1 00:00:02,040 --> 00:00:03,800 Speaker 1: This is Bloomberg Law. 2 00:00:03,920 --> 00:00:06,760 Speaker 2: What does a prosecutor have to prove in order to 3 00:00:06,760 --> 00:00:09,959 Speaker 2: get a Rico conviction? Tell us why the Solicitor General 4 00:00:10,000 --> 00:00:12,280 Speaker 2: is sometimes referred to as the tenth Justice. 5 00:00:12,320 --> 00:00:15,520 Speaker 1: Interviews with prominent attorneys in Bloomberg Legal Experts. 6 00:00:15,560 --> 00:00:18,360 Speaker 2: That's Jennifer k for Bloomberg Law. Joining me is former 7 00:00:18,440 --> 00:00:20,160 Speaker 2: federal prosecutor Robert miss. 8 00:00:20,040 --> 00:00:23,200 Speaker 1: And analysis of important legal issues, cases and headlines. 9 00:00:23,239 --> 00:00:27,040 Speaker 2: It's the toughest hurdle for prosecutors proving Trump's intent. Alito 10 00:00:27,120 --> 00:00:30,479 Speaker 2: took on Congress, saying Congress has no power to regulate 11 00:00:30,520 --> 00:00:31,360 Speaker 2: the Supreme Court. 12 00:00:31,520 --> 00:00:34,640 Speaker 1: Bloomberg Law with June Grosso from Bloomberg Radio. 13 00:00:37,840 --> 00:00:40,599 Speaker 2: Welcome to a special best of edition of the Bloomberg 14 00:00:40,680 --> 00:00:44,520 Speaker 2: Law Show. Ahead in this hour, the Supreme Court grapples 15 00:00:44,560 --> 00:00:48,880 Speaker 2: with whether public officials can block citizens on social media? 16 00:00:48,920 --> 00:00:53,640 Speaker 2: What exactly is a legal hot tub? And Instagram promoters 17 00:00:53,720 --> 00:00:58,480 Speaker 2: test the limits of a ninety year old securities law. 18 00:00:58,960 --> 00:01:01,000 Speaker 3: That's what makes these cases hard is that there are 19 00:01:01,120 --> 00:01:03,040 Speaker 3: First Amendment interests all over the place. 20 00:01:03,440 --> 00:01:06,600 Speaker 2: And not only are their First Amendment interests all over 21 00:01:06,640 --> 00:01:09,800 Speaker 2: the place, as Justice Elena Kagan put it, but the 22 00:01:10,080 --> 00:01:13,360 Speaker 2: justices questions seemed to be all over the place as 23 00:01:13,400 --> 00:01:17,720 Speaker 2: well as they considered whether public officials can block citizens 24 00:01:17,800 --> 00:01:22,080 Speaker 2: on social media. The two cases involved school board members 25 00:01:22,120 --> 00:01:25,120 Speaker 2: in San Diego and a city manager in Michigan who 26 00:01:25,120 --> 00:01:29,480 Speaker 2: blocked followers on social media, of course, evoking discussion of 27 00:01:29,600 --> 00:01:33,040 Speaker 2: former President Donald Trump's efforts to block people from his 28 00:01:33,160 --> 00:01:33,959 Speaker 2: Twitter account. 29 00:01:34,280 --> 00:01:36,560 Speaker 3: I mean, I don't think a citizen would be able 30 00:01:36,640 --> 00:01:41,240 Speaker 3: to really understand the Trump presidency, if you will, without 31 00:01:41,319 --> 00:01:44,760 Speaker 3: any access to all the things that the president said 32 00:01:45,280 --> 00:01:48,160 Speaker 3: on that account. It was an important part of how 33 00:01:48,200 --> 00:01:52,640 Speaker 3: he wielded his authority. And to cut a citizen off 34 00:01:52,720 --> 00:01:55,920 Speaker 3: from that is to cut a citizen off from part 35 00:01:55,960 --> 00:01:57,520 Speaker 3: of the way that government works. 36 00:01:57,800 --> 00:02:01,400 Speaker 2: The central question is whether the so social media activity 37 00:02:01,760 --> 00:02:05,800 Speaker 2: constitute state action, making it subject to the First Amendment, 38 00:02:06,320 --> 00:02:09,080 Speaker 2: and the federal appellate courts in the cases came to 39 00:02:09,200 --> 00:02:13,520 Speaker 2: opposite conclusions. The Justice has presented a host of social 40 00:02:13,560 --> 00:02:17,919 Speaker 2: media scenarios to the lawyers. Here are Justices Sonya Sotomayor 41 00:02:18,040 --> 00:02:19,080 Speaker 2: and Brett Kavanaugh. 42 00:02:19,720 --> 00:02:23,840 Speaker 4: So let's assume a mayor says, I'm setting up a 43 00:02:23,919 --> 00:02:29,720 Speaker 4: hotline for emergencies on my Facebook or Twitter, and if 44 00:02:29,760 --> 00:02:34,000 Speaker 4: you have an emergency, call that hotline and I will 45 00:02:34,160 --> 00:02:38,440 Speaker 4: use the power of my office to set in motion 46 00:02:38,880 --> 00:02:43,679 Speaker 4: government response for your emergency. Seems to me that that's 47 00:02:43,760 --> 00:02:45,079 Speaker 4: government faction, isn't it. 48 00:02:46,320 --> 00:02:50,000 Speaker 5: But suppose the city manager on the personal site says, 49 00:02:50,600 --> 00:02:53,000 Speaker 5: we have new recycling rules. You have to use a 50 00:02:53,000 --> 00:02:55,680 Speaker 5: blue bin, has to be at the curb, will be 51 00:02:55,760 --> 00:02:59,680 Speaker 5: picked up on Wednesdays. If you have any questions, contact me. 52 00:03:00,040 --> 00:03:03,440 Speaker 5: It's only on the personal site, not on the official site. 53 00:03:03,880 --> 00:03:04,880 Speaker 5: Such a state action. 54 00:03:05,120 --> 00:03:08,000 Speaker 2: Joining me is Professor Eric Golman, co director of the 55 00:03:08,080 --> 00:03:11,840 Speaker 2: High Tech Law Institute at Santa Clara University Law School. 56 00:03:12,720 --> 00:03:15,320 Speaker 2: Eric explained the main issue in these cases. 57 00:03:16,040 --> 00:03:20,680 Speaker 6: The core issue is what should happen when government officials 58 00:03:20,760 --> 00:03:24,720 Speaker 6: maintain social media accounts. Can they treat it as if 59 00:03:24,760 --> 00:03:28,600 Speaker 6: they're ordinary citizens or are they governed by the rules 60 00:03:28,600 --> 00:03:30,200 Speaker 6: that apply to government generally? 61 00:03:30,480 --> 00:03:33,720 Speaker 2: And are the issues in the two cases before the 62 00:03:33,919 --> 00:03:35,320 Speaker 2: court basically the same? 63 00:03:35,760 --> 00:03:39,040 Speaker 6: They're basically the same. There are little details about exactly 64 00:03:39,160 --> 00:03:43,040 Speaker 6: how the particular government officials were using their social medi 65 00:03:43,040 --> 00:03:46,880 Speaker 6: accounts that might matter to the final conclusion, but the 66 00:03:46,920 --> 00:03:49,880 Speaker 6: core questions the court's asking and the legal test it's 67 00:03:50,040 --> 00:03:52,320 Speaker 6: likely to adopt are probably going to be the same. 68 00:03:52,520 --> 00:03:56,000 Speaker 2: So let's talk about the concerns of some of the justices, 69 00:03:56,480 --> 00:03:59,760 Speaker 2: and Justice Elena Kagan said there are First Amendment interests 70 00:03:59,800 --> 00:04:00,960 Speaker 2: on all over the place. 71 00:04:01,440 --> 00:04:03,880 Speaker 6: I thought that was a really great line, honestly, just 72 00:04:03,920 --> 00:04:07,040 Speaker 6: as Kaigan has just such a great way of turning phrases, 73 00:04:07,280 --> 00:04:11,640 Speaker 6: and she's absolutely right their First Amendment considerations on all sides. 74 00:04:11,720 --> 00:04:15,400 Speaker 6: It's not like there's an easy path forward that balances 75 00:04:15,440 --> 00:04:18,160 Speaker 6: all the respective interests. On the one hand, people who 76 00:04:18,240 --> 00:04:21,040 Speaker 6: work for the government should be free to engage their 77 00:04:21,080 --> 00:04:25,359 Speaker 6: communities and express themselves publicly as private citizens. That's the 78 00:04:25,400 --> 00:04:28,520 Speaker 6: constitutionally protected right. They don't give up that right by 79 00:04:28,560 --> 00:04:31,200 Speaker 6: going to work for the government. On the other hand, 80 00:04:31,279 --> 00:04:37,000 Speaker 6: when the government controls online discourse spaces where people are 81 00:04:37,120 --> 00:04:41,360 Speaker 6: talking to each other, there's a really real and significant 82 00:04:41,480 --> 00:04:45,600 Speaker 6: risk of censorship. And so the concern is that if 83 00:04:45,839 --> 00:04:49,159 Speaker 6: the government officials can act like private individuals, they can 84 00:04:49,440 --> 00:04:53,839 Speaker 6: functionally censor conversations. Now, if they're acting as a private individual, 85 00:04:53,880 --> 00:04:56,120 Speaker 6: they're allowed to do that, but as the actings the government, 86 00:04:56,240 --> 00:04:59,719 Speaker 6: they're not. And so either we're going to circumscribe the 87 00:05:00,000 --> 00:05:03,080 Speaker 6: free speech rights of government employees, or we're going to 88 00:05:03,480 --> 00:05:07,560 Speaker 6: allow government employees to circumferent the free speech rights of 89 00:05:07,720 --> 00:05:09,800 Speaker 6: the people who want to engage with them. Somebody is 90 00:05:09,800 --> 00:05:10,880 Speaker 6: going to lose something here. 91 00:05:11,480 --> 00:05:15,440 Speaker 2: And in these local cases, it's just as important for 92 00:05:15,720 --> 00:05:19,719 Speaker 2: constituents to hear what their school board members are saying, 93 00:05:19,839 --> 00:05:22,080 Speaker 2: or their town managers and the like. 94 00:05:23,080 --> 00:05:25,039 Speaker 6: It's not just to be able to hear what the 95 00:05:25,080 --> 00:05:27,479 Speaker 6: government officials are saying, but also to be able to 96 00:05:27,720 --> 00:05:31,680 Speaker 6: talk back to them, and even more importantly, in certain circumstances, 97 00:05:31,720 --> 00:05:34,720 Speaker 6: be able to talk to each other as constituents or 98 00:05:34,760 --> 00:05:39,240 Speaker 6: as citizens that are responding to the posting of a 99 00:05:39,279 --> 00:05:42,960 Speaker 6: government official. And so when a government official exercises some 100 00:05:43,000 --> 00:05:46,120 Speaker 6: of the tools that provide them via social media to 101 00:05:46,240 --> 00:05:50,280 Speaker 6: control conversations, what they're really doing is distorting the conversation 102 00:05:50,400 --> 00:05:52,360 Speaker 6: that citizens might want to have with each other. 103 00:05:52,839 --> 00:05:55,200 Speaker 2: So I don't know why. To me, it seems like, 104 00:05:55,720 --> 00:06:00,520 Speaker 2: you know, if you're posting public information on a web side, 105 00:06:00,520 --> 00:06:04,440 Speaker 2: on a Facebook page, that that should be open to 106 00:06:04,520 --> 00:06:07,360 Speaker 2: the public and the public able to comment, and if 107 00:06:07,400 --> 00:06:09,760 Speaker 2: you want not to do that, then have a private 108 00:06:09,800 --> 00:06:10,680 Speaker 2: page as well. 109 00:06:11,120 --> 00:06:13,680 Speaker 6: So certainly those ideas came out. In fact, there are 110 00:06:13,720 --> 00:06:17,960 Speaker 6: three different categories of pages that a government official might have. 111 00:06:18,040 --> 00:06:21,920 Speaker 6: They may have an official government page, they may have 112 00:06:22,080 --> 00:06:24,920 Speaker 6: a campaign page which is not part of their official 113 00:06:24,920 --> 00:06:27,640 Speaker 6: government duties but still is an important place for them 114 00:06:27,680 --> 00:06:31,200 Speaker 6: to evangelize the work they're doing, and they may have 115 00:06:31,240 --> 00:06:33,960 Speaker 6: a personal page that has nothing to do with their 116 00:06:34,040 --> 00:06:37,719 Speaker 6: role in government. And figuring out which account is in 117 00:06:37,760 --> 00:06:41,240 Speaker 6: which category is something that is baffling to us as 118 00:06:41,360 --> 00:06:44,800 Speaker 6: citizens when we see our government officials online. And it's 119 00:06:44,880 --> 00:06:48,320 Speaker 6: also vexxing to the government officials because so often they 120 00:06:48,360 --> 00:06:51,040 Speaker 6: want to take their victory labs, they want to evangelize 121 00:06:51,040 --> 00:06:54,360 Speaker 6: their work, to tout their successes, and we aren't sure 122 00:06:54,400 --> 00:06:57,280 Speaker 6: are they telling them as official government policy, as a 123 00:06:57,279 --> 00:07:01,120 Speaker 6: campaign promise, or just because they're counting their own work 124 00:07:01,120 --> 00:07:04,520 Speaker 6: as a private individual. And the court didn't know how 125 00:07:04,560 --> 00:07:07,920 Speaker 6: to approach that issue. They understood the trade offs, but 126 00:07:07,960 --> 00:07:10,040 Speaker 6: there was no clear way to move forward that was 127 00:07:10,080 --> 00:07:11,280 Speaker 6: going to satisfy everybody. 128 00:07:11,680 --> 00:07:14,040 Speaker 2: So I want to get your reaction to what, just 129 00:07:14,120 --> 00:07:16,160 Speaker 2: as Amy Cony Barrett said. 130 00:07:16,360 --> 00:07:20,080 Speaker 7: I think it's very difficult when you have an official 131 00:07:20,080 --> 00:07:22,600 Speaker 7: who can in some sense define his own authority. So 132 00:07:22,640 --> 00:07:25,240 Speaker 7: I think for a governor or you know, President Trump, 133 00:07:25,600 --> 00:07:28,200 Speaker 7: it's a harder call than someone like a police officer 134 00:07:28,240 --> 00:07:31,240 Speaker 7: who's a subordinator. I could you know, my lucker could 135 00:07:31,280 --> 00:07:34,400 Speaker 7: just start posting things and say this is the official 136 00:07:34,440 --> 00:07:38,680 Speaker 7: business of the Barrett Chambers, right, and that wouldn't be okay. 137 00:07:38,840 --> 00:07:41,960 Speaker 7: But if you know that wouldn't be okay. 138 00:07:44,800 --> 00:07:47,400 Speaker 2: That come and got a laugh, of course, But what 139 00:07:47,480 --> 00:07:50,440 Speaker 2: do you think about the content of what she's saying. 140 00:07:51,280 --> 00:07:54,480 Speaker 6: I mean, the the ample she gave was kind of 141 00:07:54,520 --> 00:07:57,400 Speaker 6: weird because clerk wouldn't be likely to be able to 142 00:07:57,400 --> 00:08:00,040 Speaker 6: set up and speak on behalf of their judge that 143 00:08:00,120 --> 00:08:03,160 Speaker 6: employs them. So that was a weird example. But the 144 00:08:03,200 --> 00:08:07,040 Speaker 6: broader principle is one hundred percent correct that the Court 145 00:08:07,080 --> 00:08:09,560 Speaker 6: is trying to figure out how do they simultaneously govern 146 00:08:10,120 --> 00:08:14,960 Speaker 6: the top of the political hierarchy, like a president or 147 00:08:15,000 --> 00:08:18,040 Speaker 6: a governor or even a mayor, someone who's at the 148 00:08:18,080 --> 00:08:21,480 Speaker 6: top of the organizational Peermid and all the people who 149 00:08:21,480 --> 00:08:24,080 Speaker 6: are rank and fly, all government employees, some of who 150 00:08:24,160 --> 00:08:26,480 Speaker 6: might also be able to speak on behalf of the government, 151 00:08:26,600 --> 00:08:29,400 Speaker 6: others of whom have no real legitimacy to do so. 152 00:08:29,680 --> 00:08:31,880 Speaker 6: And the Supreme Court is struggling figure out, how can 153 00:08:31,920 --> 00:08:34,240 Speaker 6: we come up with one rule that covers all of 154 00:08:34,280 --> 00:08:38,880 Speaker 6: those different types of job, responsibilities, and status in the hierarchy, 155 00:08:39,120 --> 00:08:41,280 Speaker 6: and it's possible that they cannot come up with a 156 00:08:41,280 --> 00:08:43,480 Speaker 6: single rule that will cover it. They may need multiple 157 00:08:43,559 --> 00:08:45,400 Speaker 6: rules that will have to be iterated over time. 158 00:08:45,600 --> 00:08:47,920 Speaker 2: So you think that there's no clear legal test that 159 00:08:47,920 --> 00:08:48,920 Speaker 2: they could come out with. 160 00:08:49,280 --> 00:08:52,480 Speaker 6: Honestly, no, there is no clear legal test. And I 161 00:08:52,480 --> 00:08:54,920 Speaker 6: think we can be a little bit more emphatic that 162 00:08:55,200 --> 00:09:00,240 Speaker 6: the different considerations include things like what's the employee's job 163 00:09:00,400 --> 00:09:03,960 Speaker 6: and what tools are available in social media to be 164 00:09:03,960 --> 00:09:06,760 Speaker 6: able to co control conversations and which of those tools 165 00:09:06,840 --> 00:09:10,679 Speaker 6: was wielded, and how did the person describe or characterize 166 00:09:10,760 --> 00:09:13,760 Speaker 6: their account, and how much of the account was used 167 00:09:13,800 --> 00:09:18,160 Speaker 6: with official related postings versus personal postings, like we need 168 00:09:18,200 --> 00:09:21,120 Speaker 6: a multi dimensional matrix to try to figure out where 169 00:09:21,160 --> 00:09:25,120 Speaker 6: to place all the different nodes in those questions. And 170 00:09:25,120 --> 00:09:27,199 Speaker 6: that's why, even with two cases in front of the 171 00:09:27,200 --> 00:09:29,480 Speaker 6: Supreme Court that they can use to compare and contrast, 172 00:09:29,800 --> 00:09:32,480 Speaker 6: they still don't have enough cases to cover the full 173 00:09:32,600 --> 00:09:34,920 Speaker 6: range of facts that are going to be implicated by 174 00:09:34,920 --> 00:09:35,400 Speaker 6: their ruling. 175 00:09:35,760 --> 00:09:39,160 Speaker 2: How about the idea that was floated by Justice Katanji Brown, 176 00:09:39,240 --> 00:09:44,040 Speaker 2: Jackson of a clear disclaimer indicating that government officials were 177 00:09:44,040 --> 00:09:47,280 Speaker 2: posting on social media in their personal capacity. 178 00:09:47,920 --> 00:09:51,280 Speaker 6: Certainly no doubt that legends would help at least us 179 00:09:51,320 --> 00:09:55,480 Speaker 6: as constituents know what to expect. But the disclaimers could 180 00:09:55,520 --> 00:09:59,199 Speaker 6: just be another form of a manipulation by the government official. 181 00:09:59,440 --> 00:10:02,120 Speaker 6: They could say I'm not speaking officially, but then speak 182 00:10:02,160 --> 00:10:05,120 Speaker 6: in ways that actually are fully official, or vice versa. 183 00:10:05,120 --> 00:10:07,360 Speaker 6: They can say, this official government account, but let me 184 00:10:07,440 --> 00:10:10,320 Speaker 6: highlight some of my personal attributes and treat them as 185 00:10:10,320 --> 00:10:13,880 Speaker 6: if they're a part of the government responsibility. And so 186 00:10:14,440 --> 00:10:18,880 Speaker 6: the disclaimer doesn't really solve the problems that I think 187 00:10:18,920 --> 00:10:23,600 Speaker 6: we have. But no doubt that if somebody portrays their 188 00:10:24,000 --> 00:10:28,280 Speaker 6: account as an official government account without trying to walk 189 00:10:28,320 --> 00:10:31,959 Speaker 6: it back or qualify that, I think the rules should 190 00:10:32,040 --> 00:10:34,640 Speaker 6: be that we should hold them to that approach. But 191 00:10:34,960 --> 00:10:38,200 Speaker 6: if they don't officially represent as part of their government account, 192 00:10:38,240 --> 00:10:40,840 Speaker 6: it still might be part of their government function, and 193 00:10:40,920 --> 00:10:43,360 Speaker 6: so the disclaimer is not going to be complete. 194 00:10:43,559 --> 00:10:46,600 Speaker 2: Coming up, we'll discuss whether there was any consensus on 195 00:10:46,640 --> 00:10:49,920 Speaker 2: the court. I'm Jim Grosso. When you're listening to Bloomberg. 196 00:10:58,480 --> 00:11:03,360 Speaker 1: Is Bloomberg with June Brusso from Bloomberg Radio. 197 00:11:04,360 --> 00:11:06,959 Speaker 2: You're listening to a special best of edition of the 198 00:11:07,000 --> 00:11:11,000 Speaker 2: Bloomberg Law Show. Joining me is Professor Eric Goldman of 199 00:11:11,080 --> 00:11:15,679 Speaker 2: Santa Clara University Law School about Supreme Court oral arguments 200 00:11:15,720 --> 00:11:19,880 Speaker 2: over whether public officials can be sued for restricting access 201 00:11:19,960 --> 00:11:23,400 Speaker 2: to their social media feeds. It's the first of several 202 00:11:23,480 --> 00:11:27,640 Speaker 2: social media classes this term. The first case involves two 203 00:11:27,720 --> 00:11:31,559 Speaker 2: San Diego Area school board members who set up Facebook 204 00:11:31,600 --> 00:11:35,960 Speaker 2: and Twitter pages during their twenty fourteen campaigns, then continued 205 00:11:36,040 --> 00:11:39,240 Speaker 2: using the sites to talk about school issues after winning 206 00:11:39,280 --> 00:11:42,520 Speaker 2: election and taking their seats. They set up their pages 207 00:11:42,559 --> 00:11:45,240 Speaker 2: so that their posts were open to comment by members 208 00:11:45,240 --> 00:11:49,400 Speaker 2: of the public. Two of their constituents left frequent comments 209 00:11:49,520 --> 00:11:53,880 Speaker 2: criticizing the board, and the school board members eventually blocked them. 210 00:11:54,280 --> 00:11:58,040 Speaker 2: The second case involves a city manager in Michigan who 211 00:11:58,160 --> 00:12:02,400 Speaker 2: used his Facebook page to post both family and professional information. 212 00:12:02,920 --> 00:12:06,480 Speaker 2: His post in twenty twenty about the COVID nineteen pandemic 213 00:12:06,880 --> 00:12:10,040 Speaker 2: drew a series of critical comments from a follower, who 214 00:12:10,040 --> 00:12:14,800 Speaker 2: he then blocked. Federal appeals courts reached opposite decisions in 215 00:12:14,880 --> 00:12:17,520 Speaker 2: the cases, and now it's up to the Supreme Court. 216 00:12:18,000 --> 00:12:23,400 Speaker 2: The Biden administration was backing the government officials' positions. They 217 00:12:23,520 --> 00:12:27,640 Speaker 2: characterized the Facebook and Twitter feeds as private property. That 218 00:12:27,760 --> 00:12:31,120 Speaker 2: seemed to me to be a not a great concept here. 219 00:12:31,679 --> 00:12:36,160 Speaker 6: It's a really awkward conversation because we know that the 220 00:12:36,200 --> 00:12:40,120 Speaker 6: social media services have their own rules, they have their 221 00:12:40,160 --> 00:12:46,640 Speaker 6: own technological options that differ amongst themselves, and they have 222 00:12:46,800 --> 00:12:50,600 Speaker 6: the ability to intervene with respective part guaris and content 223 00:12:50,960 --> 00:12:53,959 Speaker 6: irrespective of whether or not the Constitution would permit the 224 00:12:54,000 --> 00:12:57,320 Speaker 6: government official take that action. So they're like the elephant 225 00:12:57,320 --> 00:13:00,280 Speaker 6: in the room. Everyone knows that the social media services 226 00:13:00,440 --> 00:13:03,400 Speaker 6: are an integal player in this conversation, but they're not 227 00:13:03,440 --> 00:13:07,120 Speaker 6: the plaintiff or the defendant, and as a result, they're 228 00:13:07,120 --> 00:13:10,920 Speaker 6: not actually represented in this litigation, and as a result, 229 00:13:11,200 --> 00:13:13,360 Speaker 6: the Supreme Court is likely to treat them as this 230 00:13:13,520 --> 00:13:18,920 Speaker 6: opaque third party player who is immaterial or inconsequential to 231 00:13:18,960 --> 00:13:21,760 Speaker 6: the rules. That's actually a good outcome. I really don't 232 00:13:21,800 --> 00:13:25,720 Speaker 6: want the Supreme Court talking about social media as a 233 00:13:25,760 --> 00:13:28,920 Speaker 6: private entity or not. I don't want them making hard 234 00:13:28,960 --> 00:13:31,680 Speaker 6: lines when that's not the question the government has to answer. 235 00:13:31,920 --> 00:13:34,600 Speaker 6: But it's impossible to ignore the shadow of the cast 236 00:13:34,640 --> 00:13:37,479 Speaker 6: over everything that takes place on their services. 237 00:13:37,960 --> 00:13:42,160 Speaker 2: The federal appeals courts reached opposite conclusions in the lower 238 00:13:42,160 --> 00:13:42,920 Speaker 2: court cases. 239 00:13:43,679 --> 00:13:46,840 Speaker 6: That's correct. The Ninth Circuit held that the government officials 240 00:13:46,880 --> 00:13:50,600 Speaker 6: in that case school board members were acting in their 241 00:13:50,640 --> 00:13:54,800 Speaker 6: function as government officials when they blocked some constituents from 242 00:13:54,920 --> 00:13:58,800 Speaker 6: access in social mediaccount. In the sixth Circuit it was 243 00:13:58,840 --> 00:14:03,120 Speaker 6: a government employee who had also blocked individuals. The court 244 00:14:03,160 --> 00:14:05,160 Speaker 6: had held in that case that he was acting as 245 00:14:05,160 --> 00:14:07,439 Speaker 6: a private individual. That was his private account. 246 00:14:08,160 --> 00:14:11,600 Speaker 2: So there were three hours, i believe, of oral arguments. 247 00:14:12,000 --> 00:14:16,760 Speaker 2: Did you see some justices, some blocks of justices sort 248 00:14:16,760 --> 00:14:22,760 Speaker 2: of coming to some conclusions or did you see any patterns? 249 00:14:23,280 --> 00:14:26,560 Speaker 6: The short answer is no, Really, the oral arguments were 250 00:14:26,640 --> 00:14:29,280 Speaker 6: quite opaque about where the judges are likely to end up, 251 00:14:29,320 --> 00:14:31,760 Speaker 6: which is unusual. But one would have hoped that we 252 00:14:31,800 --> 00:14:33,840 Speaker 6: would have been able to get a clearer line from 253 00:14:33,880 --> 00:14:36,240 Speaker 6: the oral arguments. Having said that, there are two things 254 00:14:36,240 --> 00:14:39,320 Speaker 6: that stood out to me. First is that some justices 255 00:14:39,360 --> 00:14:42,160 Speaker 6: seem to be gravittaining around the test that was advocated 256 00:14:42,240 --> 00:14:46,080 Speaker 6: by the Department of Justice and was endorsed by the 257 00:14:46,200 --> 00:14:50,400 Speaker 6: lawyers for the government employees about looking at the duties 258 00:14:50,480 --> 00:14:53,120 Speaker 6: of the government official and their authority to speak on 259 00:14:53,120 --> 00:14:56,160 Speaker 6: behalf of the government. And so Justice Gore such, for example, 260 00:14:56,280 --> 00:14:58,800 Speaker 6: at one point, said it sounds like we got consensus 261 00:14:58,840 --> 00:15:02,160 Speaker 6: that's the right test. I don't know if there was consensus, 262 00:15:02,240 --> 00:15:04,680 Speaker 6: but it wouldn't surprise me if the test looked something 263 00:15:04,880 --> 00:15:07,640 Speaker 6: like that. At the end of the oral arguments, Justice 264 00:15:07,680 --> 00:15:10,880 Speaker 6: Kagan once again had a really powerful turn of the phrase. 265 00:15:11,360 --> 00:15:14,880 Speaker 6: She came and basically blasted the government lawyers, saying that 266 00:15:14,920 --> 00:15:19,040 Speaker 6: the government lawyers proposed test was really out of sync 267 00:15:19,240 --> 00:15:23,040 Speaker 6: with the importance of social media to the government function 268 00:15:23,440 --> 00:15:27,000 Speaker 6: and would limit the ability of us as constituents or 269 00:15:27,080 --> 00:15:29,520 Speaker 6: to be able to defend our own interests when the 270 00:15:29,520 --> 00:15:32,560 Speaker 6: government keeps embracing social media. So I saw kind of 271 00:15:32,640 --> 00:15:36,000 Speaker 6: two opposite approaches there, Justice Gore such saying, you know, 272 00:15:36,120 --> 00:15:37,920 Speaker 6: sounds good to me, let's go with the test that 273 00:15:38,000 --> 00:15:40,800 Speaker 6: you proposed, and Jessic Kagan saying that test is actually 274 00:15:40,840 --> 00:15:42,600 Speaker 6: really harmful to the future. 275 00:15:43,200 --> 00:15:45,680 Speaker 2: Was there a split on ideological lines or did this 276 00:15:45,760 --> 00:15:47,280 Speaker 2: cross ideological lines? 277 00:15:47,760 --> 00:15:51,080 Speaker 6: I couldn't put together a pattern that represented any kind 278 00:15:51,120 --> 00:15:55,120 Speaker 6: of ideological partisan fit. But having said that, I would 279 00:15:55,120 --> 00:15:57,600 Speaker 6: say that it seemed like some of the quote more 280 00:15:57,640 --> 00:16:02,200 Speaker 6: conservative justices were more inclined to support the government employees 281 00:16:02,320 --> 00:16:04,600 Speaker 6: freedom to do what they want, whereas some of the 282 00:16:04,680 --> 00:16:07,840 Speaker 6: quote more liberal justices were more skeptical about how that 283 00:16:07,840 --> 00:16:09,000 Speaker 6: could lead to censorship. 284 00:16:09,160 --> 00:16:12,960 Speaker 2: So at times when we've had these oral arguments at 285 00:16:12,960 --> 00:16:17,640 Speaker 2: the Supreme Court involving, you know, the Internet, texting, social media, 286 00:16:18,120 --> 00:16:21,880 Speaker 2: the justices have seemed to be a step behind, maybe 287 00:16:21,920 --> 00:16:24,840 Speaker 2: more than one step. Did it seem like they fully 288 00:16:25,000 --> 00:16:27,680 Speaker 2: grasped what was going on in these cases? 289 00:16:28,240 --> 00:16:31,280 Speaker 6: They really didn't. This was yet another example of how 290 00:16:31,320 --> 00:16:34,720 Speaker 6: the Internet baffles Supreme Court justices. And just to be clear, 291 00:16:35,160 --> 00:16:38,200 Speaker 6: we don't know how many Supreme Court justices spend time 292 00:16:38,360 --> 00:16:41,600 Speaker 6: on social media, but it's not like they do it publicly. 293 00:16:41,880 --> 00:16:45,360 Speaker 6: So they're just not familiar with social media at the 294 00:16:45,400 --> 00:16:48,080 Speaker 6: same degree that most of us, as everyday users are, 295 00:16:48,440 --> 00:16:51,120 Speaker 6: So it's not surprising that it's a little bit baffling 296 00:16:51,120 --> 00:16:53,320 Speaker 6: to them if they're not immersed in that as part 297 00:16:53,320 --> 00:16:56,280 Speaker 6: of their daily functions. There was a really awkward line 298 00:16:56,280 --> 00:16:59,160 Speaker 6: that came from Chief Justice Roberts where he talked about 299 00:16:59,360 --> 00:17:03,600 Speaker 6: social media, described it as the gathering of protons, and 300 00:17:03,640 --> 00:17:06,960 Speaker 6: it was such a reductionist approach that social media is 301 00:17:07,160 --> 00:17:10,399 Speaker 6: just about the movement of electronic pulses on the Internet. 302 00:17:10,480 --> 00:17:12,520 Speaker 6: That's all it is. And it's kind of like saying 303 00:17:12,520 --> 00:17:15,920 Speaker 6: that Supreme Court opinions are just inc on a piece 304 00:17:15,920 --> 00:17:20,199 Speaker 6: of paper. It's a reductionist conclusion that isn't inherently wrong, 305 00:17:20,560 --> 00:17:24,479 Speaker 6: but it completely misunderstands the scope and the stakes at 306 00:17:24,520 --> 00:17:25,480 Speaker 6: issue in this case. 307 00:17:26,040 --> 00:17:30,480 Speaker 2: And this is the first of several social media clashes 308 00:17:30,760 --> 00:17:33,760 Speaker 2: that coming up this term involving the First Amendment and 309 00:17:33,760 --> 00:17:36,160 Speaker 2: how it applies to social media companies. 310 00:17:36,560 --> 00:17:38,800 Speaker 6: So just to be clear, there's going to be a 311 00:17:38,800 --> 00:17:41,760 Speaker 6: steady stream of Internet law cases going to the Supreme 312 00:17:41,840 --> 00:17:45,160 Speaker 6: Court and likely to be decided by the Supreme Court 313 00:17:45,200 --> 00:17:48,320 Speaker 6: over the next few years. We've had just this upswell 314 00:17:48,800 --> 00:17:52,359 Speaker 6: of legislation trying to regulate the Internet, and many of 315 00:17:52,359 --> 00:17:54,919 Speaker 6: those laws are going to end up before the Supreme Court. 316 00:17:55,080 --> 00:17:57,760 Speaker 6: So we're just kind of at the beginning of this 317 00:17:58,000 --> 00:18:00,680 Speaker 6: multi year cycle where the Supreme Court is going to 318 00:18:00,720 --> 00:18:03,520 Speaker 6: be regularly deciding the future of the Internet. One of 319 00:18:03,560 --> 00:18:06,720 Speaker 6: the other cases they've set it, or there's two companion 320 00:18:06,760 --> 00:18:10,479 Speaker 6: cases involved the Texas and Florida's social media censorship laws. 321 00:18:10,760 --> 00:18:14,760 Speaker 6: These are laws that were enacted to basically take government 322 00:18:14,840 --> 00:18:18,960 Speaker 6: control over the functional operations of social media. Sounds like 323 00:18:18,960 --> 00:18:20,560 Speaker 6: the kind of thing that we would think would be 324 00:18:20,600 --> 00:18:24,840 Speaker 6: clearly censorship, and yet the Florida Court said that some 325 00:18:24,880 --> 00:18:26,959 Speaker 6: of it was struck down, some of it was okay. 326 00:18:27,359 --> 00:18:30,399 Speaker 6: The Texas pele Court said it all sounds good to me. 327 00:18:30,760 --> 00:18:32,920 Speaker 6: And so the future of the Internet is very much 328 00:18:32,920 --> 00:18:35,600 Speaker 6: mistake in that set of cases as well, because if 329 00:18:35,600 --> 00:18:38,600 Speaker 6: the Supreme Court says that the government can dictate how 330 00:18:38,640 --> 00:18:41,480 Speaker 6: social media runs its operations, they are going to be 331 00:18:41,520 --> 00:18:44,960 Speaker 6: dictating what editorial decisions those services can make. 332 00:18:45,520 --> 00:18:48,800 Speaker 2: A lot more oral arguments on social media to come. 333 00:18:49,760 --> 00:18:52,840 Speaker 2: Thanks so much, Eric. That's Eric Goldman, a professor at 334 00:18:52,920 --> 00:18:56,639 Speaker 2: Santa Clara University School of Law and co director of 335 00:18:56,680 --> 00:19:01,000 Speaker 2: the High Tech Law Institute. Coming up next, what exactly 336 00:19:01,160 --> 00:19:04,239 Speaker 2: is a legal hot tub? Remember you can always get 337 00:19:04,280 --> 00:19:06,800 Speaker 2: the latest legal news by listening to our Bloomberg Law 338 00:19:06,840 --> 00:19:11,040 Speaker 2: podcasts and attorneys looking for legal research. Whether you're an 339 00:19:11,040 --> 00:19:14,720 Speaker 2: in house counsel or in private practice, Bloomberg Law gives 340 00:19:14,760 --> 00:19:18,680 Speaker 2: you the edge with the latest in AI powered legal analytics, 341 00:19:18,840 --> 00:19:23,200 Speaker 2: business insights, and workflow tools. With guidance from our experts, 342 00:19:23,280 --> 00:19:26,719 Speaker 2: you'll grasp the latest trends in the legal industry, helping 343 00:19:26,720 --> 00:19:29,959 Speaker 2: you achieve better results for the practice of law, the 344 00:19:29,960 --> 00:19:33,240 Speaker 2: business of law, the future of law. Visit Bloomberg Law 345 00:19:33,240 --> 00:19:36,639 Speaker 2: dot com. I'm June Grosso and you're listening to Bloomberg. 346 00:19:45,400 --> 00:19:50,200 Speaker 1: This is Bloomberg Law with June Grosso from Bloomberg Radio. 347 00:19:50,920 --> 00:19:53,560 Speaker 2: You're listening to a special best of edition of the 348 00:19:53,560 --> 00:19:59,159 Speaker 2: Bloomberg Law Show. What exactly is a legal hot tub. 349 00:19:59,560 --> 00:20:02,879 Speaker 2: It's not diverting or exciting as it may sound, and 350 00:20:02,920 --> 00:20:05,520 Speaker 2: it really has nothing to do with hot tubs. It's 351 00:20:05,600 --> 00:20:11,440 Speaker 2: formally called concurrent expert testimony or a concurrent expert evidence proceeding, 352 00:20:11,760 --> 00:20:14,720 Speaker 2: and it's more like a discussion among experts. If you 353 00:20:14,800 --> 00:20:17,359 Speaker 2: haven't heard about it, it's because it's a novelty in 354 00:20:17,520 --> 00:20:20,440 Speaker 2: US courts. Here to tell us all about it and 355 00:20:20,520 --> 00:20:24,560 Speaker 2: how it got. That name is Dan paskin Bloomberg Law Reporter. 356 00:20:25,680 --> 00:20:29,400 Speaker 2: So tell us exactly what this legal hot tub is, Dan. 357 00:20:30,520 --> 00:20:32,400 Speaker 8: Yes, So you can kind of think of it as 358 00:20:32,400 --> 00:20:36,879 Speaker 8: a debate between experts, often economic experts, but not necessarily 359 00:20:37,280 --> 00:20:40,320 Speaker 8: where instead of one sitting on the stand in a 360 00:20:40,359 --> 00:20:44,120 Speaker 8: trial or in the pre trial hearing and getting examined 361 00:20:44,160 --> 00:20:46,399 Speaker 8: and then cross examined by one size attorneys and then 362 00:20:46,440 --> 00:20:50,520 Speaker 8: the other. Both or all of the witnesses sit together 363 00:20:50,600 --> 00:20:53,200 Speaker 8: before the judge and are basically prompted to debate each 364 00:20:53,200 --> 00:20:56,560 Speaker 8: other on a series of predetermined topics or questions. 365 00:20:56,760 --> 00:21:00,600 Speaker 2: So, tell us about this hot tub. It doesn't sound 366 00:21:00,680 --> 00:21:04,560 Speaker 2: very legal to say, even legalta. Tell us what federal 367 00:21:04,640 --> 00:21:08,320 Speaker 2: Judge James Donado used it for in San Francisco this summer. 368 00:21:08,760 --> 00:21:12,159 Speaker 8: So Donado held the second hot sub he's held in 369 00:21:12,160 --> 00:21:16,320 Speaker 8: this case. This is a lawsuit alleging Google basically has 370 00:21:16,359 --> 00:21:21,440 Speaker 8: anti competitive control over the payment systems in its playstore, 371 00:21:21,480 --> 00:21:23,640 Speaker 8: which is like if you have an Android, Sponi's where 372 00:21:23,640 --> 00:21:27,280 Speaker 8: you get your apps. And so the second hotu was 373 00:21:27,440 --> 00:21:31,680 Speaker 8: to basically determine whether the plaintiffs experts have reached kind 374 00:21:31,720 --> 00:21:36,480 Speaker 8: of valid models for figuring out how much consumers were 375 00:21:36,520 --> 00:21:40,760 Speaker 8: harmed by these playstore policies and what the impact was 376 00:21:40,800 --> 00:21:45,320 Speaker 8: on the market. Pretty central evidence for a trial to 377 00:21:45,359 --> 00:21:49,240 Speaker 8: figure out whether Google, in fact, you know, overcharged customers 378 00:21:49,400 --> 00:21:50,920 Speaker 8: and buy how much if it did. 379 00:21:51,520 --> 00:21:54,320 Speaker 2: Is the judge the only one asking questions? Or are 380 00:21:54,359 --> 00:21:58,399 Speaker 2: the lawyers asking questions? Is their cross talk between the experts. 381 00:21:58,760 --> 00:22:01,640 Speaker 8: There's a lot of cross time. It's almost exclusively Tonauto 382 00:22:01,680 --> 00:22:05,360 Speaker 8: asking the question. He allows the attorneys a couple attorneys 383 00:22:05,400 --> 00:22:08,320 Speaker 8: to sit with the experts in the hot sub, but 384 00:22:08,359 --> 00:22:10,399 Speaker 8: they're really only allowed to ask questions right at the 385 00:22:10,480 --> 00:22:13,360 Speaker 8: end if they have kind of clarifying questions for either expert. 386 00:22:13,720 --> 00:22:18,520 Speaker 8: Otherwise Tonao prompts one side or the other. We'll say like, yeah, 387 00:22:18,520 --> 00:22:20,919 Speaker 8: I read your report, I had this question about this, 388 00:22:21,040 --> 00:22:24,040 Speaker 8: you know, one part of the model, and then we'll 389 00:22:24,080 --> 00:22:26,520 Speaker 8: prompt the other expert to be like, do you disagree 390 00:22:26,520 --> 00:22:30,160 Speaker 8: with that? So why it got pretty heated. Several times 391 00:22:30,280 --> 00:22:32,160 Speaker 8: there was I don't know if you would call it yelling, 392 00:22:32,240 --> 00:22:35,800 Speaker 8: but definitely raised voices. The court reporter had to interrupt 393 00:22:36,280 --> 00:22:40,119 Speaker 8: I think three separate times because two experts and the 394 00:22:40,200 --> 00:22:43,359 Speaker 8: judge were talking over each other and she couldn't transcribe 395 00:22:43,359 --> 00:22:46,000 Speaker 8: that in real time. So it definitely is a little 396 00:22:46,000 --> 00:22:48,480 Speaker 8: more chaotic than your average court oral testimony. 397 00:22:49,160 --> 00:22:53,480 Speaker 2: Is this because the expert testimony is so complex for 398 00:22:53,560 --> 00:22:58,760 Speaker 2: the judge to understand? Or is it because this is quicker? 399 00:22:58,840 --> 00:23:00,639 Speaker 2: I mean, what's the real reason behind this? 400 00:23:01,200 --> 00:23:04,240 Speaker 8: The reason do not ouheld the hantu was to answer 401 00:23:05,119 --> 00:23:08,000 Speaker 8: this Google motion over whether the experts should be allowed 402 00:23:08,040 --> 00:23:11,240 Speaker 8: to test or not, and Donato told me in an 403 00:23:11,240 --> 00:23:16,200 Speaker 8: interview afterwards that it's very useful for him understanding their 404 00:23:16,200 --> 00:23:18,960 Speaker 8: testimony and their models. It is really complicated, and that's 405 00:23:18,960 --> 00:23:22,400 Speaker 8: a big reason why judges are deploying hot tubs. They 406 00:23:22,640 --> 00:23:25,240 Speaker 8: haven't deployed too many of them. But it's not just 407 00:23:25,280 --> 00:23:28,800 Speaker 8: about the complexity. It's also faster, Tonatoa said, it's a 408 00:23:28,840 --> 00:23:33,760 Speaker 8: lot cleaner compared like normal expert testimony, non hot tub 409 00:23:33,800 --> 00:23:36,879 Speaker 8: testimony to a game of telephone. Right, you've got the 410 00:23:36,920 --> 00:23:39,120 Speaker 8: expert on the stand, you've got their attorney questioning them, 411 00:23:39,440 --> 00:23:41,639 Speaker 8: and then you've got the judge hearing their answers. So 412 00:23:41,680 --> 00:23:44,440 Speaker 8: it's kind of filtered through what questions the attorney wants 413 00:23:44,480 --> 00:23:47,680 Speaker 8: to ask and then how the economist in this case 414 00:23:48,119 --> 00:23:51,359 Speaker 8: answers those questions. The judge might not necessarily be getting 415 00:23:51,640 --> 00:23:55,399 Speaker 8: the exact answers they're looking for and instead getting, you know, 416 00:23:55,480 --> 00:23:58,479 Speaker 8: the versions that the economist wants to give, the response 417 00:23:58,560 --> 00:24:00,560 Speaker 8: to the questions the attorney wants to ask. And so 418 00:24:01,000 --> 00:24:03,600 Speaker 8: by having this hot tub, it's a lot more direct 419 00:24:03,760 --> 00:24:06,560 Speaker 8: and clear. The judge can ask really complex questions and 420 00:24:07,160 --> 00:24:10,200 Speaker 8: get you know, exactly what they want out of them 421 00:24:10,440 --> 00:24:12,480 Speaker 8: and kind of follow up if you have dodges the 422 00:24:12,560 --> 00:24:15,680 Speaker 8: question and doesn't answers have factorily and they're kind of 423 00:24:15,760 --> 00:24:20,520 Speaker 8: us to typically get hired for these cases. One who's 424 00:24:20,520 --> 00:24:23,560 Speaker 8: done several of these told me that it's pretty hard 425 00:24:23,600 --> 00:24:25,439 Speaker 8: for an attorney to cross examine them, to kind of 426 00:24:25,480 --> 00:24:29,399 Speaker 8: catch them in errors or obfuscations, because the stuff is 427 00:24:29,400 --> 00:24:31,560 Speaker 8: so complex and because it involves, you know, so many 428 00:24:31,640 --> 00:24:34,680 Speaker 8: years of study. Really the only person in the courtroom 429 00:24:34,760 --> 00:24:38,120 Speaker 8: can really call them on their mistakes or on lack 430 00:24:38,160 --> 00:24:40,680 Speaker 8: of clarity is the other economists. So it also means 431 00:24:40,720 --> 00:24:43,520 Speaker 8: that you have the only other person able to make 432 00:24:43,560 --> 00:24:46,080 Speaker 8: these calls in the room with them and able to 433 00:24:47,080 --> 00:24:48,240 Speaker 8: disagree in real time. 434 00:24:48,920 --> 00:24:52,600 Speaker 2: Do attorneys object to this because it's taking them out 435 00:24:52,600 --> 00:24:56,600 Speaker 2: of the equation with a very important witness or witnesses? 436 00:24:57,800 --> 00:25:00,760 Speaker 8: Yeah, So, I mean like these are arguable some of 437 00:25:00,760 --> 00:25:04,480 Speaker 8: the most important players in a trial, especially in anti 438 00:25:04,520 --> 00:25:07,840 Speaker 8: trust but also in I imagine you know, patent cases 439 00:25:07,920 --> 00:25:10,920 Speaker 8: and elsewhere, and what they come up with can really 440 00:25:10,920 --> 00:25:14,359 Speaker 8: determine not just whether a company or an individual is 441 00:25:14,400 --> 00:25:17,239 Speaker 8: liable or not, but also you know, monetarily how much 442 00:25:17,320 --> 00:25:21,479 Speaker 8: they have to pay the attorneys aren't the biggest fans 443 00:25:21,560 --> 00:25:24,560 Speaker 8: of having to step back and basically watch this thing happen. 444 00:25:24,920 --> 00:25:28,679 Speaker 8: But once I spoke to you, also appreciated how useful 445 00:25:28,720 --> 00:25:31,119 Speaker 8: it was for the judge and again how clean the 446 00:25:31,160 --> 00:25:34,040 Speaker 8: whole thing was. But yeah, you're right, they they definitely 447 00:25:34,880 --> 00:25:37,359 Speaker 8: lose quite a bit of control. They're they're relegated to 448 00:25:37,440 --> 00:25:40,720 Speaker 8: preparing for the hot dub and then you know, trying 449 00:25:40,720 --> 00:25:44,000 Speaker 8: to pick up pieces afterwards. Probably the most helpless they 450 00:25:44,040 --> 00:25:45,919 Speaker 8: are throughout the proceedings. 451 00:25:46,280 --> 00:25:49,720 Speaker 2: So where does that term hot tub come from Australia? 452 00:25:49,800 --> 00:25:52,320 Speaker 8: Which kind of when you when you learn that makes 453 00:25:52,400 --> 00:25:54,560 Speaker 8: quite of the descent, I feel like you can you 454 00:25:54,560 --> 00:25:56,919 Speaker 8: can definitely imagine for one of what's an Australian accents, 455 00:25:57,040 --> 00:25:59,480 Speaker 8: saying hot at least makes sense to me. 456 00:25:59,680 --> 00:25:59,880 Speaker 6: Right. 457 00:26:00,240 --> 00:26:04,200 Speaker 8: These originated pretty much right around the beginning of the decade, 458 00:26:04,359 --> 00:26:08,560 Speaker 8: and it was deployed originally by the Australian Competition Tribunal. 459 00:26:09,040 --> 00:26:12,320 Speaker 8: And there are kind of antitrust dedicated court system basically 460 00:26:12,400 --> 00:26:15,399 Speaker 8: for this reason to get a clearer understanding of what 461 00:26:15,440 --> 00:26:18,040 Speaker 8: experts we're talking about and make them really drill down 462 00:26:18,160 --> 00:26:21,560 Speaker 8: on their agreements and their disagreements. It was pretty successful there. 463 00:26:21,600 --> 00:26:23,439 Speaker 8: They've modified it quite a bit. I don't think it's 464 00:26:23,480 --> 00:26:25,680 Speaker 8: technically called the hot ted there anymore, but it's effectively 465 00:26:25,720 --> 00:26:27,960 Speaker 8: the way we still run the way. That's Nato Rana 466 00:26:28,040 --> 00:26:30,280 Speaker 8: in his courtroom, and it's taken off in a bunch 467 00:26:30,320 --> 00:26:34,200 Speaker 8: of other countries in Europe, in South Africa, Canada has 468 00:26:34,320 --> 00:26:37,960 Speaker 8: used it. It's mostly been unpopular. In the US. We've 469 00:26:37,960 --> 00:26:41,000 Speaker 8: only found a little less than two dozen instances of 470 00:26:41,000 --> 00:26:45,000 Speaker 8: federal judges using on although also it's been to ployed 471 00:26:45,000 --> 00:26:47,800 Speaker 8: in arbitration a little bit, but it hasn't it hasn't 472 00:26:47,800 --> 00:26:48,280 Speaker 8: taken off. 473 00:26:48,760 --> 00:26:52,840 Speaker 2: Yeah, and I'm wondering have there been any appeals based 474 00:26:52,880 --> 00:26:55,359 Speaker 2: on the fact that this was used So. 475 00:26:55,520 --> 00:27:00,719 Speaker 8: Denata's case, he in the Google play is used a 476 00:27:00,880 --> 00:27:03,760 Speaker 8: hot tub for class certification about a year ago. It 477 00:27:03,880 --> 00:27:08,439 Speaker 8: was last June, and Google appealed to the ruling, which 478 00:27:08,640 --> 00:27:11,399 Speaker 8: he found in favor of the class and certified a 479 00:27:11,440 --> 00:27:14,960 Speaker 8: cost of consumers are pretty large cost of consumers that 480 00:27:14,960 --> 00:27:16,800 Speaker 8: would have put Google on the hook for quite a 481 00:27:16,800 --> 00:27:19,520 Speaker 8: bit of money and hypothetical damages. Google appealed that to 482 00:27:19,520 --> 00:27:22,600 Speaker 8: the Ninth Circuit Court of Appeals in California, but before 483 00:27:22,600 --> 00:27:25,159 Speaker 8: they could actually rule and it was kind of unclear 484 00:27:25,200 --> 00:27:28,560 Speaker 8: exactly how much the hot tub aspect of it would 485 00:27:28,720 --> 00:27:32,480 Speaker 8: affect the ruling. I'm not sure that would have changed anything. 486 00:27:32,920 --> 00:27:35,920 Speaker 8: Donato actually changed his mind in part because of evidence 487 00:27:35,960 --> 00:27:38,200 Speaker 8: that came up at the hot tub that I attended 488 00:27:39,160 --> 00:27:42,719 Speaker 8: and decertified the class, kind of rendering the Ninth Circuit 489 00:27:42,760 --> 00:27:43,680 Speaker 8: librations mood. 490 00:27:44,040 --> 00:27:46,760 Speaker 2: There's no appeal from his reversal, but in the end 491 00:27:46,800 --> 00:27:48,680 Speaker 2: he decertified the class. 492 00:27:49,359 --> 00:27:51,840 Speaker 8: Yeah, and it looks like they probably won't. But no, 493 00:27:51,960 --> 00:27:55,240 Speaker 8: there hasn't been any other appeals. The Ninth Circuit basically 494 00:27:55,720 --> 00:27:59,159 Speaker 8: handed the ruling back to Donado when he changed his 495 00:27:59,240 --> 00:28:00,520 Speaker 8: mind at the end of August. 496 00:28:01,080 --> 00:28:05,160 Speaker 2: So this was pretty consequential then to make him change 497 00:28:05,200 --> 00:28:05,679 Speaker 2: his mind. 498 00:28:06,760 --> 00:28:07,000 Speaker 6: Yeah. 499 00:28:07,160 --> 00:28:09,840 Speaker 8: So if you read his ruling on the classification, he 500 00:28:10,000 --> 00:28:12,199 Speaker 8: quotes from the hot tub that I attended at the 501 00:28:12,200 --> 00:28:15,600 Speaker 8: beginning of August and basically says it helped him get 502 00:28:15,600 --> 00:28:19,080 Speaker 8: a better understanding of the issues. Basically, what happened was 503 00:28:19,640 --> 00:28:22,640 Speaker 8: part of the model that one of the experts used 504 00:28:23,280 --> 00:28:27,880 Speaker 8: in certifying the class was also relevant for determining damages 505 00:28:27,920 --> 00:28:31,560 Speaker 8: to that class, and the defendants expert tried to poke 506 00:28:31,640 --> 00:28:34,360 Speaker 8: some holes in it. At the hot tub that I attended, 507 00:28:34,400 --> 00:28:37,080 Speaker 8: and Donato found this to be kind of a valid attack, 508 00:28:37,720 --> 00:28:41,320 Speaker 8: and so he didn't just throw out the testimony of 509 00:28:41,320 --> 00:28:45,040 Speaker 8: that plaintiffs expert for the merits of the harms, but 510 00:28:45,160 --> 00:28:46,400 Speaker 8: also for the classes off. 511 00:28:47,040 --> 00:28:48,320 Speaker 2: I think they have to come up with a new 512 00:28:48,400 --> 00:28:50,840 Speaker 2: name for this, don't you. The judge held a hot 513 00:28:50,880 --> 00:28:52,320 Speaker 2: tub just doesn't sound right. 514 00:28:53,040 --> 00:28:55,680 Speaker 8: Oh yeah, I mean my pitching the story was quite 515 00:28:55,680 --> 00:28:58,080 Speaker 8: the experience. I got a lot of raised arostrum editors, 516 00:28:58,280 --> 00:29:02,280 Speaker 8: although I have the receiver of a variety of memes 517 00:29:02,320 --> 00:29:04,720 Speaker 8: created from it, which was pretty nice. But now attorneys 518 00:29:04,720 --> 00:29:07,280 Speaker 8: don't love it. I talked to an economist she said 519 00:29:08,520 --> 00:29:10,920 Speaker 8: strongly believes we need to find another term for it. 520 00:29:11,040 --> 00:29:13,400 Speaker 8: If she mentioned that it's kind of weird when you're 521 00:29:13,440 --> 00:29:15,120 Speaker 8: at a conference and someone walks up to you and 522 00:29:15,120 --> 00:29:17,160 Speaker 8: it's like, I recognize you from the hot sub I 523 00:29:17,200 --> 00:29:20,080 Speaker 8: think people are trying to find another term. But concurrent 524 00:29:20,200 --> 00:29:24,520 Speaker 8: expert evidence, that concurrent expert witness proceeding is not very catchy, 525 00:29:24,840 --> 00:29:25,400 Speaker 8: not very. 526 00:29:25,280 --> 00:29:28,479 Speaker 2: Catchy at all. Thanks so much, Dan. That's Dan paskin, 527 00:29:28,520 --> 00:29:32,040 Speaker 2: Bloomberg Law Reporter, Coming up next on The Bloomberg Law Show. 528 00:29:32,640 --> 00:29:36,280 Speaker 2: Instagram promoters test the limits of a ninety year old 529 00:29:36,360 --> 00:29:38,680 Speaker 2: securities law. This is Bloomberg. 530 00:29:47,400 --> 00:29:52,200 Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio. 531 00:29:52,760 --> 00:29:55,360 Speaker 2: You're listening to a special best of edition of the 532 00:29:55,400 --> 00:29:56,440 Speaker 2: Bloomberg Law Show. 533 00:29:57,240 --> 00:29:59,880 Speaker 9: Real Estate Investing Made Simple. Grant Cardon here in the 534 00:30:00,520 --> 00:30:02,680 Speaker 9: on every Monday, I said, Steve, would I pay you 535 00:30:02,760 --> 00:30:06,400 Speaker 9: last month? Steve was paid thirty one and twenty dollars 536 00:30:07,640 --> 00:30:12,320 Speaker 9: last month because he invested at Cardoncapital dot Com. 537 00:30:12,480 --> 00:30:15,440 Speaker 2: In October, the Supreme Court declined to hear a case 538 00:30:15,520 --> 00:30:20,320 Speaker 2: involving a lawsuit against real estate management company Cardone Capital 539 00:30:20,680 --> 00:30:24,840 Speaker 2: and its CEO, Grant Cardone, for misleading statements in YouTube 540 00:30:24,840 --> 00:30:29,160 Speaker 2: and Instagram videos. The lawsuit was dismissed on other grounds 541 00:30:29,280 --> 00:30:32,680 Speaker 2: days after the Justices refused the case, But the core 542 00:30:32,840 --> 00:30:36,320 Speaker 2: issue remains, what does it mean to sell securities in 543 00:30:36,360 --> 00:30:40,720 Speaker 2: the age of YouTube and Instagram? As venture capital firms 544 00:30:40,760 --> 00:30:45,440 Speaker 2: and others hyping investment projects online are facing lawsuits from 545 00:30:45,480 --> 00:30:49,440 Speaker 2: disgruntled buyers. Joining me is Anne Lipton, a business law 546 00:30:49,560 --> 00:30:54,520 Speaker 2: professor at Tulane University. Tell us about the provision in 547 00:30:54,600 --> 00:30:57,080 Speaker 2: the thirty three Securities. 548 00:30:56,440 --> 00:30:59,680 Speaker 10: Act okay so Section twelve is from the nineteen thirty 549 00:30:59,680 --> 00:31:02,680 Speaker 10: three Ccurities Act, and it basically has two separate provisions. 550 00:31:03,280 --> 00:31:06,240 Speaker 10: The first is that a purchaser of a security that 551 00:31:06,360 --> 00:31:10,360 Speaker 10: was sold unregistered when it should have been registered has 552 00:31:10,400 --> 00:31:14,280 Speaker 10: a right to sue the seller. And then secondly, they 553 00:31:14,320 --> 00:31:16,920 Speaker 10: can sue anyone who sold it to them or who 554 00:31:17,000 --> 00:31:23,640 Speaker 10: solicited the purchase if the prospectus or sales documents contained 555 00:31:24,080 --> 00:31:27,480 Speaker 10: false statements. Now, sometimes there's a bit of a debate 556 00:31:27,480 --> 00:31:29,720 Speaker 10: about what counts as a prospectus, but what it comes 557 00:31:29,800 --> 00:31:32,480 Speaker 10: down to is that this is sometimes a more attractive 558 00:31:32,480 --> 00:31:36,360 Speaker 10: option than say, more traditional ways of suing for false statements, 559 00:31:36,480 --> 00:31:39,320 Speaker 10: like Section ten B, which is the anti fraud statute, 560 00:31:39,520 --> 00:31:42,280 Speaker 10: because if you sue for false statements in connection with 561 00:31:43,040 --> 00:31:47,360 Speaker 10: essentially these unregistered security sales under section twelve, you don't 562 00:31:47,560 --> 00:31:50,400 Speaker 10: have to show that you relied on the false statement, 563 00:31:50,440 --> 00:31:51,800 Speaker 10: and you don't have to show that there was any 564 00:31:51,840 --> 00:31:53,160 Speaker 10: intent to make a false statement. 565 00:31:53,280 --> 00:31:56,840 Speaker 2: The Supreme Court decided not to take a case involving 566 00:31:56,920 --> 00:32:00,000 Speaker 2: cardone Capital. Tell us a little about the issue. 567 00:32:00,040 --> 00:32:02,880 Speaker 10: Who's there, Well, that was the case that was Actually 568 00:32:02,920 --> 00:32:04,680 Speaker 10: it wasn't a registered offering. I believe it was under 569 00:32:04,720 --> 00:32:09,520 Speaker 10: regulation A so Regulation A is an exemption from full 570 00:32:09,640 --> 00:32:13,480 Speaker 10: on registered offerings, but it does require some degree of 571 00:32:13,480 --> 00:32:16,640 Speaker 10: filing and disclosure with the SEC. So it wasn't an 572 00:32:16,760 --> 00:32:21,880 Speaker 10: unregistered offering. But because it's not registered offerings, the standard 573 00:32:21,920 --> 00:32:25,920 Speaker 10: protections available in registered offerings are not available to purchasers. Instead, 574 00:32:26,000 --> 00:32:28,480 Speaker 10: the only liability available would be, you know, just straight 575 00:32:28,560 --> 00:32:30,880 Speaker 10: up fraud, which is again very hard to prove, or 576 00:32:31,040 --> 00:32:34,640 Speaker 10: Section twelve liability. That's what's available. And so this real 577 00:32:34,800 --> 00:32:39,560 Speaker 10: estate company, they used social media to advertise the offering 578 00:32:39,800 --> 00:32:42,160 Speaker 10: that was filed with the SEC. They had documents with 579 00:32:42,160 --> 00:32:44,920 Speaker 10: the SEC and so forth, and shareholders claimed that these 580 00:32:45,000 --> 00:32:50,320 Speaker 10: advertisements were solicitations. In the Ninth Circuit agreed and repudiated. 581 00:32:50,400 --> 00:32:51,760 Speaker 10: I mean, you know, some of the case law that 582 00:32:51,840 --> 00:32:54,080 Speaker 10: had held there must be direct contact hadn't come out 583 00:32:54,080 --> 00:32:55,440 Speaker 10: of the Ninth Circuit, so at very least it was 584 00:32:55,440 --> 00:32:59,320 Speaker 10: disagreeing with you know, the other courts that had imposed 585 00:32:59,320 --> 00:33:04,320 Speaker 10: something like direct contact requirement. But the Supreme Court denies sort, 586 00:33:04,480 --> 00:33:06,040 Speaker 10: you know, I mean, there are any number of reasons 587 00:33:06,040 --> 00:33:08,080 Speaker 10: why they could have denied SIRT, but one possibility is 588 00:33:08,120 --> 00:33:12,440 Speaker 10: that the social media cases are new. They're you know, 589 00:33:12,520 --> 00:33:16,520 Speaker 10: looking to this old precedent that was generated under IPO situations, 590 00:33:16,560 --> 00:33:18,280 Speaker 10: and you know, it may take some time to work 591 00:33:18,320 --> 00:33:19,160 Speaker 10: through the court. 592 00:33:19,400 --> 00:33:21,600 Speaker 2: You know, if you ask an average person, it doesn't 593 00:33:21,640 --> 00:33:26,040 Speaker 2: seem like the difficult question. They're online, they're soliciting. Yeah, 594 00:33:26,080 --> 00:33:26,720 Speaker 2: they're selling. 595 00:33:27,240 --> 00:33:31,240 Speaker 10: What makes so difficult, Well, because the interesting thing is 596 00:33:31,320 --> 00:33:34,840 Speaker 10: that the word solicit it doesn't actually appear in the statute. 597 00:33:35,000 --> 00:33:38,480 Speaker 10: What the statute says is imposing liability for selling. The 598 00:33:38,520 --> 00:33:42,280 Speaker 10: Supreme Court's interpretation of selling in Printer versus Doll, this 599 00:33:42,360 --> 00:33:45,320 Speaker 10: case from nineteen eighty eight is the one that imposed 600 00:33:45,320 --> 00:33:49,640 Speaker 10: this concept of solicitation with this very specific kind of definition. 601 00:33:49,880 --> 00:33:52,320 Speaker 10: And to be honest, Printer doesn't seem to really understand 602 00:33:52,360 --> 00:33:55,720 Speaker 10: how security sales works. There are parts of it that 603 00:33:56,000 --> 00:33:59,520 Speaker 10: display a kind of lack of understanding. This concept of 604 00:33:59,520 --> 00:34:03,400 Speaker 10: solicit Exactly how we're defining it is not in the statute. 605 00:34:03,400 --> 00:34:05,400 Speaker 10: It comes from the Supreme Court case Lawn. So now 606 00:34:05,400 --> 00:34:06,960 Speaker 10: we're all trying to figure out what the Supreme Court 607 00:34:06,960 --> 00:34:09,680 Speaker 10: man and how you translate a case in nineteen eighty 608 00:34:09,719 --> 00:34:10,520 Speaker 10: eight it's today. 609 00:34:10,840 --> 00:34:14,319 Speaker 2: That's Anne Lipton, a business law professor at Tulane University, 610 00:34:14,640 --> 00:34:16,959 Speaker 2: and that's it for this edition. Of the Bloomberg Law Show. 611 00:34:17,320 --> 00:34:19,839 Speaker 2: Remember you can always get the latest legal news by 612 00:34:19,880 --> 00:34:22,680 Speaker 2: listening to our Bloomberg Law podcasts. You can find them 613 00:34:22,719 --> 00:34:27,680 Speaker 2: on Apple Podcasts, Spotify, and at www dot bloomberg dot 614 00:34:27,719 --> 00:34:31,960 Speaker 2: com slash podcast Slash Law. Stay with us today's top 615 00:34:32,040 --> 00:34:35,640 Speaker 2: stories and global business headlines are coming up right now.