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Charges in Matthew Perry's Death & $267 Million Legal Fee · Bloomberg Law

0:03
Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.
0:10
Speaker 2: These defendants took advantage of mister Perry's addiction issues to
0:15
Speaker 2: enrich themselves. They knew what they were doing was wrong.
0:18
Speaker 2: They knew what they were doing was risking great danger
0:22
Speaker 2: to mister Perry, but they did it anyways.
0:25
Speaker 1: Federal prosecutors have charged five people, including two doctors, in
0:29
Speaker 1: the ketamine drug overdose death of friend Star Matthew Perry
0:33
Speaker 1: last October. US attorney Martine Estrada said their seven month
0:38
Speaker 1: investigation revealed a vast criminal network.
0:42
Speaker 2: That investigation has revealed a broad, underground criminal network responsible
0:49
Speaker 2: for distributing large quantities of ketamine to mister Perry and others.
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Speaker 1: Three defendants have already pled guilty, Perry's live in assistant,
1:00
Speaker 1: one of the doctors, and a middleman. The case will
1:03
Speaker 1: now focus on the two who have pleaded not guilty,
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Speaker 1: Jazzvin's Sanga, an alleged drug trafficker known as the Ketamine Queen,
1:11
Speaker 1: and doctor Salvador Placentia. His attorney says the doctor sold
1:15
Speaker 1: ketamine to Perry, but insists he did not break the law.
1:19
Speaker 3: He was a patient.
1:20
Speaker 2: He did receive ketymine treatment therapy.
1:23
Speaker 1: Joining me is healthcare attorney Harry Nelson of Nelson Hardiman.
1:27
Speaker 1: Harry tell us about ketamine and what it's used for.
1:30
Speaker 4: It was originally developed as a tranquilizer for veterinarians, for
1:34
Speaker 4: large animals like horses, but it's been used increasingly, you know,
1:38
Speaker 4: for human beings as a sedative, and in the last
1:42
Speaker 4: twenty five years or so, there's been a growing body
1:46
Speaker 4: of research that it can be an effective alternative for
1:50
Speaker 4: treatment resistant depression, meaning when people are not successful in
1:55
Speaker 4: managing clinical depression with the sort of standard more conventional
1:59
Speaker 4: treatments like SESSR, high sterotonin reuptake inhibitors like prozac most famously,
2:04
Speaker 4: and also for post traumatic stress disorders. Those are awful
2:07
Speaker 4: labeled uses, but those are the widespread uses that have
2:10
Speaker 4: really led to this massive growth in ketymine the last
2:14
Speaker 4: couple of years. So we've been seeing some ketamine used
2:16
Speaker 4: in some detox situations, but primarily depression and PTSD are
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Speaker 4: the primary uses that we're seeing for it in the United.
2:24
Speaker 1: States today, Matthew Perry was getting ketamine infusion therapy.
2:29
Speaker 4: Matthew Perry was getting ketamine infusion therapy and then at
2:34
Speaker 4: some point one of the doctors who has been arrested
2:37
Speaker 4: here basically started allowing him to self administer the keademine.
2:41
Speaker 4: At least that's the allegation, and the self administration, it appears,
2:45
Speaker 4: may have come in both the form of infusion at home,
2:49
Speaker 4: meaning through like putting it in an interveneous line, or
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Speaker 4: more commonly, what we've seen and what's grown in popularity
2:54
Speaker 4: in the last few years has been ketamine taken by
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Speaker 4: a trophy, which is essentially like a lot and so
3:00
Speaker 4: people basically just suck on a ketamine lozenge and get
3:04
Speaker 4: the same effect metabolized by doing so.
3:07
Speaker 1: The defendants here range from his live in assistant, two doctors,
3:13
Speaker 1: an acquaintance to acted as a middleman and a drug
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Speaker 1: dealer known as the ketamine Queen. Is the prosecution out
3:20
Speaker 1: to prove a criminal.
3:22
Speaker 4: Network here, You know, it's not clear from what we've
3:25
Speaker 4: seen so far how much this was a coordinated criminal
3:29
Speaker 4: network as opposed to various individuals being prosecuted for their
3:34
Speaker 4: own personal violations of the laws. So you had a
3:37
Speaker 4: lot of different people with different responsibilities. In the case
3:40
Speaker 4: of the doctors, their writing of prescriptions and their instructions
3:44
Speaker 4: and their sort of permissiveness about giving Matthew Perry the
3:47
Speaker 4: drug is leading to one set of charges similar to
3:50
Speaker 4: you know things we've seen with doctors and other celebrities,
3:53
Speaker 4: where essentially there's like a gross negligence because they own
3:55
Speaker 4: a duty, as opposed to some of the hangers on
3:58
Speaker 4: and the entourage who are directly violating drug laws by
4:02
Speaker 4: handling controlled substances, which ketamine is a Schedule three controlled
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Speaker 4: substance without any authorization to do so, so they're effectively
4:08
Speaker 4: being charged as drug dealers.
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Speaker 1: One of the defendants who pleaded guilty was Perry's living assistant,
4:15
Speaker 1: and according to the documents, he gave Perry ketamine three
4:19
Speaker 1: times on the day he died, and before the third dose,
4:23
Speaker 1: according to the documents, Perry asked his assistant to quote,
4:27
Speaker 1: shoot me up with a big one. I'm sort of wondering,
4:31
Speaker 1: you have someone who works for you and you're giving
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Speaker 1: them orders. How much is that person responsible and how
4:37
Speaker 1: much are you responsible?
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Speaker 4: It's a good question. Look, Matthew Perry certainly was being
4:44
Speaker 4: irresponsible and kind of assigning this responsibility and thinking that
4:48
Speaker 4: somehow he could safely allow a person with no training,
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Speaker 4: no license, no authorization, legally to do this, to do it,
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Speaker 4: and the person himself in the eyes of the law.
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Speaker 4: We only have one person who's alive and here to
5:03
Speaker 4: point a finger at and to hold it accountable. But
5:06
Speaker 4: there's certainly no question that Matthew Perry was complicit in
5:11
Speaker 4: these completely you know, outside the bound therapeutic relationships, as
5:16
Speaker 4: is always the case when you have situations like this
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Speaker 4: where you have you know, famous, powerful people who are
5:23
Speaker 4: managing to hold sway enough over people around them that
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Speaker 4: judgments that most people wouldn't make around their peers, you know,
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Speaker 4: all of a sudden goes out the windows. So people
5:33
Speaker 4: do things for celebrities and agree to do things as
5:37
Speaker 4: this assistant did in administering the Keademy in this way
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Speaker 4: that he probably wouldn't have done, you know, had a
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Speaker 4: friend asked him simply based on his relationship and you know,
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Speaker 4: his willingness to go so far beyond ordinary boundaries with
5:49
Speaker 4: Matthew Perry. Yeah, it's an interesting question, but we only
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Speaker 4: as a practical matter, we have the people who are
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Speaker 4: left to hold accountable and hopefully to send a message
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Speaker 4: that makes other people think twice about playing similar roles.
6:00
Speaker 1: So the two who have pleaded not guilty are the
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Speaker 1: alleged drug trafficker known as the ketamine Queen, and one
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Speaker 1: of the doctors who allegedly taught Perry's live an assistant
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Speaker 1: how to inject the drug and injected it himself as well.
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Speaker 1: Does it seem like prosecutors gave the deals to those
6:19
Speaker 1: who appeared less culpable.
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Speaker 4: So it's clear that the government was looking for cooperation
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Speaker 4: from some of the people who were considered lower level participants.
6:29
Speaker 4: It's always the case that the doctors are viewed as
6:32
Speaker 4: the most serious target, I think, in part to send
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Speaker 4: a message to other doctors, because doctors have a unique
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Speaker 4: privilege in terms of their proximity and access and ability
6:43
Speaker 4: to put the drugs in the place where they caused
6:46
Speaker 4: harm and where this tragedy happens. So I think the
6:49
Speaker 4: focus in these cases is consistently to make an example
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Speaker 4: of the doctors, because as we see here, we have
6:56
Speaker 4: these doctors who just completely go outside the requirements of
7:01
Speaker 4: the law, outside the bounds of safe practice, and essentially
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Speaker 4: set up the circumstances in which this death occurred. So
7:09
Speaker 4: that's always going to be the top level goal of prosecutors,
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Speaker 4: and they.
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Speaker 1: Have text messages and I think this helps also to
7:17
Speaker 1: paint the doctors in a bad light, because the doctor
7:21
Speaker 1: who's pleaded not guilty texted the other doctor about how
7:25
Speaker 1: much to charge, and he wrote, I wonder how much
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Speaker 1: this moron will pay. Let's find out. So they charged
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Speaker 1: him exorbit in amounts, like twelve dollars worth of ketamine.
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Speaker 1: They charged him two thousand dollars.
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Speaker 4: Look, it doesn't get any worse than that. We hold
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Speaker 4: doctors responsible for following the hippocratic oath right to take
7:46
Speaker 4: care of patients, to do no harm. And it's a
7:50
Speaker 4: tricky subject. Money and healthcare is inherently a fraud topic
7:55
Speaker 4: because doctors are entitled to make a living. But when
7:59
Speaker 4: you see the kind of naked greed here and the
8:04
Speaker 4: dehumanizing language, you know how much you know will this
8:07
Speaker 4: more on pay? Where a doctor was so contemptuous of
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Speaker 4: the patient he was responsible for that he had a
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Speaker 4: duty to, it's really like heartbreaking, and I think it
8:17
Speaker 4: shows a level of dehumanization and disregard for responsibility that
8:22
Speaker 4: is not likely to sit well with a jury or
8:24
Speaker 4: a judge and probably spells not just losing a license,
8:28
Speaker 4: but spending some significant time and custody.
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Speaker 1: For this doctor is the cause of death a possible
8:34
Speaker 1: defense because the La County Medical Examiner's Office said that
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Speaker 1: he died of the acute effects of ketamine, but that
8:42
Speaker 1: contributing factors included drowning, coronary artery disease, and the effects
8:48
Speaker 1: of buff and orphan.
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Speaker 4: Yeah. Buf and orphan is a drug that's become the
8:52
Speaker 4: most popular and widespread sort of drug to keep people
8:56
Speaker 4: from craving opioids, So it's been used widely after prescription
9:01
Speaker 4: opioids and other kind of opioid addictions. It's a partial
9:04
Speaker 4: antagonist that basically sort of satisfies that craving without getting
9:08
Speaker 4: people high, and it's safe, people don't die from it.
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Speaker 4: But your question raises a really interesting sort of set
9:14
Speaker 4: of possibilities. Matt Perry was known, I think widely at
9:17
Speaker 4: least from either heard over the years, to be in
9:19
Speaker 4: really poor health as a result of his drug use,
9:21
Speaker 4: which is often the case. So the question is was
9:24
Speaker 4: that possibly a factor. Maybe this isn't what actually killed him.
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Speaker 4: And first of all, when we talk about the doctors
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Speaker 4: and the responsibility that they played, they owed separate duties,
9:33
Speaker 4: so they're falling below standards of practice. So extremely is
9:37
Speaker 4: a problem for them, irrespective of what happened, but for
9:40
Speaker 4: everybody in this case who's charged. You know, there's a
9:42
Speaker 4: fundamental principle that you learn when you start law school
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Speaker 4: and you take first year fourth which is that you
9:49
Speaker 4: kind of take the person who's harmed as you find them. So,
9:53
Speaker 4: you know, in law school there's a classic case of
9:54
Speaker 4: the eggshell skull, right of a person who has a
9:58
Speaker 4: very thin skull and accidents, you know, someone hitting them
10:02
Speaker 4: on the head, which which ordinarily would not have harmed
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Speaker 4: a normal person. It's sort of your bad luck that
10:08
Speaker 4: you've chose to hit this person, and none of us knows,
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Speaker 4: you know, what are the vulnerabilities of the people around us.
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Speaker 4: So unfortunately for all of these people who have been charged,
10:17
Speaker 4: you know, the condition that Matthew Perry was in wasn't
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Speaker 4: a risk that they were taking, and they didn't have
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Speaker 4: to know exactly how bad his physical health was, and
10:25
Speaker 4: it doesn't really matter if his death would have been
10:28
Speaker 4: preventable had he been in better health. It sort of
10:31
Speaker 4: goes out the window, and they take him as they
10:34
Speaker 4: found him and are responsible.
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Speaker 1: So the doctor who pled not guilty to the charges,
10:41
Speaker 1: his attorney says, his clients sold ketamine to Perry, but
10:44
Speaker 1: he insists he did not break the law. The attorney
10:46
Speaker 1: said he was a patient, he did receive ketamine treatment therapy.
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Speaker 4: Right, So this is going to be probably the hardest case,
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Speaker 4: the case that does not involve the sort of gross
10:57
Speaker 4: profiteering motive. But this case still involved a doctor who
11:02
Speaker 4: gave the ketamine for self administration without monitoring. And part
11:06
Speaker 4: of what happened here is something fundamentally unsafe, i e.
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Speaker 4: A person taking ketamine and getting into a hot tub
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Speaker 4: where they were susceptible of drowning just because ketamine causes disassociation.
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Speaker 4: You're not sharp, right. We have all these settings where
11:22
Speaker 4: you take over the counter medication and the warning on
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Speaker 4: the label says, don't operate machinery, don't get behind the
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Speaker 4: wheel of a car, and so too here you have
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Speaker 4: to wonder what this doctor thought. I can certainly tell you,
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Speaker 4: you know, in advising practices that use ketamine, we consistently
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Speaker 4: advise that people should be monitored to make sure they're
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Speaker 4: not having a negative effect. Ketamine can have dangerous effects,
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Speaker 4: most commonly disassociation and panic attacks. And so we don't
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Speaker 4: know exactly what happened here yet, And I don't know
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Speaker 4: if we ever will, but I think the doctor still
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Speaker 4: bears responsibility for unsafe administration of ketamine and not make
12:00
Speaker 4: sure that it was being used in the setting where
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Speaker 4: there was oversight by a person who was knowledgeable and
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Speaker 4: able to do what needed to be done if something
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Speaker 4: went wrong.
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Speaker 1: Coming up next, Why are federal prosecutors involved in what
12:12
Speaker 1: would normally be a state case? This is Bloomberg.
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Speaker 3: Video.
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Speaker 1: Federal prosecutors have charged five people, including two doctors, in
12:24
Speaker 1: the ketamine drug overdose of actor Matthew Perry last October.
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Speaker 1: All five were charged with conspiracy to distribute the drug
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Speaker 1: and some with other charges as well. Three defendants have
12:35
Speaker 1: already pleaded guilty. Perry's live an assistant, one of the doctors,
12:39
Speaker 1: and a middleman. One of the doctors, and the alleged
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Speaker 1: drug trafficker have pleaded not guilty. I've been talking to
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Speaker 1: healthcare attorney Harry Nelson of Nelson Hardiman. Harry, I'm not
12:50
Speaker 1: clear on why the doctors didn't just give him the
12:54
Speaker 1: ketamine infusion shots themselves and where the drug dealer came
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Speaker 1: into this.
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Speaker 4: My sense, just from reading this case and looking at
13:03
Speaker 4: the investigation is that Matthew Perry had a persistent and
13:08
Speaker 4: significant interest in ketamine that went beyond what most doctors
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Speaker 4: who are responsibly prescribing and administering ketamine will do. And
13:18
Speaker 4: so there was this constant pressure. And there are a
13:20
Speaker 4: lot of questions because ketamine has been a relatively new treatment,
13:24
Speaker 4: we are frequently getting questions from all kinds of practices
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Speaker 4: about how many times ketamine can be administered to the
13:31
Speaker 4: same patient, you know, over what period of time, you know.
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Speaker 4: And so it's my sense is that there was this
13:37
Speaker 4: constant effort to find the drug that looks more and
13:41
Speaker 4: more like the way that people sort of behave around
13:44
Speaker 4: illegal drugs, where someone who's addicted is constantly looking for
13:47
Speaker 4: a source and a supply and not sort of counting
13:50
Speaker 4: on the fact that routine prescribing through physicians and sticking
13:54
Speaker 4: up at pharmacies and so on, or administration in doctor's
13:57
Speaker 4: offices is going to take care of it. So I
13:59
Speaker 4: just think there was clearly a pressure, you know, in
14:02
Speaker 4: the way that the ketamine was procured that led to
14:06
Speaker 4: all these different sources. This is not what good healthcare
14:09
Speaker 4: looks like. This is what drug dealing and illegal you know,
14:12
Speaker 4: misuse of drugs looks like, and so I think it's
14:15
Speaker 4: giving us a really troubling picture of how this happened.
14:19
Speaker 1: And you've represented physicians with celebrity clients dealing with drug addictions.
14:25
Speaker 4: We've had a lot of cases over the years, Unfortunately,
14:28
Speaker 4: many cases where we didn't get involved until after a
14:31
Speaker 4: physician called us in a death. Inevitably, because celebrity deaths
14:35
Speaker 4: hit the media and make headlines, there's a lot more
14:38
Speaker 4: pressure on both local law enforcement, on the medical board,
14:41
Speaker 4: and in this case, on federal authorities you know, to investigate.
14:45
Speaker 4: So I've been involved in over a dozen cases involving
14:47
Speaker 4: celebrity deaths and plenty of cases where addiction treatment programs
14:52
Speaker 4: and physicians you know, are managing celebrity patients. And it's
14:56
Speaker 4: challenging because there are some legitimate challenges. Right people's privacy
15:01
Speaker 4: of celebrity has a much narrower zone of privacy, so
15:04
Speaker 4: inevitably that can be something that creates a little more
15:08
Speaker 4: complication to get effective treatment. But the most common thread
15:13
Speaker 4: for me throughout all these cases is that you had
15:16
Speaker 4: someone whose celebrity led them to feel somewhat entitled to
15:19
Speaker 4: easier access to drugs and medications that we normally make
15:24
Speaker 4: very challenging. We put some hurdles to people getting them
15:27
Speaker 4: and those go out the window, and we just constantly
15:30
Speaker 4: see physicians and other health professionals making compromises in standards
15:35
Speaker 4: to make things easier. And whether it's out of greed,
15:38
Speaker 4: whether it's out of some kind of like you know,
15:41
Speaker 4: romantic idea of your own power being as close to
15:45
Speaker 4: these people, whether it's out of respect for their privacy.
15:48
Speaker 4: It's definitely a different world of medicine and certainly a
15:51
Speaker 4: part of practicing in southern California where this is such
15:55
Speaker 4: an epicenter of this. But yeah, unfortunately, this case feels
15:58
Speaker 4: too much to me, like so many of the ones
16:01
Speaker 4: that have come before it, and that I'm sure we're
16:03
Speaker 4: going to be seeing after who.
16:05
Speaker 1: Most of these cases settled before trial, or have some
16:07
Speaker 1: gone to trial.
16:08
Speaker 4: It's very unusual that positions get charged criminally. You know,
16:12
Speaker 4: one of the most famous cases back a few years
16:14
Speaker 4: ago was the Michael Jackson case where doctor Conrad Murray
16:17
Speaker 4: was criminally tried. You know, most doctors who are facing
16:22
Speaker 4: a risk of jail time along with of course their
16:25
Speaker 4: loss of licensure, fight these cases much more aggressively than
16:30
Speaker 4: non physicians, so I would say that when criminal charges
16:34
Speaker 4: are at stake, these cases have a very high tendency
16:38
Speaker 4: to go to trial. When it's just a licensing issue,
16:41
Speaker 4: sometimes doctors being put on probation or having a suspension
16:45
Speaker 4: on their license, or even in some cases just giving
16:48
Speaker 4: up their license temporarily with an intention to reapply in
16:51
Speaker 4: a few years. It's more likely that extreme cases will settle,
16:54
Speaker 4: But I think it becomes a life and death thing
16:56
Speaker 4: for doctors when they're threatened with jail time and the
16:59
Speaker 4: possibility of no, we're practicing again.
17:01
Speaker 1: Did you actually talk to investigators about this case?
17:04
Speaker 3: We did.
17:05
Speaker 4: We had contact with investigators in this case, not for
17:08
Speaker 4: anybody who was ultimately charged, but you know, anytime these
17:11
Speaker 4: investigations are going on, there are plenty of people, you know,
17:15
Speaker 4: who are in the background, and so we did have
17:18
Speaker 4: contact and knew that this investigation was going on for
17:21
Speaker 4: quite a while. It was an unusual investigation because we
17:24
Speaker 4: don't often see federal investigations in celebrity debts, right that
17:28
Speaker 4: most of the federal investigations involved sort of broader problems
17:31
Speaker 4: of controlled substance distribution on a wider scale, so that
17:35
Speaker 4: this case was unusual in that respect.
17:37
Speaker 1: Why were federal charges brought here.
17:40
Speaker 4: I think what was happening here is that the media
17:42
Speaker 4: attention led to enormous pressure on the DEA as the
17:48
Speaker 4: agency responsible for controlled substances, and we have not seen
17:52
Speaker 4: a significant number of DEA cases involving ketamine, and I
17:56
Speaker 4: think there was a conscious decision to make an example
18:00
Speaker 4: of the loose practices around ketamine in this case that
18:04
Speaker 4: led to this unusual decision to go so deep on
18:07
Speaker 4: this investigation. It's interesting because one of the other big
18:11
Speaker 4: cases that we've been involved in recently, also involving a
18:14
Speaker 4: federal Department of Justice investigation driven by DEA concerns, was
18:19
Speaker 4: related to websites and during the pandemic loosening standards for
18:24
Speaker 4: ADHD meds like adderall, we were kind of wondering, you know,
18:28
Speaker 4: there had been a number of ketamine telemedicine sights that
18:31
Speaker 4: took off during the pandemic, and a lot of wonder
18:34
Speaker 4: whether the Department of Justice was also going to turn
18:37
Speaker 4: its attention to ketymine and we did not see that
18:39
Speaker 4: same kind of response. And I almost read this case
18:43
Speaker 4: and the federal resources here as sort of a makeup
18:47
Speaker 4: in a way of trying to devote attention to ketamine
18:51
Speaker 4: out of concern that it's being misused and being given
18:54
Speaker 4: out to loosely. So I'm not sure that's just my
18:57
Speaker 4: personal theory, but I'm sure we'll learn more ahead.
18:59
Speaker 1: What strikes me is that it takes a celebrity for
19:03
Speaker 1: them to spend so much time on investigation and actually
19:06
Speaker 1: come up with with charges when you know how many
19:10
Speaker 1: cases are there out there not involving a celebrity.
19:14
Speaker 4: Yeah, it certainly makes you wonder if Look, the reality
19:17
Speaker 4: is that our media becomes an enormous source of pressure
19:22
Speaker 4: and accountability on our government. And so the irony is
19:26
Speaker 4: that there are undoubtedly other, many, sort of anonymous people
19:31
Speaker 4: out there who also you know, died unnecessarily or were
19:35
Speaker 4: harmed by unsafe practices around ketamine. And it takes a
19:39
Speaker 4: case like this to get attention. And it's a strange
19:43
Speaker 4: aspect of our celebrity culture that drives so much media
19:46
Speaker 4: attention in this case. I just hope it ends up
19:49
Speaker 4: being Forgod in calling more attention to a serious problem.
19:53
Speaker 1: In light of that, do you think that the prosecution
19:56
Speaker 1: is not going to want to make a deal with
19:58
Speaker 1: the remaining two and bring this to trial.
20:02
Speaker 4: Prosecutors will always make a deal. Prosecutors will never insist
20:05
Speaker 4: on going to trial if the defense, then the defendants
20:09
Speaker 4: capitulate and acknowledge wrongdoing. The problem here is that I
20:14
Speaker 4: think the consequences are so extreme for the remaining defendants
20:20
Speaker 4: that there's a pretty good chance these cases will go
20:22
Speaker 4: to trial and there will be attempt to make it
20:24
Speaker 4: look like there might have been something less than you know,
20:27
Speaker 4: kind of a wanton sort of disregard for human life,
20:30
Speaker 4: and to make their conduct look better. So I'm not
20:33
Speaker 4: ruling out the possibilities they'll be a guilty plea here.
20:35
Speaker 4: I think, you know, there's always the advantage of negotiating
20:40
Speaker 4: shorter sentencing, but it's very serious. This is a career
20:44
Speaker 4: ending for these doctors, and so there's a pretty good
20:46
Speaker 4: chance they'll go to trial.
20:47
Speaker 1: Not only that, but if convicted, I mean, if you
20:50
Speaker 1: add up everything, not that a judge would do that,
20:52
Speaker 1: but if you add everything up, they could spend their
20:54
Speaker 1: life in prison, both of them.
20:56
Speaker 4: Yes, that's constantly the calculus for people facing charge, just
21:00
Speaker 4: from federal authorities, in particular, because when you're facing federal charges,
21:05
Speaker 4: the standards for time off for good behavior and reduction
21:09
Speaker 4: of sentences are much narrower. So the big advantage here
21:14
Speaker 4: of some degree of cooperation and a plea would be
21:19
Speaker 4: what kind of sentencing recommendations prosecutors will make. So I
21:22
Speaker 4: do think that that would not be a surprising way
21:25
Speaker 4: for this to go.
21:26
Speaker 1: Are we assuming that the people who pled have some
21:30
Speaker 1: kind of a deal in place about prison terms.
21:34
Speaker 4: That's a pretty safe assumption that anybody who is cooperating
21:38
Speaker 4: and entered into a plea has had conversations and reached
21:42
Speaker 4: some kind of agreement on sentencing. Typically, the prosecutors don't
21:48
Speaker 4: decide sentencing, they just make recommendations to judges. But there's
21:52
Speaker 4: a fairly high degree of confidence that judges are going
21:55
Speaker 4: to be responsive and acknowledge the cooperation is. It's not
22:00
Speaker 4: like an open and shut sort of topic where someone
22:03
Speaker 4: gets a written guarantee that you know of what their
22:06
Speaker 4: sentence is going to be for cooperation. But there's enough
22:09
Speaker 4: confidence in the way that our system operates to continue
22:12
Speaker 4: to motivate people to enter into these kind of pleas.
22:14
Speaker 4: It's a safe bet that that happened here.
22:17
Speaker 1: Is a doctor ever allowed to prescribe ketamine to be
22:19
Speaker 1: taken at home, In other words, not in the office
22:23
Speaker 1: under supervision.
22:24
Speaker 4: Trochies these lozenges have become popular with ketymine and they're
22:29
Speaker 4: perfectly legal and doctors can prescribe them. The question of
22:33
Speaker 4: what's appropriate supervision is a really important one, I will
22:38
Speaker 4: tell you personally, we have recommended that even if it's
22:42
Speaker 4: happening you know, by video essentially by like a telehealth
22:46
Speaker 4: means that there be a requirement of observation, that somebody
22:50
Speaker 4: a nurse for example, be watching the person and they
22:54
Speaker 4: be visible on a camera so that we can make
22:57
Speaker 4: sure that they're safe and that there be immediate people
23:00
Speaker 4: who can step in immediately if something goes wrong. So
23:03
Speaker 4: the law is slightly different from state to state about
23:06
Speaker 4: what the degree of supervision necessary is for safe administration
23:11
Speaker 4: of ketamine lozenges, but it's definitely my belief and recommendation
23:15
Speaker 4: as just a matter of good safety practices, that somebody
23:18
Speaker 4: be observed and that there'd be someone who can step
23:21
Speaker 4: in and a doctor or a physician assistant or nurse
23:24
Speaker 4: practitioner immediately available to give instructions about how to handle
23:28
Speaker 4: whatever is happening, whether it's dissociation, which is the most
23:31
Speaker 4: common thing, or some kind of panic attack and kettymine
23:34
Speaker 4: infusion should not be happening outside of medical facilities. That
23:37
Speaker 4: seems pretty black and white to me.
23:39
Speaker 1: Well, we'll see if the two remaining defendants strike a
23:42
Speaker 1: deal with prosecutors before the trial. Thanks so much, Harry.
23:45
Speaker 1: That's Harry Nelson of Nelson Hardiman coming up. The Delaware
23:50
Speaker 1: Supreme Court approves a nearly three hundred million dollar lawyer's fee.
23:56
Speaker 1: I'm June Grosso and you're listening to Bloomberg. We're used
24:01
Speaker 1: to big numbers. That's what Chief Justice Colin Seitz wrote
24:05
Speaker 1: in an opinion affirming certainly a very big number for
24:09
Speaker 1: attorney's fees, a two hundred and sixty seven million dollar
24:13
Speaker 1: fee award for the attorneys who negotiated a one billion
24:17
Speaker 1: dollar settlement in a lawsuit over an acquisition involving Dell Technologies.
24:22
Speaker 1: It's the second highest fee award in the Court's history.
24:25
Speaker 1: The ruling may be a concern for Tesla, which faces
24:29
Speaker 1: unusually large fee applications in two separate lawsuits involving CEO
24:35
Speaker 1: Elon Musk's pay package and compensation for the electric vehicle
24:39
Speaker 1: maker's board. Joining me is business law professor Eric Tally
24:43
Speaker 1: of Columbia Law School so the Delaware Supreme Court ruled
24:47
Speaker 1: that five firms should receive two hundred and sixty seven
24:50
Speaker 1: million in legal fees for securing this billion dollar settlement.
24:54
Speaker 1: That's twenty seven percent. Would you consider that normal for
24:58
Speaker 1: a settlement like this.
24:59
Speaker 3: Or as that above, Well, I guess it suggests once again, Jimmy,
25:04
Speaker 3: you and I are both in the wrong business. But
25:06
Speaker 3: this is an interesting area of law involving situations where
25:11
Speaker 3: a law firm, without any promise of compensation if they
25:16
Speaker 3: lose outright, brings a case forward and then petitions the
25:20
Speaker 3: court for some fraction of the award. In this case,
25:23
Speaker 3: it was a mediated settlement, and so the idea behind
25:28
Speaker 3: how to come up with that amount has always been
25:31
Speaker 3: somewhat controversial. But the way that Delaware has generally done
25:35
Speaker 3: this is to partially recognize the idea that, you know,
25:39
Speaker 3: these cases can sometimes be risky to bring forward, and
25:43
Speaker 3: as a result, a lot of them are going to
25:45
Speaker 3: end up being losers. The situations where you win are
25:49
Speaker 3: the ones where you actually make any money at all,
25:52
Speaker 3: end up sort of having to sort of compensate for
25:54
Speaker 3: that overall chanciness or riskiness of a set of cases
25:59
Speaker 3: you pry forward the idea behind allowing something in the
26:04
Speaker 3: fifteen to thirty percent rate is just not that unconventional.
26:08
Speaker 3: What makes this case an interesting one is that this
26:12
Speaker 3: settlement amount was so large. There really aren't that many
26:15
Speaker 3: cases that are either adjudicated or settle at numbers beginning.
26:20
Speaker 4: With a B.
26:21
Speaker 3: In this case, it was a one billion dollars settlement.
26:23
Speaker 3: So once you apply that conventional formula to the percentage,
26:28
Speaker 3: you end up with a number that looks like it's
26:30
Speaker 3: about two hundred and seventy million dollars. And that just
26:34
Speaker 3: is an absolute matter can be jaw dropping to people
26:38
Speaker 3: unless you put it against the context in which these
26:40
Speaker 3: cases generally are decided.
26:43
Speaker 1: So the investors, led by Pentwater Capital Management, as Delaware's
26:48
Speaker 1: Supreme Court to reduce the fee, and they proposed a
26:50
Speaker 1: federal court model where attorney's fees generally decrease as settlement
26:56
Speaker 1: sizes increase. So they said that under that mind would
27:00
Speaker 1: justify around a fifteen percent ratio.
27:04
Speaker 3: Yeah, the federal approach to this has been a little
27:06
Speaker 3: bit more along the lines of just trying to come
27:09
Speaker 3: up with an hourly amount, maybe scale out a little
27:13
Speaker 3: bit by risk, and then apply it to the case
27:16
Speaker 3: that Delaware approach has rejected that years ago in a
27:21
Speaker 3: pretty well known case that Delaware Court's decided, no, we're
27:25
Speaker 3: actually going to use what's known as a percentage of
27:28
Speaker 3: the fund approach, in which depending on how deeply into
27:32
Speaker 3: the case you get, how far towards the finished line
27:35
Speaker 3: of actually litigating the case in court you get, you're
27:38
Speaker 3: going to get an increasing amount of the settlement in
27:42
Speaker 3: a percentage term, and that percentage is not going to
27:46
Speaker 3: start declining as a general matter if it's a large,
27:50
Speaker 3: sort of mega settlement, as this one was. Now the
27:54
Speaker 3: defendants in this case sort of excuse me, it wasn't
27:56
Speaker 3: the defendants. It was actually some of the shareholders who
27:59
Speaker 3: had one in this case well, petitioning the court to
28:03
Speaker 3: reduce that amount so that they could end up getting more.
28:06
Speaker 3: And this is always kind of an interesting issue because
28:09
Speaker 3: until you have a prevailing plaintiff, you know the parties
28:13
Speaker 3: that are all part of the shareholder group and the
28:16
Speaker 3: attorneys are all on the same side. But then once
28:19
Speaker 3: it comes to the question of how much of the
28:20
Speaker 3: attorney's going to get versus how much of the shareholder
28:23
Speaker 3: is going to get, that's when you can start to
28:25
Speaker 3: have these disputes, and the parties the petitioners in this
28:29
Speaker 3: case were saying, look, this is such a large settlement,
28:32
Speaker 3: the law firms really didn't need that big of an
28:34
Speaker 3: inducement to bring this case. They'll need that big of
28:37
Speaker 3: an award. By Sancho Laster was the judge that was
28:40
Speaker 3: here in case at the trial courts level, you should
28:42
Speaker 3: just reduce this to reflect the fact that this was
28:45
Speaker 3: such a windfall that it would just be unseemly to
28:49
Speaker 3: award something north of twenty five percent. He didn't end
28:53
Speaker 3: up buying that, in large part because he was essentially
28:56
Speaker 3: applying the precedent and the rules that the Delaware courts
28:59
Speaker 3: themselves have set down years ago. And while there were
29:03
Speaker 3: a couple of cases where Delaware courts awarded something less
29:07
Speaker 3: than the sort of standard amount that would be appropriate here,
29:11
Speaker 3: which is in that twenty five percent grounds, by Chancellor
29:14
Speaker 3: Alaster basically said, look, enough of these factors bill in
29:17
Speaker 3: the direction of the planet's attorneys actually getting the more
29:21
Speaker 3: conventional amount, and I'm not going to effectively impose a
29:25
Speaker 3: larger tax on the attorneys fees the larger the settlement gets.
29:30
Speaker 1: I mean, are these sort of slam dunk cases that
29:32
Speaker 1: any lawyers can handle or are they specialized.
29:36
Speaker 3: You know, this is actually kind of an interesting area, June,
29:38
Speaker 3: because when it comes right down to it, a lot
29:40
Speaker 3: of these cases, you know, are pretty much going to
29:43
Speaker 3: fall or win on the basis of the effort that
29:46
Speaker 3: the attorneys put forward. The shareholders in these cases play
29:50
Speaker 3: some role, but the attorneys are really, you know, essentially
29:53
Speaker 3: making a bunch of the decisions about, you know, whether
29:55
Speaker 3: to go forward, whether or not to go forward, and
29:57
Speaker 3: so forth, and so a lot of their efforts end
29:59
Speaker 3: up being critical in determining whether you win and whether
30:03
Speaker 3: you get a big settlement. The economics of this sort
30:06
Speaker 3: of situation actually kind of point in the opposite direction
30:10
Speaker 3: that the larger the amount of the outcome that's created
30:13
Speaker 3: for the stockholders, if you create enough of an incentive
30:18
Speaker 3: to go for those larger outcomes, the general economics of
30:20
Speaker 3: the situation actually suggests that that percentage should be increasing
30:24
Speaker 3: in the award. Judges generally shy away from that because
30:27
Speaker 3: we get into these really really large numbers. But in
30:29
Speaker 3: this case, by chancellors last said, look, I'm not going
30:32
Speaker 3: to abandon the traditional way that we have done this,
30:35
Speaker 3: and in this case, this was a risky case. It
30:38
Speaker 3: wasn't clear they were going to win playing its attorneys
30:40
Speaker 3: put in a lot of effort. There was a lot
30:43
Speaker 3: of contingencies about this that could have caused this case
30:46
Speaker 3: to go away with nothing. These were reputable attorneys. They
30:49
Speaker 3: weren't sort of bringing this case in order to basically
30:52
Speaker 3: get a quick settlement. They were in it for the
30:54
Speaker 3: long haul, and they pursued this case for several years,
30:57
Speaker 3: and all those are factors that go into court, you know,
31:00
Speaker 3: basically deciding when combined with the fact that you know,
31:03
Speaker 3: they were essentially on the courthouse steps when they settled
31:06
Speaker 3: this case to sort of lean towards a percentage that
31:09
Speaker 3: is more consistent with you know, plaintive attorneys that take
31:13
Speaker 3: these cases into the final stages, which is what happened here.
31:16
Speaker 3: It's still, however, a very very large number. That's something
31:20
Speaker 3: that the petitioning parties in this case basically assisted on
31:23
Speaker 3: making sure that they called the court's attention to it. Ultimately,
31:27
Speaker 3: the Supreme Court said, look, in some cases, it might
31:30
Speaker 3: be appropriate to reduce that percentage for one of these
31:33
Speaker 3: mega settlements. However, that's really in the discretion of the
31:36
Speaker 3: trial court in this case, by chance. Loo Elast wrote
31:40
Speaker 3: a pretty well reasoned opinion about why he was willing
31:43
Speaker 3: to go to the percentage that he ended up landing on,
31:46
Speaker 3: and we just don't see enough in the record to
31:48
Speaker 3: suggest that he abused his discretion that is generally given him.
31:51
Speaker 3: So we're going to affirm it.
31:52
Speaker 1: So the Chief Justice, Colin Sites noted that it amounted
31:58
Speaker 1: to an hourly rate of five one thousand dollars, which
32:01
Speaker 1: he said was at the high end. I would say
32:03
Speaker 1: it's at the high end. And then he wrote, but
32:05
Speaker 1: it is also legitimate to ask, outside are somewhat insular
32:10
Speaker 1: legal universe, whether the public would ever believe that lawyers
32:13
Speaker 1: must be awarded many hundreds of millions of dollars in
32:16
Speaker 1: any given case to motivate them to pursue representative litigation,
32:21
Speaker 1: or to discourage counsel from settling cases for less than
32:24
Speaker 1: they are worth. I mean, I think that most people
32:27
Speaker 1: would consider these fees to be way out of bounds.
32:31
Speaker 1: And isn't there then an appearance problem?
32:34
Speaker 3: Yeah? I think the optics of large settlements that then
32:37
Speaker 3: end up getting converted into large attorneys fees that clearly
32:41
Speaker 3: plays a role in terms of public perceptions. And I
32:44
Speaker 3: think that's what the petitioning part is really hoping take
32:47
Speaker 3: advantage of here sort of say, hey, listen, you know
32:50
Speaker 3: this is so large that the average Joe out there
32:52
Speaker 3: is really not going to be able to understand why
32:55
Speaker 3: the fees got this large. One way to think about this, however,
32:59
Speaker 3: is you know, this is not Silicon Valley venture capital investing,
33:03
Speaker 3: but it's got some of the singing features associated with it.
33:06
Speaker 3: Right when you when you look at a company that says, Okay,
33:08
Speaker 3: I'm going to invest a couple million dollars in a startup,
33:12
Speaker 3: nine out of ten times, you're just not going to
33:14
Speaker 3: see that money come back because most startups basically fail,
33:18
Speaker 3: or if they don't fail, they disappoint supremely. Only about
33:22
Speaker 3: one in ten really, you know, pays off, and those
33:26
Speaker 3: are the only cases where a venture capital investor actually
33:30
Speaker 3: is going to make their money. The rest of the
33:32
Speaker 3: bets that they make are going to be losing bets.
33:35
Speaker 3: And so the way that you sort of keep people
33:37
Speaker 3: engaged in this business is, you know, assuming it's a
33:40
Speaker 3: valuable business to be engaged in, is to you know,
33:43
Speaker 3: make sure that for all of the nine out of
33:45
Speaker 3: ten cases they lose, they are able to recoup a
33:48
Speaker 3: reasonable return on the cases they do well audiency. It's
33:52
Speaker 3: not a perfect analogy by any means, but it's not
33:54
Speaker 3: a bad analogy to describe how, you know, attorneys who
33:58
Speaker 3: are bringing cases that are effective leak contingency cases think
34:01
Speaker 3: about these cases, right, most of these lottery tickets are
34:04
Speaker 3: going to be losing lottery tickets, and they hope the
34:06
Speaker 3: ones that are the winners are going to make up
34:08
Speaker 3: for the ones that are losers. Now, when you look back,
34:11
Speaker 3: the only the one that won, and you disregard all
34:14
Speaker 3: of the other cases that lost, it looks like that
34:16
Speaker 3: one winning lottery ticket is paying an unruly amount of
34:20
Speaker 3: capital back to the attorneys. But you know, in some
34:24
Speaker 3: ways that is the compensation for all of the cases
34:27
Speaker 3: that the attorneys bring that just don't make it that
34:30
Speaker 3: far to the finish line, or don't end up generating
34:32
Speaker 3: settlement or get dismissed outright. And so it's you know,
34:35
Speaker 3: a very kind of similar analogy because when you look at,
34:38
Speaker 3: you know, situations where a venture capital fund has put
34:40
Speaker 3: in money into a startup that's done really really well,
34:43
Speaker 3: it's like, oh man, they made all kinds of money,
34:45
Speaker 3: was it really that necessary? For them to make all
34:48
Speaker 3: that money, and you know, maybe the answer is no.
34:51
Speaker 3: But the analysis also has to take into account the
34:54
Speaker 3: fact that there were a lot of losing bets that
34:56
Speaker 3: were placed alongside the winning.
34:57
Speaker 1: One site said that, but at some point the percentage
35:01
Speaker 1: of fees awarded in a megafund case exceeds their value
35:04
Speaker 1: as an incentive to take representative cases and turn into
35:08
Speaker 1: a windfall. I mean, does he explain when it's a
35:12
Speaker 1: windfall and when it's not. This seems like the windfall
35:15
Speaker 1: to me.
35:16
Speaker 3: Yeah, from the opinion, it's a little bit hard to
35:18
Speaker 3: know going in what represents the windfall case. But you
35:22
Speaker 3: could imagine that there might be some cases that are
35:24
Speaker 3: just so good that the worst case scenario for them
35:28
Speaker 3: is that, you know, you're going to be able to
35:29
Speaker 3: recover five hundred billion dollars for the stockholders. In other words,
35:32
Speaker 3: that first five hundred million dollars is almost a freebie.
35:36
Speaker 3: So it doesn't really, you know, require much effort to
35:40
Speaker 3: get the lower end of that spectrum. But then it
35:43
Speaker 3: may require a little bit more to pull in, you know,
35:46
Speaker 3: something the six hundred and seven hundred up to a
35:48
Speaker 3: billion dollars in terms of a settlement you know, I
35:51
Speaker 3: think that's probably the paradigmatic mega settlement type case that
35:57
Speaker 3: Chief Justice Site has in mind. There the question and
36:00
Speaker 3: the challenge really is identifying which cases are those where
36:04
Speaker 3: it's really clear that you get, you know, half a
36:06
Speaker 3: billion dollars without barely lifting a finger, versus the ones
36:10
Speaker 3: where you got to kind of scrap for every dollar
36:13
Speaker 3: that you get. Now, the case that was an issue
36:15
Speaker 3: here involved the Dell Corporation and some kind of interesting
36:20
Speaker 3: shenanigans that went on in its attempt to try to
36:25
Speaker 3: buy out a class of its own stockholders. They effectively
36:30
Speaker 3: had tried to set up this committee to negotiate the price,
36:35
Speaker 3: but the committee was never really empowered to do very much,
36:40
Speaker 3: and Dell sort of had this, you know, almost like
36:42
Speaker 3: a sort of damocles hanging over the whole negotiation that
36:46
Speaker 3: they had some rights to almost force these stockholders to pay,
36:50
Speaker 3: but on terms that were really really hard to figure out.
36:53
Speaker 3: So they ended up successfully buying out the stockholders and
36:57
Speaker 3: negotiating a deal, but there was always a little bit
36:59
Speaker 3: of tint of you know, was this negotiated, and a
37:03
Speaker 3: kind of a shadow of unfairness, and so it was
37:06
Speaker 3: not a case that was free from complication. It was
37:09
Speaker 3: a really interesting one. In fact, I was commenting on
37:12
Speaker 3: the case when the first facts came out, sort of,
37:14
Speaker 3: you know, thinking, this is really kind of one of
37:16
Speaker 3: these edge cases. It's not really clear whether this is
37:19
Speaker 3: going to trigger liability or not. But it was an
37:22
Speaker 3: intriguing case to bring forward, and so, you know, I
37:25
Speaker 3: don't know that back in twenty eighteen, when the original
37:28
Speaker 3: facts started to unfold, this was obviously a case of
37:32
Speaker 3: being a mega settlement. But on the other hand, there
37:35
Speaker 3: was a pretty heated contest amongst planet Off attorneys to
37:40
Speaker 3: try to get representation for this case. So I think
37:43
Speaker 3: that there were several points attorneys who thought, you know, this,
37:46
Speaker 3: this looks like it's a fairly winnable case, you know,
37:49
Speaker 3: Ultimately deciding whether this was the type of mega settlement
37:53
Speaker 3: that you really didn't need that full amount of incentive
37:56
Speaker 3: versus one that you know, really, you know, the lawyers
37:59
Speaker 3: had to kind of scrap for every bit of food
38:01
Speaker 3: coming off the table. Ultimately, the discretion to decide that
38:05
Speaker 3: is probably going to have to faull to the judge
38:07
Speaker 3: that's the closest to those facts, and that's the trial
38:09
Speaker 3: court judge, and that's basically where the Supreme Court went.
38:13
Speaker 3: I think that Chief Justice Sites correctly probably wanted to say, hey, listen,
38:18
Speaker 3: just because we are affirming here, it doesn't mean that
38:21
Speaker 3: every case that involves a mega settlement is one in
38:24
Speaker 3: which the point of attorney should automatically expect to get
38:27
Speaker 3: twenty seven percent of the settlement. Some of those cases
38:30
Speaker 3: that were kind of like you could hardly imagine not
38:33
Speaker 3: recovering a large amount, and therefore, you know, there was
38:36
Speaker 3: kind of an automatic amount that was almost going to
38:38
Speaker 3: come forward those cases. Maybe that would give rise to
38:42
Speaker 3: a reason to shave the percentage a little bit more,
38:45
Speaker 3: simply because the attorneys don't need as much of an
38:48
Speaker 3: incentive to bring it forward.
38:49
Speaker 1: Speaking of incentives, speaking of billions, let's turn to Tesla,
38:54
Speaker 1: and there are two other legal feed cases involving Tesla.
39:00
Speaker 1: First of all, do you think that this particular opinion,
39:03
Speaker 1: the way the Court's upholding the attorney's fees, do you
39:06
Speaker 1: think that will affect the Tesla cases?
39:09
Speaker 3: Well, I think there's a distinct chance that it will.
39:12
Speaker 3: Look the fact of the matter is, this is a
39:15
Speaker 3: very very recent case in which the Supreme Court itself
39:18
Speaker 3: has decided to analyze the decisions of a trial court
39:22
Speaker 3: judge in awarding a fee compensation to plaintiffs attorneys and
39:28
Speaker 3: basically said, look, if it's a well reasoned decision, we're
39:31
Speaker 3: going to allow that the award to go forward. So
39:34
Speaker 3: I think on some level, this decision suggests that the
39:37
Speaker 3: Supreme Court stands ready to defer to a trial court's
39:41
Speaker 3: decision so long as that trial court decision is well
39:45
Speaker 3: reasoned and well founded. And so it's hard to read
39:48
Speaker 3: this case without sort of thinking about the potential implications
39:52
Speaker 3: for the ongoing tesla. The awards, certainly the most significant
39:55
Speaker 3: one is the fee request in the case involving Elon
39:59
Speaker 3: Musk's own co copensation was Chancellor McCormick basically nullified earlier
40:03
Speaker 3: this year. And so that particular case, at the time
40:07
Speaker 3: that the judgment came down, Chancellor McCormick basically, you know,
40:11
Speaker 3: nullified stock awards that were a little over fifty billion
40:14
Speaker 3: dollars actually, And so the plaintiffs attorneys in that case,
40:17
Speaker 3: you know, this was a case that it actually even
40:19
Speaker 3: made it further than the Dell case. It went all
40:22
Speaker 3: the way into litigation. They basically put pretty much from
40:26
Speaker 3: the beginning in twenty eighteen all the way through the
40:30
Speaker 3: end in twenty twenty three, that all that effort into it,
40:34
Speaker 3: and so when they came forward with their fee request,
40:37
Speaker 3: I think they sort of anticipated the idea that asking
40:40
Speaker 3: for twenty seven percent of of you know, fifty six
40:44
Speaker 3: billion dollars was just not going to be tenable. Where
40:48
Speaker 3: the plaintess ended up landing is asking for eleven percent
40:51
Speaker 3: approximately of the value of the nullified compensation and asked
40:56
Speaker 3: for it all in stock rather than cash. I think
40:58
Speaker 3: part of this was, you know, essentially an anticipation that
41:02
Speaker 3: you know, for a settlement or in this case, a
41:04
Speaker 3: judgment that had such a large monetary consequence associated with it,
41:09
Speaker 3: it would be hard to come into court to expect,
41:12
Speaker 3: you know, sort of a standard treatment, the usual sort
41:14
Speaker 3: of formula which was applied in this Dell case would
41:17
Speaker 3: be applied in Tesla. Having had all that, however, the
41:21
Speaker 3: Supreme Court has suggested that, you know, whenever Chancellor McCormack
41:25
Speaker 3: comes back with her decision on the fever request, they
41:28
Speaker 3: are going to at least initially read that with the
41:31
Speaker 3: type of deference that they would, you know, have basically said,
41:34
Speaker 3: we're generally going to give to trial court judges who
41:37
Speaker 3: are closer to the facts, closer to the process, and
41:40
Speaker 3: have a you know, sort of a sense of just
41:42
Speaker 3: how risky this case was to bring forward.
41:45
Speaker 1: To the trial court. Judges consider the you know, the
41:47
Speaker 1: hourly rate that we just talked about, which was in
41:50
Speaker 1: the Dell case about five thousand. In Elon Musk's pay case,
41:56
Speaker 1: rates of ten thousand, six hundred and ninety and over
41:59
Speaker 1: two hundred eighty thousand per hour. Is that considered by
42:03
Speaker 1: the court in making the decision.
42:06
Speaker 3: Oh, it will absolutely be considered, because the must defendants
42:09
Speaker 3: are going to put it right in front of the judge.
42:13
Speaker 3: And you know, like I said earlier, I think, you know,
42:16
Speaker 3: the optics of such a large hourly rate are absolutely
42:20
Speaker 3: things that judges almost can't help but consider on some level. Ultimately,
42:25
Speaker 3: my guess is what's going to happen is, you know,
42:26
Speaker 3: Chancellor Macormer is going to have to potentially backtrack back
42:29
Speaker 3: to twenty eighteen and sort of say, look, how likely
42:32
Speaker 3: was it that this case was going to achieve an
42:35
Speaker 3: outcome that was lucrative at all, or alternately, this lucrative
42:40
Speaker 3: to the you know, the shareholder plaintiffs in this case
42:44
Speaker 3: and the riskier the case at the time it was
42:47
Speaker 3: originally brought as an end, as it's brought through the process,
42:51
Speaker 3: you know, that theory is, you know, the more the
42:53
Speaker 3: attorney's efforts are going to matter, and because the attorney's
42:56
Speaker 3: efforts are going to matter more in those risky cases,
42:58
Speaker 3: those truly risky cases, the attorneys are justified in asking
43:02
Speaker 3: for a larger compensation amount. The problem in these Musk cases,
43:06
Speaker 3: particularly the Elon Musk compensation cases, these numbers are just
43:09
Speaker 3: astronomically large compared to other situations that you know, Delaware
43:14
Speaker 3: has had to deal with. Right, the Dell case was
43:16
Speaker 3: notable because there really haven't been that many cases that
43:20
Speaker 3: topped a billion dollars. Well, here we're in the Musk case.
43:23
Speaker 3: In the compensation case, we're dealing with an award that
43:26
Speaker 3: the tops fifty billion dollars at least if you view
43:28
Speaker 3: the value of the of the canceled options. And so
43:31
Speaker 3: this is you know, orders of magnitude larger than the
43:35
Speaker 3: Dell case or other cases that are in that same league.
43:38
Speaker 3: And so we really are in some ways untread waters
43:42
Speaker 3: for or unswum waters. I guess I should say for
43:46
Speaker 3: this type of magnitude of a decision, and so that
43:50
Speaker 3: you know, in some ways, like you know, it puts
43:51
Speaker 3: us once again in that zone in which Chanceler mccr
43:55
Speaker 3: is going to have to figure out, well, how much
43:56
Speaker 3: of this case was kind of like shooting fish in
43:58
Speaker 3: a barrel versus how much really turned on the efforts
44:02
Speaker 3: for the attorney.
44:03
Speaker 1: It's always a pleasure to have you on the show. Eric,
44:05
Speaker 1: thanks so much. That's Professor Eric Talley of Columbia Law School.
44:09
Speaker 1: And that's it for this edition of the Bloomberg Law Podcast.
44:12
Speaker 1: Remember you can always get the latest legal news by
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44:18
Speaker 1: and at Bloomberg dot com, Slash podcast, Slash Law. I'm
44:22
Speaker 1: June Grosso and this is Bloomberg