Latest / Bloomberg Law / Weekend Law: Noncompetes, SCOTUS Is Slow & Charges in Matthew Perry Death

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Weekend Law: Noncompetes, SCOTUS Is Slow & Charges in Matthew Perry Death · Bloomberg Law

0:03
Speaker 1: This is Bloomberg Law, with June Brusso from Bloomberg Radio.
0:10
Speaker 2: A Texas judge struck down the FTC's ban on non
0:14
Speaker 2: compete agreements before the ban even went into effect, blocking
0:18
Speaker 2: the agency's effort to make labor markets more competitive. Non
0:22
Speaker 2: Compete agreements have become increasingly common, with an estimated twenty
0:27
Speaker 2: percent of workers that's about thirty million Americans subject to them.
0:32
Speaker 2: Last January, President Joe Biden chouted the FTC's overhaul of
0:37
Speaker 2: the rules, saying non competes make it needlessly difficult for
0:42
Speaker 2: average working Americans to get better jobs.
0:46
Speaker 3: That's another thing to say you're working for a subway
0:50
Speaker 3: and you can't walk across the street and go to
0:53
Speaker 3: Jimmy John's and get a twenty cent raise. What tells
0:56
Speaker 3: that all about other than keeping wages down?
1:00
Speaker 2: Judge Ada Brown, a Trump appointee, said the FTC lacked
1:04
Speaker 2: the authority to enact the non compete ban and tossed
1:08
Speaker 2: it out. Joining me is William Kavasik, a professor at
1:11
Speaker 2: GW Law School and the former chair of the FTC.
1:15
Speaker 2: The judge said in her twenty seven page ruling that
1:19
Speaker 2: the FTC's proposed rule was arbitrary and capricious, and would
1:23
Speaker 2: cause irreparable harm. Can you tell us more about her decision?
1:28
Speaker 4: Judge Brown had two grounds for suspending the implementation of
1:33
Speaker 4: the rule vacating it. The first is the one you mentioned,
1:36
Speaker 4: which is that the FDC lacked an adequate basis to
1:40
Speaker 4: support the scope and the complete reach of the rule.
1:43
Speaker 4: That is, the rule applies to a very broad range
1:46
Speaker 4: of employment contracts. There are a couple of carbouts, but
1:49
Speaker 4: the judge concluded that you lacked a sufficient evidentiary basis
1:54
Speaker 4: to implement that rule, and therefore the rule itself is
1:58
Speaker 4: arbitrary and caprecious. The seconds for rejecting the rule is
2:02
Speaker 4: her conclusion that the FDC lacks the legal authority to
2:06
Speaker 4: adopt rules involving competition policy. That is, substantive competition rules
2:11
Speaker 4: are beyond the FDC's remit. This involved a fairly elaborate
2:15
Speaker 4: and technical analysis the FDC's authority going back to nineteen
2:19
Speaker 4: fourteen when Congress established the FDC Act and coming forward,
2:23
Speaker 4: but her review of the original framework and its subsequent
2:27
Speaker 4: evolution to the FTC simply lacks legal authority to adopt
2:31
Speaker 4: and apply such a rule, so that on that basis
2:34
Speaker 4: as well, the rule was suspended.
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Speaker 1: Do you agree with her reasoning.
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Speaker 4: On the second point. I do. It's always difficult to
2:42
Speaker 4: decide when you have a good fit between the substantive
2:45
Speaker 4: rule and the underlying basis. I think what's a matter
2:48
Speaker 4: of concern is that, first, it's an extraordinarily broad rule
2:51
Speaker 4: and unashamably it applies to the laws that forty eight
2:55
Speaker 4: states that currently allow various forms of noncompete. It involves
3:00
Speaker 4: the FTC emphasized hundreds of billions of dollars of wages.
3:03
Speaker 4: There are tremendous economic stakes here. This is very clearly
3:06
Speaker 4: a major extension of the FTC's oversight role in labor
3:12
Speaker 4: related agreements. You would think that for a measure of
3:15
Speaker 4: that art, you would have to have a fairly extensive
3:17
Speaker 4: and careful review of the existing literature pro and con.
3:21
Speaker 4: I would say, in many ways, the FDC took shortcuts
3:23
Speaker 4: on that and tended to brush aside views that it
3:26
Speaker 4: found to be incompatible with its policy preferences. And I
3:29
Speaker 4: think that did create a real vulnerability with respect to
3:32
Speaker 4: the arbitrary and capricious issue you argue about the FDC's
3:36
Speaker 4: authority is ambiguous. There are certainly plausible arguments that the
3:39
Speaker 4: FDC has the authority. My intuition is that given the
3:43
Speaker 4: current direction of Supreme Court jurisprudence involving the grant of
3:48
Speaker 4: authority to administrative agencies and the effort that administrative agencies
3:52
Speaker 4: regulators to interpret their authority in a way to meet
3:56
Speaker 4: new conditions and to stretch in some sense the application
3:59
Speaker 4: of their authority, the current Supreme Court is skeptical about that.
4:03
Speaker 4: The current Supreme Court says, if you want to do
4:05
Speaker 4: bold thing and to apply the law in a broad way,
4:08
Speaker 4: we want you to anchor that in a clear statement
4:11
Speaker 4: of congressional purpose. That Congress to allow you to do
4:15
Speaker 4: bold things has to say so. Clearly, the direction of
4:18
Speaker 4: travel of this doctrine runs against the philosophy the interpretation
4:23
Speaker 4: approach that the FDC is relying on. Here. Goodness knows
4:26
Speaker 4: how the Supreme Court would ultimately evaluate the rule. I
4:30
Speaker 4: haven't talked to them today, so I don't know exactly
4:33
Speaker 4: what they'll do. But my inference from the current direction
4:37
Speaker 4: of their jurisprudence and the attitude that's embedded in that
4:40
Speaker 4: jurisprudence is that this rule would have a very difficult
4:43
Speaker 4: time surviving review as it goes up to the court,
4:47
Speaker 4: and that Judge Brown's ruling here that the Commission just
4:49
Speaker 4: doesn't have authority to issue any rules involving competition is
4:53
Speaker 4: quite likely to be sustained.
4:55
Speaker 2: How about another agency doing this? The National Labor Relations
4:59
Speaker 2: Board's top lawyer is moving ahead with an enforcement strategy
5:03
Speaker 2: to make restrictive covenants illegal. General Counsel Jennifer Brusso says
5:08
Speaker 2: such packs deny workers the ability to quit or change jobs,
5:12
Speaker 2: which in turn interferes with exercising their organizing rights. Do
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Speaker 2: you think a rule by the NLRB would survive.
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Speaker 4: I'm less familiar June with the specific grant of authority
5:24
Speaker 4: that the NLRB would be relying upon. Certainly in the
5:27
Speaker 4: application of its adjudication function, that is, in the prosecution
5:30
Speaker 4: of individual cases, it would be less likely to run
5:33
Speaker 4: into the question whether it has rulemaking authority, which is
5:37
Speaker 4: the issue in the FTC proceedings. The question for the
5:40
Speaker 4: NLRB would be in its law enforcement capacity. Has it
5:45
Speaker 4: appropriately interpreted the mandate the Congress gave it? And would
5:49
Speaker 4: reviewing courts conclude that its interpretation of it's the law
5:53
Speaker 4: enforcement mission encompasses the concerns that the NLARB the Solicitor
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Speaker 4: General has raised about noncompete. So the NLRB might be
6:03
Speaker 4: in a position to challenge these I don't know if
6:06
Speaker 4: they mean to do it by rulemaking. And I would
6:08
Speaker 4: add that the FDC does have authority to challenge individual
6:13
Speaker 4: non compete agreements using its law enforcement mandate. It has
6:17
Speaker 4: a law enforcement mandate to prohibit unfair deceptive acts or
6:21
Speaker 4: practices or unfair methods of competition that involves case by
6:25
Speaker 4: case adjudication to challenge specific arrangements. That authority is not
6:30
Speaker 4: endangered in the challenges that are present in the federal
6:33
Speaker 4: courts now, the FDC can continue to do that. That
6:37
Speaker 4: has the disadvantage that you go step by step and
6:40
Speaker 4: you don't have the capacity necessarily to adopt a broad
6:44
Speaker 4: based prohibition that applies across the country and condemns all
6:48
Speaker 4: of the arrangements. It's a more laborious way to get
6:53
Speaker 4: to the final destination that you wish to achieve. That
6:56
Speaker 4: pass is still open to the FDC. That kind of litigation,
7:00
Speaker 4: I assume is open to the NRB. That case by
7:03
Speaker 4: case litigation approach is available. The district judge decision and
7:07
Speaker 4: the FDC case deals with the effort in a single
7:10
Speaker 4: rule to achieve what otherwise be attained through a collection
7:14
Speaker 4: of cases over time.
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Speaker 1: How big a blow do you think this is to
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Speaker 1: the FTC.
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Speaker 4: I think it's a significant blow. When I look at
7:21
Speaker 4: the whole span of the FTC's program since the Biden
7:24
Speaker 4: administration began in twenty twenty one, I would characterize this
7:29
Speaker 4: as the most significant initiative that they pursued. Most significant
7:33
Speaker 4: measured by its purported economic impact, it's anticipated economic impact,
7:37
Speaker 4: which is self described as being very broad, Most significant
7:41
Speaker 4: in terms of its effort to move the doctrinal framework
7:44
Speaker 4: of intervention outwards to gain acceptance for the idea that
7:47
Speaker 4: the FTC has power to issue these competition rules and
7:51
Speaker 4: include powerful prohibitions in them. And Third, symbolically, it is
7:56
Speaker 4: held out as an example of the Biden FTC is
8:00
Speaker 4: willing to take more risks, to be far more ambitious
8:03
Speaker 4: than its predecessors are, and as such to bring a
8:07
Speaker 4: new attitude toward the application of federal power to control commerce.
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Speaker 4: In all of these respects, I would say, in the
8:15
Speaker 4: entire fleet of FTC initiatives, this is the flagship. And
8:20
Speaker 4: if you are running a Navy. You don't want your
8:22
Speaker 4: flagship to be sunk.
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Speaker 2: In a statement, FTC spokesperson Victoria Graham said, the agency
8:28
Speaker 2: is seriously considering a potential appeal. Do you think they
8:31
Speaker 2: should appeal this because it's going to the Fifth Circuit,
8:34
Speaker 2: which is ultra conservative as a reputation for overturning Biden
8:39
Speaker 2: administration rules, and then likely to the Supreme Court, where
8:43
Speaker 2: As you mentioned, I don't think they'll find a receptive court.
8:47
Speaker 4: I think they should. If I was guiding the strategy,
8:49
Speaker 4: I would do it. One reason is that the FTC
8:52
Speaker 4: has had some surprising success over the past year in
8:55
Speaker 4: front of that very court. It was in the context
8:57
Speaker 4: of a merger challenge to an acquisition by a Lumina
9:00
Speaker 4: of the Grail Company. It was an appeal from an
9:03
Speaker 4: FDC administrative decision. The parties opposing the FDC roise four
9:08
Speaker 4: distinct constitutional and administrative law challenges to the FDC's authority.
9:13
Speaker 4: The court basically brush the side all of the administrative
9:16
Speaker 4: law and constitutional law challenges. It upheld the FDC's decision,
9:21
Speaker 4: and in a sense, it showed that even in a
9:24
Speaker 4: very difficult litigation environment, you can prevail. So it's not
9:29
Speaker 4: a hopeless pursuit. And another reason I bring the case
9:32
Speaker 4: is that I think it would demonstrate the conviction of
9:34
Speaker 4: the agency to take on hard, difficult matters, notwithstanding the
9:39
Speaker 4: possibility of failure in the court. You're ultimately going to
9:42
Speaker 4: have to face a judiciary, perhaps ultimately the Supreme Court,
9:46
Speaker 4: that has raised issues with this form of approach. My
9:50
Speaker 4: suggestion was, have it out now, get the appellate decision,
9:54
Speaker 4: take it up to the Supreme Court, and say we
9:56
Speaker 4: need a basic decision about the frame work work of
10:00
Speaker 4: FDC authority generally and about its application of its absurdive
10:05
Speaker 4: authority in this instance. Let's not wait for another case
10:08
Speaker 4: or another time. Let's bring it to ahead now, and
10:11
Speaker 4: if the result is adverse, we go back to Congress
10:13
Speaker 4: and say, if you want us to be active in
10:16
Speaker 4: this area, give us a clearer mandate to do so.
10:19
Speaker 2: There are non competes at the state level. Four states
10:23
Speaker 2: have banned nearly all non competes, and at least eleven
10:26
Speaker 2: more have thresholds protecting lower income, middle income hourly workers,
10:30
Speaker 2: et cetera. Do you think we'll see more states passing
10:33
Speaker 2: laws banning non competes.
10:35
Speaker 4: I think we'll see an amendment of the legal framework.
10:38
Speaker 4: And this is a respect in which the FDC's initiative,
10:40
Speaker 4: despite the risk that I've been describing in the sense,
10:44
Speaker 4: has achieved real success. It has drawn broad attention within
10:47
Speaker 4: the United States. So the issue of non compete. It's
10:51
Speaker 4: catalyzed reconsideration of the existing legal framework, which, with the
10:55
Speaker 4: exception of a handful of states such as California, does
10:58
Speaker 4: not prohibit these agreements or render them unenforceable. Most states
11:03
Speaker 4: allow them to be evaluated by a reasonableness standard. The
11:06
Speaker 4: FDC's initiative has inspired a new debate about whether or
11:10
Speaker 4: not these kinds of restrictions are appropriate. So I think
11:13
Speaker 4: we're going to see a rethink in many states that
11:16
Speaker 4: allow these arrangements under a reasonableness standard, to rethink that approach,
11:21
Speaker 4: perhaps to create presumptions against them, to apply prohibitions that
11:26
Speaker 4: exist now on certain noncompetes more broadly. So we could
11:30
Speaker 4: see in the state a restoration of bolder enforcement and
11:35
Speaker 4: scrutiny regarding noncompete. And I think you point to a
11:39
Speaker 4: result that the FDC probably had in mind in taking
11:43
Speaker 4: a very bold approach here, which was to change the
11:45
Speaker 4: policy debate to bring about indirect effects, including in the
11:49
Speaker 4: state government.
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Speaker 2: Thanks for your insight, spill. That's Professor William Kovasik of
11:54
Speaker 2: GW Law School coming up next. Why the Supreme Court's
11:57
Speaker 2: workload is backloaded? Juan Grosso and you're listening to Bloomberg.
12:03
Speaker 2: You might remember the end of the Supreme Court's term
12:06
Speaker 2: in June, when in the space of a week, the
12:08
Speaker 2: Republican super majority slashed the power of regulators, curbed the
12:13
Speaker 2: SEC's use of in house judges, tossed a six billion
12:18
Speaker 2: dollar opioid settlement, and allowed cities to evict the homeless
12:22
Speaker 2: from public encampments. And then the justices added a day
12:26
Speaker 2: to issue the blockbuster decision shielding former presidents from criminal
12:30
Speaker 2: prosecution and giving Donald Trump an election year boost. So
12:35
Speaker 2: why do we increasingly see the most controversial decisions handed
12:39
Speaker 2: down the last week of the term. Justice Elena Kagan
12:43
Speaker 2: told the group of judges and lawyers last month that
12:46
Speaker 2: it's not planned that way.
12:48
Speaker 5: You know, I read at the end of every year
12:50
Speaker 5: all these theories about how we've sort of planned it
12:53
Speaker 5: this way, and you know what I would say are
12:58
Speaker 5: a little bit conspiracy theories and the truth of the matter, truly,
13:01
Speaker 5: you know, this is really truly the case is that
13:04
Speaker 5: we announce decisions when they're done.
13:06
Speaker 2: More and more the Court's workload is bunched up toward
13:10
Speaker 2: the end of the term, and the upcoming term appears
13:13
Speaker 2: to be no exception, as the Justices are off to
13:17
Speaker 2: a slow start. Joining me is Bloomberg Law Supreme Court
13:21
Speaker 2: reporter Kimberly Strowbridge Robinson, who's investigated this. Kimberly start by
13:27
Speaker 2: explaining how the Supreme Court's calendar works.
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Speaker 6: Yeah, so the Supreme Court has a pre long break
13:34
Speaker 6: in the middle of the summer, which I think a
13:36
Speaker 6: lot of the justices like it tends to break up
13:39
Speaker 6: the workload, at least in the past, is broken up
13:41
Speaker 6: the workload. But that means that when the Justices come
13:44
Speaker 6: back to start off their terms in October, they really
13:48
Speaker 6: have had to do some work beforehand to sort of
13:51
Speaker 6: have enough cases that have already gone through briefing and
13:54
Speaker 6: that are ready for arguments. So it really means that
13:57
Speaker 6: in January, February, March, the Justices need to be granting
14:01
Speaker 6: cases for their October, November, and December sittings. The problem
14:06
Speaker 6: with that is that's also when the Court is still
14:09
Speaker 6: hearing new cases and trying to get decisions together. So
14:13
Speaker 6: it becomes a really busy time for the justices.
14:15
Speaker 2: Argument sittings start again in the fall, famously on the
14:19
Speaker 2: first Monday in October. How many cases have they lined
14:22
Speaker 2: up so far?
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Speaker 6: Well, this term is starting off like many recent terms,
14:26
Speaker 6: where the justices are really getting a pretty slow start.
14:30
Speaker 6: You know, a full calendar, we think of full argument
14:33
Speaker 6: calendar is about two cases a day where the justice
14:37
Speaker 6: is here cases in the morning at ten and eleven.
14:39
Speaker 6: We haven't really seen that for a few terms, and
14:41
Speaker 6: so instead, you know, the justices are coming in under
14:44
Speaker 6: their full calendar, and that just means that they're going
14:47
Speaker 6: to have to make up those empty argument sittings in
14:50
Speaker 6: the later sittings that they have in January, February, March, April.
14:54
Speaker 6: And you know, again that's creating this backlog where right
14:58
Speaker 6: as other work is sort of ram up, they're having
15:01
Speaker 6: to go back and fill in for the deficits that
15:03
Speaker 6: they had in the.
15:04
Speaker 2: Fall, and they're hearing far fewer cases than they did
15:08
Speaker 2: years ago.
15:09
Speaker 6: Yeah, that's one thing. You know, even Justice Kagan, she
15:12
Speaker 6: talked about when she clerked many decades ago, the court
15:16
Speaker 6: was hearing you know, one hundred to one hundred and
15:18
Speaker 6: fifty cases. Now the justices are hearing about sixty. So
15:22
Speaker 6: it's been a really dramatic decrease, and it's been a
15:24
Speaker 6: really steady one too. So I started covering the court
15:27
Speaker 6: about a dozen years ago and the Court was hearing
15:30
Speaker 6: about seventy five cases, and now it's closer to sixty
15:33
Speaker 6: each year, So it keeps getting smaller and smaller. Nobody
15:36
Speaker 6: really knows why. We know, the justices are aware of this,
15:39
Speaker 6: but nobody has really been able to pin down why
15:41
Speaker 6: it is that the court's hearing so fewer cases.
15:44
Speaker 2: Justice Kagan said that even she doesn't understand why so
15:47
Speaker 2: many CIRT petitions are being filed in the spring.
15:50
Speaker 5: One part of it is a little bit unfathomable to me,
15:53
Speaker 5: which is, for whatever reason, we seem to get a
15:56
Speaker 5: lot of cert petitions that we take at a time
16:00
Speaker 5: of the year where arguments are scheduled in March and April,
16:04
Speaker 5: and those cases are just not realistically going to come
16:08
Speaker 5: down until the end of June, and in fact, even
16:11
Speaker 5: that is very it's a very crunched time period.
16:15
Speaker 6: For some reason, a lot of the really significant petitions
16:20
Speaker 6: seem to be coming into the court sort of in
16:23
Speaker 6: the later months of its term, right when the Court
16:26
Speaker 6: is really trying to get out all of its opinions,
16:29
Speaker 6: usually when the justices are circulating opinions on its most
16:32
Speaker 6: sort of consequential cases, and so it just really seems
16:36
Speaker 6: like all the work is sort of bunching up in
16:38
Speaker 6: the later months of the term, which you know, are
16:40
Speaker 6: in the spring and early summer. And so she didn't
16:43
Speaker 6: really have an explanation for it, but she said, you know,
16:46
Speaker 6: for whatever reason, that just seems to be the case
16:48
Speaker 6: that it makes for a really really busy March in
16:52
Speaker 6: April sitting. And then she said something that I thought
16:54
Speaker 6: was really candid was that, you know, she doesn't think
16:57
Speaker 6: that the justices can really do their best work in
17:01
Speaker 6: those months because there's so much going on. And she
17:03
Speaker 6: sort of told the story of a previous justice talking about,
17:07
Speaker 6: you know, one of his clerks coming to him and saying,
17:08
Speaker 6: I can't make sense of this case. Then he would say, well,
17:11
Speaker 6: when was it decided? Is it an April case? Than
17:13
Speaker 6: if it is, then that would explain why the case
17:16
Speaker 6: didn't really make any sense. So Justice Kagan was talking
17:19
Speaker 6: about that seems to still be the case decades on.
17:22
Speaker 2: Is there anything in the way they're handling cases or
17:25
Speaker 2: a green cases that's changed over the years.
17:29
Speaker 6: I think one thing that you know, advocates that I
17:32
Speaker 6: talk to people who had clerked to the court, people
17:34
Speaker 6: who argue with the court, if they say that it
17:36
Speaker 6: seems like the court is taking bigger cases, meaning you know,
17:39
Speaker 6: these cases that really grapple with big social issues that
17:43
Speaker 6: are really important for the country, and those cases, you know,
17:46
Speaker 6: they're hard cases. They take up a lot of the
17:48
Speaker 6: court's time. They're more likely to be divided cases, which
17:52
Speaker 6: means that there's more likely to be more opinions, more
17:55
Speaker 6: to sense, more concurrences. All that just takes a lot
17:58
Speaker 6: of time.
17:59
Speaker 2: The number of conc hurring opinions has really shot up
18:02
Speaker 2: in recent terms, it.
18:04
Speaker 6: Has, you know, I think one of the best examples
18:07
Speaker 6: of this from last term was the Second Amendment case
18:10
Speaker 6: Brahemi about whether or not the federal government could spar
18:14
Speaker 6: those with a domestic violence restraining order from owning guns.
18:18
Speaker 6: And there we saw not only a majority and a descent,
18:22
Speaker 6: but we saw many I think there were five concurrences,
18:26
Speaker 6: and so you know, in a case that was eight
18:29
Speaker 6: to one, to see seven different opinions was really striking.
18:32
Speaker 6: But I think it's something that people think is going
18:35
Speaker 6: to be happening more and more, as again we have
18:37
Speaker 6: these more consequential cases where the justices be like, you know,
18:40
Speaker 6: they really got to get it right and they got
18:41
Speaker 6: to explain their reasoning.
18:43
Speaker 2: Yeah, that seemed like they were each explaining their approach
18:47
Speaker 2: to originalism or textualism or right despite agreeing. Now, you
18:52
Speaker 2: spoke to someone who said that if the court returned
18:55
Speaker 2: to hearing seventy five cases or more, the justices would probably.
18:59
Speaker 1: Pick up the pace.
19:01
Speaker 6: Yeah. I think the thinking there is that, you know,
19:03
Speaker 6: if the court is taking fewer cases, and if a
19:07
Speaker 6: larger majority of those cases are really high profile, that
19:10
Speaker 6: all that's going to suck up a lot of time.
19:12
Speaker 6: And if the court were to go back to a
19:14
Speaker 6: time where it was sort of resolving circuit splits or
19:17
Speaker 6: cases where it really doesn't matter what the outcome is,
19:21
Speaker 6: it just there really needs to be some sort of
19:23
Speaker 6: rule for lawyers. But they wouldn't spend so much time
19:25
Speaker 6: on these concurring opinions. There wouldn't be so many dissenting opinions,
19:29
Speaker 6: and it wouldn't create the kind of bottlenecks that we
19:31
Speaker 6: sort of are guessing is happening at the court to
19:33
Speaker 6: kind of push everything back. You know, we really saw
19:36
Speaker 6: that this term when the justices, they used to be
19:38
Speaker 6: sort of a hard deadline that they would not go
19:40
Speaker 6: into July, that that was sort of a sacred time
19:43
Speaker 6: for them to go off and take a break or
19:45
Speaker 6: to do some sort of teaching assignments. But for the
19:48
Speaker 6: second time and a few terms, they went into July.
19:51
Speaker 6: And we think it's probably because of this effect of
19:54
Speaker 6: having so few cases and such a high portion of
19:57
Speaker 6: them being really high profile.
19:59
Speaker 2: They have a form on vacation, but they have to
20:01
Speaker 2: work during some of that time as well.
20:04
Speaker 6: Yeah, especially now, you know, this is another thing that
20:06
Speaker 6: Justice Kagan spoke about, as well as Justice Kavanaugh, Justice Thomas.
20:10
Speaker 6: We're also speaking this summer, and they all said that
20:13
Speaker 6: they feel really busy, you know, and they're granting sixty
20:17
Speaker 6: or so cases, which isn't as many as before, but
20:20
Speaker 6: they feel like they're working just as hard. And that's
20:22
Speaker 6: because even in the summertime, when they typically wouldn't have
20:25
Speaker 6: a lot of work to do, they're sort of inundated
20:28
Speaker 6: with What we've come to know is the shadow dog
20:30
Speaker 6: at these emergency requests, so they're definitely not on you know,
20:33
Speaker 6: these vacations like they used to have.
20:36
Speaker 2: Are there any big cases coming up next term?
20:38
Speaker 6: So far, so I don't think we really see the
20:41
Speaker 6: kind of high profile cases that we saw from last term,
20:44
Speaker 6: which was just blockbuster after blockbuster after blockbuster. But there
20:47
Speaker 6: are some big cases. I think the biggest one is
20:50
Speaker 6: probably the United States versus her Many, which deals with
20:53
Speaker 6: a Tennessee law that is a ban on gender affirming
20:57
Speaker 6: care for minors. That's going to be a big one
20:59
Speaker 6: and hasn't been set argument yet. There's also another Second
21:02
Speaker 6: Amendment case that's sort of like the bump stock case
21:04
Speaker 6: from last year, this one dealing with ghost guns.
21:07
Speaker 4: You know.
21:07
Speaker 6: The Biden administration says that if the Justices strike down
21:11
Speaker 6: this rule that it could really undo federal gun regulations
21:14
Speaker 6: because people can just take these kits and sort of
21:17
Speaker 6: circumvent all federal laws. And then there's another, you know,
21:21
Speaker 6: important environmental case. The justices have really been sort of
21:24
Speaker 6: dismantling environmental cases under democratic presidential administration. So a few
21:29
Speaker 6: big ones, but again nothing like we saw a last
21:31
Speaker 6: term or a couple of terms ago with abortion and
21:34
Speaker 6: affirmative action. But there's still a lot of time to go.
21:37
Speaker 1: There might be election cases too, coming.
21:39
Speaker 6: Up, right. I do think, you know that maybe part
21:43
Speaker 6: of the reason that the Court has gotten off to
21:44
Speaker 6: a slow start as well is that they do anticipate
21:47
Speaker 6: that there will be some emergency election cases that will
21:50
Speaker 6: be sort of making their way up to the justices
21:52
Speaker 6: that will require them to really focus on that in
21:55
Speaker 6: a short period of time. And actually we already see
21:58
Speaker 6: that happening at the course. So it would be reasonable,
22:00
Speaker 6: I think, for them to think that some of those
22:02
Speaker 6: cases are going to come, but of course they don't
22:04
Speaker 6: know what those are going to look.
22:05
Speaker 2: Like, and of course there is a long way to go,
22:08
Speaker 2: even before the first Monday in October. Thanks so much, Kimberly.
22:12
Speaker 2: That's Bloomberg Law, Supreme Court reporter Kimberly Strawbridge Robinson and
22:16
Speaker 2: turning out of one of those election cases on the
22:19
Speaker 2: shadow docket that the Court decided on Thursday, an emergency
22:23
Speaker 2: appeal was filed by Republicans in the swing state of Arizona,
22:27
Speaker 2: and a divided court decided to allow Arizona to enforce
22:31
Speaker 2: a state law that requires residents to provide proof of
22:35
Speaker 2: citizenship to register to vote, but that will only be
22:38
Speaker 2: allowed in state elections, not in federal elections. Here's elections
22:42
Speaker 2: law expert Derek Muller, a professor at Notre Dame Law School.
22:47
Speaker 7: So it's really five to four to allow this provision,
22:49
Speaker 7: the sort of two track process to play out. So
22:52
Speaker 7: if you can't prove your citizenship, you can still vote
22:55
Speaker 7: in the congressional elections and the presidential elections. You just
22:58
Speaker 7: can't vote in the state elections. And there was a
23:00
Speaker 7: different majority. That was a six to three majority that
23:02
Speaker 7: says no, Actually, these other provisions are also going to
23:05
Speaker 7: be stayed. We're not going to have a split system
23:07
Speaker 7: for dealing with presidential elections. We're not going to require
23:10
Speaker 7: those who are unable to prove citizenship to come and
23:13
Speaker 7: vote in person. You know, three justices would have allowed
23:16
Speaker 7: all of these provisions to take effect. You know, six
23:18
Speaker 7: of them said that those two couldn't take effect. But
23:21
Speaker 7: you had a majority allowing one track of this take effect.
23:24
Speaker 7: So the court comes without any reasons on this. It's
23:26
Speaker 7: a very truncated briefing schedule. They're just trying to issue
23:30
Speaker 7: an order that provides some guidance for election administration officials.
23:34
Speaker 7: Whether or not they give reasons in the future is
23:36
Speaker 7: a matter for another day.
23:37
Speaker 2: What happened to the so called Percel principle where the
23:41
Speaker 2: Supreme Court said, we don't make changes too close to
23:45
Speaker 2: an election because it's too confusing for people. I mean,
23:48
Speaker 2: this is very close to an election.
23:51
Speaker 7: I mean the problem is like, where do you measure
23:54
Speaker 7: when the change happens. So this lawsuit was first filed
23:57
Speaker 7: in twenty twenty two. It was in May that a
24:00
Speaker 7: federal court issued us an injunction prohibiting any of these
24:04
Speaker 7: provisions from taking effect. Clan it goes on appeal the
24:07
Speaker 7: Ninth Circuit. The Ninth Circuit says, no one of these
24:09
Speaker 7: provisions can go into effect to the others are going
24:12
Speaker 7: to be stayed. But then there's another Court of Appeals
24:14
Speaker 7: later that comes on and says they're no, we're going
24:16
Speaker 7: to stay all of them. So depending on where you look, right,
24:19
Speaker 7: each court decision is always later than the last one.
24:21
Speaker 7: It's always coming after the fact. So Purcell is guidance
24:25
Speaker 7: to the courts don't change the rules too close to
24:26
Speaker 7: the election. But the Supreme Court has to be able
24:29
Speaker 7: to weigh in and say no, you court change the
24:31
Speaker 7: rules too close to the election, So we're changing the change,
24:34
Speaker 7: which brings a little bit of difficulty if you're an
24:36
Speaker 7: election administrator, There's no question about it.
24:38
Speaker 2: That's Professor Derek Muller of Notre Dame Law School. Coming
24:41
Speaker 2: up next, federal charges in the overdose death of actor
24:45
Speaker 2: Matthew Perry. I'm June Grosso and this is Bloomberg. Ten
24:49
Speaker 2: months after the overdose death of friend stor Matthew Perry,
24:53
Speaker 2: federal prosecutors have charged five people, including two doctors, in
24:58
Speaker 2: connection with his death. The US Attorney Martina Strata said
25:02
Speaker 2: the investigation revealed a broad, underground criminal network distributing large
25:07
Speaker 2: amounts of ketamine to Perry and others.
25:10
Speaker 8: These defendants took advantage of mister Perry's addiction issues to
25:14
Speaker 8: enrich themselves. They knew what they were doing was wrong.
25:18
Speaker 8: They knew what they were doing was risking great danger
25:22
Speaker 8: to mister Perry, but they did it anyways.
25:24
Speaker 2: Three of the defendants have already pleaded guilty, one of
25:28
Speaker 2: the doctors Perry's live in assistant and a drug middleman.
25:32
Speaker 2: The case will now focus on the two who have
25:34
Speaker 2: pleaded not guilty, Josvin sanga An alleged drug trafficker known
25:39
Speaker 2: as the Ketamine Queen, and doctor Salvador Placentia. His attorney
25:44
Speaker 2: says the doctor gave ketamine to Perry, but insists he
25:47
Speaker 2: did not break the law.
25:49
Speaker 7: He was a patient.
25:50
Speaker 5: He did receive ketamine treatment therapy.
25:52
Speaker 2: Joining me is healthcare attorney Harry Nelson of Nelson Hardiman.
25:56
Speaker 2: Harry tell us about ketamine and what it's used for.
26:00
Speaker 9: It was originally developed as a tranquilizer for veterinarians, for
26:04
Speaker 9: large animals like horses, but it's been used increasingly, you know,
26:08
Speaker 9: for human beings as a sedative, and in the last
26:11
Speaker 9: twenty five years or so, there's been a growing body
26:15
Speaker 9: of research that it can be an effective alternative for
26:19
Speaker 9: treatment resistant depression, meaning when people are not successful in
26:23
Speaker 9: managing clinical depression with the sort of standard more conventional
26:27
Speaker 9: treatments like SSRI, sterotonin reuptake inhibitors like prozac most famously,
26:32
Speaker 9: and also for post traumatic stress disorders. Those are awful
26:35
Speaker 9: label uses, but those are the widespread uses that have
26:38
Speaker 9: really led to this massive growth in ketamine the last
26:42
Speaker 9: couple of years, and.
26:43
Speaker 2: Matthew Perry was being treated with ketamine.
26:47
Speaker 9: Matthew Perry was getting ketamine infusion therapy, and then at
26:51
Speaker 9: some point one of the doctors who has been arrested
26:54
Speaker 9: here basically started allowing him to self administer the ketemine.
26:58
Speaker 9: At least that's the allegation, and the self administration, it appears,
27:02
Speaker 9: may have come in both the form of infusion at home,
27:06
Speaker 9: meaning through like putting in and intervening this line, or
27:09
Speaker 9: more commonly, what we've seen and what's grown in popularity
27:11
Speaker 9: in the last few years has been ketamine taken by
27:14
Speaker 9: a trophy, which is essentially like a lozenge, and so
27:17
Speaker 9: people basically just suck on a ketamine lozenge and get
27:21
Speaker 9: the same effect metabolized by doing so.
27:23
Speaker 2: Is the prosecution out to prove a criminal network here?
27:28
Speaker 9: You know, it's not clear from what we've seen so
27:30
Speaker 9: far how much this was a coordinated criminal network as
27:34
Speaker 9: opposed to various individuals being prosecuted for their own personal
27:39
Speaker 9: violations of the laws. In the case of the doctors,
27:42
Speaker 9: their writing of prescriptions and their instructions and their sort
27:45
Speaker 9: of permissiveness about giving Matthew Perry the drug is leading
27:49
Speaker 9: to one set of charges similar to you know, things
27:51
Speaker 9: we've seen with doctors and other celebrities where essentially there's
27:54
Speaker 9: like a gross negligence because they owe a duty, as
27:56
Speaker 9: opposed to some of the hangers on and the who
28:00
Speaker 9: are directly violating drug laws by handling controlled substances which
28:04
Speaker 9: ketamine is a Schedule three controlled substance without any authorization
28:07
Speaker 9: to do so, so they're effectively being charged as drug dealers.
28:10
Speaker 2: So the two who have pleaded not guilty are the
28:14
Speaker 2: alleged drug trafficker and one of the doctors who allegedly
28:18
Speaker 2: taught Perry's live an assistant how to inject the drug
28:22
Speaker 2: and injected it himself as well.
28:24
Speaker 1: Does it seem like.
28:25
Speaker 2: Prosecutors gave the deals to those who appeared less culpable, So.
28:29
Speaker 9: It's clear that the government was looking for cooperation from
28:32
Speaker 9: some of the people who were considered lower level participants.
28:36
Speaker 9: It's always the case that the doctors are viewed as
28:40
Speaker 9: the most serious target, I think in part to send
28:43
Speaker 9: a message to other doctors, because doctors have a unique
28:46
Speaker 9: privilege in terms of their proximity and access and ability
28:50
Speaker 9: to put the drugs in the place where they caused
28:53
Speaker 9: harm and where this tragedy happens. So I think the
28:56
Speaker 9: focus in these cases is consistently to make an example
29:00
Speaker 9: of the doctors, because as we see here, we have
29:03
Speaker 9: these doctors who just completely go outside the requirements of
29:08
Speaker 9: the law, outside the bounds of safe practice, and essentially
29:12
Speaker 9: set up the circumstances in which this death occurred. So
29:15
Speaker 9: that's always going to be the top level goal of prosecutors.
29:19
Speaker 2: And they have text messages, and I think this helps
29:22
Speaker 2: also to paint the doctors in a bad light. Because
29:27
Speaker 2: the doctor who's pleaded not guilty texted the other doctor
29:31
Speaker 2: about how much to charge, and he wrote, I wonder
29:33
Speaker 2: how much this moron will pay, Let's find out. So
29:37
Speaker 2: they charged him exorbitant amounts, like twelve dollars worth of ketamine.
29:42
Speaker 2: They charged him two thousand dollars.
29:45
Speaker 9: Look, it doesn't get any worse than that. We hold
29:48
Speaker 9: doctors responsible for following the hippocratic oath right to take
29:51
Speaker 9: care of patients, to do no harm. And it's a
29:55
Speaker 9: tricky subject. Money and healthcare is inherently a fraught topic
30:00
Speaker 9: because doctors are entitled to make a living. But when
30:03
Speaker 9: you see the kind of naked greed here and the
30:07
Speaker 9: dehumanizing language, you know, how much will this more on pay?
30:12
Speaker 9: Where a doctor was so contemptuous of the patient he
30:15
Speaker 9: was responsible for that he had a duty to. It's
30:18
Speaker 9: really like heartbreaking, and I think it shows a level
30:21
Speaker 9: of dehumanization and disregard for responsibility that is not likely
30:25
Speaker 9: to sit well with a jury or a judge and
30:27
Speaker 9: probably spells not just losing a license, but spending some
30:31
Speaker 9: significant time and custody for this doctor.
30:34
Speaker 2: Is the cause of death a possible defense because the
30:38
Speaker 2: La County Medical Examiner's Office said that he died of
30:41
Speaker 2: the acute effects of ketamine, but that contributing factors included drowning,
30:48
Speaker 2: coronary artery.
30:49
Speaker 1: Disease, and the effects of buff and orphan.
30:52
Speaker 2: Yeah.
30:52
Speaker 9: Buf and orphan is a drug that's become the most
30:54
Speaker 9: popular and widespread sort of drug to keep people from
30:58
Speaker 9: craving opioids. It's been used widely after prescription opioids and
31:02
Speaker 9: other kind of opiod addictions. It basically sort of satisfies
31:06
Speaker 9: that craving without getting people high, and it's safe people
31:09
Speaker 9: don't die from it. But your question raises a really
31:12
Speaker 9: interesting sort of set of possibilities. Matt Perry was known,
31:15
Speaker 9: I think widely to be in really poor health as
31:18
Speaker 9: a result of his drug use, which is often the case,
31:20
Speaker 9: So the question is was that possibly a factor. Maybe
31:23
Speaker 9: this isn't what actually killed him. First of all, when
31:25
Speaker 9: we talk about the doctors and the responsibility that they played,
31:29
Speaker 9: they owed separate duties, so they're falling below standards of practice.
31:33
Speaker 9: So extremely is a problem for them irrespective of what happened.
31:36
Speaker 9: But for everybody in this case who's charged, you know,
31:39
Speaker 9: there's a fundamental principle that you learn when you start
31:41
Speaker 9: law school and you take first year fourth which is
31:45
Speaker 9: that you kind of take the person who's harmed as
31:48
Speaker 9: you finds them. So you know, in law school there's
31:50
Speaker 9: a classic case of the eggshell skull, right of a
31:53
Speaker 9: person who has a very thin skull and an accident,
31:57
Speaker 9: you know, someone hitting them on the head, a hit
31:59
Speaker 9: which ordinarily would not have harmed a normal person. It's
32:02
Speaker 9: sort of your bad luck that you've chose to hit
32:05
Speaker 9: this person, and none of us knows, you know, what
32:07
Speaker 9: are the vulnerabilities of the people around us. So for
32:10
Speaker 9: all of these people who have been charged, you know,
32:12
Speaker 9: a condition that Matthew Perry was in wasn't a risk
32:15
Speaker 9: that they were taking, and they didn't have to know
32:17
Speaker 9: exactly how bad his physical health was. And it doesn't
32:20
Speaker 9: really matter if his death would have been preventable had
32:23
Speaker 9: he been in better health. It sort of goes out
32:25
Speaker 9: the window.
32:26
Speaker 2: The doctor who pled not guilty to the charges. His
32:30
Speaker 2: attorney says his clients sold ketamine to Perry, but he
32:34
Speaker 2: insists he did not break the law. The attorney said
32:36
Speaker 2: he was a patient. He did receive ketamine treatment therapy.
32:41
Speaker 9: Right, So this is going to be probably the hardest case.
32:44
Speaker 9: This case still involved the doctor who gave the ketamine
32:48
Speaker 9: for self administration without monitoring, and part of what happened
32:51
Speaker 9: here is something fundamentally unsafe, i e. A person taking
32:55
Speaker 9: ketamine and getting into a hot tub where they were
32:58
Speaker 9: susceptible of drowning just because ketamine causes disassociation. You're not sharp, right.
33:04
Speaker 9: We have all these settings where you take over the
33:06
Speaker 9: counter medication and the warning on the label says, don't
33:08
Speaker 9: operate machinery, don't get behind the wheel of a car,
33:12
Speaker 9: and so too. Here you have to wonder what this
33:14
Speaker 9: doctor thought. I can certainly tell you. You know, in
33:18
Speaker 9: advising practices they use ketamine. We consistently advise that people
33:23
Speaker 9: should be monitored to make sure they're not having a
33:25
Speaker 9: negative effect. Ketamine can have dangerous effects, most commonly disassociation
33:30
Speaker 9: and panic attacks. And so we don't know exactly what
33:33
Speaker 9: happened here yet, and I don't know if we ever will,
33:35
Speaker 9: but I think the doctor still bears responsibility for unsafe
33:39
Speaker 9: administration of ketamine and not making sure that it was
33:42
Speaker 9: being used in the setting where there was oversight by
33:44
Speaker 9: a person who was knowledgeable and able to do what
33:47
Speaker 9: needed to be done if something went wrong.
33:49
Speaker 2: Harry, I'm not clear on why the doctors didn't just
33:53
Speaker 2: give him the ketamine infusion shots themselves and where the
33:58
Speaker 2: drug dealer came into.
33:59
Speaker 9: This sense, just from reading this case and looking at
34:02
Speaker 9: the investigation is that Matthew Perry had a persistent and
34:07
Speaker 9: significant interest in ketamine that went beyond what most doctors
34:12
Speaker 9: who are responsibly prescribing and administering ketamine will do, and
34:16
Speaker 9: so there was this constant pressure. And there are a
34:18
Speaker 9: lot of questions. Because ketamine has been a relatively new treatment,
34:22
Speaker 9: we are frequently getting questions from all kinds of practices
34:26
Speaker 9: about how many times ketamine can be administered to the
34:29
Speaker 9: same patient, you know, over what period of time. And
34:32
Speaker 9: so it's my sense is that there was this constant
34:35
Speaker 9: effort to find the drug. That looks more and more
34:39
Speaker 9: like the way that people sort of behave around illegal drugs,
34:42
Speaker 9: where someone who's addicted is constantly looking for a source
34:45
Speaker 9: and a supply and not sort of counting on the
34:48
Speaker 9: fact that routine prescribing through physicians and sticking up at
34:51
Speaker 9: pharmacies and so on, or administration in doctors' offices is
34:55
Speaker 9: going to take care of it. So I just think
34:57
Speaker 9: there was clearly a pressure, you know, in the way
35:00
Speaker 9: that the ketamine was procured that led to all these
35:03
Speaker 9: different sources. This is not what good healthcare looks like.
35:06
Speaker 9: This is what drug dealing and misuse of drugs looks like.
35:09
Speaker 9: And so I think it's giving us a really troubling
35:12
Speaker 9: picture of how this happened.
35:14
Speaker 2: I know you had contact with investigators in this case.
35:18
Speaker 2: Why do you think the FEDS brought this case instead
35:21
Speaker 2: of the state.
35:22
Speaker 9: We don't often see federal investigations in celebrity debts, right
35:26
Speaker 9: that most of the federal investigations involved sort of broader
35:29
Speaker 9: problems of controlled substance distribution on a wider scale, so
35:33
Speaker 9: that this case was unusual in that respect. I think
35:35
Speaker 9: what was happening here is that the media attention led
35:39
Speaker 9: to enormous pressure on the DEA as the agency responsible
35:44
Speaker 9: for controlled substances, and we have not seen a significant
35:48
Speaker 9: number of DEA cases involving ketamine, and I think there
35:51
Speaker 9: was a conscious decision to make an example of the
35:55
Speaker 9: loose practices around ketamine in this case that led to
35:58
Speaker 9: this unusual decision to go so deep on this investigation.
36:02
Speaker 9: It's interesting because one of the other big cases that
36:06
Speaker 9: we've been involved in recently, also involving a Federal Department
36:09
Speaker 9: of Justice investigation driven by DEA concerns, was related to
36:14
Speaker 9: websites during the pandemic loosening standards for ADHD meds like adderall.
36:19
Speaker 9: We were kind of wondering, you know, there had been
36:21
Speaker 9: a number of ketamine telemedicine sights that took off during
36:25
Speaker 9: the pandemic, and a lot of wonder whether the Department
36:28
Speaker 9: of Justice was also going to turn its attention to
36:30
Speaker 9: ketymine and we did not see that same kind of response.
36:33
Speaker 9: And I almost read this case and the federal resources
36:36
Speaker 9: here as sort of a makeup in a way of
36:40
Speaker 9: trying to devote attention to ketamine out of concern that
36:44
Speaker 9: it's being misused and being given out to loosely, so
36:47
Speaker 9: I'm not sure that's just my personal theory, but I'm
36:50
Speaker 9: sure we'll learn more ahead.
36:51
Speaker 2: It sounds like a very plausible theory to me. Thanks
36:54
Speaker 2: so much, Harry. That's healthcare attorney Harry Nelson of Nelson Hardiman.
36:59
Speaker 2: And that's it this edition of the Bloomberg Law Podcast.
37:02
Speaker 2: Remember you can always get the latest legal news by
37:04
Speaker 2: subscribing and listening to the show on Apple Podcasts, Spotify,
37:08
Speaker 2: and at Bloomberg dot com, slash podcast, Slash Law.
37:12
Speaker 1: I'm June Grosso, and this is Bloomberg