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

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Speaker 2: Remember when Donald Trump said as president he could declassified

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Speaker 2: documents by thinking about it.

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Speaker 3: If you're the president of the United States, you can

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Speaker 3: declassify just by saying it's stay classified, even by thinking

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Speaker 3: about it, because you're sending it to mar a Lago

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Speaker 3: or to wherever you're sending it, and there doesn't have

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Speaker 3: to be a process. There can be a process, but

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Speaker 3: there doesn't have to be you're the president. You make

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Speaker 3: that decision, so when you send it, it's steak Classwick.

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Speaker 2: Well, the judge handling the criminal classified documents case against

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Speaker 2: the former president, seems to be buying into that to

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Speaker 2: some extent, and Special Counsel Jack Smith appears to be

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Speaker 2: at the end of his rope with Judge Eileen Cannon.

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Speaker 2: He took the Trump appointee to task in an almost

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Speaker 2: scolding response to her request for jury instructions in the matter,

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Speaker 2: with an unto subtle indication that he might have to

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Speaker 2: go to the Eleventh Circuit, which has reversed Kenon twice

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Speaker 2: in the past. The judge came back quickly today with

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Speaker 2: an order that's part win, part loss for the Special Council.

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Speaker 2: Joining me is former federal prosecutor Robert Mintz, a partner

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Speaker 2: maccarter in English, Bob, Before we get into all the details,

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Speaker 2: I'd like you to explain what I think is one

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Speaker 2: of the most off the wall claims by Trump that

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Speaker 2: he transformed national security documents into his own personal property

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Speaker 2: under the Presidential Records Act, and the prosecutors wrote that

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Speaker 2: it would be pure fiction to suggest that highly classified

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Speaker 2: documents created by members of the intelligence community and military

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Speaker 2: and presented to the President of the United States during

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Speaker 2: his term in office were purely private. Yeah.

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Speaker 1: So what has prosecutors so incensed here is that the

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Speaker 1: judge is fixating on the Presidential Record Act, which is,

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Speaker 1: according to prosecutors, a law that has absolutely nothing whatsoever

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Speaker 1: to do with this case. And what they're concerned about

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Speaker 1: is that if the judge gives an instruction about the

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Speaker 1: Presidential Record back to a curate, it essentially nudges them,

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Speaker 1: potentially towards an acquittal or possibly even leaving the door

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Speaker 1: open for the judge herself to acquit the former president

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Speaker 1: at the end of the proceeding by declaring that the

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Speaker 1: government has failed to prove its case and the.

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Speaker 2: Special counsel not only attacks this on the law, but

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Speaker 2: also on the facts, and he lays out all the

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Speaker 2: facts showing that Trump did not designate the documents as

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Speaker 2: personal while he was in office, and also when and

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Speaker 2: how he quote invented the theory that they were personal

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Speaker 2: for the first time in February of twenty twenty two.

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Speaker 1: Well, what prosecutors have done is essentially argues that this

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Speaker 1: is a last minute argument and that there's no factual

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Speaker 1: basis in the record whatsoever to even support a claim

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Speaker 1: that these records were protected by the Presidential Records Act.

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Speaker 1: The Presidential Records Act was an active post Watergate to

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Speaker 1: clarify what records belonged to the president and what records

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Speaker 1: belonged to the public, and the idea was to restrict

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Speaker 1: very clearly the types of records that a president could

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Speaker 1: remove from the White House when they left office, and

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Speaker 1: the Presidential Records Acts make very clear that only purely

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Speaker 1: personal records, records relating to the president's personal activities, health records,

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Speaker 1: records related to the president's family, those types of personal records,

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Speaker 1: those could be removed, But any records relating to the public,

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Speaker 1: such as national security, national policy, anything related to the

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Speaker 1: function of the president acting as president. Those records belonged

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Speaker 1: to the White House and were not permitted to be

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Speaker 1: removed under the Presidential Records Act. What the defense here

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Speaker 1: is trying to argue is that former President Trump transformed

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Speaker 1: those records, which are clearly public in nature, into personal

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Speaker 1: records merely by removing them and taking them to mar

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Speaker 1: A Lago. They're not even suggesting that at any point

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Speaker 1: in time former President Trump had designated them as personal

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Speaker 1: under the Presidential Records Act. And prosecutors pointed to the

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Speaker 1: fact that they interviewed all of the people who were

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Speaker 1: involved in those records in the White House at the time,

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Speaker 1: and none of them recall any reference to those records

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Speaker 1: being related to the Presidential Records Act. So the defense

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Speaker 1: argument goes that simply because they were removed and brought

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Speaker 1: to maur A Lago, they were transformed into personal records.

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Speaker 1: That's something that the prostitution think is absurd on his face,

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Speaker 1: and even injecting that question into the trial and getting

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Speaker 1: in front of the jury would be highly prejudicial to prosecutors.

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Speaker 2: The Special Council's response seems especially harsh. They flatly say

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Speaker 2: the judge got it wrong repeatedly. Quote both of the

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Speaker 2: court scenarios are fundamentally flawed. In any jury instructions that

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Speaker 2: reflect those scenarios would be error. Sort of a scolding tone.

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Speaker 1: Yeah, prosecutors are taking a very aggressive approach with the

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Speaker 1: judge here, but I think in their minds they have

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Speaker 1: no choice because the judge has yet to make a

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Speaker 1: decision on so many important motions that are still pending

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Speaker 1: before her, and those could affect the trial going forward.

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Speaker 2: And the special counsel sort of gave her a nudge

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Speaker 2: about a Trump motion to dismiss based on the Presidential

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Speaker 2: Records Act that she had not ruled on yet, and

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Speaker 2: lo and behold, she ruled on it today, denying Trump's

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Speaker 2: motion to dismiss based on the Presidential Records Act.

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Speaker 1: So what the Trump defense team had asked the judge

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Speaker 1: to do is to throw out the indictment all together

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Speaker 1: based upon the Presidential Records Act, arguing that the fact

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Speaker 1: that President Trump had removed those records from the White

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Speaker 1: House as an indication that he had deemed them to

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Speaker 1: be personal records, and that as a matter of law,

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Speaker 1: that was enough to dismiss the indictment and there would

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Speaker 1: be no trial. Today's ruling is very limited. What it

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Speaker 1: does is it says there will be a trial. It says,

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Speaker 1: at least as far as the Presidential Records Act goes,

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Speaker 1: that is not a basis to dismiss this indictment. But

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Speaker 1: she does leave open the door to dealing with this

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Speaker 1: issue at some point later down the road. She simply says,

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Speaker 1: the Presidential Records Act is not a basis to dismiss

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Speaker 1: this indictment pre trial, but it leaves the possibility that

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Speaker 1: the defense will raise this issue at some point during

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Speaker 1: the trial. And this whole question about whether the jury

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Speaker 1: will be instructed on the Presidential Records Act and whether

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Speaker 1: or not has any relevance whatsoever to the trial has

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Speaker 1: been left open to be decided on another day.

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Speaker 2: She pushes back on Smith's challenge to her request for

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Speaker 2: jury instructions on the Presidential Records Act. She says, separately,

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Speaker 2: to the extent the Special Council demands an anticipatory finalization

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Speaker 2: of jury instructions prior to trial, prior to a charge conference,

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Speaker 2: and prior to the presentation of trial defenses and evidence.

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Speaker 2: The Court declines that demand as unprecedented and unjust. Is

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Speaker 2: his demand to know whether or not she's going to

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Speaker 2: allow this defense unprecedented and unjust.

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Speaker 1: Well, what Jackspaths trying to do is to smoke the

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Speaker 1: judge out on this issue and get a decision one

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Speaker 1: way or the other, because of what prosecutors don't want

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Speaker 1: to have happened is that the jury gets in paneled,

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Speaker 1: the trial begins, and then this issue is decided, because

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Speaker 1: at that point, once the jury is impaneled, double jeopardy

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Speaker 1: attacks and prosecutors will not be able to appeal that decision.

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Speaker 1: If ultimately Judge Cannon decides that the presidential record is

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Speaker 1: a viable defense, prosecutors know that that would be the

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Speaker 1: death knell for their case because it would essentially tell

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Speaker 1: jurors that simply designating records as personal is enough to

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Speaker 1: avoid the Espionage Act, and it would entirely get the prosecution.

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Speaker 1: So prosecutors are trying to get the judge to go

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Speaker 1: on record one way or the other on this issue,

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Speaker 1: and all she's done so far is to say it

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Speaker 1: is not something that will prevent this trial from going forward.

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Speaker 1: But she's leaving the possibility that the Presidential Records Act

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Speaker 1: will still be an issue down the road, and that's

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Speaker 1: something that is going to have prosecutors very concerned, Bob.

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Speaker 2: Isn't the prosecution entitled to know which defenses the judge

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Speaker 2: will allow before the trial?

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Speaker 1: Generally speaking, that's true. Prosecutors have the right to know

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Speaker 1: what the defenses are going to be so that they

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Speaker 1: can appeal them if they believe that they have no

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Speaker 1: application to the case at all. Obviously, defenses are based

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Speaker 1: upon evidence, and so to the extent that the defense

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Speaker 1: can raise evidence to suggest that there's some applicability to

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Speaker 1: the Presidential Records Act to this case, they'd be allowed

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Speaker 1: to raise that defense. But what prosecutors are saying is

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Speaker 1: they've interviewed all these witnesses and nobody has said that

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Speaker 1: President Trump ever designated any of these records personal under

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Speaker 1: the Presidential Records Act. So they're saying there is no

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Speaker 1: basis in law and no basis in fact to raise

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Speaker 1: this defense, and they want the judge to go on

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Speaker 1: record one way or the other whether she's going to

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Speaker 1: allow it, and so far, she has resisted that attempt

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Speaker 1: by prosecutors to pin her down on this issue.

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Speaker 2: And in a final sentence, in response to the Special

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Speaker 2: Counsel's threat of going to the eleventh Circuit. She says,

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Speaker 2: as always, any party remains free to avail itself of

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Speaker 2: whatever appellate options it sees fit to invoke, as permitted

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Speaker 2: by law. So the Special Council won this order. In theory,

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Speaker 2: can Jack Smith go to the Eleventh Circuit and try

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Speaker 2: to get Judge Canon remove from the case.

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Speaker 1: Well, I think prosecutors are going back to the war

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Speaker 1: room right now and trying to decide how to respond

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Speaker 1: to this decision because they got a ruling, but they

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Speaker 1: didn't get the ruling they want because it's only preliminary

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Speaker 1: and it doesn't really ultimately decide the question of presidential

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Speaker 1: records acting whether or not it will be a part

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Speaker 1: of this trial, and I think prosecutors have to come

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Speaker 1: up with a way to try to bring this issue

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Speaker 1: to the Court of Appeals if they can, or to

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Speaker 1: force the judge to make that decision at some point

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Speaker 1: prior to the trial. As long as she makes the

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Speaker 1: decision before the jury's channeled, that gives prosecutors the opportunity

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Speaker 1: to immediately appeal that case up to the Eleventh Circuit.

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Speaker 1: That still, however, does raise the prospect if she waits

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Speaker 1: until just prior to trial to address this issue that

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Speaker 1: the trial will be delayed, and then that could push

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Speaker 1: the trial back after November. So prosecutors are dealing not

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Speaker 1: only with trying to get this decision piify, but they

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Speaker 1: also want to get the decision clarified as soon as

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Speaker 1: possible so that they don't have an appellate delay that

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Speaker 1: ultimately pushes the trial after November.

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Speaker 2: Okay, stay with me, Bob. Coming up next, we're going

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Speaker 2: to be talking about Trump's hush money trial. Trump has

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Speaker 2: now made eight requests to postpone the trials start, and

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Speaker 2: Manhattan Judge Jan Mr. Shawn rejected his latest motion to

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Speaker 2: postpone until after the Supreme Court determines whether he has

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Speaker 2: immunity from prosecution in a different criminal case. I'm June

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Speaker 2: Grosso and you're listening to Bloomberg. Federal Judge Eileen Cannon

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Speaker 2: denied Donald Trump's bid to get criminal charges in the

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Speaker 2: classified Documents case drop by claiming that the top secret

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Speaker 2: records found that his Florida home were personal. The Special

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Speaker 2: Council had vented frustration with the judge after she asked

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Speaker 2: both sides for jury instructions on the Presidential Records Act

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Speaker 2: before setting a trial date, saying her understanding of key

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Speaker 2: legal issues appeared to be fundamentally flawed. However, Canon refused

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Speaker 2: the Special Counsel's request that she explicitly say the Presidential

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Speaker 2: Records Act won't come up in the trial. I've been

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Speaker 2: talking to former federal prosecutor Robert Mintz of Macarter and

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Speaker 2: English Bob. Judge Canon has many critics because of several

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Speaker 2: decisions that don't seem grounded in the law or the facts.

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Speaker 1: Well, it's hard to say what's going on behind the scenes,

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Speaker 1: but I can tell you, based upon many years of experience,

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Speaker 1: that the way the judges handling this case procedurally is unusual. Typically,

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Speaker 1: judges will go through a very orderly process in bringing

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Speaker 1: a case to trial by resolving these motions to dismiss,

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Speaker 1: then moving on to any other motions affecting the evidence

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Speaker 1: that could be admitted during the course of the trial,

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Speaker 1: dealing with dury instructions. There's an order to which these

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Speaker 1: things typically go, and she seems to be taking them

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Speaker 1: out of order, and that's creating a lot of chaos

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Speaker 1: for the prosecution. And there are risks here that if

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Speaker 1: these decisions are not made and are not made soon,

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Speaker 1: that this case may not go to trial until after

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Speaker 1: the November election, and that is something that has prosecutors

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Speaker 1: greatly worried.

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Speaker 2: The Special Council also alluded to seeking a rid of

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Speaker 2: mandamus from the Appeals Court in his citations.

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Speaker 1: Yeah, prosecutors have alluded to filing a rid of mandamus,

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Speaker 1: which is essentially a remedy that can be used to

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Speaker 1: compel a lower court to perform an act that is

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Speaker 1: ministerial in nature and that the court has a clear

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Speaker 1: duty to do under the law. In this case, prosecutors

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Speaker 1: are trying to get the judge to make decisions about

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Speaker 1: all of these pending motions because they can't appeal those

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Speaker 1: decisions until those decisions are made. And the longer the

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Speaker 1: judge sits on those decisions and doesn't rule on them,

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Speaker 1: the more it jeopardizes this case going to trial before

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Speaker 1: the Novment election. So they are getting more and more

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Speaker 1: frustrated with the pace of this case and are now

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Speaker 1: threatening to take that up to the Court of Appeals

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Speaker 1: and essentially argue that this judge has failed in a

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Speaker 1: procedural way, not what she ruled, but the fact that

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Speaker 1: she has simply failed to rule on motions in a

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Speaker 1: timely manner.

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Speaker 2: They've threatened to go to the Eleventh Circuit with some

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Speaker 2: of her other decisions in the case, and the Eleventh

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Speaker 2: Circuit has reversed her Yes.

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Speaker 1: Well, as you point out, Judge Cannon was reduced by

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Speaker 1: the Eleventh Circuit in an earlier related proceeding back in

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Speaker 1: twenty twenty two, when former President Trump brought a lawsuit

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Speaker 1: attacking the FBI's document investigation. In that lawsuit, Judge Cannon

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Speaker 1: granted what was an extraordinary request by former President Trump

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Speaker 1: for a third party to review the FBI's twenty twenty

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Speaker 1: two search of his Mar Lago resort for classified documents.

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Speaker 1: But basically happens when a search warrant is executed. As

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Speaker 1: a federal agents come in, they remove the documents that

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Speaker 1: are within the scope of the search warrant. Those documents

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Speaker 1: are brought back to SBI headquarters and then they're reviewed

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Speaker 1: by prosecutors to determine the evidentiary value. In a case

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Speaker 1: in which there's the potential for privileged information to be

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Speaker 1: mixed in with those documents, prosecutors will set up a

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Speaker 1: separate team of lawyers not involved in the case to

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Speaker 1: review the documents, and they then remove anything that could

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Speaker 1: be considered privileged while walling off the prosecution team from

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Speaker 1: ever receiving knowledge of any of that information that is

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Speaker 1: between an attorney and a client and should not be

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Speaker 1: available to prosecutors. In that case, Judge Cannon ordered what

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Speaker 1: was an extraordinary and unprecedented decision where she ordered that

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Speaker 1: an independent monitor, in other words, somebody separate apart from

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Speaker 1: the Department of Justice, had to be brought in to

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Speaker 1: review those documents. There was no base in law and

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Speaker 1: no basis in precedent for inserting that additional layer of review.

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Speaker 1: She relied on the fact that because it was a

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Speaker 1: search of a former president's residence, that it somehow required

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Speaker 1: an additional level of scrutiny. The Eleventh Circuit looked at

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Speaker 1: that issue and immediately reversed to ruling on that and

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Speaker 1: rebuked her for essentially creating a layer of protection for

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Speaker 1: a former president that would not apply to any other

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Speaker 1: citizen of this country.

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Speaker 2: Some legal experts say, well, there's a risk in doing this,

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Speaker 2: but as I mentioned, the Special Council has threatened to

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Speaker 2: go to the Eleventh Circuit before with Judge Kenon, do

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Speaker 2: you see any risk in the way this document is worded,

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Speaker 2: or the tone or saying we want to go to

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Speaker 2: the Eleventh Circuit.

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Speaker 1: But I think what procecutes are doing or they are

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Speaker 1: trying to ratchet up the pressure on the judge and

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Speaker 1: they're making it known to the judge that they will

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Speaker 1: not hesitate to take this case the Eleventh Circuit. The

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Speaker 1: judge was already rebuked in that prior case, and no

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Speaker 1: doubt the judge is mindful of trying to get this

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Speaker 1: right and not being overturned by the Eleventh Circuit. So

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Speaker 1: I think cross secutors are trying, in the strongest words possible,

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Speaker 1: to state to the judge, judge, rightly or wrongly, you've

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Speaker 1: got to make these decisions because if we think you're wrong,

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Speaker 1: we are going to go up to the Eleventh Circuit

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Speaker 1: and get that review. And they don't want the clock

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Speaker 1: to run out before they have that opportunity.

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Speaker 2: So let's turn to the hush money case in New York,

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Speaker 2: which is now the first criminal case that's actually scheduled

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Speaker 2: to go to trial. Trump has now made eight various

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Speaker 2: requests to postpone the trial start, and yesterday Judge Wan

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Speaker 2: Mrchan rejected his motion to postpone the trial until after

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Speaker 2: the Supreme Court determines whether Trump has immunity from prosecution

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Speaker 2: in a separate criminal case. Is the judge on sound

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Speaker 2: round here?

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Speaker 1: What we're seeing here is a motion by the Trump

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Speaker 1: defense team to try to delay the trial for yet

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Speaker 1: another reason, arguing that it ought to be delayed until

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Speaker 1: a decision is made by the Supreme Court. In connect

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Speaker 1: you with the January sixth insurrection case, which has to

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Speaker 1: do with a question of presidential immunity. What the judge

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Speaker 1: in the New York case decided was that that issue

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Speaker 1: could have been raised a long time ago, and to

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Speaker 1: raise it now, only days before the trial is simply

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Speaker 1: too late, and so he rejected that out of hand.

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Speaker 2: Trump is also asking to delay the trial due to

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Speaker 2: pre trial publicity, which the Manhattan DA points out is

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Speaker 2: of his own making. Also, pre trip publicity. Isn't that

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Speaker 2: something that judges normally say, we can handle that in

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Speaker 2: the voidir.

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Speaker 1: Yeah, whenever you have a high profile case involving a

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Speaker 1: high profile defendant, and certainly this case fits the bill

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Speaker 1: in every respect. In that regard, you always have jurors

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Speaker 1: who have read about the case, who have formed an

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Speaker 1: opinion about the defendant, who may have prejudged the case

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Speaker 1: that's going to happen in every high profile case where

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Speaker 1: all of the pre trial proceedings and all of the

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Speaker 1: charges have been in the media for months, perhaps even years.

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Speaker 1: And so the vuas deer process, which is the opportunity

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Speaker 1: for lawyers for both the defense and the prosecution to

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Speaker 1: screen out the jurors who because in order to sit

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Speaker 1: on that jury, the jurors has to say that they

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Speaker 1: have not formed any opinion as to the guilt or

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Speaker 1: innocence of the defendant, that they will be able to

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Speaker 1: make a decision based solely upon the evidence that's presented

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Speaker 1: during the trial, That they will not rely on any

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Speaker 1: information outside of the courtroom, that they will not talk

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Speaker 1: to anybody or read any media accounts of the trial

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Speaker 1: during the course of the trial. And that process may

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Speaker 1: take some time, given the high degree of publicity that

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Speaker 1: has predated this trial, but eventually they will find a

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Speaker 1: set of jurors who meet that criteria. That happens a

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Speaker 1: the time, and that will certainly happen in this case.

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Speaker 2: And Trump also they've renewed their request, which the judge

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Speaker 2: turned down once before, for him to recuse himself because

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Speaker 2: of his daughter's political work for Democratic politicians. The judge

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Speaker 2: is not going to recuse himself at this point either.

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Speaker 2: Why renew this motion? Is it just to put it

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Speaker 2: in the public light.

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Speaker 1: Well, it's hard to say what motivated this emotion again,

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Speaker 1: but as you point out, this is exactly the same

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Speaker 1: motion that was made earlier when they challenged the judges

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Speaker 1: impartiality and asked for a recusal based on his daughter's

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Speaker 1: job and the judge's own small donations to Democrats. In

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Speaker 1: that case, the Judicial Ethics Committee had taken a look

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Speaker 1: at this issue and decided that the judges impartiality could

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Speaker 1: not reasonably be questioned based on his law contribution to Democrats,

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Speaker 1: or his daughter's career. And this is basically the same

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Speaker 1: motion raised again. There's nothing new about it, But I

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Speaker 1: think one thing that may be going on here is

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Speaker 1: again playing not to the judge, but playing to the

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Speaker 1: greater public. People who are sitting on that jury may

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Speaker 1: be aware of this motion. They may come into the

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Speaker 1: courtroom and ultimately find their way on a jury. And

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Speaker 1: the more that the defense team can project their defense

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Speaker 1: arguments to potential jurors even before the trial starts, the

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Speaker 1: better they have an opportunity of finding one juror who

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Speaker 1: might not be willing to vote for a conviction.

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Speaker 2: Finally, Bob, we have the judge expanding his gag order

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Speaker 2: because Donald Trump attacked his daughter on social media. The

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Speaker 2: district attorney requested this, But is the judge on solid

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Speaker 2: ground in expanding the gag order to include family.

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Speaker 1: These are rulings that we really have never seen before,

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Speaker 1: because we've really never seen a defendant who has attacked

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Speaker 1: the judicial system, who have attacked judges, who have attacked

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Speaker 1: courtroom employees, who have attacked family members of prosecutors and

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Speaker 1: judge before, and certainly not a defendant who has the

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Speaker 1: platform that former President Trump has in order to launch

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Speaker 1: these attacks on the judicial system. And so we're seeing

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Speaker 1: the judge place in a difficult position trying to allow

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Speaker 1: for former President Trump's First Amendment rights to be able

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Speaker 1: to speak his mind as to the judge, as to

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Speaker 1: the prosecutors. But when he talks about people who are

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Speaker 1: not directly related to the trial, and there is a

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Speaker 1: certain risk of danger based upon some of the comments

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Speaker 1: that he makes. That's where I think we're seeing the

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Speaker 1: judge try to carefully rein that in we'll begin the

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Speaker 1: trials soon and those comments will no longer really be relevant.

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Speaker 1: I think once we see the trial start, all the

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Speaker 1: talking will go on in the courtroom and we'll see

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Speaker 1: less commentary going on outside of the courtroom as the

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Speaker 1: trial is unfolding.

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Speaker 2: And Bob, why don't the judges ever include themselves in

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Speaker 2: these gag orders?

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Speaker 1: You know, these gag orders are a difficult balancing act.

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Speaker 1: There is a First Amendment right of defendants to speak out,

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Speaker 1: but on the other hand, there's also the judge's obligation

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Speaker 1: to ensure that the trial proceeds in an orderly way,

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Speaker 1: that jury pools are not tampered with, and perhaps most importantly,

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Speaker 1: that people who are involved in the case, whether it's

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Speaker 1: witnesses or court employees, are not in any way endangered

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Speaker 1: by comments that a defendant may make. Generally speaking, the

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Speaker 1: judge and the prosecutor are considered public figures. They are

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Speaker 1: considered people who are central to the trial. But at

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Speaker 1: the same time they have essentially bought into this process.

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Speaker 1: It's their job. So you'll almost never find a gag

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Speaker 1: order that prevents a defendant from making comments about the

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Speaker 1: judge or the prosecution. But when it bills over into

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Speaker 1: other people, family members, court employees. That's where we see

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Speaker 1: judges draw the line.

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Speaker 2: And we'll see if Trump chose the line. Thanks so much, Bob.

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Speaker 2: That's former federal prosecutor Robert Mintz coming up next on

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Speaker 2: the Bloomberg Law Show. The Baltimore bridge collapse could be

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Speaker 2: the most expensive marine insured loss in history, with estimates

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Speaker 2: of losses up to four billion dollars, but the owner

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Speaker 2: of the cargo ship that struck the bridge is looking

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Speaker 2: to limit its liability. I'm June Gross and you're listening

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Speaker 2: to Bloomberg. The divers who responded to the Baltimore bridge

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Speaker 2: collapse were honored today for their dedication and bravery. County

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Speaker 2: Executive Angel Also Brooks praised the divers for jumping into

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Speaker 2: action on that tragic day. The rest of our state,

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Speaker 2: and I dare say the rest of the nation got

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Speaker 2: to see what we see each and every day in

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Speaker 2: all of you. It's the bravery, it is the carrying,

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Speaker 2: it is the selflessness, it's the sacrifice. The bridge fell

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Speaker 2: last Tuesday after being struck by the cargo ship Dolly,

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Speaker 2: which lost powers shortly after leaving Baltimore. Bad weather has

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Speaker 2: hindered the around the clock salvage operations, joining me is

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Speaker 2: maritime law expert Martin Davies, the director of Tulane University

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Speaker 2: Maritime Law Center. What's gotten a lot of attention recently

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Speaker 2: is that the owner and the manager of the cargo

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Speaker 2: ship filed a court petition seeking to limit their legal

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Speaker 2: liability for the disaster.

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Speaker 4: The law in question dates from eighteen fifty one. There

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Speaker 4: are international equivalents based on international conventions, so limitation of

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Speaker 4: liability is a very typical thing that occurs in the

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Speaker 4: wake of any maritime casualty. And what the law allows

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Speaker 4: is for a shipowner to petition to limit its total

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Speaker 4: liability for any claims arising out of a single incident

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Speaker 4: to the value of the vessel at the end of

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Speaker 4: the voyage, plus any pending freight any sums owed to

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Speaker 4: it for carriage of cargo or passengers. The other main

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Speaker 4: advantage of limitation proceedings is that it enables the shipowner

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Speaker 4: to litigate the case in a single forum, in a

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Speaker 4: single court of its own choosing, because what happen happens

441
00:26:00,520 --> 00:26:04,080
Speaker 4: is that once the shipowner has petitioned the federal court

442
00:26:04,200 --> 00:26:08,639
Speaker 4: for limitation of liability, it must pay into court or

443
00:26:08,680 --> 00:26:12,080
Speaker 4: give security for the amount of the value of the

444
00:26:12,160 --> 00:26:14,320
Speaker 4: vessel at the end of the voyage. And then once

445
00:26:14,359 --> 00:26:17,240
Speaker 4: that fund has been constituted, and it will be constituted

446
00:26:17,240 --> 00:26:20,359
Speaker 4: by the ship's liability insurer, the P and I Club.

447
00:26:20,480 --> 00:26:23,560
Speaker 4: But once the fund has been constituted, the federal court

448
00:26:23,560 --> 00:26:26,960
Speaker 4: will then issue an order saying that no claimant can

449
00:26:27,000 --> 00:26:31,520
Speaker 4: bring a claim in any other court except that federal court. So,

450
00:26:31,640 --> 00:26:34,439
Speaker 4: for example, the claimants could not bring a claim in

451
00:26:34,800 --> 00:26:38,320
Speaker 4: Maryland State court or New York State Court or California

452
00:26:38,400 --> 00:26:42,120
Speaker 4: State court anywhere. All claims must be brought against the

453
00:26:42,600 --> 00:26:46,119
Speaker 4: fund that has been constituted in the court. So the

454
00:26:46,200 --> 00:26:48,879
Speaker 4: two main advantages from the shipowner's point of view is

455
00:26:48,920 --> 00:26:52,400
Speaker 4: one it has at least a chance of limiting its liability.

456
00:26:52,760 --> 00:26:56,840
Speaker 4: But secondly, it can marshal all the claims into one place,

457
00:26:57,280 --> 00:26:59,440
Speaker 4: the court of its own choosing, which in this case

458
00:26:59,520 --> 00:27:01,600
Speaker 4: is the Federal District Court in Maryland.

459
00:27:01,720 --> 00:27:04,160
Speaker 2: I take it the judge is going to decide whether

460
00:27:04,240 --> 00:27:07,000
Speaker 2: or not to limit liability. So what happens is it

461
00:27:07,040 --> 00:27:09,560
Speaker 2: the plaintiffs who have to come up with reasons why

462
00:27:09,960 --> 00:27:12,360
Speaker 2: the liability should not be limited.

463
00:27:13,119 --> 00:27:15,960
Speaker 4: It's a little confusing in terms of terminology because the

464
00:27:15,960 --> 00:27:18,480
Speaker 4: plaintiff is the shipowner, and the shipowner must show that

465
00:27:18,560 --> 00:27:22,479
Speaker 4: it was not guilty of what is called privity or knowledge,

466
00:27:22,480 --> 00:27:26,119
Speaker 4: that's the expression in the statute, because it's only entitled

467
00:27:26,160 --> 00:27:29,840
Speaker 4: to limit its liability if it itself the shipowner was

468
00:27:29,960 --> 00:27:32,600
Speaker 4: not at fault, and it does have the burden of

469
00:27:32,640 --> 00:27:36,920
Speaker 4: showing that it was not at fault. But it's the plaintiff.

470
00:27:37,040 --> 00:27:40,640
Speaker 4: So the liability claimants, which in this case will be

471
00:27:40,800 --> 00:27:44,360
Speaker 4: the families of those who died, the personal injury claimants,

472
00:27:44,400 --> 00:27:47,320
Speaker 4: and also the cost of the bridge, they are not

473
00:27:47,440 --> 00:27:51,639
Speaker 4: actually the plaintiffs in this limitation proceeding. The procedure is

474
00:27:52,000 --> 00:27:54,439
Speaker 4: a little bit feels a little bit upside down or

475
00:27:54,440 --> 00:27:57,320
Speaker 4: back to front or whatever, because the shipowner must show

476
00:27:57,880 --> 00:27:59,960
Speaker 4: that it was not guilty or fault or privity.

477
00:28:00,720 --> 00:28:03,560
Speaker 2: How does mechanical failure fit in?

478
00:28:03,680 --> 00:28:07,760
Speaker 4: Yes, mechanical failure will be a significant issue in this case,

479
00:28:07,800 --> 00:28:11,439
Speaker 4: I think, because if the incident had occurred because of

480
00:28:11,480 --> 00:28:15,000
Speaker 4: a pure sailing mistake on the part of those navigating

481
00:28:15,040 --> 00:28:17,800
Speaker 4: the vessel, then the shipowner probably would be entitled to

482
00:28:17,840 --> 00:28:21,879
Speaker 4: limit its liability. That was the example that everybody has

483
00:28:21,920 --> 00:28:24,680
Speaker 4: been talking about in relation to the Titanic. The Titanic

484
00:28:24,920 --> 00:28:28,959
Speaker 4: was a perfectly seaworthy, brand new vessel sank because of

485
00:28:29,280 --> 00:28:33,080
Speaker 4: sailing errors. There the shipowner was held to be able

486
00:28:33,160 --> 00:28:36,320
Speaker 4: to limit its liability. But if the incident occurred because

487
00:28:36,359 --> 00:28:39,800
Speaker 4: of some defect in the vessel, that looks much more

488
00:28:40,120 --> 00:28:43,840
Speaker 4: like it might be the responsibility of the shipowner itself.

489
00:28:44,280 --> 00:28:47,560
Speaker 4: It has to be personal fault of the shipowner or manager.

490
00:28:48,000 --> 00:28:52,000
Speaker 4: And well, it's too early to say, but there clearly

491
00:28:52,040 --> 00:28:55,560
Speaker 4: seem to have been some physical problems with the vessel itself,

492
00:28:55,680 --> 00:28:58,520
Speaker 4: which I think will be front and center in the

493
00:28:58,680 --> 00:29:00,000
Speaker 4: limitation proceedings.

494
00:29:00,160 --> 00:29:02,200
Speaker 2: What physical problems have you heard about?

495
00:29:02,840 --> 00:29:06,320
Speaker 4: Well, the engine, the power failed more than once, I believe,

496
00:29:06,600 --> 00:29:09,440
Speaker 4: before the vessel struck the bridge. And there are also

497
00:29:09,920 --> 00:29:12,880
Speaker 4: questions have been raised about the quality of the fuel

498
00:29:13,040 --> 00:29:16,160
Speaker 4: that's been used. Most of that, I must say speculation,

499
00:29:16,320 --> 00:29:19,040
Speaker 4: because none of that has been recorded yet. But if

500
00:29:19,040 --> 00:29:22,280
Speaker 4: the ship's power failed, which it seems clearly that it did,

501
00:29:22,600 --> 00:29:26,640
Speaker 4: that's going to raise questions of whether the shipowner is

502
00:29:26,720 --> 00:29:30,160
Speaker 4: responsible for the condition of the vessel that caused the

503
00:29:30,200 --> 00:29:30,800
Speaker 4: power to fail.

504
00:29:31,000 --> 00:29:34,880
Speaker 2: So this law has been used in the most notable

505
00:29:34,920 --> 00:29:39,040
Speaker 2: maritime disasters. How often has it worked? Does it work

506
00:29:39,120 --> 00:29:39,960
Speaker 2: more often than not.

507
00:29:40,760 --> 00:29:43,880
Speaker 4: No, it fails more often than not. The statistics show

508
00:29:44,160 --> 00:29:49,040
Speaker 4: that the shipowner's petition to limit its liability succeeds in

509
00:29:49,120 --> 00:29:52,480
Speaker 4: only about thirty two percent of the cases, so it

510
00:29:52,520 --> 00:29:55,080
Speaker 4: fails most of the time under US law, as in

511
00:29:55,640 --> 00:29:58,320
Speaker 4: sixty eight percent of the time it fails. But that

512
00:29:58,400 --> 00:30:02,560
Speaker 4: doesn't stop shipowners from petitioning in the event of a casualty,

513
00:30:02,760 --> 00:30:07,000
Speaker 4: because the other benefit of the limitation proceedings, as I've said,

514
00:30:07,080 --> 00:30:10,040
Speaker 4: is to bring all the claims together in one place,

515
00:30:10,440 --> 00:30:13,120
Speaker 4: so that the shipowner then doesn't have to fight lots

516
00:30:13,120 --> 00:30:17,040
Speaker 4: of different lawsuits about the same incident in different jurisdictions.

517
00:30:18,000 --> 00:30:21,440
Speaker 2: President Biden has said that the federal government would bear

518
00:30:21,480 --> 00:30:25,440
Speaker 2: the cost of cleaning the debris and rebuilding the bridge.

519
00:30:26,120 --> 00:30:28,360
Speaker 2: Is that something the federal government should be paying for

520
00:30:28,480 --> 00:30:30,240
Speaker 2: or should the insurance be paying for that?

521
00:30:30,840 --> 00:30:34,920
Speaker 4: Well, that's an interesting question because I believe that the

522
00:30:35,240 --> 00:30:37,880
Speaker 4: bridge did carry an interstate highway, which would be a

523
00:30:37,920 --> 00:30:41,080
Speaker 4: reason for the federal government participating, if you like, in

524
00:30:41,400 --> 00:30:44,600
Speaker 4: the cost of the repairs. But what the maritime law

525
00:30:44,680 --> 00:30:48,560
Speaker 4: says is that only those who have suffered physical damage

526
00:30:48,760 --> 00:30:52,400
Speaker 4: to their property can claim against the vessel. So the

527
00:30:52,520 --> 00:30:56,560
Speaker 4: question will be like who actually owned the bridge, And

528
00:30:56,560 --> 00:30:59,400
Speaker 4: now if it's the State of Maryland, then the state

529
00:30:59,440 --> 00:31:04,360
Speaker 4: of Maryland is the proper claimant, and the federal government

530
00:31:04,520 --> 00:31:09,120
Speaker 4: choosing to pay looks much more like an economic loss.

531
00:31:09,920 --> 00:31:13,240
Speaker 4: And there's a Supreme Court decision that says that purely

532
00:31:13,360 --> 00:31:17,680
Speaker 4: economic losses are not recoverable from the ship itself. So

533
00:31:17,800 --> 00:31:20,360
Speaker 4: all of the economic losses that I'm sure are already

534
00:31:20,400 --> 00:31:24,280
Speaker 4: being suffered in the city of Baltimore are not recoverable

535
00:31:24,600 --> 00:31:25,640
Speaker 4: from the ship.

536
00:31:26,560 --> 00:31:30,800
Speaker 2: How long does a claim like this take to play out?

537
00:31:31,120 --> 00:31:36,120
Speaker 4: Oh gosh, years. It will be years to work out

538
00:31:36,960 --> 00:31:40,840
Speaker 4: exactly what happened and the responsibility for it. Litigation of

539
00:31:40,920 --> 00:31:44,400
Speaker 4: this complexity doesn't move very quickly. Plus it's going to

540
00:31:44,400 --> 00:31:47,560
Speaker 4: be a long time before it's even known how much

541
00:31:47,640 --> 00:31:51,240
Speaker 4: it costs to replace the bridge, so you know, the

542
00:31:51,280 --> 00:31:54,760
Speaker 4: magnitude of the claim will not be clear for years,

543
00:31:55,120 --> 00:31:59,280
Speaker 4: and litigation of this kind generally does not move very quickly.

544
00:31:59,840 --> 00:32:03,000
Speaker 2: Is there anyone besides the owner of the ship and

545
00:32:03,040 --> 00:32:05,920
Speaker 2: the manager that can be sued here?

546
00:32:06,840 --> 00:32:08,960
Speaker 4: Well, there are lots of people that can be sued,

547
00:32:09,200 --> 00:32:13,080
Speaker 4: but I don't think there's anybody other than the owner

548
00:32:13,080 --> 00:32:17,360
Speaker 4: and manager. It seemed to be plausible candidates for litigation

549
00:32:17,720 --> 00:32:21,880
Speaker 4: because the charter of the vessel, Mersk is merely the

550
00:32:22,040 --> 00:32:27,560
Speaker 4: commercial operator. It's not responsible for navigational operation, and whatever

551
00:32:27,600 --> 00:32:31,920
Speaker 4: happened here seems to have been a navigational problem, not

552
00:32:32,080 --> 00:32:36,800
Speaker 4: a commercial problem. There is a possibility I think that

553
00:32:36,880 --> 00:32:41,160
Speaker 4: if the problem is with deficient fuel, then there might

554
00:32:41,280 --> 00:32:46,320
Speaker 4: be the possibility of a cross claim against Mersk, but

555
00:32:46,480 --> 00:32:50,160
Speaker 4: the principal responsibility will lie with the shipowner.

556
00:32:50,720 --> 00:32:53,360
Speaker 2: Could the harbor master be sued, I.

557
00:32:53,320 --> 00:32:56,400
Speaker 4: Mean, someone could try, but I really think that that's

558
00:32:56,520 --> 00:33:01,200
Speaker 4: unlikely because once the ship is off the birth, the

559
00:33:01,240 --> 00:33:04,680
Speaker 4: task of the tugs is done the harbor pilots. The

560
00:33:04,760 --> 00:33:07,280
Speaker 4: ship is responsible for any fault on the part of

561
00:33:07,280 --> 00:33:09,720
Speaker 4: the harbor pilots, although there doesn't seem to be any

562
00:33:09,760 --> 00:33:12,360
Speaker 4: indication of fault on the part of the harbor pilots.

563
00:33:12,400 --> 00:33:16,480
Speaker 4: But the responsibility lies with the ship. And I mean,

564
00:33:16,520 --> 00:33:19,480
Speaker 4: I guess it's conceivable that someone could try to sue

565
00:33:19,560 --> 00:33:23,400
Speaker 4: the port authority for the tugs casting off too soon,

566
00:33:23,600 --> 00:33:26,280
Speaker 4: but the vessel was in in the middle of the channel.

567
00:33:26,560 --> 00:33:28,280
Speaker 4: I don't think it needed tugs anymore.

568
00:33:28,960 --> 00:33:33,520
Speaker 2: So insurance the insurance is about two or three billion.

569
00:33:33,280 --> 00:33:36,680
Speaker 4: Dollars three point one billion, thank you? What it is? Right?

570
00:33:36,920 --> 00:33:41,400
Speaker 2: All right? So will the insurance definitely cover this? Let's say,

571
00:33:41,600 --> 00:33:44,840
Speaker 2: you know, it's found that they can't limit their legal liability.

572
00:33:45,240 --> 00:33:48,400
Speaker 2: Does the insurance cover it, whether it's negligence or not.

573
00:33:49,240 --> 00:33:52,840
Speaker 4: Yes, most definitely. The insurers are what are called a

574
00:33:52,840 --> 00:33:55,880
Speaker 4: P and I club protection and indemnity club, and they

575
00:33:55,920 --> 00:34:00,280
Speaker 4: are mutual self insurance associations of ship owners and they

576
00:34:00,640 --> 00:34:05,560
Speaker 4: don't operate like commercial insurers. Their instinct is to pay

577
00:34:05,880 --> 00:34:09,040
Speaker 4: because they are all shipowners. And so every ship owner

578
00:34:09,080 --> 00:34:11,040
Speaker 4: that's a member of the club, that has got a

579
00:34:11,080 --> 00:34:13,480
Speaker 4: ship entered in the club is both an insurer and

580
00:34:13,560 --> 00:34:17,799
Speaker 4: an assured and so the coverage offered by p and

581
00:34:17,840 --> 00:34:22,799
Speaker 4: I clubs is very comprehensive, has very few exceptions. It's

582
00:34:22,880 --> 00:34:25,479
Speaker 4: not like a commercial insurer where there are all sorts

583
00:34:25,520 --> 00:34:28,840
Speaker 4: of exclusions in the contract. And so the club will

584
00:34:28,880 --> 00:34:31,840
Speaker 4: cover this even if it turns out to be negligence

585
00:34:31,880 --> 00:34:34,239
Speaker 4: on the part of the shipowner, it will definitely be

586
00:34:34,280 --> 00:34:37,000
Speaker 4: covered by the club. And then what happens is the club.

587
00:34:37,120 --> 00:34:40,719
Speaker 4: The particular club that Dari was entered in is Britannia,

588
00:34:41,000 --> 00:34:44,200
Speaker 4: which is one of twelve p and I clubs forming

589
00:34:44,360 --> 00:34:48,040
Speaker 4: something called the International Group, which covers over ninety percent

590
00:34:48,080 --> 00:34:50,680
Speaker 4: of the ships in the world, and they have this

591
00:34:51,000 --> 00:34:56,200
Speaker 4: complicated pooling arrangement if claims exceed a certain level, which

592
00:34:56,400 --> 00:34:59,800
Speaker 4: they most certainly will in this case, the individual club

593
00:35:00,080 --> 00:35:03,720
Speaker 4: longer bears it itself. It's pooled among all the twelve

594
00:35:03,800 --> 00:35:09,280
Speaker 4: clubs in the International Group. They have commercial reinsurance, and

595
00:35:09,320 --> 00:35:13,520
Speaker 4: it's a complicated scheme. But the total pool of insurance

596
00:35:13,560 --> 00:35:16,600
Speaker 4: sitting behind the shipowner is at present three point one

597
00:35:16,760 --> 00:35:17,640
Speaker 4: billion dollars.

598
00:35:18,080 --> 00:35:22,200
Speaker 2: So there's no reason for plaintiffs to rush to file claims.

599
00:35:22,640 --> 00:35:23,359
Speaker 2: There's enough there.

600
00:35:24,000 --> 00:35:28,200
Speaker 4: Well no, because now that the shipowners filed its limitation suit,

601
00:35:28,200 --> 00:35:32,000
Speaker 4: they will have to file suit in those limitation proceedings,

602
00:35:32,120 --> 00:35:35,279
Speaker 4: they'll have to bring claims against the limitation fund. What

603
00:35:35,360 --> 00:35:37,680
Speaker 4: they will want to do is to try and argue

604
00:35:37,719 --> 00:35:40,400
Speaker 4: that the shipowner itself was at faultrom therefore it's not

605
00:35:40,719 --> 00:35:43,680
Speaker 4: entitled to limit its liability, which then gives them access

606
00:35:43,680 --> 00:35:47,280
Speaker 4: to this sort of huge ocean of insurance funds.

607
00:35:47,640 --> 00:35:50,640
Speaker 2: Many are saying that this could be the most expensive

608
00:35:51,120 --> 00:35:55,800
Speaker 2: marine disaster in history. Is there anything to be learned

609
00:35:55,840 --> 00:35:56,359
Speaker 2: from these?

610
00:35:57,160 --> 00:36:00,880
Speaker 4: Well, yes, I mean it's it's a very unusual obviously

611
00:36:01,360 --> 00:36:04,080
Speaker 4: in some respects not unique. I mean ships have knocked

612
00:36:04,120 --> 00:36:08,080
Speaker 4: down bridges before. What is so spectacular about this one

613
00:36:08,280 --> 00:36:11,799
Speaker 4: is that the bridge completely fell down and needs to

614
00:36:11,840 --> 00:36:15,640
Speaker 4: be completely replaced. So in terms of the amount of

615
00:36:15,800 --> 00:36:19,359
Speaker 4: money at stake, yes, it will be more expensive than

616
00:36:19,600 --> 00:36:23,440
Speaker 4: perhaps any other. But in other respect the way that

617
00:36:23,520 --> 00:36:28,200
Speaker 4: maritime casualties work is fairly clear and well settled, and

618
00:36:28,480 --> 00:36:31,440
Speaker 4: I don't think there's any new law likely to be

619
00:36:31,520 --> 00:36:35,960
Speaker 4: made here. You know, this is obviously a spectacular casualty,

620
00:36:36,120 --> 00:36:39,399
Speaker 4: but in other respects, and this sounds like an odd

621
00:36:39,440 --> 00:36:41,960
Speaker 4: way of putting it, there's nothing particularly unusual about it.

622
00:36:42,040 --> 00:36:45,040
Speaker 4: I mean, ships collide with one another, they run into things.

623
00:36:45,320 --> 00:36:48,239
Speaker 4: You know, casualty cases happen all the time, and what

624
00:36:48,280 --> 00:36:52,600
Speaker 4: I've been explaining to many journalists, including you, is fairly routine.

625
00:36:52,640 --> 00:36:56,120
Speaker 4: I mean, there's always a limitation suit. There's always the

626
00:36:56,200 --> 00:36:59,120
Speaker 4: question of whether the ship owner wizard fault. There's always

627
00:36:59,160 --> 00:37:02,799
Speaker 4: the question of the extent to which the club will respond.

628
00:37:03,120 --> 00:37:07,040
Speaker 4: I mean it sounds glib, but we know how this works.

629
00:37:07,600 --> 00:37:10,399
Speaker 2: It seems like such a specialized area of the law.

630
00:37:10,480 --> 00:37:14,320
Speaker 2: Thanks so much for joining us. That's Martin Davies, director

631
00:37:14,320 --> 00:37:18,160
Speaker 2: of Tulane University's Maritime Law Center. And that's it for

632
00:37:18,160 --> 00:37:20,799
Speaker 2: this edition of The Bloomberg Law Show. Remember you can

633
00:37:20,840 --> 00:37:24,080
Speaker 2: always get the latest legal news on our Bloomberg Law Podcast.

634
00:37:24,360 --> 00:37:27,399
Speaker 2: You can find them on Apple Podcasts, Spotify, and at

635
00:37:27,560 --> 00:37:32,560
Speaker 2: www dot Bloomberg dot com, slash podcast, Slash Law, And

636
00:37:32,640 --> 00:37:35,719
Speaker 2: remember to tune into The Bloomberg Law Show every weeknight

637
00:37:35,800 --> 00:37:39,239
Speaker 2: at ten pm Wall Street Time. I'm June Grosso and

638
00:37:39,320 --> 00:37:40,759
Speaker 2: you're listening to Bloomberg