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Legal Battle in Tennis & FTC Firings · Bloomberg Law

0:02
Speaker 1: This is Bloomberg Law with June Grosso from Bloomberg Radio.
0:08
Speaker 2: You know, I think things needed to change. So it's
0:10
Speaker 2: a big day for.
0:11
Speaker 1: Tennis, and not because of a big tournament, but because
0:14
Speaker 1: of a big lawsuit. Nick Carrios is one of the
0:17
Speaker 1: Name plaintiffs suing tennis's governing bodies, alleging they run a
0:22
Speaker 1: cartel that CAP's earnings, restricts competition from rival tournaments, and
0:27
Speaker 1: forces players to endure grueling schedules. He spoke to Sky News.
0:32
Speaker 2: I felt like people knew that something was going on
0:35
Speaker 2: behind the scenes for a long time, and I think that,
0:37
Speaker 2: you know, myself, Paspasil Djokovic, we all wanted to do
0:42
Speaker 2: something like this, you know, for the future of tennis.
0:44
Speaker 2: You know. I know the players and myself and many
0:47
Speaker 2: other players aren't happy with the structures and everything that's
0:49
Speaker 2: going on in tennis at.
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Speaker 1: The moments, and their dissatisfaction is apparent from the one
0:54
Speaker 1: hundred and fifty nine page class action antitrust lawsuit filed
0:58
Speaker 1: by the Name Players and the Professional Tennis Players Association.
1:02
Speaker 1: My guest is anti trust law professor Harry First, a
1:05
Speaker 1: professor at NYU Law School. Harry can you give us
1:08
Speaker 1: the basics of this very long complaint.
1:12
Speaker 3: Well, the basic idea is sort of similar to other
1:16
Speaker 3: suits that have been brought. Basically players complaining that those
1:21
Speaker 3: owners who are running the sport are getting a lot
1:26
Speaker 3: of the benefits and they're not getting their due, and
1:30
Speaker 3: mainly because the owners are suppressing the market for the
1:35
Speaker 3: player's services in various ways, and one of the ways
1:40
Speaker 3: being trying to exclude competitors that might be willing to
1:46
Speaker 3: hire the talent these players in competing leagues, competing races,
1:52
Speaker 3: competing tournaments, things like that. So there's exclusion, there's price fixing,
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Speaker 3: and the talent, the players, the laborers, if you will,
2:01
Speaker 3: not getting their due.
2:03
Speaker 1: They accuse the sports governing bodies of running a cartel
2:06
Speaker 1: and say professional tennis players are stuck in a rig game,
2:10
Speaker 1: not on the court, but off it, where players are
2:13
Speaker 1: forced to endure grueling schedules, capped earnings, abusive and invasive
2:18
Speaker 1: investigations and discipline, and have limited control over their own
2:22
Speaker 1: careers and brands. Of course, money is one of the
2:25
Speaker 1: top issues, and you have to make a distinction between
2:28
Speaker 1: the top players who are making millions and millions of
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Speaker 1: dollars and the lower ranked players. The gap with low
2:35
Speaker 1: ranked players is the widest of any major professional sport.
2:40
Speaker 1: In other professional sports, about half the gross revenue goes
2:44
Speaker 1: to players, but tennis shares less than twenty percent. But
2:48
Speaker 1: is this an antitrust issue?
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Speaker 3: Well, that's a really great question. It's sort of a no, yes.
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Speaker 1: No, Let me think about that.
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Speaker 3: Okay, how's that for good wishy washiness. So, really low
3:02
Speaker 3: prices for the things you are buying, or what economists
3:06
Speaker 3: would call the inputs, that in itself I don't think
3:10
Speaker 3: is an any trust violation, just like charging really high
3:14
Speaker 3: prices for what you sell is not really an anti
3:17
Speaker 3: trust violation. You have to have exclusion of competition for
3:22
Speaker 3: there to be an anti trust violation, and an agreement
3:25
Speaker 3: among competitors. So sometimes an agreement among competitors to buy
3:29
Speaker 3: things for a low price that could be an anti
3:32
Speaker 3: trust violation, or an agreement among competitors to sell things
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Speaker 3: at a higher price that could be an anti trust
3:40
Speaker 3: violation technically, because you have competitors who might otherwise either
3:45
Speaker 3: compete the price down if they're sellers, or compete the
3:49
Speaker 3: price up if they're buyers, like buyers of labor, if
3:55
Speaker 3: they were acting independently, you might have different prices, different outcomes,
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Speaker 3: better for the party that's selling their goods or services
4:04
Speaker 3: or better for us consumers who are buying them. So
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Speaker 3: that's in a technical sense no, as an individual seller
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Speaker 3: setting your price, that's okay, it's bad if you do
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Speaker 3: it in collusion, or a more graphic way is to
4:18
Speaker 3: call them a cartel, that's bad. And then there's a
4:22
Speaker 3: slight sort of twist on it. Although it is not
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Speaker 3: bad in itself. If you're a single seller, to pay
4:30
Speaker 3: too much or pay too little, that's often a sign
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Speaker 3: that you do have monopoly power. And so in a
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Speaker 3: lot of cases that we're seeing, the parties are litigating
4:40
Speaker 3: the idea that prices are either too high or in
4:43
Speaker 3: the case of labor, too low, and it will form
4:46
Speaker 3: the basis for a damage's claim.
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Speaker 1: So Harry, there's a price fixing claim. And according to
4:52
Speaker 1: the lawsuit, a key method used by the tennis governing
4:56
Speaker 1: bodies to keep player pay low is locking them into
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Speaker 1: this clothes system of tournaments. And Larry Ellison, the billionaire,
5:04
Speaker 1: wanted to increase the total prize money at his tournament
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Speaker 1: by one point six million dollars, but the ATP and
5:12
Speaker 1: the WTA wouldn't allow that because they didn't want one
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Speaker 1: event to be paying more prize money than the sports
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Speaker 1: for Marquee Grand Slam events. That does sound like price fixing.
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Speaker 3: Well, it's sort of a colorful example because it shows
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Speaker 3: what price fixers who agree on what they will pay
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Speaker 3: for labor can affect the price of labor. You know,
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Speaker 3: here's even Larry Ellison can't pay what he thinks is
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Speaker 3: a market price to attract talent to his tournament and
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Speaker 3: compete in other tournaments. So that sounds really bad. The
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Speaker 3: little problem with that is that actually was what year
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Speaker 3: was that?
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Speaker 1: Does that occur twenty twelve? A while ago?
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Speaker 3: Oh a while ago? Outside the statute of limitations technically,
6:04
Speaker 3: So it's nice to put in a complaint. Whether this
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Speaker 3: is going to be even admissible a trial as another story,
6:13
Speaker 3: but it is an example. I sort of wish they
6:16
Speaker 3: had more recent examples. But presumably their argument is the
6:21
Speaker 3: tournament operators are actually sort of happy with this. You know,
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Speaker 3: they're not Larry Ellison, They're not. Well, actually, some of
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Speaker 3: the tournaments operators are the equivalent. But you know, they
6:31
Speaker 3: would just as soon pay the players less and rake
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Speaker 3: in the money more. And not find themselves in the
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Speaker 3: position of other wealthy owners of teams or in this case,
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Speaker 3: tournaments that actually have to compete to put together the best.
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Speaker 3: So the fact that we don't see more recent examples
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Speaker 3: doesn't show that there isn't price fixing. But on the
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Speaker 3: other hand, you don't have a nice example like you
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Speaker 3: have in that case of a tournament operator that was
7:02
Speaker 3: trying to compete this way but couldn't.
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Speaker 1: The players also claim that the governing bodies limit sponsorship
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Speaker 1: and endorsement deals in part by making players give up
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Speaker 1: some name, image and likeness rights and also controlling the
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Speaker 1: number of sponsors allowed to be displayed on a player's shirt, hat, towel,
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Speaker 1: and bag, and it has to be brands that are
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Speaker 1: ATP or WTA approved.
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Speaker 3: Well, I think that probably needs a little more elaborations
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Speaker 3: to why they do it and what they get out
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Speaker 3: of it. So, you know, it may be that their
7:37
Speaker 3: argument is that sponsorship is more valuable if you can
7:42
Speaker 3: actually see it on the player's uniform rather than it's
7:47
Speaker 3: one of a thousand things that players sport, so to speak,
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Speaker 3: And so they might have a justification that overall it's better,
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Speaker 3: it's a better way to compete. I don't know, so
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Speaker 3: you know, on the face of it, that's a pause
8:00
Speaker 3: will claim the you know how it will fare in
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Speaker 3: litigations and other story The ban on selling nil rights, name, image,
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Speaker 3: and likeness struck me as an unusual, well not unusual,
8:12
Speaker 3: but you know, something that may be problematic from the
8:16
Speaker 3: point of view of the defendants. This is featured in
8:20
Speaker 3: other litigations. Really start out with the NCAA limiting the
8:24
Speaker 3: ability of so called amateur players to sell their nil rights.
8:30
Speaker 3: So I would look for that to play some part
8:33
Speaker 3: in this litigation. But you know, as I hear about
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Speaker 3: the sponsorship, I think if do you remember the movie
8:39
Speaker 3: Talladega Knights, Yes, where they put a sponsor's logo over
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Speaker 3: the windshield Will Ferrell couldn't see as he was driving.
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Speaker 3: You know, that's sort of the outrageous idea of sponsors
8:53
Speaker 3: plastering everything. And they may have a legitimate argument that
8:57
Speaker 3: they do better and get better fan recognition and draw
9:01
Speaker 3: more fans to these if they don't look at this
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Speaker 3: as just a plastered sponsor event. Remember all of this
9:08
Speaker 3: the tennis players come out of actually an amateur tradition.
9:12
Speaker 3: It's only fairly recently that the sports has been monetized
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Speaker 3: this way, so this may play in it as well.
9:19
Speaker 3: But these sorts of justifications have yet to be seen,
9:23
Speaker 3: but they might play a role in the litigation as it.
9:26
Speaker 1: Develops, coming up a jury trial or a settlement. This
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Speaker 1: is Bloomberg. Some top tennis players are suing the sports
9:35
Speaker 1: governing bodies for allegedly running a cartel that caps prize money,
9:39
Speaker 1: limits off court earnings, and restricts competition from rival tournaments.
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Speaker 1: I've been talking to anti trust law professor Harry First
9:47
Speaker 1: of NYU Law School. They also complained about the eleven
9:51
Speaker 1: month schedule, which is long, and that it damages players'
9:56
Speaker 1: bodies and also prevents them from competing in other events.
10:00
Speaker 3: Well, I'm not sure this is any trust violation. Sounded
10:04
Speaker 3: more like a labor law complaint to me in a way.
10:07
Speaker 3: You know. I think it goes in there to show
10:10
Speaker 3: that what the public may see as sort of privileged,
10:14
Speaker 3: high class athletes turns out to be a rather grueling job.
10:19
Speaker 3: I mean, they're not coal miners. But there's an aspect
10:22
Speaker 3: to this that the public doesn't see, and I can
10:25
Speaker 3: understand the plaintiffs wanting to get that in front of
10:28
Speaker 3: the judge and eventually in front of a jury if
10:33
Speaker 3: they can. But whether this is actually an anti trust violation.
10:37
Speaker 1: So what do you think is the strongest antitrust claim
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Speaker 1: in the lawsuit?
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Speaker 3: Well, I think the strongest claim is the collusion or
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Speaker 3: cartel claim that these are you know, competing parties, various
10:51
Speaker 3: tournaments that have gotten together to divide up markets geographically,
10:57
Speaker 3: to control the sport, to control the mobility of other tournaments,
11:03
Speaker 3: to enter and compete for talents, to control what they
11:06
Speaker 3: have to pay the talent, and you know, to run
11:10
Speaker 3: the sport in their favor. And these are there are
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Speaker 3: a lot of competing tournaments amongst the defendants. You know,
11:17
Speaker 3: usually competitors have a problem when they get together and agree.
11:22
Speaker 3: Now there's a little different maybe for sports where there's
11:26
Speaker 3: an idea of a circuit or a league or you know,
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Speaker 3: that's how you get fan interest. It's not everything's not
11:31
Speaker 3: a one off. So but the basic idea that this
11:35
Speaker 3: is a cartel and a cartel with power in the
11:39
Speaker 3: market because they've excluded other tournaments, very hard to become
11:42
Speaker 3: a sanctioned tournament. So you know, that core of the
11:46
Speaker 3: case I think certainly will survive any effort to dismiss
11:50
Speaker 3: the case outright, I think, but then we'll see what
11:53
Speaker 3: the justifications might be. And of course what the defendants
11:57
Speaker 3: response is, because they you hat to file anything in
12:01
Speaker 3: this litigation, right, so.
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Speaker 1: They've disputed the claims, say they work to expand compensation
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Speaker 1: for players. I mean, do you see what the defense
12:11
Speaker 1: might be.
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Speaker 3: I think that you know, their basic defense is the
12:15
Speaker 3: defense of you know, all of these organized sports. You know,
12:19
Speaker 3: we can't play tennis individually. You know, you need competitors,
12:25
Speaker 3: and that means you have to deal with others. So
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Speaker 3: to put together a league of circuit tournaments, you know,
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Speaker 3: to appeal to fans requires some joint effort. And remember,
12:37
Speaker 3: you know, a lot of this money is broadcasting money.
12:39
Speaker 3: People don't have to watch tennis, they watch golf. They
12:43
Speaker 3: always argue that there are lots of substitutes. Not sure
12:45
Speaker 3: that's a great argument, but they'll argue that. But basically
12:48
Speaker 3: they'll argue they are good justifications for what they do,
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Speaker 3: for how they come together, and that gives them certain
12:56
Speaker 3: ability to manage the sport in a way that attracts capital,
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Speaker 3: that serves the fans consumers after all, consumer interests, and
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Speaker 3: also is in the interest of the players except for
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Speaker 3: the two hundred and fifty has claimed players who don't
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Speaker 3: seem to like what's going on or just simply want
13:19
Speaker 3: more money.
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Speaker 1: Does it make a difference that the top players in
13:23
Speaker 1: the sport are not among the plaintiffs.
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Speaker 3: Yeah, that's very interesting. I mean, legally it doesn't make
13:30
Speaker 3: a difference. This is a suit. It's styles as a
13:32
Speaker 3: class action, meaning they're bringing on behalf of all tennis players,
13:37
Speaker 3: which they claim are sort of similarly situated, all have
13:40
Speaker 3: similar interests, So in that sense, it really doesn't matter.
13:44
Speaker 3: On the optics of it, it's sort of good and bad.
13:47
Speaker 3: I mean, it does serve to highlight the disparities in
13:53
Speaker 3: this industry, in this sport between the you know, the
13:57
Speaker 3: very top people who are relatively pretty well paid and
14:02
Speaker 3: the majority of people you know who they claim are
14:05
Speaker 3: living out of their cars, So that's good. On the
14:08
Speaker 3: other hand, the public loves to see the names they
14:11
Speaker 3: know behind this, so Michael Jordan's name features prominently, and
14:19
Speaker 3: you know all the stories about the NASCAR litigation, But
14:22
Speaker 3: I don't see that similar sort of marquee name among
14:26
Speaker 3: the plaintiffs in the class. Of course, I don't know tennis,
14:30
Speaker 3: so maybe I'm missing something.
14:33
Speaker 1: They're seeking a jury trial. Do you think that this
14:36
Speaker 1: will get to trial or you know they'll negotiate, there'll
14:39
Speaker 1: be a settlement.
14:40
Speaker 3: Well, the most cases settle, Most lawsuits, and certainly most
14:44
Speaker 3: lawsuits in federal courts settle. So if you want to
14:48
Speaker 3: predict in an actuarial sense, you would predict settlement whether
14:51
Speaker 3: this case will settle. I have no real idea, but
14:55
Speaker 3: certainly it might be in the sense that I'm not
14:58
Speaker 3: sure the players want to blow up the system because
15:04
Speaker 3: I'm not sure what would really be in its place.
15:07
Speaker 3: They do benefit from not having every tournament be a
15:12
Speaker 3: one off. I think, you know, if there's some ATP tournament,
15:17
Speaker 3: some sort of circuit that you build up points that
15:20
Speaker 3: you know, everything's not individual. So I'm not sure that
15:23
Speaker 3: they would want to blow this up, but I don't
15:25
Speaker 3: really know. So that might indicate that some sort of
15:29
Speaker 3: settlement would be what the plaintiffs might like. But you know, now,
15:34
Speaker 3: as a class action, well we're a long way from
15:37
Speaker 3: That's how we say, if it is certified by the
15:40
Speaker 3: judge as a class then they have to have a
15:43
Speaker 3: settlement that the judge approves as being in the interest
15:46
Speaker 3: of the class, so it becomes a little more complicated.
15:49
Speaker 1: And Harry, why do you think they filed in New
15:52
Speaker 1: York City, London and Brussels.
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Speaker 3: It's sort of smart actually, So generally it's harder to
15:58
Speaker 3: bring private litigation in Europe or the UK. The rules
16:03
Speaker 3: are different, discoveries, different class action status. Bringing on behalf
16:08
Speaker 3: collectively is harder. On the other hand, the law may
16:11
Speaker 3: be a little more favorable to them because competition law
16:16
Speaker 3: in the UK and in Europe tends to recognize more
16:21
Speaker 3: of abuse of dominance, which is sort of a little
16:25
Speaker 3: more in tune with exploitation that they're talking about exploiting
16:30
Speaker 3: the workers, and may be a little more willing to
16:34
Speaker 3: entertain collective dominance, which is a group of competitors exercising
16:40
Speaker 3: dominance together. So it's interesting they filed there as well.
16:44
Speaker 3: Or some of the tournaments in Europe are really quite
16:47
Speaker 3: important and in England it is really an international sport.
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Speaker 1: Always a pleasure to talk to you, Harry, thanks so much.
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Speaker 1: That's Professor Harry First of NYU Law School. President Donald
16:59
Speaker 1: Trump I hired the two Democratic members of the Federal
17:02
Speaker 1: Trade Commission, risking dismantling the image the one hundred and
17:06
Speaker 1: ten year old agency has cultivated as an independent regulator,
17:12
Speaker 1: and also setting up a likely showdown at the Supreme
17:15
Speaker 1: Court over his ability to fire agency leaders at will.
17:20
Speaker 1: The emails firing Rebecca Kelly Slaughter and Alvaro Bedoya said quote,
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Speaker 1: your continued service on the FTC is inconsistent with my
17:30
Speaker 1: administration's priorities. Accordingly, I am removing you from office. Both
17:36
Speaker 1: have vowed to fight their dismissals in court. Slaughter told
17:40
Speaker 1: Bloomberg that the firings are illegal.
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Speaker 4: There is no claim of cause, and the statute actually
17:46
Speaker 4: specifically says cause means neglect, malfeasan's or inefficiency, and there
17:51
Speaker 4: was no claim of any of those on the part
17:54
Speaker 4: of miss Commissioner Badoya or myself, just that the President
17:58
Speaker 4: had the right to fire us and was doing it.
18:01
Speaker 4: And to be clear, that statute is over one hundred
18:04
Speaker 4: years old, and only one time in history has a
18:08
Speaker 4: president attempted to remove an FTC commissioner over a policy disagreement.
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Speaker 4: It was ninety years ago.
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Speaker 1: This is part of Trump's moves to assert control over
18:18
Speaker 1: US regulatory agencies. Since taking office, he's fired other members
18:24
Speaker 1: of independent agencies, including a Democratic commissioner from the National
18:28
Speaker 1: Labor Relations Board, two Democrats on the Equal Employment Opportunity Commission,
18:34
Speaker 1: and a Democratic member of the Privacy and Civil Liberties
18:37
Speaker 1: Oversight Board. Joining me is constitutional law expert Harold Krent,
18:42
Speaker 1: a professor at the Chicago Kent College of Law. The
18:45
Speaker 1: statute says that FTC commissioners can only be removed for cause,
18:50
Speaker 1: meaning neglect, malfeasance, or inefficiency. But the email sent to
18:55
Speaker 1: these two Democratic commissioners just said, your continued service on
19:00
Speaker 1: the FTC is inconsistent with my administration's priorities. So the
19:06
Speaker 1: administration isn't even making an attempt to comply with the statute.
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Speaker 5: Well, the administration has already been on record that it
19:13
Speaker 5: doesn't believe in the existence of independent agencies and that
19:16
Speaker 5: thinks the president needs to closely control all departments, agencies,
19:20
Speaker 5: and burrows within the executive branch. So it's really no
19:23
Speaker 5: surprise that the president's administration reached out between move the
19:26
Speaker 5: two Democratic commissioners. So the consistent with the world view
19:30
Speaker 5: of the administration that he needs to have his fingers
19:33
Speaker 5: in every pot in terms of the administration of the
19:35
Speaker 5: executive branch.
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Speaker 1: Ignoring the law for one minute, these commissioners. The Democratic
19:41
Speaker 1: commissioners are in a minority, so they're not going to
19:44
Speaker 1: influence the policy of the FTC. Why bother firing them.
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Speaker 5: This is not for control of the FTC per se.
19:54
Speaker 5: This is for making a statement as to control of
19:57
Speaker 5: the entire executive branch. Usually commissi are because it's a
20:01
Speaker 5: three to two split for the president's party, are pretty
20:05
Speaker 5: receptive to the President's views. But nonetheless there are sometimes
20:08
Speaker 5: when there's an internal dissension within the commission and therefore
20:12
Speaker 5: the minority members can play a more significant role. But
20:17
Speaker 5: I think here this is not so much reflection the
20:20
Speaker 5: fact that President Trump doesn't trust the FTC. This is
20:23
Speaker 5: reflection of the fact that the administration wants to make statement,
20:27
Speaker 5: wants to make a statement as to the expanse of
20:29
Speaker 5: articles to authority which they believe is devoloved into a
20:33
Speaker 5: single individual on top of the administration, namely the president.
20:38
Speaker 1: So this involves one hundred year old statue. And the
20:42
Speaker 1: one time the president has attempted to remove a commissioner
20:45
Speaker 1: led to the Supreme Court case Humphrey's Executor in nineteen
20:49
Speaker 1: thirty five. So that's the precedent.
20:51
Speaker 5: So President Roosevelt Franklin Roosevelt had a dispute with a
20:55
Speaker 5: right wing member of the Federal Trade Commission. He removed
20:58
Speaker 5: him from office. Unfortunately, the individual dies shortly thereafter, but
21:01
Speaker 5: his state brought a suit in order to claim that
21:05
Speaker 5: President Roosevelt lacked the ability to fire the individual without cause,
21:10
Speaker 5: and President Roosevelt did not delineate any specific cause for
21:15
Speaker 5: the ouster of the commissioner. Supreme Court ultimately took up
21:19
Speaker 5: the case and decided, in a surprise at the time,
21:23
Speaker 5: that Congress can, with respect to agencies that they said
21:27
Speaker 5: acted in a kind of quasi judicial or quasi legislative manner,
21:31
Speaker 5: that Congress could preserve those commissioners from the president's at
21:35
Speaker 5: well removal if it's so Desira. It doesn't have to.
21:38
Speaker 5: If Congress thinks that quasi independence is important for those
21:42
Speaker 5: officers performing what they suggested were quasi legislative the quasiti
21:46
Speaker 5: judicial functions, then that would be consistent with the separation
21:49
Speaker 5: of powers in the Constitution now. But those are kind
21:52
Speaker 5: of weird words, quasi legislative and quasi judicial. By that
21:56
Speaker 5: the Court really meant sort of from quasi legislative will
21:59
Speaker 5: make function, which FTC does, as does other agencies and
22:04
Speaker 5: by quasi judicial and meant some kind of sitting enforcement action,
22:08
Speaker 5: and of course the FTC does that, as does many
22:10
Speaker 5: other agencies as well.
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Speaker 1: The Justice Department said recently that it is going to
22:16
Speaker 1: push the Supreme Court to reverse that precedent. Now, the
22:20
Speaker 1: Supreme Court's conservative majority, as we've discussed before, has with
22:25
Speaker 1: a series of rulings, reigned in regulators independence, and in
22:30
Speaker 1: twenty twenty, Justices Clarence Thomas and Neil Gorsuch said they
22:34
Speaker 1: would have overturned Humphrey's Executor. Do you think Humphrey's Executor
22:39
Speaker 1: would survive at the Supreme Court? At this Supreme Court, it's.
22:43
Speaker 5: Going to be a close call. And I think that
22:46
Speaker 5: if you look at the t leaves, the TVs are
22:48
Speaker 5: all suggesting that the Court is a firm believer in
22:51
Speaker 5: the unitary executive. And indeed, the distinction between a single
22:55
Speaker 5: member commission, which the Court previously is held cannot be
22:59
Speaker 5: shielded from that will removal, and a multi member commission
23:03
Speaker 5: is very thin. On the other hand, what these tip
23:07
Speaker 5: administration is a private court of is its ability to
23:10
Speaker 5: sort of go very slow and make these odd sort
23:13
Speaker 5: of distinctions and therefore not rush to judgment as to
23:17
Speaker 5: the makeup of the entire administrative state. And so President
23:20
Speaker 5: Trumpson will force the Court in the near future to
23:23
Speaker 5: make this call as to what does it mean to
23:26
Speaker 5: have the independent agencies. And there's a couple other factors involved.
23:30
Speaker 5: Theres not just all independents. It may mean how extensive
23:34
Speaker 5: is the authority issue. They may have to make the judgment.
23:37
Speaker 5: They may have to make a judgment about what kind
23:40
Speaker 5: of functions a agency is undertaking before Congress can decide
23:46
Speaker 5: to shield them from some kind of that will removal.
23:50
Speaker 5: And so you know, for instance, there are some agencies
23:52
Speaker 5: that principally adjudicate, and even recently the Supreme Court has
23:57
Speaker 5: said that Congress has the right to share yield those
24:00
Speaker 5: adjudicating agencies from that will removal. In the Colns case
24:05
Speaker 5: just a couple of years ago, the Court reaffirmed the
24:07
Speaker 5: validity of that decision. Will that go unclear, you know,
24:12
Speaker 5: And again even in the Special Council case where the
24:15
Speaker 5: Court remove the head of the whistle blowers within the government,
24:19
Speaker 5: you know, that doesn't seem like a traditional executive function either.
24:23
Speaker 5: And it's unclear though we're not going to see that
24:25
Speaker 5: case because the case died off. It's unclear whether Congress
24:29
Speaker 5: can shield whistleblowers from the will removal authority of the president. Logically,
24:33
Speaker 5: you would think that they could, because you wouldn't want
24:36
Speaker 5: to have a whistleblower against the president be able to
24:40
Speaker 5: be removed that will. But that's the kind of issues
24:43
Speaker 5: the Court will have to face. Whether anybody in the
24:46
Speaker 5: executive branch must be subject to at will removal or
24:50
Speaker 5: doesn't mean they have to have a certain amount authority,
24:52
Speaker 5: doesn't mean they have to have a certain type of authority.
24:55
Speaker 5: These are issues that the Court has died so far,
24:58
Speaker 5: and so wolves have to see what they come up with.
25:01
Speaker 1: So then there could be different rules for different agencies, and.
25:06
Speaker 5: Here has been right. There's been rules for some agencies
25:09
Speaker 5: which are deemed independent because they have these quasi judicial
25:12
Speaker 5: quasi legislative functions, as opposed to others like prosecutors, who
25:17
Speaker 5: must be subject to the atword mu authority. So that's
25:20
Speaker 5: a distinction that the Court has relied upon in the past,
25:23
Speaker 5: and so they may form other distinctions in the upcoming cases.
25:27
Speaker 5: I mean, and one of the things, you know, how
25:29
Speaker 5: broad is the authority? What type of authority? So in
25:32
Speaker 5: my mind. For instance, you can have scientific authority technological
25:36
Speaker 5: authority in the executive branch, but that doesn't really mean
25:40
Speaker 5: that you're a type of officer that the present needs
25:43
Speaker 5: to be at his or her Beck and Call.
25:46
Speaker 1: Slaughter said on Bloomberg. If they can remove me, they
25:49
Speaker 1: can remove Jerome Powell, the head of the Federal Reserve.
25:53
Speaker 5: And the Republicans for a long time have used power
25:57
Speaker 5: as an example of an officer who, at least at
26:00
Speaker 5: the time, many did not want to be removed at will.
26:04
Speaker 5: And the theory is that you don't want the money
26:07
Speaker 5: supply and inflation rates to be pegged upon a presence
26:12
Speaker 5: need to win an election. But you know, it's hard
26:16
Speaker 5: to separate monetary policy from foreign policy, or from health policy,
26:23
Speaker 5: or from the FTC itself. So I think that if
26:28
Speaker 5: the court decides that the FTC commissioners can be removed
26:32
Speaker 5: at will, then the next step would be logically that
26:36
Speaker 5: so could the head of the ped The.
26:38
Speaker 1: FDC is an active litigation against corporate giants such as Amazon,
26:43
Speaker 1: Meta Platforms and three major pharmacy benefit managers. And here's
26:48
Speaker 1: what Padoya has said.
26:50
Speaker 3: I'm worried that the only thing that's going to matter
26:53
Speaker 3: are which billionaire has the president's ear on this deal
26:56
Speaker 3: and what strings can he pull about it.
27:00
Speaker 5: It is always possible for the administration to pressure agencies
27:04
Speaker 5: to side with friends. Doesn't happen very often, probably not,
27:07
Speaker 5: but I'm sure it's happened historically. And this will just
27:10
Speaker 5: be a more self evident case where the commissioners know
27:16
Speaker 5: and the Republican commissioners will know that if they go
27:18
Speaker 5: against a Tesla they're going to be in immediate trouble.
27:23
Speaker 5: They probably knew it anyway, but this will make it
27:25
Speaker 5: even more clear. And so that's the dangerous not just
27:28
Speaker 5: that it's the Democratic members of the Commission who might
27:32
Speaker 5: have gone against the business. It's also the Republican members
27:35
Speaker 5: of the Commission, and this will take away some of
27:38
Speaker 5: their security in going about their business without looking over
27:41
Speaker 5: their shoulder at what the political aid of the land
27:44
Speaker 5: might be.
27:45
Speaker 1: The DC Circuit Court of Appeals appear a split over
27:49
Speaker 1: whether to sideline two independent agency officials as the Trump
27:53
Speaker 1: administration continues to fight for the legal right to fire them.
27:58
Speaker 1: Trump fired Gwyn Wilcox National Labor Relations Board and Kathy
28:02
Speaker 1: Harris at the Merit Systems Protection Board, but federal judges
28:07
Speaker 1: reinstated them. I've been talking to Professor Harold Krant of
28:10
Speaker 1: the Chicago Kent College of Law. It appeared like the
28:14
Speaker 1: court was split, with the Democratic appointee favoring the reinstatement
28:19
Speaker 1: and the Republican appointee favoring the administration's position, and then
28:24
Speaker 1: the third We're not sure where, because she didn't ask
28:27
Speaker 1: very many questions.
28:29
Speaker 5: At the PC Circuit, there there was a fearing on
28:32
Speaker 5: basically the same issue we've been discussing about whether the
28:35
Speaker 5: president of Humphrey's Executor is still valid. I mean, the
28:38
Speaker 5: court recognized that under Humphrey's Executor that the President acted
28:43
Speaker 5: illegally in firing the members of the Merit System Protection
28:46
Speaker 5: Board and the National Labor Relations Board, because those two
28:50
Speaker 5: are engaged in both a kind of rulemaking power as
28:54
Speaker 5: well as an adjudication power, both more adjudication than the rulemaking,
28:58
Speaker 5: but still some kind of mixture. But at the same time,
29:02
Speaker 5: they also realized that the Supreme Court has been showing
29:06
Speaker 5: disfavor to Humphrey's Executive and showing more unease with the
29:12
Speaker 5: whole concept of independent agencies. So the discussion in the
29:15
Speaker 5: case was mixed because of the fact that there was
29:19
Speaker 5: a tension between the validity of the precedent at which
29:22
Speaker 5: the Court has reaffirmed on numerous occasions, that is Humphrey's Executor,
29:25
Speaker 5: but also the kind of again these tea leaves that
29:29
Speaker 5: the Court was laying out narrowing the Humphrey's Executor over
29:33
Speaker 5: and over again, most recently in the College case, in
29:36
Speaker 5: the Cello Law case involving the Consumer Financial Protection Board.
29:40
Speaker 1: Yeah, the Trump appoint de judge Justin Walker said, the
29:44
Speaker 1: Court is bound by the Humphreys Executor case, but it's
29:48
Speaker 1: also bound by Supreme Court decisions that took a more
29:51
Speaker 1: skeptical view of restrictions on the president's removal power. But still,
29:57
Speaker 1: Humphrey's Executor is good law right now? How can they
30:02
Speaker 1: rule against it?
30:03
Speaker 5: Well, And that was part of the discussion. I mean,
30:05
Speaker 5: it's not for the lower courts to finally take the
30:08
Speaker 5: step to overrule a Supreme Court precedent. It's traditionally been
30:12
Speaker 5: up to the Supreme Court. And that's certainly some of
30:14
Speaker 5: the arguments that were made in the DC case. My
30:18
Speaker 5: guess is that at the end of the day, the
30:21
Speaker 5: Court is going to stick with a narrow ground of
30:24
Speaker 5: Humphrey's Executor and allow the Supreme Court to make the
30:27
Speaker 5: change if indeed it's so desirous too, which is more
30:31
Speaker 5: likely not the debate, but not a Footgart conclusion.
30:34
Speaker 1: The cases of the FTC commissioners will end up at
30:37
Speaker 1: the DC Circuit as well.
30:40
Speaker 5: Yeah, I mean, we'll see.
30:41
Speaker 2: You know.
30:41
Speaker 5: Obviously, the Supreme Court's going have to rule on this
30:44
Speaker 5: relatively soon. There's no factional issues involved, so it can
30:47
Speaker 5: be a kind of easy case to go up to
30:50
Speaker 5: the Court of Appeals and then the Supreme Court, because
30:53
Speaker 5: you know, President Trump's administrations ask the Supreme Court to
30:57
Speaker 5: do this. There's all these cases floating around now, so
30:59
Speaker 5: it just makes sense for the Court to perhaps to
31:02
Speaker 5: take all of them together and to make a decision.
31:05
Speaker 1: And this is all part of the unitary executive concept,
31:10
Speaker 1: all power in the president.
31:12
Speaker 5: It absolutely is. I mean, most people think that Congress
31:14
Speaker 5: has at least a range of discretion to decide how
31:18
Speaker 5: best to construct offices, whether offices should be headed by
31:22
Speaker 5: three people, one person, five people, and whether officers need
31:25
Speaker 5: independence or quasi independence from the president in order to
31:29
Speaker 5: effectuate their job. I would think that the head of
31:31
Speaker 5: the whistleblowers would need some kind of independence. I would
31:36
Speaker 5: think that. Again, it's up to the Congress to determine
31:39
Speaker 5: whether complex organizations or agencies like the National Labor Relations
31:43
Speaker 5: Board or the Mayor Assistants Protection Board should deserve a
31:47
Speaker 5: little bit of independence as well as well as the
31:49
Speaker 5: head of the FAT. As we discussed before, many people
31:52
Speaker 5: think you need to isolate and insulate the head of
31:55
Speaker 5: the fat from political pressures. So that's really many people
31:58
Speaker 5: think up to Congress make that judgment. But under the
32:01
Speaker 5: minitary executive belief that all those kinds of measures of
32:06
Speaker 5: separating the executional law from the president is a violation
32:11
Speaker 5: of the Article too, So that's really the grand dispute,
32:15
Speaker 5: And the court has a variety of options of how
32:19
Speaker 5: to accommodate Congress's interest with the executive's interest, but right
32:23
Speaker 5: now it's been leaning towards the executive, so we'll have
32:25
Speaker 5: to see how this plays out. There is one other
32:28
Speaker 5: interesting compromise that the courts might take. The courts might
32:31
Speaker 5: suggest that the president has acted unconstitutionally, but nonetheless declined
32:38
Speaker 5: to order reinstatement, thinking that it would be too much
32:41
Speaker 5: of a imposition on the president to have to work
32:44
Speaker 5: with someone wholice try to fire so they can offer
32:47
Speaker 5: a declaratory judgment and require the government to pay money
32:51
Speaker 5: and say that the president acted illegally, but nonetheless not
32:54
Speaker 5: require the president to take back the officer. And now
32:58
Speaker 5: would be sort of an interesting compromise, but I could
33:00
Speaker 5: see some members of the court leaning to in order
33:03
Speaker 5: to again affirm a position that the president does not
33:08
Speaker 5: have the way to ignore Congress's decision to put restrictions
33:13
Speaker 5: on the removal power of a certain type of agency
33:15
Speaker 5: had and yet the same time be empathetic to the
33:18
Speaker 5: President and show respect by saying, we're not going to
33:21
Speaker 5: force you to rehire these individuals.
33:23
Speaker 1: We'll see how fast this issue gets to the Supreme Court.
33:27
Speaker 1: Thanks so much, Hal. That's Professor Harold Krant of the
33:29
Speaker 1: Chicago Kent College of Law. And that's it for this
33:33
Speaker 1: edition of The Bloomberg Law Show. Remember you can always
33:36
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33:39
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