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Murdoch Succession Fight & Agencies Targeted · Bloomberg Law

• 0:03
  Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.
• 0:12
  Speaker 1: I want to broadcast network.
• 0:13
  Speaker 2: I don't want to see what other news operations we
• 0:15
  Speaker 2: can sweep up.
• 0:16
  Speaker 1: He's erratic, he's making bad decisions. If he's not careful,
• 0:19
  Speaker 1: he's going to destroy the company.
• 0:20
  Speaker 2: And are you going to do something?
• 0:21
  Speaker 1: I think I'm the best option, all.
• 0:23
  Speaker 3: Right, because you like playing boss.
• 0:25
  Speaker 2: Pick out the old man, in with the new guard,
• 0:28
  Speaker 2: and you want this enough to go to war with
• 0:30
  Speaker 2: your family. It's rebellion, sabotage, the liberal attempt to undermine
• 0:36
  Speaker 2: my own business.
• 0:39
  Speaker 1: That's my company. It's a bitter legal fight among siblings
• 0:44
  Speaker 1: over a media empire that's reminiscent of the TV series Succession,
• 0:49
  Speaker 1: with good reason since that show was inspired in part
• 0:53
  Speaker 1: by the Murdochs. The Murdoch succession battle playing out in
• 0:57
  Speaker 1: Nevada is over an irrevocable fa family trust that will
• 1:01
  Speaker 1: ultimately decide who controls the conservative media empire that includes
• 1:06
  Speaker 1: Fox News and the Wall Street Journal. Rupert Murdoch is
• 1:10
  Speaker 1: trying to change the terms of the irrevocable family trust
• 1:14
  Speaker 1: created in nineteen ninety nine, which splits his voting shares
• 1:18
  Speaker 1: equally among his four oldest children after his death. The
• 1:23
  Speaker 1: ninety three year old wants to alter it so that
• 1:25
  Speaker 1: all his voting shares go to his eldest son, Lachlan,
• 1:29
  Speaker 1: the CEO of Fox and chairman of News Corps, who's
• 1:32
  Speaker 1: politically aligned with him. That prompted the three other children
• 1:37
  Speaker 1: to fight back in probate court. Joining me is Jamar
• 1:40
  Speaker 1: Creech of Romano Law. First of all, why is this
• 1:44
  Speaker 1: in Nevada?
• 1:45
  Speaker 2: This is in Nevada because Nevada offers a number of
• 1:49
  Speaker 2: protections for trust, including privacy, flexibility, management, and asset protection.
• 1:55
  Speaker 2: So the trust laws in Nevada are just very, very
• 1:57
  Speaker 2: favorable for situations like this.
• 2:00
  Speaker 1: It's in probate court. Several news outlets tried unsuccessfully to
• 2:06
  Speaker 1: open up the proceedings. Is probate court ever open to
• 2:09
  Speaker 1: the public? Is it always closed?
• 2:12
  Speaker 2: Well, in this instance, this is not really a probate
• 2:15
  Speaker 2: matter in a traditional sense because Ruper Murdoch is still living.
• 2:18
  Speaker 2: But this is a dispute regarding the structure of an
• 2:21
  Speaker 2: irrevocable trust. So in instances like this, in some jurisdictions,
• 2:26
  Speaker 2: those matters are more publicized. But because of Nevada's laws
• 2:31
  Speaker 2: and structure. This is a more private matter, which would
• 2:35
  Speaker 2: include things like, in addition to the just regular Nevada laws,
• 2:39
  Speaker 2: things like non disclosure agreements and such would all provide
• 2:43
  Speaker 2: kind of those walls of protection for privacy.
• 2:45
  Speaker 1: So explain what the issue is.
• 2:48
  Speaker 2: Certainly so, Ruper Murdoch established many years ago an irrevocable
• 2:53
  Speaker 2: trust which provides in part for the management of his
• 2:57
  Speaker 2: assets upon his death, which would include Box Corporation and
• 3:00
  Speaker 2: News Corporation. And in that trust he lists four of
• 3:04
  Speaker 2: his six children as the individuals who be able to
• 3:07
  Speaker 2: take control over those assets, James, Lachlan, Elizabeth and Prudence.
• 3:12
  Speaker 2: And right now, as many people know, Lock the Murdoch
• 3:15
  Speaker 2: was named CEO of Fox and chairman of News Corporation,
• 3:20
  Speaker 2: and Ruper Murdoch is attempting to change that trust and
• 3:24
  Speaker 2: give Lock the Murdoch controlling interest over all those assets,
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  Speaker 2: as opposed to equal authority as it's currently written.
• 3:33
  Speaker 1: So you mentioned that it's an irrevocable trust. If it's irrevocable,
• 3:39
  Speaker 1: how is he allowed to change it?
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  Speaker 2: Great question. The law provides in certain instances so long
• 3:45
  Speaker 2: as the changes are in the interests or best interests
• 3:49
  Speaker 2: of the beneficiaries and the changes are made in good faith.
• 3:53
  Speaker 2: Changes can be done to an irrevocable trust, but it's
• 3:55
  Speaker 2: a high standard that in most instances changes are not permitted.
• 4:00
  Speaker 1: This irrevocable trust was set up as part of a
• 4:03
  Speaker 1: divorce settlement with his second wife. So if it's changed,
• 4:07
  Speaker 1: does that invalidate the divorce settlement in any respect because
• 4:11
  Speaker 1: giving all the voting shares to Lachlan was not what
• 4:15
  Speaker 1: was agreed to.
• 4:17
  Speaker 2: Yeah, that's a possibility. I mean without seeing the settlement
• 4:20
  Speaker 2: terms of the divorce as well as the actual trust itself.
• 4:24
  Speaker 2: I imagine this was, as you indicated, some consideration for
• 4:29
  Speaker 2: the divorce, and it's likely that if in fact these
• 4:34
  Speaker 2: material alterations to the trust are permitted, that could be
• 4:37
  Speaker 2: affected as a result.
• 4:40
  Speaker 1: Explain what Rupert Murdoch is arguing why he says it's
• 4:45
  Speaker 1: in the best interests of his children As far as.
• 4:48
  Speaker 2: We know, sure, and I'm glad you asked me that
• 4:51
  Speaker 2: question because there has been limited coverage on this. So
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  Speaker 2: as far as I understand, Lachlan Murdoch, who's currently as
• 4:59
  Speaker 2: indicated before or the CEO and chairman of Fox Corporation
• 5:02
  Speaker 2: News Corporation, respectively, his political stance is aligned with his father,
• 5:08
  Speaker 2: and Ruper Murdoch believes that this is part of the
• 5:11
  Speaker 2: reason why he should be able to continue on running
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  Speaker 2: Fox in the News Corporation because the success is based
• 5:18
  Speaker 2: principally on or in part on the political ideologies of
• 5:22
  Speaker 2: Fox Corporation, and any change to that could significantly change
• 5:26
  Speaker 2: the value of these assets that are currently in the trust.
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  Speaker 1: How does a judge decide, Oh, in years to come,
• 5:34
  Speaker 1: this may change if this happens. I mean that seems
• 5:37
  Speaker 1: like it's so speculative.
• 5:40
  Speaker 2: Yes, it is. Forecasting something like this is just hard
• 5:43
  Speaker 2: to do. I think that that will likely be the
• 5:47
  Speaker 2: avenue that Ruper Murdoch is going to have to take
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  Speaker 2: in order to demonstrate that this is in the best interest.
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  Speaker 2: But a judge is going to rely on I would
• 5:54
  Speaker 2: imagine past performance, and I mean there are experts out
• 5:59
  Speaker 2: here who can provide these types of projections. So with
• 6:03
  Speaker 2: the long history of Fox and News Corporation and the
• 6:07
  Speaker 2: current performance of these assets these corporations, an expert can
• 6:10
  Speaker 2: give a reasonable future value of what these companies may
• 6:14
  Speaker 2: be able to do moving forward.
• 6:15
  Speaker 1: Is it more about politics than about future benefits to
• 6:19
  Speaker 1: his children that Rupert Murdoch wants to keep Fox and
• 6:23
  Speaker 1: the rest of his media empire conservative.
• 6:28
  Speaker 2: Yeah, that's correct. That's why Lachlan has been attached as
• 6:32
  Speaker 2: the successor. The other children, James, Elizabeth and Prudence, they
• 6:35
  Speaker 2: don't share those as I understand it, they don't share
• 6:38
  Speaker 2: those same political positions. So the future of these entities
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  Speaker 2: could be in jeopardy, if you will, from perhaps Ruper
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  Speaker 2: Murdock's position, if Lachlan is not given the controlling entry.
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  Speaker 1: The three children have united. They have one lawyer. They
• 6:54
  Speaker 1: say reportedly that the move violates the spirit of the
• 6:58
  Speaker 1: initial trust in and it's equal governance provision.
• 7:03
  Speaker 2: Their argument is that the intent, the original intent of
• 7:06
  Speaker 2: the trust was to provide all of them with equal
• 7:09
  Speaker 2: authority to manage these corporations, these assets moving forward, so
• 7:14
  Speaker 2: significantly altering that changes the original intent and also impacts
• 7:19
  Speaker 2: their interest greatly, and that's not what was thought of
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  Speaker 2: when this was created, and that should not be permitted
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  Speaker 2: here because that would not be in their best interest
• 7:28
  Speaker 2: and quite frankly not in good faith either.
• 7:31
  Speaker 1: Well, I mean, it does seem that no matter what
• 7:33
  Speaker 1: they say about how Fox will perform, that it's not
• 7:36
  Speaker 1: in their best interests to lose control of the companies.
• 7:41
  Speaker 1: I don't think this is about money. Each of the
• 7:43
  Speaker 1: six kids are multi billionaires, correct.
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  Speaker 2: I agree with that one hundred percent. I mean there
• 7:49
  Speaker 2: are a couple of things in play here. One, there's
• 7:51
  Speaker 2: the actual future value and performance of Fox, which Ruper
• 7:55
  Speaker 2: Murdoch is likely going to argue as the basis for
• 7:59
  Speaker 2: wanting the changes. On the other hand, the children themselves,
• 8:03
  Speaker 2: while that may be a consideration, their primary interest is
• 8:07
  Speaker 2: keeping their interest if you will, intact under the trust.
• 8:11
  Speaker 2: So the performance is really not, as you indicate, it,
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  Speaker 2: not their main concern. It's I have a piece of
• 8:17
  Speaker 2: the rock, if you will, and I want to maintain
• 8:20
  Speaker 2: my piece of the rock.
• 8:21
  Speaker 1: So the probate Commissioner will make a decision, and then
• 8:25
  Speaker 1: that can be appealed to the district court, and then
• 8:28
  Speaker 1: that could be appealed to the Nevada Supreme Court. So
• 8:32
  Speaker 1: this could take years.
• 8:33
  Speaker 2: It could. It just really depends on how this plays out.
• 8:37
  Speaker 2: But yes, I mean in theory it could take years because,
• 8:40
  Speaker 2: to be quite frank, given with a stake, you know,
• 8:43
  Speaker 2: the control of the Wall Street Journal, the control of
• 8:45
  Speaker 2: Fox and HarperCollins and all of these massive entities, yes,
• 8:50
  Speaker 2: that could very well happen.
• 8:52
  Speaker 1: So what happens If Rupert Murdoch dies before this is resolved,
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  Speaker 1: then the trust would go into affect at that point, right,
• 9:01
  Speaker 1: So is this attempt to revoke the trust over?
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  Speaker 2: Then if he dies, then the trust has to be
• 9:07
  Speaker 2: construed as it is now. There could still be some
• 9:11
  Speaker 2: issues to resolve moving forward, but it now turns into
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  Speaker 2: as you indicator before a matter of administering the trust.
• 9:20
  Speaker 2: I mean, it's the probate matter at that point, and
• 9:23
  Speaker 2: the trust would have to proceed as is. There are
• 9:26
  Speaker 2: in most trusts success or trustees, so in the event
• 9:29
  Speaker 2: that Ruper Murdoch dies, the successor trustee would then be
• 9:33
  Speaker 2: charged with administering the trust. But in most instances, the
• 9:37
  Speaker 2: success or trustee does not have the authority to alter
• 9:41
  Speaker 2: the trust because the success or trustee did not create it.
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  Speaker 2: Their only function is to carry out the terms of
• 9:47
  Speaker 2: the trust as drastic.
• 9:49
  Speaker 1: Does it happen often? That you know, people want to
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  Speaker 1: change the irrevocable trust, not the beneficiary but the person
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  Speaker 1: who set it up.
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  Speaker 2: Does it happen often? As hard to say what I
• 10:01
  Speaker 2: do feel In some instances, given the nature of the
• 10:06
  Speaker 2: matter before the novadic commissioner is that their assets that
• 10:10
  Speaker 2: are trying to be protected here, and this seems to
• 10:13
  Speaker 2: be more like an instance where ruper Murdocks is looking
• 10:16
  Speaker 2: to manage his assets, perhaps from the grave. So if
• 10:20
  Speaker 2: someone feels like, hey, I'm not going to let my
• 10:23
  Speaker 2: vision of what I've built if you will get changed
• 10:27
  Speaker 2: or significantly altered, then yes, I'm going to crack open
• 10:31
  Speaker 2: this irrevocable trust and make the changes in a way
• 10:34
  Speaker 2: in fashion and the way I see fit.
• 10:36
  Speaker 1: If that's what's really happening, that's not the argument that
• 10:40
  Speaker 1: you need to change the irrevocable trust, because that's not
• 10:44
  Speaker 1: in the best interests of the beneficiaries, not at all.
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  Speaker 1: So the next thing is that the commissioner will make
• 10:50
  Speaker 1: a ruling and we may not hear about that for
• 10:53
  Speaker 1: a while because it's not a public record. Thanks for
• 10:57
  Speaker 1: being on the show, Jamar. That's Jamar Creech of Romano Law.
• 11:01
  Speaker 1: Coming up next on The Bloomberg Law Show. Coming up
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  Speaker 1: next on The Bloomberg Law Show, new lawsuits are testing
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  Speaker 1: the power of a string of federal agencies as companies
• 11:12
  Speaker 1: take their cues from the Supreme Court's decisions. This is Bloomberg,
• 11:19
  Speaker 1: the Federal Trade Commission, the Occupational Safety and Health Administration,
• 11:25
  Speaker 1: the National Labor Relations Board, and the Equal Employment Opportunity Commission.
• 11:30
  Speaker 1: These are just some of the agencies that have been
• 11:32
  Speaker 1: targeted in recent months in a challenge to federal agency power.
• 11:37
  Speaker 1: These challenges will test the limits of recent Supreme Court
• 11:41
  Speaker 1: decisions that roll back the power of federal agencies to
• 11:44
  Speaker 1: regulate business and overturned a forty year old legal precedent
• 11:49
  Speaker 1: that had been a regulatory bedrock. Some conservatives have their
• 11:53
  Speaker 1: eyes on a nineteen thirty five Supreme Court decision Humphrey's
• 11:57
  Speaker 1: Executor versus the United States. It established removal projections for
• 12:02
  Speaker 1: FTC commissioners and help lay the foundation for the modern
• 12:06
  Speaker 1: administrative state. Joining me is an administrative law expert, Carrie Coliniesi,
• 12:12
  Speaker 1: a professor at the University of Pennsylvania Law School. There
• 12:15
  Speaker 1: are so many agencies that are being sued right now.
• 12:19
  Speaker 1: Is it just a general attack on agency power or
• 12:23
  Speaker 1: is it more specific?
• 12:25
  Speaker 3: Well, there's both a general attack and a specific but
• 12:29
  Speaker 3: broad attack on agencies that we would call independent agencies,
• 12:34
  Speaker 3: meaning that they've been set up so that the heads
• 12:37
  Speaker 3: of these agencies can't be fired at will by the president.
• 12:42
  Speaker 3: And there's a big target on a nineteen thirty five
• 12:47
  Speaker 3: President of the Supreme Court that upheld these so called
• 12:50
  Speaker 3: good cause limitations on removal of agency heads. And pretty
• 12:56
  Speaker 3: much any agency with those good cause limitations are you know,
• 13:00
  Speaker 3: in either you call it the spotlight or the firing range.
• 13:04
  Speaker 3: I don't know what's the better metaphor these days, but yes,
• 13:08
  Speaker 3: so we're seeing a lot of it.
• 13:09
  Speaker 1: So let's talk about some of them. There is one
• 13:12
  Speaker 1: against OSHA's Review Commission, so Kenrick Steele sued on September
• 13:18
  Speaker 1: seventeenth to block enforcement of a three hundred and forty
• 13:22
  Speaker 1: eight thousand dollars safety fine against it. But it's not
• 13:26
  Speaker 1: so much about the fine itself. It's arguing about process
• 13:30
  Speaker 1: and attacking the structure of the.
• 13:33
  Speaker 3: Agency right exactly and strikingly, this review Commission and its structure,
• 13:40
  Speaker 3: which you know is mainly an adjudicatory structure that reviews
• 13:45
  Speaker 3: violations that are alleged by the Occupational Safety and Health
• 13:49
  Speaker 3: Administration that had been held by the Supreme Court in
• 13:53
  Speaker 3: the past, but you know, precedent by the Supreme Court today,
• 13:58
  Speaker 3: I don't know that. And maybe three bucks at Starbucks
• 14:02
  Speaker 3: gets you a cup of coffee, so true.
• 14:05
  Speaker 1: So explain what they're attacking specifically here.
• 14:09
  Speaker 3: Sure, so it helps to go back to really square
• 14:13
  Speaker 3: one and just recognize that we have, you know, in
• 14:16
  Speaker 3: the Constitution three branches of government. Article once the legislative
• 14:21
  Speaker 3: branch with Congress. Article two is the executive branch headed
• 14:25
  Speaker 3: by the president. Article three is the judiciary. And we
• 14:29
  Speaker 3: have a system of what's called separation of powers, but
• 14:33
  Speaker 3: also one of checks and balances where different branches of
• 14:38
  Speaker 3: government have different kinds of oversight or involvement of other branches. Now,
• 14:44
  Speaker 3: what we don't see in the Constitution is an Occupational
• 14:49
  Speaker 3: Safety and Health Administration or a Federal Trade Commission or
• 14:53
  Speaker 3: so forth. Right, So those are departments or agencies that
• 14:58
  Speaker 3: the Constitution actually so acknowledges and contemplates that they will exist.
• 15:03
  Speaker 3: There are references to departments in agencies. In fact, there's
• 15:06
  Speaker 3: a provision that speaks to how the heads of these
• 15:10
  Speaker 3: agencies or departments will be appointed. But these are agencies
• 15:14
  Speaker 3: set up by Congress by statutes, you know, And there's
• 15:17
  Speaker 3: a process of course by statutes with the separation of powers,
• 15:21
  Speaker 3: where Congress passes laws, the President signs it. So there's
• 15:25
  Speaker 3: like two branches of government and creating a law. These agencies,
• 15:29
  Speaker 3: as I say, the appointments of the heads of them
• 15:32
  Speaker 3: is governed by a pretty clear procedure in the Constitution itself.
• 15:39
  Speaker 3: But the Constitution is totally silent, totally silent about how
• 15:45
  Speaker 3: they can be removed, the heads of these agencies, and
• 15:49
  Speaker 3: that for the longest time had been kind of settled
• 15:54
  Speaker 3: law that for purely executive agencies, ones that would just
• 16:01
  Speaker 3: be executing laws through ministerial functions, purely executive actions. Maybe
• 16:10
  Speaker 3: law enforcement might be thought of as even one of those.
• 16:13
  Speaker 3: The courts had said, it's a nineteen twenty six decision
• 16:18
  Speaker 3: by the Supreme Court Myers versus the United States, those
• 16:21
  Speaker 3: had to be capable of being removed. The heads of
• 16:23
  Speaker 3: those agencies had to be capable of being removed by
• 16:26
  Speaker 3: the President at will, meaning for any reason, President could
• 16:30
  Speaker 3: remove them, but Congress could. According to a nineteen thirty
• 16:33
  Speaker 3: five decision called Humphrey's Executor case involving the Federal Trade Commission,
• 16:40
  Speaker 3: Congress could impose what are called good cause limitations, which
• 16:44
  Speaker 3: limit the president's ability to remove the heads of those
• 16:48
  Speaker 3: agencies to those instances where there's good cause. Usually that
• 16:53
  Speaker 3: refers to things like negligence, dereliction of duty, criminal offences,
• 17:01
  Speaker 3: gross violations of carrying out their functions, And these good
• 17:07
  Speaker 3: cause limitations have been placed in statutes limiting the president's
• 17:13
  Speaker 3: ability to remove certain agency heads then just for political reasons,
• 17:19
  Speaker 3: just because say the heads of these agencies don't do
• 17:22
  Speaker 3: the President's bidding, that's not a good cause. So that's
• 17:27
  Speaker 3: been the law since nineteen thirty five. Humphrey's Executor, and
• 17:30
  Speaker 3: the Humphrey's Executor decision now is really under some threat
• 17:36
  Speaker 3: of being overturned, much like the Supreme Court has overturned
• 17:40
  Speaker 3: Roversus weighed, much is overturned Chevron versus Natural Resource Defense Council.
• 17:47
  Speaker 3: A forty year president, there's a likelihood that there's a
• 17:51
  Speaker 3: majority on the Court that would be willing to overturn
• 17:54
  Speaker 3: Humphrey's Executor. And we know that because the Court has
• 17:58
  Speaker 3: been since at least twenty ten, so at least for
• 18:02
  Speaker 3: the last fifteen years, slowly shipping away at Congress's ability
• 18:09
  Speaker 3: to put in place these good cause limitations on removal
• 18:14
  Speaker 3: of officers in various cases.
• 18:18
  Speaker 1: So tell us about the line of cases sort of
• 18:22
  Speaker 1: chipping away at agency power.
• 18:24
  Speaker 3: There's not been a sort of a wholesale frontal challenge
• 18:30
  Speaker 3: to all of these good cause limitations. In twenty ten,
• 18:35
  Speaker 3: the Court said, well, Congress can't put good cause limitations
• 18:39
  Speaker 3: on an officer that can be removed only by another officer,
• 18:45
  Speaker 3: a higher officer that has a good cause limitation. So
• 18:48
  Speaker 3: no double layer of good cause limitations. In a case
• 18:53
  Speaker 3: in twenty twenty, Celia Law versus the Consumer Financial Protection
• 18:57
  Speaker 3: Bureau of the Court said you can't have a good
• 19:00
  Speaker 3: cause limitation on agencies that are headed by just a
• 19:03
  Speaker 3: single administrator. But that still leaves agencies like the Federal
• 19:08
  Speaker 3: Trade Commission, like the Federal Communications Commission, like the Occupational
• 19:14
  Speaker 3: Safety and Health Review Commission, like the Consumer Product Safety Commission,
• 19:21
  Speaker 3: like the Federal Reserve Board, where there are multi members
• 19:26
  Speaker 3: that head up these these commissions that have good cause limitations.
• 19:30
  Speaker 3: Those are still in place as long as Humphrey's executor
• 19:34
  Speaker 3: is still in place. But you know, it's any quest
• 19:37
  Speaker 3: He's guess how long Humphrey's executor will stay law and
• 19:40
  Speaker 3: all sorts of litigants are trying to challenge Humphrey's executor
• 19:45
  Speaker 3: frontally by these current lawsuits that you're seeing.
• 19:49
  Speaker 1: Let me ask you a basic question, isn't it better
• 19:53
  Speaker 1: to have an agency head where the president can only
• 19:56
  Speaker 1: remove for good cause, because then the agency had is
• 20:00
  Speaker 1: not so much subject to you know, shifting political wins.
• 20:05
  Speaker 3: I mean, there's good arguments, policy arguments for that, and
• 20:11
  Speaker 3: certainly there's really strong research, for example, that shows that
• 20:16
  Speaker 3: central bank institutions around the world that are somewhat insulated
• 20:21
  Speaker 3: from politics are better for the economy. So you know,
• 20:25
  Speaker 3: there's a lot to be said for that. And even
• 20:27
  Speaker 3: quite frankly, with agencies where the heads can be removed
• 20:34
  Speaker 3: by the president for any reason, there's still a good
• 20:38
  Speaker 3: argument that we would want these agency heads to exercise
• 20:44
  Speaker 3: autonomy from the pure raw electoral politics and do what
• 20:50
  Speaker 3: is best for the country in carrying out their statutory mandates.
• 20:55
  Speaker 3: So I think you do see many presidents recognizing that,
• 21:00
  Speaker 3: and you see even instances where it could be possible
• 21:05
  Speaker 3: for a president to remove an officer who might be
• 21:10
  Speaker 3: creating some kind of embarrassing or perhaps slightly electorally disadvantageous decision.
• 21:18
  Speaker 3: You know, it keeps from removing them because they recognize
• 21:20
  Speaker 3: the value of that autonomy. You think about that very
• 21:25
  Speaker 3: special council that was investigating President Biden for his retention
• 21:31
  Speaker 3: of documents that were deemed classified, for example, that was
• 21:35
  Speaker 3: handled by a separate process that's structured through regulation, but
• 21:41
  Speaker 3: the President didn't intervene and say I want to get
• 21:46
  Speaker 3: rid of that. There's recognition, I think on both sides
• 21:49
  Speaker 3: of the aisle historically, that certain agencies do need to
• 21:55
  Speaker 3: exercise autonomy. Do we want a food in drug administration
• 21:58
  Speaker 3: that's making decisions about the safety and efficacy of our
• 22:03
  Speaker 3: medications or medical devices based upon the whims of a
• 22:08
  Speaker 3: non expert president or what seems politically desirable or expedient
• 22:14
  Speaker 3: for that president. I think most Americans would say no,
• 22:18
  Speaker 3: we want the expertise, We want the independence and the autonomy.
• 22:22
  Speaker 1: Coming up next on the Bloomberg Law Show, will the
• 22:24
  Speaker 1: Supreme Court overturn the unanimous ruling in a case that
• 22:28
  Speaker 1: helped lay the foundation for the modern administrative state. I'm
• 22:33
  Speaker 1: June Grosso and you're listening to Bloomberg. A host of
• 22:37
  Speaker 1: federal agencies have been targeted in recent lawsuits in a
• 22:42
  Speaker 1: challenge to agency power, testing the limits of recent Supreme
• 22:46
  Speaker 1: Court decisions that roll back the power of federal agencies
• 22:50
  Speaker 1: to regulate business. I've been talking to Professor Carrie Coolinisi
• 22:55
  Speaker 1: of the University of Pennsylvania Law School. I can understand
• 22:58
  Speaker 1: why the Supreme Court last term and increasingly is giving
• 23:03
  Speaker 1: more power to judges, But I don't understand why they're
• 23:07
  Speaker 1: giving more power to the president. I mean, even in
• 23:09
  Speaker 1: that controversial case they recognize certain presidential immunity from criminal prosecution.
• 23:15
  Speaker 1: Why is that a conservative viewpoint to give more power
• 23:19
  Speaker 1: to one person.
• 23:20
  Speaker 3: Well, that's a really good question. I suppose you might
• 23:23
  Speaker 3: have to ask, you know, the those are expeusing.
• 23:28
  Speaker 2: To be fair.
• 23:29
  Speaker 3: I mean, we don't yet know if there's a majority
• 23:32
  Speaker 3: that would overturn Humphrey's executor. You'd have to ask. You know,
• 23:36
  Speaker 3: justices who've been on the record is criticizing it, like
• 23:40
  Speaker 3: Justice cour Such or Justice Thomas, and see what they say.
• 23:45
  Speaker 3: But you know, over the last couple of decades, there's
• 23:49
  Speaker 3: emerged a real preference in conservative legal circles for what's
• 23:55
  Speaker 3: called the unitary executive theory that puts the entire federal
• 24:01
  Speaker 3: government under the president's control. They're very control, top heavy,
• 24:06
  Speaker 3: hierarchically control orientation in their approach under this unitary executive theory.
• 24:12
  Speaker 3: And you know, maybe partly it's because you know, Republicans
• 24:17
  Speaker 3: have been more successful at putting their candidates in the
• 24:21
  Speaker 3: White House than they might otherwise be in getting you know,
• 24:26
  Speaker 3: majorities in Congress to pass laws that would implement their agenda.
• 24:31
  Speaker 3: You know, I don't know, but this grows out of this,
• 24:34
  Speaker 3: this real preference as of late for a unitary executive
• 24:39
  Speaker 3: and the limitations on the president's power to remove is
• 24:43
  Speaker 3: seen as really central to that theory because this is true.
• 24:48
  Speaker 3: I suppose in almost any employment situation, how can a boss,
• 24:53
  Speaker 3: you know, run an organization if ultimately the boss can't
• 24:57
  Speaker 3: fire somebody's unwilling to follow directions, if they.
• 25:01
  Speaker 1: Do away with Humphrey's executor, what would that actually mean, Well, what.
• 25:07
  Speaker 3: It would just mean is that the heads of agencies
• 25:11
  Speaker 3: that are currently deemed to be independent are now removable
• 25:17
  Speaker 3: at will by the president. So it might not change
• 25:21
  Speaker 3: a lot. I mean, we look at, for example, what's
• 25:24
  Speaker 3: happened after the Celia law versus this Consumer Financial Protection
• 25:29
  Speaker 3: Bureau case in twenty twenty. Now there's the ability of
• 25:34
  Speaker 3: a president to remove the head of the CFPB at will.
• 25:37
  Speaker 3: But here's the thing. The heads of these agencies are
• 25:41
  Speaker 3: usually aligned with the president. The president appoints them, you know,
• 25:45
  Speaker 3: it goes through Senate, confirmation, and there's you know, often
• 25:49
  Speaker 3: a great deal of alignment. So in many cases, there's
• 25:53
  Speaker 3: not going to be much of a difference. Now, you know,
• 25:56
  Speaker 3: I do think there could be a big difference if
• 25:59
  Speaker 3: we have another Trumpet administration. This was a president who
• 26:03
  Speaker 3: in the past, you know, has been willing to fire
• 26:07
  Speaker 3: at will heads of agencies, like the head of the
• 26:11
  Speaker 3: Federal Bureau of Investigation that other presidents in the past
• 26:15
  Speaker 3: have said, you know, we should leave the FBI alone
• 26:19
  Speaker 3: and let them have that autonomy to conduct investigations and
• 26:24
  Speaker 3: not metal politically in them. You know, let's just be clear.
• 26:29
  Speaker 3: The Food and Drug Administration is an agency that's not
• 26:32
  Speaker 3: independent that the head of it could be removed at
• 26:35
  Speaker 3: will by the president for any reason. But most presidents
• 26:40
  Speaker 3: recognize that. First of all, they put in place a
• 26:43
  Speaker 3: competent FDA administrator and they let them do their job,
• 26:47
  Speaker 3: and unless they do something absolutely wildly irresponsible, you let
• 26:54
  Speaker 3: them do their job. President Trump, however, you know, would
• 26:57
  Speaker 3: be I think more than willing to intervene with some
• 27:01
  Speaker 3: of these agency heads.
• 27:03
  Speaker 1: Humphrey's executor would affect every kind of agency, not.
• 27:08
  Speaker 3: Just it's it's the precedent. Yeah, I mean, you know
• 27:11
  Speaker 3: it's one of these things. Of course, it depends on
• 27:14
  Speaker 3: exactly how the Court would decide to deal with Humphrey's executor.
• 27:20
  Speaker 3: So far, it's been nibbling around the edges, and it says, well,
• 27:24
  Speaker 3: you know, Humphrey's executors said, these good cause limitations could
• 27:29
  Speaker 3: apply across the board to any agency that exercise what
• 27:34
  Speaker 3: it called quasi legislative or quasi judicial functions, which is
• 27:38
  Speaker 3: just about any agency. Well, then we got this little
• 27:42
  Speaker 3: carve out for the double layer of protections in twenty
• 27:45
  Speaker 3: ten for the Public Company Accounting Oversight Board. Then we
• 27:49
  Speaker 3: got this little carve out from Humphrey's executor, clear rule
• 27:54
  Speaker 3: in Celia law that says, well, no, you know that
• 27:57
  Speaker 3: you can't have good cause limitations when there's a single
• 28:01
  Speaker 3: agency administrator. But we haven't yet had the full frontal
• 28:07
  Speaker 3: repudiation of Humphrey's executor. Maybe there's going to be a
• 28:10
  Speaker 3: way for the Supreme Court to say Humphrey's executor is
• 28:15
  Speaker 3: overruled for anything except the Federal Reserve. Perhaps that's a possibility.
• 28:21
  Speaker 3: I wouldn't seem to be a principled carve out, but
• 28:26
  Speaker 3: you know, the Supreme Court gets to set the final word.
• 28:29
  Speaker 3: So if they want to carve out the Constitution in
• 28:33
  Speaker 3: a way that protects monetary policy, that would be better
• 28:37
  Speaker 3: than eliminating Humphrey's executor altogether. But it's just hard for
• 28:41
  Speaker 3: anyone right now to imagine how they could do that
• 28:44
  Speaker 3: on a principal basis.
• 28:46
  Speaker 1: I'm trying to count justices here, because there was a
• 28:49
  Speaker 1: concurring opinion by Justice Kagan that was joined by Justices
• 28:53
  Speaker 1: Sonya Soto Mayo, Brett Kavanaugh, and Amy Coney Barrett that
• 28:57
  Speaker 1: people say signaled that maybe they wouldn't go along with
• 29:01
  Speaker 1: a wholesale doing away with Humphrey's executive I'm trying to
• 29:05
  Speaker 1: count how many Yeah, Jarns, Thomas and Neil Gorzich.
• 29:08
  Speaker 3: And Alito Alito, right, And we don't know really where
• 29:12
  Speaker 3: Roberts will be on this, and it's not likely to
• 29:16
  Speaker 3: be a six to three decision, but could they end
• 29:19
  Speaker 3: up with a five to four possibly, We'll see, you know.
• 29:24
  Speaker 3: I will say that as much as we look at
• 29:26
  Speaker 3: the last Supreme Court term as one in which the
• 29:30
  Speaker 3: Court clearly put a target on the administrative state through
• 29:36
  Speaker 3: overruling Chevron deference, through the Jarkisi case that held that
• 29:43
  Speaker 3: the Seventh Amendment precluded the Securities and Exchange Commission from
• 29:48
  Speaker 3: using its own aljs for civil fraud cases. There was
• 29:52
  Speaker 3: actually a case that could have been really extreme, that
• 29:57
  Speaker 3: could have upended the Federal reserves sources of funding, and
• 30:02
  Speaker 3: the Supreme Court didn't buy that in a seven to
• 30:05
  Speaker 3: two decision the CFPB versus Community Financial Services Association case,
• 30:11
  Speaker 3: where the lower court had held that the funding of
• 30:14
  Speaker 3: the CFPB through bank collected fees by the Federal Reserve
• 30:20
  Speaker 3: was in violation of the appropriation's clause. But the Supreme
• 30:23
  Speaker 3: Court didn't bite it that and they said, no, we
• 30:25
  Speaker 3: uphold that. So we might see the same, you know,
• 30:29
  Speaker 3: some kind of limitation on Humphrey's executor's status as well,
• 30:34
  Speaker 3: and something of it will remain. It's anybody's guests, but
• 30:37
  Speaker 3: it's also very clear that that's what all the conservative
• 30:42
  Speaker 3: groups are targeting right now, and until we get a
• 30:47
  Speaker 3: case squarely before the support and we might I know
• 30:50
  Speaker 3: there's a case involving the Consumer Safety Product Commission that
• 30:55
  Speaker 3: would challenge its four cause limitations that schedule forward deciding
• 31:01
  Speaker 3: whether the Court will take it at their conference today.
• 31:04
  Speaker 3: I haven't seen or heard yet whether there's been any
• 31:07
  Speaker 3: decision on whether to take that case or not. But
• 31:10
  Speaker 3: we'll see.
• 31:11
  Speaker 1: There'll be a lot to see as the Supreme Court
• 31:13
  Speaker 1: term begins next Monday. Thanks so much, Carrie. That's Carrie Coliniesi,
• 31:18
  Speaker 1: a professor at the University of Pennsylvania Law School. And
• 31:21
  Speaker 1: that's it for this edition of the Bloomberg Law Podcast.
• 31:24
  Speaker 1: Remember you can always get the latest legal news by
• 31:26
  Speaker 1: subscribing and listening to the show on Apple Podcasts, Spotify,
• 31:31
  Speaker 1: and at Bloomberg dot com, slash podcast, slash Law. I'm
• 31:35
  Speaker 1: June Grosso and this is Bloomberg