Speaker 1: This is Bloomberg Law. A divided Supreme Court rejects a
Speaker 1: religious challenge. Tell us a little about the facts of
Speaker 1: the case. Interviews with prominent attorneys in Bloomberg Legal experts.
Speaker 1: I guess his former federal prosecutor Jimmy Garula Joining me
Speaker 1: is Bloomberg Law reporter Jordan Ruben. And analysis of important
Speaker 1: legal issues, cases and headlines. The Supreme Court takes on
Speaker 1: state secrets. Multiple lawsuits were filed against the emergency rule?
Speaker 1: Is this lawsuit for real? Bloomberg Law with June Grasso
Speaker 1: from Bloomberg Radio. Welcome to Bloomberg Laws Show. I'm Lydia
Speaker 1: Wheeler and I'm Kimberly Robinson. We're in for June Grosso.
Speaker 1: Coming up on the show, we'll discuss the U. S.
Speaker 1: Supreme Court's latest COVID action and the increasing use of
Speaker 1: the courts so called shadow doctor. The first Bloomberg Law reporter,
Speaker 1: Andrea Vittorio joins us to talk about the new extended
Speaker 1: reality experiences that technology companies are promising in the metaverse
Speaker 1: and the privacy pitfollows that could come with collecting more
Speaker 1: data from users. Andrea, thanks for being here. Can you
Speaker 1: start off by explaining what an extended reality is and
Speaker 1: what types of technology it typically includes. Sure, so I
Speaker 1: asked this question myself in writing this story, because there
Speaker 1: are many different kinds of reality and UM, there's sort
Speaker 1: of regular reality on one side and then virtual reality
Speaker 1: on the other, and that's where UM, there's a whole
Speaker 1: virtual world. You have a virtual version of yourself and
Speaker 1: you can participate in virtual activities like games or events
Speaker 1: like concerts or shopping. So UM, that's sort of what
Speaker 1: we think of when we talk about the metaverse. There
Speaker 1: are also versions in between where you can have holograms
Speaker 1: imposed on real life or UM you can see digital
Speaker 1: characters like Pokemon go um in your everyday activities. So
Speaker 1: the virtual realities that we are talking about can mean
Speaker 1: a lot different things. And so what are the digital
Speaker 1: experiences that extended reality companies are promising users. It doesn't
Speaker 1: seem like we're talking about just games here right right.
Speaker 1: There are a lot of potential applications. UM. Gaming is
Speaker 1: definitely one of them. UM that is learning. There are
Speaker 1: schools that are experimenting with virtual reality for students. There's
Speaker 1: also corporate training that can happen in virtual reality. You
Speaker 1: can help firefighters or doctors learn their craft UM just
Speaker 1: by practicing in additual environment UM. And they're just a
Speaker 1: lot of different UM use cases that we kind of
Speaker 1: are seeing explored. But UM could brawn now like theme parks,
Speaker 1: travel shopping. There's a lot going on there in the metaverse.
Speaker 1: So what kinds of data are our companies collecting from
Speaker 1: people who use these sorts of extended reality devices? And
Speaker 1: is any of its sensitive information? The data collected can
Speaker 1: depend on the device or how you're using it UM,
Speaker 1: but there are a lot of potential collection points, like
Speaker 1: when you wear a headset can gather information about like
Speaker 1: how your head is moving, what you're looking at. UM.
Speaker 1: You can sometimes hold devices in your hands that will
Speaker 1: track your hands are moving or what sides they are
Speaker 1: even So UM these are all considered um pretty personal
Speaker 1: pieces of information because they really varied by person UM
Speaker 1: and can even sort of amount to identifying a person
Speaker 1: if you have enough information about them and how they
Speaker 1: move and what they look like. So, UH, try to
Speaker 1: be advocates or concerned just about the um physical characteristics
Speaker 1: or traits that are being gathered about people as they
Speaker 1: use these devices. Right in your story that you recently wrote,
Speaker 1: you refer to you know, tracking these movements as a
Speaker 1: kind of thumb print of your movements, which I thought
Speaker 1: was really interesting. And I'm wondering do companies have to
Speaker 1: get permission from users before they can collect this kind
Speaker 1: of data? And if so, how do they usually do that? Right? So,
Speaker 1: permission is kind of interesting concepts, like when you're in
Speaker 1: a virtual world and you're interacting with different uh people
Speaker 1: or with places, and there's sort of different touch points
Speaker 1: where you would need permission. So there's sort of like
Speaker 1: the base level of permission of using a device and
Speaker 1: creating accounts, but then um, when you play a game
Speaker 1: or some other sort of activity in the in the
Speaker 1: virtual world, um, you're interacting with another business potentially, and
Speaker 1: so they would have to potentially ask for permission to
Speaker 1: gather information about you. Or if you go and buy
Speaker 1: something in the metaverse, then maybe you have to agree
Speaker 1: to private people healthy of the merchant selling you something.
Speaker 1: So UM, permission to gather information or touse information could
Speaker 1: be many layered in this virtual world. Are there any
Speaker 1: laws in place, either at the state or the federal
Speaker 1: level to protect this kind of digital data? So far,
Speaker 1: we have been thinking about privacy laws UM in virtual
Speaker 1: worlds just sort of as applying existing laws to the
Speaker 1: space and UM. So in Europe there's a rule called
Speaker 1: the General Data Protection Regulation that would um probably apply
Speaker 1: these general privacy rights to UM different platforms regardless of
Speaker 1: where you are, So it would apply um in the
Speaker 1: metaverse as well as just sort of auto website UM.
Speaker 1: But then in the US it might kind of depend
Speaker 1: on different state laws since there's no national privacy law here. UM.
Speaker 1: So there's still a lot of questions around, like how
Speaker 1: do these laws apply? And like especially how do how
Speaker 1: do location base laws apply when like I might be
Speaker 1: in one physical place using a device, but I might
Speaker 1: be going somewhere else in the world in my device,
Speaker 1: So does that change like where the laws of that
Speaker 1: place would apply to me or whether the laws where
Speaker 1: I am physically apply to me. So, um, there's still
Speaker 1: a lot of policy questions around, uh, how existing laws
Speaker 1: might fit or um if we need to have new
Speaker 1: laws written specifically for this space. Well, thanks so much.
Speaker 1: That's Bloomberg Law reporter Andrea Vittorio. You're listening to Bloomberg Law.
Speaker 1: Next up will bring in the University of Texas law
Speaker 1: professor Stephen Bladdock to discuss the U S. Supreme Courts
Speaker 1: COVID rulings. I'm Kimberly Robinson and I'm Lidia Wheeler. This
Speaker 1: is Bloomberg Y. This is Bloomberg Law with June Brasso
Speaker 1: from Bloomberg Radio. I'm Lydia Wheeler and I'm Kimberly Robinson.
Speaker 1: We're in for June Grasso. We turn now from the
Speaker 1: metaverse to the COVID pandemic, which has upended life worldwide,
Speaker 1: including at the U. S. Supreme Court, to discuss how
Speaker 1: the justices have dealt with the health crisis. We bring
Speaker 1: in University of Texas law professor Steven Laddock. Thanks so
Speaker 1: much for being here with us. Oh, thanks for having
Speaker 1: me so. On Tuesday, Justice Sonia Sotomayor refused to block
Speaker 1: New York City's requirement that employees here a New York
Speaker 1: City Police detective, be vaccinated against COVID nineteen. There was
Speaker 1: no explanation from the court, but we've seen the justices
Speaker 1: block other vaccine mandates and allow other requirements to stay
Speaker 1: in place. Do you have an understanding about why the
Speaker 1: Court have might have rejected this particular request. Yeah, I mean,
Speaker 1: I think if you look at the overall body of
Speaker 1: work and there's actually a fairly substantial number of cases
Speaker 1: where the Justices have been asked to block various COVID restrictions. UM.
Speaker 1: The cases that have succeeded, basically with I think one exception,
Speaker 1: invariably fall into one of two categories. Either they are
Speaker 1: religious liberty based challenges to COVID restrictions, whether it's a
Speaker 1: vaccine mandate or a limit on how many people can
Speaker 1: gather in the same place. UM. Or it is a
Speaker 1: challenge to a federal policy on grounds that the federal
Speaker 1: policy exceeds the statutory authority that the relevant agency, the
Speaker 1: Centers for Disease Control and Prevention OSHA right that they had.
Speaker 1: And so with one exception, and the exception is the
Speaker 1: New York State eviction moratorium, every single case where the
Speaker 1: Supreme Court has agreed to block a state or federal
Speaker 1: COVID policy the grounds of been religious liberty or you know,
Speaker 1: federal administrative law. You mentioned those in person gatherings in particular,
Speaker 1: and I was, you know, on religious gatherings, I should say,
Speaker 1: and I was curious, how did the justices analyze those
Speaker 1: specific requests? Yeah, you know, I mean, as you guys know,
Speaker 1: part of the trick here is that very very few
Speaker 1: of these rulings should actually come with opinions for the court. UM.
Speaker 1: But so there were a series of cases, you know,
Speaker 1: starting in the summer of and really culminating in the summer,
Speaker 1: where UM, religious groups others challenged, you know, gathering restrictions,
Speaker 1: especially in New York, UM in California. And you know,
Speaker 1: this is I think one place where we saw the
Speaker 1: confirmation of Justice Barrett have a huge shift. UM. So
Speaker 1: in the summer of the court was actually denying these
Speaker 1: requests to block the gathering restrictions. UM. In one or
Speaker 1: two cases, one from California went from the VATA by
Speaker 1: five to four votes, and it was Chief Justice Roberts
Speaker 1: joining the liberals in those cases. UM. And one of
Speaker 1: those cases, the case called South Bay Unitependent Constal Church UM.
Speaker 1: To Justice Roberts wrote separately to say, you know, I'm
Speaker 1: not unsympathetic to the claims that these planets are making,
Speaker 1: but this is you know, not something we should be
Speaker 1: resolving on an emergency application. UM. You know, the sort
Speaker 1: of things are changing on the ground, the policies are shifting, UM,
Speaker 1: and so we should give at least some latitude right
Speaker 1: to the government decision makers. UM. That shifts quickly when
Speaker 1: Justice Barrett's confirmed, so that you know, within a month
Speaker 1: of her confirmation UM in November. Now it's five to
Speaker 1: four the other way in a pair of cases blocking
Speaker 1: you know, New York's restrictions on religious gatherings, UM. And
Speaker 1: in the first of those cases, the case called Roman
Speaker 1: Catholic Diocese of We've got a very short, unsigned opinion
Speaker 1: for the Court that says, the problem with these restrictions
Speaker 1: is that they are treating you know, religious worship more
Speaker 1: harshly than they're treating other forms of essential secular businesses,
Speaker 1: and that that becomes the dominant problem that the Justice
Speaker 1: is find with whole bunch of these um, you know,
Speaker 1: state gathering restrictions during the pandemic, which I think is
Speaker 1: part of why we saw so much action through these cases,
Speaker 1: only when the claims were about religious liberty as opposed
Speaker 1: to other due process or other constitutional rights. So you
Speaker 1: mentioned that a lot of these cases, most of them
Speaker 1: in fact, came up through these emergency requests. I wanted
Speaker 1: to talk a little bit about the so called shadow doctor.
Speaker 1: Can you first explained to people what that even is? Sure,
Speaker 1: So it's it's sort of it's a catchy term um
Speaker 1: that will Bow the Professor Chicago coined in UM to
Speaker 1: describe basically all of the traditionally boring stuff the Supreme
Speaker 1: Court does. You know, we spend most of our time
Speaker 1: thinking about like the fifty five to sixty big merits
Speaker 1: decisions the Court hands down each year dabbs, you know,
Speaker 1: the gun case, etcetera. And as you guys both know,
Speaker 1: I mean, the reality is that, at least by volume,
Speaker 1: the overwhelming majority of what the Supreme Court does is
Speaker 1: actually not those It's these unsigned and usually unexplained orders UM.
Speaker 1: Most of these or anodyne right. No one really gets
Speaker 1: exercised about extensions of time to file briefs UM, even
Speaker 1: when the court is denying sorceerarity, that is to say,
Speaker 1: refuse them to take up an appeal. You know, that
Speaker 1: doesn't often make headlines. But what we've seen in the
Speaker 1: last couple of years, as we've seen more and more
Speaker 1: of these orders, especially when parties are asking for emergency relief,
Speaker 1: especially when a party is saying, I want to appeal
Speaker 1: a decision from a lower court. While I'm appealing it,
Speaker 1: I want you to block this state policy. UM, We're
Speaker 1: seeing the court not only sort of here and and
Speaker 1: take seriously more of those, but grant more of those requests. Um.
Speaker 1: And that's coming you know, without oral argument in almost
Speaker 1: all cases with limited briefing, um, oftentimes through orders that
Speaker 1: have no explanation, and if they have an explanations, through
Speaker 1: a short explanation. UM. As you guys know, well, these
Speaker 1: orders can come at all times a day or even
Speaker 1: in the middle of the dice. And so I think,
Speaker 1: you know, the COVID pandemic was in some respects a
Speaker 1: flashpoint for how much the court is due through these unfined,
Speaker 1: unexplained orders, um. And really for how those orders can
Speaker 1: have massive real world effects even when we have no
Speaker 1: idea why the court is doing what it's doing. And Steve,
Speaker 1: you know, as you mentioned just you know, just now
Speaker 1: that it seems like you're a big critic of the
Speaker 1: shadow docket. And you know, because these cases are coming
Speaker 1: before the court, we're not getting or argument, we're not
Speaker 1: getting you know, opinions. What's can you put into perspective though?
Speaker 1: What's the harm in the fact that we're not having
Speaker 1: like a fully briefed case and arguments before the court? Yeah,
Speaker 1: I mean, I think there are a couple of harms.
Speaker 1: I mean, as to be sure, I don't think the
Speaker 1: shado adopted is first say a bad thing, UM Like,
Speaker 1: there are going to be emergency and the court has
Speaker 1: to have a way of dealing with them. I know
Speaker 1: that the trouble comes when you have the court basically
Speaker 1: issuing an unsigned, unexplained order, let's say, blocking a California
Speaker 1: COVID policy for example, UM, in a case where first
Speaker 1: the lower courts actually had detailed hurings and took significant
Speaker 1: evidence um and actually you know, did a bunch of
Speaker 1: fact findings to support their their conclusions that what California
Speaker 1: was doing with above board. But second where the court
Speaker 1: then turns around and says, hey, lower courts, you are
Speaker 1: bound to follow our unsigned, unexplained order in this case.
Speaker 1: And so I think the problem the shadow doctor creates
Speaker 1: is not just that it's a compressed opportunity for the
Speaker 1: court to do its job, but that it also deprives
Speaker 1: the court in the typical case of the ability to
Speaker 1: provide the kind of lengthy, principled rationale that you know, guys,
Speaker 1: we may not agree with, but at least we understand
Speaker 1: and that you know, the relevant parties, the local and
Speaker 1: state governments, the lower courts can figure out how to
Speaker 1: apply in future cases with you know, marginally different facts.
Speaker 1: We don't have those in most of these orders, and
Speaker 1: I think that's part of why, you know, the proliferation
Speaker 1: of these decisions, especially in context in which the justices
Speaker 1: are treating them as creating precedents. Um is I think
Speaker 1: hard to defend. Coming up next will continue our conversation
Speaker 1: with the University of Texas law professor Stephen Addic. I'm
Speaker 1: Lidia Wheeler and I'm Kimberly Robinson. This is Bloomberg Y.
Speaker 1: This is Bloomberg Law with June Grasso from Bloomberg Radio.
Speaker 1: I'm Lidia Wheeler and I'm Kimberly Robinson. We're in for
Speaker 1: June Grasso. We're back with Professor Stephen Bladdock of the
Speaker 1: University of Texas. When we left, we were talking about
Speaker 1: the courts shadow docket and how most of the COVID
Speaker 1: cases came up through uh that procedure. Of course, there
Speaker 1: were two major exceptions that was on the on two
Speaker 1: federal vaccine mandates, one that the Supreme Court upheld and
Speaker 1: another more broader mandate that the Supreme Court struck down.
Speaker 1: Can you tell us Uh. These cases started on the
Speaker 1: shadow docket themselves, though, right, Yeah, and actually I think
Speaker 1: we could even probably debate whether they were even exception
Speaker 1: so the right. There were two sets of really high
Speaker 1: profile challenges to vaccine mandate from the Biden administration. One
Speaker 1: was the Osha um proposed emergency rule that would have
Speaker 1: required every large employer to impose a vaccination or testing
Speaker 1: requirement on their employees UM. And the other was a
Speaker 1: rule promulgated by the Center for Medicare and Medicaid Services
Speaker 1: that basically required all health care facilities that received federal
Speaker 1: Medicare or Medicaid funds to a whole lot of them
Speaker 1: UM to require their healthcare workers to be vaccinated. So
Speaker 1: they both came to the Supreme Court through the shadow docket.
Speaker 1: The the Osha mandate UM was not blocked by the
Speaker 1: Sixth Circuit UM, and then a whole bunch of parties
Speaker 1: fifteen different sets of applicants asked the Supreme Court to
Speaker 1: issue an emergency stay of the ocean Man date Um.
Speaker 1: The CMS mandate was blocked by two different district courts
Speaker 1: on a nationwide basis, and the Biden administration came to
Speaker 1: the Supreme Court um asking for emergency relief in the
Speaker 1: form of stays of those injunctions. And so what the
Speaker 1: court did, I think made it look like it was
Speaker 1: less shadowy is for the first time nearest we can tell,
Speaker 1: since like um, the full Court decided to hear oral
Speaker 1: argument on the vaccine mandates, and they did, you know,
Speaker 1: in early January, UM. And they turned around about a
Speaker 1: week later and handed down these you know, unsigned procureum
Speaker 1: for the court opinions UM, where they blocked the Ocean
Speaker 1: rule and unblocked the CMS rule. And you know, I guess, guys,
Speaker 1: to me, those cases are a remarkable bell weather because first,
Speaker 1: you know, the fact that the justices saw fit the
Speaker 1: whole argument I think was a bit of a concession
Speaker 1: that they realized that, like you know, the normal shadow
Speaker 1: doctor process was insufficient for cases of the of that magnitude.
Speaker 1: But second, you know, there's a line in the majority
Speaker 1: opinion in the Ocean case where the you know whoever
Speaker 1: wrote it, we don't know who did, um talks about
Speaker 1: the equities and how you know, the federal government said
Speaker 1: if you block the Ocean mandate, all these bath rooms
Speaker 1: will happen. The Balingers, including a bunch of Red State said,
Speaker 1: if you don't block the mandate, these bad dems will happen.
Speaker 1: And then the Court says, it's not our job to
Speaker 1: balance those trade offs. Um. And I have to say,
Speaker 1: guys like that, that line, as someone who studies this
Speaker 1: like kind of set me spinning, because it's actually exactly
Speaker 1: the Court's job in the context of these kinds of
Speaker 1: emergency application to balance those trade offs. And so I
Speaker 1: think you know, in that respect, these cases were actually
Speaker 1: this perfect encapsulation of how the shadow doctor has evolved,
Speaker 1: of how more and more high profile disputes are being
Speaker 1: resolved through these expedited processes, and how in that context
Speaker 1: where the Court is supposed to be balancing the harms
Speaker 1: to each side, UM, the Court is really increasingly just
Speaker 1: deciding what it thinks the right answer is on the merits.
Speaker 1: I want to talk with you more about how the
Speaker 1: shadow docket has evolved, UM, because I know you've been
Speaker 1: following a change in how parties and the justices use
Speaker 1: the shadow jacket. So can you talk talk about those
Speaker 1: changes in particularly those changes under the Trump administration. Yeah,
Speaker 1: I mean, so you know it used to be, as
Speaker 1: I said, we've had the shadow docket forever um and
Speaker 1: the historically the body of cases that were the source
Speaker 1: of the most shadowed doctor activity involved the death penalty,
Speaker 1: where you know, you'd oftentimes have last minute applications from
Speaker 1: death row inmates for stage of execution or if a
Speaker 1: lower court had blocks and execution, and lasting application from
Speaker 1: a state to unblock the execution and real these guys
Speaker 1: into the tens. Like that was the majority of what
Speaker 1: was interesting about emergency applications in the Supreme Court. The
Speaker 1: shift in the Trump administration is a shift in just
Speaker 1: the kinds of cases that are ending up on the
Speaker 1: shadow dockets, and cases with not just massive implications for
Speaker 1: one death row prisoner, but for state or federal policies. So,
Speaker 1: just to take one data point, um, during the Bush
Speaker 1: and Obama administrations from two thousand one seventeen, two pretty
Speaker 1: different administrations, the federal government fils a total of eight
Speaker 1: emergency applications in the Supreme Court, so one every other
Speaker 1: year on average. During the Trump administration, so four years,
Speaker 1: the Justice Department files forty one application and I think,
Speaker 1: you know, the there's a longer conversation to to sort
Speaker 1: of be had about, you know, the sort of what
Speaker 1: caused that uptick, whatever caused it. Right, what it means
Speaker 1: is that there was a lot more UM nationwide policy
Speaker 1: challenging going on on the shadow docket, where you know,
Speaker 1: it started as like the travel band, that it turned
Speaker 1: into a case about the transgender band, you know, immigration,
Speaker 1: environmental law. All of a sudden, right, every major contentious
Speaker 1: UM challenge to staateard federal policies is coming to the
Speaker 1: shadow docket. And I think that's the shift that has
Speaker 1: led to why this has had so much more of
Speaker 1: an impact on all of us. Well, thank you so
Speaker 1: much for that. That's University of Texas Law professor Steven Bladdock.
Speaker 1: You're listening to Bloomberg Radio. Up next, we'll talk with
Speaker 1: Bloomberg News reporter Jeff Feey about Elon Musk his fight
Speaker 1: to get out of his forty four billion dollar Twitter deal.
Speaker 1: I'm Kimberly Robinson and I'm Lydia Wheeler. This is Bloomberg.
Speaker 1: This is Bloomberg Law with June Grasso from Bloomberg Radio.
Speaker 1: I'm Kimberly Robinson and I'm Lydia Wheeler. We're in for
Speaker 1: June grass Ow. Elon Musk has been engulfed in a
Speaker 1: legal battle over his failed forty four billion dollar deal
Speaker 1: to buy Twitter. He's now claiming a whistle blower's allegations
Speaker 1: against the company should let him walk away from that
Speaker 1: purchase agreement. Joining us now to talk about this litigation,
Speaker 1: as Bloomberg News reporter Jeff Feely, Jeff, thanks for being here,
Speaker 1: no problem. Can you start off by telling us a
Speaker 1: bit of background about this litigation and how it came about? Yes, Uh,
Speaker 1: it came about because Mr Musk, the world's richest man,
Speaker 1: decided he had agend own Twitter, which he is a
Speaker 1: very frequent user of that platform to tweet out the
Speaker 1: various things that come to his mind, and he decided
Speaker 1: that maybe it would be good for him to buy Twitter.
Speaker 1: So he back in April, offered fifty four dollars and
Speaker 1: twenty cents a share of the social media platform, waived
Speaker 1: his due diligence on the deal, and signed well. When
Speaker 1: the market turned a bit and Twitter's stock value fell,
Speaker 1: Mr Musk was not happy and he decided that maybe
Speaker 1: he didn't want Twitter as much as he thought he did,
Speaker 1: so he decided to cancel or walk away from the
Speaker 1: billion dollar deal. Well, the fox at Twitter, understandably weren't
Speaker 1: happy about that, and so they filed suit in Delaware
Speaker 1: chancery court to force him to consummate the deal. The
Speaker 1: reason they came to the first state is because under
Speaker 1: the merger agreement, that was where all legal disputes had
Speaker 1: to be litigated. Delaware has a long tradition of its
Speaker 1: business courts handling merger and acquisition disputes. So that sort
Speaker 1: of gets us to where we are. And so we've
Speaker 1: discussed before on this UH show about the whistle blower
Speaker 1: who recently came forward with allegations against Twitter. Can you
Speaker 1: tell us a little bit more about that and what
Speaker 1: it is that they're alleging is happening at the company. Sure.
Speaker 1: The whistleblower's name is Peter Zako. He's a well known hacker,
Speaker 1: um and pardon me, computer security expert, and he was
Speaker 1: Twitter's ahead of computer security for a while. While at Twitter,
Speaker 1: Mr Zako says that he raised issues about the number
Speaker 1: of spam and robot accounts that are embedded in the
Speaker 1: company's customer base. Uh. These accounts are not basically ones
Speaker 1: with humans hid them, but they are you know, uh,
Speaker 1: put on there to increase people's audience, if you will,
Speaker 1: and um, he claims that the folks of Twitter had
Speaker 1: no idea how many of these accounts were, you know,
Speaker 1: part of their customers, and really didn't seem to care
Speaker 1: to delve too deeply into it, because you know, the
Speaker 1: more customers they have, the more they can charge advertisers.
Speaker 1: So if they if they you know, I didn't want
Speaker 1: to dig into it, it's because they didn't want to
Speaker 1: reduce their advertiser numbers. So Mr zach Coo got fired
Speaker 1: for performance issues a couple of months ago, and he
Speaker 1: has now come forward and lodged a so called whistleblower's
Speaker 1: complaint with regulators and UH congresspeople. And those complaints include
Speaker 1: laxity of computer security, a district art for privacy issues,
Speaker 1: and this whole issue about the spam and robot accounts.
Speaker 1: Those accounts are important because Mr Musk has made them
Speaker 1: the centerpiece of his legal arguments, saying that he's justified
Speaker 1: and walking away from the deal. Isn't elon Musk here
Speaker 1: um asking the court to kind of amend his argument um,
Speaker 1: and is the judge in this case likely to allow
Speaker 1: him to do that. He is asking to amend his counterclaims.
Speaker 1: So Twitter has filed the actual suit. Mr Musk has
Speaker 1: filed his defenses and counterclaims to those, and those counterclaims
Speaker 1: focused solely on the bot issue at first. Well, now
Speaker 1: that this gentleman has come forward talking about security issues
Speaker 1: and privacy concerns, he wants to amend his counterclaims to
Speaker 1: say that these are other legitimate bases for uh POEMA
Speaker 1: rug out from the deal. Under Delaware law, UH judges
Speaker 1: have wide authority to amend and it's basically granted as
Speaker 1: long as it does not prejudice the other side in
Speaker 1: some way. So most people think that Judge McCormick will
Speaker 1: allow some amendment to add these other issues to the case.
Speaker 1: And do you think that these whistable or allegations are
Speaker 1: ultimately going to help must break the deal with Twitter. Well,
Speaker 1: we really don't know at this point. It's too early
Speaker 1: to tell whether Mr Zako's allegations have so called meat
Speaker 1: on the bones or sour grapes by fired employee. UH
Speaker 1: people really need to dig into them to find out
Speaker 1: whether there's substance or not. What is Twitter said in
Speaker 1: response to Musk, you know, using the whistleblower complaints in
Speaker 1: his defense. Well, they have said that Mrs obviously they
Speaker 1: are the ones who who notice, who let people know
Speaker 1: that Mr Zako was fired for performance issues. They also
Speaker 1: have said that his complaint is quote it old with
Speaker 1: inaccuracies closed quote. So um, again, we're going to have
Speaker 1: to wait and see whether the rubber meets the road
Speaker 1: on these issues that he's raised about Twitter's operations. And
Speaker 1: do we have any sense about how many Twitter users
Speaker 1: are really body accounts or are really real or is
Speaker 1: that just an unknown at this point? Apparently in the industry,
Speaker 1: the social media industry, this is a problem. It's a
Speaker 1: problem trying to figure out robots from humans. Um. Twitter
Speaker 1: has more than two d and thirty million customers, it
Speaker 1: has said in its regulatory or securities filings with the SEC.
Speaker 1: But it believes the bot and scam accounts are somewhere
Speaker 1: about five round five of their customer base. Mr Musk
Speaker 1: and his experts have done some preliminary analysis and they
Speaker 1: postulate that it could be as much as a third
Speaker 1: of the thirty million plus customers who are not humans.
Speaker 1: The reason that is important again is that you can
Speaker 1: only really make money with advertising from humans with eyeballs
Speaker 1: watching the ads. And you know, if the Twitter folks
Speaker 1: you know, have written their sec disclosures in a masterful
Speaker 1: way to headge them. But if there turns out to
Speaker 1: be a major discrepancy, you know, and there's many more
Speaker 1: bots than five percent, that could be a problem for
Speaker 1: the deal. So has this dispute hurt Twitter in any way?
Speaker 1: I mean, our market shares down. Shares are down. Shares
Speaker 1: are down as part of an overall drop in the
Speaker 1: technical sector as well, but shares are down. And I
Speaker 1: do believe this whole fight has certainly had an effect
Speaker 1: on Twitter. They have said that the uncertainty has cast
Speaker 1: a cloud over the shares. It's caused unrest among the
Speaker 1: employe ease, there's been you know, a significant brain drain,
Speaker 1: and you know, it's just it's just not it's not
Speaker 1: a pretty it's not pretty optics either about the way
Speaker 1: Twitter operates and how it handles things, and this whole
Speaker 1: stuff about the box. It's just not pretty. Well, you
Speaker 1: can understand why Twitter would want to get this trial over.
Speaker 1: Then when is it slated for? And also I read
Speaker 1: that Musk is trying to delay it. What's the strategy there?
Speaker 1: So the trial right now is set for October seventeenth
Speaker 1: in beautiful Wilmington, Delaware, and it is. Of course, chancery
Speaker 1: court is a business court, is a non jury court.
Speaker 1: So Judge McCormick will hear it by herself and then
Speaker 1: render a decision some months afterwards. Uh. Mr Musk originally
Speaker 1: wanted to have the trial in February. He wanted to
Speaker 1: have a nice long time for discovery and everything. But
Speaker 1: the Twitter folks wanted to fast track it. They wanted,
Speaker 1: you know, they said the uncertainty was hurting the company,
Speaker 1: so a quicker decision would be better for them. So
Speaker 1: Judge McCormick sort of split the baby. Twitter asked for September,
Speaker 1: Musk asked for February. She said it for mid October.
Speaker 1: Now Mr Musk is saying, with the emergence of Mr Zacho,
Speaker 1: the whistleblower, there's going to be some more time needed
Speaker 1: to dig into his claims, analyze them, and figure out
Speaker 1: the implications for the case. So they had originally asked
Speaker 1: for November, and some court filings yesterday today our sources
Speaker 1: are saying they're even thinking about asking for early December
Speaker 1: for a trial date. Interesting, Um, can you tell us
Speaker 1: who's been subpoena in this case and if those people
Speaker 1: could end up as witnesses. Well, it would take a
Speaker 1: couple hours to tell you all the subpoenas because there's
Speaker 1: been over a hundred of them. But we've we've had
Speaker 1: some big names. Jack Dorsey, the former CEO Twitter, he's likely,
Speaker 1: I suspect he's likely to testify. We've had Larry Ellison,
Speaker 1: the head of Oracle, he's an investor in the case. Um,
Speaker 1: there have been investment vehicles tied to Mark Andres and
Speaker 1: the very famous tech investor. That's that's a pretty good start.
Speaker 1: And so a judge ordered Musk to disclose all of
Speaker 1: his potential investors. How calm and could those people end
Speaker 1: up being witnesses too? Well, I think the judge was
Speaker 1: trying to get a sense of the universe of investors
Speaker 1: and advisers to Mr Musk, and to get an idea
Speaker 1: of whether or not there might be a second equity race,
Speaker 1: which is possible. Um. You know, there's a bunch of
Speaker 1: funds who have um invested in the deal. I mean
Speaker 1: he raised he did a first equity raise of over
Speaker 1: seven billion dollars for the deal, and you know there
Speaker 1: I think there continues to be some conversations among folks.
Speaker 1: So Twitter is entitled to know who they're talking to.
Speaker 1: So that's why McCormick ordered them to give up both
Speaker 1: the names of the investors and the potential investors. And
Speaker 1: that does it for this episode of Bloomberg Law. I'm
Speaker 1: Lydia Wheeler and I'm Kimberly Robinson. This is Bloomberg