an increasing amount of the settlement in 473 00:27:42,119 --> 00:27:46,399 Speaker 3: a percentage term, and that percentage is not going to 474 00:27:46,440 --> 00:27:50,680 Speaker 3: start declining as a general matter if it's a large, 475 00:27:50,680 --> 00:27:54,080 Speaker 3: sort of mega settlement, as this one was. Now the 476 00:27:54,160 --> 00:27:56,600 Speaker 3: defendants in this case sort of excuse me, it wasn't 477 00:27:56,600 --> 00:27:59,680 Speaker 3: the defendants. It was actually some of the shareholders who 478 00:27:59,720 --> 00:28:03,000 Speaker 3: had one in this case well, petitioning the court to 479 00:28:03,119 --> 00:28:06,280 Speaker 3: reduce that amount so that they could end up getting more. 480 00:28:06,520 --> 00:28:09,159 Speaker 3: And this is always kind of an interesting issue because 481 00:28:09,520 --> 00:28:13,680 Speaker 3: until you have a prevailing plaintiff, you know the parties 482 00:28:13,720 --> 00:28:16,600 Speaker 3: that are all part of the shareholder group and the 483 00:28:16,640 --> 00:28:19,120 Speaker 3: attorneys are all on the same side. But then once 484 00:28:19,160 --> 00:28:20,879 Speaker 3: it comes to the question of how much of the 485 00:28:20,920 --> 00:28:23,760 Speaker 3: attorney's going to get versus how much of the shareholder 486 00:28:23,840 --> 00:28:25,639 Speaker 3: is going to get, that's when you can start to 487 00:28:25,680 --> 00:28:29,639 Speaker 3: have these disputes, and the parties the petitioners in this 488 00:28:29,720 --> 00:28:32,400 Speaker 3: case were saying, look, this is such a large settlement, 489 00:28:32,640 --> 00:28:34,879 Speaker 3: the law firms really didn't need that big of an 490 00:28:34,920 --> 00:28:37,200 Speaker 3: inducement to bring this case. They'll need that big of 491 00:28:37,240 --> 00:28:40,040 Speaker 3: an award. By Sancho Laster was the judge that was 492 00:28:40,080 --> 00:28:42,520 Speaker 3: here in case at the trial courts level, you should 493 00:28:42,600 --> 00:28:45,120 Speaker 3: just reduce this to reflect the fact that this was 494 00:28:45,160 --> 00:28:48,840 Speaker 3: such a windfall that it would just be unseemly to 495 00:28:49,000 --> 00:28:52,959 Speaker 3: award something north of twenty five percent. He didn't end 496 00:28:53,040 --> 00:28:56,200 Speaker 3: up buying that, in large part because he was essentially 497 00:28:56,240 --> 00:28:59,600 Speaker 3: applying the precedent and the rules that the Delaware courts 498 00:28:59,640 --> 00:29:03,480 Speaker 3: themselves have set down years ago. And while there were 499 00:29:03,600 --> 00:29:07,760 Speaker 3: a couple of cases where Delaware courts awarded something less 500 00:29:07,880 --> 00:29:11,640 Speaker 3: than the sort of standard amount that would be appropriate here, 501 00:29:11,640 --> 00:29:14,280 Speaker 3: which is in that twenty five percent grounds, by Chancellor 502 00:29:14,280 --> 00:29:17,800 Speaker 3: Alaster basically said, look, enough of these factors bill in 503 00:29:17,800 --> 00:29:21,400 Speaker 3: the direction of the planet's attorneys actually getting the more 504 00:29:21,440 --> 00:29:25,400 Speaker 3: conventional amount, and I'm not going to effectively impose a 505 00:29:25,520 --> 00:29:29,920 Speaker 3: larger tax on the attorneys fees the larger the settlement gets. 506 00:29:30,280 --> 00:29:32,880 Speaker 1: I mean, are these sort of slam dunk cases that 507 00:29:32,960 --> 00:29:35,800 Speaker 1: any lawyers can handle or are they specialized. 508 00:29:36,040 --> 00:29:38,720 Speaker 3: You know, this is actually kind of an interesting area, June, 509 00:29:38,720 --> 00:29:40,680 Speaker 3: because when it comes right down to it, a lot 510 00:29:40,760 --> 00:29:43,120 Speaker 3: of these cases, you know, are pretty much going to 511 00:29:43,480 --> 00:29:46,640 Speaker 3: fall or win on the basis of the effort that 512 00:29:46,680 --> 00:29:50,320 Speaker 3: the attorneys put forward. The shareholders in these cases play 513 00:29:50,360 --> 00:29:53,160 Speaker 3: some role, but the attorneys are really, you know, essentially 514 00:29:53,160 --> 00:29:55,440 Speaker 3: making a bunch of the decisions about, you know, whether 515 00:29:55,480 --> 00:29:57,400 Speaker 3: to go forward, whether or not to go forward, and 516 00:29:57,400 --> 00:29:59,520 Speaker 3: so forth, and so a lot of their efforts end 517 00:29:59,640 --> 00:30:03,120 Speaker 3: up being critical in determining whether you win and whether 518 00:30:03,160 --> 00:30:06,920 Speaker 3: you get a big settlement. The economics of this sort 519 00:30:06,920 --> 00:30:10,320 Speaker 3: of situation actually kind of point in the opposite direction 520 00:30:10,560 --> 00:30:13,800 Speaker 3: that the larger the amount of the outcome that's created 521 00:30:13,840 --> 00:30:18,000 Speaker 3: for the stockholders, if you create enough of an incentive 522 00:30:18,080 --> 00:30:20,760 Speaker 3: to go for those larger outcomes, the general economics of 523 00:30:20,800 --> 00:30:24,160 Speaker 3: the situation actually suggests that that percentage should be increasing 524 00:30:24,320 --> 00:30:27,080 Speaker 3: in the award. Judges generally shy away from that because 525 00:30:27,080 --> 00:30:29,239 Speaker 3: we get into these really really large numbers. But in 526 00:30:29,240 --> 00:30:32,320 Speaker 3: this case, by chancellors last said, look, I'm not going 527 00:30:32,400 --> 00:30:35,360 Speaker 3: to abandon the traditional way that we have done this, 528 00:30:35,840 --> 00:30:38,200 Speaker 3: and in this case, this was a risky case. It 529 00:30:38,240 --> 00:30:40,680 Speaker 3: wasn't clear they were going to win playing its attorneys 530 00:30:40,680 --> 00:30:43,280 Speaker 3: put in a lot of effort. There was a lot 531 00:30:43,320 --> 00:30:46,080 Speaker 3: of contingencies about this that could have caused this case 532 00:30:46,120 --> 00:30:49,479 Speaker 3: to go away with nothing. These were reputable attorneys. They 533 00:30:49,520 --> 00:30:52,080 Speaker 3: weren't sort of bringing this case in order to basically 534 00:30:52,160 --> 00:30:54,200 Speaker 3: get a quick settlement. They were in it for the 535 00:30:54,240 --> 00:30:57,600 Speaker 3: long haul, and they pursued this case for several years, 536 00:30:57,840 --> 00:31:00,920 Speaker 3: and all those are factors that go into court, you know, 537 00:31:00,960 --> 00:31:03,400 Speaker 3: basically deciding when combined with the fact that you know, 538 00:31:03,440 --> 00:31:06,120 Speaker 3: they were essentially on the courthouse steps when they settled 539 00:31:06,120 --> 00:31:09,320 Speaker 3: this case to sort of lean towards a percentage that 540 00:31:09,480 --> 00:31:12,960 Speaker 3: is more consistent with you know, plaintive attorneys that take 541 00:31:13,040 --> 00:31:16,719 Speaker 3: these cases into the final stages, which is what happened here. 542 00:31:16,920 --> 00:31:20,240 Speaker 3: It's still, however, a very very large number. That's something 543 00:31:20,280 --> 00:31:23,640 Speaker 3: that the petitioning parties in this case basically assisted on 544 00:31:23,720 --> 00:31:27,640 Speaker 3: making sure that they called the court's attention to it. Ultimately, 545 00:31:27,880 --> 00:31:30,560 Speaker 3: the Supreme Court said, look, in some cases, it might 546 00:31:30,640 --> 00:31:33,840 Speaker 3: be appropriate to reduce that percentage for one of these 547 00:31:33,920 --> 00:31:36,920 Speaker 3: mega settlements. However, that's really in the discretion of the 548 00:31:36,920 --> 00:31:40,000 Speaker 3: trial court in this case, by chance. Loo Elast wrote 549 00:31:40,040 --> 00:31:43,120 Speaker 3: a pretty well reasoned opinion about why he was willing 550 00:31:43,160 --> 00:31:46,040 Speaker 3: to go to the percentage that he ended up landing on, 551 00:31:46,360 --> 00:31:48,000 Speaker 3: and we just don't see enough in the record to 552 00:31:48,040 --> 00:31:51,160 Speaker 3: suggest that he abused his discretion that is generally given him. 553 00:31:51,280 --> 00:31:52,280 Speaker 3: So we're going to affirm it. 554 00:31:52,960 --> 00:31:57,960 Speaker 1: So the Chief Justice, Colin Sites noted that it amounted 555 00:31:58,000 --> 00:32:01,760 Speaker 1: to an hourly rate of five one thousand dollars, which 556 00:32:01,840 --> 00:32:03,720 Speaker 1: he said was at the high end. I would say 557 00:32:03,720 --> 00:32:05,640 Speaker 1: it's at the high end. And then he wrote, but 558 00:32:05,920 --> 00:32:09,880 Speaker 1: it is also legitimate to ask, outside are somewhat insular 559 00:32:10,120 --> 00:32:13,480 Speaker 1: legal universe, whether the public would ever believe that lawyers 560 00:32:13,560 --> 00:32:16,080 Speaker 1: must be awarded many hundreds of millions of dollars in 561 00:32:16,160 --> 00:32:20,440 Speaker 1: any given case to motivate them to pursue representative litigation, 562 00:32:21,120 --> 00:32:24,200 Speaker 1: or to discourage counsel from settling cases for less than 563 00:32:24,240 --> 00:32:27,479 Speaker 1: they are worth. I mean, I think that most people 564 00:32:27,560 --> 00:32:31,040 Speaker 1: would consider these fees to be way out of bounds. 565 00:32:31,400 --> 00:32:34,160 Speaker 1: And isn't there then an appearance problem? 566 00:32:34,560 --> 00:32:37,720 Speaker 3: Yeah? I think the optics of large settlements that then 567 00:32:37,800 --> 00:32:41,680 Speaker 3: end up getting converted into large attorneys fees that clearly 568 00:32:41,840 --> 00:32:44,440 Speaker 3: plays a role in terms of public perceptions. And I 569 00:32:44,440 --> 00:32:47,280 Speaker 3: think that's what the petitioning part is really hoping take 570 00:32:47,320 --> 00:32:49,960 Speaker 3: advantage of here sort of say, hey, listen, you know 571 00:32:50,000 --> 00:32:52,640 Speaker 3: this is so large that the average Joe out there 572 00:32:52,680 --> 00:32:55,360 Speaker 3: is really not going to be able to understand why 573 00:32:55,720 --> 00:32:59,160 Speaker 3: the fees got this large. One way to think about this, however, 574 00:32:59,360 --> 00:33:03,000 Speaker 3: is you know, this is not Silicon Valley venture capital investing, 575 00:33:03,040 --> 00:33:06,160 Speaker 3: but it's got some of the singing features associated with it. 576 00:33:06,240 --> 00:33:08,920 Speaker 3: Right when you when you look at a company that says, Okay, 577 00:33:08,960 --> 00:33:12,080 Speaker 3: I'm going to invest a couple million dollars in a startup, 578 00:33:12,440 --> 00:33:14,560 Speaker 3: nine out of ten times, you're just not going to 579 00:33:14,560 --> 00:33:18,760 Speaker 3: see that money come back because most startups basically fail, 580 00:33:18,960 --> 00:33:22,920 Speaker 3: or if they don't fail, they disappoint supremely. Only about 581 00:33:22,920 --> 00:33:26,360 Speaker 3: one in ten really, you know, pays off, and those 582 00:33:26,440 --> 00:33:30,720 Speaker 3: are the only cases where a venture capital investor actually 583 00:33:30,760 --> 00:33:32,360 Speaker 3: is going to make their money. The rest of the 584 00:33:32,400 --> 00:33:35,120 Speaker 3: bets that they make are going to be losing bets. 585 00:33:35,160 --> 00:33:37,160 Speaker 3: And so the way that you sort of keep people 586 00:33:37,160 --> 00:33:39,920 Speaker 3: engaged in this business is, you know, assuming it's a 587 00:33:40,000 --> 00:33:42,920 Speaker 3: valuable business to be engaged in, is to you know, 588 00:33:43,160 --> 00:33:45,200 Speaker 3: make sure that for all of the nine out of 589 00:33:45,240 --> 00:33:48,560 Speaker 3: ten cases they lose, they are able to recoup a 590 00:33:48,600 --> 00:33:52,000 Speaker 3: reasonable return on the cases they do well audiency. It's 591 00:33:52,000 --> 00:33:54,440 Speaker 3: not a perfect analogy by any means, but it's not 592 00:33:54,480 --> 00:33:58,120 Speaker 3: a bad analogy to describe how, you know, attorneys who 593 00:33:58,160 --> 00:34:01,920 Speaker 3: are bringing cases that are effective leak contingency cases think 594 00:34:01,920 --> 00:34:04,560 Speaker 3: about these cases, right, most of these lottery tickets are 595 00:34:04,560 --> 00:34:06,760 Speaker 3: going to be losing lottery tickets, and they hope the 596 00:34:06,760 --> 00:34:08,680 Speaker 3: ones that are the winners are going to make up 597 00:34:08,960 --> 00:34:11,399 Speaker 3: for the ones that are losers. Now, when you look back, 598 00:34:11,480 --> 00:34:14,239 Speaker 3: the only the one that won, and you disregard all 599 00:34:14,280 --> 00:34:16,879 Speaker 3: of the other cases that lost, it looks like that 600 00:34:16,960 --> 00:34:20,320 Speaker 3: one winning lottery ticket is paying an unruly amount of 601 00:34:20,719 --> 00:34:24,040 Speaker 3: capital back to the attorneys. But you know, in some 602 00:34:24,160 --> 00:34:27,080 Speaker 3: ways that is the compensation for all of the cases 603 00:34:27,120 --> 00:34:30,080 Speaker 3: that the attorneys bring that just don't make it that 604 00:34:30,239 --> 00:34:32,360 Speaker 3: far to the finish line, or don't end up generating 605 00:34:32,400 --> 00:34:35,640 Speaker 3: settlement or get dismissed outright. And so it's you know, 606 00:34:35,960 --> 00:34:38,520 Speaker 3: a very kind of similar analogy because when you look at, 607 00:34:38,520 --> 00:34:40,879 Speaker 3: you know, situations where a venture capital fund has put 608 00:34:40,880 --> 00:34:43,120 Speaker 3: in money into a startup that's done really really well, 609 00:34:43,120 --> 00:34:45,240 Speaker 3: it's like, oh man, they made all kinds of money, 610 00:34:45,560 --> 00:34:47,960 Speaker 3: was it really that necessary? For them to make all 611 00:34:48,000 --> 00:34:50,440 Speaker 3: that money, and you know, maybe the answer is no. 612 00:34:51,000 --> 00:34:53,960 Speaker 3: But the analysis also has to take into account the 613 00:34:54,000 --> 00:34:55,960 Speaker 3: fact that there were a lot of losing bets that 614 00:34:56,000 --> 00:34:57,840 Speaker 3: were placed alongside the winning. 615 00:34:57,560 --> 00:35:01,400 Speaker 1: One site said that, but at some point the percentage 616 00:35:01,400 --> 00:35:04,880 Speaker 1: of fees awarded in a megafund case exceeds their value 617 00:35:04,920 --> 00:35:08,640 Speaker 1: as an incentive to take representative cases and turn into 618 00:35:08,680 --> 00:35:12,040 Speaker 1: a windfall. I mean, does he explain when it's a 619 00:35:12,080 --> 00:35:15,560 Speaker 1: windfall and when it's not. This seems like the windfall 620 00:35:15,640 --> 00:35:15,840 Speaker 1: to me. 621 00:35:16,480 --> 00:35:18,400 Speaker 3: Yeah, from the opinion, it's a little bit hard to 622 00:35:18,440 --> 00:35:21,960 Speaker 3: know going in what represents the windfall case. But you 623 00:35:22,000 --> 00:35:24,440 Speaker 3: could imagine that there might be some cases that are 624 00:35:24,520 --> 00:35:28,000 Speaker 3: just so good that the worst case scenario for them 625 00:35:28,080 --> 00:35:29,360 Speaker 3: is that, you know, you're going to be able to 626 00:35:29,400 --> 00:35:32,879 Speaker 3: recover five hundred billion dollars for the stockholders. In other words, 627 00:35:32,960 --> 00:35:36,160 Speaker 3: that first five hundred million dollars is almost a freebie. 628 00:35:36,360 --> 00:35:40,040 Speaker 3: So it doesn't really, you know, require much effort to 629 00:35:40,080 --> 00:35:43,120 Speaker 3: get the lower end of that spectrum. But then it 630 00:35:43,160 --> 00:35:46,000 Speaker 3: may require a little bit more to pull in, you know, 631 00:35:46,040 --> 00:35:48,400 Speaker 3: something the six hundred and seven hundred up to a 632 00:35:48,480 --> 00:35:51,440 Speaker 3: billion dollars in terms of a settlement you know, I 633 00:35:51,520 --> 00:35:56,839 Speaker 3: think that's probably the paradigmatic mega settlement type case that 634 00:35:57,160 --> 00:36:00,279 Speaker 3: Chief Justice Site has in mind. There the question and 635 00:36:00,320 --> 00:36:04,480 Speaker 3: the challenge really is identifying which cases are those where 636 00:36:04,520 --> 00:36:06,840 Speaker 3: it's really clear that you get, you know, half a 637 00:36:06,840 --> 00:36:10,439 Speaker 3: billion dollars without barely lifting a finger, versus the ones 638 00:36:10,440 --> 00:36:13,200 Speaker 3: where you got to kind of scrap for every dollar 639 00:36:13,280 --> 00:36:15,640 Speaker 3: that you get. Now, the case that was an issue 640 00:36:15,680 --> 00:36:20,200 Speaker 3: here involved the Dell Corporation and some kind of interesting 641 00:36:20,800 --> 00:36:25,040 Speaker 3: shenanigans that went on in its attempt to try to 642 00:36:25,080 --> 00:36:30,160 Speaker 3: buy out a class of its own stockholders. They effectively 643 00:36:30,520 --> 00:36:35,000 Speaker 3: had tried to set up this committee to negotiate the price, 644 00:36:35,640 --> 00:36:39,480 Speaker 3: but the committee was never really empowered to do very much, 645 00:36:40,000 --> 00:36:42,719 Speaker 3: and Dell sort of had this, you know, almost like 646 00:36:42,760 --> 00:36:46,239 Speaker 3: a sort of damocles hanging over the whole negotiation that 647 00:36:46,280 --> 00:36:50,000 Speaker 3: they had some rights to almost force these stockholders to pay, 648 00:36:50,080 --> 00:36:53,600 Speaker 3: but on terms that were really really hard to figure out. 649 00:36:53,719 --> 00:36:56,960 Speaker 3: So they ended up successfully buying out the stockholders and 650 00:36:57,040 --> 00:36:59,839 Speaker 3: negotiating a deal, but there was always a little bit 651 00:36:59,840 --> 00:37:02,759 Speaker 3: of tint of you know, was this negotiated, and a 652 00:37:03,040 --> 00:37:06,319 Speaker 3: kind of a shadow of unfairness, and so it was 653 00:37:06,480 --> 00:37:09,360 Speaker 3: not a case that was free from complication. It was 654 00:37:09,400 --> 00:37:12,200 Speaker 3: a really interesting one. In fact, I was commenting on 655 00:37:12,239 --> 00:37:14,440 Speaker 3: the case when the first facts came out, sort of, 656 00:37:14,600 --> 00:37:16,480 Speaker 3: you know, thinking, this is really kind of one of 657 00:37:16,520 --> 00:37:19,360 Speaker 3: these edge cases. It's not really clear whether this is 658 00:37:19,360 --> 00:37:22,120 Speaker 3: going to trigger liability or not. But it was an 659 00:37:22,120 --> 00:37:25,279 Speaker 3: intriguing case to bring forward, and so, you know, I 660 00:37:25,719 --> 00:37:28,600 Speaker 3: don't know that back in twenty eighteen, when the original 661 00:37:28,680 --> 00:37:32,560 Speaker 3: facts started to unfold, this was obviously a case of 662 00:37:32,600 --> 00:37:35,680 Speaker 3: being a mega settlement. But on the other hand, there 663 00:37:35,760 --> 00:37:40,239 Speaker 3: was a pretty heated contest amongst planet Off attorneys to 664 00:37:40,400 --> 00:37:43,239 Speaker 3: try to get representation for this case. So I think 665 00:37:43,239 --> 00:37:46,080 Speaker 3: that there were several points attorneys who thought, you know, this, 666 00:37:46,080 --> 00:37:49,000 Speaker 3: this looks like it's a fairly winnable case, you know, 667 00:37:49,160 --> 00:37:53,200 Speaker 3: Ultimately deciding whether this was the type of mega settlement 668 00:37:53,280 --> 00:37:56,080 Speaker 3: that you really didn't need that full amount of incentive 669 00:37:56,440 --> 00:37:59,080 Speaker 3: versus one that you know, really, you know, the lawyers 670 00:37:59,120 --> 00:38:01,720 Speaker 3: had to kind of scrap for every bit of food 671 00:38:01,719 --> 00:38:04,560 Speaker 3: coming off the table. Ultimately, the discretion to decide that 672 00:38:05,080 --> 00:38:07,200 Speaker 3: is probably going to have to faull to the judge 673 00:38:07,239 --> 00:38:09,840 Speaker 3: that's the closest to those facts, and that's the trial 674 00:38:09,840 --> 00:38:13,359 Speaker 3: court judge, and that's basically where the Supreme Court went. 675 00:38:13,680 --> 00:38:17,800 Speaker 3: I think that Chief Justice Sites correctly probably wanted to say, hey, listen, 676 00:38:18,280 --> 00:38:21,040 Speaker 3: just because we are affirming here, it doesn't mean that 677 00:38:21,200 --> 00:38:24,200 Speaker 3: every case that involves a mega settlement is one in 678 00:38:24,239 --> 00:38:27,319 Speaker 3: which the point of attorney should automatically expect to get 679 00:38:27,360 --> 00:38:30,680 Speaker 3: twenty seven percent of the settlement. Some of those cases 680 00:38:30,719 --> 00:38:33,640 Speaker 3: that were kind of like you could hardly imagine not 681 00:38:33,800 --> 00:38:36,440 Speaker 3: recovering a large amount, and therefore, you know, there was 682 00:38:36,520 --> 00:38:38,759 Speaker 3: kind of an automatic amount that was almost going to 683 00:38:38,760 --> 00:38:42,600 Speaker 3: come forward those cases. Maybe that would give rise to 684 00:38:42,640 --> 00:38:45,399 Speaker 3: a reason to shave the percentage a little bit more, 685 00:38:45,640 --> 00:38:48,120 Speaker 3: simply because the attorneys don't need as much of an 686 00:38:48,160 --> 00:38:49,360 Speaker 3: incentive to bring it forward. 687 00:38:49,560 --> 00:38:54,560 Speaker 1: Speaking of incentives, speaking of billions, let's turn to Tesla, 688 00:38:54,880 --> 00:39:00,120 Speaker 1: and there are two other legal feed cases involving Tesla. 689 00:39:00,160 --> 00:39:03,800 Speaker 1: First of all, do you think that this particular opinion, 690 00:39:03,920 --> 00:39:06,880 Speaker 1: the way the Court's upholding the attorney's fees, do you 691 00:39:06,880 --> 00:39:09,240 Speaker 1: think that will affect the Tesla cases? 692 00:39:09,920 --> 00:39:12,880 Speaker 3: Well, I think there's a distinct chance that it will. 693 00:39:12,920 --> 00:39:15,319 Speaker 3: Look the fact of the matter is, this is a 694 00:39:15,520 --> 00:39:18,760 Speaker 3: very very recent case in which the Supreme Court itself 695 00:39:18,760 --> 00:39:22,360 Speaker 3: has decided to analyze the decisions of a trial court 696 00:39:22,440 --> 00:39:28,359 Speaker 3: judge in awarding a fee compensation to plaintiffs attorneys and 697 00:39:28,560 --> 00:39:31,600 Speaker 3: basically said, look, if it's a well reasoned decision, we're 698 00:39:31,600 --> 00:39:34,279 Speaker 3: going to allow that the award to go forward. So 699 00:39:34,320 --> 00:39:37,840 Speaker 3: I think on some level, this decision suggests that the 700 00:39:37,880 --> 00:39:41,560 Speaker 3: Supreme Court stands ready to defer to a trial court's 701 00:39:41,600 --> 00:39:45,000 Speaker 3: decision so long as that trial court decision is well 702 00:39:45,040 --> 00:39:48,280 Speaker 3: reasoned and well founded. And so it's hard to read 703 00:39:48,320 --> 00:39:52,000 Speaker 3: this case without sort of thinking about the potential implications 704 00:39:52,200 --> 00:39:55,560 Speaker 3: for the ongoing tesla. The awards, certainly the most significant 705 00:39:55,560 --> 00:39:59,040 Speaker 3: one is the fee request in the case involving Elon 706 00:39:59,120 --> 00:40:03,840 Speaker 3: Musk's own co copensation was Chancellor McCormick basically nullified earlier 707 00:40:03,880 --> 00:40:07,120 Speaker 3: this year. And so that particular case, at the time 708 00:40:07,239 --> 00:40:10,920 Speaker 3: that the judgment came down, Chancellor McCormick basically, you know, 709 00:40:11,080 --> 00:40:14,280 Speaker 3: nullified stock awards that were a little over fifty billion 710 00:40:14,320 --> 00:40:17,600 Speaker 3: dollars actually, And so the plaintiffs attorneys in that case, 711 00:40:17,719 --> 00:40:19,920 Speaker 3: you know, this was a case that it actually even 712 00:40:19,960 --> 00:40:22,319 Speaker 3: made it further than the Dell case. It went all 713 00:40:22,320 --> 00:40:26,319 Speaker 3: the way into litigation. They basically put pretty much from 714 00:40:26,360 --> 00:40:29,920 Speaker 3: the beginning in twenty eighteen all the way through the 715 00:40:30,000 --> 00:40:33,560 Speaker 3: end in twenty twenty three, that all that effort into it, 716 00:40:34,160 --> 00:40:36,960 Speaker 3: and so when they came forward with their fee request, 717 00:40:37,320 --> 00:40:40,600 Speaker 3: I think they sort of anticipated the idea that asking 718 00:40:40,640 --> 00:40:44,560 Speaker 3: for twenty seven percent of of you know, fifty six 719 00:40:44,640 --> 00:40:47,960 Speaker 3: billion dollars was just not going to be tenable. Where 720 00:40:48,040 --> 00:40:51,600 Speaker 3: the plaintess ended up landing is asking for eleven percent 721 00:40:51,640 --> 00:40:56,239 Speaker 3: approximately of the value of the nullified compensation and asked 722 00:40:56,239 --> 00:40:58,520 Speaker 3: for it all in stock rather than cash. I think 723 00:40:58,520 --> 00:41:02,120 Speaker 3: part of this was, you know, essentially an anticipation that 724 00:41:02,200 --> 00:41:04,759 Speaker 3: you know, for a settlement or in this case, a 725 00:41:04,840 --> 00:41:09,200 Speaker 3: judgment that had such a large monetary consequence associated with it, 726 00:41:09,200 --> 00:41:11,800 Speaker 3: it would be hard to come into court to expect, 727 00:41:12,040 --> 00:41:14,960 Speaker 3: you know, sort of a standard treatment, the usual sort 728 00:41:14,960 --> 00:41:17,600 Speaker 3: of formula which was applied in this Dell case would 729 00:41:17,640 --> 00:41:21,080 Speaker 3: be applied in Tesla. Having had all that, however, the 730 00:41:21,120 --> 00:41:25,280 Speaker 3: Supreme Court has suggested that, you know, whenever Chancellor McCormack 731 00:41:25,320 --> 00:41:28,600 Speaker 3: comes back with her decision on the fever request, they 732 00:41:28,640 --> 00:41:31,640 Speaker 3: are going to at least initially read that with the 733 00:41:31,719 --> 00:41:34,640 Speaker 3: type of deference that they would, you know, have basically said, 734 00:41:34,640 --> 00:41:37,400 Speaker 3: we're generally going to give to trial court judges who 735 00:41:37,440 --> 00:41:40,200 Speaker 3: are closer to the facts, closer to the process, and 736 00:41:40,320 --> 00:41:42,200 Speaker 3: have a you know, sort of a sense of just 737 00:41:42,239 --> 00:41:46,240 Speaker 3: how risky this case was to bring forward. 738 00:41:45,360 --> 00:41:47,920 Speaker 1: To the trial court. Judges consider the you know, the 739 00:41:47,960 --> 00:41:50,600 Speaker 1: hourly rate that we just talked about, which was in 740 00:41:50,640 --> 00:41:55,080 Speaker 1: the Dell case about five thousand. In Elon Musk's pay case, 741 00:41:56,080 --> 00:41:59,160 Speaker 1: rates of ten thousand, six hundred and ninety and over 742 00:41:59,400 --> 00:42:03,440 Speaker 1: two hundred eighty thousand per hour. Is that considered by 743 00:42:03,480 --> 00:42:06,160 Speaker 1: the court in making the decision. 744 00:42:06,080 --> 00:42:09,640 Speaker 3: Oh, it will absolutely be considered, because the must defendants 745 00:42:09,640 --> 00:42:13,360 Speaker 3: are going to put it right in front of the judge. 746 00:42:13,400 --> 00:42:15,880 Speaker 3: And you know, like I said earlier, I think, you know, 747 00:42:16,000 --> 00:42:19,840 Speaker 3: the optics of such a large hourly rate are absolutely 748 00:42:20,000 --> 00:42:24,840 Speaker 3: things that judges almost can't help but consider on some level. Ultimately, 749 00:42:25,000 --> 00:42:26,840 Speaker 3: my guess is what's going to happen is, you know, 750 00:42:26,920 --> 00:42:29,640 Speaker 3: Chancellor Macormer is going to have to potentially backtrack back 751 00:42:29,680 --> 00:42:32,680 Speaker 3: to twenty eighteen and sort of say, look, how likely 752 00:42:32,880 --> 00:42:35,279 Speaker 3: was it that this case was going to achieve an 753 00:42:35,320 --> 00:42:40,200 Speaker 3: outcome that was lucrative at all, or alternately, this lucrative 754 00:42:40,680 --> 00:42:43,800 Speaker 3: to the you know, the shareholder plaintiffs in this case 755 00:42:44,160 --> 00:42:47,360 Speaker 3: and the riskier the case at the time it was 756 00:42:47,400 --> 00:42:51,080 Speaker 3: originally brought as an end, as it's brought through the process, 757 00:42:51,360 --> 00:42:53,680 Speaker 3: you know, that theory is, you know, the more the 758 00:42:53,680 --> 00:42:56,400 Speaker 3: attorney's efforts are going to matter, and because the attorney's 759 00:42:56,400 --> 00:42:58,759 Speaker 3: efforts are going to matter more in those risky cases, 760 00:42:58,760 --> 00:43:02,400 Speaker 3: those truly risky cases, the attorneys are justified in asking 761 00:43:02,440 --> 00:43:06,120 Speaker 3: for a larger compensation amount. The problem in these Musk cases, 762 00:43:06,160 --> 00:43:09,360 Speaker 3: particularly the Elon Musk compensation cases, these numbers are just 763 00:43:09,480 --> 00:43:14,040 Speaker 3: astronomically large compared to other situations that you know, Delaware 764 00:43:14,080 --> 00:43:16,560 Speaker 3: has had to deal with. Right, the Dell case was 765 00:43:16,680 --> 00:43:19,640 Speaker 3: notable because there really haven't been that many cases that 766 00:43:20,080 --> 00:43:23,439 Speaker 3: topped a billion dollars. Well, here we're in the Musk case. 767 00:43:23,480 --> 00:43:26,040 Speaker 3: In the compensation case, we're dealing with an award that 768 00:43:26,040 --> 00:43:28,279 Speaker 3: the tops fifty billion dollars at least if you view 769 00:43:28,320 --> 00:43:31,680 Speaker 3: the value of the of the canceled options. And so 770 00:43:31,760 --> 00:43:35,239 Speaker 3: this is you know, orders of magnitude larger than the 771 00:43:35,360 --> 00:43:38,440 Speaker 3: Dell case or other cases that are in that same league. 772 00:43:38,640 --> 00:43:42,160 Speaker 3: And so we really are in some ways untread waters 773 00:43:42,520 --> 00:43:45,440 Speaker 3: for or unswum waters. I guess I should say for 774 00:43:46,160 --> 00:43:49,960 Speaker 3: this type of magnitude of a decision, and so that 775 00:43:50,080 --> 00:43:51,879 Speaker 3: you know, in some ways, like you know, it puts 776 00:43:51,960 --> 00:43:55,120 Speaker 3: us once again in that zone in which Chanceler mccr 777 00:43:55,239 --> 00:43:56,600 Speaker 3: is going to have to figure out, well, how much 778 00:43:56,600 --> 00:43:58,880 Speaker 3: of this case was kind of like shooting fish in 779 00:43:58,920 --> 00:44:02,440 Speaker 3: a barrel versus how much really turned on the efforts 780 00:44:02,440 --> 00:44:03,120 Speaker 3: for the attorney. 781 00:44:03,160 --> 00:44:05,160 Speaker 1: It's always a pleasure to have you on the show. Eric, 782 00:44:05,200 --> 00:44:08,800 Speaker 1: thanks so much. That's Professor Eric Talley of Columbia Law School. 783 00:44:09,320 --> 00:44:12,000 Speaker 1: And that's it for this edition of the Bloomberg Law Podcast. 784 00:44:12,360 --> 00:44:14,719 Speaker 1: Remember you can always get the latest legal news by 785 00:44:14,760 --> 00:44:18,600 Speaker 1: subscribing and listening to the show on Apple Podcasts, Spotify, 786 00:44:18,880 --> 00:44:22,719 Speaker 1: and at Bloomberg dot com, Slash podcast, Slash Law. I'm 787 00:44:22,800 --> 00:44:25,239 Speaker 1: June Grosso and this is Bloomberg