Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.
Speaker 2: Remember when Donald Trump said as president he could declassified
Speaker 2: documents by thinking about it.
Speaker 3: If you're the president of the United States, you can
Speaker 3: declassify just by saying it's stay classified, even by thinking
Speaker 3: about it, because you're sending it to mar a Lago
Speaker 3: or to wherever you're sending it, and there doesn't have
Speaker 3: to be a process. There can be a process, but
Speaker 3: there doesn't have to be you're the president. You make
Speaker 3: that decision, so when you send it, it's steak Classwick.
Speaker 2: Well, the judge handling the criminal classified documents case against
Speaker 2: the former president, seems to be buying into that to
Speaker 2: some extent, and Special Counsel Jack Smith appears to be
Speaker 2: at the end of his rope with Judge Eileen Cannon.
Speaker 2: He took the Trump appointee to task in an almost
Speaker 2: scolding response to her request for jury instructions in the matter,
Speaker 2: with an unto subtle indication that he might have to
Speaker 2: go to the Eleventh Circuit, which has reversed Kenon twice
Speaker 2: in the past. The judge came back quickly today with
Speaker 2: an order that's part win, part loss for the Special Council.
Speaker 2: Joining me is former federal prosecutor Robert Mintz, a partner
Speaker 2: maccarter in English, Bob, Before we get into all the details,
Speaker 2: I'd like you to explain what I think is one
Speaker 2: of the most off the wall claims by Trump that
Speaker 2: he transformed national security documents into his own personal property
Speaker 2: under the Presidential Records Act, and the prosecutors wrote that
Speaker 2: it would be pure fiction to suggest that highly classified
Speaker 2: documents created by members of the intelligence community and military
Speaker 2: and presented to the President of the United States during
Speaker 2: his term in office were purely private. Yeah.
Speaker 1: So what has prosecutors so incensed here is that the
Speaker 1: judge is fixating on the Presidential Record Act, which is,
Speaker 1: according to prosecutors, a law that has absolutely nothing whatsoever
Speaker 1: to do with this case. And what they're concerned about
Speaker 1: is that if the judge gives an instruction about the
Speaker 1: Presidential Record back to a curate, it essentially nudges them,
Speaker 1: potentially towards an acquittal or possibly even leaving the door
Speaker 1: open for the judge herself to acquit the former president
Speaker 1: at the end of the proceeding by declaring that the
Speaker 1: government has failed to prove its case and the.
Speaker 2: Special counsel not only attacks this on the law, but
Speaker 2: also on the facts, and he lays out all the
Speaker 2: facts showing that Trump did not designate the documents as
Speaker 2: personal while he was in office, and also when and
Speaker 2: how he quote invented the theory that they were personal
Speaker 2: for the first time in February of twenty twenty two.
Speaker 1: Well, what prosecutors have done is essentially argues that this
Speaker 1: is a last minute argument and that there's no factual
Speaker 1: basis in the record whatsoever to even support a claim
Speaker 1: that these records were protected by the Presidential Records Act.
Speaker 1: The Presidential Records Act was an active post Watergate to
Speaker 1: clarify what records belonged to the president and what records
Speaker 1: belonged to the public, and the idea was to restrict
Speaker 1: very clearly the types of records that a president could
Speaker 1: remove from the White House when they left office, and
Speaker 1: the Presidential Records Acts make very clear that only purely
Speaker 1: personal records, records relating to the president's personal activities, health records,
Speaker 1: records related to the president's family, those types of personal records,
Speaker 1: those could be removed, But any records relating to the public,
Speaker 1: such as national security, national policy, anything related to the
Speaker 1: function of the president acting as president. Those records belonged
Speaker 1: to the White House and were not permitted to be
Speaker 1: removed under the Presidential Records Act. What the defense here
Speaker 1: is trying to argue is that former President Trump transformed
Speaker 1: those records, which are clearly public in nature, into personal
Speaker 1: records merely by removing them and taking them to mar
Speaker 1: A Lago. They're not even suggesting that at any point
Speaker 1: in time former President Trump had designated them as personal
Speaker 1: under the Presidential Records Act. And prosecutors pointed to the
Speaker 1: fact that they interviewed all of the people who were
Speaker 1: involved in those records in the White House at the time,
Speaker 1: and none of them recall any reference to those records
Speaker 1: being related to the Presidential Records Act. So the defense
Speaker 1: argument goes that simply because they were removed and brought
Speaker 1: to maur A Lago, they were transformed into personal records.
Speaker 1: That's something that the prostitution think is absurd on his face,
Speaker 1: and even injecting that question into the trial and getting
Speaker 1: in front of the jury would be highly prejudicial to prosecutors.
Speaker 2: The Special Council's response seems especially harsh. They flatly say
Speaker 2: the judge got it wrong repeatedly. Quote both of the
Speaker 2: court scenarios are fundamentally flawed. In any jury instructions that
Speaker 2: reflect those scenarios would be error. Sort of a scolding tone.
Speaker 1: Yeah, prosecutors are taking a very aggressive approach with the
Speaker 1: judge here, but I think in their minds they have
Speaker 1: no choice because the judge has yet to make a
Speaker 1: decision on so many important motions that are still pending
Speaker 1: before her, and those could affect the trial going forward.
Speaker 2: And the special counsel sort of gave her a nudge
Speaker 2: about a Trump motion to dismiss based on the Presidential
Speaker 2: Records Act that she had not ruled on yet, and
Speaker 2: lo and behold, she ruled on it today, denying Trump's
Speaker 2: motion to dismiss based on the Presidential Records Act.
Speaker 1: So what the Trump defense team had asked the judge
Speaker 1: to do is to throw out the indictment all together
Speaker 1: based upon the Presidential Records Act, arguing that the fact
Speaker 1: that President Trump had removed those records from the White
Speaker 1: House as an indication that he had deemed them to
Speaker 1: be personal records, and that as a matter of law,
Speaker 1: that was enough to dismiss the indictment and there would
Speaker 1: be no trial. Today's ruling is very limited. What it
Speaker 1: does is it says there will be a trial. It says,
Speaker 1: at least as far as the Presidential Records Act goes,
Speaker 1: that is not a basis to dismiss this indictment. But
Speaker 1: she does leave open the door to dealing with this
Speaker 1: issue at some point later down the road. She simply says,
Speaker 1: the Presidential Records Act is not a basis to dismiss
Speaker 1: this indictment pre trial, but it leaves the possibility that
Speaker 1: the defense will raise this issue at some point during
Speaker 1: the trial. And this whole question about whether the jury
Speaker 1: will be instructed on the Presidential Records Act and whether
Speaker 1: or not has any relevance whatsoever to the trial has
Speaker 1: been left open to be decided on another day.
Speaker 2: She pushes back on Smith's challenge to her request for
Speaker 2: jury instructions on the Presidential Records Act. She says, separately,
Speaker 2: to the extent the Special Council demands an anticipatory finalization
Speaker 2: of jury instructions prior to trial, prior to a charge conference,
Speaker 2: and prior to the presentation of trial defenses and evidence.
Speaker 2: The Court declines that demand as unprecedented and unjust. Is
Speaker 2: his demand to know whether or not she's going to
Speaker 2: allow this defense unprecedented and unjust.
Speaker 1: Well, what Jackspaths trying to do is to smoke the
Speaker 1: judge out on this issue and get a decision one
Speaker 1: way or the other, because of what prosecutors don't want
Speaker 1: to have happened is that the jury gets in paneled,
Speaker 1: the trial begins, and then this issue is decided, because
Speaker 1: at that point, once the jury is impaneled, double jeopardy
Speaker 1: attacks and prosecutors will not be able to appeal that decision.
Speaker 1: If ultimately Judge Cannon decides that the presidential record is
Speaker 1: a viable defense, prosecutors know that that would be the
Speaker 1: death knell for their case because it would essentially tell
Speaker 1: jurors that simply designating records as personal is enough to
Speaker 1: avoid the Espionage Act, and it would entirely get the prosecution.
Speaker 1: So prosecutors are trying to get the judge to go
Speaker 1: on record one way or the other on this issue,
Speaker 1: and all she's done so far is to say it
Speaker 1: is not something that will prevent this trial from going forward.
Speaker 1: But she's leaving the possibility that the Presidential Records Act
Speaker 1: will still be an issue down the road, and that's
Speaker 1: something that is going to have prosecutors very concerned, Bob.
Speaker 2: Isn't the prosecution entitled to know which defenses the judge
Speaker 2: will allow before the trial?
Speaker 1: Generally speaking, that's true. Prosecutors have the right to know
Speaker 1: what the defenses are going to be so that they
Speaker 1: can appeal them if they believe that they have no
Speaker 1: application to the case at all. Obviously, defenses are based
Speaker 1: upon evidence, and so to the extent that the defense
Speaker 1: can raise evidence to suggest that there's some applicability to
Speaker 1: the Presidential Records Act to this case, they'd be allowed
Speaker 1: to raise that defense. But what prosecutors are saying is
Speaker 1: they've interviewed all these witnesses and nobody has said that
Speaker 1: President Trump ever designated any of these records personal under
Speaker 1: the Presidential Records Act. So they're saying there is no
Speaker 1: basis in law and no basis in fact to raise
Speaker 1: this defense, and they want the judge to go on
Speaker 1: record one way or the other whether she's going to
Speaker 1: allow it, and so far, she has resisted that attempt
Speaker 1: by prosecutors to pin her down on this issue.
Speaker 2: And in a final sentence, in response to the Special
Speaker 2: Counsel's threat of going to the eleventh Circuit. She says,
Speaker 2: as always, any party remains free to avail itself of
Speaker 2: whatever appellate options it sees fit to invoke, as permitted
Speaker 2: by law. So the Special Council won this order. In theory,
Speaker 2: can Jack Smith go to the Eleventh Circuit and try
Speaker 2: to get Judge Canon remove from the case.
Speaker 1: Well, I think prosecutors are going back to the war
Speaker 1: room right now and trying to decide how to respond
Speaker 1: to this decision because they got a ruling, but they
Speaker 1: didn't get the ruling they want because it's only preliminary
Speaker 1: and it doesn't really ultimately decide the question of presidential
Speaker 1: records acting whether or not it will be a part
Speaker 1: of this trial, and I think prosecutors have to come
Speaker 1: up with a way to try to bring this issue
Speaker 1: to the Court of Appeals if they can, or to
Speaker 1: force the judge to make that decision at some point
Speaker 1: prior to the trial. As long as she makes the
Speaker 1: decision before the jury's channeled, that gives prosecutors the opportunity
Speaker 1: to immediately appeal that case up to the Eleventh Circuit.
Speaker 1: That still, however, does raise the prospect if she waits
Speaker 1: until just prior to trial to address this issue that
Speaker 1: the trial will be delayed, and then that could push
Speaker 1: the trial back after November. So prosecutors are dealing not
Speaker 1: only with trying to get this decision piify, but they
Speaker 1: also want to get the decision clarified as soon as
Speaker 1: possible so that they don't have an appellate delay that
Speaker 1: ultimately pushes the trial after November.
Speaker 2: Okay, stay with me, Bob. Coming up next, we're going
Speaker 2: to be talking about Trump's hush money trial. Trump has
Speaker 2: now made eight requests to postpone the trials start, and
Speaker 2: Manhattan Judge Jan Mr. Shawn rejected his latest motion to
Speaker 2: postpone until after the Supreme Court determines whether he has
Speaker 2: immunity from prosecution in a different criminal case. I'm June
Speaker 2: Grosso and you're listening to Bloomberg. Federal Judge Eileen Cannon
Speaker 2: denied Donald Trump's bid to get criminal charges in the
Speaker 2: classified Documents case drop by claiming that the top secret
Speaker 2: records found that his Florida home were personal. The Special
Speaker 2: Council had vented frustration with the judge after she asked
Speaker 2: both sides for jury instructions on the Presidential Records Act
Speaker 2: before setting a trial date, saying her understanding of key
Speaker 2: legal issues appeared to be fundamentally flawed. However, Canon refused
Speaker 2: the Special Counsel's request that she explicitly say the Presidential
Speaker 2: Records Act won't come up in the trial. I've been
Speaker 2: talking to former federal prosecutor Robert Mintz of Macarter and
Speaker 2: English Bob. Judge Canon has many critics because of several
Speaker 2: decisions that don't seem grounded in the law or the facts.
Speaker 1: Well, it's hard to say what's going on behind the scenes,
Speaker 1: but I can tell you, based upon many years of experience,
Speaker 1: that the way the judges handling this case procedurally is unusual. Typically,
Speaker 1: judges will go through a very orderly process in bringing
Speaker 1: a case to trial by resolving these motions to dismiss,
Speaker 1: then moving on to any other motions affecting the evidence
Speaker 1: that could be admitted during the course of the trial,
Speaker 1: dealing with dury instructions. There's an order to which these
Speaker 1: things typically go, and she seems to be taking them
Speaker 1: out of order, and that's creating a lot of chaos
Speaker 1: for the prosecution. And there are risks here that if
Speaker 1: these decisions are not made and are not made soon,
Speaker 1: that this case may not go to trial until after
Speaker 1: the November election, and that is something that has prosecutors
Speaker 1: greatly worried.
Speaker 2: The Special Council also alluded to seeking a rid of
Speaker 2: mandamus from the Appeals Court in his citations.
Speaker 1: Yeah, prosecutors have alluded to filing a rid of mandamus,
Speaker 1: which is essentially a remedy that can be used to
Speaker 1: compel a lower court to perform an act that is
Speaker 1: ministerial in nature and that the court has a clear
Speaker 1: duty to do under the law. In this case, prosecutors
Speaker 1: are trying to get the judge to make decisions about
Speaker 1: all of these pending motions because they can't appeal those
Speaker 1: decisions until those decisions are made. And the longer the
Speaker 1: judge sits on those decisions and doesn't rule on them,
Speaker 1: the more it jeopardizes this case going to trial before
Speaker 1: the Novment election. So they are getting more and more
Speaker 1: frustrated with the pace of this case and are now
Speaker 1: threatening to take that up to the Court of Appeals
Speaker 1: and essentially argue that this judge has failed in a
Speaker 1: procedural way, not what she ruled, but the fact that
Speaker 1: she has simply failed to rule on motions in a
Speaker 1: timely manner.
Speaker 2: They've threatened to go to the Eleventh Circuit with some
Speaker 2: of her other decisions in the case, and the Eleventh
Speaker 2: Circuit has reversed her Yes.
Speaker 1: Well, as you point out, Judge Cannon was reduced by
Speaker 1: the Eleventh Circuit in an earlier related proceeding back in
Speaker 1: twenty twenty two, when former President Trump brought a lawsuit
Speaker 1: attacking the FBI's document investigation. In that lawsuit, Judge Cannon
Speaker 1: granted what was an extraordinary request by former President Trump
Speaker 1: for a third party to review the FBI's twenty twenty
Speaker 1: two search of his Mar Lago resort for classified documents.
Speaker 1: But basically happens when a search warrant is executed. As
Speaker 1: a federal agents come in, they remove the documents that
Speaker 1: are within the scope of the search warrant. Those documents
Speaker 1: are brought back to SBI headquarters and then they're reviewed
Speaker 1: by prosecutors to determine the evidentiary value. In a case
Speaker 1: in which there's the potential for privileged information to be
Speaker 1: mixed in with those documents, prosecutors will set up a
Speaker 1: separate team of lawyers not involved in the case to
Speaker 1: review the documents, and they then remove anything that could
Speaker 1: be considered privileged while walling off the prosecution team from
Speaker 1: ever receiving knowledge of any of that information that is
Speaker 1: between an attorney and a client and should not be
Speaker 1: available to prosecutors. In that case, Judge Cannon ordered what
Speaker 1: was an extraordinary and unprecedented decision where she ordered that
Speaker 1: an independent monitor, in other words, somebody separate apart from
Speaker 1: the Department of Justice, had to be brought in to
Speaker 1: review those documents. There was no base in law and
Speaker 1: no basis in precedent for inserting that additional layer of review.
Speaker 1: She relied on the fact that because it was a
Speaker 1: search of a former president's residence, that it somehow required
Speaker 1: an additional level of scrutiny. The Eleventh Circuit looked at
Speaker 1: that issue and immediately reversed to ruling on that and
Speaker 1: rebuked her for essentially creating a layer of protection for
Speaker 1: a former president that would not apply to any other
Speaker 1: citizen of this country.
Speaker 2: Some legal experts say, well, there's a risk in doing this,
Speaker 2: but as I mentioned, the Special Council has threatened to
Speaker 2: go to the Eleventh Circuit before with Judge Kenon, do
Speaker 2: you see any risk in the way this document is worded,
Speaker 2: or the tone or saying we want to go to
Speaker 2: the Eleventh Circuit.
Speaker 1: But I think what procecutes are doing or they are
Speaker 1: trying to ratchet up the pressure on the judge and
Speaker 1: they're making it known to the judge that they will
Speaker 1: not hesitate to take this case the Eleventh Circuit. The
Speaker 1: judge was already rebuked in that prior case, and no
Speaker 1: doubt the judge is mindful of trying to get this
Speaker 1: right and not being overturned by the Eleventh Circuit. So
Speaker 1: I think cross secutors are trying, in the strongest words possible,
Speaker 1: to state to the judge, judge, rightly or wrongly, you've
Speaker 1: got to make these decisions because if we think you're wrong,
Speaker 1: we are going to go up to the Eleventh Circuit
Speaker 1: and get that review. And they don't want the clock
Speaker 1: to run out before they have that opportunity.
Speaker 2: So let's turn to the hush money case in New York,
Speaker 2: which is now the first criminal case that's actually scheduled
Speaker 2: to go to trial. Trump has now made eight various
Speaker 2: requests to postpone the trial start, and yesterday Judge Wan
Speaker 2: Mrchan rejected his motion to postpone the trial until after
Speaker 2: the Supreme Court determines whether Trump has immunity from prosecution
Speaker 2: in a separate criminal case. Is the judge on sound
Speaker 2: round here?
Speaker 1: What we're seeing here is a motion by the Trump
Speaker 1: defense team to try to delay the trial for yet
Speaker 1: another reason, arguing that it ought to be delayed until
Speaker 1: a decision is made by the Supreme Court. In connect
Speaker 1: you with the January sixth insurrection case, which has to
Speaker 1: do with a question of presidential immunity. What the judge
Speaker 1: in the New York case decided was that that issue
Speaker 1: could have been raised a long time ago, and to
Speaker 1: raise it now, only days before the trial is simply
Speaker 1: too late, and so he rejected that out of hand.
Speaker 2: Trump is also asking to delay the trial due to
Speaker 2: pre trial publicity, which the Manhattan DA points out is
Speaker 2: of his own making. Also, pre trip publicity. Isn't that
Speaker 2: something that judges normally say, we can handle that in
Speaker 2: the voidir.
Speaker 1: Yeah, whenever you have a high profile case involving a
Speaker 1: high profile defendant, and certainly this case fits the bill
Speaker 1: in every respect. In that regard, you always have jurors
Speaker 1: who have read about the case, who have formed an
Speaker 1: opinion about the defendant, who may have prejudged the case
Speaker 1: that's going to happen in every high profile case where
Speaker 1: all of the pre trial proceedings and all of the
Speaker 1: charges have been in the media for months, perhaps even years.
Speaker 1: And so the vuas deer process, which is the opportunity
Speaker 1: for lawyers for both the defense and the prosecution to
Speaker 1: screen out the jurors who because in order to sit
Speaker 1: on that jury, the jurors has to say that they
Speaker 1: have not formed any opinion as to the guilt or
Speaker 1: innocence of the defendant, that they will be able to
Speaker 1: make a decision based solely upon the evidence that's presented
Speaker 1: during the trial, That they will not rely on any
Speaker 1: information outside of the courtroom, that they will not talk
Speaker 1: to anybody or read any media accounts of the trial
Speaker 1: during the course of the trial. And that process may
Speaker 1: take some time, given the high degree of publicity that
Speaker 1: has predated this trial, but eventually they will find a
Speaker 1: set of jurors who meet that criteria. That happens a
Speaker 1: the time, and that will certainly happen in this case.
Speaker 2: And Trump also they've renewed their request, which the judge
Speaker 2: turned down once before, for him to recuse himself because
Speaker 2: of his daughter's political work for Democratic politicians. The judge
Speaker 2: is not going to recuse himself at this point either.
Speaker 2: Why renew this motion? Is it just to put it
Speaker 2: in the public light.
Speaker 1: Well, it's hard to say what motivated this emotion again,
Speaker 1: but as you point out, this is exactly the same
Speaker 1: motion that was made earlier when they challenged the judges
Speaker 1: impartiality and asked for a recusal based on his daughter's
Speaker 1: job and the judge's own small donations to Democrats. In
Speaker 1: that case, the Judicial Ethics Committee had taken a look
Speaker 1: at this issue and decided that the judges impartiality could
Speaker 1: not reasonably be questioned based on his law contribution to Democrats,
Speaker 1: or his daughter's career. And this is basically the same
Speaker 1: motion raised again. There's nothing new about it, But I
Speaker 1: think one thing that may be going on here is
Speaker 1: again playing not to the judge, but playing to the
Speaker 1: greater public. People who are sitting on that jury may
Speaker 1: be aware of this motion. They may come into the
Speaker 1: courtroom and ultimately find their way on a jury. And
Speaker 1: the more that the defense team can project their defense
Speaker 1: arguments to potential jurors even before the trial starts, the
Speaker 1: better they have an opportunity of finding one juror who
Speaker 1: might not be willing to vote for a conviction.
Speaker 2: Finally, Bob, we have the judge expanding his gag order
Speaker 2: because Donald Trump attacked his daughter on social media. The
Speaker 2: district attorney requested this, But is the judge on solid
Speaker 2: ground in expanding the gag order to include family.
Speaker 1: These are rulings that we really have never seen before,
Speaker 1: because we've really never seen a defendant who has attacked
Speaker 1: the judicial system, who have attacked judges, who have attacked
Speaker 1: courtroom employees, who have attacked family members of prosecutors and
Speaker 1: judge before, and certainly not a defendant who has the
Speaker 1: platform that former President Trump has in order to launch
Speaker 1: these attacks on the judicial system. And so we're seeing
Speaker 1: the judge place in a difficult position trying to allow
Speaker 1: for former President Trump's First Amendment rights to be able
Speaker 1: to speak his mind as to the judge, as to
Speaker 1: the prosecutors. But when he talks about people who are
Speaker 1: not directly related to the trial, and there is a
Speaker 1: certain risk of danger based upon some of the comments
Speaker 1: that he makes. That's where I think we're seeing the
Speaker 1: judge try to carefully rein that in we'll begin the
Speaker 1: trials soon and those comments will no longer really be relevant.
Speaker 1: I think once we see the trial start, all the
Speaker 1: talking will go on in the courtroom and we'll see
Speaker 1: less commentary going on outside of the courtroom as the
Speaker 1: trial is unfolding.
Speaker 2: And Bob, why don't the judges ever include themselves in
Speaker 2: these gag orders?
Speaker 1: You know, these gag orders are a difficult balancing act.
Speaker 1: There is a First Amendment right of defendants to speak out,
Speaker 1: but on the other hand, there's also the judge's obligation
Speaker 1: to ensure that the trial proceeds in an orderly way,
Speaker 1: that jury pools are not tampered with, and perhaps most importantly,
Speaker 1: that people who are involved in the case, whether it's
Speaker 1: witnesses or court employees, are not in any way endangered
Speaker 1: by comments that a defendant may make. Generally speaking, the
Speaker 1: judge and the prosecutor are considered public figures. They are
Speaker 1: considered people who are central to the trial. But at
Speaker 1: the same time they have essentially bought into this process.
Speaker 1: It's their job. So you'll almost never find a gag
Speaker 1: order that prevents a defendant from making comments about the
Speaker 1: judge or the prosecution. But when it bills over into
Speaker 1: other people, family members, court employees. That's where we see
Speaker 1: judges draw the line.
Speaker 2: And we'll see if Trump chose the line. Thanks so much, Bob.
Speaker 2: That's former federal prosecutor Robert Mintz coming up next on
Speaker 2: the Bloomberg Law Show. The Baltimore bridge collapse could be
Speaker 2: the most expensive marine insured loss in history, with estimates
Speaker 2: of losses up to four billion dollars, but the owner
Speaker 2: of the cargo ship that struck the bridge is looking
Speaker 2: to limit its liability. I'm June Gross and you're listening
Speaker 2: to Bloomberg. The divers who responded to the Baltimore bridge
Speaker 2: collapse were honored today for their dedication and bravery. County
Speaker 2: Executive Angel Also Brooks praised the divers for jumping into
Speaker 2: action on that tragic day. The rest of our state,
Speaker 2: and I dare say the rest of the nation got
Speaker 2: to see what we see each and every day in
Speaker 2: all of you. It's the bravery, it is the carrying,
Speaker 2: it is the selflessness, it's the sacrifice. The bridge fell
Speaker 2: last Tuesday after being struck by the cargo ship Dolly,
Speaker 2: which lost powers shortly after leaving Baltimore. Bad weather has
Speaker 2: hindered the around the clock salvage operations, joining me is
Speaker 2: maritime law expert Martin Davies, the director of Tulane University
Speaker 2: Maritime Law Center. What's gotten a lot of attention recently
Speaker 2: is that the owner and the manager of the cargo
Speaker 2: ship filed a court petition seeking to limit their legal
Speaker 2: liability for the disaster.
Speaker 4: The law in question dates from eighteen fifty one. There
Speaker 4: are international equivalents based on international conventions, so limitation of
Speaker 4: liability is a very typical thing that occurs in the
Speaker 4: wake of any maritime casualty. And what the law allows
Speaker 4: is for a shipowner to petition to limit its total
Speaker 4: liability for any claims arising out of a single incident
Speaker 4: to the value of the vessel at the end of
Speaker 4: the voyage, plus any pending freight any sums owed to
Speaker 4: it for carriage of cargo or passengers. The other main
Speaker 4: advantage of limitation proceedings is that it enables the shipowner
Speaker 4: to litigate the case in a single forum, in a
Speaker 4: single court of its own choosing, because what happen happens
Speaker 4: is that once the shipowner has petitioned the federal court
Speaker 4: for limitation of liability, it must pay into court or
Speaker 4: give security for the amount of the value of the
Speaker 4: vessel at the end of the voyage. And then once
Speaker 4: that fund has been constituted, and it will be constituted
Speaker 4: by the ship's liability insurer, the P and I Club.
Speaker 4: But once the fund has been constituted, the federal court
Speaker 4: will then issue an order saying that no claimant can
Speaker 4: bring a claim in any other court except that federal court. So,
Speaker 4: for example, the claimants could not bring a claim in
Speaker 4: Maryland State court or New York State Court or California
Speaker 4: State court anywhere. All claims must be brought against the
Speaker 4: fund that has been constituted in the court. So the
Speaker 4: two main advantages from the shipowner's point of view is
Speaker 4: one it has at least a chance of limiting its liability.
Speaker 4: But secondly, it can marshal all the claims into one place,
Speaker 4: the court of its own choosing, which in this case
Speaker 4: is the Federal District Court in Maryland.
Speaker 2: I take it the judge is going to decide whether
Speaker 2: or not to limit liability. So what happens is it
Speaker 2: the plaintiffs who have to come up with reasons why
Speaker 2: the liability should not be limited.
Speaker 4: It's a little confusing in terms of terminology because the
Speaker 4: plaintiff is the shipowner, and the shipowner must show that
Speaker 4: it was not guilty of what is called privity or knowledge,
Speaker 4: that's the expression in the statute, because it's only entitled
Speaker 4: to limit its liability if it itself the shipowner was
Speaker 4: not at fault, and it does have the burden of
Speaker 4: showing that it was not at fault. But it's the plaintiff.
Speaker 4: So the liability claimants, which in this case will be
Speaker 4: the families of those who died, the personal injury claimants,
Speaker 4: and also the cost of the bridge, they are not
Speaker 4: actually the plaintiffs in this limitation proceeding. The procedure is
Speaker 4: a little bit feels a little bit upside down or
Speaker 4: back to front or whatever, because the shipowner must show
Speaker 4: that it was not guilty or fault or privity.
Speaker 2: How does mechanical failure fit in?
Speaker 4: Yes, mechanical failure will be a significant issue in this case,
Speaker 4: I think, because if the incident had occurred because of
Speaker 4: a pure sailing mistake on the part of those navigating
Speaker 4: the vessel, then the shipowner probably would be entitled to
Speaker 4: limit its liability. That was the example that everybody has
Speaker 4: been talking about in relation to the Titanic. The Titanic
Speaker 4: was a perfectly seaworthy, brand new vessel sank because of
Speaker 4: sailing errors. There the shipowner was held to be able
Speaker 4: to limit its liability. But if the incident occurred because
Speaker 4: of some defect in the vessel, that looks much more
Speaker 4: like it might be the responsibility of the shipowner itself.
Speaker 4: It has to be personal fault of the shipowner or manager.
Speaker 4: And well, it's too early to say, but there clearly
Speaker 4: seem to have been some physical problems with the vessel itself,
Speaker 4: which I think will be front and center in the
Speaker 4: limitation proceedings.
Speaker 2: What physical problems have you heard about?
Speaker 4: Well, the engine, the power failed more than once, I believe,
Speaker 4: before the vessel struck the bridge. And there are also
Speaker 4: questions have been raised about the quality of the fuel
Speaker 4: that's been used. Most of that, I must say speculation,
Speaker 4: because none of that has been recorded yet. But if
Speaker 4: the ship's power failed, which it seems clearly that it did,
Speaker 4: that's going to raise questions of whether the shipowner is
Speaker 4: responsible for the condition of the vessel that caused the
Speaker 4: power to fail.
Speaker 2: So this law has been used in the most notable
Speaker 2: maritime disasters. How often has it worked? Does it work
Speaker 2: more often than not.
Speaker 4: No, it fails more often than not. The statistics show
Speaker 4: that the shipowner's petition to limit its liability succeeds in
Speaker 4: only about thirty two percent of the cases, so it
Speaker 4: fails most of the time under US law, as in
Speaker 4: sixty eight percent of the time it fails. But that
Speaker 4: doesn't stop shipowners from petitioning in the event of a casualty,
Speaker 4: because the other benefit of the limitation proceedings, as I've said,
Speaker 4: is to bring all the claims together in one place,
Speaker 4: so that the shipowner then doesn't have to fight lots
Speaker 4: of different lawsuits about the same incident in different jurisdictions.
Speaker 2: President Biden has said that the federal government would bear
Speaker 2: the cost of cleaning the debris and rebuilding the bridge.
Speaker 2: Is that something the federal government should be paying for
Speaker 2: or should the insurance be paying for that?
Speaker 4: Well, that's an interesting question because I believe that the
Speaker 4: bridge did carry an interstate highway, which would be a
Speaker 4: reason for the federal government participating, if you like, in
Speaker 4: the cost of the repairs. But what the maritime law
Speaker 4: says is that only those who have suffered physical damage
Speaker 4: to their property can claim against the vessel. So the
Speaker 4: question will be like who actually owned the bridge, And
Speaker 4: now if it's the State of Maryland, then the state
Speaker 4: of Maryland is the proper claimant, and the federal government
Speaker 4: choosing to pay looks much more like an economic loss.
Speaker 4: And there's a Supreme Court decision that says that purely
Speaker 4: economic losses are not recoverable from the ship itself. So
Speaker 4: all of the economic losses that I'm sure are already
Speaker 4: being suffered in the city of Baltimore are not recoverable
Speaker 4: from the ship.
Speaker 2: How long does a claim like this take to play out?
Speaker 4: Oh gosh, years. It will be years to work out
Speaker 4: exactly what happened and the responsibility for it. Litigation of
Speaker 4: this complexity doesn't move very quickly. Plus it's going to
Speaker 4: be a long time before it's even known how much
Speaker 4: it costs to replace the bridge, so you know, the
Speaker 4: magnitude of the claim will not be clear for years,
Speaker 4: and litigation of this kind generally does not move very quickly.
Speaker 2: Is there anyone besides the owner of the ship and
Speaker 2: the manager that can be sued here?
Speaker 4: Well, there are lots of people that can be sued,
Speaker 4: but I don't think there's anybody other than the owner
Speaker 4: and manager. It seemed to be plausible candidates for litigation
Speaker 4: because the charter of the vessel, Mersk is merely the
Speaker 4: commercial operator. It's not responsible for navigational operation, and whatever
Speaker 4: happened here seems to have been a navigational problem, not
Speaker 4: a commercial problem. There is a possibility I think that
Speaker 4: if the problem is with deficient fuel, then there might
Speaker 4: be the possibility of a cross claim against Mersk, but
Speaker 4: the principal responsibility will lie with the shipowner.
Speaker 2: Could the harbor master be sued, I.
Speaker 4: Mean, someone could try, but I really think that that's
Speaker 4: unlikely because once the ship is off the birth, the
Speaker 4: task of the tugs is done the harbor pilots. The
Speaker 4: ship is responsible for any fault on the part of
Speaker 4: the harbor pilots, although there doesn't seem to be any
Speaker 4: indication of fault on the part of the harbor pilots.
Speaker 4: But the responsibility lies with the ship. And I mean,
Speaker 4: I guess it's conceivable that someone could try to sue
Speaker 4: the port authority for the tugs casting off too soon,
Speaker 4: but the vessel was in in the middle of the channel.
Speaker 4: I don't think it needed tugs anymore.
Speaker 2: So insurance the insurance is about two or three billion.
Speaker 4: Dollars three point one billion, thank you? What it is? Right?
Speaker 2: All right? So will the insurance definitely cover this? Let's say,
Speaker 2: you know, it's found that they can't limit their legal liability.
Speaker 2: Does the insurance cover it, whether it's negligence or not.
Speaker 4: Yes, most definitely. The insurers are what are called a
Speaker 4: P and I club protection and indemnity club, and they
Speaker 4: are mutual self insurance associations of ship owners and they
Speaker 4: don't operate like commercial insurers. Their instinct is to pay
Speaker 4: because they are all shipowners. And so every ship owner
Speaker 4: that's a member of the club, that has got a
Speaker 4: ship entered in the club is both an insurer and
Speaker 4: an assured and so the coverage offered by p and
Speaker 4: I clubs is very comprehensive, has very few exceptions. It's
Speaker 4: not like a commercial insurer where there are all sorts
Speaker 4: of exclusions in the contract. And so the club will
Speaker 4: cover this even if it turns out to be negligence
Speaker 4: on the part of the shipowner, it will definitely be
Speaker 4: covered by the club. And then what happens is the club.
Speaker 4: The particular club that Dari was entered in is Britannia,
Speaker 4: which is one of twelve p and I clubs forming
Speaker 4: something called the International Group, which covers over ninety percent
Speaker 4: of the ships in the world, and they have this
Speaker 4: complicated pooling arrangement if claims exceed a certain level, which
Speaker 4: they most certainly will in this case, the individual club
Speaker 4: longer bears it itself. It's pooled among all the twelve
Speaker 4: clubs in the International Group. They have commercial reinsurance, and
Speaker 4: it's a complicated scheme. But the total pool of insurance
Speaker 4: sitting behind the shipowner is at present three point one
Speaker 4: billion dollars.
Speaker 2: So there's no reason for plaintiffs to rush to file claims.
Speaker 2: There's enough there.
Speaker 4: Well no, because now that the shipowners filed its limitation suit,
Speaker 4: they will have to file suit in those limitation proceedings,
Speaker 4: they'll have to bring claims against the limitation fund. What
Speaker 4: they will want to do is to try and argue
Speaker 4: that the shipowner itself was at faultrom therefore it's not
Speaker 4: entitled to limit its liability, which then gives them access
Speaker 4: to this sort of huge ocean of insurance funds.
Speaker 2: Many are saying that this could be the most expensive
Speaker 2: marine disaster in history. Is there anything to be learned
Speaker 2: from these?
Speaker 4: Well, yes, I mean it's it's a very unusual obviously
Speaker 4: in some respects not unique. I mean ships have knocked
Speaker 4: down bridges before. What is so spectacular about this one
Speaker 4: is that the bridge completely fell down and needs to
Speaker 4: be completely replaced. So in terms of the amount of
Speaker 4: money at stake, yes, it will be more expensive than
Speaker 4: perhaps any other. But in other respect the way that
Speaker 4: maritime casualties work is fairly clear and well settled, and
Speaker 4: I don't think there's any new law likely to be
Speaker 4: made here. You know, this is obviously a spectacular casualty,
Speaker 4: but in other respects, and this sounds like an odd
Speaker 4: way of putting it, there's nothing particularly unusual about it.
Speaker 4: I mean, ships collide with one another, they run into things.
Speaker 4: You know, casualty cases happen all the time, and what
Speaker 4: I've been explaining to many journalists, including you, is fairly routine.
Speaker 4: I mean, there's always a limitation suit. There's always the
Speaker 4: question of whether the ship owner wizard fault. There's always
Speaker 4: the question of the extent to which the club will respond.
Speaker 4: I mean it sounds glib, but we know how this works.
Speaker 2: It seems like such a specialized area of the law.
Speaker 2: Thanks so much for joining us. That's Martin Davies, director
Speaker 2: of Tulane University's Maritime Law Center. And that's it for
Speaker 2: this edition of The Bloomberg Law Show. Remember you can
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