Speaker 1: As Travis Scott took the stage at his sold out
Speaker 1: concert in Houston last Friday, the crowd pushed forward towards
Speaker 1: the stage and the crush began. It took only twenty
Speaker 1: minutes for the police to radio about the unfolding tragedy,
Speaker 1: and Scott paused briefly after noticing an ambulance in the crowd.
Speaker 1: Moments later, he asked fans to put up a middle
Speaker 1: finger if they were okay every Scott resumed his performance
Speaker 1: until his set was over, despite please from the crowd.
Speaker 1: Nine people were killed and dozens were injured. Joining me
Speaker 1: is Rachel Phase, a criminal defense attorney with his wy
Speaker 1: back Phez and Coleman Rachel This isn't the first time
Speaker 1: Scott has face legal action over his concerts. Are criminal
Speaker 1: charges possible here? I think there needs to be an
Speaker 1: incredibly massive investigation that encompasses Travis Scott, Light Nation, the venue,
Speaker 1: the security team, and all members of the crowd to
Speaker 1: determine what happened. So what they'll be looking for in
Speaker 1: that investigation, particularly as it relates to Scot's role, is
Speaker 1: if he encouraged the conduct that led to the deaths
Speaker 1: and the injuries, and if he did encourage it in
Speaker 1: some way, if that encouragement rises to a criminal act.
Speaker 1: In Texas, Scott was arrested twice when he encouraged fans
Speaker 1: at concerts in Chicago and and Arkansas in to ignore
Speaker 1: security measure and rush the stage. He pleaded guilty to
Speaker 1: public disorder charges both times. That's a slap on the wrist.
Speaker 1: Is that what's likely to happen here? I think the
Speaker 1: public disorder charges are different than what would rise to
Speaker 1: the level of a felony, which would be that Scott
Speaker 1: acted in a way that he knew he was creating
Speaker 1: an unjustifiable risk given the circumstances, And so if he
Speaker 1: was creating an unjustifiable risk to his crowd, that would
Speaker 1: be a felony in Texas as to disorderly conduct. I
Speaker 1: think that was a plea deal, and so it was
Speaker 1: down from what maybe law enforcements thought they could charge
Speaker 1: him with. How does it play and the fact that
Speaker 1: this seems to be part of what he does fans
Speaker 1: come expecting. I suppose this kind of raucous environment. So
Speaker 1: the way it plays in and the way negligence always works,
Speaker 1: has to do with force, the ability, and so it
Speaker 1: really has to do with his state of mind, and
Speaker 1: that's where his priors come in, because he already knows
Speaker 1: that there's been injuries at task concerts and that he
Speaker 1: has been found responsible for inciting some of those safety breaches.
Speaker 1: So it really puts him on maybe higher alert than
Speaker 1: somebody who has not been charged. So it makes this
Speaker 1: act more foreseeable. And that's really how a negligence determination,
Speaker 1: both for civil liability and for criminal liability plays out.
Speaker 1: Because nothing was intentional. He didn't intentionally kill anyone. It's
Speaker 1: whether he acted in a way where he was putting
Speaker 1: these people at risk. Also, the Houston Police chief said
Speaker 1: he met with Scott and his head of security prior
Speaker 1: to the event to express his concerns about safety. So
Speaker 1: that's putting him on notice, isn't it. Absolutely all of
Speaker 1: these things put him on notice. He's getting sued by
Speaker 1: a or concert goer that was paralyzed at one of
Speaker 1: his shows. It would be hard to say that safety
Speaker 1: concerns for frankly, all parties involved, including the venue, including
Speaker 1: the security team, including the promoter, including everyone, safety concerns
Speaker 1: people were on notice of them. They should have been
Speaker 1: front of mind based on past events, particularly at Travis
Speaker 1: Scott concerts. This should have been foreseeable and so what
Speaker 1: was done to prevent it? Now becomes the questions. Let's
Speaker 1: discuss the civil lawsuits that are piling up. They're being
Speaker 1: filed against Scott, the events promoters and management, including Live Nation,
Speaker 1: basically for negligence. What would have to be proven if
Speaker 1: the cases went to a jury. So these kinds of
Speaker 1: determinations go back to the same analysis. What was foreseeable
Speaker 1: and what was done in advance and during the show
Speaker 1: to take the correct measures for the safety of the
Speaker 1: crowd and as to the venue and the security and
Speaker 1: all the people setting up in advance, were those roots
Speaker 1: in play? Did they have safety measures, do they have
Speaker 1: emergency measures? Did they have the right amount of people
Speaker 1: in the fake What was done in advance to make
Speaker 1: sure the crowd was faked? And there are a lot
Speaker 1: of the sports that even before Travis Dot came on
Speaker 1: that people were passing out and basically the safety of
Speaker 1: the show was already in jeopardy and all of that
Speaker 1: should be foreseeable to those in management. Did they sell
Speaker 1: too many tickets? Did they let too many people in?
Speaker 1: All of this is going to be closely investigated and
Speaker 1: these civil suits will continue to pop up because there
Speaker 1: were so many injuries and so many deaths, and Live
Speaker 1: Nation has already been linked to hundreds of deaths and
Speaker 1: injuries in the past fifty years. According to the Houston Chronicle,
Speaker 1: they've been connected to about two hundred deaths and at
Speaker 1: least seven fifty injuries since two thousand six. Does that
Speaker 1: come in in a trial, It all comes in. I mean,
Speaker 1: of course, it matters what kinds of deaths those were,
Speaker 1: Were they related to crowd management, what kinds of venues
Speaker 1: that those deaths and injuries took place. What is standard
Speaker 1: in the industry is what our Live Nations numbers better
Speaker 1: than other company numbers as it relates to concert injuries
Speaker 1: and deaths. All of that will be closely looked at.
Speaker 1: The concerts are a high risk business in some ways,
Speaker 1: and so there will always be some sort of injury
Speaker 1: or deaths unfortunately associated with live events with large crowds.
Speaker 1: So it just comes into play. What were they doing
Speaker 1: to react to each of these possible safety issues and
Speaker 1: safety management issues for each of their events? What were
Speaker 1: they doing in response to each of the other incidents,
Speaker 1: or do they know things and they're specifically not addressing
Speaker 1: them because it would cost too much money, or they
Speaker 1: couldn't promote the show in the way they wanted. So
Speaker 1: it is a large scale investigation and discovery process as
Speaker 1: it relates to these civil lawsuits. There are allegations that
Speaker 1: people begged the security guards that were hired by Live
Speaker 1: Nation for help, but we're ignored. So it's wondering what
Speaker 1: they could have done, why they weren't doing anything. Perhaps
Speaker 1: the security guard could not help one person because he
Speaker 1: had if he left to help one person to see
Speaker 1: other people would be in jeopardy. All of this will
Speaker 1: come down to a lot of witness that pounds. There
Speaker 1: will be many, many witness accounts. There's video footage, concert goers,
Speaker 1: security guards, the people that put the plans in place.
Speaker 1: This is a very large legal issue and issues this
Speaker 1: This will be going on four years. Do you know
Speaker 1: of any other cases like this? I was able to find.
Speaker 1: Gwen Stefani was sued by a concert goer who was
Speaker 1: injured at one of her concerts and she was sued
Speaker 1: along with Live Nation, and I believe the judge dismissed
Speaker 1: Live Nation from that suit, but said that Gwen Stefani
Speaker 1: could be held liabel. This kind of issue, with this
Speaker 1: mass amount of casualties and injuries is new for our country.
Speaker 1: There's been soccer stampedes in other countries where over a
Speaker 1: hundred members of the crowd have died as a results,
Speaker 1: but those laws are different. Toward laws are different, and
Speaker 1: that's what a lot of this civil liability will absolutely
Speaker 1: hanging on. So there's not full precedent for this kind
Speaker 1: of map. There's been a lot of talk about whether
Speaker 1: there were drugs and it's a concert, so if there
Speaker 1: are drugs involved, could that be used against the plaintiffs? Right,
Speaker 1: So what will happen is if any of these cases
Speaker 1: make it to trial, what will happen is the venue
Speaker 1: will say it was the concert go resplved that there was,
Speaker 1: and these are this is part of the investigations. What
Speaker 1: was the concert go? We're doing him or herself to
Speaker 1: cause the injury? Were they intoxicated, were their drugs? Were
Speaker 1: they inciting violence? Were were by acting in a dangerous way?
Speaker 1: And if they were, how much of the responsibility for
Speaker 1: their own injury should they take. I think the one
Speaker 1: thing that is important here as it relates to possible
Speaker 1: criminal charges and the civil liability is under Texas law
Speaker 1: that if somebody is found to have committed a felony
Speaker 1: and they are one of many defendants, they can be
Speaker 1: on the hook for everything. So I think that what
Speaker 1: will happen is the criminal issues may play out if
Speaker 1: there are any charges made, that may come first before
Speaker 1: the civil issues conclude. Uh if anyone is charged with
Speaker 1: a crime, Thanks so much, Rachel. That's Racial Physe, managing
Speaker 1: partner of Sybeck, Physe and Coleman. Thanksgiving and Christmas may
Speaker 1: look a little dear Frint this year as the supply
Speaker 1: chain crisis threatens our holiday cheer, from toys to books
Speaker 1: to Christmas trees. Disruptions are making things harder to find
Speaker 1: and much more expensive, something President Joe Biden has acknowledged.
Speaker 1: COVID nineteen has stretched global supply chains like never before,
Speaker 1: and suddenly when you go to order a pair of
Speaker 1: sneakers or a bicycle or Christmas presents for the family,
Speaker 1: you're met with higher prices and long delays that they
Speaker 1: said they just don't have any at all. So what's
Speaker 1: the legal fallout here? To answer that question is Brian Gardner,
Speaker 1: a partner at Winston and Strong, describe the different kinds
Speaker 1: of legal fallout we're likely to see from this crunch
Speaker 1: on the supply chain. We've really got a perfect storm
Speaker 1: here in terms of the fragility of the supply chain
Speaker 1: and then the disruption that hit it. In terms of disputes,
Speaker 1: you've got two sort of areas. You could have shippers.
Speaker 1: When I say shippers, I mean consumers of services like Walmartner,
Speaker 1: cost Co, right carriers being notion carriers like Marisker. I
Speaker 1: think you could see service contract breach actions brought by
Speaker 1: shippers against the carriers. And I think also really the
Speaker 1: big question form is going to be the Federal Maritime
Speaker 1: Commission and whether folks really start to ramp up complaints
Speaker 1: being filed with the Federal Maritime Commission for violation and
Speaker 1: the Shipping Act, or whether the Bureau of Enforcement, which
Speaker 1: is sort of like the prosecutorial arm of the Commission,
Speaker 1: whether they begin to take action on their own as
Speaker 1: they've telegraphed they're going to do, separately from those things
Speaker 1: case by case disputes. I think there's a big question
Speaker 1: as to whether legislative action is going to happen, and
Speaker 1: the Ocean Shipping Reform Act is one such piece of legislation.
Speaker 1: That's been introduced in the House and is quickly gathering
Speaker 1: sponsors with something like this COVID, which no one anticipated.
Speaker 1: Where is the blame to be placed, Well, it's going
Speaker 1: to be placed everywhere, right, So, certainly folks are looking
Speaker 1: at carriers and saying the carriers are violating the Shipping
Speaker 1: Act or service contracts. There's a couple of different things
Speaker 1: in play. If you're a shipper, a furniture importer on
Speaker 1: the West coat Post, and you're a small shipper and
Speaker 1: you're not getting the capacity that the box carriers, you know,
Speaker 1: the container carriers promised you, you will blame them for
Speaker 1: violating your contract in terms of delay if goods arrive
Speaker 1: late because they got rolled from one vessel to another.
Speaker 1: And almost all carrier contracts do not promise that the
Speaker 1: goods will arrive at any particular time, for any particular purpose,
Speaker 1: or to meet any deadline under most bills of lading
Speaker 1: in contracts, so there's blame on the carriers for delay
Speaker 1: or for not our in commitments. There's blame on the truckers,
Speaker 1: the drage struckers who moved the boxes from the yard
Speaker 1: to inland points for not responding, not having the capacity
Speaker 1: there's blame for chassis providers, which is the truck chassis
Speaker 1: that goes underneath the box. There's simply not enough to
Speaker 1: go around, or they're in the wrong place. If there's
Speaker 1: no contractual promise that goods will arrive on time, how
Speaker 1: do you sue the carriers if you do eventually get
Speaker 1: the goods. I think anybody bringing a suit, a contractual
Speaker 1: suit against the carrier for having goods that don't arrive
Speaker 1: on time is going to have a difficult time if
Speaker 1: they have the standard contract. I think you could bring
Speaker 1: a Shipping Act cause of action. The Shipping Act makes
Speaker 1: unlawful unreasonable practices and it makes unlawful discrimination against shippers.
Speaker 1: So for example of if a carrier is providing all
Speaker 1: the good service, the speed, the capacity to a large
Speaker 1: shipper and scriminate against small shippers, that could potentially be
Speaker 1: a violation of the Act and the actionable. Where I'm
Speaker 1: seeing a lot of traction in this area is with
Speaker 1: demerging detention charges, and this is a big issue and
Speaker 1: it's a friction point in the community. Demerge is the
Speaker 1: charge that the container carrier, the ocean carrier, charges the shippers,
Speaker 1: say Walmart, for not picking up their container on time
Speaker 1: at the yard. It sits there too long, they get
Speaker 1: to say ten days of free time. And if it
Speaker 1: doesn't get picked up because it's too congested, they just
Speaker 1: can't get there, whatever the reason. They can't find a trucker,
Speaker 1: the truckers are too busy, they can't get in, it's
Speaker 1: too crowded, it's blocked in. They get charged X dollars
Speaker 1: per day, and if they don't return that container back
Speaker 1: to where it's supposed to go, they get charged another
Speaker 1: fee white dollars per day. The first one is demerged
Speaker 1: is the cost of not picking up the container on time,
Speaker 1: and detention is the cau us not returning it on time.
Speaker 1: That mounts into the millions or tens of millions of dollars,
Speaker 1: particularly in this environment where there's so much congestion and problems,
Speaker 1: and the carriers are charging that, and often the yard
Speaker 1: charges the carrier, and the carrier may market up and
Speaker 1: charges the shipper, and so not only are the goods
Speaker 1: not arriving on time, but then the shippers, you know
Speaker 1: you're a Walmarts and so forth, they're being stuck with
Speaker 1: these huge bills for what they view is poor service.
Speaker 1: And then on top of that, the ocean carriers are saying, well,
Speaker 1: if you really wanted it to get to a certain
Speaker 1: place at a particular time, you can buy one of
Speaker 1: our premium end to end products. You know, It's kind
Speaker 1: of like we're all familiar with the airlines, and you know,
Speaker 1: we were buying airline seats and we thought we were
Speaker 1: supposed to get a seat to go from A to
Speaker 1: B at a particular time. And now the airlines are
Speaker 1: telling us, well, you know, if you really want to
Speaker 1: get there on time, you really want to get a seat,
Speaker 1: you really want to have a place to put your
Speaker 1: carry ons, you can pay extra. People don't receive that well,
Speaker 1: and shippers are the same way with these premium products.
Speaker 1: Are shippers suing at this point? So yes, some UM
Speaker 1: there have been some actions filed the Federal Maritime Commission,
Speaker 1: far fewer than we would expect. And the real reason
Speaker 1: that we've seen and that the Commission themselves have identified
Speaker 1: is a fear of retaliation the ocean carriers. It's almost
Speaker 1: all collected in say nine or ten painter carriers, all
Speaker 1: the all the capacity, and then they in turn are
Speaker 1: organized into three UM shipping conferences and you know in
Speaker 1: many ways it's an oligopoli, and you know the antitrust laws.
Speaker 1: They have antitrust immunity in the industry in exchange for
Speaker 1: being monitored by the Commission. So people are just afraid
Speaker 1: to file is what we've seen a lot. I think
Speaker 1: a lot of things you've been settled offline. Some people
Speaker 1: have filed. There was a furniture importer called MCS Industries
Speaker 1: filed a suit against Costco Chin Ocean Shipping with the
Speaker 1: Commission and that just settled recently. I know that there
Speaker 1: are others in the pipeline as well. So in this chain,
Speaker 1: who is likely to get sued if Walmart doesn't get
Speaker 1: the products that it needs, If Mark doesn't get the
Speaker 1: products because they're not getting the capacity that was contractually
Speaker 1: promised to them by the Ocean Carry, the Ocean Carry
Speaker 1: will get suited. If it's because their truckers don't pick
Speaker 1: up the goods, there may be a breach of contract
Speaker 1: action against the trucker. But I think what's really going
Speaker 1: to happen is that the Christmas goods or you know,
Speaker 1: whatever it's it is. It's a issue, right, we're all
Speaker 1: talking about Christmas presents. Now they're just gonna be late.
Speaker 1: There's going to be a fewer of them, and ultimately
Speaker 1: the shipping public and the consumer will pay the price
Speaker 1: in terms of less quality, and people are gonna start rethinking.
Speaker 1: There's seven thousand miles supply chain. People are gonna start rethinking,
Speaker 1: particularly an era of great power competition, whether they want
Speaker 1: to have a sole source with China seven thousand miles away.
Speaker 1: You add to that just in time inventory, you know,
Speaker 1: which which everybody learned from the Japanese starting in the eighties.
Speaker 1: You've got a really fragile situation and all it takes
Speaker 1: is the beating of a butterfly's wings for the whole
Speaker 1: thing to go to hell or their force masure provisions
Speaker 1: in these contracts that COVID would fall under. So maybe, right,
Speaker 1: I mean, you could try. Um, you know, we maritime
Speaker 1: lawyers have been writing pretty good contracts for ocean carriers
Speaker 1: for a long time, and they're pretty they're pretty solid,
Speaker 1: and you know, I would say that probably somebody trying
Speaker 1: to bring a force masure um claim. We're trying to
Speaker 1: sert first and forced masure here is going to have
Speaker 1: a hard time. Um. You know, first of all, I
Speaker 1: mean the ocean carriers are disclaiming delay right in the contract,
Speaker 1: and to claim force the masure here, it's going to
Speaker 1: be difficult because it's so foreseeable. I mean, the fact
Speaker 1: that you and I are sitting here talking about this
Speaker 1: shows how foreseeable you know, it really is. So I
Speaker 1: don't think a force masure claim is gonna lie. What
Speaker 1: would an action on a service contract look like? So
Speaker 1: there's a contract, right, So you've got a service contract.
Speaker 1: So carriers can operate on a tariff, which is basically
Speaker 1: like a posted bill of prices, and then they have
Speaker 1: a bill of lading, which is their contract of carriacter.
Speaker 1: The tariffs sets out the terms and includes the bill
Speaker 1: and that that's got all the protective language about we
Speaker 1: don't we don't pay for delays and all that kind
Speaker 1: of stuff, right, I mean, that could be a breach
Speaker 1: action for you know, not providing the quality. Most service
Speaker 1: contracts are just that, right, They promised a certain amount
Speaker 1: of quality at a certain rate. They can deviate from
Speaker 1: their posted tariff, right they can. They can charge somebody
Speaker 1: less in exchange, for example, for getting more volume, because
Speaker 1: carriers are typically chasing volume as opposed to running away
Speaker 1: from it like they are now, so there's a potentially
Speaker 1: contract action there, but those contract actions are lying courts.
Speaker 1: They don't lie before the Federal Maritime Commission. As I said,
Speaker 1: I don't I think at least with the perspect of
Speaker 1: the ocean carriers, and we can talk about the truck
Speaker 1: are separately, but at least with respect of the ocean carriers,
Speaker 1: what you can assume for if it's not a breach
Speaker 1: of the commitment, delay is going to be an uphill battle.
Speaker 1: But at the Commission you can sue for unreasonable practices
Speaker 1: and discrimination and emerging attention. I think it's going to
Speaker 1: be a big thing. As I mentioned earlier, you know,
Speaker 1: the Commission is very focused on this. The Ocean Shipping
Speaker 1: Reform Act, the piece of legislation I mentioned, is also
Speaker 1: focused on this. Um. The carriers have these pake many
Speaker 1: of them, not all of them, that have these very
Speaker 1: opaque billing practices with respect to emerging attention. And it's
Speaker 1: not clear you know, to the shippers, to the to
Speaker 1: the walmarts when they're gonna get hit with these charges,
Speaker 1: and so that that is an unreasonable practice if they
Speaker 1: if they're getting whacked with these charges for boxes that
Speaker 1: they couldn't pick up or they couldn't return beyond their control.
Speaker 1: It's an unreasonable practice and they can get sued for that.
Speaker 1: It has to promote freight fluidity because demerge charges. The
Speaker 1: reason they're justified is because they expect the movement of
Speaker 1: the boxes. They get them out of the port, they
Speaker 1: get them back, they keep things moving. If they're not
Speaker 1: doing that because you just can't get there, you can't
Speaker 1: get the container because there's too much congestion, how does
Speaker 1: that promote fre freight fluidity? So you anticipate seeing some
Speaker 1: action there in that area. Yeah, um, and I think
Speaker 1: you'll see some action by the Bureau of Enforcement as well.
Speaker 1: If things don't debate, if we don't see money shifting
Speaker 1: to services and the pressure keeps up on the supply chain,
Speaker 1: I think we're going to see a more muscular and
Speaker 1: more robust Federal Maritime Commission. They've already done a lot.
Speaker 1: I mean they've they've done a lot of inquiries. Commissioner
Speaker 1: dies been focused on fact finding. Twenty nine, they promulgated
Speaker 1: an interpretive rule, we're going to merge in detention. They
Speaker 1: laid down the law about this whole freight fluidity principle.
Speaker 1: And so they've they put down the markers, they've been
Speaker 1: conducting investigations, submitting information requests, you know, basically subpoenas to
Speaker 1: the carriers. So they're watching, they're waiting, and they're getting ready.
Speaker 1: There hasn't been a lot of activity yet in the docket,
Speaker 1: but you know, I think that they will because as
Speaker 1: I mentioned, there's a lot of shipper you know, Walmart,
Speaker 1: you know, Ocean, Ocean Service consumer fear of that they
Speaker 1: will be discriminated against, which of course would be a
Speaker 1: violation of the Shipping Act. But nevertheless, they they're afraid
Speaker 1: that if they come out against the ocean carriers, they
Speaker 1: won't get any any service at all, you know. So
Speaker 1: and also you know, it's very diffuse. The shippers are
Speaker 1: very diffused, right, I mean, they've got there's so many
Speaker 1: of them compared to the nine or ten carriers and
Speaker 1: three conferences, and it's factually very challenging, you know, because
Speaker 1: they might have one one container here, one container there,
Speaker 1: and there's so you know, each container is a different
Speaker 1: delay period, each one is a different move and so
Speaker 1: you know, unless you take a consolidated entity like to
Speaker 1: grow of enforcement, that's going to sort of stand up
Speaker 1: for everybody. There's a lower incentive to bring a cause
Speaker 1: of action for a shipper. And if if BOE doesn't,
Speaker 1: then and then Congress will, Congressman John Garamendi and Congressman
Speaker 1: Johnson will through their act, which has got sixty six
Speaker 1: co sponsors. What is their act do just broadly imposes
Speaker 1: new requirements to certify and explain and make more transparent
Speaker 1: these emerging detention charges and invoices. Another thing that it does,
Speaker 1: which is which is really interesting, it imposes new obligations
Speaker 1: for the carriers to furnish the facilities and instrumentalities to
Speaker 1: perform their services, including containers. So you know, as a consumer,
Speaker 1: you think they're going to get your stuff to you
Speaker 1: in say Peory, Illinois from l A Long Beach. But
Speaker 1: so the carrier, you know, they've kind of spun off
Speaker 1: everything after the port except for these end to end
Speaker 1: products which I was talking about earlier. So as I mentioned,
Speaker 1: it's like a huge problem is that the containers are
Speaker 1: just all in the wrong places and the chassis are
Speaker 1: in the wrong places or there aren't enough of them,
Speaker 1: and the carriers are saying, well, it's not my fault,
Speaker 1: you know, sorry, you know, you know, there's been reports
Speaker 1: that the carriers are sending back empty containers westbound to
Speaker 1: China because they can make ten or twenty or or
Speaker 1: more dollars to box on that eastbound import. Whereas before
Speaker 1: they were sending it westbound to make a little extra money.
Speaker 1: They were sending westbound with the farmers agricultural products. Now
Speaker 1: it's just not going to the inland at all, and
Speaker 1: so um, you know, there's a lot of anger there.
Speaker 1: But you know, they can disclaim the obligation to provide
Speaker 1: the container and the chassis if the Act goes through.
Speaker 1: You know, that language to me looks like it puts
Speaker 1: the onus back on the ocean carry to make sure
Speaker 1: that box is available, make sure that chassis availab ball
Speaker 1: and that that's a huge change and transparency emerge as
Speaker 1: a huge change. And it also has other things that
Speaker 1: it does that provides new weapons to the Commission to
Speaker 1: make them more robust. You know, for example, you know,
Speaker 1: has new compensation rules that allows the Commission to prosecute
Speaker 1: or pursue refunds on behalf of shippers who may not
Speaker 1: be willing to bring the causes of action. What about truckers,
Speaker 1: is it easier. Is that an easier cause of action
Speaker 1: because you're not involved with the Maritime Commission? Well, you know,
Speaker 1: it kind of depends on what your contract looks like
Speaker 1: with your trucker. Again, a lot, I think a lot
Speaker 1: of shippers there's a scarcity of truckers as well, you know,
Speaker 1: particularly you know in the drage segment, which is what
Speaker 1: we're really talking about. And so again they're disinclined to
Speaker 1: drag their trucker into court. Who can just say, you know,
Speaker 1: I'm not going to deal with you anymore, and where
Speaker 1: are they going to go? But you know, they can
Speaker 1: bring cause of action against them. But what I've seen
Speaker 1: a lot is that, you know, the the trucking contracts
Speaker 1: typically say um, here's the conditions of service, and then
Speaker 1: underneath that there for each move there's like an offering acceptance.
Speaker 1: There's a task order, you know, and often they will
Speaker 1: have two or three dradge providers and so the shipper
Speaker 1: wah wah right, they will say, um, okay, you know,
Speaker 1: I have a boxing needs to go from me to
Speaker 1: be and then the trucker can accept it or not.
Speaker 1: And so what the truckers are saying now is, you know,
Speaker 1: we just don't have the capacity. So if you've got
Speaker 1: two or three and both of them are rolling, you know,
Speaker 1: saying I can't take that load, how do you really go?
Speaker 1: How do you proceed against them for breach? Unless you
Speaker 1: know you have a particular commitment that they're not meeting,
Speaker 1: then you can go after them. You know, in terms
Speaker 1: of volume. My guess is that that the truckers are
Speaker 1: meeting that volume because nobody foresaw what the volume would be.
Speaker 1: So it's not that they aren't meeting their commitments, it's
Speaker 1: just that the demand is higher than it used to be.
Speaker 1: One of the things that's really interesting that I've seen
Speaker 1: is that, you know, say as a shipper, you know,
Speaker 1: like a big box store with a lot of power,
Speaker 1: they have capacity commitments from the ocean carriers that say
Speaker 1: you have to give me however many boxes I need
Speaker 1: on a rolling, say eight week basis. So those guys
Speaker 1: have that. But then you know you're small four hundred
Speaker 1: boxes forty boxes a year importer and say like this
Speaker 1: West Coast furniture importer, that guy doesn't have that. You know,
Speaker 1: he's got something that says you get your whatever you want.
Speaker 1: You were going to pay for your four D boxes.
Speaker 1: So you see what happens is that the big box
Speaker 1: stores they keep eating more and more commitment. And I
Speaker 1: mean to put it on the big box stores. They
Speaker 1: just mean, you know, anybody who has that kind of
Speaker 1: market power with the ocean carriers, because there's a fixed
Speaker 1: supply of wrestle space, they keep eating more and it
Speaker 1: rolls downhill and a lot of and I've seen carriers
Speaker 1: just walk out on contracts, just say I'm not going
Speaker 1: to give you your minimum quantity commitment or they call
Speaker 1: m QC. I'm not gonna give your boxes the little
Speaker 1: guy because they don't have to. And those guys bring actions,
Speaker 1: and you know, typically, you know, the ocean carriers are
Speaker 1: making so much money that they just stepped them. It's
Speaker 1: cheaper to walk out on that than then disappoint the
Speaker 1: big box store or that, you know, the big the
Speaker 1: big customer. Thanks Briant. That's Brian Gardner, a partner at
Speaker 1: Winston and Strawn Unicolors, was before the Supreme Court arguing
Speaker 1: that the Ninth Circuit wrongly next to copyright and rangement
Speaker 1: win against designer H and M, and several Supreme Court
Speaker 1: joices appeared skeptical of the Ninth circuits interpretation of when
Speaker 1: a copyright registration should be invalidated for errors. Joining me
Speaker 1: is an expert in intellectual property law. Sham balgan Ish,
Speaker 1: a professor at Columbia Law School. Unicolors sued H and
Speaker 1: M in federal court. Explain what the lawsuit was about
Speaker 1: and what happened so so the lawsuit itself was fairly straightforward.
Speaker 1: Unicolors is obviously a company that manufactures and selves designs
Speaker 1: of fabrics, and it had registered a whole bunch of
Speaker 1: different designs, and its sued H and M for copying
Speaker 1: one of its designs in federal court and um in
Speaker 1: the actual At the actual trial, the jury concluded that
Speaker 1: there was in fact infringement and awarded Unicolors a significant
Speaker 1: award of damages. And then what happened at the end
Speaker 1: of the trial, Each and M discovered that Unicolors, when
Speaker 1: hit it had applied for its copyright registration, had made
Speaker 1: an error, had submitted inaccurate information to the Copyright Office,
Speaker 1: and under a provision known as Section four and eleven
Speaker 1: of the Copyright Statute, it allows the certificate of registration
Speaker 1: to be invalidated. And that's what the whole litigation is
Speaker 1: about if there was inaccurate information that was included on
Speaker 1: the application for registration with the knowledge that it was inaccurate, okay.
Speaker 1: And so the district courts found, however, that there was
Speaker 1: no knowledge of this inaccuracy, and it continues to find,
Speaker 1: and it found for Unicolors and affirmed the jury award,
Speaker 1: and I think there was a reduction in the jury award,
Speaker 1: but it awards the damages the Unicolor and also awards
Speaker 1: attorneys fees reasonable costs. Then what happens The matter gets
Speaker 1: appealed to the Ninth Circuit, and the Ninth Circuit interprets
Speaker 1: that requirement of inaccurate in formation and knowledge to conclude that,
Speaker 1: based on the on the lower court's factual record itself
Speaker 1: and its own interpretation of the inaccuracy, that all that
Speaker 1: was needed for the invalidation of the copyright registration was
Speaker 1: that Unicolors should have known about a factual inaccuracy on
Speaker 1: the registration information that was submitted, and since that was
Speaker 1: unambiguously shown on the trial record, its registration was invalidated
Speaker 1: and it would not succeed. And that's the narrow question
Speaker 1: on which the Supreme Court took this petition took this
Speaker 1: case was to determine what kind of knowledge there needed
Speaker 1: to be in order to invalidate a copyright registration or
Speaker 1: inaccurate information. So whether Unicolor committed fraud in filing the application,
Speaker 1: well so um in technical terms yes, but not fraud.
Speaker 1: That's not the legal term that's used. They did use
Speaker 1: it occasionally. It basically a little bit of background into
Speaker 1: it was in an eighth Congress makes a change the
Speaker 1: Copyright Statute to introduce this standard for invalidating a copyright
Speaker 1: registration for inaccuracy, and it's it codifies this age old
Speaker 1: doctrine that is known as fraud on the Copyright Office,
Speaker 1: which is about giving the Copyright Office UH improper information
Speaker 1: inaccurate information in order to get a copyright registration. But
Speaker 1: the statute itself doesn't talk about fraud. And so the
Speaker 1: whole question technically was about what kind of knowledge Unicolors
Speaker 1: needed to have had for this invalidation to happen. And
Speaker 1: Unicolors makes the argument that you know, while we did
Speaker 1: present inaccuracy UM on on the underlying facts, namely on
Speaker 1: whether all of the registrations and if you want to
Speaker 1: talk about the group registration, which was another wrinkle and complexity,
Speaker 1: making this even more technical. But Unicolor said there was
Speaker 1: an inaccuracy, yes, in the facts. However, the legal standard
Speaker 1: that applies to those facts is what rendered inaccurate. In
Speaker 1: other words, the inaccuracy emanates not just from the underlying facts,
Speaker 1: but from the standard for registrability, which has remained ambiguous,
Speaker 1: and we don't have any clear interpretation until the Ninth
Speaker 1: Circuit took a particular position on it, and so we
Speaker 1: did not know when we submitted the registration that we
Speaker 1: were inaccurate as a matter of law. And you should
Speaker 1: apply the standard to mean an inaccuracy on the legal
Speaker 1: application of the standard to the facts, and therefore you
Speaker 1: should not invalidate our registration. What was the main topic
Speaker 1: or what was the concern of the justices during oral arguments?
Speaker 1: So I think a couple of things. First, trying to
Speaker 1: figure out what exactly the party's dispute and disagreement was
Speaker 1: in terms of their standard of knowledge. What exactly each
Speaker 1: party meant by its sense of knowledge, was it going
Speaker 1: to be actual knowledge? Was its subjective knowledge? And really
Speaker 1: a focus on the difference between knowledge of the underlying
Speaker 1: fact and knowledge of the legal standard. Is applied to
Speaker 1: that fact, which renders it an inaccuracy and application right.
Speaker 1: I think that was the principal concern of the justices,
Speaker 1: and in some sense most of the questions really turned
Speaker 1: on statutory interpretation. I think one of the unambiguous things
Speaker 1: coming out of today's oral argument was that this is
Speaker 1: going to be a case about statutory interpretation, where there's
Speaker 1: going to be agreement that there is a knowledge requirement
Speaker 1: in the statute based on the plain meaning. But the
Speaker 1: second question is going to be what is that knowledge
Speaker 1: relating to? Is it just knowledge of the underlying facts,
Speaker 1: like the Ninth Circuit said, or is it knowledge of
Speaker 1: the legal standard as applied to the facts, namely, knowledge
Speaker 1: of the legal interpretation to render something an inaccuracy along
Speaker 1: the lines of what Unicolor is asking for. And I
Speaker 1: think that's that was one of the main takeaways. The
Speaker 1: second one was a sense in which how to approach
Speaker 1: the question of knowledge. Whether you should look exclusively at
Speaker 1: the other parts of the copyright Statute which used the
Speaker 1: word knowledge and have other kinds of c inter requirements,
Speaker 1: or that you should look at other statutes that have
Speaker 1: similar usages of the word knowledge. I think, especially when
Speaker 1: h and M's lawyer argued there was a lot of
Speaker 1: back and forth and trying to compare the knowledge requirement
Speaker 1: under this section to some of the courts prior jurisprisons
Speaker 1: on knowledge to life and dife how there may be
Speaker 1: some differences. Another question that came up, not quite as
Speaker 1: central as one might have initially predicted, was this issue
Speaker 1: with copyright troll, which H and M had made an
Speaker 1: issue of in its brief, basically accusing Unicolors of being
Speaker 1: a copyright troll. So tell us what a copyright troll is.
Speaker 1: Copyright troll at least as not a technical legal term,
Speaker 1: but it's used pejoratively, no doubt, to refer to a
Speaker 1: copyright plaintiff who doesn't have a real interest in the
Speaker 1: underlying creativity that copyright is meant to promote, but whose
Speaker 1: business model is really built around copyright litigation and and
Speaker 1: sort of generating licensing fees after threats to litigate right
Speaker 1: and so H and M was trying to make the
Speaker 1: argument that you want a lower standard of knowledge so
Speaker 1: as to not encourage copyright trolls to file frivolous lawsuits.
Speaker 1: I think a couple of justices asked that question Justice
Speaker 1: to Mayor began with that question, and then Justice brier
Speaker 1: really pushed on it in oral argument, and I think
Speaker 1: one of the revelations was the justices didn't really see
Speaker 1: the copyright troll issue to be a major issue because
Speaker 1: under Unicolor's argument about inaccuracy needing to be inaccuracy relating
Speaker 1: to the legal standard, at least, Justice Briar's argument was, well,
Speaker 1: copyright trolls tend to be pretty legally sophisticated, so they
Speaker 1: wouldn't be able to satisfy that burden. So having a
Speaker 1: higher threshold is really not going to feed into copyright trolls.
Speaker 1: So I guess if I were to just summarize that
Speaker 1: that the core takeaway from the argument argument today was
Speaker 1: that it was going to be about statutory interpretation, trying
Speaker 1: to figure out what knowledge means in this particular domain,
Speaker 1: and and really trying to figure out whether that knowledge
Speaker 1: word and meaning is something specific to the copyright statute
Speaker 1: or whether it can draw parallels to other statutes that
Speaker 1: use the similar terminology in different contexts. There are several
Speaker 1: justices who are textualists on the Court. Did you see
Speaker 1: any division between the textualists and the other justices as
Speaker 1: to how they look at the statute. I actually did not,
Speaker 1: and I'm not surprised by that, to be honest, I
Speaker 1: think all of the justices agreed at the text says something,
Speaker 1: but that the text is not clear, right. I think
Speaker 1: where you would see this kind of disagreement would be
Speaker 1: in a case like Star Athletica, which I had to
Speaker 1: do with the cheerleader uniforms and definition of design of
Speaker 1: a useful article. I think what you you had here
Speaker 1: was a recognition that the text uses the word knowledge.
Speaker 1: No one was denying that. Then the second order question
Speaker 1: was simply how you interpret the word knowledge that is
Speaker 1: embedded in the text. And there I think there wasn't
Speaker 1: the sense that the language is plain and unambiguously clear,
Speaker 1: that you needed to go beyond the text itself to
Speaker 1: try and understand the context in which Congress use this
Speaker 1: word in two thousand and eight, and the context against
Speaker 1: which you know other statutes that Congress had enacted this.
Speaker 1: So I did not see that textualist non textualist division,
Speaker 1: And to be very honest, and I think part of
Speaker 1: it is even the justices who are not self identified
Speaker 1: textualists recognize that they have to begin a question of
Speaker 1: statutory interpretation with the text of the statute, right, So
Speaker 1: it's not as though the non textualists don't pay attention
Speaker 1: to the statute. So everyone agrees that you begin with
Speaker 1: the statute. Here, the question is what additional components do
Speaker 1: you use to add meaning to the statute? And I
Speaker 1: think that's where, to the extent we see some potential disagreement.
Speaker 1: It may come in in terms of the sources for
Speaker 1: interpreting that that second order question of what knowledge means.
Speaker 1: But I also wanted to add I don't think I'm
Speaker 1: surprised by this because one of the things we started
Speaker 1: seeing in the Roberts Court where there's a lot of
Speaker 1: disagreement around substantive major core copyright issues. So for example,
Speaker 1: Oracle versus Google a split decision, or even the one
Speaker 1: before that p r OH State of Georgia versus Public
Speaker 1: Dot Resource Org, we saw splinter decision. In contrast to that,
Speaker 1: on copyright decisions that deal with the administrative, the remedial,
Speaker 1: or the procedural side of the system, there's been a
Speaker 1: significant amount of unanimity in the on the court. Granted,
Speaker 1: this is sort of a first for the court because
Speaker 1: it's the first time Justice Barrett has been participating in
Speaker 1: a copyright decision, So it remains to be seen what
Speaker 1: role she plays in it, because remember she was not
Speaker 1: part of the decision in Oracle versus Google, and with
Speaker 1: the replacement of Justice Ginsburg, it will be interesting to
Speaker 1: see what the dynamic is. But before that, the unambiguous
Speaker 1: reality was that the Court's procedural and remedial and administrative
Speaker 1: opinions and copyright generated a significant amount of unanimity, and
Speaker 1: that would be in keeping with the trend that we
Speaker 1: saw today's oral argument, how do you think that justices
Speaker 1: will rule here? So there was very favorably predisposed based
Speaker 1: on the oral argument to the listener General's argument. The
Speaker 1: Government intervened basically on the side of unicolors, saying that
Speaker 1: the Ninth Circuits approach saying that all you needed was
Speaker 1: knowledge of the underlying fact, and even if you misinterpreted
Speaker 1: the law because the law was unclear, that does not
Speaker 1: protect you. That is, they basically said that that was
Speaker 1: a path breaking, unprecedented opinion that needed to be changed.
Speaker 1: And I think the justices who were quizzing government's lawyer
Speaker 1: seemed favorably predisposed towards that argument. So I think that
Speaker 1: the Court will come out saying that Unicolor's position is
Speaker 1: a more preferable one. It does not feed into the
Speaker 1: phenomenon of copyright trolls. The standard for invalidating a copyright
Speaker 1: registration is that the inaccuracy must have been included with
Speaker 1: the knowledge that the legal standard as applied to the
Speaker 1: fact was in fact inaccurate. In other words, it's not
Speaker 1: just enough if you know of the underlying facts. You
Speaker 1: have to know that as you interpreted the underlying facts,
Speaker 1: you were representing an inaccuracy who copyright office. That's the
Speaker 1: way in which I think the Court is gonna come
Speaker 1: out rather than on the other side. I think principally
Speaker 1: because there's there's also an underlying policy concern here, which
Speaker 1: is um Congress and the Court a couple of justices
Speaker 1: did voice this. You don't want a standard that makes
Speaker 1: it very easy to have a copyright registration invalidated. The
Speaker 1: flip side of the copyright troll situation would be where
Speaker 1: every defendant who is sued for copyright infringement basically goes
Speaker 1: and digs around to find some minor inaccuracy in the
Speaker 1: copyright registration. And then goes back to court saying, hey, look,
Speaker 1: I found an inaccuracy. As long as we were able
Speaker 1: to show some level of knowledge connected to that factually
Speaker 1: inaccuracy left invalidate the registration and not allow the lawsuit
Speaker 1: to go for I think that's also a concern because
Speaker 1: the idea behind the registration is to to not have
Speaker 1: it be an impediment to having creators go into court
Speaker 1: to sue for copyright infringement. It shouldn't be an easy
Speaker 1: get out of jail free pass, and I think the
Speaker 1: justices were, in my view, seemingly convinced by that concern.
Speaker 1: That's Professor sham Balganes of Columbia Law School. And that's
Speaker 1: it for this edition of The Bloomberg Law Show. Remember
Speaker 1: you can always get the latest legal news on our
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