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NFL Wants $4.7 Billion Verdict Tossed & Boeing Plea Deal · Bloomberg Law

0:03
Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.
0:10
Speaker 2: Last month, jurors sided with football fans who said the
0:13
Speaker 2: NFL conspired with DirecTV to raise the prices of subscriptions
0:18
Speaker 2: to watch out of market games to the tune of
0:21
Speaker 2: damages in the amount of four point seven billion dollars,
0:24
Speaker 2: which stands to be tripled to fourteen billion under federal law.
0:29
Speaker 2: While the NFL is asking a federal judge to toss
0:32
Speaker 2: that verdict in part, accusing jurors of relying on a
0:35
Speaker 2: made up methodology to come up with damages the league
0:39
Speaker 2: called nonsensical. Joining me is Jenniferree, Bloomberg Intelligence senior litigation
0:44
Speaker 2: analyst jen tell Us about this class action antitrust case
0:48
Speaker 2: against the NFL.
0:50
Speaker 1: You know, this is actually a really complicated case. It
0:53
Speaker 1: doesn't seem like it should be it's the NFL, but
0:55
Speaker 1: it is, and it's been around for ten years and
0:57
Speaker 1: by the way, almost made a trip to the Supreme
0:59
Speaker 1: Court rite, So there's a lot of history here. But
1:02
Speaker 1: what this is about are people who pay for something
1:05
Speaker 1: called Sunday Ticket. Now, Sunday Ticket is a package of
1:08
Speaker 1: out of market football games during the football season. So
1:11
Speaker 1: Let's say I live in New York, but I'm a
1:13
Speaker 1: Cleveland Browns fan, and all I can get over the
1:15
Speaker 1: weekend is a Giants game or a Jets game, and
1:18
Speaker 1: I want to watch the Browns. In order to see
1:19
Speaker 1: that game, I have to buy Sunday ticket. And you
1:21
Speaker 1: know what, Sunday ticket is expensive, and commercial establishments buy
1:25
Speaker 1: it too. So if you went to a sports bar
1:26
Speaker 1: where they're playing all the games, it's because they bought
1:28
Speaker 1: this Sunday ticket from the NFL. Well not from the NFL,
1:31
Speaker 1: but from Direct TV. Now it's YouTube. So basically what
1:36
Speaker 1: the objection was was that NFL member teams are supposed
1:39
Speaker 1: to be competitors. They are separate teams, they are separate businesses,
1:43
Speaker 1: and they are supposed to compete, but for the purposes
1:45
Speaker 1: at least of licensing their telecasts and producing the telecasts
1:49
Speaker 1: of their games, they were pooling them in the NFL,
1:52
Speaker 1: creating these telecasts, pulling them in the NFL, and then
1:55
Speaker 1: giving the NFL itself, whatever you want to call it,
1:58
Speaker 1: a joint venture of the league, right to then sell
2:01
Speaker 1: it license it at the time to Direct TV, giving
2:04
Speaker 1: DirecTV exclusive rights, allowing DirecTV therefore to praise it anywhere
2:09
Speaker 1: they want to, because they're the only one that has
2:11
Speaker 1: it and it's quite expensive. There were actually really similar
2:14
Speaker 1: lawsuits brought against MLB and National Hockey League as well,
2:18
Speaker 1: long long time ago. They settled, so those cases are gone.
2:21
Speaker 1: I sort of thought this one would go the same route,
2:24
Speaker 1: but the NFL is going to fight it. And what
2:26
Speaker 1: has happened is that the plaintiffs, which are both commercial
2:30
Speaker 1: establishments and people who bought Sunday Ticket, won a jury verdict.
2:34
Speaker 1: They basically showed that pooling these rights, these telecast rights,
2:38
Speaker 1: is anti competitive under the anti trust laws. At least
2:41
Speaker 1: this is what the jury decided based on the evidence
2:43
Speaker 1: they heard at trial, and that because of that, people
2:46
Speaker 1: were overcharged for many years for Sunday Ticket, and they
2:49
Speaker 1: determined that the overcharges amounted to what you said, something
2:52
Speaker 1: over four billion before tripling, close to fight before tripling.
2:56
Speaker 1: Anti trust damages are always tripled, So we're talking four
3:00
Speaker 1: fourteen billion really here at the end of the day
3:02
Speaker 1: if this sticks, So that's something a judge will have
3:05
Speaker 1: to decide. So what the plaintiffs we're looking for here
3:07
Speaker 1: are damages, but also injunctive relief and preventing them from
3:11
Speaker 1: exclusively giving all the rights to these out of market games.
3:14
Speaker 1: It's now to YouTube, not DirecTV anymore to YouTube for
3:18
Speaker 1: YouTube to turn around and sell a subscription, that's something
3:20
Speaker 1: the judge will have to decide after the post trial
3:23
Speaker 1: motions were in that process. Now, after those are all
3:26
Speaker 1: finished up, the jury just decided on liability and on damages, the.
3:30
Speaker 2: NFL wants the judge to toss the verdict explain the
3:34
Speaker 2: reasons they've given.
3:36
Speaker 1: So the NFL's making a lot of claims here that,
3:38
Speaker 1: first of all, that based on the evidence presented, the
3:42
Speaker 1: jury's finding was simply irrational. That first, they're indirect purchasers.
3:46
Speaker 1: They're not direct purchasers. And that's a weird little antitrust thing, right.
3:50
Speaker 1: A long time ago the Supreme Court said only direct
3:53
Speaker 1: purchasers of a product can sue under the federal antitrust laws.
3:57
Speaker 1: And they're saying they didn't buy this from us. They
3:59
Speaker 1: bought it from DirecTV, so they are indirect purchasers. Now,
4:03
Speaker 1: the court has already rejected that claim, saying that this
4:06
Speaker 1: was a conspiracy and they bought it from one of
4:09
Speaker 1: your co conspirators. But what the NFL said is they
4:12
Speaker 1: did not provide evidence and trial that there was a
4:15
Speaker 1: conspiracy or that DirecTV was a co conspirator. You need
4:18
Speaker 1: what's called a conscious commitment to a common scheme to
4:21
Speaker 1: be conspirators. And it is complicated, and that the NFL
4:26
Speaker 1: teams might have gotten together to pool all of their
4:29
Speaker 1: telecasts and give those telecasts to the NFL for the
4:32
Speaker 1: NFL to do with them what they would DirecTV wasn't
4:36
Speaker 1: a party to that. They separately have an agreement with
4:38
Speaker 1: the NFL, but they weren't a party to this overall conspiracy.
4:41
Speaker 1: And so they're saying this simply isn't evidence that there was.
4:44
Speaker 1: And without DirecTV being one of the co conspirators, they
4:48
Speaker 1: then plaintiffs become indirect purchasers and they didn't have standing here.
4:52
Speaker 1: So that's one thing that they're claiming. You know, they're
4:54
Speaker 1: basically really challenging sort of across the board everything that
4:58
Speaker 1: was decided. They're also saying something else quite complicated. There
5:01
Speaker 1: was a law passed in the nineteen sixties called the
5:03
Speaker 1: Sports Broadcasting Act. And what that act did. Congress passed
5:07
Speaker 1: this act to say NFL has an exemption from Section
5:12
Speaker 1: one of the Sherman Act. Section one is the conspiracy
5:15
Speaker 1: law right that is being alleged in this lawsuit four
5:18
Speaker 1: purposes of pooling telecasts to get together and organize as
5:23
Speaker 1: a league and get those games on air for the
5:26
Speaker 1: people that are interested in those games. The catch is
5:29
Speaker 1: that the SBA said for sponsored television, and sponsored television
5:33
Speaker 1: is free televisions. It's television that existed in the nineteen
5:37
Speaker 1: sixties that we all forget about now, where you just
5:39
Speaker 1: have an antenna on your TV and there are commercials
5:42
Speaker 1: and you don't pay a thing, right, You've got your
5:44
Speaker 1: antenna free TV because it's supported by advertising and that's
5:48
Speaker 1: where the revenue comes from. So it was limited to
5:51
Speaker 1: sponsored telecasts and this is not a sponsored telecast CBS
5:57
Speaker 1: and Fox which air Sunday games at least it's a
6:00
Speaker 1: little bit different now, but at the time the history
6:03
Speaker 1: of this, when the allegations were being made, it was
6:05
Speaker 1: CBS and Fox that would do the telecasts for the
6:08
Speaker 1: regular Sunday games that we could all see our in
6:11
Speaker 1: market team at home. They are basically over the air stations.
6:15
Speaker 1: They're not cable networks, right, So they're saying the Sports
6:20
Speaker 1: Broadcasting Act applies to our pooling of all the teams
6:23
Speaker 1: coming together and pooling their rights to these telecasts, giving
6:26
Speaker 1: them to the NFL to let CBS and Fox air
6:29
Speaker 1: them on Sundays may not apply to Direct TV, which
6:32
Speaker 1: is paid for subscription, but it does apply to the
6:35
Speaker 1: other one. And the judge here and the jury here
6:38
Speaker 1: improperly said that the Sports Broadcasting Act doesn't apply. So
6:42
Speaker 1: there are a lot a lot of complications to this case.
6:45
Speaker 2: It's anti trust, so I expect complications. But didn't the
6:49
Speaker 2: judge rule on some of these before trial?
6:52
Speaker 1: So the judge did. There was a summary judgment motion.
6:54
Speaker 1: The judge's hands were a little bit tied, and the
6:57
Speaker 1: reason is because the judge actually dismissed this case on
7:01
Speaker 1: a motion to dismiss It was a different judge. The
7:03
Speaker 1: judges changed in the course of the litigation because it's
7:06
Speaker 1: been going so long, But the case was dismissed. This
7:09
Speaker 1: is how it took a route to the Supreme Court.
7:10
Speaker 1: You know that that's very early complaints filed. The defendants say,
7:14
Speaker 1: there's nothing in this complaint that alleges any kind of
7:17
Speaker 1: facts that would mean that the law has been violated.
7:19
Speaker 1: Judge agreed, dismissed the case. It went to the Ninth
7:22
Speaker 1: Circuit on appeal, and the Ninth Circuit reversed. The NFL
7:25
Speaker 1: sought a review by the Supreme Court. Supreme Court interestingly
7:29
Speaker 1: didn't take the case, but Justice Kavanaugh issued a statement
7:33
Speaker 1: along with not taking the case, basically saying he agreed
7:36
Speaker 1: with the NFL's position and practically inviting the NFL to
7:40
Speaker 1: come back and try again in front of the Supreme
7:42
Speaker 1: Court should they lose. So that June is the reason.
7:46
Speaker 1: I'll tell you, I think they have a very good
7:47
Speaker 1: shot on appeal here.
7:49
Speaker 2: No matter what, it's going to end up at the
7:51
Speaker 2: Supreme Court again, and the NFL has at least one
7:54
Speaker 2: vote there to take the case.
7:55
Speaker 1: They got one, and maybe they'll get there. So the
7:58
Speaker 1: reason that the judge is a little bit tied is
8:00
Speaker 1: because when the Ninth Circuit ruled, the Ninth Circuit said, no,
8:03
Speaker 1: we don't think the SBA applies Sports Broadcasting Act. We
8:06
Speaker 1: don't think they're indirect purchasers here. So the judge kind
8:10
Speaker 1: of went back and looked at that and said, all right,
8:12
Speaker 1: you know, I mean I need to kind of align
8:15
Speaker 1: with what the Ninth Circuit has already said, and I'm
8:17
Speaker 1: going to put this in front of the jury. You know,
8:19
Speaker 1: the judge on a summary judgment doesn't decide if there's liability,
8:22
Speaker 1: just decides if there are enough facts that it should
8:24
Speaker 1: go before a jury to decide. And he said, yes,
8:26
Speaker 1: it should go before the jury, and the jury decided.
8:28
Speaker 2: What we all know, it would be a big step
8:31
Speaker 2: for a judge to toss out a four point seven
8:34
Speaker 2: billion dollar verdict. Might you just knock it down?
8:38
Speaker 1: I think there's a good chance here, And the reason
8:41
Speaker 1: is because it seems a bit arbitrary. If what the
8:45
Speaker 1: NFL is saying is true, and it sounds like it's correct,
8:49
Speaker 1: it seems like the jury, rather than going with what
8:52
Speaker 1: the plaintiff's experts models said they should do with respect
8:56
Speaker 1: to damages, came up with their own calculation, maybe on
8:59
Speaker 1: their eye phones, with their calculators. It's a very strange
9:02
Speaker 1: damages determination. It looks like what they did was took
9:05
Speaker 1: the list price for Sunday tickets somewhere around two hundred
9:08
Speaker 1: and fifty for the season, something like that, and then
9:10
Speaker 1: the average actual price paid. You know, people get discounts,
9:13
Speaker 1: they get coupons, they get specials, and they get sales.
9:15
Speaker 1: So what the experts had shown is the actual price paid.
9:18
Speaker 1: The average is around one hundred and twenty some somewhere
9:21
Speaker 1: in there. And what they did is they took the
9:22
Speaker 1: list price and they subtracted that actual price. That difference
9:26
Speaker 1: that one ninety nine or so. They considered that the overcharge,
9:29
Speaker 1: and they multiply that by the number of subscribers. That's
9:33
Speaker 1: quite arbitrary and antitrust because anti trust damages should be
9:37
Speaker 1: in a butt four world, if this anti competitive conduct
9:41
Speaker 1: were not taking place, there was healthy, appropriate competition, what
9:44
Speaker 1: would the price have been. And you look at that
9:46
Speaker 1: price and then you look at how much more was
9:49
Speaker 1: paid over that. That's your overcharge, not the difference between
9:53
Speaker 1: the list price and the actual average price paid. So
9:56
Speaker 1: it seems a little arbitrary. It seems a little disconnected
9:59
Speaker 1: to the alleged anti competitive conduct. And I do think
10:03
Speaker 1: there's a shot here at the judge saying, Okay, they
10:06
Speaker 1: may have determined liability, but the damage's decision doesn't really
10:09
Speaker 1: make sense and we need to do something with that.
10:12
Speaker 2: Is there a possibility that they could settle this whole
10:15
Speaker 2: thing and avoid retrials and appeals on and on.
10:19
Speaker 1: They absolutely could settle, which is what I thought five
10:21
Speaker 1: years ago would happen because MLB and NHL settled really
10:25
Speaker 1: quite easily. All they did is what plaintiffs wanted. They
10:28
Speaker 1: offered up a la carte options. So instead of forcing
10:32
Speaker 1: people to buy, for a very high price, the entire
10:35
Speaker 1: season of games that they may not want, they allowed
10:38
Speaker 1: them to pick and choose teams. So I live in
10:40
Speaker 1: New York, I'm a Cleveland Browns fan. It would let
10:42
Speaker 1: me just say, I just want to buy Cleveland Browns games,
10:45
Speaker 1: I don't want everybody else's, and let me do that
10:47
Speaker 1: for a reduced price. And this is what NHL and
10:49
Speaker 1: MLB did, and it seems to have worked out really
10:51
Speaker 1: well for them and really well for fans.
10:53
Speaker 2: So this case provides the perfect example for why Google
10:58
Speaker 2: did not want a jury trial. Google wrote a two
11:02
Speaker 2: point three million dollar check to avoid a jury trial
11:06
Speaker 2: in an anti trust case, and it worked. They got
11:09
Speaker 2: away with it.
11:09
Speaker 1: They did get away with it, yes, And I get
11:12
Speaker 1: why they don't want a jury trial. I think it's
11:14
Speaker 1: pretty easy for a lawyer who's good to get up
11:17
Speaker 1: and paint Google as a big, bad bully. And that's
11:20
Speaker 1: happened Epic Games versus Google essentially what happened, and the
11:23
Speaker 1: jury ruled against Google in that one and we're waiting
11:26
Speaker 1: to see what the remedy will be there. But what
11:28
Speaker 1: they did is normally the Department of Justice the United
11:31
Speaker 1: States has to have a bench trial because you only
11:35
Speaker 1: have a right to a jury trial if you have
11:36
Speaker 1: monetary damages. So this is an unusual case with the
11:39
Speaker 1: DJ said, we used Google's products. This is about Google's
11:42
Speaker 1: ad tech products. So it's these this software that basically
11:45
Speaker 1: connects digital advertisers and digital publishers together, and you pay
11:49
Speaker 1: Google to use them. DOJ said, we have agencies that
11:52
Speaker 1: advertised use these products and therefore were overcharged. So not
11:55
Speaker 1: only do we want injunctive relief here with this case,
11:58
Speaker 1: we also want we have damages, and so we have
12:00
Speaker 1: the right to a jury trial. So a lot of
12:03
Speaker 1: litigation has happened, right, we're not at the beginning. We're
12:06
Speaker 1: getting near trial here. So we've had a lot of
12:08
Speaker 1: expert reports submitted, We've had summary judgment motions filed, and
12:13
Speaker 1: the US the Department of Justices experts came in and said,
12:16
Speaker 1: here's what we think the damages are, and here's our range,
12:18
Speaker 1: our low range, in our high range. So Google took
12:21
Speaker 1: the highest range that the DOJ's own experts said, could
12:24
Speaker 1: possibly be the damages trebled it because under antitrust damages
12:28
Speaker 1: are tripled and even added prejudgment interest. You know, basically
12:32
Speaker 1: as much as they could possibly have gotten if they'd
12:34
Speaker 1: gotten a jury verdict for damages and they paid that,
12:38
Speaker 1: and it basically made the damages claim moot. And that's
12:41
Speaker 1: what the judge said. She said, the DJ actually had
12:44
Speaker 1: already sort of sanctioned this range by their own experts,
12:47
Speaker 1: said this is the range, right, because the DJ kind
12:50
Speaker 1: of came back and said no, no, no, no, the damages
12:51
Speaker 1: are higher than that. And the judge said, no, you
12:53
Speaker 1: really already kind of accepted this as your top range.
12:56
Speaker 1: They've paid it. Your claim is moved, and there was
12:59
Speaker 1: some legal precedent for that that once the damages are paid,
13:02
Speaker 1: the claim becomes moot. And once it becomes moot, all
13:05
Speaker 1: you have left is your injunctive relief request and that
13:08
Speaker 1: has to be before me, a said judge in a
13:10
Speaker 1: bench trial. And so that's how we're going to proceed.
13:12
Speaker 2: Okay, stay with me. Jen. Coming up next on the
13:14
Speaker 2: Bloomberg Lass Show, more about Google's three high profile anti
13:18
Speaker 2: trust trials in the past year plus. The Biden administration
13:22
Speaker 2: is cracking down on mergers from mattresses to handbags. I'm
13:26
Speaker 2: June Grosso and you're listening to Bloomberg. How much did
13:30
Speaker 2: Google want to avoid an unpredictable jury trial in a
13:33
Speaker 2: high stakes antitrust case while it wrote out a check
13:37
Speaker 2: for two point three million dollars to ensure a judge
13:40
Speaker 2: would decide the case against it rather than a jury.
13:44
Speaker 2: The Justice Department is looking to break up Google's multi
13:47
Speaker 2: billion dollar ad business that publishers and advertisers use to buy, sell,
13:52
Speaker 2: and service video and display ads online, and Google was
13:57
Speaker 2: taking no chances with a jury. I've been talking to
14:00
Speaker 2: Jennifer Ree, Bloomberg Intelligence senior litigation analyst. So Jen, explain
14:04
Speaker 2: how Google accomplished this.
14:07
Speaker 1: What they did is normally the Department of Justice the
14:10
Speaker 1: United States has to have a bench trial because you
14:13
Speaker 1: only have a right to a jury trial if you
14:15
Speaker 1: have monetary damages. So this is an unusual case with
14:18
Speaker 1: the DJ said, we used Google's products. This is about
14:20
Speaker 1: Google's ad tech products. So it's these this software that
14:23
Speaker 1: basically connects digital advertisers and digital publishers together and you
14:27
Speaker 1: pay Google to use them. DJ said, we have agencies
14:30
Speaker 1: that advertised use these products and therefore were overcharged. So
14:34
Speaker 1: not only do we want injunctive relief here with this case,
14:37
Speaker 1: we also we have damages and so we have the
14:39
Speaker 1: right to a jury trial. So a lot of litigation
14:42
Speaker 1: has happened, right, We're not at the beginning, we're getting
14:44
Speaker 1: near trial here. So we've had a lot of expert
14:47
Speaker 1: reports submitted, We've had summary judgment motions filed, and the
14:51
Speaker 1: US the Department of Justices experts came in and said,
14:54
Speaker 1: here's what we think the damages are, and here's our range,
14:56
Speaker 1: our low range, in our high range. So Google took
14:59
Speaker 1: the highest range that the DOJ's own experts said could
15:02
Speaker 1: possibly be the damages, trebled it because under antitrust damages
15:06
Speaker 1: are tripled and even added pre judgment interest, you know,
15:09
Speaker 1: basically as much as they could possibly have gotten if
15:12
Speaker 1: they'd gotten a jury verdict for damages, and they paid that,
15:15
Speaker 1: and it basically made the damages claim moot. And that's
15:18
Speaker 1: what the judge said. She said, the DJ actually had
15:22
Speaker 1: already sort of sanctioned this range by their own experts,
15:25
Speaker 1: so that this is the range, right, Because the DJ
15:27
Speaker 1: kind of came back and said no, no, no, no, the
15:29
Speaker 1: damages are higher than that, and the judge said, no,
15:31
Speaker 1: you really already kind of accepted this as your top range.
15:34
Speaker 1: They've paid it. Your claim is moot, and there was
15:37
Speaker 1: some legal precedent for that that once the damages are paid,
15:40
Speaker 1: the claim becomes moot. And once it becomes moot, all
15:43
Speaker 1: you have left is your injunctive relief request and that
15:46
Speaker 1: has to be before me as a judge and a
15:47
Speaker 1: bench trial, and so that's how we're going to proceed.
15:50
Speaker 2: And Jen tell us what's at stake in another bench
15:53
Speaker 2: trial over Google Search business, which wrapped up in San
15:57
Speaker 2: Francisco in May, and they're for the judge's decision. What's
16:01
Speaker 2: at stake there?
16:02
Speaker 1: A lot is actually at stake there, because that was
16:05
Speaker 1: a trial about Google paying Apple and Mozilla and other
16:08
Speaker 1: entities to place Google's search engine as the default search
16:12
Speaker 1: engine in sort of all the places on a phone
16:15
Speaker 1: or a device or a tablet where you might need
16:17
Speaker 1: a search engine. So let's say I'm on Safari on
16:19
Speaker 1: my phone and I'm doing a search. People don't know it,
16:21
Speaker 1: but the entity doing that search for you is Google Search.
16:24
Speaker 1: So Google had all these default positions and basically the
16:27
Speaker 1: allegation is that, well, it foreclosed other search engines. You know,
16:30
Speaker 1: there is duc doc go, there is being it foreclosed
16:33
Speaker 1: these engines. And you know what, people say, Google is better,
16:37
Speaker 1: and they may not like being or they may not
16:39
Speaker 1: like duc dot go. But what the DOJ alleges is
16:42
Speaker 1: that those search engines never got a chance to become
16:45
Speaker 1: good because you need scale and they were deprived scale
16:48
Speaker 1: by Google because Google locked up all of these channels
16:51
Speaker 1: to people. Right. So the trial ended in the end
16:54
Speaker 1: of last year, the closing arguments. There was a time
16:56
Speaker 1: lapse between the end and the closing arguments in May,
16:59
Speaker 1: and I think, really any day now we're waiting for
17:01
Speaker 1: the liability decision by the judge. I would expect it
17:04
Speaker 1: this year, probably not in the next few weeks, but
17:07
Speaker 1: I would think sometime in three q probably. And that's
17:10
Speaker 1: just on liability. That's it.
17:12
Speaker 2: And the third antitrust case was with Epic Games, which
17:17
Speaker 2: Google lost. Tell us about where that stands.
17:20
Speaker 1: It's a private case Epic Games versus Google. This is
17:23
Speaker 1: about the playstore where we all download. If you have
17:25
Speaker 1: an Android phone, you download your apps through the Playstore.
17:28
Speaker 1: If you have an iPhone, you do it through the
17:29
Speaker 1: App store. So Epic Games has challenged both Apple and
17:33
Speaker 1: Google two separate trials, because Epic Games wants access to
17:37
Speaker 1: Android and iOS. They want to have their own app store.
17:40
Speaker 1: They want to be a third party app store on
17:41
Speaker 1: those phones so people can go in, buy the apps,
17:44
Speaker 1: install the apps from Epic Games store. And they also
17:47
Speaker 1: want to be able to use their own payment processor,
17:49
Speaker 1: so if somebody did buy an Epic Games game or
17:51
Speaker 1: make an in app purchase through the playstore, Epic Games
17:55
Speaker 1: can process that payment rather than being forced to do
17:57
Speaker 1: it through Google. And they did win that. They did
18:00
Speaker 1: not win as against Apple. That trial is also finished,
18:03
Speaker 1: but they did win before a jury with respect to Google,
18:06
Speaker 1: and we're now in the process of waiting for the
18:08
Speaker 1: judge to tell us what the remedy is going to
18:10
Speaker 1: be there, and I think he's going to force Google
18:13
Speaker 1: to allow other app stores on the Android devices.
18:16
Speaker 2: Yet another reason why Google doesn't want to face a jury.
18:20
Speaker 2: And whatever happens, Google will appeal.
18:22
Speaker 1: And Google will appeal absolutely.
18:24
Speaker 2: Let's now go to what I call Mergermania or the
18:28
Speaker 2: FTC trying to stop merger mania. These cases were interesting
18:32
Speaker 2: because I didn't realize that there was a market for
18:35
Speaker 2: accessible luxury handbags and a market for premium mattresses. So
18:41
Speaker 2: let's start with the FTC suing to block temper Cely's
18:46
Speaker 2: acquisition of Mattress Firm for four billion dollars, which would
18:51
Speaker 2: bring together the US's biggest mattress seller with its largest
18:54
Speaker 2: mattress retail store. So here the FTC is defining the
18:59
Speaker 2: market as a market of premium mattresses. Is there really
19:04
Speaker 2: a market for just premium mattresses?
19:07
Speaker 1: You know, you put your finger exactly on the crux
19:10
Speaker 1: of the issue. In almost all merger challenges, it's always
19:14
Speaker 1: about what we call that relevant market the way the
19:17
Speaker 1: FDC or DOJ defines the market, because that can be
19:20
Speaker 1: just positive, right, and they figure out a way to
19:23
Speaker 1: define it in a manner that makes that market concentrated. Right.
19:27
Speaker 1: So if they say premium mattresses here, it creates an
19:30
Speaker 1: issue for this deal. If it wasn't premium mattresses, you
19:34
Speaker 1: probably would have a lot more competition from online sellers
19:37
Speaker 1: because what the FTC says is that when people buy
19:40
Speaker 1: a mattress online, let's say, from Amazon or anybody else,
19:43
Speaker 1: they tend to buy the beginner mattresses. Starter mattresses they
19:46
Speaker 1: call them, you know, they're lower priced much lower price.
19:49
Speaker 1: But people who are ready to spend the money for
19:51
Speaker 1: a really good premium mattress. You know, you get a
19:54
Speaker 1: little older, your back starts start. You need that good mattress.
19:56
Speaker 2: It made me think that I need a new mattress
19:58
Speaker 2: by the way, I started thinking about you're can.
20:00
Speaker 1: To spend a lot of money. You want to go
20:01
Speaker 1: in and you want to lie down, touch, feel, see
20:03
Speaker 1: that mattress, and you need brick and mortar to do that.
20:06
Speaker 1: So they define this premium mattress market, and I think
20:10
Speaker 1: you are exactly right that the outcome of this very
20:13
Speaker 1: much could depend on whether or not they can prove
20:16
Speaker 1: that that is an appropriate, relevant market and whether the
20:18
Speaker 1: judge accepts that, because it really limits the competition both
20:22
Speaker 1: in terms of who's making those premium mattresses and who's
20:25
Speaker 1: selling those premium mattresses.
20:27
Speaker 2: So this is a vertical deal. Do vertical deals usually
20:31
Speaker 2: get challenged?
20:33
Speaker 1: Well? Today yes, but the thirty years before this administration no.
20:38
Speaker 2: So explain a vertical deal first for those not up
20:42
Speaker 2: on antitrust lingo.
20:43
Speaker 1: So, vertical deals are two companies that don't compete with
20:46
Speaker 1: each other in the market, but they're at different levels
20:48
Speaker 1: of distribution. So often it's like this, it's a company
20:51
Speaker 1: that makes a product and then a company that sells
20:53
Speaker 1: the product, or maybe a company that makes the product
20:55
Speaker 1: company that distributes the product. Right, two different levels, same
20:57
Speaker 1: product chain, supply chain. And for many, many years, sort
21:01
Speaker 1: of the orthodoxy was that vertical deals way more pro
21:04
Speaker 1: competitive than harmful because they actually can really reduce costs
21:08
Speaker 1: for a company that's now becoming vertically integrated. Vertical integration
21:12
Speaker 1: for a company can create efficiencies within that company. It
21:15
Speaker 1: can reduce costs. There's something called believe it or not,
21:18
Speaker 1: elimination of double marginalization. I believe that I won't. I
21:23
Speaker 1: don't even want to hear about what it is. So
21:25
Speaker 1: and the main issue with vertical deals is that it
21:28
Speaker 1: can allow the merged firm to foreclosed rivals. Right, a
21:32
Speaker 1: rival might need access like to mattress firm to sell
21:34
Speaker 1: your mattresses. I've got to get my mattress in that store,
21:37
Speaker 1: otherwise I don't really have a good way to get
21:40
Speaker 1: to customers. So foreclosure is fairly easily fixed remedy just
21:45
Speaker 1: by a promise, you know, signing on the bottom line
21:48
Speaker 1: to the Department of Justice or FTC that you know,
21:51
Speaker 1: as a condition to allowing us to go ahead and
21:53
Speaker 1: close this deal, we promise we won't discriminate against rivals.
21:57
Speaker 1: We promise will treat them as the same way we
21:59
Speaker 1: treat our own products, et cetera. And that's the way
22:01
Speaker 1: these deals got closed for years and years and years, right,
22:04
Speaker 1: they didn't really get challenged, but they often had behavioral
22:07
Speaker 1: remedies like that. This FTC came along and said, you
22:11
Speaker 1: know what, part of the problem we have in so
22:12
Speaker 1: many industries in our country in high prices is because
22:15
Speaker 1: we allowed so much vertical integration for the last thirty
22:18
Speaker 1: forty years to take place. And vertical integration is much
22:21
Speaker 1: more harmful than the orthodoxy would say. It is that
22:24
Speaker 1: we're learning that it's actually harmful, even though there was
22:27
Speaker 1: a school of thought that it was more pro competitive.
22:29
Speaker 1: And we're going to challenge and they have been good
22:31
Speaker 1: to their word. They've challenged quite a few vertical deals.
22:34
Speaker 2: So has temper seally offered any remedies.
22:38
Speaker 1: So apparently they have. It's really vague. They haven't been
22:41
Speaker 1: at all clear. There isn't very detailed public information about
22:44
Speaker 1: what they've offered up Apparently they've offered some supply agreements
22:48
Speaker 1: to some of the companies that are concerned about losing
22:50
Speaker 1: an outlet. I think you know Certa Simmons is a
22:52
Speaker 1: big competitor with premium mattresses, a company called Purple. They
22:55
Speaker 1: both sell currently through Mattress Firm and are afraid that
22:58
Speaker 1: they won't be able to where they'll be discreptated against.
23:01
Speaker 1: They've got some supply agreements. Apparently we're willing to sell
23:04
Speaker 1: some Mattress Firm stores, but the FDC has said it's insufficient.
23:07
Speaker 1: There's very little detail about what it is they've offered up.
23:10
Speaker 2: The FTC voted unanimously to block the deal, and so
23:14
Speaker 2: you have the two Republican FTC commissioners voting to suit
23:18
Speaker 2: a block.
23:19
Speaker 1: Which is meaningful to me. I think that's.
23:22
Speaker 2: Unusual, but meaningful. It was a better way.
23:23
Speaker 1: I think it's meaningful because one of them made a point.
23:27
Speaker 1: Melissa Holyoake made a point, a concurring statement, saying, look,
23:30
Speaker 1: I'm voting to sue, although I tend to. She basically
23:34
Speaker 1: laid out the old orthodoxy that vertical deals are not
23:37
Speaker 1: deals between competitors. They tend to be more pro competitive.
23:40
Speaker 1: Usually they're going to be fine, but in this case,
23:43
Speaker 1: I think there's substantial evidence that the intention of Temper
23:47
Speaker 1: Seeley in buying Mattress firm is to block out its rivals.
23:51
Speaker 2: This deal has been in limbo since it was announced
23:53
Speaker 2: in May of twenty twenty three. Yes, what's the timing here?
23:58
Speaker 1: These things are taking longer and longer longer, so.
24:00
Speaker 2: Because the FDC is bringing more and more and more rights.
24:03
Speaker 1: And they're slowing them down. They're asking for concessions from
24:06
Speaker 1: the companies that sort of slows down the investigation, asking
24:09
Speaker 1: for timing agreements and more time. So I think pending
24:11
Speaker 1: since May is becoming more than norm Look, they have
24:15
Speaker 1: time worked into their agreement to get through the initial
24:18
Speaker 1: FTC lawsuit in federal court. The FDC always brings two suits, right,
24:23
Speaker 1: They bring a suit in federal court asking just for
24:26
Speaker 1: a preliminary a temporary block on closing the deal, because
24:30
Speaker 1: the main suit they bring is internal before an administrative
24:33
Speaker 1: law judge at the FTC. It's called a Part three
24:35
Speaker 1: and that's the lawsuit that is intended to determine whether
24:38
Speaker 1: the deal actually violates antitrust laws. The federal court process
24:42
Speaker 1: can get done quickly. It can get done four to
24:44
Speaker 1: six months, so it'll get done this year. Theoretically, the
24:47
Speaker 1: part three takes a very very long time. So these companies,
24:51
Speaker 1: in order to get this deal closed and not have
24:53
Speaker 1: to extend their end date for the merger agreement, will
24:55
Speaker 1: have to win in first that first level, that preliminary injunction.
24:59
Speaker 2: Processllion dollar breakup fee, yes, right, if the deal fails
25:03
Speaker 2: to close. So now we're going from premium mattresses to
25:07
Speaker 2: accessible luxury handbags. Okay, I never knew about accessible luxury
25:13
Speaker 2: handbags if this was a market.
25:15
Speaker 1: Nor did I.
25:17
Speaker 2: Leave it to the FTC to figure it out. So
25:20
Speaker 2: the FTC is suing to stop tapestries eight point five
25:24
Speaker 2: billion dollar takeover of rival Capri Holdings, the first time
25:28
Speaker 2: the Biden administration has used its aggressive antitrust enforcement to
25:34
Speaker 2: try to stop a deal in the fashion accessories sector.
25:37
Speaker 2: I know a lot about this NFL Sunday ticket, not
25:40
Speaker 2: so much.
25:41
Speaker 1: And it made it hard on analysts like me because
25:43
Speaker 1: usually we go back to look at what is the
25:45
Speaker 1: FTC or DD done in the past for this kind
25:48
Speaker 1: of industry, this kind of deal, and I realized there
25:50
Speaker 1: aren't any.
25:51
Speaker 2: You have to look on the shelves of Bloomingdale's and
25:53
Speaker 2: Sex to find the answer. So, Jen, why is the
25:55
Speaker 2: FTC trying to block tapestries acquisition of Caprice holdings?
26:01
Speaker 1: So, you know, I think a lot like the tempor
26:04
Speaker 1: Sari Le Mattress Firm deal, what they're saying is it's
26:07
Speaker 1: a lot about the documents. I think the similarity between
26:09
Speaker 1: the two cases is that it seems that the FTC
26:12
Speaker 1: is saying there are a lot, a lot, a lot,
26:14
Speaker 1: a lot of documents that support our case in these matters.
26:17
Speaker 1: I think back to when the DOJ challenged AT and
26:20
Speaker 1: T in time Warner. It was unbelievable how few documents
26:23
Speaker 1: there were introduced in court that actually supported the DOJ's theory.
26:26
Speaker 1: But here we've heard that there are a lot of documents,
26:29
Speaker 1: and in particular with Tapestry and Capri, what they're saying
26:32
Speaker 1: is that the companies themselves have a lot of ordinary
26:34
Speaker 1: course documents that suggest they really only view each other
26:37
Speaker 1: as their primary competitors, and that they price against each other,
26:41
Speaker 1: they move against each other. If one goes on sale,
26:43
Speaker 1: the other one does, if one raises prices the other
26:46
Speaker 1: one does, and that they really kind of disregard all
26:49
Speaker 1: the other fringe sort of what we called accessible luxury handbags,
26:53
Speaker 1: because we're talking now about Coach, Kate Spade and Michael Core's.
26:57
Speaker 1: Those are the three brands of handbags that would come
26:59
Speaker 1: to get right.
27:00
Speaker 2: But they have also Versace and Jimmy cho and Stuart Whitesman,
27:03
Speaker 2: who are much more expensive.
27:05
Speaker 1: They do. But when the market that they're talking about
27:07
Speaker 1: the accessible luxury handbag, they're really focusing on the handbag
27:11
Speaker 1: makers Stuart Whiteesman's More Shoes, Jimmy Choo's More Shoes, And
27:14
Speaker 1: they're saying that it's really based on the company's documents,
27:18
Speaker 1: that they define this market, that the company looks at
27:20
Speaker 1: the market that way, that the company defines the market
27:23
Speaker 1: that way, and that the company really views only each
27:27
Speaker 1: other as their primary competitors, and that you lose that
27:30
Speaker 1: competition if they come together.
27:31
Speaker 2: So it's not based on price point.
27:33
Speaker 1: Well, that's the difficult thing. You know, when you have
27:36
Speaker 1: a market that's based on price point, what is that range?
27:39
Speaker 1: You know, where does it stop. Markets are supposed to
27:41
Speaker 1: be defined by people and demand side substitutability with if
27:45
Speaker 1: somebody is buying something and the price goes up and
27:47
Speaker 1: it's unpalatable to them at that price, what do they
27:49
Speaker 1: switch to? So you have this situation where you've got
27:53
Speaker 1: handbags priced a little lower, you've got handbags priced a
27:55
Speaker 1: little higher, and you have consumers that might go either direction,
27:58
Speaker 1: and so I think it becomes very hard to define
28:01
Speaker 1: the contours of the market. And in fact, early on
28:04
Speaker 1: the defendants asked the judge to force the FDC to
28:07
Speaker 1: define the contours of the market, and the judge said, no,
28:10
Speaker 1: I'm not going to do that.
28:11
Speaker 2: I mean, Tapestry is saying that it's trying to get
28:14
Speaker 2: the Michael Core's brand back on track and that this
28:16
Speaker 2: would help that.
28:18
Speaker 3: Well.
28:18
Speaker 1: Part of getting Michael Core's back on track means raising
28:20
Speaker 1: prices for Michael Cores. So I think that it probably
28:24
Speaker 1: isn't really going to be a great defense. It won't
28:27
Speaker 1: necessarily be considered a great pro competitive, legitimate business justification
28:31
Speaker 1: for the deal if that is what the documents show,
28:34
Speaker 1: that the intention would be to increase prices.
28:36
Speaker 2: We've talked before about this very aggressive antitrust enforcement policy
28:42
Speaker 2: of the Biden administration, whether it's the FTC or the
28:45
Speaker 2: Justice Department. Are they being too aggressive at this point?
28:49
Speaker 1: You know? Too aggressive? Is an interesting question because I
28:52
Speaker 1: think I think in my mind, i'd say yes, because
28:55
Speaker 1: I think they should be picking and choosing what they're fighting,
28:59
Speaker 1: maybe with a little finer tooth comb, but I think
29:04
Speaker 1: their position is so few deals over the last forty
29:07
Speaker 1: years have actually gone through litigation and been challenged. We
29:10
Speaker 1: don't have precedent. We need court decisions. And if we
29:13
Speaker 1: want to push the antitrust laws, if we want to
29:15
Speaker 1: expand them out, and we want to reach some of
29:18
Speaker 1: these conglomerate deals, and some of these vertical deals that
29:20
Speaker 1: have just constantly been cleared with remedies are not challenged
29:23
Speaker 1: at all. We've got to get to court, and to
29:25
Speaker 1: get to court, you have to sue, and so to them,
29:28
Speaker 1: this is what they're attempting to do, and that's where
29:30
Speaker 1: all the lawsuits are coming from.
29:31
Speaker 2: Have they been successful in litigation?
29:34
Speaker 1: It's been mixed. In the beginning, it was rocky start,
29:37
Speaker 1: I think for the FTC, not so much for the DOJ,
29:40
Speaker 1: And now it's quite mixed, you know. I would even
29:44
Speaker 1: say fifty to fifty. I think that the FTC has
29:46
Speaker 1: a good shot with the upcoming challenge to Kroger and
29:49
Speaker 1: Albertson's and their deal. I'm not so sure about the
29:52
Speaker 1: Tapestry Capri. I mean based on what we talked about,
29:55
Speaker 1: I think it's very difficult to define that market. I
29:57
Speaker 1: think it's difficult to say that entry is to for
30:00
Speaker 1: luxury handbags. I mean, you get somebody carrying your bag
30:03
Speaker 1: on TikTok and you know you're good to go right
30:06
Speaker 1: through the roof. I think Temper Seedley Mattress Firm is
30:10
Speaker 1: difficult because it's a vertical deal. But if the documents
30:13
Speaker 1: look the way they sound like they look, they have
30:14
Speaker 1: a good shot there too. So as we're coming toward
30:17
Speaker 1: the end of Biden's first term, we may see that
30:21
Speaker 1: their record gets better. They may turn it around. We
30:24
Speaker 1: may be getting some decisions in the fourth quarter this
30:26
Speaker 1: year that turn them around and put them more on
30:28
Speaker 1: the winning side than on the losing side.
30:30
Speaker 2: Always Fungeen, thanks so much. We get an education and
30:33
Speaker 2: antitrust law whenever you're on. That's Bloomberg Intelligence Senior litigation
30:38
Speaker 2: analyst jenniferree Boeing will have a felony conviction if it
30:42
Speaker 2: follows through on an agreement with prosecutors to plead guilty
30:45
Speaker 2: to criminal conspiracy to defraud the United States in connection
30:49
Speaker 2: with approval of it's seven thirty seven max before two
30:53
Speaker 2: of the planes crashed, killing three hundred and forty six
30:56
Speaker 2: people in twenty eighteen and twenty nineteen. The US planemaker
31:01
Speaker 2: has apparently made the calculation that admitting to a crime
31:05
Speaker 2: is better than fighting the charge and enduring a long
31:08
Speaker 2: public trial. However, the plea deal is not a sure thing.
31:12
Speaker 2: Relatives of some of the passengers who died have indicated
31:15
Speaker 2: they'll ask a federal judge to throw out the agreement,
31:19
Speaker 2: which they say is too lenient considering the lives that
31:22
Speaker 2: were lost. Nadilla Millern, whose daughter died in the Boeing
31:26
Speaker 2: Max crash in Ethiopia in twenty nineteen, says, the families
31:31
Speaker 2: want a jury trial.
31:33
Speaker 3: When you have a trial, you get witnesses and you
31:36
Speaker 3: can bring up evidence, and so by Boeing pleading guilty,
31:40
Speaker 3: they don't have that process happening. So that's not what
31:44
Speaker 3: the victims want. That's not what the victims' families want.
31:47
Speaker 2: A federal judge in Texas will decide whether to approve
31:50
Speaker 2: the deal or not. Joining me is Andreas Muno's a
31:53
Speaker 2: litigation partner with Romano Law. What does it mean when
31:57
Speaker 2: a company pleads guilty to a felony? Is going to prison?
32:01
Speaker 2: So what's the import.
32:03
Speaker 4: Well, when a company pleads guilty to authelity, there's certainly
32:06
Speaker 4: a record that's created, notably where the charges are fraud based. Right,
32:11
Speaker 4: any plea of guilty could impair the company's ability to
32:16
Speaker 4: enter into contracts, you know, especially to government related work,
32:20
Speaker 4: and so there is you know, some negative impact there.
32:23
Speaker 4: You're right, no one is really going to jail, but
32:26
Speaker 4: you know, there are penalties associated. There's you know oftentimes
32:30
Speaker 4: fines as well, and so that's you know, that's really
32:32
Speaker 4: the impact of a criminal play on the company.
32:35
Speaker 2: And tell us about this specific plea deal.
32:38
Speaker 4: In this plea deal, which is a deferred prosecution agreement
32:42
Speaker 4: which basically is sort of an informal probationary agreement between
32:47
Speaker 4: the government and Boeing. Under this deal, Boeing will be
32:51
Speaker 4: pleading guilty to a felony and also, you know, is
32:55
Speaker 4: promising to abide by certain requirements and obligations. For example,
33:00
Speaker 4: ball the payment of a pretty healthy fined. Boeing will
33:03
Speaker 4: also be obligated to have an independent monitor appointed to
33:09
Speaker 4: monitor there. You know, there are certain operational aspects. They
33:13
Speaker 4: will also be required to I believe in best about
33:17
Speaker 4: four hundred million to improve and implement additional safety protocols
33:23
Speaker 4: so that you know, future accidents are avoided. In other words, this.
33:26
Speaker 2: Is an update to the twenty twenty one settlement that
33:30
Speaker 2: the company not engage in wrongdoing for a three year period,
33:33
Speaker 2: which it broke. Why is the government entering into this?
33:38
Speaker 2: Is it because you're not going to get much more
33:40
Speaker 2: if they go to trial, Because it sounds like Boeing
33:42
Speaker 2: is a bad actor.
33:44
Speaker 4: So the upside for the DOJ And you're right, like,
33:48
Speaker 4: we're here because of that twenty twenty one agreement, and
33:51
Speaker 4: the DOJ is alleging that they've breached that agreement and
33:54
Speaker 4: now we're facing another deferred prosecution agreement. With that being said,
33:59
Speaker 4: there is a huge upside for the DJ. You know, first,
34:03
Speaker 4: it's another commitment by Boeing to as part of essentially
34:07
Speaker 4: the conditional plea, to pay the fine to install the monitor.
34:11
Speaker 4: But the bigger upside for the DJ is that it
34:14
Speaker 4: avoids the prosecution and actual trial of these charges, which
34:18
Speaker 4: you know, as I'm sure you know, a trial is
34:21
Speaker 4: just inherently unpredictable.
34:22
Speaker 2: Is it odd that part of the plea deal is
34:25
Speaker 2: that the Boeing board of directors meet with families of
34:29
Speaker 2: the victims. I don't know what the purpose.
34:31
Speaker 1: Of that is.
34:32
Speaker 4: I believe the purpose of that was to appease, you know,
34:34
Speaker 4: the victims' families. As part of these deferred prosecution agreements,
34:38
Speaker 4: both parties negotiate the terms. You know, this is an
34:41
Speaker 4: interesting term. I think, like I said, it was meant
34:44
Speaker 4: to appease the victim's families, get them a factor of
34:48
Speaker 4: either apology or accountability.
34:50
Speaker 2: So I don't think the families are placated by this.
34:53
Speaker 2: In a separate document, they call this a sweetheart deal
34:57
Speaker 2: that fails to recognize that because of Boeing's can conspiracy,
35:01
Speaker 2: three hundred and forty six people died. So what does
35:04
Speaker 2: it mean that they're opposing the deal? What kind of
35:08
Speaker 2: impact does that have?
35:10
Speaker 4: So from a technical perspective, the agreement is going to
35:14
Speaker 4: be negotiated between the DOJ and Boeen. To the extent
35:17
Speaker 4: that the victims' families have, you know, express criticism, it
35:20
Speaker 4: doesn't really impact anything. However, the deal will be subject
35:26
Speaker 4: to court approval by the judge, and in that sense,
35:29
Speaker 4: the family's opinions or perspectives could be considered by the
35:32
Speaker 4: judge and it might be a factor in denying the
35:36
Speaker 4: terms of the agreement.
35:38
Speaker 2: So could part of the reason why the plaintiff's lawyers,
35:41
Speaker 2: the lawyers for the families don't want a settlement is
35:44
Speaker 2: because they wanted more to come out at trial that
35:47
Speaker 2: they could use in their own case. And here Boeing
35:51
Speaker 2: hasn't made any admissions that are helpful to it.
35:54
Speaker 4: I think that is very likely the case. You know,
35:56
Speaker 4: On one hand, I'm sure the victims' families wanted some
36:00
Speaker 4: you know, large factor of public accountability via a trial,
36:04
Speaker 4: you know, having witnesses come forward and having you know,
36:07
Speaker 4: very public me coopa if you will. Under the terms
36:11
Speaker 4: of the proposed DPA, yes, Boeing will be required to
36:16
Speaker 4: pretty guilty. However, you know, you're right, like, there may
36:19
Speaker 4: not be a very detailed allocation and they may not
36:22
Speaker 4: admit all the elements that a plant's explawyer would need
36:26
Speaker 4: to prove a civil case. So that's certainly part of it.
36:30
Speaker 2: Could the government still go after employees or corporate executives
36:35
Speaker 2: with this deal in place if they somehow find new evidence.
36:40
Speaker 4: There might be a small chance that they could. However,
36:43
Speaker 4: I'm sure that you know, once the final deal is negotiated,
36:47
Speaker 4: it will have some terminology that would you know, essentially
36:51
Speaker 4: prohibit or preclude those types of individual prosecutions.
36:55
Speaker 2: Boeing is also being investigated by the SEC, Congress and
37:00
Speaker 2: a Seattle grand jury about an accident in January a
37:04
Speaker 2: board an Alaska Airlines plane where the door blew off.
37:07
Speaker 2: So this deal has nothing to do with that, right,
37:11
Speaker 2: those investigations still go forward.
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Speaker 4: That's correct. As part of this deal, the DOJ will
37:16
Speaker 4: be resolving their allegations and potential claims to the extent
37:20
Speaker 4: that Boeing has violated state specific statutes or criminal laws.
37:25
Speaker 4: That's definitely separate.
37:26
Speaker 2: When you have these plea deals with the government and companies,
37:31
Speaker 2: I mean, do judges often say no, I'm not going
37:35
Speaker 2: to prove that deal.
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Speaker 4: These deferred prosecution agreements are ultimately at the court's discretion.
37:41
Speaker 4: With that being said, you know, they do offer pretty
37:44
Speaker 4: wide latitude the DOJ and the defendants to negotiate the
37:48
Speaker 4: proper terms. They'll review the agreement and it's very likely
37:51
Speaker 4: that they will approve it. It is very rare that
37:54
Speaker 4: they would object to it.
37:55
Speaker 2: It seems like Boeing keeps making promises and then hides
37:59
Speaker 2: it's misdeeds, and then we have another agreement. What's the
38:03
Speaker 2: monitor like in this case?
38:05
Speaker 4: I mean I totally agree with that. You know, it's
38:07
Speaker 4: sort of like a pool of me one to me
38:09
Speaker 4: twice kind of thing, right that the twenty twenty one
38:11
Speaker 4: for prosecution had certain requirements. You know, we're here because
38:15
Speaker 4: the DJ is saying that Boeing has violated that, and
38:20
Speaker 4: so now we're talking about another one. It's almost like
38:22
Speaker 4: how many DPAs is too many? So your last point,
38:25
Speaker 4: the interesting thing is that Boeing will be required to
38:29
Speaker 4: have a monitor. That is not that they're choosing. I
38:33
Speaker 4: believe under the terms, the DOJ will choose the monitor.
38:36
Speaker 2: Thanks for being on the show. That's Andreas Munoz, a
38:40
Speaker 2: litigation partner at Romano Law. And that's it for this
38:43
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