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Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.

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Speaker 2: Two hundred dollars, instantly, jes A betting, five bucks, DraftKings,

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Speaker 2: Listen to me, you listening? You listen good. I appreciate

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Speaker 2: you for recognizing how valuable my time is. But instantly stop.

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Speaker 1: You're not gonna make me sweat a little bit, feel

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Speaker 1: some extra bump, some of a chest.

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Speaker 2: While the game is going on. Oh look, wait a minute,

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Speaker 2: there's my two hundred dollars.

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Speaker 1: Sports betting apps are fast. You can place multiple bets

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Speaker 1: on multiple games within seconds, and of course there's the

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Speaker 1: accessibility right on your phone at any time. There's expected

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Speaker 1: to be more sports betting this NFL season than ever before,

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Speaker 1: but consumer bankruptcy attorneys are starting to see the downside

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Speaker 1: to the apps, as gambling debts play a more prominent

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Speaker 1: role in bankruptcies. In fact, a new study finds there's

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Speaker 1: a twenty eight percent increase in the likelihood of bankruptcy

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Speaker 1: filings in states with legalized online sports betting. Joining me

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Speaker 1: is Evan Oxner, a bankruptcy reporter at Bloomberg Law who's

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Speaker 1: researched and written about this. Online gambling is pretty new

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Speaker 1: in the legal scheme of things. How many states have

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Speaker 1: legalized it.

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Speaker 3: This all stems from a twenty eighteen Supreme Court decision

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Speaker 3: that cleared the way for states to legalize sports betting,

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Speaker 3: and so far about thirty states have legalized online sports

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Speaker 3: betting since that decision. There's some additional states that have

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Speaker 3: legalized sports betting but not online, still only at physical

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Speaker 3: locations like casinos, and so you have a buried landscape

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Speaker 3: right now of states that have legalized it in some

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Speaker 3: states that haven't. Missouri is set to go to the

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Speaker 3: ballot in November. They're considering whether to legalize sports betting

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Speaker 3: at that time.

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Speaker 1: And I assume that billions are involved. How many billions?

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Speaker 3: The number that I highlighted in my stool with a

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Speaker 3: projection from the American Gaming Association which projects thirty five

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Speaker 3: billion dollars in legal sports bets to be placed throughout

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Speaker 3: this NFL season. I don't know what proportion of that

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Speaker 3: is online, but the thirty five billion dollar projection is

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Speaker 3: up significantly from twenty seven billion dollars last year.

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Speaker 4: Wow.

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Speaker 1: You talked to consumer bankruptcy attorneys and they say that

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Speaker 1: online sports books betting have pushed clients into chapter seven

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Speaker 1: or chapter thirteen.

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Speaker 3: Yeah, that's right. I chatted with consumer bankruptcy attorneys and

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Speaker 3: states that have legalized online gambling, and they said within

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Speaker 3: the last few years they have seen an increase seen

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Speaker 3: clients that have had issues of financial distress that were

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Speaker 3: tied to online sports betting. One attorney told me this

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Speaker 3: is a phenomenon that he's just started to see within

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Speaker 3: the last five years, and another told me that he's

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Speaker 3: seeing the largest gambling debts when his clients are doing

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Speaker 3: betting online. The issues that they see are generally most

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Speaker 3: pronounced among young men, and some of the research that's

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Speaker 3: been coming out in recent months also find some of

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Speaker 3: the strongest financial downsides among younger men.

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Speaker 1: And it's not necessarily because of huge bets. It can

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Speaker 1: just be a lot of small bets.

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Speaker 3: Yeah, that's right. That's a great point. And a lot

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Speaker 3: of times they'll see their clients just rack up bets

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Speaker 3: over time, sometimes ten dollars bets, sometimes one hundred dollars bets,

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Speaker 3: but that can all build up. I also saw one

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Speaker 3: case where the debtor admitted himself that he was trying

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Speaker 3: to make something out of nothing. He was struggling financially

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Speaker 3: and actually placed some bets right around the time of

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Speaker 3: his bankruptcy filing and right after, and that through the

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Speaker 3: attention of a creditor who didn't like that type of spending.

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Speaker 3: But yes, it can be small bets that just add

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Speaker 3: up over time. And the consumer attorneys, though, did emphasize

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Speaker 3: that this is a problem that's often combined with other

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Speaker 3: financial issues. It's not necessarily a giant gambling debt that

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Speaker 3: pushes something into bankruptcy. There's usually other things going on,

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Speaker 3: and sometimes too, you'll see their clients who say, gamble

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Speaker 3: away their money in cash and then rack up debt

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Speaker 3: elsewhere because they don't have cash to meet other needs

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Speaker 3: like groceries are ranked.

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Speaker 1: One attorney told you he's had clients who blew through

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Speaker 1: their four to one case savings.

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Speaker 3: That's right. He was telling me about clients who, he said,

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Speaker 3: make a good living, make a high salary, but blew

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Speaker 3: through their savings accounts in their four oh one case

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Speaker 3: and then that's when they kind of have that moment

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Speaker 3: of reckoning and reach out to a bankruptcy attorney.

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Speaker 1: Can gambling debts be discharged in bankruptcy?

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Speaker 3: Yeah, gambling debts generally can be discharged in bankruptcy, but

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Speaker 3: it's not always super simple, at least according to the

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Speaker 3: bankruptcy attorneys I talk to. They said they generally tried

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Speaker 3: to design a case so that issues around the gambling

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Speaker 3: debts don't arise. One lawyer I talked to you says

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Speaker 3: she won't file the case until she can submit three

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Speaker 3: months of queen financial records that show no gambling transaction.

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Speaker 3: She said with one client she had, that was a

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Speaker 3: big struggle. They were having a hard time staying away

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Speaker 3: from the sportsbooks. To get into three clean months was

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Speaker 3: an issue. And again, even though it's dischargeable, it can

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Speaker 3: really cast some issue with the creditors or the trustees

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Speaker 3: who help administer these bankruptcy estates, because sometimes it's viewed

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Speaker 3: as irresponsible spending by someone who's already underwater. An attorney

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Speaker 3: I talk too suggested that he frames it as an

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Speaker 3: entertainment expense sometimes, and he said there's nothing illegal about it.

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Speaker 3: You can disagree about how people spend their money on entertainment,

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Speaker 3: but as long as it's within reason, there's nothing inherently

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Speaker 3: wrong about it. In the bankruptcy contact and another lawyer

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Speaker 3: I was talking to, I mentioned I was searching court

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Speaker 3: dockets for examples of some sports gambling cases, and I

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Speaker 3: told him I was having a hard time finding times

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Speaker 3: where it came up, and he said that's intentional. If

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Speaker 3: a lawyer designs their case correctly, they can prevent those

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Speaker 3: issues from coming up at all.

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Speaker 1: Are there any circumstances where you can't discharge gambling debts

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Speaker 1: in bankruptcy?

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Speaker 3: And it generally is dischargeable, and it's dischargeable under the

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Speaker 3: Bankruptcy Code. An interesting case all highlights is a creditor

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Speaker 3: who objected to thirteen thousand dollars invests that were made

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Speaker 3: by this debtor around the time and during his bankruptcy,

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Speaker 3: and the judge found that even that was a good

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Speaker 3: face debt and didn't merit the case being dismissed. He

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Speaker 3: said that, yes, it was bad judgment, but bad judgment

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Speaker 3: doesn't equal bad faith, and if it was a bad

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Speaker 3: face set, that's where you run into issues of dischargeability.

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Speaker 3: But as one lawyer told me, his clients didn't gamble

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Speaker 3: to lose. It's not like a lot of gamblers and

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Speaker 3: problem gamblers don't think they're going to pay the money back.

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Speaker 3: They fully believe that they're going to win and dig

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Speaker 3: out of that hole. So it's not a bad face

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Speaker 3: test in the sense that they knew that they weren't

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Speaker 3: going to be able to pay it off.

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Speaker 1: You mentioned that one lawyer waits until her client has

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Speaker 1: three months of financial records without gambling payments. I mean,

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Speaker 1: what happens if a client keeps gambling during the bankruptcy?

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Speaker 1: Does that show up?

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Speaker 3: Yeah, that's a good question, and it can. And that's

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Speaker 3: where the one lawyer was talking about framing it as

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Speaker 3: an entertainment expense. An individual debtor will submit a proposed

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Speaker 3: budget to the court, and let's say that in my budget,

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Speaker 3: I propose a three hundred dollars a month on entertainment,

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Speaker 3: So I could still theoretically gamble two hundred dollars a

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Speaker 3: month and you know, have that as an entertainment expense.

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Speaker 3: Is how his lawyer talked about framing it. And then

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Speaker 3: in the other case, I mentioned some of the bets

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Speaker 3: of these chunk of thirteen thousand dollars by the debtor,

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Speaker 3: who admitted that he was trying to dig himself out

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Speaker 3: of trouble. Some of those bets were made while he

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Speaker 3: was bankrupt, and that's part of why the creditor argued

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Speaker 3: that it showed that the bankruptcy was in at faith,

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Speaker 3: but again the judge disagreed with that and determined that

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Speaker 3: it didn't equal bad faith.

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Speaker 1: Did any of the other lawyers that you spoke to

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Speaker 1: make an effort to help the clients with their gambling problems?

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Speaker 3: Yeah, And essentially the lawyers who I spoke with suggested

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Speaker 3: that helping the client with the gambling problems also helped

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Speaker 3: smooth in the bankruptcy process. It's helpful essentially to be

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Speaker 3: able to tell creditors and a trustee that their client

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Speaker 3: is getting treatment. One lawyer had told me that before

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Speaker 3: he files the case, he has his client sign up

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Speaker 3: for self exclusion list, which is something that you can

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Speaker 3: do at casinos or now at online sportsbooks, where if

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Speaker 3: you know you have a gambling problem, you can essentially

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Speaker 3: ban yourself from that gambling platform so you don't accrue

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Speaker 3: any additional gambling losses. And that's something that's helpful for

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Speaker 3: the lawyers to be able to tell a court is

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Speaker 3: that their clients is no longer gambling because they sign

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Speaker 3: themselves up to these lists.

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Speaker 1: So the betting apps themselves, I mean, I take it

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Speaker 1: they're encouraging more gambling. Are there any ways to limit

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Speaker 1: yourself on a betting app. I mean, I have no

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Speaker 1: idea because I've never placed a bet on a sports app,

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Speaker 1: but I know people who have.

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Speaker 3: I haven't either, And yes, the betting apps allow you

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Speaker 3: to place limits on how much gambling activity that a

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Speaker 3: user participations, so you can set limits on, say how

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Speaker 3: much money you want to bet the gambling apps and

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Speaker 3: some of the lawyers I talked to you also said

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Speaker 3: it's helpful because they provide rundowns of how much money

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Speaker 3: a better loses for wins. So essentially, think of it

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Speaker 3: as like a monthly statement that shows you your betting activity.

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Speaker 3: That makes it easier for players to keep track of

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Speaker 3: their wins and losses.

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Speaker 4: You know.

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Speaker 3: Compare that to someone who's going into a casino and

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Speaker 3: just playing flocks and has a harder time keeping track

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Speaker 3: of it. I also talked to one expert who says

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Speaker 3: that better historically overestimate their wins and underestimate their losses.

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Speaker 3: So having to kind of print out and being able

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Speaker 3: to see wins and losses I think is intended to

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Speaker 3: be helpful as far as giving people an idea of

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Speaker 3: their financial picture.

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Speaker 1: It sounds like you had to do digging for this.

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Speaker 1: Have any studies been done about how much online gambling

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Speaker 1: contributes to bankruptcies.

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Speaker 3: Yeah, there's been a couple interesting studies that have come

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Speaker 3: out just this summer. One look at states that have

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Speaker 3: legalized online betting and in those states found a twenty

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Speaker 3: eight percent increase in bankruptcy likelihood. They saw that online

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Speaker 3: act that drives most of the effects they observe as

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Speaker 3: far as financial harms. They found out that the legalization

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Speaker 3: of sports gambling decreased consumer financial health. Another study found

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Speaker 3: the strongest adverse financial effects among lower income households in

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Speaker 3: space with legalized sports betting. They found that legalized sports

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Speaker 3: betting decreases in that investment and increases overdraft. There was

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Speaker 3: a third study that has not yet been peer reviewed

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Speaker 3: and came out just a couple of weeks ago that

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Speaker 3: did not find a statistically significant increase in self reported

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Speaker 3: financial distress.

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Speaker 1: So in the states that are considering it, I mean,

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Speaker 1: what's the upside to having online gambling in your state.

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Speaker 3: Some of the arguments I've seen amount to tax revenue.

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Speaker 3: This is something that states can tax and find another

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Speaker 3: revenue stream. You know. It was highlighted to me by

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Speaker 3: one of the experts I talked to you that that's

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Speaker 3: a big motivation for some of these states is an

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Speaker 3: additional revenue. And in some of the states, the entities

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Speaker 3: that are arguing against that are traditional casinos who don't

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Speaker 3: want people to just stay at home and bet. They

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Speaker 3: want him to have to come in and bet at

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Speaker 3: their casino.

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Speaker 1: So we'll see what happens with the ballot initiative in Missouri.

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Speaker 1: Six states tried but failed to legalize sports betting during

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Speaker 1: the twenty twenty four legislative session. They are in alphabetical order, Georgia, Hawaii, Minnesota, Missouri, Oklahoma,

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Speaker 1: and South Carolina. Thanks so much, Evan, great story and research.

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Speaker 1: That's Evan Oxner, Bloomberg Law Bankruptcy Reporter. Only eight weeks

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Speaker 1: remained for President Joe Biden to complete his efforts to

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Speaker 1: remake the racial, gender, and professional diversity of the judiciary.

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Speaker 1: The task is complicated by the pressures of an election

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Speaker 1: year and a narrowly divided Senate. Joining me is an

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Speaker 1: expert in the judiciary, Carl Tobias, a professor at the

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Speaker 1: University of Richmond Law School. Carl, where does Biden stand

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Speaker 1: in comparison to Trump?

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Speaker 4: Biden now today will confirm two people, so he will

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Speaker 4: have one hundred and sixty one confirmations at the district

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Speaker 4: level and forty three appellet. At that same point in

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Speaker 4: twenty twenty, Trump had one hundred and fifty one, ten

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Speaker 4: fewer at the district level, but fifty three appellet, and

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Speaker 4: so that's ten more at that point in time. He

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Speaker 4: ended with fifty four. So that's where we are.

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Speaker 1: So only eight weeks of the Senate session remain, including

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Speaker 1: the lame duck session. How many nominees are in place

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Speaker 1: and how many do you think they can get through?

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Speaker 4: Well? I think they can confirm the six appellet nominees,

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Speaker 4: one or two I think are controversial. But then at

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Speaker 4: the district level, there are sixteen district nominees on the floor.

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Speaker 4: I believe ten or eleven of them will easily be

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Speaker 4: confirmed because they had bipartisan Senate Judiciary Committee approval, and

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Speaker 4: so you have five who may have somewhat closer votes.

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Speaker 4: Then there are also four district nominees who've had hearings

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Speaker 4: but have not had committee votes, which they'll have either

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Speaker 4: Thursday or the following Thursday. And then they're about six

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Speaker 4: or so other newer nominees who still would need hearings

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Speaker 4: and committee votes and floor votes. So that's what we're

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Speaker 4: looking at in terms of what we have now, though

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Speaker 4: I think the White House is committed to going further

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Speaker 4: in the lame duck session and actually holding hearings then,

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Speaker 4: and may still have nominees this month in September who

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Speaker 4: could still make it through during the lame duck with

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Speaker 4: hearings and committee votes and floor votes. But we'll see

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Speaker 4: at some point it's going to be too late to

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Speaker 4: nominate and move people through the process. But I don't

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Speaker 4: think we're quite there yet.

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Speaker 1: There are some who there's been opposition to tell us

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Speaker 1: about those. One would be the first Muslim federal appellate judge,

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Speaker 1: if confirmed. Why is his confirmation being opposed?

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Speaker 4: A deal among the for the Third Circuit and the

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Speaker 4: Republican Senators have criticized him, saying that he is against

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Speaker 4: law enforcement, which is not true, and also that, for example,

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Speaker 4: they asked him questions about what his views were of

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Speaker 4: the conflict in Gaza now, and so some GOP members

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Speaker 4: raised the question of his support for Israel or support

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Speaker 4: for solutions in Gaza. That just muddy the waters. So

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Speaker 4: we'll see what happens, but I think that he will

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Speaker 4: be confirmed at some point. It may be in the

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Speaker 4: Lame dug.

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Speaker 1: A number of national Jewish groups came to his defense,

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Speaker 1: saying that Republican lawmakers inappropriately grilled him about his views

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Speaker 1: on terrorism, Israel, and anti Semitism. Another nominee who's facing

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Speaker 1: challenges is also a Muslim, Mustafa kusab Hi, who has

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Speaker 1: been nominated for Oregon's District Court.

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Speaker 2: Well.

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Speaker 4: Republicans criticized him, I think for some reasons that were

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Speaker 4: sort of analogous to Monkey, but not exactly the same.

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Speaker 4: He had written some articles I think we know it's

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Speaker 4: in law school that they thought and argued were not appropriate.

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Speaker 4: Even some of them talked about him as a Marxist

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Speaker 4: or whatever. But those were articles written a long time ago.

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Speaker 4: There were other criticisms. He's been a magistrate judge for

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Speaker 4: some time in Oregon, and they were concerned about pronouns

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Speaker 4: and that type of thing in his courtroom. But I

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Speaker 4: think that he's likely to be confirmed, but it may

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Speaker 4: be close, and so that's his situation.

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Speaker 1: It just happens to be those two or is there

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Speaker 1: a racial component to it.

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Speaker 4: I don't know. Some of the supporters of both of

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Speaker 4: those nominees are saying what you just suggested, but it's

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Speaker 4: not quite that late, but their concerns about whether that

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Speaker 4: might be the case.

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Speaker 3: There are I.

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Speaker 1: Believe, six appellate picks outstanding. Yes, do you think that

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Speaker 1: the Judiciary Committee and you know, Chuck Schumer should prioritize

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Speaker 1: the appellate picks because they have a lot more influence.

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Speaker 4: Yes, I think you're correct, But they also need thirty

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Speaker 4: hours of post cloture debate timesposed to two hours for

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Speaker 4: district nominees, and so he looks to be leading so

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Speaker 4: far this week, at least with the district nominees, because

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Speaker 4: they consume less time and they're often less controversial, as

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Speaker 4: you suggest, because they mostly do trials and move cases

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Speaker 4: and are really nominated for their competence in being able

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Speaker 4: to keep up with heavy dockets as opposed to Pella

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Speaker 4: judges who make more policy and their rulings govern multiple

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Speaker 4: states within the appeals courts, and the GOP and Democrats

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Speaker 4: too in the Trump years focus more on those kinds

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Speaker 4: of nominees because they have outsized influence as opposed to

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Speaker 4: the large number of district nominees. But district nominees of course,

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Speaker 4: are important because they make the record and they hear

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Speaker 4: the facts, but they don't bind anybody, even in their

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Speaker 4: own courthouse with their rulings as opposed to Pella judges.

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Speaker 1: The Democrats hold a fifty one to forty nine majority,

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Speaker 1: but can you really consider it fifty one to forty

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Speaker 1: nine Because Joe Manchin has said that he's not going

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Speaker 1: to support any nominees who don't have Republican support.

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Speaker 4: That's true, and that's unfortunate. But yesterday he did vote

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Speaker 4: for Abelson, and it was bipartisan because Lindsey Graham and

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Speaker 4: Susan Collins both voted for Abelson and will do the

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Speaker 4: same today. I expect for Jeanette Vargas for the Southern

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Speaker 4: District of New York. So on the more controversial nominees,

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Speaker 4: they may lose that vote, You're right, but there won't

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Speaker 4: be that many of them, and there'll be some offsetting too,

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Speaker 4: because remember, for example, yesterday there were seven GOP members

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Speaker 4: who did not vote. One of them, of course, was Vance,

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Speaker 4: and he'll be on the campaign trail for the next

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Speaker 4: couple of months.

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Speaker 1: We've talked about before that home state support, the support

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Speaker 1: from home state senators isn't required to advance ap pellet nominees,

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Speaker 1: but some Republicans have criticized Biden for not adequately consulting

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Speaker 1: them on appellet vacancies. Anyway, so North Carolina Republicans Tom

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Speaker 1: Tallis and Ted budd said they had enough votes to

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Speaker 1: sink Park's fourth Circuit nomination. Will that play into more

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Speaker 1: of these nominations.

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Speaker 4: Well, the White House has said that it did consult

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Speaker 4: and that they worked very closely with the North Carolina

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Speaker 4: Senators and four candidates the North Carolina Senators forwarded and suggested, recommended,

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Speaker 4: were considered by the White House, and in turn, the

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Speaker 4: White House had four people it was considering and ran

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Speaker 4: those people by the Senators, including Ryan Park Ark who

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Speaker 4: became the ultimate nominee. And so Biden just made a choice,

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Speaker 4: but I think he seriously considered the four people the

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Speaker 4: senators had sent forward. So there was a fair amount

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Speaker 4: of consultation that went on, and ultimately they chose someone else,

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Speaker 4: Ryan Park, who is well qualified and was very articulate

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Speaker 4: and clear at his hearing and answering difficult questions from

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Speaker 4: GOP senators. So I'm optimistic that he'll have a positive vote.

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Speaker 1: Greg Nunziata, who was the former Chief Nominations Council to

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Speaker 1: the Senate Judiciary Committee during George W. Bush's administration, said,

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Speaker 1: you never want to be a judicial nominee who's counting

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Speaker 1: on Senate action after August in an election year.

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Speaker 4: Yes, but they're there for three weeks now, and what

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Speaker 4: we've seen this week is the district nominees coming forward.

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Speaker 4: A number of them will be confirmed this week and

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Speaker 4: then on to the next couple of weeks, and then

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Speaker 4: they leave to campaign, I think around the thirtieth or so,

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Speaker 4: but they'll be back for the five week lamed duck

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Speaker 4: that starts on November twelve, after the elections, And so

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Speaker 4: there seems to be a fair amount of time left.

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Speaker 4: And the commentator is correct that there will come a

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Speaker 4: time when it's too late. But the White House has said,

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Speaker 4: and so has Senator Schumer, the Majority leader, that they

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Speaker 4: intend to go as deeply as they can into December.

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Speaker 4: I think they're going to be committed to confirming as

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Speaker 4: many people as they can.

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Speaker 1: Suppose Democrats lose the Senate in November, will that make

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Speaker 1: it harder? Will there be more opposition to pushing Biden's nominees.

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Speaker 4: Through well, there could be, but the majority rules as

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Speaker 4: happened in twenty twenty if you remember back to that

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Speaker 4: period in time, and actually after Biden defeated Trump in

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Speaker 4: the election, Trump nominated and confirmed want a Pellet judge

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Speaker 4: on December fifteenth, twenty twenty, and a dozen or so

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Speaker 4: district judges. So that's the relevant precedent. I think the

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Speaker 4: White House is committed to moving forward regardless of who

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Speaker 4: might have the majority after the elections, and that's the

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Speaker 4: prerogative as the majority until the new Senate comes in

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Speaker 4: early January.

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Speaker 1: Okay, we'll see what happens in the next few weeks.

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Speaker 1: Thanks so much, Carl. That's Professor Carl Tobias of the

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Speaker 1: University of Richmond Law School. Coming up next on the

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Speaker 1: Bloomberg Law Show, A seven year fight over a seventy

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Speaker 1: thousand dollars Tiffany engagement ring. This is Bloomberg. And if

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Speaker 1: you do decide to put a ring on it and

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Speaker 1: the engagement is broken off, who gets the ring? Well,

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Speaker 1: it depends. And that's why a fight over a seventy

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Speaker 1: thousand dollars Tiffany engagement ring has reached Massachusetts highest court.

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Speaker 1: A would be groom broke off his engagement because he

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Speaker 1: suspected his fiance was having an affair, something she denied,

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Speaker 1: so he took her to court to get the pricey

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Speaker 1: ring back. That was seven years ago, and the litigation

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Speaker 1: is still going on and now it will be up

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Speaker 1: to Massachusetts Highest Court to decide who gets the ring.

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Speaker 1: Joining me is Peter Wallser, founding partner of Wallser, Melcher

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Speaker 1: and Yoda. Our lawsuits over who gets the ring the

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Speaker 1: last remaining types of litigation over broken engagements.

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Speaker 2: Yes, that's true. All the heartbone stats which would laws

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Speaker 2: in the forties and fifties where you could suit for

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Speaker 2: a broken engagement have been abolished in all the states,

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Speaker 2: So this is sort of the vestige of that. This

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Speaker 2: is one of the last forms of liberation relating to

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Speaker 2: broken engagements. The older law in this country did allow

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Speaker 2: people to sue over a broken engagement, but those are

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Speaker 2: antiquated and course have been inclined to get rid of

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Speaker 2: bolved in relationship litigation, including divorce, broken engagement to that

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Speaker 2: kind of thing.

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Speaker 1: And in Massachusetts, in a case over who gets the

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Speaker 1: engagement ring, it depends on who's at fault for breaking

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Speaker 1: off the engagement. That's the issue.

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Speaker 2: Yeah, and other states like Texas have that kind of law.

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Speaker 2: In Massachusetts, it's case law, not statutory law. And if

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Speaker 2: you could do it was the other person's fault for

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Speaker 2: breaking off the relationship, you could keep the ring. It

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Speaker 2: was your fault, then I keep the ring. That involves

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Speaker 2: a lot of litigation, and in this case it went

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Speaker 2: from the trial court to the appellate court to the

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Speaker 2: Supreme Court, which are a lot of money, even for

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Speaker 2: seventy thousand dollars engagement ring from Tiffany.

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Speaker 1: Let me ask you this by at fault? If you

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Speaker 1: just break off an engagement, are you at fault or

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Speaker 1: is it more than that?

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Speaker 2: I think it's more than that. In this case, the guy,

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Speaker 2: the giver of the engagement ring, accused her of having

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Speaker 2: an affair. She used on posts on social media that

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Speaker 2: she was with a guy. Her claim was and it

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Speaker 2: was just an old friend and she wasn't at fault.

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Speaker 2: So this causes a court you have to decide who

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Speaker 2: is at fault. Was she really cheating on the guy

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Speaker 2: or was it an old friend and he made a mistake.

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Speaker 1: In this case, the trial court concluded, as you mentioned before,

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Speaker 1: that he was mistaken him and he had to bear

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Speaker 1: the fault, so she got to keep the ring, as

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Speaker 1: well as more than forty thousand dollars for plan dental

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Speaker 1: work he promised her. Is that over and above or

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Speaker 1: is that included too in these kinds of lawsuits, like

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Speaker 1: you promised to do this once we got married.

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Speaker 2: Well, that's probably a deferent issue. That's a contractual issue.

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Speaker 2: The court found that there was an oral contract for

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Speaker 2: him to do this and enforced that it probably had

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Speaker 2: nothing to do with the engagement. The engagement ring was

440
00:26:34,280 --> 00:26:38,800
Speaker 2: a separate issue and dealt with separately. But if you

441
00:26:39,000 --> 00:26:44,120
Speaker 2: promised somebody in court fun, there's a contract and there's consideration.

442
00:26:44,240 --> 00:26:46,760
Speaker 2: I don't know what the consideration in this case was,

443
00:26:46,840 --> 00:26:51,240
Speaker 2: but you know that is I would say unusual, and

444
00:26:51,280 --> 00:26:55,120
Speaker 2: maybe is why this case went up to the Supreme

445
00:26:55,200 --> 00:26:58,560
Speaker 2: Court because it was so ridiculous.

446
00:26:59,080 --> 00:27:03,440
Speaker 1: The trial court's decision was reversed by an appeals court,

447
00:27:03,920 --> 00:27:08,119
Speaker 1: and now the case is before Massachusetts Highest Court. What

448
00:27:08,240 --> 00:27:09,600
Speaker 1: were the arguments.

449
00:27:09,160 --> 00:27:12,720
Speaker 2: There with with special category? If you know, if you

450
00:27:12,800 --> 00:27:15,080
Speaker 2: promise to marry me, if you break it off and

451
00:27:15,520 --> 00:27:18,600
Speaker 2: for no good reason, why shouldn't I get the ring back?

452
00:27:18,600 --> 00:27:22,280
Speaker 2: And in fact, in many states like California, if the

453
00:27:22,560 --> 00:27:26,399
Speaker 2: engagement is broken off for whatever reason, you get the

454
00:27:26,560 --> 00:27:30,840
Speaker 2: ring back. Other states treated differently, but no matter what

455
00:27:31,040 --> 00:27:35,240
Speaker 2: the reason, the person who receives the ring keeps it.

456
00:27:35,920 --> 00:27:38,880
Speaker 2: But California, for example, not only do you get your

457
00:27:39,000 --> 00:27:42,119
Speaker 2: ring back, but if the person says I can't find

458
00:27:42,160 --> 00:27:45,239
Speaker 2: the ring, which you can imagine how common that is,

459
00:27:45,520 --> 00:27:49,080
Speaker 2: you have to pay the value of the way. So

460
00:27:49,600 --> 00:27:53,080
Speaker 2: you say I can't find it, Well, too bad, I

461
00:27:53,160 --> 00:27:55,840
Speaker 2: want the money for the ring. Wow.

462
00:27:56,160 --> 00:27:59,440
Speaker 1: Why isn't the ring considered a gift.

463
00:28:00,000 --> 00:28:02,639
Speaker 2: It would be considered a gift, for example, if it

464
00:28:02,800 --> 00:28:09,960
Speaker 2: was a birthday gift or a holiday gift Christmas or Knika, whatever.

465
00:28:10,119 --> 00:28:14,440
Speaker 2: But in this case, there's a promise and you broke

466
00:28:14,480 --> 00:28:17,040
Speaker 2: your promise. I want my ring back.

467
00:28:17,359 --> 00:28:20,760
Speaker 1: The highest court in Massachusetts could just decide this based

468
00:28:20,800 --> 00:28:24,520
Speaker 1: on the law as it is, or could they establish

469
00:28:24,520 --> 00:28:28,600
Speaker 1: a new law in Massachusetts more in line with other states.

470
00:28:28,640 --> 00:28:31,920
Speaker 2: From my reading of it, they're likely to set a

471
00:28:32,080 --> 00:28:36,240
Speaker 2: precedent one way or the other that it's a conditional gift.

472
00:28:36,600 --> 00:28:41,000
Speaker 2: If the engagement is broken off for whatever reason, the

473
00:28:41,080 --> 00:28:44,840
Speaker 2: ring is returned, or they could treat it as an

474
00:28:44,960 --> 00:28:49,760
Speaker 2: unconditional gift. The person keeps the ring no matter what happens.

475
00:28:49,840 --> 00:28:52,840
Speaker 2: And I guess it depends on who you are, who's

476
00:28:52,880 --> 00:28:55,760
Speaker 2: the giver and who's the receiver. But you know, if

477
00:28:55,800 --> 00:28:58,800
Speaker 2: there was a good reason for breaking up the relationship,

478
00:28:59,400 --> 00:29:02,480
Speaker 2: for example, the person was married with somebody else, you

479
00:29:02,480 --> 00:29:06,640
Speaker 2: could imagine situations that you would want your ring back,

480
00:29:07,120 --> 00:29:09,920
Speaker 2: you know, or there was some kind of fraud, you'd

481
00:29:09,920 --> 00:29:12,600
Speaker 2: want the ring back. But the court doesn't want a

482
00:29:12,640 --> 00:29:18,160
Speaker 2: lot of litigation over this because it's expensive, and it's

483
00:29:18,200 --> 00:29:22,360
Speaker 2: basically he said she said, or he said he said,

484
00:29:22,520 --> 00:29:26,680
Speaker 2: or she said she said. It's not necessarily opposite sex,

485
00:29:26,840 --> 00:29:30,840
Speaker 2: but it's a special legal relationship getting married, and it's

486
00:29:30,920 --> 00:29:34,280
Speaker 2: different than a holiday gift. And people will spend a

487
00:29:34,280 --> 00:29:38,000
Speaker 2: lot more money on an engagement ring than they would

488
00:29:38,040 --> 00:29:42,440
Speaker 2: on a holiday gift. So that's why it's treated differently

489
00:29:42,720 --> 00:29:43,440
Speaker 2: under the law.

490
00:29:44,280 --> 00:29:49,520
Speaker 1: Is there ever litigation over a ring in a divorce.

491
00:29:50,480 --> 00:29:54,960
Speaker 2: Yeah, I've had that one. That is really tough because

492
00:29:55,000 --> 00:29:58,000
Speaker 2: if it's an expensive ring, more than the parties would

493
00:29:58,040 --> 00:30:01,320
Speaker 2: ordinarily spend on a gift to one another. Under at

494
00:30:01,400 --> 00:30:05,960
Speaker 2: least California lit unless it's in writing, you can get

495
00:30:06,000 --> 00:30:10,120
Speaker 2: your ring back or your jewelry back. And I had

496
00:30:10,160 --> 00:30:15,440
Speaker 2: that in one case where the guy had cheated on

497
00:30:15,600 --> 00:30:18,320
Speaker 2: my client and he gave her a ring to make

498
00:30:18,440 --> 00:30:21,160
Speaker 2: up for it, which was worth about seventy five thousand

499
00:30:21,240 --> 00:30:25,160
Speaker 2: dollars at the time, probably twenty years ago. The court

500
00:30:25,280 --> 00:30:29,479
Speaker 2: ordered that she return it to him because it was

501
00:30:29,600 --> 00:30:33,200
Speaker 2: not in writing and it was an extraordinary amount of money.

502
00:30:33,400 --> 00:30:37,000
Speaker 2: My client was not happy. I was not happy, but

503
00:30:37,040 --> 00:30:38,160
Speaker 2: that was the result.

504
00:30:38,760 --> 00:30:41,360
Speaker 1: So in a prenup, now you should write and I

505
00:30:41,440 --> 00:30:43,480
Speaker 1: get to keep the ring or he gets to keep

506
00:30:43,520 --> 00:30:43,880
Speaker 1: the ring.

507
00:30:44,840 --> 00:30:49,360
Speaker 2: Yeah, we definitely put that in the separate property schedules

508
00:30:49,600 --> 00:30:53,200
Speaker 2: and list the ring because we don't want a situation.

509
00:30:53,840 --> 00:30:56,560
Speaker 2: And you have to say, even if we don't get married,

510
00:30:56,600 --> 00:31:00,400
Speaker 2: even though the agreement is not valid in less you

511
00:31:00,600 --> 00:31:03,440
Speaker 2: get married, except for the ring, I get to keep

512
00:31:03,440 --> 00:31:03,880
Speaker 2: my ring.

513
00:31:04,280 --> 00:31:07,560
Speaker 1: And in this case, they're fighting over a seventy thousand

514
00:31:07,640 --> 00:31:10,480
Speaker 1: dollars ring for seven years. And I wonder how much

515
00:31:10,560 --> 00:31:13,080
Speaker 1: the legal fees are going to take.

516
00:31:12,960 --> 00:31:18,240
Speaker 2: Up hundreds of thousands of dollars. I mean, that is crazy.

517
00:31:18,680 --> 00:31:22,320
Speaker 2: And you know, maybe it's a publicity stunt, maybe it's

518
00:31:22,360 --> 00:31:26,400
Speaker 2: about something else. Usually it's about somebody's fears, but it

519
00:31:26,560 --> 00:31:29,640
Speaker 2: is crazy. But seventy thousand dollars a lot of money,

520
00:31:29,720 --> 00:31:33,280
Speaker 2: but that's your end give up. I mean the fact

521
00:31:33,280 --> 00:31:36,560
Speaker 2: that this made it it's Supreme Court. Maybe the ways

522
00:31:36,600 --> 00:31:39,680
Speaker 2: of I mean that, so they their names in the paper.

523
00:31:39,720 --> 00:31:40,560
Speaker 2: Who knows.

524
00:31:41,200 --> 00:31:44,120
Speaker 1: So you think there should be a bright line rule

525
00:31:44,480 --> 00:31:45,600
Speaker 1: in all the states.

526
00:31:46,120 --> 00:31:49,000
Speaker 2: Yeah, it's it's more of a symbol. I would say.

527
00:31:49,080 --> 00:31:52,920
Speaker 2: It's an emotional symbol for people, so not like your

528
00:31:53,120 --> 00:31:59,640
Speaker 2: ordinary gifts of something. And there's a lot of feeling

529
00:31:59,800 --> 00:32:03,280
Speaker 2: and the courts really needs to take charge of the

530
00:32:03,400 --> 00:32:07,840
Speaker 2: legislatures do and make a bright light rule. Either it's

531
00:32:07,880 --> 00:32:12,960
Speaker 2: a gift outright and no conditions, no matter what, or

532
00:32:13,400 --> 00:32:17,920
Speaker 2: it's a conditional gift, so if it's broken off, you

533
00:32:18,000 --> 00:32:21,560
Speaker 2: get the ring back. It's probably practical to say if

534
00:32:21,640 --> 00:32:25,120
Speaker 2: you are inclined to give an extensive gift on the

535
00:32:25,240 --> 00:32:29,280
Speaker 2: condition of getting married, you know you're given it, no

536
00:32:29,480 --> 00:32:32,800
Speaker 2: conditions made. It doesn't matter if the relationship goes through.

537
00:32:32,880 --> 00:32:36,200
Speaker 2: It's on you to ensure you pick the right person.

538
00:32:36,360 --> 00:32:40,120
Speaker 2: And you don't get this on a on a whim.

539
00:32:40,440 --> 00:32:43,640
Speaker 2: So if I was writing the law, I would go

540
00:32:44,000 --> 00:32:46,360
Speaker 2: for it's a gift no matter what, and if you

541
00:32:46,520 --> 00:32:49,920
Speaker 2: give it, whether the wedding is broken off. On the

542
00:32:50,040 --> 00:32:55,000
Speaker 2: other hand, though, you could think of people deceiving people

543
00:32:55,160 --> 00:32:58,720
Speaker 2: saying let's get married, I love you the ring and

544
00:32:58,800 --> 00:33:02,240
Speaker 2: then they break off the way. So these things are

545
00:33:02,360 --> 00:33:05,240
Speaker 2: not as easy as it seems, right.

546
00:33:06,360 --> 00:33:08,720
Speaker 1: Not at all, although I think Montana has made it

547
00:33:08,840 --> 00:33:13,680
Speaker 1: easier because the Supreme Court there more than twenty years

548
00:33:13,720 --> 00:33:18,320
Speaker 1: ago decided no take back policy that treats the ring

549
00:33:18,680 --> 00:33:21,440
Speaker 1: no different than any other gifts, So that seems pretty easy.

550
00:33:22,320 --> 00:33:26,680
Speaker 2: So, you know, it's interesting because in the sixties, my

551
00:33:26,800 --> 00:33:29,840
Speaker 2: dad was on the Governor's Commission for no fault divorce

552
00:33:29,920 --> 00:33:34,880
Speaker 2: in California, and in nineteen seventy we enacted to no

553
00:33:35,120 --> 00:33:39,400
Speaker 2: fault statute and divorces and that's kiried to pretty much

554
00:33:40,400 --> 00:33:44,080
Speaker 2: most states, not all states, but most states. But now

555
00:33:44,280 --> 00:33:48,080
Speaker 2: there's you know, it's sort of backtracking where many states

556
00:33:48,160 --> 00:33:53,560
Speaker 2: are bringing domestic violence into it and coercive control and

557
00:33:53,720 --> 00:33:58,160
Speaker 2: it's getting back to a fault situation in many states

558
00:33:58,360 --> 00:34:03,400
Speaker 2: like California and what was or now your quote simple divorce,

559
00:34:03,480 --> 00:34:07,200
Speaker 2: even though none of them are really simple. It's led

560
00:34:07,240 --> 00:34:11,960
Speaker 2: to a lot of allegations of domestic violence or coercive

561
00:34:12,080 --> 00:34:17,600
Speaker 2: control or abuse, global abuse, that kind of thing so

562
00:34:18,040 --> 00:34:20,640
Speaker 2: with finding how things cycle around.

563
00:34:21,080 --> 00:34:23,759
Speaker 1: Yes, I've seen a lot of repeating cycles in our

564
00:34:23,800 --> 00:34:28,720
Speaker 1: society lately. Thanks so much, Peter. That's Peter Wallser of Wallser,

565
00:34:28,840 --> 00:34:31,320
Speaker 1: Melcher and Yoda. And that's it for this edition of

566
00:34:31,360 --> 00:34:34,360
Speaker 1: the Bloomberg Law Podcast. Remember you can always get the

567
00:34:34,440 --> 00:34:37,319
Speaker 1: latest legal news by subscribing and listening to the show

568
00:34:37,560 --> 00:34:42,040
Speaker 1: on Apple Podcasts, Spotify, and at Bloomberg dot com, slash podcast,

569
00:34:42,120 --> 00:34:46,000
Speaker 1: Slash Law. I'm June Grosso and this is Bloomberg