1 00:00:02,680 --> 00:00:06,920 Speaker 1: This is Bloomberg Law with June Grossel from Bloomberg Radio. 2 00:00:08,560 --> 00:00:11,840 Speaker 2: Here's the joke that made President Trump call for Jimmy 3 00:00:11,920 --> 00:00:15,160 Speaker 2: Kimmel to be fired for the second time in less 4 00:00:15,200 --> 00:00:15,800 Speaker 2: than a year. 5 00:00:16,200 --> 00:00:18,639 Speaker 3: Look at Moss, so beautiful, missus Trump, you have a 6 00:00:18,760 --> 00:00:20,840 Speaker 3: glow like an expectant widow. 7 00:00:21,280 --> 00:00:25,439 Speaker 2: Last September, Kimmel was suspended for six days after Trump 8 00:00:25,520 --> 00:00:29,000 Speaker 2: demanded he be fired for comments he made about the 9 00:00:29,080 --> 00:00:34,320 Speaker 2: killing of conservative activist Charlie Kirk that backfired when Kimmel's 10 00:00:34,400 --> 00:00:38,879 Speaker 2: ratings actually went off after his forced hiatus, and ABC 11 00:00:39,080 --> 00:00:43,479 Speaker 2: had to contend with Disney plus subscriber cancelations from the 12 00:00:43,520 --> 00:00:49,280 Speaker 2: program Blackout. Still, Federal Communications Commissioned Chairman Brendan Carr seems 13 00:00:49,280 --> 00:00:53,600 Speaker 2: to be taking Trump's grudge against Kimmel seriously. He's taken 14 00:00:53,680 --> 00:00:59,480 Speaker 2: the rare, almost unprecedented step of calling Disney's eight ABCTV 15 00:00:59,600 --> 00:01:05,440 Speaker 2: station licenses in for early review, ostensibly over Disney's diversity, 16 00:01:05,560 --> 00:01:10,960 Speaker 2: equity and inclusion practices, and Carr is also investigating ABC's 17 00:01:11,080 --> 00:01:15,240 Speaker 2: daytime talk show The View after declaring its subject to 18 00:01:15,360 --> 00:01:19,160 Speaker 2: equal time rules for political candidates. But there are signs 19 00:01:19,200 --> 00:01:22,959 Speaker 2: that Disney is taking a different approach, this time around 20 00:01:23,400 --> 00:01:27,760 Speaker 2: standing its ground and fighting back. The company fired back 21 00:01:27,800 --> 00:01:32,319 Speaker 2: at the FCC in a lengthy filing, accusing the agency 22 00:01:32,440 --> 00:01:36,959 Speaker 2: of seeking to chill critical protected speech and shape media 23 00:01:37,080 --> 00:01:41,200 Speaker 2: content to its liking. Joining me is Professor Daniel Lyons 24 00:01:41,200 --> 00:01:46,000 Speaker 2: of Boston College Law School, a telecommunications law expert. Is 25 00:01:46,520 --> 00:01:51,800 Speaker 2: FCC chair Brendan Carr taking a different approach from his 26 00:01:51,920 --> 00:01:53,600 Speaker 2: predecessors at the agency. 27 00:01:53,840 --> 00:01:55,640 Speaker 4: It's a good question, a good place to start the 28 00:01:55,680 --> 00:01:59,200 Speaker 4: conversation because SEC Chairman Brendan Carr has been so different 29 00:01:59,360 --> 00:02:03,480 Speaker 4: than his press assessors on the issues of old media speech. 30 00:02:03,560 --> 00:02:06,120 Speaker 4: So over the past twenty years or so, the FCC 31 00:02:06,160 --> 00:02:10,280 Speaker 4: has been focused significantly upon things like broadband right, expanding 32 00:02:10,360 --> 00:02:12,760 Speaker 4: broadband whether or not, net neutrality rules, things like that. 33 00:02:13,080 --> 00:02:15,640 Speaker 4: But prior to the Internet era right, the FCC was 34 00:02:16,120 --> 00:02:20,840 Speaker 4: America's communications regulator and developed a whole lot of doctrines 35 00:02:21,200 --> 00:02:25,640 Speaker 4: balancing the government's interest in regulating communications with the limits 36 00:02:25,639 --> 00:02:27,720 Speaker 4: on the government of the First Amendment. We thought for 37 00:02:27,760 --> 00:02:31,760 Speaker 4: a long time that most of these doctrines were relatively settled. 38 00:02:31,760 --> 00:02:34,520 Speaker 4: They haven't really changed much since the late nineties, but 39 00:02:34,639 --> 00:02:39,680 Speaker 4: Chairman Carr has shown an interest in aggressively exploring the 40 00:02:39,720 --> 00:02:45,160 Speaker 4: gray areas that were left unexplored by bipartisan commissions in 41 00:02:45,280 --> 00:02:48,440 Speaker 4: years past. So we say this with the comments that 42 00:02:48,480 --> 00:02:51,760 Speaker 4: he had with regard to Jimmy Kimmel's statements after Charlie 43 00:02:51,800 --> 00:02:54,120 Speaker 4: Kirks murder. We saw it even earlier than that, the 44 00:02:54,200 --> 00:02:59,640 Speaker 4: FCC began questioning PBS's sponsorship. The statements before shows which 45 00:03:00,040 --> 00:03:02,959 Speaker 4: zetorships are legal but commercials are not, and the line 46 00:03:03,000 --> 00:03:05,360 Speaker 4: between the two is not always being clear. So the 47 00:03:05,400 --> 00:03:08,600 Speaker 4: agency has shown an interest in revisiting all of these 48 00:03:08,600 --> 00:03:11,760 Speaker 4: doctrines and getting the sense of whether it should more 49 00:03:11,800 --> 00:03:15,880 Speaker 4: aggressively pursue the old media rules that had originally been 50 00:03:15,919 --> 00:03:18,880 Speaker 4: at sporte in the pre Internet era. This coincides with 51 00:03:19,120 --> 00:03:20,680 Speaker 4: the fact that we have a president who is much 52 00:03:20,680 --> 00:03:23,760 Speaker 4: more interested in old media than occupants of the White 53 00:03:23,800 --> 00:03:28,000 Speaker 4: House in years past. The President seems particularly interested in 54 00:03:28,120 --> 00:03:31,240 Speaker 4: questions about what broadcast news is doing, what cable news 55 00:03:31,280 --> 00:03:33,799 Speaker 4: is doing, which feel much more like nineteen nineties and 56 00:03:33,840 --> 00:03:37,000 Speaker 4: two thousands questions than they do the most relevant communications 57 00:03:37,040 --> 00:03:39,119 Speaker 4: law issues of twenty twenty. 58 00:03:38,840 --> 00:03:42,480 Speaker 2: Six and our car and Trump moving in lockstep. 59 00:03:42,800 --> 00:03:44,920 Speaker 4: Brending Carr's been pretty open about the fact that he's 60 00:03:44,960 --> 00:03:48,720 Speaker 4: responding to what his boss wants. That the FCC is, 61 00:03:49,120 --> 00:03:53,480 Speaker 4: Although it's structured as an independent agency, it lacks the 62 00:03:53,600 --> 00:03:57,320 Speaker 4: job protection that many other independent agencies have, which means 63 00:03:57,320 --> 00:04:00,000 Speaker 4: that the commissioners work at the whim of the President. 64 00:04:00,400 --> 00:04:04,240 Speaker 4: And Car has shown not just a realization about that, 65 00:04:04,360 --> 00:04:07,600 Speaker 4: but a zeal in kind of doing his part within 66 00:04:07,680 --> 00:04:10,960 Speaker 4: a Republican commission to tow the party line. There's another, 67 00:04:10,960 --> 00:04:13,200 Speaker 4: in think situation where the president has at least set 68 00:04:13,240 --> 00:04:16,560 Speaker 4: the direction and Car is following. I think the language 69 00:04:16,560 --> 00:04:18,760 Speaker 4: that Car is using in this context right, it's about 70 00:04:18,800 --> 00:04:23,000 Speaker 4: clarifying the scope of the equal time rule and the 71 00:04:23,040 --> 00:04:27,120 Speaker 4: broadcast music Central. It doesn't seem coincidental that the same 72 00:04:27,200 --> 00:04:30,400 Speaker 4: network is being picked on in all of these situations, 73 00:04:30,600 --> 00:04:32,120 Speaker 4: and they happen to be the same network that the 74 00:04:32,120 --> 00:04:33,599 Speaker 4: president has in his crosshairs. 75 00:04:33,760 --> 00:04:38,440 Speaker 2: The FCC is investigating the ABC talk show The View, 76 00:04:38,960 --> 00:04:43,919 Speaker 2: and in January, the FCC told broadcasters that talk shows 77 00:04:43,960 --> 00:04:47,240 Speaker 2: and late night programs hosting political candidates have to give 78 00:04:47,360 --> 00:04:50,960 Speaker 2: equal time to opponents. The View has had this exemption, 79 00:04:51,520 --> 00:04:54,080 Speaker 2: So tell us about equal time and the exemption. 80 00:04:54,760 --> 00:04:56,680 Speaker 4: Well, so, I think it's important to put this in 81 00:04:56,680 --> 00:04:59,320 Speaker 4: the broader context of how the First Amendment interacts with 82 00:04:59,720 --> 00:05:01,040 Speaker 4: FCC see Broadcast regulation. 83 00:05:01,160 --> 00:05:01,320 Speaker 5: Right. 84 00:05:01,400 --> 00:05:04,800 Speaker 4: So, the Supreme Court has made clear that in most contexts, 85 00:05:05,200 --> 00:05:10,839 Speaker 4: the government can't tell a particular platform or speaker what 86 00:05:10,920 --> 00:05:11,800 Speaker 4: they can and can't say. 87 00:05:11,880 --> 00:05:12,000 Speaker 3: Right. 88 00:05:12,040 --> 00:05:15,880 Speaker 4: This is Mammy Herald versus Tornillo, where the state of 89 00:05:15,920 --> 00:05:18,200 Speaker 4: Florida tried to adopt a rite a reply statute for 90 00:05:18,240 --> 00:05:21,760 Speaker 4: newspapers off a newspaper editorial criticized one candidate, that it 91 00:05:21,800 --> 00:05:24,479 Speaker 4: had to give equal space to that candidate to respond. 92 00:05:24,600 --> 00:05:26,280 Speaker 4: And of course this is a violation of the right 93 00:05:26,279 --> 00:05:28,919 Speaker 4: of editorial control, the right to decide what I say, 94 00:05:28,960 --> 00:05:31,040 Speaker 4: what I don't say, and what I choose to put 95 00:05:31,080 --> 00:05:32,360 Speaker 4: on page one versus what I choose to put on 96 00:05:32,400 --> 00:05:35,840 Speaker 4: page thirteen. The Supreme Court revisited this just recently with 97 00:05:35,920 --> 00:05:39,720 Speaker 4: regard to Facebook and Twitter and other Internet platforms in 98 00:05:39,720 --> 00:05:40,520 Speaker 4: the case just a couple. 99 00:05:40,360 --> 00:05:40,880 Speaker 5: Of years ago. 100 00:05:41,040 --> 00:05:44,479 Speaker 4: So broadcast is an exception to that strong limit on 101 00:05:44,600 --> 00:05:48,479 Speaker 4: government power, because broadcasters I have to apply for a 102 00:05:48,560 --> 00:05:51,400 Speaker 4: license to use the electromatic spectrum in order to send 103 00:05:51,480 --> 00:05:54,880 Speaker 4: their signal held over the airwaves. Broadcast television and radio, 104 00:05:55,120 --> 00:05:57,480 Speaker 4: the Supreme Court held did not have the same rights 105 00:05:57,480 --> 00:06:02,000 Speaker 4: of editorial control. The reason for this ostend simply was scarcity. 106 00:06:02,040 --> 00:06:04,919 Speaker 4: There's only so much electromagnetic spectrum, and so when the 107 00:06:04,960 --> 00:06:08,680 Speaker 4: government is handing out these limited licenses, it should have 108 00:06:08,760 --> 00:06:11,160 Speaker 4: the ability to decide that the users of these licenses 109 00:06:11,200 --> 00:06:14,120 Speaker 4: present both sides of a debate. This was a case 110 00:06:14,160 --> 00:06:17,040 Speaker 4: called Red Lion in the late nineteen sixties, but there 111 00:06:17,120 --> 00:06:19,800 Speaker 4: was always the concern that Red Lion was on a 112 00:06:19,880 --> 00:06:23,240 Speaker 4: very thin read at the time. Most America got its 113 00:06:23,240 --> 00:06:27,839 Speaker 4: television through broadcasters before the cable industry, and so broadcasters 114 00:06:28,120 --> 00:06:31,240 Speaker 4: had a very significant control over the pipe into people's homes. 115 00:06:31,520 --> 00:06:35,920 Speaker 4: And more importantly, the court said, we recognized that there 116 00:06:35,960 --> 00:06:39,520 Speaker 4: could be for somement problems with even this exception. If 117 00:06:39,680 --> 00:06:45,640 Speaker 4: broadcasters are unwilling to address political controversies because of fear 118 00:06:45,720 --> 00:06:48,080 Speaker 4: that they have to provide equal talking time to the 119 00:06:48,080 --> 00:06:51,560 Speaker 4: other side, and it causes them to chill political speech generally, 120 00:06:51,800 --> 00:06:54,280 Speaker 4: then it might be that even Red Lion isign constitutional. 121 00:06:54,320 --> 00:06:57,880 Speaker 4: We revisit this question. The FCC phased out the Fairness 122 00:06:57,880 --> 00:07:01,200 Speaker 4: Doctor of the nineteen eighties, but one vestige of it 123 00:07:01,279 --> 00:07:04,400 Speaker 4: still remains, which is the equal time rule. The equal 124 00:07:04,440 --> 00:07:06,599 Speaker 4: time rule says that if you have a qualified candidate 125 00:07:06,680 --> 00:07:09,600 Speaker 4: during an electoral period and to make an appearance, then 126 00:07:09,720 --> 00:07:12,680 Speaker 4: the other candidates in the election have the right to 127 00:07:12,720 --> 00:07:16,080 Speaker 4: demand equal opportunity to be heard on the broadcast network. 128 00:07:16,400 --> 00:07:19,320 Speaker 4: And that was an issue in the View. So ostensibly 129 00:07:19,840 --> 00:07:23,880 Speaker 4: the View had James tallerco on as a guest, and 130 00:07:24,120 --> 00:07:27,080 Speaker 4: Car's position was this could have implications for the equal 131 00:07:27,120 --> 00:07:30,080 Speaker 4: time rule, such that Telrico's opponent should be allowed time 132 00:07:30,120 --> 00:07:33,280 Speaker 4: on the View as well. Back in the nineteen fifties, 133 00:07:33,880 --> 00:07:37,280 Speaker 4: this became an issue in the Chicago mayoral election. Mayor 134 00:07:37,360 --> 00:07:41,679 Speaker 4: Daily was a welcoming a delegation from a foreign city 135 00:07:41,760 --> 00:07:44,720 Speaker 4: and it made the broadcast news. And this guy, Lars Daily, 136 00:07:44,760 --> 00:07:47,000 Speaker 4: who was no relation to Mayor Daily. He was a 137 00:07:47,040 --> 00:07:49,440 Speaker 4: perennial fringe candidate. He was on the ballot every year 138 00:07:49,480 --> 00:07:51,320 Speaker 4: and got like three votes. He would walk around wearing 139 00:07:51,360 --> 00:07:53,960 Speaker 4: like an Uncle Sam outfit. He wrote to the SEC 140 00:07:54,040 --> 00:07:55,320 Speaker 4: and demanded equal time. He said, if you're going to 141 00:07:55,360 --> 00:07:57,440 Speaker 4: put Mayor Daily on, then I deserve equal time. And lo, 142 00:07:57,600 --> 00:08:00,360 Speaker 4: and behold everyone's surprise, the FCC granted it. The Congress 143 00:08:00,400 --> 00:08:02,320 Speaker 4: freaked out about this and passed what they call the 144 00:08:02,320 --> 00:08:06,560 Speaker 4: bonafide news exemption. If a candidate appears on your broadcast 145 00:08:06,640 --> 00:08:10,360 Speaker 4: as part of a bonafide news broadcast, then it wouldn't 146 00:08:10,360 --> 00:08:13,560 Speaker 4: trigger the equal time rules. Partly in order to preserve 147 00:08:13,760 --> 00:08:16,000 Speaker 4: the spirit of the First Amendment, right this idea that 148 00:08:16,240 --> 00:08:19,280 Speaker 4: you should be able to cover newsworthy events. If you 149 00:08:19,280 --> 00:08:21,280 Speaker 4: decide you don't want to cover newsworthy events because of 150 00:08:21,320 --> 00:08:24,080 Speaker 4: fear of triggering the equal time rules, that's a problem 151 00:08:24,120 --> 00:08:27,880 Speaker 4: for society in general. So the scope of the bonafide 152 00:08:28,120 --> 00:08:32,480 Speaker 4: news exemption is what's an issue here. As news evolved 153 00:08:32,520 --> 00:08:36,280 Speaker 4: in format and as broadcasts became less and less of 154 00:08:36,360 --> 00:08:40,719 Speaker 4: a dominant information provider, the SEC traditionally has added more 155 00:08:40,800 --> 00:08:44,280 Speaker 4: and more programs to the exemption category. So in nineteen 156 00:08:44,280 --> 00:08:46,959 Speaker 4: eighty four, Phil Donna Hues Talk Show was recognized as 157 00:08:46,960 --> 00:08:49,720 Speaker 4: a bona fide news broadcast because it was covering topical issues. 158 00:08:50,160 --> 00:08:53,720 Speaker 4: Later on Politically Incorrect with Bill Maher Weirdly, the Howard 159 00:08:53,760 --> 00:08:56,080 Speaker 4: Stern Show and The Tonight Show is granted an exception, 160 00:08:56,400 --> 00:08:58,480 Speaker 4: and the View was granted an exception in two thousand 161 00:08:58,520 --> 00:09:01,240 Speaker 4: and two or two thousand and three. So it was 162 00:09:01,360 --> 00:09:05,839 Speaker 4: that exemption that car has announced the desire to kind 163 00:09:05,880 --> 00:09:09,320 Speaker 4: of tighten up, make it not as expansive as it 164 00:09:09,360 --> 00:09:14,000 Speaker 4: has been in FCC's past. So in January, the FCC 165 00:09:14,080 --> 00:09:17,960 Speaker 4: issued guidance saying, going forward, we're going to apply this 166 00:09:18,040 --> 00:09:20,720 Speaker 4: much more stringently, and those of you who have existing 167 00:09:20,760 --> 00:09:23,520 Speaker 4: exemptions should not assume they can be blanket exemptions. And 168 00:09:23,559 --> 00:09:26,000 Speaker 4: that's what now is being built on. With regard to 169 00:09:26,040 --> 00:09:29,760 Speaker 4: the specific inquiry into taller Eco's appearance on the View, Carr. 170 00:09:29,520 --> 00:09:33,840 Speaker 2: Is also reviewing whether to revoke the broadcast licenses for 171 00:09:34,040 --> 00:09:39,240 Speaker 2: Disney owned local ABC stations, and it's actually over Disney's 172 00:09:39,480 --> 00:09:44,280 Speaker 2: DEI practices. Carr said. The timing is purely coincidental, but 173 00:09:44,360 --> 00:09:46,679 Speaker 2: it came right after Trump demanded that Kim will be 174 00:09:46,840 --> 00:09:50,640 Speaker 2: fired for the second time. Is there any precedent for 175 00:09:50,760 --> 00:09:52,960 Speaker 2: revoking licenses like this? 176 00:09:53,640 --> 00:09:56,439 Speaker 4: These licenses to broadcasts, they are issued for an eight 177 00:09:56,480 --> 00:09:59,400 Speaker 4: year period and then they come up for renewal. But 178 00:09:59,480 --> 00:10:02,440 Speaker 4: there is a strong norm and in fact legal precedent 179 00:10:02,559 --> 00:10:05,560 Speaker 4: for a presumption that they would be renewed. The FCC 180 00:10:05,720 --> 00:10:09,080 Speaker 4: only doesn't renew a broadcast license in the event that 181 00:10:09,120 --> 00:10:11,640 Speaker 4: the broadcasters found to have engage in a repeated pattern 182 00:10:11,720 --> 00:10:16,080 Speaker 4: and practice of violating FCC rules. The only instance I'm 183 00:10:16,120 --> 00:10:19,440 Speaker 4: aware of was a religious broadcaster in the nineteen nineties 184 00:10:20,000 --> 00:10:22,839 Speaker 4: that lost its rights because it had represented itself as 185 00:10:22,840 --> 00:10:25,920 Speaker 4: a minority owned broadcaster to take advantage of the minority 186 00:10:25,920 --> 00:10:28,120 Speaker 4: preference rules, and it turns out it was more of 187 00:10:28,120 --> 00:10:30,880 Speaker 4: a straw man than a real minority owned business. And 188 00:10:30,960 --> 00:10:33,280 Speaker 4: so when it came time for the license to be renewed, 189 00:10:33,280 --> 00:10:37,000 Speaker 4: the sec chose not to renew it. But because broadcasters 190 00:10:37,040 --> 00:10:40,080 Speaker 4: invest a lot of money in the expectation that this 191 00:10:40,120 --> 00:10:42,760 Speaker 4: would be renewed, the DC circuits recognized the renewal is 192 00:10:42,800 --> 00:10:45,280 Speaker 4: almost like a property interest, and so there's a high 193 00:10:45,360 --> 00:10:48,920 Speaker 4: barrier to a license not being renewed. What's unusual in 194 00:10:48,920 --> 00:10:52,080 Speaker 4: this case is that most of ABC's licenses aren't due 195 00:10:52,120 --> 00:10:56,120 Speaker 4: for renewal for several years. The Commission has stepped up 196 00:10:56,120 --> 00:11:00,360 Speaker 4: and moved the timeline forward for starting the process and 197 00:11:00,400 --> 00:11:04,440 Speaker 4: asking for all the compliance measures, long before ABC expected 198 00:11:04,440 --> 00:11:06,240 Speaker 4: to given the Commission's history. 199 00:11:06,559 --> 00:11:09,280 Speaker 2: So even if it goes through the process and somehow 200 00:11:09,320 --> 00:11:12,319 Speaker 2: they revoke the licenses, there would be a huge court 201 00:11:12,400 --> 00:11:14,680 Speaker 2: battle after that right that might go up to the 202 00:11:14,679 --> 00:11:15,839 Speaker 2: Supreme Court. 203 00:11:16,000 --> 00:11:20,680 Speaker 4: Yeah, and ultimately it may be that ABC wins that challenge. Right, 204 00:11:20,960 --> 00:11:22,640 Speaker 4: Maybe that at the end of the day, the FCC 205 00:11:22,720 --> 00:11:25,480 Speaker 4: chooses not to revoke the licenses, or if they revoke 206 00:11:25,520 --> 00:11:28,840 Speaker 4: the licenses, ABC SUS and successfully get some reinstated. But 207 00:11:28,920 --> 00:11:31,520 Speaker 4: that in itself is a tremendous cost. And this is 208 00:11:31,760 --> 00:11:35,880 Speaker 4: what communications car sometimes call regulation by Ray's eyebrow, Right, the. 209 00:11:35,880 --> 00:11:39,320 Speaker 1: Situation where the FCC may or may not have legal 210 00:11:39,320 --> 00:11:40,960 Speaker 1: authority to what it wants to do, but it can 211 00:11:41,240 --> 00:11:46,520 Speaker 1: ask questions to try to nudge broadcasters to voluntarily comply 212 00:11:46,679 --> 00:11:49,520 Speaker 1: with requirements that the agency may not be able. 213 00:11:49,320 --> 00:11:51,720 Speaker 4: To outright demand. And there's a long history of that 214 00:11:51,840 --> 00:11:53,480 Speaker 4: in the FCC, as you might imagine. 215 00:11:53,720 --> 00:11:57,840 Speaker 2: Disney in twenty twenty four settled a fifteen million dollar 216 00:11:57,960 --> 00:12:02,680 Speaker 2: defamation lawsuit brought by Trump against George Stefanopolis and ABC 217 00:12:02,800 --> 00:12:05,040 Speaker 2: News anchor, and it did pull Kimmel off the air 218 00:12:05,200 --> 00:12:08,680 Speaker 2: for several days last fall after cars threats. But Disney's 219 00:12:08,720 --> 00:12:12,520 Speaker 2: taking an aggressive stance this time, and it's filing with 220 00:12:12,600 --> 00:12:16,439 Speaker 2: the FCC. It accused the agency of seeking to chill 221 00:12:16,600 --> 00:12:21,520 Speaker 2: critical protected speech and to shape media content to its liking. 222 00:12:21,840 --> 00:12:24,760 Speaker 2: Are they under less pressure for some reason? Why do 223 00:12:24,800 --> 00:12:28,640 Speaker 2: you think that they're deciding to really aggressively fight back. 224 00:12:28,960 --> 00:12:30,920 Speaker 4: Well, one, I think they're on pretty strong legal ground. 225 00:12:31,400 --> 00:12:37,199 Speaker 4: The constitutional ground for the equal time exception to the 226 00:12:37,240 --> 00:12:39,360 Speaker 4: first time and I think is relatively weak. The Red Lion, 227 00:12:39,440 --> 00:12:41,640 Speaker 4: I think was dubious when it was decided. I don't 228 00:12:41,640 --> 00:12:44,320 Speaker 4: know that it has very many supporters on the Supreme 229 00:12:44,360 --> 00:12:47,360 Speaker 4: Court today. Justice Thomas has come out explicitly to call 230 00:12:47,400 --> 00:12:50,320 Speaker 4: for overturning it in the right facts, I think if 231 00:12:50,320 --> 00:12:51,680 Speaker 4: it gets a spring what you don't get there. But 232 00:12:51,760 --> 00:12:55,800 Speaker 4: also the fact that the View has been granted an 233 00:12:55,800 --> 00:12:58,560 Speaker 4: exemption as a bona fide news broadcast in two thousand 234 00:12:58,600 --> 00:13:01,200 Speaker 4: and three makes it very hard or the FCC to 235 00:13:01,360 --> 00:13:04,559 Speaker 4: punish it for conduct it took under that exemption. The 236 00:13:04,640 --> 00:13:07,520 Speaker 4: SCC can make a decision going forward, but to the 237 00:13:07,559 --> 00:13:11,120 Speaker 4: extent that it's trying to sanction ABC for having Tall 238 00:13:11,200 --> 00:13:14,600 Speaker 4: Rico on during the time when the View has bonafide 239 00:13:14,600 --> 00:13:18,280 Speaker 4: news exemption license from the FCC, I think he's on 240 00:13:18,280 --> 00:13:20,000 Speaker 4: a very good ground in defending where it's at. So 241 00:13:20,040 --> 00:13:21,400 Speaker 4: I think this is the Word's decided to draw the 242 00:13:21,440 --> 00:13:22,560 Speaker 4: line in the sand, and I think it's a very 243 00:13:22,559 --> 00:13:24,760 Speaker 4: good line to draw. And you're right, it's Roy brought 244 00:13:24,800 --> 00:13:27,520 Speaker 4: in some heavy hitters. Paul Clement was the signatory on 245 00:13:27,600 --> 00:13:31,320 Speaker 4: the brief. Who is no stranger to taking on and 246 00:13:31,400 --> 00:13:33,840 Speaker 4: winning very difficult Supreme Court cases. 247 00:13:34,240 --> 00:13:38,240 Speaker 2: Certainly not. He is one of the premier Supreme Court litigators. 248 00:13:38,360 --> 00:13:42,000 Speaker 2: A former Solicitor General. I believe he's argued more cases 249 00:13:42,000 --> 00:13:45,680 Speaker 2: before the Supreme Court than any other lawyer. He's appeared 250 00:13:45,679 --> 00:13:51,000 Speaker 2: before the justices several times this term, including representing Federal 251 00:13:51,040 --> 00:13:55,200 Speaker 2: Reserve Governor Lisa Cook in her fight to prevent President 252 00:13:55,200 --> 00:13:57,880 Speaker 2: Trump from firing her. Thanks so much for taking us 253 00:13:57,880 --> 00:14:02,720 Speaker 2: through this latest saga involving ABC in the FCC. That's 254 00:14:02,800 --> 00:14:07,080 Speaker 2: Daniel Lyon's a professor at Boston College Law School. Short 255 00:14:07,120 --> 00:14:11,160 Speaker 2: Sellers are making money when others are losing it, so 256 00:14:11,200 --> 00:14:15,360 Speaker 2: they're generally not well liked. In fact, a short seller 257 00:14:15,520 --> 00:14:18,760 Speaker 2: was even cast as the super villain in the James 258 00:14:18,800 --> 00:14:24,520 Speaker 2: Bond film Casino Royale terrorist financier lashef uses a warlord's 259 00:14:24,600 --> 00:14:26,480 Speaker 2: money to short sell stock. 260 00:14:28,720 --> 00:14:33,360 Speaker 5: Can you believe in God, mister Lachief, No, I believe 261 00:14:33,400 --> 00:14:36,400 Speaker 5: in a reconable rate of return. I want no risk 262 00:14:36,480 --> 00:14:37,360 Speaker 5: in the portfolio. 263 00:14:38,000 --> 00:14:42,560 Speaker 4: I agreed, I have the money, so showed another million 264 00:14:42,600 --> 00:14:46,280 Speaker 4: shares of sky Fleet Stock. Sir, you must know you're 265 00:14:46,480 --> 00:14:50,280 Speaker 4: betting against the market. No one expects this stock to 266 00:14:50,320 --> 00:14:53,000 Speaker 4: go anywhere but up just do it. 267 00:14:54,080 --> 00:14:57,160 Speaker 2: And now one of the most prominent short sellers is 268 00:14:57,280 --> 00:15:01,680 Speaker 2: on trial for securities fraud. Andrew Left rose to fame 269 00:15:01,800 --> 00:15:06,720 Speaker 2: with sensational tweets that went viral, published reports claiming firms 270 00:15:06,760 --> 00:15:11,360 Speaker 2: were overvalued or had engaged in fraud, betting against companies 271 00:15:11,520 --> 00:15:16,160 Speaker 2: like Game Stock and Valiant Pharmaceuticals, and hyping his positions 272 00:15:16,200 --> 00:15:20,200 Speaker 2: on financial TV shows in a bit of irony. Left, 273 00:15:20,280 --> 00:15:23,640 Speaker 2: who accused so many others of fraud, is now on 274 00:15:23,760 --> 00:15:29,560 Speaker 2: trial for defrauding investors. Prosecutors say he used explosive social 275 00:15:29,640 --> 00:15:33,880 Speaker 2: media posts about dozens of companies to illegally move their 276 00:15:33,960 --> 00:15:38,440 Speaker 2: stock and make a quick profit, market manipulation that totalled 277 00:15:38,480 --> 00:15:42,040 Speaker 2: as much as twenty million dollars. The fifty five year 278 00:15:42,080 --> 00:15:47,000 Speaker 2: old denies misleading investors and says he genuinely believed in 279 00:15:47,040 --> 00:15:51,400 Speaker 2: his stock calls. My guest is securities law expert James Park, 280 00:15:51,560 --> 00:15:55,000 Speaker 2: a professor at UCLA Law School. Jim, give us a 281 00:15:55,000 --> 00:15:56,760 Speaker 2: picture of who Andrew Left is. 282 00:15:57,200 --> 00:16:01,320 Speaker 3: He started out by publishing research report companies through his 283 00:16:01,440 --> 00:16:06,800 Speaker 3: platform Citrin Research, often making negative recommendations. I think he's 284 00:16:06,920 --> 00:16:10,840 Speaker 3: mainly known for correctly identifying problems at a company called 285 00:16:11,000 --> 00:16:15,920 Speaker 3: Valiant Pharmaceuticals, a company that engaged in questionable practices with 286 00:16:16,000 --> 00:16:19,680 Speaker 3: respect to recognizing sales, and so, you know, he published 287 00:16:19,680 --> 00:16:23,720 Speaker 3: a report identifying some of the questionable practices. He also 288 00:16:23,800 --> 00:16:26,800 Speaker 3: came up interestingly in the game Stop Saga from a 289 00:16:26,800 --> 00:16:29,640 Speaker 3: few years ago, where he had taken a short position 290 00:16:29,760 --> 00:16:34,400 Speaker 3: in the company and retail investors basically rallied on Reddit 291 00:16:34,480 --> 00:16:37,560 Speaker 3: to squeeze the short ben You know, with those successes, 292 00:16:37,560 --> 00:16:41,760 Speaker 3: he's gained a high profile. You know, he makes recommendations 293 00:16:41,800 --> 00:16:46,280 Speaker 3: with respecta companies, emails them out, has an online platform 294 00:16:46,320 --> 00:16:49,320 Speaker 3: as using social media a lot, is frequently invited on 295 00:16:49,600 --> 00:16:53,200 Speaker 3: various shows, and has a lot of medium appearances. And 296 00:16:53,280 --> 00:16:56,840 Speaker 3: so he's somebody with a higher profile than most folks 297 00:16:56,880 --> 00:17:00,800 Speaker 3: who are doing research and you know, taking short positions 298 00:17:00,840 --> 00:17:02,280 Speaker 3: potentially in companies. 299 00:17:02,720 --> 00:17:06,479 Speaker 2: The government is accusing him of manipulating the stock market. 300 00:17:06,600 --> 00:17:08,280 Speaker 2: Tell us about the charges here. 301 00:17:08,720 --> 00:17:12,800 Speaker 3: He was indicted for various counts of securities fraud, manipulation 302 00:17:13,000 --> 00:17:17,919 Speaker 3: and fraud. More generally, the manipulation argument is that he 303 00:17:18,040 --> 00:17:21,840 Speaker 3: would basically establish positions in a stock, whether it was 304 00:17:21,920 --> 00:17:27,320 Speaker 3: long or short, issue a recommendation with respect to that position, 305 00:17:27,920 --> 00:17:32,720 Speaker 3: which he would disseminate to the public, presumably according to 306 00:17:32,760 --> 00:17:36,720 Speaker 3: the prosecutors, with the intent to either inflate or deflate 307 00:17:36,760 --> 00:17:39,680 Speaker 3: the stock, given his high profile, and then he would 308 00:17:39,760 --> 00:17:42,880 Speaker 3: quickly reverse his position. And I think the argument there 309 00:17:42,960 --> 00:17:46,720 Speaker 3: is that that shows he did not believe his recommendation, 310 00:17:47,160 --> 00:17:52,679 Speaker 3: that he was issuing these recommendations to artificially manipulate the 311 00:17:52,760 --> 00:17:57,320 Speaker 3: price of these stocks, and that his actions, which often 312 00:17:57,400 --> 00:18:01,320 Speaker 3: came very soon after the recommendation, indicates that he did 313 00:18:01,320 --> 00:18:04,960 Speaker 3: not sincerely believe, you know, his recommendation that you should 314 00:18:05,000 --> 00:18:07,199 Speaker 3: buy the stock or sell the stock, because he was 315 00:18:07,240 --> 00:18:09,719 Speaker 3: doing the reverse. And you know, there might have been 316 00:18:09,720 --> 00:18:13,119 Speaker 3: a dozen or so of these transactions, maybe more that 317 00:18:13,440 --> 00:18:17,360 Speaker 3: the prosecutors alleged he profited by around twenty million dollars 318 00:18:17,720 --> 00:18:19,119 Speaker 3: through this market manipulation. 319 00:18:19,800 --> 00:18:23,520 Speaker 2: Is this an aggressive legal theory for the prosecution. Is 320 00:18:23,560 --> 00:18:25,919 Speaker 2: it an uphill battle for prosecutors to prove this. 321 00:18:26,480 --> 00:18:31,600 Speaker 3: It's not a commonly prosecuted back pattern. I think that's 322 00:18:31,640 --> 00:18:35,280 Speaker 3: fair to say, you know, do the prosecutors have a 323 00:18:35,400 --> 00:18:38,040 Speaker 3: very well developed case. I think they have a lot 324 00:18:38,040 --> 00:18:40,719 Speaker 3: of evidence, right, They have a lot of evidence about 325 00:18:41,080 --> 00:18:43,960 Speaker 3: not only his recommendations, of course, which are public, but 326 00:18:44,080 --> 00:18:47,480 Speaker 3: what he did. And there is you know, some email 327 00:18:47,560 --> 00:18:51,159 Speaker 3: evidence that could be interpreted in a way that the 328 00:18:51,240 --> 00:18:54,399 Speaker 3: jury might be able to conclude that you know, he 329 00:18:54,480 --> 00:18:56,840 Speaker 3: knew that the information was false. Now that's up to 330 00:18:56,920 --> 00:18:59,240 Speaker 3: the jury, and emails have a lot of ways that 331 00:18:59,280 --> 00:19:03,960 Speaker 3: they can be interpreted. You know, market manipulation cases are 332 00:19:04,160 --> 00:19:07,520 Speaker 3: are tough, right, It's tough to prove the intent because 333 00:19:08,040 --> 00:19:12,760 Speaker 3: a lot of the actions that could potentially be manipulative, 334 00:19:13,400 --> 00:19:17,040 Speaker 3: you know, may be motivated by legitimate reason. You know, 335 00:19:17,080 --> 00:19:20,679 Speaker 3: he may legitimately believe part of his recommendation, some of 336 00:19:20,720 --> 00:19:23,640 Speaker 3: his recommendation, you know, maybe he changed his mind right 337 00:19:23,800 --> 00:19:28,200 Speaker 3: very soon after. And so, you know, market manipulation is challenging. 338 00:19:28,200 --> 00:19:29,840 Speaker 3: We've talked, you know, a few years ago about the 339 00:19:29,840 --> 00:19:33,160 Speaker 3: Bill Huang case. That's one where I noted that it's 340 00:19:33,160 --> 00:19:37,320 Speaker 3: hard to establish manipulation, and the prosecution did in that case. 341 00:19:37,680 --> 00:19:41,240 Speaker 3: And so I think that the cases is novel and 342 00:19:41,320 --> 00:19:45,440 Speaker 3: interesting because you know, manipulation is not prosecuted as much 343 00:19:45,440 --> 00:19:48,320 Speaker 3: as say insider trading, for example. It's a little bit 344 00:19:48,320 --> 00:19:52,399 Speaker 3: more straightforward when I've taken non public information, I'm an insider, 345 00:19:52,840 --> 00:19:56,040 Speaker 3: I trade on it. That is usually more straightforward than 346 00:19:56,080 --> 00:20:00,080 Speaker 3: a situation where somebody is is engaging in various training 347 00:20:00,119 --> 00:20:03,800 Speaker 3: activity and around recommendations that they've issued. And so I 348 00:20:03,840 --> 00:20:06,359 Speaker 3: think it's just less common to bring cases like this. 349 00:20:07,440 --> 00:20:10,880 Speaker 2: So far, prosecutors have focused on the stocks of two 350 00:20:11,000 --> 00:20:14,959 Speaker 2: companies they say Left tweeted about and then trade it 351 00:20:14,960 --> 00:20:18,520 Speaker 2: on Twitter, and Chronos Group, which is a cannabis company, 352 00:20:18,840 --> 00:20:22,200 Speaker 2: and they call stock analysts to the stand who disagreed 353 00:20:22,320 --> 00:20:27,080 Speaker 2: with Left's negative reports about the companies. On cross examination, 354 00:20:27,280 --> 00:20:30,440 Speaker 2: the defense attorney seem to be trying to highlight its 355 00:20:30,440 --> 00:20:35,480 Speaker 2: position that analysts can disagree about stocks and Left was 356 00:20:35,600 --> 00:20:37,520 Speaker 2: just telling the public what he believed. 357 00:20:38,080 --> 00:20:41,840 Speaker 3: I think the analyst recommendation or the analysts testimony is 358 00:20:41,880 --> 00:20:44,520 Speaker 3: probably serving as a baseline. You know, these are the 359 00:20:44,560 --> 00:20:49,560 Speaker 3: facts that were out there, and you know, without specific 360 00:20:49,680 --> 00:20:53,439 Speaker 3: facts contradicting that, if you're just kind of saying this 361 00:20:54,280 --> 00:20:56,800 Speaker 3: stuff without any basis and you're only doing it to 362 00:20:56,840 --> 00:21:00,280 Speaker 3: manipulate the stock price, that that's going to be problematic. 363 00:21:00,320 --> 00:21:04,400 Speaker 3: Disagreement is not broad. People have the ability to disagree, 364 00:21:04,520 --> 00:21:07,040 Speaker 3: But I think it shows the context of how the 365 00:21:07,040 --> 00:21:11,240 Speaker 3: stock was understood, and if you are deliberately issuing false 366 00:21:11,240 --> 00:21:15,080 Speaker 3: information that that is essentially what the cases is about. 367 00:21:15,080 --> 00:21:18,000 Speaker 3: But the testimony by the stock analyst by itself is 368 00:21:18,040 --> 00:21:21,000 Speaker 3: not going to be able to establish that these statements 369 00:21:21,000 --> 00:21:23,359 Speaker 3: were false, that he knew that they were false. 370 00:21:24,000 --> 00:21:27,240 Speaker 2: The defense hasn't said whether or not Left is going 371 00:21:27,280 --> 00:21:30,199 Speaker 2: to take the stand. Obviously, a defendant doesn't have to 372 00:21:30,240 --> 00:21:33,040 Speaker 2: take the stand and it can't be held against him, 373 00:21:33,160 --> 00:21:37,360 Speaker 2: But there are some instances. For example, prosecutors have introduced 374 00:21:37,520 --> 00:21:42,800 Speaker 2: testimony that the stock of Kronos plunged twenty eight percent 375 00:21:43,160 --> 00:21:48,040 Speaker 2: after Left's report that Kronos was misleading investors about its 376 00:21:48,119 --> 00:21:53,359 Speaker 2: distribution commitments, and prosecutors say, shortly after the tweet, about 377 00:21:53,359 --> 00:21:58,320 Speaker 2: twenty four minutes later, Left started closing out his short position. 378 00:21:58,920 --> 00:22:01,280 Speaker 2: How will the defense exps blame what happened in those 379 00:22:01,320 --> 00:22:04,680 Speaker 2: twenty four minutes if Left doesn't take the stand. 380 00:22:05,200 --> 00:22:07,399 Speaker 3: Yeah, I don't know how his operation works, whether he 381 00:22:07,440 --> 00:22:10,320 Speaker 3: does all the research himself or whether there's somebody else 382 00:22:10,320 --> 00:22:13,679 Speaker 3: who does that. I think that, you know, ideally he 383 00:22:13,720 --> 00:22:16,399 Speaker 3: would explain, you know, what was my basis for making 384 00:22:16,440 --> 00:22:20,160 Speaker 3: this this statement? About this company? What did I look 385 00:22:20,200 --> 00:22:23,720 Speaker 3: at and why did I quickly close out the position? 386 00:22:23,800 --> 00:22:26,919 Speaker 3: I think that's also a question that could be asked, 387 00:22:27,240 --> 00:22:32,359 Speaker 3: and it might be difficult to establish that without the 388 00:22:32,400 --> 00:22:35,040 Speaker 3: person who's making the recommendation taking the stand. 389 00:22:35,480 --> 00:22:38,920 Speaker 2: Jim, I've been reading some headlines that say is short 390 00:22:38,920 --> 00:22:43,080 Speaker 2: selling facing a reckoning referring to this trial. Do you 391 00:22:43,119 --> 00:22:43,639 Speaker 2: think it is? 392 00:22:44,040 --> 00:22:46,800 Speaker 3: I don't think so. You know, some of the transactions 393 00:22:46,840 --> 00:22:50,800 Speaker 3: were long positions. Now you know, he is maybe known 394 00:22:50,920 --> 00:22:54,200 Speaker 3: as a short seller, but he does make long recommendations 395 00:22:54,200 --> 00:22:56,880 Speaker 3: as well. There's a Facebook transaction where he says it's 396 00:22:57,040 --> 00:22:59,639 Speaker 3: going to one hundreds sixty dollars a share and he 397 00:22:59,760 --> 00:23:02,119 Speaker 3: sells out at much less than that after the price 398 00:23:02,200 --> 00:23:04,760 Speaker 3: goes up, And so, you know, you might think of 399 00:23:04,800 --> 00:23:08,720 Speaker 3: it as more perhaps a case involving the use of 400 00:23:08,760 --> 00:23:13,280 Speaker 3: social media, the use of kind of online recommendations. Is 401 00:23:13,280 --> 00:23:15,479 Speaker 3: that the place where you could have a bit of 402 00:23:15,760 --> 00:23:18,880 Speaker 3: a chilling effect, And so I think you might even 403 00:23:18,920 --> 00:23:21,920 Speaker 3: think of the case a bit broader than it being about, 404 00:23:22,040 --> 00:23:25,920 Speaker 3: you know, somebody who is specifically selling companies short and 405 00:23:26,200 --> 00:23:28,800 Speaker 3: making allegations that the price should go down. I think 406 00:23:28,840 --> 00:23:30,840 Speaker 3: it's a bit broader than that. It is the combination 407 00:23:31,040 --> 00:23:34,080 Speaker 3: of you know, do short sellers sometimes use social media? Sure, 408 00:23:34,160 --> 00:23:36,800 Speaker 3: I don't know that they do that to the extent 409 00:23:37,080 --> 00:23:39,800 Speaker 3: that mister Left did, and that might be kind of 410 00:23:39,800 --> 00:23:43,440 Speaker 3: what the case ultimately is about, is that technology has 411 00:23:43,840 --> 00:23:46,880 Speaker 3: you know, made it difficult to regulate conduct that might 412 00:23:47,080 --> 00:23:50,520 Speaker 3: manipulate markets because before social media, you couldn't move a 413 00:23:50,520 --> 00:23:53,040 Speaker 3: stock price like this, but now you know, there's some 414 00:23:53,119 --> 00:23:54,040 Speaker 3: individuals who can. 415 00:23:54,440 --> 00:24:00,000 Speaker 2: Short sellers were already spooked by Left's indictment, especially because 416 00:24:00,480 --> 00:24:04,960 Speaker 2: criminal investigators in DC and LA had been investigating short 417 00:24:05,040 --> 00:24:09,080 Speaker 2: selling for years. Some of Leff's biggest competitors have already 418 00:24:09,200 --> 00:24:13,400 Speaker 2: left the market, some came out with more extensive disclaimers. 419 00:24:13,840 --> 00:24:16,680 Speaker 2: So this case is really being watched closely. 420 00:24:17,119 --> 00:24:19,600 Speaker 3: No, I think it's it's tough being a short seller. 421 00:24:19,640 --> 00:24:22,439 Speaker 3: It's always been tough. Nobody likes you. And you know 422 00:24:22,480 --> 00:24:25,800 Speaker 3: there's long been scrutiny of short sellers and their statements. 423 00:24:25,880 --> 00:24:27,480 Speaker 3: You know, one that comes in mind. You know Bill 424 00:24:27,480 --> 00:24:30,639 Speaker 3: Ackman years ago, like in the early two thousands, was 425 00:24:30,680 --> 00:24:34,040 Speaker 3: investigated by the New York Attorney General's Office and maybe 426 00:24:34,080 --> 00:24:37,240 Speaker 3: the SEC about a report he published about a company 427 00:24:37,280 --> 00:24:41,440 Speaker 3: called Mbia and you know, I think that short sellers 428 00:24:41,680 --> 00:24:44,640 Speaker 3: that are sophisticated should know that their statements are going 429 00:24:44,680 --> 00:24:49,199 Speaker 3: to be scrutinized and that they cannot release information or 430 00:24:49,240 --> 00:24:51,919 Speaker 3: facts that they know are false. That's part of the 431 00:24:51,920 --> 00:24:54,800 Speaker 3: business right, is that you're violating Rule ten B five 432 00:24:54,920 --> 00:24:58,920 Speaker 3: if you issue false information relating to the purchaser sale 433 00:24:58,960 --> 00:25:03,280 Speaker 3: of security. Probably some other state law theories as well, 434 00:25:03,720 --> 00:25:06,679 Speaker 3: and so there's always been scrutiny. Taking it to a 435 00:25:06,720 --> 00:25:12,040 Speaker 3: criminal level, I think though, does raise some additional reason 436 00:25:12,119 --> 00:25:15,040 Speaker 3: to be cautious with these types of statements. So I 437 00:25:15,040 --> 00:25:17,040 Speaker 3: think in that regard, you know, when you have a 438 00:25:17,040 --> 00:25:20,240 Speaker 3: criminal case that really gets people's attention, and he is 439 00:25:20,320 --> 00:25:23,800 Speaker 3: known primarily as somebody who recommends short positions, has taken 440 00:25:23,840 --> 00:25:27,720 Speaker 3: short positions. He's an activist investor, and so I think 441 00:25:27,880 --> 00:25:31,600 Speaker 3: that's right that it is something that activist short investors 442 00:25:31,640 --> 00:25:32,600 Speaker 3: will be aware of. 443 00:25:32,880 --> 00:25:35,879 Speaker 2: The trial is expected to last another two weeks, so 444 00:25:36,080 --> 00:25:39,120 Speaker 2: we'll see what happens. Thanks so much, Jim. That's Professor 445 00:25:39,240 --> 00:25:43,159 Speaker 2: James Park of UCLA Law School coming up next. Then 446 00:25:43,640 --> 00:25:49,120 Speaker 2: many lawsuits over Trump's attempted makeover of the nation's capital. 447 00:25:49,440 --> 00:25:52,080 Speaker 2: I'm June Grosso and you're listening to Bloomberg. 448 00:25:54,560 --> 00:25:57,879 Speaker 5: You see that the trucks and trains and excavators in 449 00:25:57,920 --> 00:26:00,639 Speaker 5: the background, and you hear them, And every time I 450 00:26:00,680 --> 00:26:01,960 Speaker 5: hear them, I love the sound. 451 00:26:02,200 --> 00:26:04,840 Speaker 2: And there are plenty of other constructions sounds in the 452 00:26:04,920 --> 00:26:09,240 Speaker 2: nation's capital that would please President Trump, as well as 453 00:26:09,280 --> 00:26:12,720 Speaker 2: the sound of another lawsuit being filed every time he 454 00:26:12,800 --> 00:26:16,919 Speaker 2: attempts to remake a historic landmark. The latest is the 455 00:26:17,000 --> 00:26:20,320 Speaker 2: reflecting pool at the Lincoln Memorial, one of the most 456 00:26:20,560 --> 00:26:24,160 Speaker 2: iconic spots on the National Mall, but now the pool's 457 00:26:24,200 --> 00:26:28,560 Speaker 2: basin is being repainted from the neutral colors originally used 458 00:26:28,720 --> 00:26:32,800 Speaker 2: to a color called American Flag blue that was suggested 459 00:26:32,880 --> 00:26:37,280 Speaker 2: by one of Trump's former swimming pool contractors. And over 460 00:26:37,320 --> 00:26:40,040 Speaker 2: the years as a developer, I have probably built more 461 00:26:40,080 --> 00:26:43,040 Speaker 2: than one hundred swimming pools different buildings I built. 462 00:26:42,800 --> 00:26:45,200 Speaker 5: And I have some really good pool buildings. I also 463 00:26:45,280 --> 00:26:46,320 Speaker 5: had some really bad ones. 464 00:26:46,440 --> 00:26:50,359 Speaker 2: A nonprofit filed a lawsuit this week to stop Trump 465 00:26:50,400 --> 00:26:55,520 Speaker 2: from altering the Lincoln Memorial without the reviews and consultations 466 00:26:55,560 --> 00:27:01,040 Speaker 2: required before altering a registered historic landmark. The Cult Landscape 467 00:27:01,080 --> 00:27:05,399 Speaker 2: Foundation argues that the reflecting pool's neutral color is a 468 00:27:05,520 --> 00:27:09,800 Speaker 2: character defining feature of the site intended to convey greater 469 00:27:09,960 --> 00:27:14,359 Speaker 2: depth than reflection, it says, repainting. It follows the pattern 470 00:27:14,440 --> 00:27:18,280 Speaker 2: of Trump's other renovations like tearing down the East Wing 471 00:27:18,440 --> 00:27:21,960 Speaker 2: to build a ballroom, closing the Kennedy Center for two 472 00:27:22,080 --> 00:27:26,520 Speaker 2: years for renovations, and other projects that have drawn lawsuits 473 00:27:26,520 --> 00:27:32,000 Speaker 2: from historical societies and nonprofits for similar reasons. My guest 474 00:27:32,080 --> 00:27:36,679 Speaker 2: is former federal prosecutor Nima Romani, president of West Coast 475 00:27:36,720 --> 00:27:41,040 Speaker 2: Trial Lawyers. Nima tell us what the Cultural Landscape Foundation 476 00:27:41,520 --> 00:27:43,240 Speaker 2: is arguing in its lawsuit. 477 00:27:43,800 --> 00:27:48,560 Speaker 5: The lawsuit is alleging that the Trump administration didn't comply 478 00:27:48,680 --> 00:27:54,240 Speaker 5: with federal laws, specifically procedural law related to historic monuments 479 00:27:54,280 --> 00:27:59,400 Speaker 5: and environmental analyzes. This is similar to the Administrative Procedure 480 00:27:59,400 --> 00:28:02,280 Speaker 5: Act argument that many other planiffs have been using to 481 00:28:02,320 --> 00:28:06,720 Speaker 5: slow down the Trump administration. Now, those laws essentially say 482 00:28:06,760 --> 00:28:12,320 Speaker 5: that when a monument is altered in any way, there 483 00:28:12,359 --> 00:28:15,960 Speaker 5: has to be the opportunity for public comment, consultation with 484 00:28:16,000 --> 00:28:21,159 Speaker 5: other federal agencies, assessment of environmental impacts. And again this 485 00:28:21,200 --> 00:28:24,840 Speaker 5: is all procedural, but it can slow down this process, 486 00:28:24,880 --> 00:28:26,600 Speaker 5: which is what the planiniffs are trying to do. 487 00:28:26,800 --> 00:28:31,440 Speaker 2: The Trump administration is well aware of these requirements because 488 00:28:31,680 --> 00:28:37,160 Speaker 2: they're being sued in other cases. So ignoring similar requirements. 489 00:28:36,760 --> 00:28:41,600 Speaker 5: Oh, there's no question, And this really raises the fundamental 490 00:28:41,760 --> 00:28:44,800 Speaker 5: constitutional issue. What happens if the executive branch that is 491 00:28:44,840 --> 00:28:48,200 Speaker 5: tasked with enforcing the law doesn't follow the law. Who's 492 00:28:48,200 --> 00:28:51,120 Speaker 5: going to compel them to do so? Now, obviously, you know, 493 00:28:51,240 --> 00:28:54,680 Speaker 5: an Article three judge can step in and issue some 494 00:28:54,720 --> 00:28:58,880 Speaker 5: sort of order and injunction and hopefully there is compliance 495 00:28:58,920 --> 00:29:02,120 Speaker 5: with that. But yeah, this is a persistent problem by 496 00:29:02,360 --> 00:29:04,600 Speaker 5: this administration. I mean, there are these laws in the 497 00:29:04,600 --> 00:29:08,600 Speaker 5: books and they don't necessarily think that it applies to them. 498 00:29:08,880 --> 00:29:11,720 Speaker 5: And in this particular case with the reflecting Pool, the 499 00:29:11,760 --> 00:29:15,000 Speaker 5: president is trying to get this done before the two 500 00:29:15,080 --> 00:29:17,800 Speaker 5: hundred and fiftieth anniversary of our nation in just a 501 00:29:17,800 --> 00:29:21,360 Speaker 5: couple months, so we're really short on time and that's 502 00:29:21,360 --> 00:29:25,280 Speaker 5: why he's paying this company a significant sum of money 503 00:29:25,480 --> 00:29:26,600 Speaker 5: to get it done so quickly. 504 00:29:27,200 --> 00:29:30,960 Speaker 2: And the government awarded the firm a no bid contract 505 00:29:31,440 --> 00:29:36,360 Speaker 2: so bypassing the requirement to seek competing bids, and the 506 00:29:36,440 --> 00:29:40,600 Speaker 2: expected cost has now ballooned from one point eight million 507 00:29:40,920 --> 00:29:42,760 Speaker 2: to thirteen point one million. 508 00:29:43,520 --> 00:29:46,560 Speaker 5: It is, and the administration is saying that there's a 509 00:29:46,640 --> 00:29:48,959 Speaker 5: timing issue and that's why they're doing it. They have 510 00:29:49,040 --> 00:29:51,400 Speaker 5: to get this done, and that's why they're paying so much. 511 00:29:51,920 --> 00:29:56,160 Speaker 5: You know, from the Trump administration's perspective, the way they're 512 00:29:56,200 --> 00:29:58,720 Speaker 5: phrasing this for the litigation is that this is just 513 00:29:58,840 --> 00:30:03,400 Speaker 5: a necessary repair. This isn't an alteration because the executive 514 00:30:03,560 --> 00:30:07,640 Speaker 5: in their mandate to maintain these properties. Obviously they can 515 00:30:07,680 --> 00:30:12,280 Speaker 5: repair monuments, right and there's certain areas of the law 516 00:30:12,320 --> 00:30:16,360 Speaker 5: where the executive has much more discretion, obviously national security issues. 517 00:30:16,440 --> 00:30:20,120 Speaker 5: The other is routine maintenance and repair. So you see 518 00:30:20,160 --> 00:30:23,680 Speaker 5: the plaintiffs in these cases arguing that any of these 519 00:30:23,720 --> 00:30:26,440 Speaker 5: it could be the reflecting pool, it can be the 520 00:30:26,520 --> 00:30:29,360 Speaker 5: Kennedy Center of the White House, that these are fundamental 521 00:30:29,520 --> 00:30:34,640 Speaker 5: changes and alterations that would require approval of Congress or 522 00:30:34,720 --> 00:30:39,560 Speaker 5: others potentially, not just routine repairs. And of course the 523 00:30:39,640 --> 00:30:42,440 Speaker 5: government is arguing in their papers that this is just 524 00:30:43,040 --> 00:30:45,640 Speaker 5: a repair in the case of the reflecting pool, that 525 00:30:45,680 --> 00:30:49,360 Speaker 5: there are cracks, there's allergy, and that this isn't a 526 00:30:49,400 --> 00:30:53,760 Speaker 5: fundamentally different paint job changing the monument. It's simply just 527 00:30:53,800 --> 00:30:56,760 Speaker 5: a repair. In preparation for the big celebration. 528 00:30:57,080 --> 00:30:59,280 Speaker 2: And what do you think of their argument that the 529 00:30:59,440 --> 00:31:03,560 Speaker 2: urgency is the country's two hundred and fiftieth anniversary and 530 00:31:03,600 --> 00:31:08,520 Speaker 2: that warrants an exemption from the law's procedural requirements. 531 00:31:08,960 --> 00:31:11,480 Speaker 5: I don't think it's a particularly good argument, because the 532 00:31:11,520 --> 00:31:14,000 Speaker 5: President himself has come out and said that he wants 533 00:31:14,000 --> 00:31:17,680 Speaker 5: to paint an American blue. So you know, it seems 534 00:31:17,720 --> 00:31:20,120 Speaker 5: like he backtracked a little bit from that statement, but 535 00:31:20,160 --> 00:31:23,280 Speaker 5: it seems like it's an aesthetic change, and a significant 536 00:31:23,280 --> 00:31:27,480 Speaker 5: one at that. So obviously, time is an issue, and 537 00:31:27,520 --> 00:31:30,360 Speaker 5: we know that some of these government contracts can take 538 00:31:30,400 --> 00:31:32,600 Speaker 5: some time. In the case the Kennedy Center, we're talking 539 00:31:32,600 --> 00:31:35,360 Speaker 5: about two years. This has to happen in two months. 540 00:31:35,880 --> 00:31:39,160 Speaker 5: So that's something that I think should be taken into consideration. 541 00:31:39,320 --> 00:31:42,320 Speaker 5: But if it's a fundamental change, and this is something 542 00:31:42,400 --> 00:31:47,440 Speaker 5: that is really within Congress's authority and they haven't delegated 543 00:31:47,480 --> 00:31:50,320 Speaker 5: this to the executive and we also have the separation 544 00:31:50,360 --> 00:31:51,080 Speaker 5: of powers. 545 00:31:50,760 --> 00:31:54,480 Speaker 2: Issue here talking about the Kennedy Center, So the closure 546 00:31:54,560 --> 00:31:58,120 Speaker 2: is supposed to be for renovations, but that covers a 547 00:31:58,160 --> 00:32:02,800 Speaker 2: lot of ground. The issues the same basically as in 548 00:32:02,880 --> 00:32:04,680 Speaker 2: the Reflecting Pool lawsuit. 549 00:32:05,000 --> 00:32:08,600 Speaker 5: It's similar issues. The Kennedy Center is slightly different in 550 00:32:08,640 --> 00:32:11,360 Speaker 5: terms of how it's structured. It does get its authority 551 00:32:11,360 --> 00:32:14,480 Speaker 5: from Congress, but it's essentially a nonprofit with a board. 552 00:32:14,960 --> 00:32:17,719 Speaker 5: There's some board issues. There's labor issues as well, if 553 00:32:17,720 --> 00:32:21,520 Speaker 5: you're shutting something down, and there's you know, government employees 554 00:32:21,560 --> 00:32:23,840 Speaker 5: that are going to be essentially let go. So it's 555 00:32:23,880 --> 00:32:26,800 Speaker 5: a little bit more complicated than the Reflecting Pool, but 556 00:32:26,880 --> 00:32:29,920 Speaker 5: it does raise the same issues. So you see again 557 00:32:30,600 --> 00:32:33,680 Speaker 5: in their filing papers the government arguing that things are 558 00:32:33,680 --> 00:32:36,320 Speaker 5: going to be the same. Right that the bust of 559 00:32:36,440 --> 00:32:40,320 Speaker 5: John F. Kennedy will remain, the quotes on the walls 560 00:32:40,400 --> 00:32:45,200 Speaker 5: will remain. The changes are for repair purposes only. The 561 00:32:45,320 --> 00:32:49,000 Speaker 5: design of the center will not change. The Department of 562 00:32:49,120 --> 00:32:51,920 Speaker 5: Justice was saying that, look, these are necessary repairs because 563 00:32:51,960 --> 00:32:55,080 Speaker 5: the Kennedy Center was falling apart. There's cracks, you know, 564 00:32:55,120 --> 00:32:58,360 Speaker 5: the ceiling was going to collapse. This is dangerous and 565 00:32:58,560 --> 00:33:02,720 Speaker 5: judges are going to be obviously a lot more liberal 566 00:33:02,840 --> 00:33:06,440 Speaker 5: when it comes to the government making repairs necessary repairs 567 00:33:06,480 --> 00:33:08,840 Speaker 5: if it's a safety issue. And I think a little 568 00:33:08,880 --> 00:33:11,720 Speaker 5: bit different the Reflecting Pool extent that the repairs were made. 569 00:33:11,760 --> 00:33:14,520 Speaker 5: I don't think anyone was arguing that it was for safety, 570 00:33:14,920 --> 00:33:18,000 Speaker 5: but I think in the Kennedy Center, and again, that 571 00:33:18,200 --> 00:33:20,920 Speaker 5: case is going to come down to, is this an 572 00:33:21,080 --> 00:33:27,320 Speaker 5: esthetic redesign, a fundamental alteration of this historic building, or 573 00:33:27,480 --> 00:33:30,760 Speaker 5: is it just necessary repairs because attendees could get hurt, 574 00:33:30,840 --> 00:33:32,760 Speaker 5: and obviously we know if they get hurt and the 575 00:33:32,800 --> 00:33:35,760 Speaker 5: government can be sued in the Federal to Claims Act. 576 00:33:35,840 --> 00:33:39,280 Speaker 5: So I think that's the biggest issue in the case. 577 00:33:39,640 --> 00:33:43,080 Speaker 2: And the nonprofits lawyer pointed to the destruction of the 578 00:33:43,120 --> 00:33:47,040 Speaker 2: East Wing last year, when Trump had initially said that 579 00:33:47,400 --> 00:33:51,760 Speaker 2: constructing the ballroom wouldn't impact the existing structure. 580 00:33:52,040 --> 00:33:53,959 Speaker 5: I did want to interfere with the current building. 581 00:33:53,960 --> 00:33:58,479 Speaker 1: I won't be It'll be near it, but not touching it, 582 00:33:59,280 --> 00:34:02,040 Speaker 1: and pays total respect to the existing building, which I'm 583 00:34:02,040 --> 00:34:02,800 Speaker 1: the biggest fan of. 584 00:34:03,040 --> 00:34:05,720 Speaker 2: The cost of that has also ballooned and gone from 585 00:34:05,760 --> 00:34:09,600 Speaker 2: being paid for by private donations to being paid for 586 00:34:09,840 --> 00:34:14,560 Speaker 2: by taxpayers. And you mentioned national security before. The administration 587 00:34:14,719 --> 00:34:18,240 Speaker 2: is trying to frame the incident outside the White House 588 00:34:18,239 --> 00:34:24,040 Speaker 2: Correspondence Association's dinner as demonstrating that the ballroom is essential 589 00:34:24,160 --> 00:34:26,480 Speaker 2: for national security. Saturday night. 590 00:34:26,560 --> 00:34:27,600 Speaker 5: It was good for one thing. 591 00:34:28,239 --> 00:34:30,600 Speaker 2: People are loving my ballroom, now that's the only thing 592 00:34:31,920 --> 00:34:35,680 Speaker 2: I love my ballroom when they're using the Correspondence Center 593 00:34:35,680 --> 00:34:37,920 Speaker 2: and what happened there. But that's not the kind of 594 00:34:37,920 --> 00:34:40,440 Speaker 2: event that would even be held at the White House. 595 00:34:40,520 --> 00:34:44,759 Speaker 2: That's a private event. So that comparison doesn't work in. 596 00:34:44,800 --> 00:34:48,640 Speaker 5: Talking points immediately after the shooting that this is why 597 00:34:48,640 --> 00:34:50,880 Speaker 5: we need the president of WALDO. But you're absolutely right. 598 00:34:51,040 --> 00:34:53,680 Speaker 5: The White House Correspondent Center is a private event. It's 599 00:34:53,719 --> 00:34:56,760 Speaker 5: held at the Washington Hilton, one of the few venues 600 00:34:56,760 --> 00:35:01,240 Speaker 5: in Washington, DC that can accommodate proud of two thousand 601 00:35:01,320 --> 00:35:04,279 Speaker 5: or more people. Famously where Ronald Reagan was also shot. 602 00:35:04,760 --> 00:35:08,600 Speaker 5: The ball romans for a different purpose altogether. It's to 603 00:35:09,160 --> 00:35:12,879 Speaker 5: host heads of state. It's not like the White House 604 00:35:12,880 --> 00:35:17,640 Speaker 5: Correspondence can call and rent it or any other private 605 00:35:17,960 --> 00:35:22,120 Speaker 5: organization or group. So it wouldn't necessarily solve the problem. 606 00:35:22,400 --> 00:35:25,360 Speaker 5: But of course, you know, politically it makes for a 607 00:35:25,360 --> 00:35:28,960 Speaker 5: great talking point, so you see it parroted by a 608 00:35:28,960 --> 00:35:29,920 Speaker 5: lot of talking heads. 609 00:35:30,360 --> 00:35:33,560 Speaker 2: Seemingly lost in all this is that a federal judge, 610 00:35:33,880 --> 00:35:37,759 Speaker 2: Richard Leon found that Trump didn't have authority to tear 611 00:35:37,840 --> 00:35:41,120 Speaker 2: down the East Wing and build a new structure on 612 00:35:41,200 --> 00:35:45,239 Speaker 2: White House grounds. That decision is being appealed, but the 613 00:35:45,280 --> 00:35:48,640 Speaker 2: government has made a motion asking the judge to dissolve 614 00:35:48,680 --> 00:35:51,560 Speaker 2: his own ruling in light of the incident at the 615 00:35:51,560 --> 00:35:57,520 Speaker 2: Correspondent's dinner. These motion papers are so unusual that's putting 616 00:35:57,520 --> 00:36:02,080 Speaker 2: it mildly. They talk about Trump arrangement syndrome, and there 617 00:36:02,120 --> 00:36:07,040 Speaker 2: are multiple randomly capitalized words and exclamation points. 618 00:36:07,600 --> 00:36:11,560 Speaker 5: People the DOJ, they are jocking for position to appiece 619 00:36:11,560 --> 00:36:13,600 Speaker 5: of their boss, the President of the United States. The 620 00:36:13,640 --> 00:36:17,440 Speaker 5: way Acting Attorney General Todd blanche has handled the Comy case, 621 00:36:17,480 --> 00:36:20,320 Speaker 5: for instance, right eighty six forty seven. I don't think 622 00:36:20,760 --> 00:36:23,600 Speaker 5: that's a meritorious case at all, and I think most 623 00:36:23,719 --> 00:36:26,960 Speaker 5: former DOJ lawyers would agree. But I think that's probably 624 00:36:27,000 --> 00:36:30,719 Speaker 5: something that was done because Donald Trump dislikes Comy, and 625 00:36:30,719 --> 00:36:33,080 Speaker 5: I understand why he dislikes Colly, and I understand why 626 00:36:33,280 --> 00:36:35,719 Speaker 5: Democrats dislike call me. A lot of people dislike call me. 627 00:36:35,800 --> 00:36:37,879 Speaker 5: But if you want to prosecute and prosecute him for 628 00:36:38,400 --> 00:36:42,040 Speaker 5: what he allegedly did, which is leak information the Wall 629 00:36:42,040 --> 00:36:44,719 Speaker 5: Street Journal and compromise their national security, and you know, 630 00:36:44,760 --> 00:36:47,560 Speaker 5: you're prosecuting for Instagram posts. But I digress. Now you 631 00:36:47,560 --> 00:36:52,240 Speaker 5: have another DOJ official, high level who's filing emotion which 632 00:36:52,440 --> 00:36:56,080 Speaker 5: reads likely was written by Donald Trump on truth Social 633 00:36:56,160 --> 00:36:59,319 Speaker 5: It was bizarre, something I'd never seen is talk about 634 00:36:59,320 --> 00:37:03,279 Speaker 5: Trump drain syndrome. It's writing in caps. I mean, it 635 00:37:03,320 --> 00:37:06,280 Speaker 5: was really surreal. I mean I was just blown away. 636 00:37:06,360 --> 00:37:09,279 Speaker 5: But it was clearly something that was an attempt, in 637 00:37:09,320 --> 00:37:12,279 Speaker 5: my opinion, to pander to the president as opposed to 638 00:37:12,400 --> 00:37:13,959 Speaker 5: arguing the facts and the law. 639 00:37:14,480 --> 00:37:17,839 Speaker 2: This line struck me, saying that this frivolous and meritless 640 00:37:17,920 --> 00:37:22,400 Speaker 2: lawsuit was filed quote because it is Donald J. Trump, 641 00:37:22,840 --> 00:37:26,919 Speaker 2: solid caps, a highly successful real estate developer who has 642 00:37:26,960 --> 00:37:31,080 Speaker 2: abilities that others don't, especially those who assumed the office 643 00:37:31,120 --> 00:37:34,680 Speaker 2: of president. And it was signed by three political appointees. 644 00:37:34,760 --> 00:37:37,399 Speaker 2: No career attorneys signed that. I guess I didn't want 645 00:37:37,400 --> 00:37:40,240 Speaker 2: their name on that. But the appeals court has lifted 646 00:37:40,239 --> 00:37:43,520 Speaker 2: the injunction on the construction of the ballroom, so that's 647 00:37:43,560 --> 00:37:44,320 Speaker 2: going forward. 648 00:37:44,480 --> 00:37:47,640 Speaker 5: The problem is this, it's one thing that stopped construction 649 00:37:48,080 --> 00:37:53,640 Speaker 5: or stop painting or renovations. Once it's done, I don't 650 00:37:53,680 --> 00:37:58,520 Speaker 5: think a court is going to tell the government to 651 00:37:58,560 --> 00:38:02,640 Speaker 5: tear it down. That's a very different kind of order. 652 00:38:03,000 --> 00:38:06,000 Speaker 5: And what's going to happen with the reflecting pool, you know, 653 00:38:06,080 --> 00:38:07,840 Speaker 5: Jo just going to say we got to paint it back, 654 00:38:08,200 --> 00:38:11,719 Speaker 5: or you know, the Kennedy Center. Once those renovations are 655 00:38:11,760 --> 00:38:15,279 Speaker 5: being done, you can't restore it. It doesn't make any 656 00:38:15,360 --> 00:38:20,040 Speaker 5: sense legally or you know, practically. So I think this 657 00:38:20,120 --> 00:38:23,000 Speaker 5: is part and parcel of the government strategy let's move forward, 658 00:38:23,400 --> 00:38:27,279 Speaker 5: sort of a ask for forgiveness rather than asking for 659 00:38:27,480 --> 00:38:29,319 Speaker 5: permission type argument, but a. 660 00:38:29,239 --> 00:38:32,520 Speaker 2: Lot more litigation to come. Thanks so much, Nima. That's 661 00:38:32,560 --> 00:38:36,040 Speaker 2: former federal prosecutor Nima Romani, and that's it for this 662 00:38:36,160 --> 00:38:38,920 Speaker 2: edition of The Bloomberg Law Show. Remember you can always 663 00:38:38,920 --> 00:38:41,800 Speaker 2: get the latest legal news on our Bloomberg Law Podcast. 664 00:38:42,120 --> 00:38:45,160 Speaker 2: You can find them on Apple Podcasts, Spotify, and at 665 00:38:45,320 --> 00:38:50,360 Speaker 2: www dot Bloomberg dot com, slash podcast slash Law, and 666 00:38:50,440 --> 00:38:53,480 Speaker 2: remember to tune into The Bloomberg Law Show every weeknight 667 00:38:53,560 --> 00:38:57,040 Speaker 2: at ten pm Wall Street Time. I'm June Grosso and 668 00:38:57,080 --> 00:38:58,560 Speaker 2: you're listening to Bloomberg