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Obamacare at SCOTUS & Soccer Monopoly Trial · Bloomberg Law

0:02
Speaker 1: This is Bloomberg Law with June Grossel from Bloomberg Radio.
0:08
Speaker 1: Obamacare is back at the Supreme Court for the fourth time.
0:13
Speaker 1: The latest case challenges the task force that recommends some
0:17
Speaker 1: of the medical services health insurers must cover free of
0:21
Speaker 1: charge under the Affordable Care Act, for example, cancer screenings,
0:26
Speaker 1: statins to prevent heart disease, and medication to prevent HIV.
0:32
Speaker 1: The ultra conservative Fifth Circuit Court of Appeals found that
0:36
Speaker 1: the structure of that task force is unconstitutional under the
0:40
Speaker 1: appointment's clause. The Biden administration appealed to the Supreme Court,
0:45
Speaker 1: saying that decision jeopardizes the availability of critical preventive care
0:50
Speaker 1: for millions of Americans. Joining me is healthcare attorney Harry
0:54
Speaker 1: Nelson of Leech Tishman Nelson Hardiman Harry, this isn't a
0:58
Speaker 1: threat to the entire law.
1:01
Speaker 2: Tell us what's at stake here in this case, which
1:04
Speaker 2: is called Basera versus Braidwood Management, is a case that's
1:09
Speaker 2: bringing together challenges the constitutionality of several provisions of the
1:14
Speaker 2: Affordable Care Act. It's a little bit of a grab bag.
1:16
Speaker 2: The only scheme that seems to tie all these services
1:20
Speaker 2: is that they are all forms of preventive healthcare. So
1:24
Speaker 2: there are three main issues. One is that the Affordable
1:26
Speaker 2: Care Action requires insurance companies to cover fifty preventive services,
1:32
Speaker 2: including HIV prevention medications, which have become somewhat controversial in
1:37
Speaker 2: certain quarters, vaccinations, cancer screenings, and it does not require
1:42
Speaker 2: patient cost sharing, meaning patients to pay copays and to
1:46
Speaker 2: have to pay any deductibles or any portion of responsibility.
1:49
Speaker 2: That's one provision is this preventive services mandate. And then
1:53
Speaker 2: there's also an argument being made that the various services,
1:57
Speaker 2: particularly the US Preventive Service Task Force, are unconstitutional. That's
2:02
Speaker 2: more of a procedural issue of how the members of
2:05
Speaker 2: that task force are appointed and the fact that they're
2:07
Speaker 2: not appointed by the President or confirmed by the Senate.
2:10
Speaker 2: And finally, there are a series of religious objections being made,
2:14
Speaker 2: particularly on HIV prevention drugs. There's a therapy called PREP
2:19
Speaker 2: which is being funded, and some of the plaintiffs are
2:22
Speaker 2: arguing that it infringes on their religious beliefs to have
2:25
Speaker 2: to be forced to provide this sort of prophylactic treatment
2:30
Speaker 2: that covers the cost of PREP.
2:32
Speaker 1: As you mentioned, the plaintiffs here are Christian businesses suing
2:37
Speaker 1: over Obamacare. Now the Fifth Circuit, it seems like what
2:41
Speaker 1: they upheld is that the structure of the US Preventive
2:46
Speaker 1: Services Task Force is unconstitutional under the appointment's clause. So
2:51
Speaker 1: this is the argument that we've heard before and that
2:55
Speaker 1: has succeeded sometimes about whether or not their principal officers
2:59
Speaker 1: or in fear, what are your officers.
3:01
Speaker 2: First of all, the case was brought by even though
3:03
Speaker 2: it's in the name of a business that was forced
3:05
Speaker 2: to cover people. The case is being funded and initiated
3:10
Speaker 2: by a prominent conservative activist in Texas, doctor Stephen Hotts.
3:15
Speaker 2: And the argument is about this task force and essentially
3:19
Speaker 2: a signing of power to a panel of sixteen volunteer
3:24
Speaker 2: members who are nationally recognized experts in things like preventive medicine,
3:29
Speaker 2: family medicine, pediatrics, epidemiology. They're chosen by a federal agency
3:34
Speaker 2: within the Medicare program called the Agency for Healthcare Research
3:38
Speaker 2: and Quality AHRQ, So it's kind of a technocratic panel.
3:42
Speaker 2: It's not a political appointment. And part of the argument
3:46
Speaker 2: here is that the decisions they're making are political decisions
3:50
Speaker 2: that really should be appointments by the president and confirmations
3:53
Speaker 2: by the Senate, and the argument it seems to be
3:56
Speaker 2: that the task force is really operating without sufficient oversights
3:59
Speaker 2: as a result of sort of the way it was
4:00
Speaker 2: set up in violation of the appointments clause of the Constitution.
4:04
Speaker 1: First of all, this went to Judge Ried O'Connor in Texas,
4:08
Speaker 1: who is the judge notorious for striking down Obamacare in
4:13
Speaker 1: its entirety, and that was overruled, and even the Fifth
4:18
Speaker 1: Circuit narrowed his decision. He had had an injunction nationwide.
4:26
Speaker 2: It was clear that the Fifth Circuit was trying to
4:28
Speaker 2: narrow the decision. Judge O'Connor's decision was a very aggressive
4:33
Speaker 2: conservative activist opinion, I think the way most people view it,
4:37
Speaker 2: and while they do take quite seriously the appointment clause issue,
4:41
Speaker 2: I think some of the other arguments about religious freedom
4:44
Speaker 2: are issues that were already tried, you know, for example,
4:48
Speaker 2: in the hobby Lobby case for the Supreme Court more
4:50
Speaker 2: than a few years ago, in the early days Affordable
4:53
Speaker 2: Care Act. And my sense is that the Fifth Circuit
4:55
Speaker 2: wanted to focus attention on the appointments clause argument because
4:59
Speaker 2: that's definitely a very grounded textual argument and a fight
5:04
Speaker 2: that's going on in this country between you know, liberals
5:07
Speaker 2: and conservatives over the authority to make appointments to organizations
5:12
Speaker 2: like this and the extent to which they have to
5:14
Speaker 2: follow the process set out in the Constitution or whether
5:18
Speaker 2: you know, more creative mechanisms can be set out. I
5:22
Speaker 2: don't think when this particular panel has created anyone in
5:25
Speaker 2: vision to be controversy over the particular therapies, whatever with
5:30
Speaker 2: the prep or you know, anything else. But it is
5:32
Speaker 2: clear that these issues are now political, and so I
5:35
Speaker 2: do think that that issue is going to be an
5:37
Speaker 2: interesting one. Sucreme Court it's going to have to tangle
5:40
Speaker 2: with them.
5:41
Speaker 1: So the Solicitor General said that if this decision is
5:45
Speaker 1: a firm that it could affect things like cancer screenings,
5:49
Speaker 1: I mean things that have nothing to do with you know,
5:52
Speaker 1: the religious objections of the plaintiffs.
5:56
Speaker 2: I do believe that the issue around cancer screenings had
5:59
Speaker 2: a political issue. The cancer screenings were particularly for cervical
6:04
Speaker 2: cancer and also were related to screens for mammograms, and
6:09
Speaker 2: I think there were a lot of concerns about sort
6:13
Speaker 2: of women's health and this particular advisory panel, you know,
6:17
Speaker 2: making recommendations that were liberal and a perception that you
6:22
Speaker 2: know that they were supporting sexual activity, for example, when
6:26
Speaker 2: abstinence should be encouraged outside of marriage. There were definitely
6:29
Speaker 2: some other conservative issues beyond the obvious one of prep
6:34
Speaker 2: which has become such an important therapy for HIV prevention.
6:38
Speaker 2: But I do think that's the underlying issue with inclusion
6:40
Speaker 2: of cancer as one of the areas that they were
6:42
Speaker 2: objecting to.
6:43
Speaker 1: So the Biden administration is appealing, but the Trump administration
6:49
Speaker 1: is coming in and it's been consistently hostile to Obamacare.
6:54
Speaker 1: It might not defend the.
6:55
Speaker 2: Law, right, Yeah, it's interesting. The Biden administration was clearly
6:59
Speaker 2: opposing and really arguing that this task force operates as
7:03
Speaker 2: an advisory body rather than as an agency that has
7:06
Speaker 2: final authority, so that it was not triggering an appointment
7:09
Speaker 2: clause issue. But I do suspect that the Trump administration
7:14
Speaker 2: is likely to not defend the law to favor a
7:19
Speaker 2: sort of broad reading of federal power under the appointments clause.
7:23
Speaker 2: And so my sense is that within conservative political activist community,
7:28
Speaker 2: there's a belief that the current court will support that reading.
7:31
Speaker 2: So I do think that both the administration and the
7:34
Speaker 2: Court are receptive to that central argument here.
7:39
Speaker 1: If that happens, this applies so far, this injunction only
7:44
Speaker 1: to the blandiffs here, but that could lead to a
7:47
Speaker 1: lawsuit asking for nationwide relief if the court upholds this.
7:52
Speaker 2: Yeah, absolutely, what's really interesting. And again, if you go
7:55
Speaker 2: back to I don't have the year in front of you,
7:57
Speaker 2: but I think it was twenty fourteen or twenty fifteen,
8:00
Speaker 2: we had the Hobby Lobby decision, which was about conservative
8:04
Speaker 2: religious employers desire not to be forced, you know, to
8:08
Speaker 2: cover certain costs like birth control. What we're seeing here
8:12
Speaker 2: is a broader set of issues being subjected to religious
8:16
Speaker 2: liberty claims. And so I do think that you could
8:20
Speaker 2: see more employers and a broader range of programs potentially
8:26
Speaker 2: following the lead of the plane iff in this case.
8:29
Speaker 2: And so yeah, I do think there is a significant
8:33
Speaker 2: potential impact on access to care and potentially a huge
8:37
Speaker 2: public health backlash. For example, if cancer screenings go down,
8:41
Speaker 2: you know, because I'm sure our employers aren't required to
8:44
Speaker 2: you know, wave cost sharing requirements. I think this could
8:47
Speaker 2: be particularly burdensome for small employers, and it's going to be.
8:51
Speaker 2: It really is kind of awakening religious liberty arguments.
8:54
Speaker 1: Again, the Supreme Court is upheld Obamacare three times. It's
8:59
Speaker 1: a program that people like and need, and there are
9:05
Speaker 1: constant attacks on it. There have been something like two
9:08
Speaker 1: thousand different lawsuits.
9:10
Speaker 2: I think we're looking at a very different Supreme Court
9:12
Speaker 2: right now. If you remember back to the original challenges,
9:16
Speaker 2: you know, we saw a court where John Roberts was
9:19
Speaker 2: the center of the court, and his decision to separate
9:22
Speaker 2: from his conservative colleagues at that time, where it was
9:26
Speaker 2: a five to four conservative advantage, swung things. Now with
9:30
Speaker 2: the six to three conservative advantage, john Roberts joining and
9:34
Speaker 2: sort of taking the same position or similar position to
9:38
Speaker 2: the views of the affordable character he took back when
9:41
Speaker 2: we were dealing with this ten plus years ago. Now
9:43
Speaker 2: you're looking at Brett Kavanaugh and at Amy Comy Barrett,
9:47
Speaker 2: and so a very different makeup on the court and
9:50
Speaker 2: potentially a willingness to go and take more aggressive positions.
9:55
Speaker 2: So I do think it's going to be interesting to
9:57
Speaker 2: watch this case because it will be telling that even
10:00
Speaker 2: fairly recent Supreme Court precedent may be you know, up
10:04
Speaker 2: for reevaluation. And yeah, I think that's part of the
10:08
Speaker 2: backdrop in context of this case. A lot of people
10:11
Speaker 2: are going to be watching closely.
10:12
Speaker 1: The PSTF requires insurers to cover more than fifty preventive services.
10:19
Speaker 1: Are those all in jeopardy If the court affirms this decision.
10:24
Speaker 2: The case is challenging the entire validity of the us PPF,
10:28
Speaker 2: of the Prevention Task Force, and it certainly jeopardizes everything
10:33
Speaker 2: that they were doing, and who knows that could lead
10:36
Speaker 2: to a backlash. And I also think, even though this
10:38
Speaker 2: case is only about that task force, that kind of
10:41
Speaker 2: feature of use of clinical specialist advisory, you know, support
10:47
Speaker 2: for the government for government plans was a central part
10:50
Speaker 2: of the affordable character in a number of other respects.
10:53
Speaker 2: And I think this is in some ways an attack
10:56
Speaker 2: on the participation of the healthcare community, the scientific community,
11:02
Speaker 2: on that process without the President and primateur without the
11:05
Speaker 2: Senate confirmation. So I do think that this is essentially
11:09
Speaker 2: a much bigger issue, even though the flashpoint that brought
11:12
Speaker 2: it are these particular issues that drew you know, religious
11:16
Speaker 2: objections from conservative Christians.
11:18
Speaker 1: Harry, Before I let you go, I want to ask
11:20
Speaker 1: a couple of questions about healthcare in the upcoming Trump administration.
11:26
Speaker 1: The abortion pill MiFi pristone is being used in a
11:30
Speaker 1: majority of abortions these days. Could Trump direct the FDA
11:35
Speaker 1: to revoke the approval of MIFA pristone.
11:40
Speaker 2: That's a big question that I've been on my mind
11:43
Speaker 2: since the election and even before. You know, there certainly
11:47
Speaker 2: is a contingency within the conservative activist community who would
11:51
Speaker 2: like him to step in and to direct FDA leadership
11:56
Speaker 2: to re examine the current policies around the pristone, its approval,
12:02
Speaker 2: and all of the guidelines that surround it that were
12:05
Speaker 2: changed to make it much more accessible. I do think
12:08
Speaker 2: that that is a very real possibility. The interesting question
12:12
Speaker 2: here is that President Trump himself has said that he
12:15
Speaker 2: wants this chapter of abortion issues closed. It clearly has
12:19
Speaker 2: been a political loser until this cycle for the Republicans,
12:25
Speaker 2: and so it's interesting because this is an issue where
12:28
Speaker 2: the conservative Christian legal community clearly wants to take this
12:33
Speaker 2: on and to use the FDA itself to pull back
12:36
Speaker 2: on access to MISS pristone and by extension, telemedical abortion,
12:41
Speaker 2: and the President himself may not be so enthusiastic. So
12:45
Speaker 2: it's going to be interesting to watch where that goes.
12:47
Speaker 2: But I think it's certainly a big concern on the
12:49
Speaker 2: mind of the reproductive health access community.
12:53
Speaker 1: There's also a concern about vaccines because of the possibility
12:59
Speaker 1: or probability that Robert F. Kennedy Junior is going to
13:03
Speaker 1: be the HHS secretary. What do you think is the
13:07
Speaker 1: likelihood that he would change federal vaccine recommendations.
13:13
Speaker 2: I do think it's going to be a period under
13:16
Speaker 2: his leadership, assuming he's confirmed, of really heightened scrutiny for
13:21
Speaker 2: both current and future vaccines, and it's going to mean
13:26
Speaker 2: that the process will move lower. And I don't think
13:29
Speaker 2: we're going to see vaccines going away, but I think
13:33
Speaker 2: that mandates and government advisory issuances around vaccines are likely
13:38
Speaker 2: to change. And I think there's just a change in
13:41
Speaker 2: the culture of vaccinations that is certainly negative from the
13:45
Speaker 2: view of most of the public health community. And my
13:48
Speaker 2: only prayer is that we don't see some massive outbreak
13:51
Speaker 2: of a disease that has largely gone away, something like measles,
13:56
Speaker 2: because of this. But there's definitely going to be a
13:58
Speaker 2: change in the culture, you know, around vaccine and a
14:02
Speaker 2: lot more sort of scrutiny and skepticism after a Kennedy FDA.
14:09
Speaker 1: We'll have to wait and see how he does in
14:11
Speaker 1: those confirmation hearings coming up. Thanks so much, Harry. That's
14:15
Speaker 1: Harry Nelson, a partner at leech Tishman Nelson Hardiman. US
14:20
Speaker 1: Soccer and Major League Soccer will face off against the
14:23
Speaker 1: now defunct North American Soccer League in an anti trust
14:28
Speaker 1: trial in Brooklyn Federal Court. The NASL claims that US
14:32
Speaker 1: Soccer and MLS colluded to eliminate it from the upper
14:37
Speaker 1: tiers of US men's professional soccer, and NASL is seeking
14:43
Speaker 1: treble damages of more than five hundred million dollars. Joining
14:47
Speaker 1: me is anti trust expert Peter Carstensen, a professor at
14:51
Speaker 1: the University of Wisconsin Law School. The NASL is blaming
14:57
Speaker 1: US Soccer and MLS for driving it out of business.
15:01
Speaker 1: What's the main question in the case.
15:04
Speaker 3: As best I can tell, the key question is going
15:08
Speaker 3: to be whether the decisions that the Soccer Federation made
15:15
Speaker 3: were relatively disinterested judgments on the merits of whether or
15:21
Speaker 3: not a particular league should be allowed to participate at
15:24
Speaker 3: a particular level, or alternatively, whether these decisions were made
15:31
Speaker 3: with a goal of excluding a otherwise reasonable competitive alternative
15:36
Speaker 3: from access to the market. And what you're looking at
15:40
Speaker 3: is a regulator and the question is how did that
15:43
Speaker 3: regulator make decisions, what went into that decision, and what
15:49
Speaker 3: kind of review might there have been of the decision.
15:52
Speaker 3: So if the decision was the product of some kind
15:57
Speaker 3: of an understanding agreement with the existing upper level leagues
16:05
Speaker 3: that there shouldn't be any more comparable leagues allowed in,
16:09
Speaker 3: then that's going to look like an anti trust violation.
16:12
Speaker 3: Is going to look like using that power over access
16:16
Speaker 3: to exclude competition. That's an agreement and restraint of trade.
16:20
Speaker 3: That's illegal. On the other hand, you need some kind
16:23
Speaker 3: of a decision maker about who gets to play at
16:25
Speaker 3: what level. That's the first thing that is really kind
16:28
Speaker 3: of common ground here, as best I can tell. Somebody
16:31
Speaker 3: has to make these decisions, they need to have criteria
16:34
Speaker 3: standards for making that decision. If the decision is one
16:40
Speaker 3: on the merits, No, your league does not merit participation
16:46
Speaker 3: at either Division one or Division two level, but only
16:49
Speaker 3: at a Division three level, then that's not a restraint
16:53
Speaker 3: of trade in that it's a legitimate I'd call it
16:58
Speaker 3: regulatory about the credentials of that particular league. This is
17:04
Speaker 3: a very confusing area of anti trust law because anti
17:10
Speaker 3: trust law doesn't recognize these the facto market regulators as
17:17
Speaker 3: being a special case that needs to be looked at
17:20
Speaker 3: in a distinct kind of way. Some of us have
17:23
Speaker 3: tried to say, hey, understand what you're really dealing with.
17:27
Speaker 3: Here's how it can be made more sensible in terms
17:31
Speaker 3: of coherent standards. Everybody knows what the rules are likely
17:35
Speaker 3: to be, but so far no core has really articulated
17:39
Speaker 3: that kind of vision. It's the big issue in the
17:42
Speaker 3: NCAA litigation really as well.
17:45
Speaker 1: US Soccer said it rejected the NSL in twenty sixteen
17:49
Speaker 1: because it didn't meet the minimum standards that it was
17:52
Speaker 1: objectively applying, such as minimum stadium seating capacity of fifteen thousand,
17:58
Speaker 1: number of teams, time zone coverage in other benchmarks. But
18:03
Speaker 1: the federal judge who greenlighted the lawsuit to go ahead
18:07
Speaker 1: said that US Soccer in twenty seventeen waived twenty one
18:11
Speaker 1: standards for second Division and Favored League USL, but denied
18:17
Speaker 1: two waiver requests for NASL. So would that sort of
18:22
Speaker 1: discrimination and treatment demonstrate something.
18:26
Speaker 3: Yeah, exactly. That seems to me to be central to
18:29
Speaker 3: why the judge allowed this case to go forward. This
18:33
Speaker 3: is a tricky thing because in theory, once there it's
18:36
Speaker 3: a factual dispute, it's supposed to be decided by the jury.
18:40
Speaker 3: In anti trust cases, judges are more proactive. They've got
18:46
Speaker 3: to decide that a reasonable jury would find this claim
18:52
Speaker 3: sufficiently plausible, that it could reach a verdict of liability
18:57
Speaker 3: that the judge would feel comfortable upholding. The judge is
19:00
Speaker 3: actually doing some weighing of the evidence, even though the
19:05
Speaker 3: constitutional law since no judge you can't do that. In fact,
19:08
Speaker 3: they do it. And so what he's saying here, as
19:12
Speaker 3: best I can tell you, is this doesn't look quite right.
19:17
Speaker 3: This is the kind of thing, at least until there's
19:20
Speaker 3: much more explanation by the Federation of why these cases
19:27
Speaker 3: were treated similarly. And even though it was two waivers,
19:31
Speaker 3: those were two really important waivers, whereas the twenty one
19:35
Speaker 3: waivers were relatively minor bookkeeping matters or whatever. But that's
19:42
Speaker 3: going to be for the jury to decide. But what
19:45
Speaker 3: the judge was saying, this looks sufficiently suspicious, but I'm
19:49
Speaker 3: gonna let it go to a jury. Now, these have
19:51
Speaker 3: gone to juries with mixed results in some of the
19:54
Speaker 3: other sporting cases, and in some other cases judges have
19:59
Speaker 3: said no, I'm going to decide that it's sufficiently unlikely
20:03
Speaker 3: that you can prove your claim. You know, I'm not
20:09
Speaker 3: convinced that a jury should be convinced by this evidence.
20:13
Speaker 3: We've had litigation on tennis, on swimming, soccer, and it's
20:18
Speaker 3: all very similar. That is, there's a gatekeeper, and the
20:22
Speaker 3: question is whether the gatekeeper has behaved in a reasonably
20:27
Speaker 3: legitimate fashion. And that distinction between the twenty one waivers
20:33
Speaker 3: on one side and two waiver requests rejected on the other,
20:39
Speaker 3: that's the kind of thing that judge looks at and says, ah, hey,
20:43
Speaker 3: that could be a problem.
20:45
Speaker 1: Nas'll have to show there was an agreement between US
20:50
Speaker 1: Soccer and Major League Soccer.
20:53
Speaker 3: Ah. Yes, at least my impression is that this is
20:56
Speaker 3: a Section one conspiracy case, not a Section two monopolization case.
21:04
Speaker 3: It may be a conspiracy to monopolized, but it appears
21:09
Speaker 3: that the center piece of the plaintiffs case is that
21:14
Speaker 3: there was an agreement, an understanding of some sort between
21:20
Speaker 3: the established leagues and the regulator, the goal of which
21:25
Speaker 3: was to exclude this potential third rival league. So that
21:31
Speaker 3: requires evidence of some kind of an understanding. Now, anti
21:36
Speaker 3: trust does not require a written contract. It requires that
21:42
Speaker 3: there be some kind of an understanding between the parties. Again,
21:47
Speaker 3: this is where it gets complicated in terms of what
21:51
Speaker 3: does the evidence show. Sort of on one extreme, the
21:55
Speaker 3: evidence could show that there were no communications from these
21:59
Speaker 3: two legs to the federation, but that the leaders of
22:04
Speaker 3: the Federation felt that in terms of the best interests
22:08
Speaker 3: of soccer, they really needed to limit the number of
22:12
Speaker 3: leagues playing in Divisions one and two, so that they
22:16
Speaker 3: acted perhaps eighty competitively, but they did so without any
22:22
Speaker 3: kind of agreement or any overt understanding with the two leagues.
22:28
Speaker 3: And then you start going over to communications from these
22:33
Speaker 3: two leagues, Hey, we really think this is going to
22:35
Speaker 3: create a problem. You need to keep them from coming
22:39
Speaker 3: in regardless of their merit. Now that sounds a lot
22:43
Speaker 3: like lobbying to me, But what are their relationships. There's
22:46
Speaker 3: a joint marketing and so one of the things I
22:48
Speaker 3: would look for is, first of all, there's an economic
22:51
Speaker 3: interest on the part of the federation potentially to limit
22:57
Speaker 3: competition that could reduce the value of the promotion the
23:02
Speaker 3: revenues that come in. The more you could show an
23:05
Speaker 3: economic interest in doing what they did and lobbying, the
23:10
Speaker 3: more it begins to look like, yeah, there came to
23:13
Speaker 3: be an understanding that they would do whatever was necessary
23:16
Speaker 3: to exclude. But that's why you have a trial. These
23:19
Speaker 3: things are challenging sometimes to establish what the facts are,
23:25
Speaker 3: what the communications were, what emails were sent to whom,
23:29
Speaker 3: what was their economic interest? And that's going to be
23:33
Speaker 3: I think central here. If you move it over from
23:38
Speaker 3: section one, which it requires the conspiracy, to section two,
23:43
Speaker 3: that is monopolization. You could make a different argument, which
23:48
Speaker 3: is if you could show that the federation's economic interests
23:54
Speaker 3: were to exclude competition at divisions one and two. That's
23:59
Speaker 3: not what it is supposed to be doing. It's supposed
24:01
Speaker 3: to be making decisions about who's qualified to play. But
24:05
Speaker 3: because it's got an economic relationship with one or two leagues,
24:12
Speaker 3: it comes to have an economic interest that causes it
24:16
Speaker 3: to use its monopoly power. And the monopoly power here
24:20
Speaker 3: is in some way unavoidable because somebody has to make
24:23
Speaker 3: these decisions and they're going to control access to professional soccer.
24:27
Speaker 3: But if they're doing it to protect their economic interests
24:31
Speaker 3: rather than in the best interests of the overall program
24:35
Speaker 3: of soccer, that would also create an anti trust problem.
24:38
Speaker 1: And this trial is expected to take two weeks coming up.
24:42
Speaker 1: Could there be a settlement?
24:43
Speaker 4: This is bloomber.
24:44
Speaker 1: I've been talking to anti trust expert Peter Carstonsen other
24:49
Speaker 1: University of Wisconsin Law School about US Soccer and Major
24:53
Speaker 1: League Soccer facing off against the now defunct North American
24:58
Speaker 1: Soccer League in an anti trust trial in Brooklyn Federal Court. Peterborough,
25:03
Speaker 1: US Soccer stripped in ASL even of its original Division
25:08
Speaker 1: two status. I understand why they didn't want it to
25:11
Speaker 1: be Division one, but why did they strip it of
25:14
Speaker 1: even Division two?
25:15
Speaker 3: Indeed, is that a really interesting question, because you move
25:19
Speaker 3: them down to three, as best I can tell, you
25:23
Speaker 3: essentially make them a really low level farm league. And
25:28
Speaker 3: that's not going to attract audience. It's not going to
25:32
Speaker 3: attract good players. So it's it's a way of killing
25:37
Speaker 3: the enterprise, which effectively they did. Because this is a
25:40
Speaker 3: damage case, not an injunction case.
25:43
Speaker 1: At this point, speaking of damages, they're asking for treble damages,
25:48
Speaker 1: which you get under anti trust law. Do you know
25:50
Speaker 1: how they're estimating their damages?
25:53
Speaker 3: I'd say creatively. There's a whole special business of economists
26:01
Speaker 3: who work for plaintiffs figuring out how to estimate the loss.
26:06
Speaker 3: I guess they were for a while the vision two,
26:10
Speaker 3: so they've got some kind of a track record. So
26:12
Speaker 3: you take that, you look at what the other leagues
26:17
Speaker 3: had by way of audience and more specifically revenue, and
26:22
Speaker 3: then you create an economic model that predicts what revenues
26:28
Speaker 3: there would have been if they have been allowed either
26:32
Speaker 3: to remain as two or been allowed to move up
26:35
Speaker 3: to one, based on both their own track record and
26:39
Speaker 3: the performance of these other leagues in the United States.
26:44
Speaker 3: They may well have taken performance information from the various
26:49
Speaker 3: leagues in Europe and then compared those to the comparable
26:55
Speaker 3: American experience, and then again use this to draw an inference.
27:02
Speaker 3: If these foreign leagues when they moved from two to one,
27:06
Speaker 3: got a thirty percent increase in revenue, and we see
27:12
Speaker 3: the kind of distinction in the United States between the
27:15
Speaker 3: division two and the division of one, we can now
27:20
Speaker 3: begin to make an estimate. I don't do this, so
27:25
Speaker 3: I am permitted I think to be a little cynical.
27:27
Speaker 3: My object as an economist is to come up with
27:30
Speaker 3: the biggest plausible number I can. I worked for years
27:35
Speaker 3: with an economist co teaching a class on anti trust
27:39
Speaker 3: law and economics and he did a lot of expert work.
27:42
Speaker 3: He once told me that he tried to be pretty
27:44
Speaker 3: careful about how he did it. So, moving away from
27:47
Speaker 3: my cynicism about economists to an economist I had worked
27:50
Speaker 3: with and respected greatly, and he'd always try to find,
27:54
Speaker 3: he said, at least two and maybe three ways to
27:58
Speaker 3: estimate an economic loss for purposes of damages. He would
28:03
Speaker 3: choose the lowest of the three results. He testified all
28:07
Speaker 3: three using this model. I get three X using this model,
28:12
Speaker 3: I get two X. Using this model, I get X.
28:15
Speaker 3: So the thing I'm surest about is that the loss
28:18
Speaker 3: is at least X. Yeah, you think about it, that's
28:21
Speaker 3: not a bad strategy. Each measure involves an enormous number
28:26
Speaker 3: of assumptions, relationships that you assume. It's very tenuous in
28:32
Speaker 3: that way. I know the judge expressed skepticism about the
28:37
Speaker 3: damage estimates, and that was partly. I think that he'd
28:44
Speaker 3: really like these guys to settle this not for five
28:46
Speaker 3: hundred million, but man all one hundredred and fifty two
28:50
Speaker 3: hundred million somewhere in there. He doesn't really want to
28:53
Speaker 3: have a two week trial in any trust case.
28:56
Speaker 1: But this has been going on for about eight years.
28:59
Speaker 1: Wouldn't they have settled already if they were going to No.
29:03
Speaker 3: No, First of all, the defense lawyer's interest. They're getting
29:07
Speaker 3: paid one thousand dollars an hour. They've got no incentive
29:11
Speaker 3: to tell their client that settle And until the judge
29:15
Speaker 3: ruled as he did only fairly recently, as I understand
29:18
Speaker 3: it on the summer judgment motion. Up to that, there
29:21
Speaker 3: are three steps here. First step is you file the complaint.
29:25
Speaker 3: The defendant makes the motion to dismiss that the complaint
29:28
Speaker 3: does not state the claim. Judge rejects that. Then you
29:31
Speaker 3: go to discovery, your expert reports, et cetera. If the
29:37
Speaker 3: issue is clear. And I've seen this in a case
29:41
Speaker 3: involving conspiracy among meat packers to fix wages of workers,
29:46
Speaker 3: the judge said, hey, this is a plausible cause of action. Oop, hey, platives,
29:51
Speaker 3: can we settle this right now? So No, they knew
29:54
Speaker 3: that they were in deep, deep trouble and they wanted
29:59
Speaker 3: to settle it. Once the judge said, we're going to
30:01
Speaker 3: go forward other cases. You know, the judge's going to say, no,
30:05
Speaker 3: this state's a claim. There's some issues here. Can you
30:09
Speaker 3: do the discovery? And when that's all done, when you've
30:13
Speaker 3: got the expert reports, everything on the table. Then comes
30:17
Speaker 3: the motion for summary judgment. The defendant says, this case
30:21
Speaker 3: is not plausible. A jury could not plausibly find in
30:27
Speaker 3: favor of the plaintiff for the following ten thousand reasons.
30:31
Speaker 3: Defendants prevail in an awful lot of those cases, especially
30:34
Speaker 3: in complex cases like this one. The judge says, well, yeah,
30:39
Speaker 3: you know, it's a possibility, but it's not sufficiently plausible
30:43
Speaker 3: given the evidence for me to allow it to go
30:45
Speaker 3: to a jury. So it makes sense, especially in a
30:49
Speaker 3: case like this, which has got a lot of complexity,
30:53
Speaker 3: as we've already talked about, for the parties to hang
30:57
Speaker 3: in and get to the summary judgment decision. Now that
31:02
Speaker 3: they've lost that, do they want to go to trial.
31:05
Speaker 1: Or not, well, I believe they're starting with jury selection.
31:11
Speaker 3: Then they're probably also having some last minute, fairly serious discussions,
31:17
Speaker 3: and it is quite possible that a number of offers
31:21
Speaker 3: have been made. The plaintiffs want substantially more dollars than
31:26
Speaker 3: the defendants are prepared to put up, and both sides
31:30
Speaker 3: of them looking at this in terms of probabilities, how
31:33
Speaker 3: probable is it that the jury would find the violation,
31:37
Speaker 3: and how probable is it that, having found a violation,
31:40
Speaker 3: the jury will award something approximating the five hundred million,
31:45
Speaker 3: And given the judge of skepticism about the dollar value,
31:50
Speaker 3: this could wind up like the famous American Football League
31:54
Speaker 3: versus National Football League anti trust case, where there was
31:59
Speaker 3: so much other evidence is that the American Football League
32:01
Speaker 3: was in serious trouble. One of the key team owners
32:05
Speaker 3: was a guy named Donald Trump, who screwed things up terribly.
32:09
Speaker 3: But that's the only team owner whose name I would
32:12
Speaker 3: now recall. So the end of the day, the jury
32:14
Speaker 3: found that there was a lawful monopolization and or conspiracy
32:20
Speaker 3: to monopolized by the NFL, but almost all the damage
32:25
Speaker 3: was caused by bad business decisions by the American Football League.
32:31
Speaker 3: They nevertheless awarded the magnificent sum of one dollar trebled.
32:36
Speaker 4: That doesn't go very far, does it, No, But then
32:40
Speaker 4: the other thing that's in that statute is not only
32:44
Speaker 4: treble damages, but a reasonable attorney's fee.
32:47
Speaker 3: And so the lawyer said, well, we won. We didn't
32:50
Speaker 3: get very much, but we want what six in my
32:53
Speaker 3: mind is twenty million, but it could have been fifty million.
32:56
Speaker 3: It could have been only ten million. But they wanted
32:58
Speaker 3: something in the millions. They're reasonable attorneys fee, and they
33:01
Speaker 3: had their hours, all their records, and the judge said,
33:05
Speaker 3: that's what the statue says. You're entitled to your money.
33:08
Speaker 3: And well, they appealed to the Third Circuit saying, hey,
33:11
Speaker 3: wait a minute, you can't do this to us. It
33:14
Speaker 3: was only a dollar troubled damages. Then the Third Circuit said, no,
33:18
Speaker 3: the statue sais, if you filate d any trust laws,
33:21
Speaker 3: you've got to pay a reasonable attorneys fee as well.
33:24
Speaker 3: So my guess, and I don't know how active the judges.
33:29
Speaker 3: Some judges can be very demanding, if you will. That
33:33
Speaker 3: is saying to the parties, you really should settle this.
33:37
Speaker 3: I was involved in a case many many years ago
33:40
Speaker 3: where the judge basically said you're going to go into
33:43
Speaker 3: that room and you're not to come out until you've
33:45
Speaker 3: got this settled. Now, judges can't do I'm supposed to
33:49
Speaker 3: do that, but the judge, the judge did, and the
33:51
Speaker 3: parties they settled it. That comment about damages looked to
33:55
Speaker 3: me to be a clear flag. The judge is saying,
33:59
Speaker 3: I think there's a really good anti trust case here.
34:02
Speaker 3: I think the damages are exaggerated. Why don't you guys
34:06
Speaker 3: settle and egos get involved, It would not surprise me. However,
34:12
Speaker 3: as they start selecting jurors, somebody says, you know, we
34:17
Speaker 3: really may want to settle list for X one hundred
34:21
Speaker 3: millions rather than letting a jury make a decision.
34:25
Speaker 1: The joys of trying a case. Thanks so much for
34:27
Speaker 1: being on the show, Peter. That's Peter Carstensen, a professor
34:31
Speaker 1: at the University of Wisconsin Law School. And that's it
34:35
Speaker 1: for this edition of The Bloomberg Law Show. Remember you
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