1 00:00:03,200 --> 00:00:07,960 Speaker 1: This is Bloomberg Law with June Brussel from Bloomberg Radio. 2 00:00:10,800 --> 00:00:13,880 Speaker 1: A buyer trying to walk away from a deal found 3 00:00:13,920 --> 00:00:16,919 Speaker 1: that it would have to take the cake, and more specifically, 4 00:00:17,040 --> 00:00:20,799 Speaker 1: the company that makes the cake decorations. Kolberg and Company 5 00:00:20,800 --> 00:00:23,400 Speaker 1: had attempted to back out of buying Deco Pack, a 6 00:00:23,440 --> 00:00:27,960 Speaker 1: cake decorating technology company, because of issues related to COVID nineteen, 7 00:00:28,720 --> 00:00:32,040 Speaker 1: but after a trial in Delaware Chancery Court, the judge 8 00:00:32,159 --> 00:00:35,640 Speaker 1: ordered Colburg to complete the deal and purchase the company. 9 00:00:36,440 --> 00:00:39,320 Speaker 1: Joining me is Andrew Rossman, a partner at Quinn Emmanuel 10 00:00:39,479 --> 00:00:42,559 Speaker 1: who represented the winning seller in the case. So tell 11 00:00:42,640 --> 00:00:46,479 Speaker 1: us about the deal, so my clients no fits. The 12 00:00:46,560 --> 00:00:51,680 Speaker 1: private equity firm agreed to sell Deco Pack, a leading 13 00:00:52,240 --> 00:00:56,840 Speaker 1: manufacturer of cake decorating solutions in the country in Minnesota, 14 00:00:57,720 --> 00:01:02,400 Speaker 1: to another private equate firm called Coburger Company, and they 15 00:01:02,520 --> 00:01:06,479 Speaker 1: started agreement first week of March, and you know, as 16 00:01:06,560 --> 00:01:11,120 Speaker 1: the pandemic worsened, Coburg tried to get out of the 17 00:01:11,160 --> 00:01:14,640 Speaker 1: deal and we student Delaware to enforce it. Was there 18 00:01:14,760 --> 00:01:19,240 Speaker 1: one legal question or primary doctrine involved in the case. 19 00:01:19,800 --> 00:01:24,039 Speaker 1: Coburg raised several defenses, one of which is well known, 20 00:01:24,160 --> 00:01:28,119 Speaker 1: which is a material adverse effect, and that was one 21 00:01:28,120 --> 00:01:31,120 Speaker 1: of the things we argued about. Colberg asserted that the 22 00:01:31,160 --> 00:01:35,000 Speaker 1: effects of the pandemic caused such a material change to 23 00:01:35,080 --> 00:01:37,240 Speaker 1: the company that they should be able to get out 24 00:01:37,240 --> 00:01:39,520 Speaker 1: of their obligation to buy it. That was one issue. 25 00:01:40,000 --> 00:01:45,800 Speaker 1: And you know, another issue was the Coburg allowed the 26 00:01:45,880 --> 00:01:51,000 Speaker 1: financing for the deal to expire um actually precipitated in 27 00:01:51,120 --> 00:01:54,920 Speaker 1: our view, uh cause of dispute with the lenders to 28 00:01:55,000 --> 00:01:58,840 Speaker 1: make the financing go away UM. And they claimed then 29 00:01:59,080 --> 00:02:01,360 Speaker 1: that without finding I think they can't close the deal. 30 00:02:01,960 --> 00:02:04,320 Speaker 1: And so, you know, one of the things that you know, 31 00:02:04,360 --> 00:02:08,880 Speaker 1: maybe the opinion is the most significant for you know, 32 00:02:08,880 --> 00:02:12,840 Speaker 1: a legal precedent is the prevention doctrine, which is the 33 00:02:13,000 --> 00:02:17,160 Speaker 1: idea that you can't cause the condition to fail and 34 00:02:17,200 --> 00:02:20,240 Speaker 1: then point to the failure of that condition as the 35 00:02:20,280 --> 00:02:22,920 Speaker 1: reason to get out of your agreement. So did the 36 00:02:23,000 --> 00:02:27,359 Speaker 1: judge find that the buyer didn't just see the deal collapsing, 37 00:02:27,360 --> 00:02:31,359 Speaker 1: but they tried to make the deal collapse exactly. Instead 38 00:02:31,360 --> 00:02:36,360 Speaker 1: of trying to find solutions and use their best efforts 39 00:02:36,480 --> 00:02:40,359 Speaker 1: to get the deal closed, they did the opposite, which 40 00:02:40,440 --> 00:02:45,320 Speaker 1: is they found problems and created problems with the lenders 41 00:02:45,400 --> 00:02:48,280 Speaker 1: and then use those as excuses to get out of 42 00:02:48,280 --> 00:02:52,280 Speaker 1: the So what is your understanding now after this decision, 43 00:02:52,320 --> 00:02:57,040 Speaker 1: of what the prevention doctrine stands for? So what the 44 00:02:57,080 --> 00:03:02,119 Speaker 1: prevention doctrine stands for is the idea that you can't 45 00:03:02,880 --> 00:03:06,560 Speaker 1: create a problem. You can't manufacture a problem in your 46 00:03:06,600 --> 00:03:12,240 Speaker 1: deal and then point to that problem as your exit 47 00:03:12,600 --> 00:03:17,000 Speaker 1: from the deal. So in this case, they can't cause 48 00:03:17,120 --> 00:03:21,280 Speaker 1: the financing to go away by creating a dispute with 49 00:03:21,320 --> 00:03:25,720 Speaker 1: their lenders and then cross their arms and say we 50 00:03:25,840 --> 00:03:28,839 Speaker 1: no longer have financings, therefore we don't have to close. 51 00:03:29,400 --> 00:03:32,840 Speaker 1: It's an issue that's come up before. Where in the 52 00:03:32,880 --> 00:03:37,800 Speaker 1: famous case involving a merger of Huntsman and Hexion, where 53 00:03:38,240 --> 00:03:39,880 Speaker 1: you know, one of the parties tried to get out 54 00:03:39,920 --> 00:03:42,560 Speaker 1: of that deal by claiming that there would be an 55 00:03:42,560 --> 00:03:47,720 Speaker 1: insolvency and therefore chased the lenders away. So was the 56 00:03:47,760 --> 00:03:51,160 Speaker 1: dispute mostly on the facts of the case, where you 57 00:03:51,320 --> 00:03:54,240 Speaker 1: arguing the facts of the case more or the law 58 00:03:54,280 --> 00:03:57,360 Speaker 1: of the case. I think the facts of the case 59 00:03:57,520 --> 00:04:03,880 Speaker 1: were predominant here. The judge took an exhaustive review of 60 00:04:03,920 --> 00:04:08,680 Speaker 1: the trial record, and you know was persuaded that my 61 00:04:08,800 --> 00:04:12,720 Speaker 1: client at every step was doing the right thing, uh, 62 00:04:12,720 --> 00:04:16,320 Speaker 1: and that Colberg at every step was trying to get 63 00:04:16,360 --> 00:04:19,839 Speaker 1: out of its obligations. Now Colberg has to go through 64 00:04:19,880 --> 00:04:24,039 Speaker 1: with the deal as originally agreed to. The judge ordered 65 00:04:24,080 --> 00:04:27,720 Speaker 1: Colberg to close the deal on its original exactly. So 66 00:04:27,800 --> 00:04:32,039 Speaker 1: now here you were on the seller's side. But we 67 00:04:32,200 --> 00:04:35,279 Speaker 1: talked before when you were on the buyer side in 68 00:04:35,360 --> 00:04:38,640 Speaker 1: another deal where the judge allowed your client to walk 69 00:04:38,680 --> 00:04:41,360 Speaker 1: away from the deal. So tell us first refresh our 70 00:04:41,400 --> 00:04:45,320 Speaker 1: memory about that deal. Sure, I've been involved in several 71 00:04:46,120 --> 00:04:50,600 Speaker 1: of these litigations, but two of them actually went to 72 00:04:50,720 --> 00:04:55,200 Speaker 1: trial in the pandemic. One was a deal involving the 73 00:04:55,320 --> 00:04:59,720 Speaker 1: sale of fifteen luxury hotel by a Korean company called 74 00:04:59,760 --> 00:05:05,120 Speaker 1: the A to Chinese and Sure called Ambang. In that case, 75 00:05:05,560 --> 00:05:11,280 Speaker 1: we represented the buyer right and persuaded the court that 76 00:05:11,440 --> 00:05:14,520 Speaker 1: it was not obligated to close the deal in the 77 00:05:14,520 --> 00:05:17,240 Speaker 1: trial decision that came out towards the end of the year. 78 00:05:18,279 --> 00:05:21,159 Speaker 1: So what made the difference besides you being on the 79 00:05:21,160 --> 00:05:24,080 Speaker 1: winning side in these cases, what made the difference in 80 00:05:24,160 --> 00:05:28,200 Speaker 1: the opposite conclusions? Well, thanks thanks for that, June. But 81 00:05:28,440 --> 00:05:32,920 Speaker 1: the facts of every case and by themselves right. I 82 00:05:32,960 --> 00:05:37,919 Speaker 1: think in both cases, two clients really were doing the 83 00:05:38,000 --> 00:05:40,799 Speaker 1: right thing all along. I think they acted in good faith, 84 00:05:40,839 --> 00:05:44,440 Speaker 1: they met their obligations, and it was not the case 85 00:05:44,680 --> 00:05:48,359 Speaker 1: for the other shot. So if you're the seller, we 86 00:05:48,520 --> 00:05:51,240 Speaker 1: learned in the Maray case and that in the on 87 00:05:51,400 --> 00:05:55,480 Speaker 1: Band case that you can't hide problems, got to disclose problems, 88 00:05:55,560 --> 00:05:58,760 Speaker 1: and you've got to try to work through those. And 89 00:05:59,040 --> 00:06:02,039 Speaker 1: you know, the same thing we learned in the Deco 90 00:06:02,120 --> 00:06:06,200 Speaker 1: pat case, which is you can't manufacture problems. So you know, 91 00:06:06,240 --> 00:06:08,839 Speaker 1: I think the lesson to take away from both of 92 00:06:08,880 --> 00:06:13,080 Speaker 1: those is that parties are expected to be forthright and 93 00:06:13,120 --> 00:06:16,880 Speaker 1: expected to act in good faith, respect their obligations, and 94 00:06:16,920 --> 00:06:19,000 Speaker 1: that you know, to me it was easy because both 95 00:06:19,040 --> 00:06:21,440 Speaker 1: clients were doing the right thing. And the judge in 96 00:06:21,480 --> 00:06:25,400 Speaker 1: the latest case said it was a victory for deal certainty. 97 00:06:25,520 --> 00:06:28,200 Speaker 1: Do you think that's true even in light of the 98 00:06:28,279 --> 00:06:31,159 Speaker 1: decision in the Marae case which allowed your client to 99 00:06:31,200 --> 00:06:34,400 Speaker 1: walk away from the deal. I think the judge was 100 00:06:34,839 --> 00:06:38,120 Speaker 1: very careful to apply the law, and I think the 101 00:06:38,200 --> 00:06:42,359 Speaker 1: law was applied consistently, but the facts were quite different, 102 00:06:42,920 --> 00:06:46,120 Speaker 1: and you know, I take it as as you said, 103 00:06:46,160 --> 00:06:49,000 Speaker 1: as a victory for deal certainty, I take it just 104 00:06:49,040 --> 00:06:51,960 Speaker 1: as much as a victory for good faith, which is 105 00:06:52,040 --> 00:06:56,880 Speaker 1: that you know, parties are expected to meet their obligations 106 00:06:56,880 --> 00:07:02,640 Speaker 1: earnestly and to have exchanges with their counterparties that are candid. 107 00:07:03,440 --> 00:07:05,839 Speaker 1: So that's how I how I look at it, and 108 00:07:05,880 --> 00:07:09,480 Speaker 1: I think the two decisions stand together well and um, 109 00:07:09,600 --> 00:07:14,240 Speaker 1: you know, help provide good guidance, um for parties who 110 00:07:14,240 --> 00:07:18,160 Speaker 1: are engaged in these transactions. Due to the pandemic, I 111 00:07:18,000 --> 00:07:21,200 Speaker 1: imagine we're going to be seeing a lot of other 112 00:07:21,280 --> 00:07:24,520 Speaker 1: cases on a large scale like this or on a 113 00:07:24,560 --> 00:07:28,120 Speaker 1: smaller scale where people are trying to back out of 114 00:07:28,120 --> 00:07:33,760 Speaker 1: a deal. What will make the difference? Well, every as 115 00:07:33,800 --> 00:07:35,960 Speaker 1: I've seen in all these and I think we've done 116 00:07:36,840 --> 00:07:39,160 Speaker 1: you know, I've personally done six or eight of these 117 00:07:39,200 --> 00:07:41,720 Speaker 1: cases at least. Um. Not all of them go to trial, 118 00:07:41,840 --> 00:07:46,680 Speaker 1: but every case requires not just an examination of the facts, 119 00:07:46,720 --> 00:07:49,800 Speaker 1: but a close, uh you know, close scrutiny of the 120 00:07:49,880 --> 00:07:54,480 Speaker 1: contract itself. There are real differences in the contracts that 121 00:07:54,520 --> 00:07:58,600 Speaker 1: make a difference. So you know, in the case of uh, 122 00:07:58,640 --> 00:08:01,880 Speaker 1: you know, Murray, we're talking about hotels um and the 123 00:08:01,920 --> 00:08:05,440 Speaker 1: way that they were operated is quite dramatically different than 124 00:08:05,560 --> 00:08:08,840 Speaker 1: we were talking about the cake decorating business UM. And 125 00:08:08,920 --> 00:08:13,920 Speaker 1: how you know that manufacturing distribution business was operated is 126 00:08:14,120 --> 00:08:17,360 Speaker 1: you know, obviously quite different in the pandemic. And then 127 00:08:17,400 --> 00:08:21,240 Speaker 1: you've got to scrutinize their contract. So every case is 128 00:08:21,880 --> 00:08:24,240 Speaker 1: bespoke in that regard. And I say, the other thing 129 00:08:24,240 --> 00:08:29,360 Speaker 1: we learned too is that UM, often it's not what 130 00:08:29,440 --> 00:08:32,600 Speaker 1: you think, UH that is going to be the issue 131 00:08:32,600 --> 00:08:37,680 Speaker 1: that's in dispute. So you know, parties, look, immediately, everyone 132 00:08:37,800 --> 00:08:41,960 Speaker 1: thinks about m A UM as the you know, the 133 00:08:42,000 --> 00:08:45,480 Speaker 1: main contract feature that determines whether or not you can 134 00:08:45,520 --> 00:08:49,480 Speaker 1: exit a deal. UM. But both of these cases, what 135 00:08:49,679 --> 00:08:52,200 Speaker 1: we spend time talking about m a E. They there 136 00:08:52,200 --> 00:08:55,800 Speaker 1: were other issues that were just as prominent and more prominent. 137 00:08:56,200 --> 00:08:58,920 Speaker 1: And that's what I've seen throughout, which is that parties 138 00:08:58,960 --> 00:09:03,640 Speaker 1: often focused on other deal requirements, other conditions UM. And 139 00:09:03,679 --> 00:09:06,840 Speaker 1: it's it's those things that they're pulling apart to test 140 00:09:06,880 --> 00:09:10,600 Speaker 1: whether whether a deal is closed or not. Do you 141 00:09:10,679 --> 00:09:16,200 Speaker 1: think that contracts for deals going forward will contain, will 142 00:09:16,240 --> 00:09:21,920 Speaker 1: be will be UM formulated differently because of what lawyers 143 00:09:22,000 --> 00:09:24,320 Speaker 1: learned during the pandemic, are they're going to be different 144 00:09:24,320 --> 00:09:29,280 Speaker 1: clauses in there without questions. Um. So you know, we 145 00:09:29,480 --> 00:09:33,760 Speaker 1: every time there is a financial crisis or there is 146 00:09:33,800 --> 00:09:37,680 Speaker 1: a natural disaster. You know, you can you can look 147 00:09:37,720 --> 00:09:41,800 Speaker 1: at what m A provisions are as, you know, sort 148 00:09:41,800 --> 00:09:45,320 Speaker 1: of a history of the calamities of you know, the 149 00:09:45,400 --> 00:09:48,840 Speaker 1: last century or so, because they keep adding new ones. 150 00:09:49,559 --> 00:09:54,720 Speaker 1: So you know, now contracts, uh, you know, we'll make 151 00:09:54,760 --> 00:09:59,280 Speaker 1: direct reference to COVID nineteen, um. You know or asked 152 00:09:59,320 --> 00:10:03,480 Speaker 1: you know previous Lee obviously you know before two thousand nineteen, 153 00:10:03,760 --> 00:10:06,080 Speaker 1: you know, know when to do that. Um And and 154 00:10:06,120 --> 00:10:10,080 Speaker 1: they'll be thinking more about, you know, all of these 155 00:10:10,120 --> 00:10:13,840 Speaker 1: provisions as they get battle tests. So the judge in 156 00:10:13,880 --> 00:10:16,640 Speaker 1: this case wrote that perhaps there's a greater need to 157 00:10:16,640 --> 00:10:20,320 Speaker 1: celebrate the milestones of life amidst the tragedy of a pandemic, 158 00:10:20,720 --> 00:10:25,199 Speaker 1: or perhaps humans simply have an insatiable desire for decorated cakes. 159 00:10:25,520 --> 00:10:29,679 Speaker 1: How did the pandemic how did it hang over this trial? 160 00:10:29,800 --> 00:10:33,200 Speaker 1: I mean, besides in the details that you're litigating, how 161 00:10:33,240 --> 00:10:37,480 Speaker 1: else did the pandemic have an effect? Well, it had 162 00:10:37,760 --> 00:10:41,240 Speaker 1: an effective number of ways. Obviously in real time we're 163 00:10:41,240 --> 00:10:46,760 Speaker 1: seeing the impact on the company and our thesis throughout. 164 00:10:47,280 --> 00:10:50,920 Speaker 1: The company's thesis throughout, which was very much sustained, is 165 00:10:50,960 --> 00:10:54,760 Speaker 1: that after a short term you know dip, people are 166 00:10:54,760 --> 00:10:57,680 Speaker 1: going to get back to buying cakes. They may not 167 00:10:57,880 --> 00:11:01,560 Speaker 1: get together in the same numbers they previously did, but 168 00:11:01,960 --> 00:11:04,839 Speaker 1: you know, on on you know, Jimmy's fifth birthday, Jimmy 169 00:11:04,880 --> 00:11:07,080 Speaker 1: is going to get a case. And you know that 170 00:11:07,400 --> 00:11:10,640 Speaker 1: very much proved to be true. As we all experienced 171 00:11:11,160 --> 00:11:14,880 Speaker 1: in the pandemic, we just found different ways to celebrate um. 172 00:11:15,000 --> 00:11:17,960 Speaker 1: And it also affected the way we tried the case. Uh. 173 00:11:18,160 --> 00:11:22,280 Speaker 1: You know we uh initially we asked the judge to 174 00:11:22,280 --> 00:11:24,880 Speaker 1: set us down for trial in two weeks so that 175 00:11:24,920 --> 00:11:29,000 Speaker 1: we could be heard before the financing expired. And I think, 176 00:11:29,120 --> 00:11:31,000 Speaker 1: you know, in a in a very I didn't like 177 00:11:31,080 --> 00:11:35,560 Speaker 1: it at the time, but in a very sensible, humane decision, 178 00:11:35,559 --> 00:11:37,440 Speaker 1: and the judge you know, felt like that was not 179 00:11:38,559 --> 00:11:42,600 Speaker 1: a practical thing to do in the pandemic. UM. And 180 00:11:42,640 --> 00:11:46,160 Speaker 1: then you know, we went ahead and had an expedited trial, 181 00:11:46,280 --> 00:11:50,800 Speaker 1: but on a more understandable schedule, uh. And we did 182 00:11:50,800 --> 00:11:54,040 Speaker 1: everything remotely. You know, no one was in the room together. 183 00:11:54,160 --> 00:11:57,160 Speaker 1: We did the trial remotely on zoom. We did all 184 00:11:57,160 --> 00:11:59,959 Speaker 1: the depositions, on Zoom. It was quite a different experience 185 00:12:00,000 --> 00:12:03,120 Speaker 1: it than we've had before for the lawyers, you know, 186 00:12:03,160 --> 00:12:07,040 Speaker 1: as well as the participants in so trial. Lawyers like 187 00:12:07,200 --> 00:12:10,400 Speaker 1: to be in court. But are you gonna miss when 188 00:12:10,520 --> 00:12:12,800 Speaker 1: the pandemic is hopefully behind us? Are you going to 189 00:12:12,920 --> 00:12:18,600 Speaker 1: miss the convenience of zoom? Well, there there's something special 190 00:12:18,679 --> 00:12:22,520 Speaker 1: about you know, being able to uh, you know, just 191 00:12:22,679 --> 00:12:26,080 Speaker 1: walk down uh stairs in his house, you know, into 192 00:12:26,080 --> 00:12:28,959 Speaker 1: the courtroom, so to speak. And you know, it saves 193 00:12:28,960 --> 00:12:31,040 Speaker 1: a lot of wear and care on the travel. But 194 00:12:31,800 --> 00:12:35,200 Speaker 1: I missed being in courtrooms. I missed being with my 195 00:12:35,280 --> 00:12:38,880 Speaker 1: trial teams, at my clients. I missed, you know, having 196 00:12:38,960 --> 00:12:42,800 Speaker 1: judges you know, frown at me in person or you know, 197 00:12:42,840 --> 00:12:49,400 Speaker 1: hopefully smile. I missed the human elements of of litigation 198 00:12:49,520 --> 00:12:51,800 Speaker 1: very much. Thanks so much for being in the Bloomberg 199 00:12:51,840 --> 00:12:55,839 Speaker 1: Laws show. Andy. That's Andrew Rossman, a partner at Quinn Emmanuel. 200 00:12:57,520 --> 00:13:00,360 Speaker 1: As the Supreme Court waited into the War on drugs 201 00:13:00,360 --> 00:13:04,359 Speaker 1: this week, there was an unusually lopsided set of litigants, 202 00:13:04,400 --> 00:13:07,320 Speaker 1: so lopsided that the Court had to appoint an outside 203 00:13:07,400 --> 00:13:10,760 Speaker 1: lawyer to argue to uphold the lawn issue. After the 204 00:13:10,760 --> 00:13:15,319 Speaker 1: Biden administration switch sides and back the defendant. The question 205 00:13:15,440 --> 00:13:18,520 Speaker 1: was whether the lowest level drug offenders are eligible for 206 00:13:18,679 --> 00:13:23,040 Speaker 1: retroactive relief under the First Step Act and can seek resentencing. 207 00:13:23,679 --> 00:13:27,480 Speaker 1: Lawmakers from both parties, both conservative and liberal groups, and 208 00:13:27,520 --> 00:13:31,240 Speaker 1: the Biden administration say Congress intended for the law to 209 00:13:31,360 --> 00:13:35,680 Speaker 1: encompass low level offenders, but many of the justices sounded 210 00:13:35,760 --> 00:13:40,360 Speaker 1: skeptical that the statutory language would allow that interpretation. Kiara 211 00:13:40,480 --> 00:13:43,920 Speaker 1: Justice as Stephen Bryer and Brett Kavanaugh, I mean, I 212 00:13:43,960 --> 00:13:47,880 Speaker 1: think they were much too high. I understand that, but 213 00:13:48,000 --> 00:13:53,640 Speaker 1: I can't get away from this statute. Why didn't Congress 214 00:13:54,760 --> 00:13:59,680 Speaker 1: just say everyone who's been sentenced for crack offenses under 215 00:13:59,679 --> 00:14:04,199 Speaker 1: eighty one is eligible for resentencing? Something simple like that. 216 00:14:04,840 --> 00:14:07,440 Speaker 1: Joining me is Mark Ostler, a professor at the University 217 00:14:07,440 --> 00:14:12,400 Speaker 1: of St. Thomas School of Law who specializes in sentencing policy. So, Mark, 218 00:14:12,480 --> 00:14:15,480 Speaker 1: tell us a little bit about the First Step Act. Sure, 219 00:14:15,640 --> 00:14:18,840 Speaker 1: the First Step Act that was passed in it had 220 00:14:18,880 --> 00:14:22,040 Speaker 1: a number of provisions. UM. It was it was created 221 00:14:23,000 --> 00:14:27,480 Speaker 1: new metrics of data within the Bureau of Prisons UM 222 00:14:27,680 --> 00:14:31,480 Speaker 1: and hand some reentry provisions. But one of the primary 223 00:14:31,560 --> 00:14:36,880 Speaker 1: things that did was make retroactive prior law, the Fair 224 00:14:36,920 --> 00:14:41,560 Speaker 1: Sentencing Act in and what that did was changed the 225 00:14:41,680 --> 00:14:46,080 Speaker 1: hundred to one ratio between powder and crack cocaine. In 226 00:14:46,080 --> 00:14:50,640 Speaker 1: other words, in both the sentencing guidelines and the statutes 227 00:14:50,760 --> 00:14:54,600 Speaker 1: that created manatory minimums, you were sentenced the same for 228 00:14:55,520 --> 00:14:58,080 Speaker 1: five grams of crack because you were for five hundred 229 00:14:58,160 --> 00:15:02,720 Speaker 1: grams of powder cocaine. This had really disparate impacts in 230 00:15:02,840 --> 00:15:06,440 Speaker 1: terms of race. And I was a thorough prosecutor in 231 00:15:06,440 --> 00:15:08,920 Speaker 1: the and Detroit. There were a lot of crack cases 232 00:15:08,920 --> 00:15:11,600 Speaker 1: coming through that office, and of course it was all 233 00:15:11,680 --> 00:15:16,240 Speaker 1: or almost all black defendants in those cases. And in 234 00:15:16,360 --> 00:15:21,560 Speaker 1: time that became noticed and in they changed the law, 235 00:15:21,640 --> 00:15:25,800 Speaker 1: but they didn't make it retroactive. And that was a 236 00:15:25,800 --> 00:15:29,000 Speaker 1: continuing problem because you had people who were sentenced under 237 00:15:29,040 --> 00:15:32,920 Speaker 1: the old law who didn't have the advantage of the 238 00:15:33,440 --> 00:15:36,240 Speaker 1: change and attitude and the adjustment that had been made, 239 00:15:36,640 --> 00:15:39,520 Speaker 1: and that festered for a long time. Um you know, 240 00:15:39,600 --> 00:15:43,239 Speaker 1: the Obama administration wasn't able to fix it. And eventually 241 00:15:43,280 --> 00:15:48,280 Speaker 1: there was a bipartisan movement in uh Congress that pushed 242 00:15:48,280 --> 00:15:52,400 Speaker 1: for that change, among others, and it came through in 243 00:15:52,440 --> 00:15:55,560 Speaker 1: the first step Act of that was signed by Donald 244 00:15:55,560 --> 00:16:00,400 Speaker 1: Trump um notably the name indicated. It was supposed to 245 00:16:00,440 --> 00:16:04,000 Speaker 1: be one of a series of bills, but it was 246 00:16:04,040 --> 00:16:06,360 Speaker 1: the only one to get through. What is the issue 247 00:16:06,480 --> 00:16:10,160 Speaker 1: in this case before the Supreme Court. Yeah, it's a 248 00:16:10,200 --> 00:16:15,720 Speaker 1: little bit complicated. But the original law, the mandatory minimum 249 00:16:15,800 --> 00:16:19,560 Speaker 1: that regards crack and the number of other drugs, it's 250 00:16:19,560 --> 00:16:24,120 Speaker 1: sets three different tiers. And you know, the top tier 251 00:16:24,360 --> 00:16:28,840 Speaker 1: previously was over fifty grams of cracks for the top 252 00:16:28,880 --> 00:16:32,600 Speaker 1: tier and over five grams of crack for the middle tier, 253 00:16:32,640 --> 00:16:34,920 Speaker 1: and then the bottom tier was under five grams of cracks. 254 00:16:34,920 --> 00:16:38,760 Speaker 1: And then those thresholds all went up under the Fair 255 00:16:38,840 --> 00:16:42,600 Speaker 1: Sentence in Act. And that's what the First Step Act 256 00:16:42,760 --> 00:16:47,200 Speaker 1: made retroactive. And so in other words, people could go 257 00:16:47,280 --> 00:16:50,200 Speaker 1: back and say, I want to be resentenced under the 258 00:16:50,320 --> 00:16:53,600 Speaker 1: current law. And that meant that, let's say, if you 259 00:16:53,720 --> 00:16:57,320 Speaker 1: had been sentenced under the top tier for you know, 260 00:16:57,400 --> 00:17:00,880 Speaker 1: sixty grams of crack, now you're not mean that threshold, 261 00:17:00,880 --> 00:17:03,800 Speaker 1: and so they could be resent Now. The problem was 262 00:17:04,880 --> 00:17:09,520 Speaker 1: that the First Step Act said explicitly that it applied 263 00:17:09,720 --> 00:17:14,480 Speaker 1: to sentences in mentor minums that have been modified by 264 00:17:14,800 --> 00:17:18,880 Speaker 1: the Fair Sentencing Act and The argument from the government 265 00:17:19,000 --> 00:17:22,600 Speaker 1: under the Trump administration was that that meant that the 266 00:17:22,600 --> 00:17:26,760 Speaker 1: top two tiers, which had been changed explicitly because the 267 00:17:26,880 --> 00:17:30,520 Speaker 1: upper the threshold had been raised, that people who have 268 00:17:30,600 --> 00:17:34,080 Speaker 1: been sentenced under those got relieved, but people for whom 269 00:17:34,359 --> 00:17:37,919 Speaker 1: they weren't charged with a threshold of over five grams 270 00:17:37,920 --> 00:17:42,200 Speaker 1: of cracks, that they didn't have the benefit of this change. 271 00:17:42,600 --> 00:17:45,240 Speaker 1: That's an argument that doesn't make much sense in terms 272 00:17:45,280 --> 00:17:47,560 Speaker 1: of policy. Why you would give relief to people that 273 00:17:47,680 --> 00:17:50,520 Speaker 1: were more culpable but not people who are less culpable. 274 00:17:51,119 --> 00:17:53,200 Speaker 1: But that's what is the heart of this is the 275 00:17:53,280 --> 00:17:58,679 Speaker 1: Eleventh Circuit upheld the decision below that Mr Terry, the petitioner, 276 00:17:59,280 --> 00:18:02,400 Speaker 1: did not have the ability to have his sentence reviewed 277 00:18:02,480 --> 00:18:05,080 Speaker 1: under the First Step Act because he wasn't in those 278 00:18:05,119 --> 00:18:09,919 Speaker 1: top two tiers, but rather was charged with no amount listed. 279 00:18:10,320 --> 00:18:13,040 Speaker 1: On the date when the government's main brief in the 280 00:18:13,119 --> 00:18:17,080 Speaker 1: case was due, the Biden administration informed the court that 281 00:18:17,160 --> 00:18:21,160 Speaker 1: it was changing positions from the Trump administration and now 282 00:18:21,240 --> 00:18:24,160 Speaker 1: siding with the defendant in the case. So the court 283 00:18:24,160 --> 00:18:27,919 Speaker 1: appointed an outside lawyer to argue the case against the 284 00:18:28,000 --> 00:18:31,920 Speaker 1: defendant and the reduced sentence. Why did the Biden administration 285 00:18:32,119 --> 00:18:36,840 Speaker 1: change positions at the last minute. I think that they had, Yeah, 286 00:18:36,880 --> 00:18:40,439 Speaker 1: I think that they had pressure from reformers certainly that 287 00:18:40,520 --> 00:18:43,280 Speaker 1: they should do so. That there are a number of people, 288 00:18:43,320 --> 00:18:45,880 Speaker 1: including myself, who had taken up these first step back 289 00:18:45,960 --> 00:18:49,359 Speaker 1: cases pro bono and it had noticed the problems with 290 00:18:49,440 --> 00:18:53,320 Speaker 1: them and frankly was inconsistent with the very bi person 291 00:18:53,400 --> 00:18:56,560 Speaker 1: spirit that was behind the First Step Back in the 292 00:18:56,600 --> 00:19:01,080 Speaker 1: first place. And you know, even before they had everybody 293 00:19:01,119 --> 00:19:04,359 Speaker 1: on board at the o J with the incoming nominees, 294 00:19:04,720 --> 00:19:08,520 Speaker 1: they did switch sides and the Supreme Court appointed someone 295 00:19:08,600 --> 00:19:10,840 Speaker 1: to represent the other side, now that the d o 296 00:19:10,920 --> 00:19:14,520 Speaker 1: J had abandoned that position. So now at the Supreme 297 00:19:14,560 --> 00:19:19,480 Speaker 1: Court arguments, was there a lot of discussion of the 298 00:19:19,600 --> 00:19:23,560 Speaker 1: intent of the act or was it based more on 299 00:19:23,960 --> 00:19:29,639 Speaker 1: the language the statutory language? Well, both things, and you know, 300 00:19:29,920 --> 00:19:33,000 Speaker 1: the political set up for the for all of this 301 00:19:33,800 --> 00:19:36,520 Speaker 1: was underneath the arguments, of course. You know, one thing 302 00:19:36,680 --> 00:19:41,199 Speaker 1: that fascinates me about this, especially in our current political climate, 303 00:19:41,520 --> 00:19:44,600 Speaker 1: is that there was amaicust grief that was submitted in 304 00:19:44,720 --> 00:19:49,040 Speaker 1: support of the first Step back, applying to Mr Terry, 305 00:19:49,200 --> 00:19:54,399 Speaker 1: that was submitted by four Senators Durban Booker Grassley in 306 00:19:54,560 --> 00:19:57,760 Speaker 1: Senator Mike Lee, Now, that's a pretty incredible lineup if 307 00:19:57,760 --> 00:19:59,600 Speaker 1: you think about it. I mean, from one end of 308 00:19:59,640 --> 00:20:03,320 Speaker 1: the theological spectrum to the other. And it really reflects 309 00:20:03,359 --> 00:20:06,640 Speaker 1: the Biparsan consensus that was behind the first step back 310 00:20:06,680 --> 00:20:08,919 Speaker 1: in the first place. And you know, of course in 311 00:20:09,119 --> 00:20:12,399 Speaker 1: that argument that justices were interested both in what the 312 00:20:12,400 --> 00:20:16,159 Speaker 1: intent was, but also you know what injustices does this 313 00:20:16,320 --> 00:20:20,040 Speaker 1: create and underneath it all is you look at what 314 00:20:20,280 --> 00:20:23,440 Speaker 1: Mr Terry was sentenced to fifteen and a half years 315 00:20:23,480 --> 00:20:28,520 Speaker 1: in prison for four grams of cracks. It's shocking and 316 00:20:28,920 --> 00:20:30,720 Speaker 1: is something you know, I'll tell you. I'm talking to 317 00:20:30,760 --> 00:20:34,040 Speaker 1: you right now from downtown Minneapolis. I'm looking down over 318 00:20:34,119 --> 00:20:37,639 Speaker 1: Nicolette Mall. I'm about a mile away from where Derek Chauvin, 319 00:20:38,560 --> 00:20:42,200 Speaker 1: the police officer who killed George Floyd, is going to 320 00:20:42,240 --> 00:20:46,040 Speaker 1: be sentenced shortly. And most people are saying that what 321 00:20:46,119 --> 00:20:50,440 Speaker 1: he'll get for that cold blooded killing that America saw 322 00:20:51,200 --> 00:20:55,440 Speaker 1: is going to be about fifteen years, and that that's 323 00:20:55,480 --> 00:20:57,880 Speaker 1: the same as Mr Terry got for having the four 324 00:20:57,920 --> 00:21:02,480 Speaker 1: grams of cracks. Some of the justices seemed sympathetic to 325 00:21:03,400 --> 00:21:08,880 Speaker 1: Terry's plight to his sentence being excessive. But for example, 326 00:21:08,960 --> 00:21:12,400 Speaker 1: Justice Brier said, I can't get away from the statute. 327 00:21:12,600 --> 00:21:17,360 Speaker 1: And even Justice Sonia Soto Mayor, who is considered one 328 00:21:17,359 --> 00:21:21,760 Speaker 1: of the justices who is more sympathetic to criminal defendants, 329 00:21:21,920 --> 00:21:24,680 Speaker 1: even she seemed to indicate that you just can't get 330 00:21:24,680 --> 00:21:28,919 Speaker 1: around the words of the statute. Yeah, and I'm hoping 331 00:21:28,960 --> 00:21:31,600 Speaker 1: that you know, the argument will prevail in me that 332 00:21:31,800 --> 00:21:35,760 Speaker 1: you know, what's in the statute is is modified and 333 00:21:36,240 --> 00:21:38,960 Speaker 1: what you know, the parties and this is something that 334 00:21:39,000 --> 00:21:41,640 Speaker 1: the Senator said was their intent was that that means 335 00:21:41,680 --> 00:21:46,280 Speaker 1: something different than amended, because obviously Tier two and Tier three, 336 00:21:46,320 --> 00:21:49,960 Speaker 1: the upper two tiers were specifically amended. But that also 337 00:21:50,200 --> 00:21:54,440 Speaker 1: modifies that bottom tier by raising the level from five 338 00:21:54,480 --> 00:21:58,639 Speaker 1: grams to rams. I think it was and that is 339 00:21:58,880 --> 00:22:03,119 Speaker 1: that's the pably the best argument going to the statutory language. 340 00:22:03,280 --> 00:22:06,040 Speaker 1: I mean, one thing about about Justice Brier is that 341 00:22:06,320 --> 00:22:10,200 Speaker 1: his history and sentencing is complicated. That it's it's one 342 00:22:10,440 --> 00:22:13,919 Speaker 1: where he's been. He was on the Sentencing Commission that 343 00:22:14,040 --> 00:22:18,280 Speaker 1: drafted the original sentencing guidelines that were mandatory that in 344 00:22:18,320 --> 00:22:21,840 Speaker 1: the Booker decision. He argued that that there should they 345 00:22:21,840 --> 00:22:25,280 Speaker 1: should not be converted to being advisory. So he's somebody 346 00:22:25,320 --> 00:22:28,119 Speaker 1: who has a complicated history with these issues, and the 347 00:22:28,160 --> 00:22:30,840 Speaker 1: fact that you know he was sticking to the language 348 00:22:30,840 --> 00:22:33,800 Speaker 1: of the statute is really in keeping with some of 349 00:22:33,840 --> 00:22:38,640 Speaker 1: his prior churisprudence in this area. During the oral arguments, 350 00:22:38,880 --> 00:22:44,760 Speaker 1: did any of the justices seem inclined to adopt that argument? 351 00:22:45,400 --> 00:22:48,480 Speaker 1: It seemed that most of the justices thought the statutory 352 00:22:48,600 --> 00:22:53,040 Speaker 1: language was a problem for Terry and wouldn't support a 353 00:22:53,200 --> 00:22:59,040 Speaker 1: retroactive interpretation. Yeah, and you know that of course reflects 354 00:22:59,080 --> 00:23:01,280 Speaker 1: the circuit split that they were presented with. That four 355 00:23:01,400 --> 00:23:04,520 Speaker 1: of the circuits had been on the side of the 356 00:23:04,560 --> 00:23:07,480 Speaker 1: eleven circuit was that this new law did not apply 357 00:23:07,520 --> 00:23:10,040 Speaker 1: to Mr Terry, and there were I believe two circuits 358 00:23:10,119 --> 00:23:12,240 Speaker 1: had held that he would have, so, you know, the 359 00:23:12,320 --> 00:23:14,800 Speaker 1: lay of the land was in favor of that that 360 00:23:14,920 --> 00:23:18,600 Speaker 1: reading the statute. Were there any questions from the textualists 361 00:23:18,640 --> 00:23:22,520 Speaker 1: on the court which which indicated which way they might go? 362 00:23:24,560 --> 00:23:27,879 Speaker 1: You know, I don't recall specifically if there were, but 363 00:23:28,440 --> 00:23:31,360 Speaker 1: you know, even if you are a textualist that that 364 00:23:31,440 --> 00:23:35,439 Speaker 1: question of is modified different than amend is something to 365 00:23:35,480 --> 00:23:42,359 Speaker 1: take seriously. So will you explain the modify versus amend argument. Yeah, well, 366 00:23:42,440 --> 00:23:46,520 Speaker 1: there's no question that if the statute had said amended, 367 00:23:46,600 --> 00:23:49,720 Speaker 1: those portions that were amended, they would only apply to 368 00:23:49,760 --> 00:23:55,640 Speaker 1: the top two tiers, because it's it changed explicitly the 369 00:23:55,680 --> 00:23:58,160 Speaker 1: thresholds that had to be meant for them to apply 370 00:23:58,280 --> 00:24:04,760 Speaker 1: to enhancer cracks. And however, it did also modify even 371 00:24:04,760 --> 00:24:07,639 Speaker 1: though it didn't expressly amend the bottom tire, it did 372 00:24:07,840 --> 00:24:13,280 Speaker 1: modify or change that bottom tire because it was it 373 00:24:13,359 --> 00:24:19,720 Speaker 1: was expanded basically from five to eight cramps. So that's 374 00:24:20,359 --> 00:24:22,640 Speaker 1: you know, that's that's going to be the distinction that 375 00:24:22,680 --> 00:24:25,800 Speaker 1: they'll be talking about in conference. I'm curious. I don't 376 00:24:25,800 --> 00:24:27,879 Speaker 1: know if you know the answer to this. Terry is 377 00:24:27,920 --> 00:24:32,320 Speaker 1: about to to be finished serving his sentence. So is 378 00:24:32,320 --> 00:24:34,640 Speaker 1: it just that this case took that long to get 379 00:24:34,640 --> 00:24:38,160 Speaker 1: through the system. Well, there's a couple of things. He's 380 00:24:38,200 --> 00:24:41,800 Speaker 1: on home confinement right now and he'll be done in September, 381 00:24:41,880 --> 00:24:45,119 Speaker 1: I believe, uh, and it you know, it could be 382 00:24:45,160 --> 00:24:46,760 Speaker 1: just this is the case that got up to the 383 00:24:46,800 --> 00:24:50,640 Speaker 1: Supreme Court to resolve the issue. Um, you know, it's 384 00:24:50,680 --> 00:24:54,920 Speaker 1: it's not moved h and you know the fact that 385 00:24:54,920 --> 00:24:57,480 Speaker 1: he's on home confinement is a function of of the 386 00:24:57,560 --> 00:25:03,600 Speaker 1: COVID pandemic, where under the Trump administration and a bit administration, 387 00:25:04,160 --> 00:25:06,040 Speaker 1: many people who were towards the end of their sentence 388 00:25:06,080 --> 00:25:09,480 Speaker 1: are being switched over to home confinements. But well, you know, 389 00:25:09,560 --> 00:25:13,120 Speaker 1: one thing is people will say, you know, that's we're 390 00:25:13,119 --> 00:25:17,640 Speaker 1: talking about about three or four months, that that matters. 391 00:25:17,880 --> 00:25:20,040 Speaker 1: You know, if you think back in your own life 392 00:25:20,080 --> 00:25:23,440 Speaker 1: of the past three or four months, if they were 393 00:25:23,480 --> 00:25:25,679 Speaker 1: just gone, you know, if you had been in prison 394 00:25:25,720 --> 00:25:28,280 Speaker 1: for that period of time, that would matter. And too 395 00:25:28,280 --> 00:25:33,960 Speaker 1: often we discount the value of time when it's a 396 00:25:34,080 --> 00:25:37,520 Speaker 1: smaller bottom time on top of the larger sentence. I 397 00:25:37,560 --> 00:25:40,640 Speaker 1: have to say, this seems like such a technical argument. 398 00:25:41,680 --> 00:25:46,440 Speaker 1: You know, you've got the sentencing guideline book that's inches thick, 399 00:25:47,200 --> 00:25:49,320 Speaker 1: that is like a tax code at this point, and 400 00:25:49,320 --> 00:25:51,600 Speaker 1: that's part of the problems. Part of the problem is 401 00:25:52,240 --> 00:25:56,440 Speaker 1: is that complexity that tears and those things they become normative. 402 00:25:56,840 --> 00:26:00,239 Speaker 1: You know, when we say that the that the right 403 00:26:00,520 --> 00:26:04,399 Speaker 1: sentence for five grams of crack is five years, that 404 00:26:04,520 --> 00:26:10,480 Speaker 1: becomes normative. It sounds scientific, but that masks crazy realities. 405 00:26:10,720 --> 00:26:13,440 Speaker 1: You know that someone for programs of crack got fifteen 406 00:26:13,480 --> 00:26:17,520 Speaker 1: and a half years. That that's irrational. No one was 407 00:26:17,600 --> 00:26:20,880 Speaker 1: being denied cracked by the fact that this one person 408 00:26:21,000 --> 00:26:24,560 Speaker 1: who is selling is out of commission um, and yet 409 00:26:24,920 --> 00:26:29,720 Speaker 1: we're taking on the societal costs of that imprisonment um. Yeah. 410 00:26:29,880 --> 00:26:34,320 Speaker 1: So that complexity, that technicality of it um. Yeah, that 411 00:26:34,400 --> 00:26:37,520 Speaker 1: does bar people from digging into it. But once we do, 412 00:26:37,640 --> 00:26:42,000 Speaker 1: we find that really ugly reality. When judges had more discretion, 413 00:26:42,240 --> 00:26:45,359 Speaker 1: there was a problem with judges having discretion to people 414 00:26:45,400 --> 00:26:48,320 Speaker 1: were upset that some judges were giving sentences that were 415 00:26:48,320 --> 00:26:52,200 Speaker 1: out of the ballpark. So where's the happy medium? Yeah, 416 00:26:52,359 --> 00:26:55,520 Speaker 1: that's what's we're trying to find, is that happy medium 417 00:26:55,560 --> 00:26:59,400 Speaker 1: between judges having so much discretion that bias comes into 418 00:26:59,440 --> 00:27:04,560 Speaker 1: play and and you have incredibly disparate sentences, and where 419 00:27:05,720 --> 00:27:10,160 Speaker 1: we don't have these mandatory laws that buying judges and 420 00:27:10,400 --> 00:27:14,480 Speaker 1: create these frankly pretty ridiculous sentences as we suffer for 421 00:27:14,680 --> 00:27:18,240 Speaker 1: Mr Terry in this case. You know, there's been a 422 00:27:19,440 --> 00:27:25,040 Speaker 1: back and forth over decades between uniformity and discretion for judges. 423 00:27:25,680 --> 00:27:27,879 Speaker 1: It's like watching a ball roll back and forth in 424 00:27:27,960 --> 00:27:30,119 Speaker 1: a cup, and at some point it's going to have 425 00:27:30,200 --> 00:27:32,720 Speaker 1: to come between equilibrium in this case is a part 426 00:27:32,720 --> 00:27:37,000 Speaker 1: of that. If the court decides against Mr Terry, does 427 00:27:37,040 --> 00:27:40,560 Speaker 1: that just leave everything in place as it was before. 428 00:27:41,680 --> 00:27:44,040 Speaker 1: It will leave everything else in place, so the other 429 00:27:44,080 --> 00:27:47,680 Speaker 1: two tiers will be unaffected. Um, and you know, those 430 00:27:47,720 --> 00:27:50,520 Speaker 1: people who are doing longer terms under this are going 431 00:27:50,600 --> 00:27:53,600 Speaker 1: to have to pursue other avenues, for example clemency. One 432 00:27:53,600 --> 00:27:58,680 Speaker 1: would hope that if the Biden administration loses this case 433 00:27:59,240 --> 00:28:02,000 Speaker 1: that there we action will be to identify those people 434 00:28:02,080 --> 00:28:05,119 Speaker 1: like Mr Terry can let them out under the power 435 00:28:05,119 --> 00:28:08,160 Speaker 1: of clemency. Thanks for being on the Bloomberg Law Show. 436 00:28:08,920 --> 00:28:11,879 Speaker 1: That's Professor Mark Osler of the University of St. Thomas 437 00:28:11,880 --> 00:28:14,760 Speaker 1: School of Law. I'm June Grosso and you're listening to 438 00:28:14,800 --> 00:28:15,359 Speaker 1: Bloomberg