Latest / Bloomberg Law / Weekend Law: Trump Power Grab, SCOTUS Greatest Fear and J&J

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Weekend Law: Trump Power Grab, SCOTUS Greatest Fear and J&J · Bloomberg Law

0:02
Speaker 1: This is Bloomberg Law with June Grossel from Bloomberg Radio.
0:08
Speaker 2: Through his executive orders, President Donald Trump is making a
0:12
Speaker 2: broad push to reshape the federal government and centralize power
0:17
Speaker 2: in the White House.
0:18
Speaker 3: Don't forget I got elected on the basis of making
0:21
Speaker 3: our government stronger and smaller, because we have millions of
0:25
Speaker 3: people that obviously they're paying, millions of people that shouldn't
0:30
Speaker 3: be paid.
0:31
Speaker 2: And this week, in an unprecedented power grab, Trump issued
0:35
Speaker 2: an executive order declaring that he has direct control over
0:40
Speaker 2: some of the country's most powerful regulators. Dozens of independent
0:44
Speaker 2: agencies like the Securities and Exchange Commission and the Federal
0:48
Speaker 2: Trade Commission that were designed by Congress to operate without
0:52
Speaker 2: day to day oversight by the White House. But now,
0:55
Speaker 2: according to Trump's latest order, we'll have to submit to
0:58
Speaker 2: oversight over rulemaking, policy, agenda, spending, and interpretations of the law.
1:04
Speaker 2: Like many of Trump's executive orders, it's sure to face
1:07
Speaker 2: legal challenges. My guest is regulatory expert Carrie Coliniesi, law
1:12
Speaker 2: professor and director of the penn Program on Regulation at
1:16
Speaker 2: the University of Pennsylvania. Carrie, the President already appoints the
1:20
Speaker 2: heads of these agencies, and a majority of the commissioners
1:25
Speaker 2: are members of the Republican Party, So aren't there ideologies
1:30
Speaker 2: already aligned with the presidents?
1:33
Speaker 1: Once you have the majority control on a commission and
1:36
Speaker 1: they're appointed by the president, they are coming in with
1:40
Speaker 1: an ideology and a predisposition to do the sorts of
1:44
Speaker 1: things that the president wants. Anyway, so as a practical matter,
1:48
Speaker 1: these agencies are not as totally independent as maybe the
1:53
Speaker 1: label an independent agency might make them seem. This executive order, though,
1:58
Speaker 1: eliminates it's claiming to eliminate the kind of hands off
2:03
Speaker 1: approach that quite frankly, many presidents have taken with respect
2:07
Speaker 1: to some of the very institutionalized review processes, of having
2:13
Speaker 1: budgets not reviewed by the White House, of having regulations
2:17
Speaker 1: not reviewed by the White House. This administration is now claiming, well,
2:21
Speaker 1: we're not only going to have our loyalists heading these agencies,
2:24
Speaker 1: but we also want to scrutinize your budgets. We want
2:27
Speaker 1: to scrutinize your strategic plans, we want to scrutinize your
2:32
Speaker 1: legal decision making. We want to scrutinize your important regulations,
2:37
Speaker 1: just like we do the Department of Transportation, just like
2:41
Speaker 1: we do the Department of Labor. All of those are
2:44
Speaker 1: agencies that are headed by folks that have been appointed
2:47
Speaker 1: by the president too right, and share the president's objectives.
2:51
Speaker 1: But you know, sometimes, you know, you can get heads
2:55
Speaker 1: of these agencies that have viewpoints that do depart a
2:58
Speaker 1: little bit from what the White House swans, or heads
3:01
Speaker 1: of agencies that are not as vigilant about carrying out
3:04
Speaker 1: the president's agenda. And these institutional processes that the Trump
3:09
Speaker 1: administration says now it's going to apply to the independence
3:13
Speaker 1: are there to try to really put the hammer down
3:16
Speaker 1: and make sure that agencies follow what the White House
3:19
Speaker 1: wants them to do.
3:20
Speaker 2: And how does this order treat the Federal Reserve.
3:24
Speaker 1: Well, it brings the Federal Reserve as a regulator under
3:28
Speaker 1: the ambit of the executive Order, but it specifically exempts
3:34
Speaker 1: the Federal Reserve in its exercise of monetary policy decision
3:38
Speaker 1: making from White House scrutiny and oversight and control under
3:43
Speaker 1: the Executive Order. So, at least for now, and this
3:46
Speaker 1: is a good thing for the country, the Federal Reserve's
3:50
Speaker 1: monetary policy is supposed to remain independent and free from
3:54
Speaker 1: political interference from the White House, not so with respect
3:59
Speaker 1: to the banking regulatory functions of the Federal Reserve, at
4:03
Speaker 1: least as this order is now drafted.
4:06
Speaker 2: What are some of the dangers of a president taking
4:09
Speaker 2: control of independent agencies.
4:11
Speaker 1: Like this to the larger issue you know about what
4:15
Speaker 1: we're getting and what we're losing. I think all agencies,
4:19
Speaker 1: whether they're executive branch agencies or independent regulatory agencies, need
4:24
Speaker 1: a degree of autonomy from the kind of raw politics
4:28
Speaker 1: that can often be important to presidents, and I think
4:32
Speaker 1: are clearly important to this president. We don't want a
4:36
Speaker 1: government where agencies are acting on impulses of favoritism retribution,
4:43
Speaker 1: and some presidents might want that, this president might want that.
4:47
Speaker 1: And if we don't have a degree of autonomy in
4:50
Speaker 1: our governmental institutions from that kind of raw politics, we
4:56
Speaker 1: really suffer as a country.
4:57
Speaker 2: This is all part of the theory of the unitary executive,
5:03
Speaker 2: which gives the president sweeping powers sole authority over the
5:07
Speaker 2: federal government's executive branch. And the speculation is that the
5:12
Speaker 2: Trump administration wants to push the Supreme Court to adopt
5:17
Speaker 2: the unitary executive theory.
5:19
Speaker 1: Right they're basically acting is if the Court has already
5:23
Speaker 1: adopted wholesale the unitary executive theory by in effect overturning
5:29
Speaker 1: the nineteen thirty five Supreme Court decision called Humphrey's Executor.
5:34
Speaker 1: That decision, the Supreme Court said that Congress can create
5:38
Speaker 1: these independent agencies that are headed by officials who have
5:43
Speaker 1: some kind of tenure protection and can't be removed at
5:46
Speaker 1: will by presidents. You know, this administration is taking action
5:51
Speaker 1: that one would expect to see if Humphrey's Executor had
5:55
Speaker 1: already been determined to be unconstitutional. They're firing our some
6:00
Speaker 1: officials at the NLRB that have had good cause protections,
6:04
Speaker 1: and taking other actions like this executive order that are
6:07
Speaker 1: very aggressive. And I think they're setting up and hoping
6:09
Speaker 1: that they'll get the Supreme Court to overturn Humphrey's Executor.
6:14
Speaker 1: It wouldn't be a big stretch to expect the Supreme
6:17
Speaker 1: Court will do that. The Supreme Court's been wittling away
6:20
Speaker 1: at Humphrey's Executor for easily ten years or so now,
6:24
Speaker 1: and you know, it's probably expected by most observers to
6:28
Speaker 1: be on the chopping block. The big deal will be
6:31
Speaker 1: if Humphrey's Executor goes, will it go big time? That is,
6:35
Speaker 1: by sweeping in civil service protections and protections for the
6:39
Speaker 1: Federal reserves monetary policy, or will there be some way
6:43
Speaker 1: that the Supreme Court says, well, it's unconstitutional for Congress
6:48
Speaker 1: to create insulation for every other position in government, but
6:54
Speaker 1: we still think it's okay for civil servants to be
6:58
Speaker 1: protected with some good cause protections, or for the Federal
7:02
Speaker 1: Reserve when it's adopting monetary policy to have that. Hard
7:06
Speaker 1: to know exactly how the Supreme Court will decide when
7:10
Speaker 1: this case comes before us, but I think it's headed there,
7:13
Speaker 1: and this administration I think is already acting in effect
7:17
Speaker 1: as if it's been there. And they want do we know.
7:21
Speaker 2: Which Supreme Court justices are fully behind the unitary executive theory?
7:27
Speaker 1: Well, I think there's probably a good majority that are
7:30
Speaker 1: inclined to this. I mean, you know, its chief Justice
7:33
Speaker 1: Roberts even has been kind of spearheading decisions to whittle
7:38
Speaker 1: away at Humphrey's executor going back to the decisions that
7:43
Speaker 1: first started to say that we couldn't have sub agencies
7:46
Speaker 1: that have good cause protection if the head agency did
7:51
Speaker 1: that was held to be unconstitutional. Then it was held
7:54
Speaker 1: that you can't have a single headed body that has
7:58
Speaker 1: an administrator that's good cause protection. So there's a clear
8:02
Speaker 1: majority that looks suspiciously on these They've just been moving
8:07
Speaker 1: incrementally and maybe waiting for the case that we'll take
8:11
Speaker 1: it to the next step.
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Speaker 2: I don't understand why a judge would want to give
8:17
Speaker 2: more power to the head of the executive branch on
8:21
Speaker 2: check power. I would think they want to keep more
8:23
Speaker 2: balance between the branches of government.
8:26
Speaker 1: Yeah, you know, if you look at a lot of
8:28
Speaker 1: the cases over the years, and there haven't been that many,
8:31
Speaker 1: but when these issues have arisen, the courts have been
8:34
Speaker 1: suspicious of Congress's power, believe it or not, and Congress's
8:39
Speaker 1: power to kind of interfere with the administration of government
8:44
Speaker 1: by putting in place limitations on who can head up
8:49
Speaker 1: agencies or how they can be removed. And I think
8:52
Speaker 1: there's been some sensible decisions that have said, you know, Congress,
8:57
Speaker 1: you can't pick who are the heads of agency, or
9:00
Speaker 1: you can't yourself have a role in deciding whether an
9:04
Speaker 1: agency head is removed or not. But you know, now
9:08
Speaker 1: those cases and the suspicion of Congress is sort of
9:11
Speaker 1: going to the extreme, and you know, we do have
9:14
Speaker 1: justices on the Court who have spent time like Justice
9:18
Speaker 1: Roberts and Justice Kavanaugh and so forth, who have spent
9:22
Speaker 1: time working in the White House, and maybe that has
9:26
Speaker 1: emboldened them to think in presidentialist terms. There's also I
9:31
Speaker 1: think a mindset of sort of formalist, rigid, hierarchical authority
9:36
Speaker 1: that some of our justices in the majority seem to
9:39
Speaker 1: exhibit that they think that there should be just one
9:42
Speaker 1: person at the top of the executive branch who should
9:45
Speaker 1: get to say everything that the government does and have
9:49
Speaker 1: the ability to shape the course of all policies. Now
9:53
Speaker 1: that's not really I think how the text of the
9:56
Speaker 1: Constitution is necessarily written. There are actually no provisions in
10:01
Speaker 1: the Constitution dealing with the removal of officials. So you know,
10:06
Speaker 1: it's not something that's demanded by the text of the Constitution.
10:10
Speaker 1: Nor is it really in our history, whether at the
10:14
Speaker 1: time of the founding or or subsequently, to say that
10:18
Speaker 1: Congress can't create bodies that have some degree of autonomy
10:21
Speaker 1: from the president.
10:23
Speaker 2: Finally, what about DOGE. It's acting like an agency, but
10:28
Speaker 2: it's not an agency. Is there any problem with that?
10:31
Speaker 1: Oh? Sure, there's all sorts of problems, but you know,
10:33
Speaker 1: there are problems that are kind of unprecedented, and they're
10:37
Speaker 1: trying to be real self like with this. We don't
10:40
Speaker 1: have a lot of transparency what they're doing, and they're
10:43
Speaker 1: moving very quickly. The courts are not prepared to do
10:46
Speaker 1: very well with things that are done in secret and
10:50
Speaker 1: that are done fast. They're trying to do a lot
10:52
Speaker 1: with data and fear tactics, and you know, those are
10:57
Speaker 1: very hard to combat through the courts system. But it's
11:01
Speaker 1: very unprecedented and it may be hard to resist in
11:05
Speaker 1: a real time and this is moving very quickly, so
11:08
Speaker 1: that right now the administration's claiming that those is really
11:11
Speaker 1: just acting as advisors, but I think, you know it's
11:14
Speaker 1: actually speaking that seems not to be at all the case.
11:18
Speaker 1: I think one step that litigants will have to do
11:20
Speaker 1: is sort of pierce through that characterization and show what's
11:25
Speaker 1: really going on. This is what you see if you
11:28
Speaker 1: don't really care about making meaningful, smart management decisions. And
11:33
Speaker 1: there should be no denying that there's ways we could
11:36
Speaker 1: improve government in streamline and make more efficient government processes,
11:40
Speaker 1: but there's very little indication that that's really what's motivating
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Speaker 1: DOGE or the precedent for that matter, Thanks.
11:48
Speaker 2: So much, Carrie. That's Professor Carrey Colinies at the University
11:51
Speaker 2: of Pennsylvania Law School. Coming up next. Will the Supreme
11:55
Speaker 2: Court have to face its greatest fear? I'm June Grosso
11:58
Speaker 2: when you're listening to Blue. Unlike the executive and legislative
12:04
Speaker 2: branches of government, the Supreme Court has no real power
12:08
Speaker 2: to enforce its decisions, no army or constitutional spending power
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Speaker 2: to use as a cudgel. So what happens if the
12:16
Speaker 2: President of the United States refuses to comply with a
12:19
Speaker 2: Supreme Court order? Basically nothing, something Vice President JD. Vance
12:25
Speaker 2: pointed out on the Jack Murphy podcast in twenty twenty one.
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Speaker 4: I think that what Trump should do, like if I
12:31
Speaker 4: was giving him one piece of advice, fire every single
12:35
Speaker 4: mid level bureaucrat, every civil servant in the administrative state.
12:38
Speaker 4: Replace them with our people. And when the courts, because
12:41
Speaker 4: you will get taken to court. And when the courts stop,
12:44
Speaker 4: you stand before the country like Andrew Jackson did, and
12:47
Speaker 4: say the Chief Justice has made his ruling, now let
12:49
Speaker 4: him enforce it.
12:50
Speaker 2: A president hasn't defied a Supreme Court order since the
12:54
Speaker 2: Civil War, but Donald Trump seems to be ignoring longstanding
12:58
Speaker 2: legal constraints. Testing the limits of his power is the
13:02
Speaker 2: next step refusing to comply with a court order.
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Speaker 3: The answer is I always abide by the courts, always
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Speaker 3: abide by it, and will appeal.
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Speaker 2: Though Trump says he'll abide by court orders, his truth,
13:15
Speaker 2: social posts and key aids seem to be suggesting defiance.
13:20
Speaker 2: Will Trump force the Supreme Court to face its greatest fear,
13:24
Speaker 2: What to do when a president says no? Bloomberg Supreme
13:29
Speaker 2: Court reporter Greg Storr has written an essay on this question,
13:32
Speaker 2: and he joins me, Now, you wrote this article, and
13:36
Speaker 2: it's very scholarly, Greg, and it reminds me of being
13:39
Speaker 2: in law school in a good way. And you start
13:42
Speaker 2: with the history of the landmark case known to every lawyer,
13:46
Speaker 2: Marbury versus Madison, which established the principle of judicial review.
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Speaker 5: Yeah, this is probably the most important case in the
13:54
Speaker 5: history of the country, written by Chief Justice John Marshall.
13:58
Speaker 5: As you saidablished that the Court has the power to
14:02
Speaker 5: strike down acts of Congress. But what's notable is how
14:06
Speaker 5: Marshall got to that conclusion. The case is about when
14:10
Speaker 5: John Adams left the presidency after losing reelection on his
14:15
Speaker 5: way out the door. In eighteen oh one, he appointed
14:19
Speaker 5: a bunch of judges known as Midnight Judges, and kind
14:22
Speaker 5: of in the frenzy of doing that, with one of
14:24
Speaker 5: them a guy by the name of William Marbury. The
14:28
Speaker 5: final step of paperwork didn't happen. The commission didn't get
14:31
Speaker 5: delivered to Marbury before Adams left office. Then Jefferson comes
14:36
Speaker 5: into office and his Secretary of State James Madison, refuses
14:40
Speaker 5: to deliver the paperwork, even though that's a pretty routine step.
14:44
Speaker 5: So Marbury goes to the Supreme Court and says, hey,
14:48
Speaker 5: order Madison to turn over that commission. He's violating the
14:51
Speaker 5: law by not doing that. And so John Marshall has
14:54
Speaker 5: this dilemma here. Supreme courts knew hasn't really established itself.
14:59
Speaker 5: The question is is the Supreme Court going to order
15:01
Speaker 5: Madison and the Jefferson administration to turn over that commission
15:05
Speaker 5: to Marbury? And the continuous solution that he came up
15:08
Speaker 5: with was, Hey, we don't want to risk the possibility
15:12
Speaker 5: that Jefferson and Madison won't comply, So instead we're going
15:15
Speaker 5: to say, yes, Marbury is entitled to the commission. But
15:18
Speaker 5: as it turns out, we don't actually have jurisdiction to
15:21
Speaker 5: decide this case, because this law that Congress passed giving
15:24
Speaker 5: US jurisdiction is actually unconstitutional. So Chief Justice John Marshall
15:30
Speaker 5: ducked the confrontation with Jefferson while establishing that the Court
15:34
Speaker 5: is this very powerful institution.
15:36
Speaker 2: Marshall's fear that a president wouldn't comply with the Court's
15:40
Speaker 2: order came to fruition during Andrew Jackson's administration. Jackson, who
15:46
Speaker 2: by the way, is one of Trump's heroes, refused to
15:49
Speaker 2: enforce a Supreme Court ruling basically that the Cherokee Indian
15:53
Speaker 2: tribe had a right to live on their land in Georgia,
15:56
Speaker 2: leading to the infamous Trail of Tears. But actually it
16:00
Speaker 2: was President Abraham Lincoln who went even further than Jackson
16:05
Speaker 2: in a clash with the Supreme Court's Chief Justice Roger
16:08
Speaker 2: brook Tawny during the Civil War.
16:11
Speaker 5: Yeah, this is probably the closest the president has ever
16:14
Speaker 5: come to directly define the Supreme Court. The war had
16:17
Speaker 5: started precipitated in part by the Supreme Court in Chief
16:20
Speaker 5: Justice Roger Broke Tawny issuing the dread Scott decision that
16:24
Speaker 5: declared that freed slaves could never be citizens in the
16:28
Speaker 5: United States, and the war starts. Abraham Lincoln's very concerned
16:32
Speaker 5: about sabotage, and he issues an order that authorized one
16:37
Speaker 5: of his generals to suspend the rid of habeas corpus
16:41
Speaker 5: near railroad lines in Maryland. And hapeus corpus is this
16:44
Speaker 5: notion that if the government holds you, rescue you can
16:48
Speaker 5: go to a judge and make the governments defend why
16:50
Speaker 5: it's holding you. And Lincoln said, we're going to suspend
16:53
Speaker 5: that because of the crisis we face here. Well, the
16:56
Speaker 5: guy named John Merriman was arrested, turned to rob brook
17:00
Speaker 5: Tawney got a rid of habeas corpose anyway, which demanded
17:04
Speaker 5: that the military justify why Merriman had been picked up,
17:07
Speaker 5: and Lincoln in his generals essentially ignored the order. Merriman
17:11
Speaker 5: did not go before a judge, and Roger brook Tawney
17:14
Speaker 5: eventually said, look, I've done all I can do here,
17:17
Speaker 5: But he said, my power has been resisted by a
17:19
Speaker 5: force too strong for me to overcome. And Lincoln later
17:22
Speaker 5: justified what he did, saying, are all the laws but
17:25
Speaker 5: one to go on executed, and the government itself to
17:28
Speaker 5: go to pieces lest that one be violated. In other words,
17:31
Speaker 5: he said he was justified by the exigencies of the circumstance,
17:34
Speaker 5: namely the Civil War.
17:36
Speaker 2: Since Lincoln, presidents have complied with Supreme Court orders, and
17:41
Speaker 2: Richard Nixon turning over the secret White House recordings in
17:46
Speaker 2: nineteen seventy two is the most recent incident and probably
17:50
Speaker 2: one that people remember most but tell us about some
17:52
Speaker 2: of the other presidents who chose not to defy a
17:55
Speaker 2: court order.
17:56
Speaker 5: So there's a litany of examples. A few of the
17:59
Speaker 5: biggest ones because of how high profile the cases were.
18:02
Speaker 5: Nineteen fifty two, President Harry Truman seizes the nation's steel
18:06
Speaker 5: mills to make sure there's not a work stoppage during
18:09
Speaker 5: the Korean War. Supreme Court rules against them, says he
18:13
Speaker 5: did that illegally. Truman immediately complies. In nineteen fifty four
18:18
Speaker 5: the Brown Versus Board of Education decision and some subsequent rulings,
18:21
Speaker 5: President Dwight Eisenhower initially reluctant to get involved, but actually
18:25
Speaker 5: helped the Supreme Court enforce those rulings and the lower
18:28
Speaker 5: courts enforce those rulings when he sent federal troops to
18:32
Speaker 5: escort black students into a high school in Arkansas, and
18:35
Speaker 5: then nineteen seventy four Supreme Court orders Richard Nixon to
18:39
Speaker 5: turnover secret White House recordings. Nixon complies, days later he
18:43
Speaker 5: has to resign the presidency.
18:45
Speaker 2: So you asked this question in your piece, and so
18:48
Speaker 2: now I'm going to ask you for the answer, why
18:50
Speaker 2: are presidents so quick to accept Supreme Court rulings as binding?
18:55
Speaker 5: Well, there are both specific answers to each instance and
18:58
Speaker 5: kind of a general answer. And the specific answer is
19:00
Speaker 5: often than the president is taking a very unpopular position.
19:03
Speaker 5: Harry Truman's position, for example, very unpopular at the time,
19:07
Speaker 5: and his standing was especially low. But there's also the
19:10
Speaker 5: more general dancers, which is that the Court, over the
19:13
Speaker 5: years of the decades and centuries, has earned some trust
19:16
Speaker 5: with the public. It has institutional standing that, at least
19:20
Speaker 5: until recently, was pretty strong and very often stronger than
19:24
Speaker 5: the other branches of government, and that goodwill has essentially created,
19:28
Speaker 5: with some call the habit of accepting the Supreme Court
19:31
Speaker 5: decisions even when folks disagree with them.
19:33
Speaker 2: You said, until recently, because the Court has lost its
19:37
Speaker 2: high standing with the public.
19:39
Speaker 5: It's not quite at a flowest. Now it has recovered somewhat,
19:42
Speaker 5: but it did hit bottom just a couple of years ago,
19:44
Speaker 5: after the Dobbs really have overturned the test two, so
19:47
Speaker 5: right to abortion.
19:48
Speaker 2: President Trump has said that he'll obey court orders, and
19:52
Speaker 2: he did in his first term, but he also has
19:55
Speaker 2: said some things that leave a question mark in the air.
19:59
Speaker 2: For example, he posted a quote that's been attributed to
20:03
Speaker 2: Napoleon Bonaparte, he who saves his country does not violate
20:07
Speaker 2: any law. So is there still a question about whether
20:12
Speaker 2: Trump will follow Supreme Court orders?
20:14
Speaker 5: Absolutely, there's a question. The administration is clearly sending out
20:19
Speaker 5: mixed signals about its intentions.
20:21
Speaker 6: Here.
20:22
Speaker 5: You talked about some of the things President Trump has said.
20:25
Speaker 5: There are also things that some of his top aides
20:27
Speaker 5: have said, like Vice President Jade Vance, who actually quoted
20:31
Speaker 5: that apocryphal Andrew Jackson in the comment about the Chief
20:34
Speaker 5: Justices made is really now let him enforce it? Elon
20:37
Speaker 5: Musk has said things that have strongly suggested he would
20:41
Speaker 5: be willing to defy the Supreme Court. So that concern
20:46
Speaker 5: is in the air in a way it has not
20:49
Speaker 5: been in my lifetime, even in those moments of huge
20:52
Speaker 5: national crisis, major Supreme Court decisions like the next one
20:55
Speaker 5: TAPS case, there wasn't this level of concern that a
20:59
Speaker 5: president might FuMB his nose at the Supreme Court.
21:02
Speaker 2: And he has issued a lot of executive orders that
21:06
Speaker 2: either ignore the law or defy the law. For example,
21:10
Speaker 2: the funding freeze and the order to end birthright citizenship,
21:14
Speaker 2: which four out of four judges have found unconstitutional. So
21:19
Speaker 2: is it almost a deliberate defying of the legal norms.
21:24
Speaker 5: So let me separate two things. With birthright citizenship, what
21:29
Speaker 5: we have seen this administration do is start off by
21:33
Speaker 5: just ignoring what has been the longstanding understanding of the
21:37
Speaker 5: fourteenth Amendment and acting as though birthright citizenship is not guaranteed.
21:42
Speaker 5: But once court orders have come through, they are complying
21:46
Speaker 5: with them. But in other contexts the administration has, for example,
21:51
Speaker 5: with an order to unfreeze federal funding, the administration has
21:57
Speaker 5: been a little less quick to come apply and in
22:01
Speaker 5: one case is prompted a judge to issue a follow
22:04
Speaker 5: up order saying, hey, I really expect you to unfreeze
22:07
Speaker 5: that funding. So this is putting out in a lot
22:09
Speaker 5: of different cases. And we haven't yet got to that
22:13
Speaker 5: point where I would say we're at a constitutional crisis,
22:17
Speaker 5: but there are at least hints that we could have
22:19
Speaker 5: a big issue down the road.
22:21
Speaker 2: Greg, I have to say I find some irony here
22:24
Speaker 2: in the fact that it seems like the Supreme Court
22:27
Speaker 2: has made its own bed with that ruling in Trump
22:31
Speaker 2: the United States last term, granting immunity to the president
22:36
Speaker 2: for official acts. I mean that ruling was stunning, and
22:41
Speaker 2: administration lawyers are now quoting that opinion to demonstrate their
22:46
Speaker 2: points about presidential authority.
22:49
Speaker 5: Yes, there's a case that the Trump administration's first case
22:52
Speaker 5: at the Supreme Court in this new term, asking the
22:56
Speaker 5: court to let him immediately fire the head of a
22:58
Speaker 5: whistleblower agency. That brief was chock full of citations to
23:04
Speaker 5: Trump versus the United States. The case you talk about,
23:06
Speaker 5: the immunity case, basically saying that the president has broad authority,
23:11
Speaker 5: complete authority over the executive branch of government. And what
23:15
Speaker 5: they are arguing is the Supreme Court has said that
23:19
Speaker 5: the president is the head of the executive branch and
23:23
Speaker 5: can fire people when he deems it to be in
23:26
Speaker 5: the country's best interest. And that ruling has put a
23:31
Speaker 5: fair amount of wind behind Trump's sales and making that argument.
23:35
Speaker 2: That argument didn't get the administration too far because On
23:38
Speaker 2: Friday night, the Court declined to let Trump out the
23:43
Speaker 2: head of the federal whistleblower agency, but with a bare
23:46
Speaker 2: majority of five justices, the Court neither granted nor rejected
23:51
Speaker 2: the administration's request to immediately remove him. Instead, the Court
23:56
Speaker 2: held the request in abeyance, noting that the order expos
24:00
Speaker 2: in just a few days this coming Wednesday. Two of
24:03
Speaker 2: the liberal justices Sonya Sotomayor and Kaitanji Brown Jackson said
24:08
Speaker 2: they would have rejected Trump's request, while conservative justices Samuel
24:14
Speaker 2: Alito and Neil Gorsuch said they would have granted his request.
24:18
Speaker 2: The lower court judge has scheduled a hearing for Wednesday
24:21
Speaker 2: on whether to extend her order keeping him in the post,
24:25
Speaker 2: so the justices could return to the case depending on
24:29
Speaker 2: what she decides. So sort of a non ending ending.
24:33
Speaker 2: Thanks so much for joining me on the show, Greg,
24:35
Speaker 2: That's Bloomberg New Supreme Court reporter. Greg's store Coming up next,
24:39
Speaker 2: Johnson and Johnson tries for the third time to use
24:43
Speaker 2: bankruptcy to end thousands of lawsuits. I'm June Gross. When
24:48
Speaker 2: you're listening to Bloomberg, Johnson and Johnson one of the
24:52
Speaker 2: most profitable companies in the world has put a very
24:56
Speaker 2: small unit into bankruptcy to drive a ten billion dollar
25:00
Speaker 2: settlement of thousands of lawsuits alleging that its baby powder
25:04
Speaker 2: caused ovarian cancer. Jay and Jay wants to use special
25:07
Speaker 2: rules available only in bankruptcy court that pause all lawsuits.
25:13
Speaker 2: The company has tried this twice before, but has been
25:16
Speaker 2: stopped by courts in New Jersey. In Pennsylvania, the Third
25:19
Speaker 2: Circuit Court of Appeals ruled that bankruptcy wasn't warranted because
25:24
Speaker 2: the bankrupt unit ultimately had the backing of its deep
25:28
Speaker 2: pocketed parent. Now, in its third try, Jay and Jay
25:31
Speaker 2: is betting on a different result from a Houston, Texas court.
25:35
Speaker 2: Joining me as Stephen Church Bloomberg bankruptcy reporter. This case
25:40
Speaker 2: has a long and complicated history. Tell us how we
25:44
Speaker 2: got to this point with a trial in Houston, Texas.
25:47
Speaker 6: For the last ten years, Johnson and Johnson has been
25:51
Speaker 6: fighting allegations that painted baby powder, something that has asbestos
25:57
Speaker 6: in it, allegedly pauses ovarian cana and other gynecological cancers
26:02
Speaker 6: in women who use this powder just about every day.
26:06
Speaker 6: Those lawsuits have slowly been building. They have been more
26:09
Speaker 6: and more than filed. Now there are about sixty thousand
26:13
Speaker 6: lawsuits that have been filed and another twenty five thousand
26:17
Speaker 6: or so claims that have not yet been filed in
26:19
Speaker 6: court but are still being prepared by lawyers. The company
26:23
Speaker 6: has fought them throughout the entire time and has refused
26:28
Speaker 6: to settle, and has claimed repeatedly that there is no
26:31
Speaker 6: scientific link between bata by powder and other CALC based
26:36
Speaker 6: products and cancer. The problem is, they've had at least
26:39
Speaker 6: one major verdict that went all the way to the
26:41
Speaker 6: Supreme Court, forcing Johnson and Johnson to pay out more
26:45
Speaker 6: than two billion dollars to about twenty women. That got
26:49
Speaker 6: the company's attention, and they tried to find a new
26:52
Speaker 6: way to resolve these all at once. That new way,
26:55
Speaker 6: just a few years ago, was to go into bankruptcy court.
26:58
Speaker 6: They took a small unit and made this unit responsible
27:03
Speaker 6: for paying off all the CAUC claims. Then they gave
27:06
Speaker 6: this unit a contract that promised that Johnson and Johnson
27:10
Speaker 6: would cover all the expenses. They've tried this three times.
27:14
Speaker 6: The first two bankruptcy cases of a unit of Johnson
27:18
Speaker 6: and Johnson where they tried to create this settlement failed.
27:21
Speaker 6: They're now on their third attempt and this third attempt
27:24
Speaker 6: has gotten further than the other two. They're after an
27:27
Speaker 6: actual trial where a judge will decide whether the plan
27:31
Speaker 6: to pay nine billion dollars out is legitimate or has
27:36
Speaker 6: fatal flaws that cannot be approved.
27:39
Speaker 2: There are many attorneys handling these cases and they're fighting.
27:43
Speaker 2: Some want the settlement, some don't want the settlement correct.
27:47
Speaker 6: There are about two dozen or so prominent attorneys who
27:51
Speaker 6: represent tens of thousands of women who have some sort
27:55
Speaker 6: of health issues that they claim came from the baby
27:58
Speaker 6: powder or related products. Most of those attorneys have settled
28:02
Speaker 6: with Johnson and Johnson in this third effort, and they
28:06
Speaker 6: have agreed that a trust fund with nine billion dollars
28:10
Speaker 6: in it will be set up to handle almost all
28:13
Speaker 6: of the talk related claims. There may be a few
28:15
Speaker 6: hundreds that are exempt, but almost all of these claims
28:19
Speaker 6: will go to a special trust where they have rules
28:21
Speaker 6: set up to decide who gets paid and how much
28:24
Speaker 6: they get paid. Holdouts, A handful of attorneys who represent
28:28
Speaker 6: several thousand women object. They say there isn't enough money
28:31
Speaker 6: and that the plan itself is flawed and legally can't
28:35
Speaker 6: be justified.
28:36
Speaker 2: What made it different this time around? Was that Johnson
28:40
Speaker 2: and Johnson got pre approval from a majority of the claimants.
28:44
Speaker 6: Yes, Johnson and Johnson made a couple of changes in
28:47
Speaker 6: between their second failure and this third effort. After a
28:51
Speaker 6: Philadelphia federal appeals court rejected their second attempt to win
28:55
Speaker 6: approval of this trust fund, Johnson and Johnson negotiated heavily
28:59
Speaker 6: with many of the plaintiffs firms and got a new deal.
29:03
Speaker 6: They added more than a billion dollars on top of
29:07
Speaker 6: the original offer, bringing it to nine billion. And they
29:10
Speaker 6: also did something that happens in many bankruptcies, big giant bankruptcies,
29:14
Speaker 6: where they took a vote of all of the claimants
29:17
Speaker 6: in order to prepackage the bankruptcy case. They wrote the plan,
29:22
Speaker 6: they developed the trust and they asked more than eighty
29:26
Speaker 6: thousand women to vote in favor of it. Many of
29:28
Speaker 6: the women did. Most of the women. Johnson and Johnson
29:31
Speaker 6: claims that more than seventy five percent voted in favor
29:35
Speaker 6: of the plan. The holdouts claim that those numbers are
29:39
Speaker 6: not accurate because of some flaws in the way the
29:43
Speaker 6: voting took place. They claimed Johnson and Johnson bought votes.
29:47
Speaker 6: They claimed Johnson and Johnson counted votes in favor of
29:50
Speaker 6: the plan that should have been counted against the plan.
29:52
Speaker 6: And so that's a very technical aspect of this trial.
29:56
Speaker 6: Was the voting fair was it in compliance with these
30:00
Speaker 6: detailed rules that happen in bankruptcy corder. Both sides have
30:04
Speaker 6: spent a lot of money fighting on this case.
30:06
Speaker 2: Is that the main question that the judge is going
30:09
Speaker 2: to decide or is he going to decide the fairness.
30:12
Speaker 6: Of this There are two big focuses. The one is
30:15
Speaker 6: the voting. Was the voting does correctly? Then once you
30:18
Speaker 6: get past the voting there's another set of objections that
30:21
Speaker 6: might be even more serious. Those complaints are mostly coming
30:25
Speaker 6: from the US Trustee, that's the arm of the US
30:29
Speaker 6: Justice Department that is a watchdog in corporate bankruptcies. Some
30:32
Speaker 6: of the holdout payments, some of the holdout women who
30:35
Speaker 6: are assuming also back this type of argument against the plan,
30:38
Speaker 6: And that is Johnson and Johnson is one of the
30:41
Speaker 6: world's most profitable companies. How is it possible that they
30:45
Speaker 6: can use these special bankruptcy rules that are designed for
30:49
Speaker 6: companies in financial distress, companies with serious financial problems, in
30:54
Speaker 6: order to cancel a bunch of debt and create this
30:58
Speaker 6: new trust nau Chang. Jjohnson argues, well, there's an exception
31:02
Speaker 6: under a law that Congress passed many years ago cases
31:05
Speaker 6: that are about asbestos. If the company uses asbestos, which
31:09
Speaker 6: is a known toxic substance in one of its products,
31:13
Speaker 6: and that company files for bankruptcy, then related parties related
31:18
Speaker 6: companies can also benefit from that bankruptcy case. So in
31:23
Speaker 6: this case, the two big issues are was the voting
31:26
Speaker 6: done properly? And then step back, kid Johnson and Johnson
31:29
Speaker 6: even be allowed to take advantage of these bankruptcy rules
31:32
Speaker 6: if the company itself doesn't go bankrupt and they take
31:35
Speaker 6: advantage of this tiny little unit, put it in bankruptcy,
31:38
Speaker 6: and then that giant corporation gets the benefit.
31:41
Speaker 2: Is the bankruptcy trustee afraid that this would set a
31:45
Speaker 2: precedent If Johnson and Johnson's allowed to.
31:48
Speaker 6: Do this, There is that argument that this will encourage
31:51
Speaker 6: other very profitable companies to use sort of a loophole
31:56
Speaker 6: to avoid bankruptcy themselves. You can dump debt and eliminate
32:01
Speaker 6: these big lawsuits without actually going bankrupt yourself.
32:05
Speaker 2: Was one of the first witnesses, one of the plaintiff's
32:08
Speaker 2: lawyers talking about you know the position that some of
32:11
Speaker 2: his clients are in.
32:12
Speaker 6: Yes. What's unusual about this is that there's only been
32:16
Speaker 6: one major victory against Johnson and Johnson that made them
32:21
Speaker 6: all the way through the appeal process and that forced
32:24
Speaker 6: Johnson Johnson to pay money to victims. What has happened
32:27
Speaker 6: until now is many of these cases have been stuck
32:30
Speaker 6: on appeal. So some women have won hundreds of millions
32:34
Speaker 6: of dollars, but those cases were overturned on appeal, and
32:37
Speaker 6: now there are still fights going on in state courts
32:41
Speaker 6: and in federal courts over whether some of these cases
32:45
Speaker 6: should eventually be upheld or rejected. That has stalled a
32:49
Speaker 6: lot of the plaintiffs lawyers from being able to move forward.
32:53
Speaker 6: So the net result is that none of these women
32:57
Speaker 6: have actually collected money from Johnson and Johnson other than
33:00
Speaker 6: that one unusual case of been all the way to
33:02
Speaker 6: the Supreme Court. One lawyer testified earlier this week that
33:06
Speaker 6: he has at least twenty thousand women that he represents
33:10
Speaker 6: who haven't collected to Dine yet, and his argument in
33:13
Speaker 6: favor of the case is this is the fastest way
33:17
Speaker 6: to get money to them. Put the money in the
33:19
Speaker 6: trust and then let the women go to the trust
33:21
Speaker 6: explain their situation, fill out a whole lot of incredibly
33:25
Speaker 6: complicated forms explaining their health condition, how they got cancer,
33:29
Speaker 6: what cancer stage they are in, what types of ailments
33:32
Speaker 6: they have, and then a trust board will then decide,
33:36
Speaker 6: based on complicated rules, how much may get paid that
33:41
Speaker 6: this attorney and many of his allies argue is the
33:44
Speaker 6: fastest way to get money into the pockets of women
33:48
Speaker 6: who have cancer.
33:49
Speaker 2: Is it expected that this decision here would be taken
33:53
Speaker 2: up on appeal and then eventually end up at the
33:56
Speaker 2: Supreme Court.
33:57
Speaker 6: Most of the lawyers in the courtroom in this strial
34:00
Speaker 6: have accepted the idea that there will be an appeal
34:02
Speaker 6: no matter what. Whether that appeal goes all the way
34:05
Speaker 6: to the Supreme Court is an open question. But the
34:08
Speaker 6: Federal Appeals Court in Texas has a much different standard
34:13
Speaker 6: when it comes to certain kinds of cases and how
34:18
Speaker 6: you decide whether a case fits the law than the
34:23
Speaker 6: Philadelphia Appeals Court. So the assumption is that when this
34:27
Speaker 6: gets appealed, no matter who, when somebody is going to
34:30
Speaker 6: go to the appeals court in Texas, the Federal Appeals
34:33
Speaker 6: Court in Texas, and that's where a lot of the
34:36
Speaker 6: answers will come from. But even that could be appealed
34:40
Speaker 6: to the US Supreme Court, and if that happens, we
34:43
Speaker 6: could see a precedent that other companies will will try
34:47
Speaker 6: to take advantage of, and that.
34:49
Speaker 2: Appeals court will be the Fifth Circuit, which is the
34:53
Speaker 2: most conservative circuit in the country and has often come
34:57
Speaker 2: up with, shall we say, novel theories of the law.
35:02
Speaker 2: Thanks so much, Steven. We'll check back with you at
35:04
Speaker 2: the end of the trial. That Stephen Church Bloomberg Bankruptcy reporter.
35:09
Speaker 2: In other legal news, the saga over the Justice Department's
35:12
Speaker 2: attempt to dismiss the corruption case against New York City
35:16
Speaker 2: Mayor Eric Adams continues.
35:19
Speaker 7: After careful consideration, I have determined that I will not
35:22
Speaker 7: commence removal proceedings at this time. My strong belief is
35:28
Speaker 7: that the will of the voters and the supremacy and
35:31
Speaker 7: sanctity of democratic elections preclude me from any other action.
35:37
Speaker 2: New York Governor Kathy Hokeel said she won't remove Adams
35:40
Speaker 2: from his office at this time, but she plans to
35:43
Speaker 2: increase oversight of the mayor and City Hall, something she'll
35:47
Speaker 2: need City Council and legislative approval for the Justice Department's
35:51
Speaker 2: order to drop the corruption charges against Adams led to
35:55
Speaker 2: the resignation of eight federal prosecutors, including the interim Manhattan
36:00
Speaker 2: US Attorney Danielle Sassoon, who raised concerns about a possible
36:04
Speaker 2: quid pro quo Adam's cooperation in the Trump administration's immigration
36:09
Speaker 2: crackdown in exchange for dropping the case. And after hearing
36:13
Speaker 2: last week on the government's motion to dismiss the case,
36:17
Speaker 2: Federal Judge Dale Hoe basically said, not so fast. He's
36:21
Speaker 2: appointing a prominent conservative lawyer, former US Solicitor General Paul Clement,
36:26
Speaker 2: to examine the Trump Justice Department's moved to drop the case,
36:30
Speaker 2: saying there has been no testing of the government's position.
36:34
Speaker 2: The judge's choice of the conservative Clement is an artful one.
36:38
Speaker 2: The former Solicitor General is perhaps most famous for defending
36:42
Speaker 2: a law against same sex marriage before the U. S.
36:45
Speaker 2: Supreme Court, while Judge Hoe is an appointee of former
36:49
Speaker 2: President Joe Biden and was formerly the director of the
36:52
Speaker 2: American Civil Liberties Union's Voting Rights Project. The judge asked
36:57
Speaker 2: for briefs to be submitted by March seventh, and that
37:00
Speaker 2: he'll hold a hearing on March fourteenth, if necessary. And
37:03
Speaker 2: that's it for this edition of The Bloomberg Law Show.
37:06
Speaker 2: Remember you can always get the latest legal news on
37:08
Speaker 2: our Bloomberg Law podcasts. You can find them on Apple Podcasts, Spotify,
37:13
Speaker 2: and at www dot bloomberg dot com slash podcast Slash Law,
37:18
Speaker 2: And remember to tune into The Bloomberg Law Show every
37:21
Speaker 2: weeknight at ten pm Wall Street Time. I'm June Grosso
37:25
Speaker 2: and you're listening to Bloomberg