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First Trump Antitrust Suit & Are Those 'Buyouts' Legal? · Bloomberg Law

0:02
Speaker 1: This is Bloomberg Law with June Grossel from Bloomberg Radio.
0:08
Speaker 2: It took less than two weeks for the Trump Justice
0:11
Speaker 2: Department to file its first antitrust lawsuit. The Department sued
0:16
Speaker 2: to block Hewlett Packard Enterprise is fourteen billion dollar acquisition
0:20
Speaker 2: of Juniper Networks, arguing that tie up with harm competition
0:25
Speaker 2: in the market for enterprise wireless equipment used by large companies, universities,
0:30
Speaker 2: and hospitals. In a complaint file Thursday in federal court
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Speaker 2: in California, the US said the deal would consolidate the
0:37
Speaker 2: sector down from three major players HPE, Juniper, and Cisco
0:42
Speaker 2: Systems down to two that would control seventy percent of
0:46
Speaker 2: the market. But HPE CEO Antonio Neery told Bloomberg that
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Speaker 2: the DOJ's reasoning is flawed.
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Speaker 3: We believe there is no case here. This is pro competitive.
0:57
Speaker 3: We'll bring it two complementary technologies together, which also will
1:01
Speaker 3: enable us to compete outside the United States in the
1:04
Speaker 3: context of the previous competition we have with josh against
1:07
Speaker 3: the Chinese vendors. In the context of national security, particularly
1:11
Speaker 3: in cloud and the service provider space.
1:14
Speaker 2: Joining me is anti trust expert Harry First, a professor
1:17
Speaker 2: at NYU Law School, Harry Many expected the Trump administration
1:22
Speaker 2: to sort of ease up on the aggressive anti trust
1:26
Speaker 2: enforcement by the Biden administration. Is it a surprise that
1:30
Speaker 2: they brought an anti trust lawsuit so soon?
1:33
Speaker 4: Oh, it's a surprise, yes, that they didn't wait for
1:37
Speaker 4: the new team really to be in place. And the
1:40
Speaker 4: complaint is very much a Biden administration type complaint. It's
1:45
Speaker 4: written like and refers to the merger guidelines that were
1:49
Speaker 4: adopted during the Biden administration. So it's curious. I don't know.
1:54
Speaker 4: Maybe they're acting Assistant Attorney General just never got the memo,
1:58
Speaker 4: doesn't read his emails. I can't quite explain why they
2:03
Speaker 4: decided to go ahead with this unless there was some
2:07
Speaker 4: time pressure on the deal, I'm not certain about that.
2:10
Speaker 2: And they're also doing this big action before they actually
2:15
Speaker 2: have someone in place as the top of the antitrust.
2:19
Speaker 4: Division, right, So the complaint is signed by the acting
2:24
Speaker 4: Assistant Attorney General who was put in place over the
2:28
Speaker 4: person who would normally have been put in place for
2:31
Speaker 4: this position. So the way it's gone, particularly in recent times,
2:36
Speaker 4: is the most apolitical person in the division is appointed
2:42
Speaker 4: as acting Usually it's the head of criminal Enforcement, which
2:46
Speaker 4: is really a political is no one who says, oh, no,
2:50
Speaker 4: we like cartels and we think they should flourish, so
2:54
Speaker 4: enforcement against cartels. No one objects to that that I
2:57
Speaker 4: know of. So the person who was head of Criminal
3:01
Speaker 4: Enforcement was instead reassigned to I guess it's a homeland
3:07
Speaker 4: security position, right.
3:10
Speaker 2: Yeah, they're putting a lot of people in immigration.
3:12
Speaker 4: An immigration unit, which of course is presumably something they
3:17
Speaker 4: reassigned him to so that he would then leave the
3:20
Speaker 4: same as Manish Kumar. Fine guy, I mean you know,
3:25
Speaker 4: he couldn't have been on anybody's enemies list that I
3:27
Speaker 4: can imagine, So they reassigned him to it's a sanctuary
3:31
Speaker 4: city's task force. It's ridiculous to a waste of his talent.
3:36
Speaker 4: And then they brought in this person who has just
3:40
Speaker 4: been in the any Trust Division, just joined last year.
3:43
Speaker 4: He'd been in the White House Counsel's Office in the
3:46
Speaker 4: prior Trump administration, so they appointed him as acting head.
3:50
Speaker 4: But why he decided to go ahead and sign this complaint,
3:54
Speaker 4: I honestly do not know. And why he couldn't wait
3:58
Speaker 4: for Gail Slater to be confirmed, which I assume she
4:02
Speaker 4: will be to review it. So I don't know the
4:04
Speaker 4: answer to that.
4:05
Speaker 2: So, I mean, they're assigning environmental lawyers to that Sanctuary
4:10
Speaker 2: Cities unit, whatever it is. But these people have expertise,
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Speaker 2: this guy, for example, in anti trust or environment and
4:17
Speaker 2: they're setting them to a totally different.
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Speaker 4: Well, it's a political I mean, just the name of it.
4:22
Speaker 4: I don't know for sure, but just the name of it.
4:25
Speaker 4: It's something designed to I don't know, rub their noses
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Speaker 4: in it. It's a perversion of any good use of
4:30
Speaker 4: talent and designed to humiliate them. I don't know, but
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Speaker 4: I was sort of shocked that they did that to Kumar.
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Speaker 4: It doesn't make sense, you know, in anybody's world. And
4:43
Speaker 4: for all I know, he might have been more moderate
4:45
Speaker 4: and said, you know, we should hold up and wait
4:47
Speaker 4: for the new head of the division to be approved
4:50
Speaker 4: by the Senate. So it's sort of a curious turn
4:54
Speaker 4: of events that, you know, this complaint is the result.
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Speaker 4: Just explain what the deal is, okay, So roughly, so,
5:02
Speaker 4: this is a deal that was announced in January of
5:05
Speaker 4: twenty twenty four, so it's been sitting there for a
5:09
Speaker 4: little while under investigation, and it involves the w land industry,
5:15
Speaker 4: wireless local area network industry, but on the commercial scale,
5:20
Speaker 4: not the routers that you and I have in our
5:23
Speaker 4: houses that create this little local area network that we
5:26
Speaker 4: can connect to wherever we are in the house. But
5:30
Speaker 4: you know, for enterprises, universities, offices, big companies that need
5:37
Speaker 4: to connect all their employees wirelessly wherever they're working to
5:42
Speaker 4: some access point. So it's all the equipment necessary for
5:46
Speaker 4: putting those wireless local area networks together. And Cisco is
5:52
Speaker 4: the leader worldwide and in the United States apparently, and
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Speaker 4: according to the complaint, it's marked share is more than
6:01
Speaker 4: twice what HPE Hewlett Packard Enterprises market share is. Hp
6:07
Speaker 4: is second in the US market. And Juniper, the company
6:11
Speaker 4: being acquired by HPE, it's not clear where they sit
6:15
Speaker 4: in the market. The complaint doesn't say they're third, so
6:19
Speaker 4: maybe they're not quite third in the market. Maybe they're
6:22
Speaker 4: fourth or fifth, but I don't know. Their market shares
6:25
Speaker 4: vary around the world in different markets, but they're smaller
6:28
Speaker 4: than HPE, So Cisco's market shares more than twice what
6:33
Speaker 4: HPEES is, so they really dominate the market and the
6:36
Speaker 4: combined market share of the three firms. Now, the Justice
6:40
Speaker 4: Department complaints says Will be more than seventy percent, so
6:45
Speaker 4: a very concentrated market, and the increase in concentration, which
6:51
Speaker 4: is a key figure for merger enforcement, is over the thresholds.
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Speaker 4: For highly concentrated market, there's a presumption that competition may
7:03
Speaker 4: be substantially lessened in the future, So the market's highly concentrated,
7:08
Speaker 4: it's over the thresholds. The increases over the thresholds, and again,
7:12
Speaker 4: according to the twenty twenty three guidelines which the complaint sites,
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Speaker 4: that's presumed to violate the law. And that's sort of
7:20
Speaker 4: the core of the case.
7:22
Speaker 2: Will there be questions about market definition or anything like that,
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Speaker 2: or is it pretty.
7:26
Speaker 4: Clear there are always questions about our definition because as
7:30
Speaker 4: we know, this is what any trust lawyers love. And yes,
7:33
Speaker 4: there will probably be some, but I'm not sure in
7:37
Speaker 4: the end that that's going to be the thing that matters,
7:40
Speaker 4: even though the parties will fight over it. What makes
7:43
Speaker 4: the case more interesting is that this merger was cleared
7:46
Speaker 4: by the European Commission and by the UK Competition Markets Authority,
7:53
Speaker 4: the CMA, So both of them cleared this merger in
7:56
Speaker 4: August finding really no problems, and had been the pattern
8:01
Speaker 4: during the Biden administration, had generally been. All three of
8:06
Speaker 4: those agencies were in agreement on most of the controversial mergers.
8:11
Speaker 4: They were not out of step. They all agreed, even
8:14
Speaker 4: ones that were controversial that they violated European law or
8:20
Speaker 4: law in the United Kingdom or the United States. So
8:22
Speaker 4: this is unusual in the sense that the US is
8:26
Speaker 4: trying to block a merger that the other two just
8:29
Speaker 4: didn't go any further with. They both issued reports saying, hey,
8:33
Speaker 4: no problem.
8:34
Speaker 2: What's gotten a lot of attention is a memo in
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Speaker 2: twenty twenty one from an HPE sales leader encouraging his
8:42
Speaker 2: team to quote kill, missed, exclamation point, exclamation point, exclamation point,
8:48
Speaker 2: and on and on. There were like forty exclamation points,
8:52
Speaker 2: and missed was the name of Juniper's competing product.
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Speaker 4: We love those memos. Yeah, that's the kind of thing
8:59
Speaker 4: when NHS obviously that they go, oh my god, we
9:02
Speaker 4: cannot suppress those helse people. You know, they keep using
9:06
Speaker 4: language that get us into trouble. And yes, that's featured
9:10
Speaker 4: prominently in the complaint. Who wouldn't feature that prominently in
9:14
Speaker 4: the complaint? But in a number of these cases, those
9:17
Speaker 4: sorts of kill memos are often used where the conduct
9:22
Speaker 4: is exclusionary. In other words, the idea it was, you know,
9:26
Speaker 4: will cut off their air supply. This is back in
9:29
Speaker 4: the old Microsoft case. They were in a browser war,
9:33
Speaker 4: and that was the colorful language, but it was to
9:36
Speaker 4: exclude them from the market. These memos are a little
9:38
Speaker 4: different in the sense that he's telling his group to
9:42
Speaker 4: really compete hard and win these contracts. So the more
9:47
Speaker 4: specific parts, beyond the concentration in the market, is that
9:51
Speaker 4: these are head to head competitors that often competed for
9:56
Speaker 4: contracts with the same parties, the same buyers, and this
10:00
Speaker 4: merger will eliminate that head to head competition that had
10:04
Speaker 4: produced lower prices. So it's kill was not so much exclusionary,
10:08
Speaker 4: you know, as in kill, but you know, fight hard.
10:11
Speaker 4: However you want to look at it, and that's what
10:13
Speaker 4: I think the defense will say. So what you're witnessing
10:16
Speaker 4: is competition. So every time we have competition, you can't say,
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Speaker 4: oh my god, let's cry foul. This is what we want.
10:23
Speaker 2: I mean, is there any doubt that consumers benefit from
10:27
Speaker 2: having three players in the in the market rather.
10:30
Speaker 4: Than two, Well, I'd be a little cautious about three
10:34
Speaker 4: rather than two. The complaint doesn't say there aren't others,
10:38
Speaker 4: and in fact, at one point the complaint says, there
10:40
Speaker 4: are many suppliers, and if you look at the markets
10:43
Speaker 4: described both in the UK and in Europe, they are
10:46
Speaker 4: obviously more players, and so there are other sources of supply,
10:53
Speaker 4: and so presumably they will argue, well, we are head
10:56
Speaker 4: to head competitors, but we're also head to head competitors
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Speaker 4: with other supplies. And if now after the merger, the
11:03
Speaker 4: new Hpe Juniper decides to try to raise its price,
11:08
Speaker 4: customers will just switch to the other suppliers like Hey, Cisco,
11:13
Speaker 4: which has defenty percent of the market, or other small suppliers.
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Speaker 4: Now one difference with and it's an interesting difference. The
11:20
Speaker 4: complaint excludes Huawei, the Chinese supplier, on sort of obvious
11:25
Speaker 4: grounds that the US has been trying to keep them
11:28
Speaker 4: out of US markets and that will likely continue. That's
11:32
Speaker 4: not the case in Europe, where they are you know,
11:35
Speaker 4: they're not a big player, but they are a significant
11:38
Speaker 4: enough player that they could constrain any effort to raise
11:42
Speaker 4: price in Europe, but you know, not a competitive constraint
11:46
Speaker 4: so much in the US. So in that sense, the
11:48
Speaker 4: geographic market may be more in contention but it will
11:52
Speaker 4: be hard to say that Huawei is an effective competitor today.
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Speaker 2: How are there any accommodations that HPE could reach with
12:01
Speaker 2: the Justice Department to forward the merger?
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Speaker 4: Yeah, it would be some settlements that would restore competition,
12:11
Speaker 4: or however it's put in horizontal mergers like this. I mean,
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Speaker 4: I don't know the business that well, but it's hard
12:18
Speaker 4: to see exactly what the parties might agree to divest
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Speaker 4: that would affect the analysis of the merger. You know,
12:26
Speaker 4: when there are retail outlets, like the Albertson's Kroger deal,
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Speaker 4: you could offer to divest the number of supermarkets, and
12:37
Speaker 4: you know that becomes a point of contention. But this
12:40
Speaker 4: doesn't seem to be that sort of market. So I
12:42
Speaker 4: would be surprised if there's a deal here to be had.
12:46
Speaker 4: So my senses there, they'll probably even after the new
12:51
Speaker 4: head of any trust division is appointed that they'll probably
12:54
Speaker 4: go ahead and litigate this merger. It'd be hard to
12:57
Speaker 4: settle it, I mean, unless they decide to dismissed the complaint,
13:01
Speaker 4: but that would look sort of weird since it was
13:03
Speaker 4: this administration in a sense that filed it.
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Speaker 2: Does the government have a strong case.
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Speaker 4: Here, you think so in one sense, yes, if they
13:11
Speaker 4: get a court that's willing to stick with the twenty
13:14
Speaker 4: twenty three guidelines that emphasizes the highly concentrated market, increase
13:19
Speaker 4: in concentration, creating a presumption and says, okay, it's up
13:24
Speaker 4: to you, Hpe and Juniper to justify this merger, to
13:29
Speaker 4: show why it will increase competition, what the pro competitive
13:33
Speaker 4: effects are. So if they can convince a judge to
13:36
Speaker 4: shift the burden over to the defendants to justify the deal,
13:41
Speaker 4: then I think that's you know, they have a shot
13:43
Speaker 4: at it. They obviously have some business documents that show
13:47
Speaker 4: this head to head competition. I don't know whether they
13:51
Speaker 4: have testimony from buyers of this equipment saying, oh my god,
13:56
Speaker 4: we're afraid that prices are going to go up if
13:59
Speaker 4: the deal goes through. So it would be helpful to
14:02
Speaker 4: them if they have testimony like this. But it's possible
14:05
Speaker 4: that they'll be able to convince a district court judge
14:09
Speaker 4: to go ahead and stop the merger. But the reason
14:11
Speaker 4: why I'm hesitant is that fictions and you know, the
14:15
Speaker 4: theory that's being advanced, the head to head competition theory,
14:19
Speaker 4: was pretty much sloughed off in both of those jurisdictions.
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Speaker 2: Business leaders thought that this administration would be more amenable
14:28
Speaker 2: to deals involving tech companies, just more amenable to M
14:32
Speaker 2: and A. Is it too soon to tell whether it
14:35
Speaker 2: will be or whether it won't be with this one lawsuit.
14:38
Speaker 4: You know, if I were advising any then I would
14:40
Speaker 4: be hesitant to draw much, if anything, from this one case,
14:44
Speaker 4: because the person who's going to make these decisions is
14:47
Speaker 4: just not in place. And unless I had some intelligence
14:52
Speaker 4: indicating that the acting head really was acting in a
14:56
Speaker 4: way that he knew was consistent with what the income
15:00
Speaker 4: had wanted, I would view this as a one off
15:02
Speaker 4: and not make predictions of what the future might hold
15:06
Speaker 4: either way. Actually, until we really see what the new
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Speaker 4: heads of the two agencies do with the twenty twenty
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Speaker 4: three merger guidelines, whether they pull them or not.
15:19
Speaker 2: Do you know about the people who are nominated, what
15:22
Speaker 2: their track record is.
15:24
Speaker 4: I don't know them personally other than what I've read.
15:28
Speaker 4: Cale Slater seems like an anti trust person. She doesn't
15:33
Speaker 4: seem to be coming from some other weird spot with
15:37
Speaker 4: a list of you know who I hate in the
15:39
Speaker 4: anti trust world. So she seems like a normal anti
15:42
Speaker 4: trust person, but it's hard to know how that's going
15:45
Speaker 4: to work out in the specifics. Well, I'm a little
15:48
Speaker 4: more concerned at the Federal Trade Commission because the new
15:51
Speaker 4: chair of the Federal Trade Commission has seemed to have
15:54
Speaker 4: gone all in on the Trump agenda in ways that
15:59
Speaker 4: I haven't seen yet from the nominee at the Any
16:02
Speaker 4: Trust Division. But then if I were the nominee there,
16:05
Speaker 4: I would not say anything right now and wait to
16:08
Speaker 4: be confirmed.
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Speaker 2: A lot to watch, Thanks so much, Harry. As always,
16:12
Speaker 2: that's Professor Harry First of NYU Law School. As part
16:16
Speaker 2: of President Trump's efforts to reshape the federal government at
16:20
Speaker 2: breakneck speed, most federal employees got an email offering them
16:25
Speaker 2: the chance to resign by February sixth and be paid
16:29
Speaker 2: through September. Some lawmakers, like Democratic Senator Tim Kaine of Virginia,
16:35
Speaker 2: warned workers that Trump does not have the authority to
16:38
Speaker 2: make that offer.
16:40
Speaker 5: Don't be fooled.
16:43
Speaker 4: He's tricked hundreds of people with that offer. If you
16:47
Speaker 4: accept that offer and resign, he'll stiff you, just like
16:50
Speaker 4: he stiffed the contractors.
16:52
Speaker 1: He doesn't have any authority to do this. Do not
16:56
Speaker 1: be fooled by this guy.
16:58
Speaker 2: My guest is Bernie Cone, editor of Lodge of the
17:00
Speaker 2: Bloomberg Industry Group. Bernie tell us about these emails.
17:04
Speaker 5: So, on Tuesday, January thirty first, there was an email
17:10
Speaker 5: that went out from a brand new email address at
17:14
Speaker 5: the Office of Personnel Management to more than two million
17:17
Speaker 5: federal workers with the subject line fork in the Road.
17:22
Speaker 5: Now that's key because that is, word for word, the
17:26
Speaker 5: same subject line in the email that Elon Musk sent
17:30
Speaker 5: out after taking over Twitter, right before he got rid
17:33
Speaker 5: of eighty percent of the workforce there. So what this
17:36
Speaker 5: was was an offer to resign with pay from your position,
17:41
Speaker 5: with pay and benefits allegedly continuing through September thirty first.
17:46
Speaker 5: And the deal was is that if you were going
17:48
Speaker 5: to accept it, all you did was type the word
17:51
Speaker 5: resign in the subject line in your reply email.
17:55
Speaker 2: Tell us a little bit more about how it seems
17:57
Speaker 2: to be similar to what happened at Twitter.
18:00
Speaker 5: Well, it goes beyond the subject line. Of course. What
18:05
Speaker 5: we did was we really took a look at the
18:08
Speaker 5: promises that were in this email. And it is only
18:11
Speaker 5: an email. There was no legal documentation with it. There
18:15
Speaker 5: was nothing in fact for say you to sign or review,
18:19
Speaker 5: and how that synced up with some of the promises
18:23
Speaker 5: and the things that happened after Twitter sought to cut jobs.
18:28
Speaker 5: And there are quite a number of lawsuits still going
18:31
Speaker 5: on against Twitter over severance and related issues. And where
18:36
Speaker 5: you get some interesting parallels is that people at Twitter
18:39
Speaker 5: were promised severance if they resigned, and then over time
18:43
Speaker 5: there were reasons concocted to fire a lot of them
18:46
Speaker 5: for cause and make them ineligible for severance. And as
18:49
Speaker 5: I said, those are lawsuits that are still going on.
18:53
Speaker 5: There was another senior level person who was fired for
18:57
Speaker 5: allegedly doing something with Trump's Twitter feed. We don't quite
19:00
Speaker 5: know what that was. So what this tells you is
19:03
Speaker 5: that there are certainly reasons to doubt that the deal
19:07
Speaker 5: is what it's being presented to be.
19:10
Speaker 2: Employment lawyers that you talked to, what did they suggest
19:14
Speaker 2: for these workers.
19:16
Speaker 5: Other than obviously it's an individual decision for you know,
19:19
Speaker 5: more than more than two million people. But in terms
19:22
Speaker 5: of trying to challenge this whole thing, the lawyers we
19:25
Speaker 5: talked to said that people will have a better case
19:29
Speaker 5: if they essentially don't respond and then wait to be
19:32
Speaker 5: laid off. That sort of challenging this offer such as
19:36
Speaker 5: it is, is not likely to get you anywhere, even
19:40
Speaker 5: though there are some real questions as to whether it's
19:43
Speaker 5: even legal to offer seven eight months of administrative leave, which
19:48
Speaker 5: is what this offer pretends to be.
19:50
Speaker 2: So why would that be a problem.
19:52
Speaker 5: It's a problem because there was actually a federal rule
19:55
Speaker 5: that became final only two weeks ago that makes very
19:59
Speaker 5: clear that administrative leave can only be used for ten
20:02
Speaker 5: working days per calendar year, and the offer that went
20:06
Speaker 5: out via OPM last week says that people will be
20:10
Speaker 5: on administrative leave through September thirtieth.
20:14
Speaker 2: In Elon Musk's case, the Twitter case, there was a
20:18
Speaker 2: proposed class action that.
20:20
Speaker 6: Was dismissed right Essentially, what Musk was able to do
20:26
Speaker 6: was to claim there was no such thing as a
20:28
Speaker 6: Twitter severance plan, and he won, even though there was
20:32
Speaker 6: a fair amount of documentation produced in which severance plans
20:36
Speaker 6: were outlined and mentioned.
20:37
Speaker 5: Now that case is on appeal at the Ninth Circuit
20:40
Speaker 5: right now, but the district court decision right now prevails,
20:44
Speaker 5: and there are.
20:44
Speaker 2: Other suits by high level employees.
20:49
Speaker 5: Correct. There are several different cases, really at least four
20:52
Speaker 5: that sort of mattered to some of the issues at hand.
20:55
Speaker 5: You have people that claim that essentially they were forced
20:59
Speaker 5: to resign after deciding to stick around because they were
21:03
Speaker 5: ordered to do illegal things. You have another group that
21:07
Speaker 5: talks about having reasons concocted to terminate them for cause
21:11
Speaker 5: because which they were never told what that cause was,
21:14
Speaker 5: to deny them severance payments. At the very very end
21:17
Speaker 5: of the period, you had this class action which you
21:20
Speaker 5: just mentioned, which was for six thousand employees, which they
21:24
Speaker 5: claim outlined a severance plan and that Twitter essentially renigged
21:28
Speaker 5: on it gave them a fraction of what they say
21:31
Speaker 5: they were owed. And then you have a separate one
21:34
Speaker 5: which is personal to a Twitter senior official who claimed
21:38
Speaker 5: that she was stripped of her severance because of something
21:41
Speaker 5: involving Trump's Twitter account.
21:43
Speaker 2: This is not a buyout. This is not what a
21:45
Speaker 2: buyout looks.
21:45
Speaker 5: Like exactly, And that's a really important distinction, especially since
21:49
Speaker 5: that term has been used pretty liberally. This is not
21:52
Speaker 5: a buyout offer. A buyout offer, you would get legal
21:57
Speaker 5: paperwork which you would have a pretty decent amount of
22:01
Speaker 5: time to assess. It might be thirty days, it might
22:03
Speaker 5: be forty five days. It would very carefully outline the
22:08
Speaker 5: terms in a binding way. It would have opt out clauses,
22:12
Speaker 5: all of those kinds of things. And certainly, when I
22:15
Speaker 5: was in the newspaper business, I saw multiple rounds of buyouts,
22:18
Speaker 5: so I know what the paperwork looks like. Yes, this
22:21
Speaker 5: is a deferred resignation. That was the term they used.
22:24
Speaker 5: That's what this is. So then employees are being put
22:28
Speaker 5: in the position of trying to figure out with really
22:31
Speaker 5: no particularly legal backup, and with a very short time
22:35
Speaker 5: for decision to decide, well, what is this really? Am
22:40
Speaker 5: I really resigning right now on the spot? Are they
22:43
Speaker 5: really going to pay me through September thirty gain? What
22:45
Speaker 5: is there that finds them to actually pay me aside
22:49
Speaker 5: some promise email? Those are pretty tough decisions to have
22:52
Speaker 5: to day this kind of notice.
22:55
Speaker 2: I don't think you even need a lawyer to tell
22:57
Speaker 2: you that something's pfishient here. Thanks much, Bernie. That's Bernie Cone,
23:02
Speaker 2: editor at large of the Bloomberg Industry Group. The Trump
23:06
Speaker 2: administration fired a group of prosecutors involved in the January
23:10
Speaker 2: sixth criminal cases on Friday. Now, thousands of FBI employees
23:16
Speaker 2: who participated in investigations related to the January sixth riot
23:21
Speaker 2: are being asked to complete in depth questionnaires about their involvement.
23:26
Speaker 2: This as the Trump administration Justice Department weighs disciplinary actions
23:31
Speaker 2: that could result in firings. Joining me is former Palm
23:35
Speaker 2: Beach County State Attorney Dave Ehrenberg. The acting FBI Director
23:40
Speaker 2: Brian Driscoll, in an email to all FBI employees, and
23:43
Speaker 2: he said that the FBI was told to turnover by
23:46
Speaker 2: Tuesday all current and former FBI staff who worked on
23:50
Speaker 2: investigations or prosecutions related to the Capitol riot. He said
23:54
Speaker 2: the request covered thousands of FBI employees around the country,
23:58
Speaker 2: including him.
24:00
Speaker 1: Knew it was going to get bad, and he said
24:02
Speaker 1: that I will be your retribution. So we can't be
24:04
Speaker 1: too surprised that he's going after the people who went
24:07
Speaker 1: after him. But when it gets real like this, it
24:11
Speaker 1: is quite a moment because we've never seen this before.
24:16
Speaker 1: This is the weaponization of government. This is what the
24:20
Speaker 1: other side keeps claiming that Joe Biden and Mary Garland
24:23
Speaker 1: did weaponizing the Department of Justice. No, no, no, that
24:26
Speaker 1: was projection. What they're doing is creating the DOJ as
24:32
Speaker 1: the Donald Trump defense team, like his own law firm
24:36
Speaker 1: and as part of his own law firm. He needs
24:38
Speaker 1: investigators who are loyal to him. So that's what this
24:41
Speaker 1: is about. And if you, especially if you worked against
24:44
Speaker 1: him even though there was evidence, and they're just doing
24:47
Speaker 1: their jobs and their career prosecutors and FBI agents who
24:50
Speaker 1: have worked in multiple administrations, including Donald Trump's administration itself,
24:54
Speaker 1: then you're the enemy.
24:56
Speaker 2: I think that most of these top level people are
24:59
Speaker 2: going to have an easy time I'm finding a job
25:01
Speaker 2: in the private sector right with their experience, right.
25:04
Speaker 1: But you know, as a former prospert myself and I
25:07
Speaker 1: was a state attorney for twelve years, this is their passion.
25:11
Speaker 1: This is what they want to do. They could have
25:12
Speaker 1: always made more money in the private sector, but they
25:14
Speaker 1: have a passion for justice and for just waking up
25:17
Speaker 1: every day to try to do the right thing, to
25:19
Speaker 1: stand up for victims of crime, and to hold wrongdoers accountable.
25:23
Speaker 1: And now one of the wrongdoers is now the head guy,
25:28
Speaker 1: and he is going after them for doing their jobs.
25:31
Speaker 1: And so it is to them probably just like the
25:35
Speaker 1: bizarre world where they get punished for doing the right thing,
25:40
Speaker 1: for doing their jobs, and you got to believe in
25:43
Speaker 1: They just think that at some point that this will
25:48
Speaker 1: will be over that the bad guys don't win in
25:51
Speaker 1: the end, at least not according to the to the
25:54
Speaker 1: books that we read, the nursery rhymes and pro wrestling
25:57
Speaker 1: and for wrestling.
25:58
Speaker 2: What's happening is they're transferring a lot of these people,
26:02
Speaker 2: for example, attorneys, attorneys that are handling environmental matters for years,
26:07
Speaker 2: attorneys that are handling cartel matters, for example, in the
26:11
Speaker 2: antitrust department, and they're sending them all to this Sanctuary's
26:15
Speaker 2: City team. But what's happening is a lot of them
26:19
Speaker 2: are resigning rather than go into the Sanctuary Cities team.
26:23
Speaker 2: So it's a way to get them to resign without
26:26
Speaker 2: any legal hassles.
26:27
Speaker 1: Right See, these are career service people. They've got career
26:30
Speaker 1: service protection under the law, so if they get fired,
26:32
Speaker 1: they can sue and get their job back. But for
26:35
Speaker 1: all practical purposes, their days are numbered in this administration,
26:39
Speaker 1: because even if they get their jobs back, even if
26:42
Speaker 1: they successfully bring an action against the Trump administration, they'll
26:46
Speaker 1: be stuck counting paper clips in the basement. They're going
26:48
Speaker 1: to be stuck at a department in an area that
26:50
Speaker 1: they don't want to be in. And so they realize
26:53
Speaker 1: that they're going to have to find something else now
26:56
Speaker 1: if they want to stay around they really believe, Like
26:58
Speaker 1: the head of the FBI said that I dug a foxhole,
27:01
Speaker 1: I was staying in it. It sucked, but what had
27:04
Speaker 1: to be done during wartime. Well yeah, but this is
27:07
Speaker 1: four years as opposed to four days or four weeks.
27:11
Speaker 1: And so that's why I just think it's a no
27:13
Speaker 1: win proposition. We should all be appalled at what's going on.
27:17
Speaker 1: But after all, Donald Trump told us he would do it.
27:20
Speaker 2: We don't know exactly what the extent of it will
27:22
Speaker 2: be at this point, but do you think there are
27:24
Speaker 2: enough layers in the FBI that it won't affect the
27:28
Speaker 2: bottom line?
27:30
Speaker 1: I do worry that the FBI's mission of working with
27:33
Speaker 1: intelligence agencies, and not just for domestic law enforce but
27:36
Speaker 1: on counterintelligence, that that will be curtailed. Cashpttella said the
27:41
Speaker 1: FBI should go back to being cops. But remember the
27:43
Speaker 1: reason why the FBI has such a broad jurisdiction, a
27:47
Speaker 1: broad mission is because of nine to eleven, there were
27:49
Speaker 1: forms put in place to make sure we don't miss
27:52
Speaker 1: out on intelligence where we could actually save lives and
27:55
Speaker 1: prevent a terrorist attack. So that's why the FBI's mission
27:59
Speaker 1: was broadened. Now, if you want to circumscribe their mission
28:03
Speaker 1: and make them into just a domestic law enforcement operation
28:06
Speaker 1: at the behest of the president, that is going to
28:10
Speaker 1: jeopardize national security. And so I would hate for a
28:13
Speaker 1: tragedy to happen for us to realize the error of
28:16
Speaker 1: their ways.
28:17
Speaker 2: So cash Ptel testified that all FBI employees will be
28:22
Speaker 2: protected from political retribution and no one will be terminating
28:26
Speaker 2: because of the specific cases they worked on. But that's
28:30
Speaker 2: outright contradicted by what happened after that testimony.
28:34
Speaker 1: People will say anything to get confirmed. Ask Supreme Court
28:38
Speaker 1: justices who said that roversus Wighed is settled law. When
28:42
Speaker 1: you're there trying to get the votes, you say anything,
28:44
Speaker 1: and then you get in, and yeah, good luck trying
28:46
Speaker 1: to impeach these guys after they're sworn in. So yeah,
28:50
Speaker 1: they'll say what they have to say and then they'll
28:52
Speaker 1: do something different. But yeah, he may be right that
28:54
Speaker 1: we're not going to fire you, but you're going to
28:56
Speaker 1: essentially be sent to the office in Fargo to write
29:02
Speaker 1: a two hundred page term paper that'll take four years.
29:06
Speaker 2: Forget about the conspiracy theories, forget about the red promises
29:09
Speaker 2: of retribution? Is he qualified to run an agency as
29:12
Speaker 2: big as the FBI?
29:14
Speaker 1: Talking about Cashpitel, well, I know Cashpitel. He used to
29:18
Speaker 1: be a public defender in Dade County, so I knew him.
29:21
Speaker 1: He doesn't come from the bureau, so in that sense
29:23
Speaker 1: he would not be But now these days, expertise is disfavored.
29:28
Speaker 1: This is the era of hey, I'll do my own research.
29:32
Speaker 1: I think that he will get confirmed because he is
29:36
Speaker 1: team Trump. I think the other two controversial ones, the
29:39
Speaker 1: most controversial ones, RFK Junior and Tulsea Gabbard are not Republicans.
29:44
Speaker 1: They're not part of the team. And if you're part
29:47
Speaker 1: of the team, yeah, you're going to get through. They'll
29:49
Speaker 1: find a way to get you through. Pete Hetseth got through,
29:52
Speaker 1: but Gaberd was a Democrat who ran against Trump. RFK
29:55
Speaker 1: Junior was a Democrat. So they don't have the loyalties
29:57
Speaker 1: amongst the Republicans that a born and bred Republican does.
30:02
Speaker 1: There's an old adage Democrats fall in love, Republicans fall
30:05
Speaker 1: in line, and the centers will find a way to
30:07
Speaker 1: confirm cash Pattel and I love that he walked away
30:10
Speaker 1: from words he said in his own book. It reminds
30:12
Speaker 1: me of when Charles Barkley was criticized for some of
30:16
Speaker 1: the stuff he wrote in his own autobiography, and Barkley
30:19
Speaker 1: said out he was misquoted.
30:21
Speaker 2: Charles Barkley can get away with that stuff, though, I'm
30:24
Speaker 2: not so sure about Cash Patel. Now, one of the
30:27
Speaker 2: complaints you hear is that if Patel hads the FBI,
30:31
Speaker 2: there'll be no independence from the White House. Is that
30:35
Speaker 2: really a big problem? There have been other times when
30:38
Speaker 2: the FBI and the White House were aligned.
30:41
Speaker 1: Yeah, even though JEdgar Hoover was independent of the White House.
30:46
Speaker 1: And so there is a long history of independence. Remember
30:49
Speaker 1: the whole kerfuffle with James Comey. I mean, we've seen
30:52
Speaker 1: this over and over again that the FBI actually has
30:54
Speaker 1: had more independence from the president than the Attorney general has.
31:00
Speaker 1: In the DOJ John F. Kennedy appointed his own brother
31:03
Speaker 1: to be attorney general. President Obama and Eric Holder were
31:07
Speaker 1: very close. Eric Holder referred to President Obama as his wingman.
31:11
Speaker 1: So we've seen this before. Jimmy Carter's attorney general was
31:13
Speaker 1: a boyhood friend of his from Georgia. So it's not
31:16
Speaker 1: unusual for a president to appoint an attorney general who's
31:19
Speaker 1: close with and so the whole thing about independence, Yeah,
31:22
Speaker 1: and theory, that's great, but not everyone's going to be Jannerino.
31:26
Speaker 1: With Bill Clinton, that was truly independent, Mary Garland, truly
31:30
Speaker 1: independent when you go after and prosecute the president's son.
31:33
Speaker 1: But we had that choice in the last election. We
31:35
Speaker 1: had the choice between independent DOJ and independent FBI, and
31:39
Speaker 1: a choice between that and Donald Trump, who said they're
31:42
Speaker 1: going to essentially work for me and I will be
31:43
Speaker 1: a retribution, and the voters chose the latter.
31:46
Speaker 2: So I know, you know Pam Bondy, but it seemed
31:48
Speaker 2: like she did benefit from the fact that the person
31:51
Speaker 2: who was initially chosen to be the attorney general was
31:55
Speaker 2: so out of so out of the mainstream, so out
31:59
Speaker 2: of most people comprehension, that she sort of got I
32:02
Speaker 2: think a benefit from that because people were like, she's
32:05
Speaker 2: not Matt.
32:05
Speaker 1: Gates, right right.
32:06
Speaker 5: Yeah.
32:07
Speaker 1: Reminds me of the person who became mayor of Washington,
32:09
Speaker 1: d C. After Marion Barry. When your predecessor is caught
32:12
Speaker 1: on camera smoking crack, you know you've got a low
32:14
Speaker 1: bar to exceed. So that was Pam Bondi having to
32:18
Speaker 1: to exceed that Matt Gates bar that was going to
32:20
Speaker 1: be an easier get and Pam A. Bondi is someone
32:24
Speaker 1: I know very well. I ran against her than I
32:26
Speaker 1: worked for her, so I know that she does believe
32:28
Speaker 1: in the rule of law. And people are asking, well
32:31
Speaker 1: she should resign now, well, she hasn't even been confirmed yet,
32:35
Speaker 1: and if she's not approved, and if she decides to resign,
32:40
Speaker 1: out of discuss who do you think he's going to
32:41
Speaker 1: a point? He's going to a point like Rudy Giuliani
32:44
Speaker 1: or like the MyPillow guy with a degree from Trump
32:47
Speaker 1: University or something. Who knows. So it's not going to
32:50
Speaker 1: get better. Pam Bondi, I think is the best nominee
32:52
Speaker 1: that Democrats could hope for, because she at least as
32:55
Speaker 1: someone who is qualified. She's a twenty year prosecutor, she
32:59
Speaker 1: believe in the rule of law, and she's hired Democrats
33:01
Speaker 1: like me to work with her. So I do think
33:04
Speaker 1: she will serve as somewhat of a check on some
33:07
Speaker 1: of the real radical abuses. I got to believe she
33:09
Speaker 1: would never have supported the full pardons for all these criminals,
33:13
Speaker 1: these rioters, these insurrectionists that Donald Trump pardon including those
33:16
Speaker 1: who beat up police officers.
33:19
Speaker 2: One thing that a lot of people found concerning Democrats,
33:22
Speaker 2: I'll say is that she would not say that the
33:25
Speaker 2: twenty twenty election was fair.
33:28
Speaker 1: Yeah, she went further than most. She said she accepts
33:31
Speaker 1: the results. And yeah, but yeah, I mean, if you're
33:34
Speaker 1: going to wait for a Republican nominee to say that
33:37
Speaker 1: Donald Trump lost a twenty twenty election, you're gonna be
33:39
Speaker 1: waiting for a long time because he would never appoint
33:42
Speaker 1: someone who's not going to at least give lip service
33:44
Speaker 1: to the big lie. This is the reason why he
33:47
Speaker 1: appointed them, because they're gonna be loyal to him, and
33:49
Speaker 1: you can't be loyal to him and actually say the
33:51
Speaker 1: truth about the twenty twenty election. So yeah, you can
33:54
Speaker 1: just hope for the best that we can get, which
33:56
Speaker 1: is someone like Pam who can say that I accept
33:58
Speaker 1: the results of the election. And she never used the
34:01
Speaker 1: F word when she testified fraud. She didn't use that word.
34:04
Speaker 1: She didn't say she saw fraud in Pennsylvania. She says
34:06
Speaker 1: she saw things. Okay, take what you can get.
34:10
Speaker 2: She'll have control over the FBI, it's part of the DOJ.
34:15
Speaker 1: She'll have some level of control over it. Ultimately, the
34:18
Speaker 1: power to prosecute comes from her, not from the FBI.
34:22
Speaker 1: But there's an old adage you can beat the rap,
34:24
Speaker 1: but you can't beat the ride. And that's where cash
34:27
Speaker 1: Btel can be really dangerous. Is that, even if Pamboni
34:30
Speaker 1: does not approve of the actual indictment of going to
34:33
Speaker 1: a grand jury, cash Motel as the head of the FBI,
34:36
Speaker 1: can investigate and make any target's life miserable.
34:40
Speaker 2: The investigations and the build up to possible prosecutions can
34:44
Speaker 2: not only be nerve wracking, but very expensive as you
34:48
Speaker 2: hire lawyers to defend yourself. Thanks so much for coming
34:51
Speaker 2: on the show, Dave. That's Dave Ehrenberg, former Palm Beach
34:55
Speaker 2: County State Attorney. And that's it for this edition of
34:58
Speaker 2: The Bloomberg Law Show. Remember you can always get the
35:01
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35:04
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