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SEC Sues Elon Musk & Wildfire Lawsuits · Bloomberg Law

0:02
Speaker 1: This is Bloomberg Law with June Grossel from Bloomberg Radio.
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Speaker 1: The Securities and Exchange Commission is suing Elon Musk for
0:12
Speaker 1: a third time. This time, the agency says that Musk
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Speaker 1: cheated Twitter shareholders out of more than one hundred and
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Speaker 1: fifty million dollars by waiting too long to disclose his
0:23
Speaker 1: growing stake in the company as he prepared a takeover
0:27
Speaker 1: bid in twenty twenty two. The sec complaint accuses the
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Speaker 1: billionaire of failing to promptly report that he had amassed
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Speaker 1: more than five percent of the social media platform stock
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Speaker 1: in early twenty twenty two, a revelation that would have
0:43
Speaker 1: sent the stocks price up quote. Because Musk failed to
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Speaker 1: timely disclose his beneficial ownership, he was able to make
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Speaker 1: these purchases from the unsuspecting public at artificially low prices.
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Speaker 1: A lawyer from Musque disputed the charges, saying the billionaire
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Speaker 1: has done nothing wrong and everyone sees this sham for
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Speaker 1: what it is. Joining me is securities law expert James Park,
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Speaker 1: a professor at UCLA Law School. Jim tell us about
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Speaker 1: the SEC's complaint, Well, there.
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Speaker 2: Was a violation by Elon Musk of Section thirteen d
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Speaker 2: of the Securities Exchange Act, which says that any person
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Speaker 2: that acquires more than five percent of company shares has
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Speaker 2: to file a report with the SEC within ten calendar
1:33
Speaker 2: days after crossing that threshold. And simply put, Musk did
1:39
Speaker 2: not file that report. And so it's a very clear
1:43
Speaker 2: violation of a well established SEC rule. And I suspect
1:48
Speaker 2: that the SEC wants to send the signal that this
1:52
Speaker 2: is a rule that has to be followed. I think
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Speaker 2: that's one explanation as to why the case is being
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Speaker 2: brought now.
2:00
Speaker 1: As you say, it seems like a simple case, sort
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Speaker 1: of cut and dried. SEC started investigating this in twenty
2:06
Speaker 1: twenty two. Why did it take so long?
2:09
Speaker 2: A very good question. It has been a few years,
2:13
Speaker 2: and you know their number of possible explanations. One is that,
2:17
Speaker 2: you know, they're busy doing a lot of things. As
2:20
Speaker 2: you know, over the last few years, they've been working
2:22
Speaker 2: on a lot of various rule proposals. They've brought some
2:26
Speaker 2: very interesting, ambitious enforcement cases. They may simply have been busy.
2:33
Speaker 2: Another possibility is that there may have been some debate
2:38
Speaker 2: within the SDC about, you know, should the case be
2:43
Speaker 2: brought given that you know, We have brought prior cases
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Speaker 2: against Elon Musk that have been settled, and they've been
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Speaker 2: very high profile. He's been somebody who has vigorously opposed
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Speaker 2: the SDC, and maybe the thought as well, we bring
3:00
Speaker 2: another case right now. Maybe the perception is that we
3:05
Speaker 2: are targeting Elon Musk, And another possibility is maybe there
3:09
Speaker 2: was some debate about Okay, there's a violation. You know,
3:13
Speaker 2: what exactly is the harm, what exactly is the impact
3:17
Speaker 2: on investors. The purpose of the rule when it was
3:22
Speaker 2: originally passed in nineteen sixty eight as part of a
3:25
Speaker 2: law called the Williams Acts, was to give the management
3:29
Speaker 2: of a corporation some notice when somebody was interested in
3:35
Speaker 2: taking control over the corporation, so that they could react,
3:39
Speaker 2: so they might implement various defensive measures to make it
3:43
Speaker 2: more difficult for a hostile takeover to succeed. And as
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Speaker 2: we know, Elon Musk eventually did successfully acquire Twitter, and
3:54
Speaker 2: it was actually forced to do so. At the end.
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Speaker 2: He tried to back out and it was forced. You know,
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Speaker 2: it be sort of a you know, interesting question as
4:03
Speaker 2: to you know, can you argue what we were harmed?
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Speaker 2: You know, was the company harmed when at one point
4:08
Speaker 2: they actually were trying to force Elon Musk to think
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Speaker 2: over Twitter, right, And so yeah, I think those are
4:14
Speaker 2: all things that, you know, that could have contributed to
4:18
Speaker 2: the length of time it took to file the case.
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Speaker 1: So you don't think that it was sort of a
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Speaker 1: last contentious kind of act by the outgoing ahead of
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Speaker 1: the SEC. Gary Gensler certainly was.
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Speaker 2: A last act. And whether this was meant a sort
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Speaker 2: of a final you know, let's poke at Elon Musk
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Speaker 2: for some political reason. I'm skeptical that that's the reason,
4:42
Speaker 2: but I do believe, you know, I think this is
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Speaker 2: somewhat obvious that you know, maybe there's a concern that
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Speaker 2: the next administration may not pursue the case, and we
4:52
Speaker 2: believe there's a case here, so we should file it
4:56
Speaker 2: while we can't. I think that is certainly a possibility
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Speaker 2: that that what happened. And you know, the other possibility is,
5:03
Speaker 2: you know, it just took some time to figure out
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Speaker 2: all of these issues and come to a decision, and
5:10
Speaker 2: they just had more time, you know, in the fall
5:13
Speaker 2: or late fall after the election to come to conclusion
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Speaker 2: on some of these more difficult issues. That's also a
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Speaker 2: very real possibility that the timing was simply that this
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Speaker 2: is when they finished their deliberation as to whether or
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Speaker 2: not to bring the case.
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Speaker 1: Musk's lawyer, Alex Spiro, said the agency has waged a
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Speaker 1: multi year campaign of harassment against Musk, but filed up
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Speaker 1: quote a single count TICKI tack complaint. No, what's your
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Speaker 1: reaction to that single count TICKI tack complaint. I'm not
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Speaker 1: even sure what that means.
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Speaker 2: Well, it's true that it is a single count. It's
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Speaker 2: a violation of Section thirteen D, no other provisions indicating
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Speaker 2: he committed you know, security fraud. There's nothing saying he
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Speaker 2: acted with fraudulent intent. Is simply a strict liability violation
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Speaker 2: of a very simple rule. You might liken this to
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Speaker 2: a speeding ticket, right, You violate the speed limit and
6:10
Speaker 2: you get a ticket, and that's that's the law, right,
6:12
Speaker 2: And you know the SEC's response is, you know the
6:16
Speaker 2: laws the law. You know, if I'm taught going over
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Speaker 2: sixty five miles per hour, then you get a ticket.
6:22
Speaker 2: Now what the defense may say as well, And as
6:25
Speaker 2: you know, sometimes you know, the police do not enforce
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Speaker 2: the speed limit. And you know, you go a few
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Speaker 2: miles over and you know, police officer's busy has better
6:35
Speaker 2: things to do. They're not going to write you a ticket,
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Speaker 2: and so there might be an argument, well, the SEC
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Speaker 2: could have used its discretion not to pursue an enforcement
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Speaker 2: and action in this case. I think so that would
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Speaker 2: be problematic when you have such a clear violation that's
6:50
Speaker 2: been highly publicized, to say we're just going to let
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Speaker 2: this go. If you believe that thirteen D matters and
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Speaker 2: is important and should be enforced, then you know, I
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Speaker 2: think that the SEC would say that this is an
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Speaker 2: opportunity to show that this rule is something that we
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Speaker 2: treat seriously and you can't just violate it without paying
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Speaker 2: a penalty. And I think there's some merit to that
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Speaker 2: argument to thirteen D is an important provision. In fact,
7:19
Speaker 2: there's a huge amount of debate, and there are rules
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Speaker 2: that strengthen thirteen D that were passed a year or
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Speaker 2: two ago, and there's an argument that this is a
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Speaker 2: very significant rule that serves an important purpose, and if
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Speaker 2: we let it go unenforced, that's the problem for the SEC.
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Speaker 1: Taking that into consideration that it might look bad if
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Speaker 1: the SEC drops this case when Trump takes office, but
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Speaker 1: also that Elon Musk seems to be Trump's new best buddy.
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Speaker 1: Do you think there's a hazard in them dropping the case?
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Speaker 2: Certainly? I think that, you know, the new SDC, I think,
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Speaker 2: will look at a lot of different things as to
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Speaker 2: how they pursue the case. I would be surprised if
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Speaker 2: they dropped it completely. What they could do is quickly
8:05
Speaker 2: allow it to settle for a nominal sum, right. I
8:07
Speaker 2: think that's a more likely outcome.
8:11
Speaker 3: And you know, there would.
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Speaker 2: Potentially be some criticism while you're doing this, because there's
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Speaker 2: a sort of political reason why you're letting him go
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Speaker 2: with a slap on the wrist. And I think that's
8:23
Speaker 2: something that they'll have to keep in mind. And I
8:26
Speaker 2: think in addition to that, they will also have to
8:28
Speaker 2: consider how important do we think Section thirteen D is
8:31
Speaker 2: what kind of message would it spend if if we
8:34
Speaker 2: let him go with a slap on the wrist? And
8:36
Speaker 2: that's in addition to the question of whether or not
8:39
Speaker 2: there's favoritism going on with respect to Elon Musk. And
8:44
Speaker 2: you know, I would add that I think, you know,
8:46
Speaker 2: part of the reason the SEC might have felt like
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Speaker 2: it had to ask is it didn't want to create
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Speaker 2: the impression that just because you know, we have an
8:55
Speaker 2: individual who has been highly critical of us. You know
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Speaker 2: we're not going to be scared it off by that.
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Speaker 2: So I would send a bad message as well if
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Speaker 2: we simply are intimidated and not you know, bringing cases
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Speaker 2: for clear violations against that individual simply because we've brought
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Speaker 2: cases against him in the past, and he has used
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Speaker 2: this platform to criticize that.
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Speaker 1: He certainly has. I've been talking to Professor James Park
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Speaker 1: of UCLA Law School about the SEC suing elon Musk,
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Speaker 1: saying he cheated Twitter's shareholders out of more than one
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Speaker 1: hundred and fifty million dollars by waiting too long to
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Speaker 1: disclose his growing stake in the company as he prepared
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Speaker 1: a takeover bid. Apparently, Musk rejected a settlement offer, and
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Speaker 1: reportedly the settlement offer was more than two hundred million
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Speaker 1: dollars to settle this. How does that compare to other
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Speaker 1: finds under this section.
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Speaker 2: It's a large thump. It's a large thumb. And the
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Speaker 2: way they would I think justify that is the theory
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Speaker 2: is that if he had disclosed in a timely manner,
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Speaker 2: the stock price would have gone up because other investors
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Speaker 2: know he's interested in buying for some reason, and you
10:18
Speaker 2: know the cost of buying those shares might have been
10:22
Speaker 2: an additional few hundred million dollars. And so I think
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Speaker 2: that the SEC's rationale might be that, you know, you
10:32
Speaker 2: got a bargain on these shares because anyone else would
10:35
Speaker 2: have filed a Schedule thirteen D with the SCC, the
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Speaker 2: stock price would have gone up, and you would have
10:41
Speaker 2: spent hundreds of millions of dollars more to buy the
10:45
Speaker 2: Twitter stocks that you wanted to buy. And so their
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Speaker 2: argument is that the shareholders who basically sold their shares
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Speaker 2: in the market to Musk were cheated in a sense
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Speaker 2: because they were entitled to some disclosure that this is
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Speaker 2: going on, and that might have been there their justification
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Speaker 2: for what is a fairly you know, it seems like
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Speaker 2: a fairly high penalty to me that it's it's probably
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Speaker 2: based upon the harm to investors, and so, you know,
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Speaker 2: that's the argument that might have been made. Now, on
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Speaker 2: the other hand, you might say, well that that's a
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Speaker 2: lot for something that you know, is it an intentional violation,
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Speaker 2: and that's something where you know, there's some indication that
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Speaker 2: at the very least maybe he was reckless and didn't
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Speaker 2: care about the rules, and so maybe another argument for
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Speaker 2: a higher penalty is that, you know, you need to
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Speaker 2: figure out what the law is before you ask. And
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Speaker 2: so I think those are the reasons the sec might
11:49
Speaker 2: justify a high penalty. Yeah.
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Speaker 1: So I read that Alphabet paid seven hundred and fifty
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Speaker 1: thousand to settle allegations that it failed to file time reports,
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Speaker 1: and that almost two dozen firms and individuals were cited
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Speaker 1: in September for not submitting proper reports about their holdings
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Speaker 1: and transactions. So it doesn't seem to be out of
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Speaker 1: the ordinary.
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Speaker 2: Yeah, there are penalties all the time that are imposed.
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Speaker 2: You could argue that in this case it's, you know,
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Speaker 2: the sheer amount of purchases that have that were made.
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Speaker 2: Maybe that might justify an even higher penalty than the
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Speaker 2: ones that were imposed before because of just the market impact.
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Speaker 2: I don't know what the market impact of the other
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Speaker 2: those other cases were, but you know, given the volume,
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Speaker 2: the amount of shares he's buying out in the marketplace,
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Speaker 2: there might be an argument that, well, there's more potential
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Speaker 2: investor harmer or unjust enrichment by mister Musk that could
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Speaker 2: justify an even higher penalty than past penalties the SEC
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Speaker 2: has imposed for these cases.
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Speaker 1: Let me ask you this, what's your take on Paul Atkins,
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Speaker 1: who Trump says he's going to nominate to succeed Gary Gensler.
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Speaker 2: He's been a commissioner before, so he knows the SEC.
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Speaker 2: You know, he certainly has a different approach than mister Gensler,
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Speaker 2: and I think it reflects, you know, probably a more
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Speaker 2: conservative view with respect to the role of securities law
13:26
Speaker 2: and more of a concern for reducing regulatory burdens on
13:33
Speaker 2: public corporations and other market participants. He knows securities law,
13:39
Speaker 2: he has views on it, and whether or not you
13:42
Speaker 2: disagree with those views, I think, you know, he's an
13:46
Speaker 2: appropriate choice for the position. And you know, I think
13:50
Speaker 2: there's a lot of difficult issues he's going to have
13:53
Speaker 2: to grapple with, and I think, you know, crypto regulation
13:56
Speaker 2: is one of them.
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Speaker 1: And you know, the.
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Speaker 2: Third Circuit sent back at the various rules to the
14:02
Speaker 2: SEC instead give us a better reason why you're not
14:05
Speaker 2: writing rules on crypto and you know that's going to
14:09
Speaker 2: be owned by the Atkins SDC whatever essentially comes out
14:14
Speaker 2: of that process. And you know, the danger here is
14:18
Speaker 2: that if you're perceived as being the regular story and
14:22
Speaker 2: something really bad happens, then you know there'll be a
14:26
Speaker 2: tendency to kind of put the blame on you. You know,
14:30
Speaker 2: if there are a lot of crypto losses, for example,
14:32
Speaker 2: then everyone's going to be pointing at at the Atkins SDC,
14:36
Speaker 2: and so those are things that he's going to have
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Speaker 2: to navigate as he enters this job.
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Speaker 1: It's always interesting to watch what happens at an agency
14:43
Speaker 1: when there's a new administration. Thanks so much, Jim. Always
14:47
Speaker 1: a pleasure. That's Professor James Park of UCLA Law School.
14:51
Speaker 1: It's one of the most destructive natural disasters in Southern
14:55
Speaker 1: California history, killing at least twenty five people and destroying
15:00
Speaker 1: thousands of homes, and while crews continue to battle the wildfires,
15:04
Speaker 1: the investigation into the cause of the devastating fires is intensifying.
15:10
Speaker 1: Atf special age and in charge of the LA Field Division,
15:14
Speaker 1: Jose Medina, says they're tackling the investigation from all angles.
15:19
Speaker 4: Investigators are looking for remaining fuels and surviving fire patterns,
15:23
Speaker 4: as well as fire patterns on non compulstible materials such
15:27
Speaker 4: as rocks, cans, bottles, et cetera. We have conducted interviews
15:32
Speaker 4: with individuals that initiated the nine one one calls and
15:36
Speaker 4: the first responders. We are talking to individuals about not
15:40
Speaker 4: just what they saw, but what they smelled and they heard.
15:44
Speaker 1: In the meantime, litigation over the fires has begun. Lawsuits
15:48
Speaker 1: on behalf of homeowners, renters, business owners, and others have
15:53
Speaker 1: been filed against Southern California Edison over the Eton fire
15:57
Speaker 1: and against the Los Angeles Department of Water Power over
16:01
Speaker 1: the Palisades fire. Edison International Chief executive Officer Pedro Pizarro
16:06
Speaker 1: told Bloomberg on Monday that the utility didn't detect any
16:11
Speaker 1: electrical issues on a transmission line near the start of
16:15
Speaker 1: the deadly Eaten fire.
16:17
Speaker 5: Certainly, we've seen the video images and photos that are
16:19
Speaker 5: in the media that a number of residents have taken
16:22
Speaker 5: showing flames near our towers. Today, we have not seen
16:28
Speaker 5: in our telemetry any indication of any electrical anomaly. And
16:33
Speaker 5: typically when you have a fire costs by electrical infrastructure,
16:36
Speaker 5: you do see a signature of voltage rupping, current increasing.
16:40
Speaker 5: We have not seen that in our study.
16:43
Speaker 1: Joining me is Bernie Bernheim of the Bernheim Law Firm.
16:47
Speaker 1: I know you're going to be filing your lawsuits in
16:50
Speaker 1: the next few days. What's alleged in the lawsuits filed
16:54
Speaker 1: against Southern California Edison.
16:58
Speaker 3: They alleged that that the power company for the Eton Fire,
17:03
Speaker 3: which is Southern California Edison, their equipment started the fire,
17:08
Speaker 3: and that the equipment was negligently maintained and operated.
17:13
Speaker 1: So on Monday, Edison CEO Pedro Pizarro tol Bloomberg News
17:17
Speaker 1: it didn't detect any operating anomalies on its transmission wires
17:22
Speaker 1: in the twelve hours before the fire. What will you
17:25
Speaker 1: use to make out a case for negligence, Well.
17:29
Speaker 3: First of all, there's video of the fire starting under
17:34
Speaker 3: their equipment, a giant shadower of spark. Number one, and
17:38
Speaker 3: that video is widely available. Number two, there's essentially a
17:43
Speaker 3: tracking service that shows when there are namlies in the
17:48
Speaker 3: electrical grid, and the average is like two, three or four.
17:52
Speaker 3: But it detected over one hundred in the hours before
17:56
Speaker 3: the fire, and at that point power should have been
17:59
Speaker 3: shut down out and it wasn't. So, you know, with
18:03
Speaker 3: all due respect to the CEO of the company, there's
18:07
Speaker 3: ample evidence to indicate that you know, they're responsible. Now,
18:12
Speaker 3: you know, would like of any lawsuit, there's going to
18:15
Speaker 3: be discovery. We are only going on what is publicly
18:19
Speaker 3: available right now. But once you know discovery's done, documents
18:23
Speaker 3: are obtained, depositions are taken, the actual truth of what
18:27
Speaker 3: the curd is going to come out. And if their equipment,
18:32
Speaker 3: I mean, the fact that the fire started right under
18:35
Speaker 3: their equipment is pretty telling. And what does you say
18:39
Speaker 3: caused the fire if there wasn't his equipment.
18:41
Speaker 1: California has this unique doctrine that a utility can be
18:46
Speaker 1: held liable for property damage when its equipment ignites a fire,
18:51
Speaker 1: even if it didn't act negligently. Tell us about that
18:55
Speaker 1: doctrine known as inverse condemnation.
18:59
Speaker 3: Yes, because there was a taking of property. Is the
19:03
Speaker 3: term that's used by a government or quase government entity.
19:08
Speaker 3: And you know, there's been sort of a legal debate
19:12
Speaker 3: about whether utilities qualify. I mean, most commonly you see
19:18
Speaker 3: and there so that they do qualify. But initially an
19:22
Speaker 3: earlier fire on the utility spot decided to say that
19:25
Speaker 3: we're not a government entity. We're publicly traded company, you know,
19:30
Speaker 3: by stocking us. But the courts here in California have
19:33
Speaker 3: decided that they qualify as quase government entities against whom
19:39
Speaker 3: inverse condemnation can be alleged. But inverse condemnation originates where
19:45
Speaker 3: let's say the government, the county, let's say, says it's
19:51
Speaker 3: safe to build a certain area okay, and you know,
19:55
Speaker 3: you get your permit and everything, and then that it
19:58
Speaker 3: turns out that it doesn't build. There's a big mud
20:02
Speaker 3: slide and all of the you know, the houses. But
20:06
Speaker 3: the government or the county, let's say the city said
20:09
Speaker 3: we're okay to build on slide into the into the ocean, right, well,
20:15
Speaker 3: they basically condemned the property. And an aversion of it
20:20
Speaker 3: comes when the government takes property, like to build a
20:24
Speaker 3: highway or something. That's the underlying principle where then if
20:28
Speaker 3: they're going to take your property build a highway, they
20:32
Speaker 3: have to give you a fair compensation for that taking.
20:37
Speaker 3: That's where it originates from. And then it's kind of
20:39
Speaker 3: it becomes a taking when they when when they when
20:46
Speaker 3: they create conditions, but what you with your problem? They
20:49
Speaker 3: create conditions, but what you with your problem?
20:51
Speaker 1: The CEO on Bloomberg said that California has in place
20:56
Speaker 1: this provision that allows a utility to remain financially healthy
21:01
Speaker 1: even if it's found libel for the wildfire, including a
21:05
Speaker 1: twenty one billion dollar fire insurance fund that caps the
21:08
Speaker 1: company's exposure at three point nine billion. Suppose the claims
21:13
Speaker 1: exceed twenty one billion, what happens then?
21:17
Speaker 3: I don't know. That has never been an issue before.
21:20
Speaker 1: Because some of the estimates for this fire are well above.
21:25
Speaker 3: Yeah, we don't know. It's uncharted territory.
21:28
Speaker 1: What kind of damages would you be seeking in these cases?
21:34
Speaker 3: Well, there are damages for the damage to the property,
21:40
Speaker 3: the real property, there's damage to the personal property. There
21:46
Speaker 3: is additional living expenses that people infer when they have
21:52
Speaker 3: to lead. There is also physical injury that can occur,
22:01
Speaker 3: sometimes not just because you're burned, but you know, we've
22:04
Speaker 3: had children and other fires who develop asthma and so forth.
22:09
Speaker 3: We they're psychological injury. You could call it emotional distress.
22:14
Speaker 3: There's also the annoyance and other aggravation that comes from
22:19
Speaker 3: the rebuilding process and loss of use. There is often
22:28
Speaker 3: business loss associated with it. Sometimes it's because literally a
22:34
Speaker 3: business was damaged or destroyed. For example, when we did
22:39
Speaker 3: the last Malibu fire, a big one, we had quite
22:42
Speaker 3: a few of the rehabilitation drug rehabilitation centers that had
22:48
Speaker 3: business laws or we've represented owners of gas stations and
22:53
Speaker 3: car washes, all kinds of jewelry stores, all sorts of businesses.
22:58
Speaker 3: And then and you also have we've also represented clients
23:03
Speaker 3: who had home businesses operating sometimes very substantial home businesses
23:10
Speaker 3: with millions of dollars of loss, especially now a lot
23:14
Speaker 3: of people combining their home and their business. There's also
23:18
Speaker 3: interest loss of use of money, which we generally recover
23:23
Speaker 3: at an arab of seven percent inplement. And there's also
23:27
Speaker 3: be attornitees and expenses of litigation.
23:31
Speaker 1: And how long do these cases generally take to litigate.
23:37
Speaker 3: Years.
23:38
Speaker 1: Also, property owners in the Pacific Palisades are suing the
23:42
Speaker 1: Los Angeles Department of Water and Power, claiming that a
23:46
Speaker 1: reservoir that had been drained and not repaired, couple with
23:50
Speaker 1: inadequate water pressure in fire hydrants, undercut efforts by firefighters
23:55
Speaker 1: and ultimately allowed the fire to spread out of control.
24:00
Speaker 1: Alleges that the utilities negligence turned homeowners to homeless in
24:04
Speaker 1: a matter of hours. Is that lawsuit tougher to litigate
24:09
Speaker 1: than the one against Addison?
24:11
Speaker 3: Yes, And that's being done in connection with the Palisades
24:14
Speaker 3: fire with slow runs up down the Pacific Coast Highway.
24:19
Speaker 3: And the reason that the lawyers filed that, and we're
24:23
Speaker 3: still investigating and deciding what the viability of that is,
24:28
Speaker 3: is because there was not a power company to sue.
24:31
Speaker 3: In other words, there's no evidence so far that a
24:35
Speaker 3: viable you know, private dependent or pause a public defendent
24:40
Speaker 3: or potentially a deep pocket defending caused that fire. So
24:46
Speaker 3: what at least one law firm has decided to do
24:49
Speaker 3: is exactly what you said, sue over the mismanagement of
24:54
Speaker 3: a particular reservoir that wasn't available. And one of the
25:00
Speaker 3: things I know that's being an alleged there in connection
25:02
Speaker 3: with the Power States fire is that not only wasn't
25:05
Speaker 3: there sufficient water, but they did not inform the fire company,
25:11
Speaker 3: excuse me, the fire department that certain I guess you
25:16
Speaker 3: would call the cisterns or reserves of water were empty
25:21
Speaker 3: when they should have been filled. But there's an issue
25:25
Speaker 3: there of immunity, sovereign immunity, because there are statutes that
25:30
Speaker 3: they are asserted by the city, by the Department of
25:33
Speaker 3: Water and Power, that provide immunity for these kinds of decisions.
25:37
Speaker 3: You can't sue them now Just because you know, immunity
25:41
Speaker 3: is available as an affirmative defense to the city does
25:46
Speaker 3: not necessarily mean that the city will assert that. Any
25:50
Speaker 3: One could say, well, why on earth wouldn't they assert
25:53
Speaker 3: that community right? I mean, that goes the case out
25:57
Speaker 3: of court. But remember there's a political social component to this.
26:03
Speaker 3: Many of the victims of the Palistates fire do not
26:06
Speaker 3: have insurance is being sure pulled out of California not
26:10
Speaker 3: long ago like State Farmer many did. Or they're very underinsured.
26:15
Speaker 3: So you have people that if they cannot sue the city,
26:19
Speaker 3: they have very little redress. I mean, whatever little FEMA
26:23
Speaker 3: aid or SBA loan aide you're going to get, and
26:27
Speaker 3: you know, they could go out into the streets with
26:30
Speaker 3: pitchforks and it might look very bad to the city
26:33
Speaker 3: if the city said, well, you know, we can't really
26:35
Speaker 3: refute that we were negligent, but we do have this
26:39
Speaker 3: immunity and we're going to we're going to hide behind
26:42
Speaker 3: this shield. And that could result in you know, the
26:45
Speaker 3: whole city council and you know, the mayor and everybody
26:49
Speaker 3: being thrown out. And they may decide I'm not a politician,
26:53
Speaker 3: but they may decide that it's better for us to
26:58
Speaker 3: pay at least something into this than just to take
27:00
Speaker 3: the position. Nin nin or Nina. You can't sue us
27:04
Speaker 3: even though we screwed up.
27:06
Speaker 1: Thanks so much for being on the show. That's Bernie
27:09
Speaker 1: Bernheim of the Bernheim Law Firm, and that's it for
27:12
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