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Constitutional Test of Elon Musk's Power · Bloomberg Law

0:02
Speaker 1: This is Bloomberg Law with June Grosseol from Bloomberg Radio.
0:08
Speaker 2: I guess it was like last week President encouraged me
0:12
Speaker 2: via through social and also viophone called to be more aggressive,
0:17
Speaker 2: and I was like, okay, yeah, yes, sir, as President.
0:21
Speaker 3: We'll give you that.
0:23
Speaker 1: One thing no one disputes is that Elon Musk has
0:27
Speaker 1: been aggressive. A barrage of lawsuits have been filed in
0:31
Speaker 1: an effort to rein Musk in as the billionaire pushes
0:35
Speaker 1: a relentless campaign to slash government spending, firing thousands of workers,
0:40
Speaker 1: dismantling federal agencies, canceling contracts, and accessing sensitive information systems
0:48
Speaker 1: as he and his Doze employees drive to downsize the
0:52
Speaker 1: government with speed and in secrecy. Many of the lawsuits
0:56
Speaker 1: argue that the virtually unchecked authority Musk wields is unconstitutional.
1:02
Speaker 1: Judges have questioned Musk's role in the government, and the
1:05
Speaker 1: White House answer has been that Musk isn't the head
1:08
Speaker 1: of DOGE, but rather is a senior advisor to the
1:11
Speaker 1: President with no authority to make government decisions. That was
1:16
Speaker 1: contradicted by President Trump as he gave a shout out
1:20
Speaker 1: to Musk during his speech Tuesday Night.
1:23
Speaker 4: I have created the brand new Department of Government Efficiency
1:29
Speaker 4: go perhaps you've heard of it, perhaps, which is headed
1:37
Speaker 4: by Elon Musk Poison the gallery.
1:40
Speaker 1: Tonight, in the gallery, in the Oval Office, and at
1:45
Speaker 1: cabinet meetings. The unelected billionaire seems to be exerting influence everywhere.
1:51
Speaker 1: My guest is constitutional law expert Jamal Green, a professor
1:55
Speaker 1: at Columbia Law School. Some of the lawsuits, including the
1:59
Speaker 1: war by fourteen Democratic Attorneys General, argue that Trump's granting
2:05
Speaker 1: sweeping powers to Mosque without proper authorization from Congress, and
2:11
Speaker 1: that it's a violation of the appointment's clause. Can you
2:13
Speaker 1: tell us more about that argument?
2:15
Speaker 3: So, the first thing to note is we don't actually
2:18
Speaker 3: have a whole lot of transparency about exactly what the
2:21
Speaker 3: nature of his appointment is. But what we do know
2:24
Speaker 3: from a constitutional perspective is that if you are exercising
2:29
Speaker 3: what the Supreme Court refers to as significant authority on
2:32
Speaker 3: behalf of the United States, and if you don't have
2:35
Speaker 3: a supervisor or other than the President, then you have
2:38
Speaker 3: to be appointed consistent with the Constitution, and for that
2:42
Speaker 3: kind of person, a high level figure exercising authority on
2:46
Speaker 3: behalf of the United States. It has to be presidential
2:49
Speaker 3: appointment and Senate confirmation, and we know for sure he
2:53
Speaker 3: hasn't been confirmed by the Senate. So the argument would
2:56
Speaker 3: be that he is basically exercising government power without going
3:01
Speaker 3: through the kinds of accountability that the Constitution provides for
3:04
Speaker 3: people officials of that sort.
3:06
Speaker 1: As you mentioned, there's no transparency about Musk's role and
3:11
Speaker 1: what DOJE is doing behind the scenes, and judges in
3:15
Speaker 1: many of these cases have been trying to find out,
3:19
Speaker 1: and the Justice Department has argued that Musk may carry
3:23
Speaker 1: sway or influence within the executive branch, even significant influence,
3:27
Speaker 1: but that's not the same as exercising authority that the
3:31
Speaker 1: Constitution's appointments clause says is reserved for officers of the
3:35
Speaker 1: United States. So they're contending that his role is more
3:39
Speaker 1: like a senior advisor, more like a White House chief
3:42
Speaker 1: of staff.
3:43
Speaker 3: Yeah, so that's the argument they'd make, if that's probably
3:47
Speaker 3: the argument I would make if I were them, That
3:49
Speaker 3: there are people in the president's orbit, and the chief
3:51
Speaker 3: of staff is an example of that who don't have
3:53
Speaker 3: to go through the appointments clause, and the reason they
3:56
Speaker 3: don't have to go through the appointment's clause. Is they're
3:58
Speaker 3: essentially acting on behalf as the president and kind of
4:01
Speaker 3: conveying the president's wishes, but they themselves are not the
4:04
Speaker 3: ones exercising the authority. A court that hears that kind
4:08
Speaker 3: of argument can try to get to the bottom of
4:10
Speaker 3: the facts of the matter. The President himself said that
4:14
Speaker 3: Elon Musk is the head of this entity called DOGE.
4:17
Speaker 3: He said that, you know, in front of a joint
4:19
Speaker 3: meeting of Congress, and others in the administration have said
4:22
Speaker 3: that they're taking some directions from Musk. Musk is showing
4:25
Speaker 3: up at cabinet meetings, and all the cabinet officials are
4:28
Speaker 3: people who are principal officers, So it can be a
4:31
Speaker 3: matter of kind of semantic to say, well, he's not
4:34
Speaker 3: actually been appointed to head an agency, but if he's
4:37
Speaker 3: actually exercising authority, he's actually issuing directions, you know, it
4:41
Speaker 3: sort of walks like a cabinet official, talks like one.
4:43
Speaker 3: A court can certainly say that, you know, he's exercising
4:46
Speaker 3: authority in the way in which the Secretary of the
4:48
Speaker 3: Treasury or the Attorney General or someone else who counts
4:51
Speaker 3: as what's called the principal officer would be exercising authority.
4:55
Speaker 1: I think it just took a few hours for the
4:57
Speaker 1: lawyers in one of the lawsuits to cite what President
5:01
Speaker 1: Trump said about Elon Musk in his speech as an
5:05
Speaker 1: admission that Elon Musk is acting as a head of
5:09
Speaker 1: an agency.
5:11
Speaker 4: Yeah, he sure.
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Speaker 3: Doesn't sound like an advisor in the way in which
5:13
Speaker 3: the President himself spoke about him and in the aggressiveness
5:17
Speaker 3: with which he's proceeding. If this is directions directly from
5:21
Speaker 3: the President and you're trying to litigate this kind of thing,
5:24
Speaker 3: you'd want to hear more from the President about the
5:27
Speaker 3: way in which he's operating according to directions. But he
5:30
Speaker 3: seems pretty autonomous from what we can tell.
5:33
Speaker 1: So are they trying to insulate Musk from oversight by
5:38
Speaker 1: making him an advisor he would enjoy executive privilege.
5:42
Speaker 3: Then well, if he's really an advisor and really is
5:45
Speaker 3: not actually exercising authority on behalf of the government, then
5:50
Speaker 3: for one thing, there wouldn't be an appointments clause problem
5:53
Speaker 3: for the nature of his appointment. Even private citizens can
5:56
Speaker 3: be advisors to the president. The other kind of insulation
6:01
Speaker 3: is if he's in the White House, and it's just
6:04
Speaker 3: a White House advisor, he wouldn't be subject to Freedom
6:06
Speaker 3: of Information Act requests, whereas if he's part of an
6:10
Speaker 3: agency or issuing directions to the agency, that becomes much more.
6:14
Speaker 3: He starts to fall within federal transparency laws. So as
6:17
Speaker 3: the oversight Congress isn't really doing much oversight right now,
6:21
Speaker 3: but if it were, he may have certain kinds of
6:24
Speaker 3: defenses grounded in what's called a presidential communications privilege, so
6:30
Speaker 3: that he is issuing orders based on his conversations with
6:35
Speaker 3: the president or the wishes of the president. That I
6:37
Speaker 3: think doesn't depend so much on what his actual position is.
6:41
Speaker 3: It depends more on the nature of his interactions with
6:43
Speaker 3: the White House.
6:45
Speaker 1: I'm not sure that the Justice Department has raised that
6:48
Speaker 1: in any of these lawsuits. I haven't seen it referred to.
6:51
Speaker 1: You know that he has executive privilege.
6:53
Speaker 3: Well, depending on what the nature of the privilege is.
6:56
Speaker 3: You know, anyone in the executive branch might be able
6:58
Speaker 3: to claim some kind of executive It depends on what
7:02
Speaker 3: is being shielded. Now Here, we actually have orders being
7:07
Speaker 3: issued to departments and to actually engage in activity, cutting programs,
7:13
Speaker 3: canceling contracts, and so forth. Those are final actions of
7:17
Speaker 3: the executive branch, and finding out whether those things are
7:21
Speaker 3: happening or not is something that the American people have
7:24
Speaker 3: a right to know. And I don't just mean that
7:25
Speaker 3: in a general sense, but based on federal transparency laws,
7:29
Speaker 3: so that those aren't things that he'd be able to
7:31
Speaker 3: claim privilege about. He might be able to claim a
7:34
Speaker 3: privilege if you know, someone were to ask, when did
7:36
Speaker 3: the President tell you to do this? If he were
7:39
Speaker 3: to say, well, let's privilege, well that might be something
7:41
Speaker 3: that someone could claim privilege about. But there are there
7:44
Speaker 3: are actions being taken, and they are coming from somewhere,
7:47
Speaker 3: and you know that's not a privileged back.
7:50
Speaker 1: Several judges, perhaps all the judges, are having trouble finding
7:54
Speaker 1: out the information about Mosque and Doge. Marilyn judged theatre
8:00
Speaker 1: Or Chwang called the administration's answers to the questions about
8:05
Speaker 1: Musk and Doge highly suspicious, and DC Judge John Bates
8:12
Speaker 1: ordered the Trump administration to produce witnesses for depositions, as
8:16
Speaker 1: well as produce records and answer questions. That's in a
8:20
Speaker 1: lawsuit brought by labor unions and nonprofit groups. Another problem
8:26
Speaker 1: is the judges are getting conflicting information from the Justice
8:31
Speaker 1: Department lawyers, or no information at all. A lot of
8:33
Speaker 1: the time, the Justice Department lawyers can answer the questions
8:37
Speaker 1: that the judges are asking.
8:39
Speaker 3: And it's not clear to me whether they necessarily even
8:41
Speaker 3: know the answers to the questions they're being asked. I
8:43
Speaker 3: wouldn't necessarily assume that the Justice Department lawyers are obfuscating.
8:48
Speaker 3: They may not be getting the right information from their clients.
8:51
Speaker 3: And there are tools that a judge can use to
8:55
Speaker 3: find out this kind of information, as you mentioned, they
8:58
Speaker 3: can have and evidentry hearing, they can conduct depositions, they
9:01
Speaker 3: can issue subpoenas, and failing to comply with those, or
9:04
Speaker 3: being mis leading in the course of a deposition, or
9:07
Speaker 3: failing to respond appropriately to a subpoena, either for a
9:10
Speaker 3: testimony or for documents, you can be held in contempt.
9:13
Speaker 3: And so that's a serious penalty that presumably anyone would
9:17
Speaker 3: want to avoid. But part of this, I think is
9:19
Speaker 3: the lawyers themselves are having trouble tracking down this kind
9:22
Speaker 3: of information. And we'll see how successful various courts are
9:26
Speaker 3: in trying to get people to actually show up and
9:28
Speaker 3: answer their question. A judge can always say, you tell
9:30
Speaker 3: me who issued this order, and I'm going to bring
9:33
Speaker 3: that person in and I'm going to talk to them.
9:35
Speaker 3: I'm going to issue an order. And that's a very
9:37
Speaker 3: aggressive move, but we may be approaching that stage in some.
9:41
Speaker 1: Of these cases. Are the plaintiffs asking the judges to
9:45
Speaker 1: determine that DOGE is an agency that's subject to the
9:49
Speaker 1: laws of agencies.
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Speaker 3: I'm not sure from the individual complaints whether that's one
9:54
Speaker 3: of the things that they're asking for. DOGE is very
9:57
Speaker 3: clearly not a fatchatorily created entity. It's not an agency.
10:02
Speaker 3: It's because it hasn't been created by in Congress. There
10:05
Speaker 3: are entities that can be set up within the executive
10:09
Speaker 3: branch and subject to different kinds of rules than the
10:12
Speaker 3: typical agencies that are controlled by cabinet officials or cabinet
10:16
Speaker 3: level officials. So I don't know exactly what determinations along
10:21
Speaker 3: those lines are being requested by Theolitiicans in these cases.
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Speaker 1: We were speaking about contradictions before, and Judge Bates wrote
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Speaker 1: that basically the government was given contradictory information about DOGE
10:34
Speaker 1: depending on the circumstance. In the government's view, DOGE is
10:38
Speaker 1: quote a Goldilock's entity not an agency when it is burdensome,
10:44
Speaker 1: but an agency when it is convenient.
10:46
Speaker 3: Yeah, And there's a real irony about this, which is
10:49
Speaker 3: that part of the overall philosophy of the administration is
10:56
Speaker 3: what sometimes referred to as unitary executive theory, which is
10:59
Speaker 3: sort of all power or in the executive branch runs
11:02
Speaker 3: to the president and is accountable to the president. And
11:05
Speaker 3: that's a theory that is popular among some circles of
11:09
Speaker 3: legal scholars and judges and so forth, but it relies
11:12
Speaker 3: on a theory of accountability. And when you don't even
11:15
Speaker 3: know who's exercising authority, how they're appointed, where they got
11:19
Speaker 3: their power from, whether they're answering for the president or not,
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Speaker 3: and those basic questions are unclear, it's entirely at odds
11:27
Speaker 3: with the idea of unitary executive theory. It's really kind
11:31
Speaker 3: of a chaotic environment. And I have to think that
11:34
Speaker 3: for at least some judges, some of the arguments that
11:37
Speaker 3: the president has to have certain levels of control over
11:41
Speaker 3: the executive branch are going to start to fall flat
11:45
Speaker 3: when it seems as though there are other entities or
11:47
Speaker 3: other power centers within the executive branch. That are either
11:50
Speaker 3: not controlled by the president or that the administration is
11:53
Speaker 3: unwilling to be transparent about.
11:56
Speaker 1: Up next, will the Supreme Court provide any guard rails?
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Speaker 1: This is bloomberg. A blitz of lawsuits have been filed
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Speaker 1: in an effort to rain in Elon Musk and his
12:07
Speaker 1: relentless campaign to slash government spending by firing thousands of workers,
12:14
Speaker 1: eliminating federal agencies, canceling contracts, and accessing sensitive information systems,
12:21
Speaker 1: and judges are asking questions about the power of Musk
12:25
Speaker 1: and Doge. I've been talking to Columbia Law School professor
12:29
Speaker 1: Jamal Green. One of the problems seems to be that
12:32
Speaker 1: courts move slowly usually, and Musk and Doge are operating
12:38
Speaker 1: with such speed and in secrecy. So people are being
12:42
Speaker 1: fired and agencies are being dismantled and sensitive information is
12:46
Speaker 1: being accessed while the courts try to catch up.
12:50
Speaker 3: Courts can move relatively quickly, but I think the key
12:53
Speaker 3: point is that they can move as quickly as the
12:55
Speaker 3: executive branch can, and it is not the job of
12:59
Speaker 3: courts within our system, within our constitutional system, it's not
13:02
Speaker 3: the job of courts to control a lawless executive branch.
13:06
Speaker 3: Courts are a last resort. If the executive branch is
13:08
Speaker 3: not itself abiding by any kind of internal checks or
13:12
Speaker 3: internal control, legal controls over it's over what it's doing,
13:17
Speaker 3: it can do quite a lot of damage before anything
13:19
Speaker 3: gets filed in a court, even when you win in
13:23
Speaker 3: challenging the executive branch. If you're talking about, for example,
13:26
Speaker 3: if eighty thousand people get fired and then then a
13:29
Speaker 3: week later they're reinstated, well that week matter to their lives,
13:33
Speaker 3: and some of those people are never coming back, right.
13:35
Speaker 3: So that's just one example. But the executive branch does
13:38
Speaker 3: a ton of things that will never get to a
13:41
Speaker 3: court that are really hard to figure out whether they're
13:44
Speaker 3: happening or not. And for generations, we've relied upon an
13:49
Speaker 3: executive branch that has its own internal process for deciding
13:53
Speaker 3: whether it's acting legally, and it's not at all clear
13:55
Speaker 3: that there's any kind of process going on right now.
14:00
Speaker 1: Yesterday, the Supreme Court rejected Trump rejected Trump's request to
14:08
Speaker 1: toss out a lower court order that requires the quick
14:13
Speaker 1: dispersement of as much as two billion dollars owed to
14:17
Speaker 1: contractors for already completed work. Four justices dissented. Does that
14:22
Speaker 1: indicate to you that there are at least five justices
14:26
Speaker 1: who are willing to put the brakes on Trump.
14:29
Speaker 3: I think the most we can say from that decision
14:33
Speaker 3: and from the few other ways in which the Supreme
14:36
Speaker 3: Court has weighed in so far on the Trump administration,
14:39
Speaker 3: is that the Court is acting extremely cautiously. So by
14:44
Speaker 3: the court, I mean the middle of the court, which
14:46
Speaker 3: in this case is Chief Justice Roberts and Amy Clay Barrett.
14:50
Speaker 3: I think the Court knows that whenever it weighs in,
14:52
Speaker 3: people are going to be paying a lot of attention
14:55
Speaker 3: and reading those tea leaves very carefully, and so they're
14:58
Speaker 3: kind of holding their a little bit until they really
15:02
Speaker 3: have to rule on something. And so in this USAID
15:06
Speaker 3: related case involving money owed under contracts, the court they
15:11
Speaker 3: didn't really weigh in on whether the money was owed
15:15
Speaker 3: or anything like that. It was really just to say,
15:17
Speaker 3: we're not going to throw out what the district Court
15:19
Speaker 3: has done, but we're going to ask it to make
15:23
Speaker 3: sure that it clarifies exactly what it's asking the government
15:26
Speaker 3: to do, so that it can give the government a
15:28
Speaker 3: very specific order rather than something broader than that. It's
15:31
Speaker 3: really kind of a we're not going to reveal too
15:34
Speaker 3: much kind of decision that I would interpret as at
15:39
Speaker 3: least there are five people on the Court who are
15:41
Speaker 3: not willing at this stage to give the Trump administration
15:45
Speaker 3: everything at once, but that doesn't necessarily mean that they
15:48
Speaker 3: won't get there at some point.
15:50
Speaker 1: What's happening is a lot of the lower court judges
15:53
Speaker 1: are doing things. They're issuing tros or preliminary injunctions, and
15:59
Speaker 1: today Judge John McConnell of Rhode Island issued a preliminary
16:05
Speaker 1: injunction blocking Trump's attempt to freeze billions of dollars in
16:11
Speaker 1: Congressional approved loans, grants, and other payments, and judge in
16:15
Speaker 1: Washington ruled similarly in a case last week. The judge
16:19
Speaker 1: said the interaction of three coequal branches of government is
16:22
Speaker 1: an intricate, delicate, and sophisticated balance that's crucial to the
16:26
Speaker 1: functioning of the government. And with the spending freeze, the
16:29
Speaker 1: executive branch put itself above Congress. Do you expect that
16:33
Speaker 1: that's going to end up at the Supreme Court as well?
16:36
Speaker 3: I think if the Trump administration decides to appeal it
16:39
Speaker 3: all the way to the Supreme Court, I think there's
16:41
Speaker 3: a good chance it ends up there. The spending freezes
16:45
Speaker 3: are really among the many kinds of challenges that are
16:49
Speaker 3: being brought against the administration. I think they're on just
16:53
Speaker 3: about their weakest footing when it comes to refusing to
16:57
Speaker 3: spend money that Congress has appropriated. It's a very kind
17:00
Speaker 3: of constitutional law one oh one basic proposition that Congress
17:04
Speaker 3: decides whether to appropriate money, and the president has to
17:08
Speaker 3: take care that the laws are faithfully executed and among
17:12
Speaker 3: those laws or laws that require the spending of money. So,
17:15
Speaker 3: you know, if you're the Trump administration and you're trying
17:17
Speaker 3: to figure out what cases you have the best chance
17:20
Speaker 3: of winning before the court, you know, it's conceivable that
17:24
Speaker 3: you pull back a little bit and try to communicate
17:27
Speaker 3: that actually, you're not trying to not spend money that
17:31
Speaker 3: Congress has appropriated, and try to kind of delay and
17:34
Speaker 3: with the district court before taking that kind of case
17:36
Speaker 3: up to the Supreme Court, because it's really not you know,
17:39
Speaker 3: if we're talking about a blanket spending freeze that just
17:41
Speaker 3: asserts the authority of the president to refuse to spend
17:44
Speaker 3: money based on his own policy priorities, that that's really
17:48
Speaker 3: pretty blatantly unconstitutional, and so you'd want a different posture
17:52
Speaker 3: if you're the administration.
17:54
Speaker 1: But I mean, they're taking up, for example, the birthright
17:57
Speaker 1: citizenship case. That's another one that seems like a complete
18:01
Speaker 1: loser for the administration. But yet they're fighting in district
18:05
Speaker 1: courts and appellate courts and they'll probably take it to
18:08
Speaker 1: the Supreme Court. It doesn't seem like they're exercising the
18:11
Speaker 1: discretion that other Justice departments have exercised. I mean, maybe
18:18
Speaker 1: it's because Trump is pushing them because he thinks the
18:20
Speaker 1: Supreme Court is on his side.
18:23
Speaker 3: Yeah, it's certainly possible that this administration is not being
18:26
Speaker 3: especially kind of rationally strategic about the law. You know,
18:30
Speaker 3: I do think the birthright Citizenship Executive Order, which is
18:34
Speaker 3: certainly another example of something that's not on solid legal
18:38
Speaker 3: footing based on text and history and precedent of the
18:42
Speaker 3: Supreme Court. But I'm not sure that the administration necessarily
18:46
Speaker 3: expects to win that case. There's a lot of symbolic
18:51
Speaker 3: politics potentially going on there, Whereas I in terms of
18:56
Speaker 3: these spending cuts, you know, this really does seem to
18:59
Speaker 3: be a policy priority, and they're kind of I wouldn't
19:02
Speaker 3: be surprised if they're trying, really are trying to push
19:05
Speaker 3: the envelope in a variety of ways in terms of
19:06
Speaker 3: what they're allowed to do. So you know, we'll see
19:10
Speaker 3: what they take to the court and what they don't.
19:13
Speaker 3: If you're being rational and if you're a lawyer trying
19:16
Speaker 3: to actually win cases, neither this what's called impoundment or
19:21
Speaker 3: in refusing to spend appropriated money or the birthright citizenship
19:25
Speaker 3: executive order, neither of these is a strong case.
19:29
Speaker 1: Do you think that the lower courts are moving as
19:32
Speaker 1: quickly as they can or quickly enough to stop mosk
19:36
Speaker 1: or you know it'll be over before the cases are over.
19:40
Speaker 3: So they are moving as quickly as we ever really
19:44
Speaker 3: see courts move. A lot of these decisions are coming
19:46
Speaker 3: within a matter of days. A lot of these courts,
19:49
Speaker 3: especially in the District of Columbia, are really inundays with
19:52
Speaker 3: a lot of cases, so they are certainly working extremely
19:55
Speaker 3: hard and working around the clock on this. But even
19:58
Speaker 3: the fastest courts the world can't operate as quickly as
20:03
Speaker 3: the so called DOGE seems to be operating. Where if
20:05
Speaker 3: you can just send someone into agency and then attach
20:09
Speaker 3: a flash driver, have access to payment systems, fire people,
20:14
Speaker 3: freeze contracts, refuse to pay out money however illegal. So
20:18
Speaker 3: many of these things are They do damage immediately if
20:22
Speaker 3: someone isn't getting a drug that they need that day
20:25
Speaker 3: or that hour, even if a court says two days later,
20:29
Speaker 3: you've got to pay that money and you've got to
20:31
Speaker 3: provide those resources, and then that winds its way through
20:34
Speaker 3: the system, and then another day passes. You know that
20:36
Speaker 3: person may lose their life in that interim, And so
20:40
Speaker 3: multiply that by hundreds of thousands of potential cases, and
20:44
Speaker 3: there's really a lot that can happen. Even if courts
20:46
Speaker 3: are moving as fast as they can.
20:49
Speaker 1: There are more than one hundred lawsuits already. It's sort
20:52
Speaker 1: of astonishing and very hard to follow.
20:55
Speaker 3: We're at the beginning rather than the end of this,
20:57
Speaker 3: and that they're going to do more things. But we
20:59
Speaker 3: have I haven't really seen you at of spoil litigation
21:02
Speaker 3: trying to figure out what's going on inside of these agencies.
21:04
Speaker 3: Because after you file a playact during twenty business days
21:08
Speaker 3: before you can file litigation between the requests and the litigation,
21:12
Speaker 3: and so we'll just be getting to the point where
21:15
Speaker 3: you'll see lots of foil litigation and that's all going
21:17
Speaker 3: to go to the same courts in DC, and there'll
21:19
Speaker 3: be lots of rulings of various sorts, so it'll get
21:22
Speaker 3: harder to follow.
21:23
Speaker 1: Thanks so much for sharing your insights with us. That's
21:26
Speaker 1: Columbia Law School professor Jamal Green coming up next on
21:30
Speaker 1: the Bloomberg Law Show. The Supreme Court has dealt a
21:33
Speaker 1: severe blow to a Holocaust survivor's lawsuit to recover compensation
21:38
Speaker 1: from Hungary. I'm June Gross. When you're listening to Bloomberg.
21:43
Speaker 1: The Supreme Court justices have struggled in several recent cases
21:48
Speaker 1: brought by Holocaust survivors against foreign countries with how to
21:52
Speaker 1: balance potential international friction with congressional intent to redress World
21:58
Speaker 1: War Two wrongs. In at least cases, and in the
22:01
Speaker 1: latest case, the Court dealt a severe blow to Holocaust
22:05
Speaker 1: survivors and their families in a long running lawsuit seeking
22:09
Speaker 1: compensation from Hungary for property confiscated during World War II.
22:14
Speaker 1: In a unanimous ruling, the justices took a narrow view
22:18
Speaker 1: of when suits involving properties stolen from Holocaust victims can
22:23
Speaker 1: be litigated in US courts. The court found that the
22:26
Speaker 1: survivors couldn't meet the exception to the Foreign Sovereign Immunities Act,
22:31
Speaker 1: which allows suits in American courts for property taken in
22:35
Speaker 1: violation of international law if there's a sufficient connection between
22:39
Speaker 1: the property taken and commercial activity in the US. And
22:44
Speaker 1: the justices found that their legal theory that Hungry sold
22:48
Speaker 1: off the property, mixed the proceeds with its general funds
22:52
Speaker 1: and used that commingled money to issue bonds and by
22:55
Speaker 1: military equipment in the US, and the two thousands didn't
22:59
Speaker 1: meet the exception. Joining me is a Pellet attorney mc
23:02
Speaker 1: sun Guila, a partner at the Complex Appellet Litigation Group.
23:06
Speaker 1: This case has been going on since twenty ten. Just
23:09
Speaker 1: I mean it's been at the Supreme Court before. Tell
23:11
Speaker 1: us what it's about.
23:13
Speaker 5: This case against Hungary is on behalf of Holocaust survivors
23:18
Speaker 5: or their heirs who were taken as part of the
23:22
Speaker 5: Holocaust en route. The train company took all of their
23:26
Speaker 5: property pursuant to Hungary's laws that said that Jews property
23:32
Speaker 5: belongs to the state. And so the survivors and their
23:36
Speaker 5: heirs are saying, hey, you know, we want some compensation
23:40
Speaker 5: for that property that was taken from us, and it's
23:43
Speaker 5: been just an ongoing, as you mentioned twenty ten, an
23:47
Speaker 5: ongoing uphel battle for those errors to bring those claims
23:52
Speaker 5: in US court. And really we're still at the pleating stages.
23:55
Speaker 5: I mean, that's one of the amazing things that really
23:59
Speaker 5: struck me when I was reading in the Court's opinion
24:00
Speaker 5: in this cases, like, Oh, we're just talking about standards
24:04
Speaker 5: for foreign sovereign immunity and exceptions to it, really just
24:07
Speaker 5: at the pleating stage, you know, the question of proof
24:10
Speaker 5: that's to work out later. And it just struck me, like,
24:15
Speaker 5: we're still at the pleating stage, you know, after that long.
24:18
Speaker 1: So the problem that the plaintiffs or survivors here are
24:22
Speaker 1: facing is they have to fit within the exception to
24:26
Speaker 1: the Foreign Sovereign Immunities Act. So they have to show
24:30
Speaker 1: a sufficient connection between the property that was taken and
24:34
Speaker 1: commercial activity in the US. How are they trying to
24:37
Speaker 1: do that?
24:38
Speaker 5: Yeah, exactly, that's the question. And as the Court pointed
24:42
Speaker 5: out in his opinion, it said, oh, well, if this were,
24:44
Speaker 5: as it often is in Holocaust cases, a tangible asset
24:49
Speaker 5: like a painting, then we could trace that. We could say, oh,
24:52
Speaker 5: it's owned by someone here, we've found it here or
24:55
Speaker 5: you know, there was some kind of movement through through
24:57
Speaker 5: the US of funds from this sale of that. But
25:01
Speaker 5: here where we really have a commingling into really the
25:06
Speaker 5: general treasury of Hungary. And because it's so long ago,
25:11
Speaker 5: really what the theory that the survivors in their errors
25:14
Speaker 5: have and really the only one they can have given
25:17
Speaker 5: the passage of time and the way their property was
25:20
Speaker 5: just added to the rest of the property for the state.
25:23
Speaker 5: The theory they're proceeding on is a commingling theory saying, okay,
25:28
Speaker 5: you know it was mingled with other assets of this state.
25:31
Speaker 5: The states purchased and did some commercial activities within the US,
25:36
Speaker 5: and we do not need to directly trace that money
25:40
Speaker 5: to our property or our heir's property. Is that would
25:43
Speaker 5: just be too burdensome and unreasonable to expect us to
25:47
Speaker 5: be able to do. And so this general commingling of
25:51
Speaker 5: funds of fungible funds in this case money is enough.
25:56
Speaker 5: That's enough for us to show that we fit within
25:58
Speaker 5: this exception for the Foreign Sovereign Communities Act. And the
26:02
Speaker 5: court said no, you know, as a matter of pleading,
26:06
Speaker 5: they said, not proof. And then's necessarily in this case
26:09
Speaker 5: that you can't do that. You have to show some
26:12
Speaker 5: kind of tracing. And they rely on the s touchtory
26:17
Speaker 5: text of the Foreign Sovereign Communities Act and what it
26:21
Speaker 5: is meant to do, and the examples of prior cases
26:24
Speaker 5: where the court is said, yeah, this is enough to
26:27
Speaker 5: track something and saying, well, this case is not like those.
26:32
Speaker 5: Now the court is really careful to say we're not
26:34
Speaker 5: saying you could never prove com England. We're not saying
26:37
Speaker 5: you could never rely on this theory. We're just saying,
26:42
Speaker 5: here as fled in this case under these circumstances, they
26:46
Speaker 5: haven't even fled enough. So we're saying in federal court
26:51
Speaker 5: that thing you haven't not that you haven't proven this,
26:55
Speaker 5: but that you haven't even really pled a plausible theory
27:00
Speaker 5: under your in your context, in your scenario under which
27:03
Speaker 5: you could possibly establish commingling. So it's a really threshold
27:08
Speaker 5: problem that they have in your case.
27:11
Speaker 1: Were you surprised that it was a unanimous decision, not given.
27:15
Speaker 5: Some of the careful wording in the decisions.
27:18
Speaker 3: So I look at it.
27:19
Speaker 5: I was reading the opinion and I'm thinking, well, yes,
27:22
Speaker 5: all of them, and Justice stood in my rotate and
27:26
Speaker 5: she you know, tends to be sympathetic to uh, to
27:30
Speaker 5: these I mean, these are sympathetic claims. Let's just put
27:32
Speaker 5: it that way. You know, you don't think of her
27:34
Speaker 5: as being a justice who wants to close the door
27:37
Speaker 5: to claims that would be as sympathetic as this. But
27:41
Speaker 5: the phrasing, you know, they're very careful to say, we're
27:44
Speaker 5: just looking at the statute, We're looking at the feedings
27:49
Speaker 5: in this case and the context. Well, we're not saying
27:52
Speaker 5: that there isn't a scenario where a commingling theory could
27:57
Speaker 5: be used in another context in an another way. So
28:01
Speaker 5: they're very carefully narrowing this. They also say, we're not
28:05
Speaker 5: saying you can't bring your claims at all under this theory.
28:09
Speaker 5: We're saying you cannot bring your claims.
28:11
Speaker 3: In the US.
28:12
Speaker 5: So in that way they're also recognizing, well, you know,
28:17
Speaker 5: we're just have this threshold question of access to US courts.
28:20
Speaker 5: The question would be to you errors and survivors, bring
28:25
Speaker 5: your substan of claims elsewhere, just not the US. And
28:30
Speaker 5: so they suggest, I think that's the way of you know,
28:33
Speaker 5: maybe feeling a little better about closing the courthouse doors
28:36
Speaker 5: and saying, well, we're not saying if that's the reason,
28:39
Speaker 5: but you can bring them elsewhere perhaps, So I think
28:42
Speaker 5: that's how you all of those things in the opinion.
28:45
Speaker 5: I think it's how you get the unanimous opinion.
28:48
Speaker 1: So I mean, to me, it made sense because you
28:51
Speaker 1: know they really can't trace the funds. It's it's sort
28:55
Speaker 1: of amorphous.
28:57
Speaker 5: Well, I mean, I think that the question is a
29:00
Speaker 5: statutory question and a question they're always concerned about in
29:03
Speaker 5: the Sovereign community cases, which is, we don't want to
29:06
Speaker 5: be too magnanimous in opening our courthouse stores because perhaps
29:10
Speaker 5: other jurisdictions would do the same thing with us, sort
29:13
Speaker 5: of as a matter to protect kind of things, So
29:16
Speaker 5: we want to be very cautious about that. We also
29:18
Speaker 5: want to be cautious because Congress, in enacting the Foreign
29:21
Speaker 5: Sovereign Communities that was saying, well, there's certain kinds of
29:24
Speaker 5: things that states will not get immunity for, and those
29:28
Speaker 5: are really things that focus on commercial activities rather than
29:32
Speaker 5: purely public activities. And so we want to be true
29:35
Speaker 5: to what Congress has opened the door for as well.
29:38
Speaker 5: So all of those things, and given the court questions,
29:42
Speaker 5: the various members of the court questions that argument who
29:44
Speaker 5: were concerned about this like, how would you apply a
29:47
Speaker 5: tommun going tests? And you know how narrow would the
29:49
Speaker 5: court house door be open if we really allowed this
29:53
Speaker 5: without any proof of requirement of tracing. So it does
29:58
Speaker 5: seem like it flows from questions at argument and the
30:02
Speaker 5: overall tendency to really hew the language and the Foreign
30:08
Speaker 5: Sovereign Communities Act.
30:10
Speaker 1: I think we discussed it in twenty twenty one when
30:12
Speaker 1: the Justice has sided with Germany in the dispute over
30:16
Speaker 1: the religious art works in these Holocaust recovery cases, has
30:21
Speaker 1: the court been generally ruling against the survivors who are
30:27
Speaker 1: trying to get their property back.
30:29
Speaker 5: Yeah, in large part, it's been a very upheld battle
30:33
Speaker 5: for those who seek to recover property, including artworks, in
30:38
Speaker 5: Holocaust recovery cases in the US. That's not to say
30:42
Speaker 5: there haven't been some successes, but I would point out
30:46
Speaker 5: even in the Altman case from like two thousand and four,
30:49
Speaker 5: which was decited favorably by the US Supreme Court under
30:53
Speaker 5: the Foreign Sovereign Communities Act, under which the Court said, yes,
30:56
Speaker 5: you can sue Austria for your climped paintings. Less court
31:01
Speaker 5: Maria Alban ended up opting out of that and going
31:04
Speaker 5: to arbitration in Austria and eventually recovering her paintings that way.
31:08
Speaker 5: And you know, part of the calculus of that, no doubt,
31:11
Speaker 5: was like how long it takes to get your claim
31:14
Speaker 5: through court in the United States, your your Holocaust recovery
31:18
Speaker 5: claims like this one decades and you know, we never
31:21
Speaker 5: got to the substance of it. So there are you know,
31:25
Speaker 5: some hard decisions that claimants in these cases have to
31:29
Speaker 5: make in terms of where they go to resolve these claims.
31:34
Speaker 5: And there's actually a movement within Europe. Germany has a commission.
31:39
Speaker 5: Now there are a lot of countries who are setting
31:41
Speaker 5: up their own commission somewhat like arbitral bodies, in order
31:46
Speaker 5: to decide on the merits these Holocaust claims, largely art
31:51
Speaker 5: recovery claims, but other kinds of claims too, because you know,
31:54
Speaker 5: people want closure.
31:55
Speaker 1: Speaking of not getting closure, the court sent this back
31:58
Speaker 1: to the Ure's appeals court for the DC Circuit. I mean,
32:03
Speaker 1: what's left of the lawsuit after this, although the DC
32:06
Speaker 1: Circuit has ruled for them time and time again. Yeah, exactly.
32:11
Speaker 5: We talked about that last time, listending it back to
32:13
Speaker 5: the DC Circuit to try and find you know, one
32:16
Speaker 5: more slim read through which perhaps they can allow the
32:20
Speaker 5: case to continue. I mean, under the decision here, it
32:24
Speaker 5: certainly seems to close the door on the commingling theory,
32:27
Speaker 5: not in other cases, but in this case. So I know,
32:30
Speaker 5: I saw that disposition, and I thought, well, to do
32:33
Speaker 5: what now? What is left not on the Kommingling point
32:37
Speaker 5: for sure at the pleating stage. So I don't know.
32:40
Speaker 5: It would have to be some alternative ethery or alternative ground.
32:44
Speaker 5: But this is really the key question. Can you be
32:47
Speaker 5: in US court at all? So I don't know if
32:49
Speaker 5: they have another theory on which to remain in the
32:53
Speaker 5: United States Court.
32:55
Speaker 1: And the Supreme Court is considering taking yet another case
33:00
Speaker 1: involving the recovery of art by a Holocaust survivor, and
33:05
Speaker 1: this involves a Psorrow painting that Spain has possession of.
33:10
Speaker 1: And we've discussed this one before.
33:12
Speaker 5: Too, and that's been up and back to the US
33:15
Speaker 5: and Court and the Ninth Circuit. And that has to
33:19
Speaker 5: do with a choice of law question about whether Spanish
33:22
Speaker 5: law applies or California law applies to determine whether the
33:28
Speaker 5: foundation in Spain has now gained a right to the
33:33
Speaker 5: painting by having had possession of it openly for so long.
33:39
Speaker 5: And that is a theory that applies in Spanish law,
33:42
Speaker 5: but it does not apply in California law. And so
33:44
Speaker 5: once again the ninth clurkage. But Spanish law is the
33:47
Speaker 5: right subsm of law to apply. Although certainly some members
33:51
Speaker 5: of the Court were very set with this results and
33:54
Speaker 5: felt that it didn't like the moral one. But in
33:57
Speaker 5: the interim between that decision and this first petition, California
34:02
Speaker 5: enacted a law retroactively that said California's substance of law
34:06
Speaker 5: I'll apply impending in future cases brought by California residents
34:10
Speaker 5: to recover stolen artworks in the possession of a museum.
34:14
Speaker 5: So there's a cert petition pending on the underlying Night's
34:17
Speaker 5: look At decision and the choice of law question. But
34:20
Speaker 5: the first question in the petition has to do with page.
34:23
Speaker 5: This court should just grant vacate and remand for application
34:27
Speaker 5: of the choice of law statute, the brand new one
34:29
Speaker 5: that California just enacted, which is the opposite of what
34:33
Speaker 5: the nice look At had concluded. And then, of course,
34:36
Speaker 5: if the Court doesn't do that, then the third petition
34:39
Speaker 5: asks the court to take the case up on the
34:41
Speaker 5: merits of the Nine Circus decision and choice of law decision,
34:45
Speaker 5: and also to look at the impact of treaties and
34:48
Speaker 5: international law on policies and agreements on US law and
34:53
Speaker 5: choice of law questions. So it's a juicy petition but
34:56
Speaker 5: with a really potentially quick, you know, remand I'm given
35:00
Speaker 5: the new California.
35:01
Speaker 1: Statue and this is one of the reasons why these
35:05
Speaker 1: cases go on and on. Thanks so much, MC. That's
35:08
Speaker 1: mcsun Gila of the Complex Appellate Litigation Group. And that's
35:12
Speaker 1: it for this edition of The Bloomberg Law Show. Remember
35:15
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