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Huawei Rico Trial, Grand Conspiracy Investigation & Shadow Docket · Bloomberg Law

0:02
Speaker 1: This is Bloomberg Law with June Grosso from Bloomberg Radio.
0:08
Speaker 2: During his first term, President Trump raised national security concerns
0:14
Speaker 2: about the Chinese company Huawei, the world's biggest supplier of
0:18
Speaker 2: telecommunications network equipment.
0:21
Speaker 1: Huawei is something that's very dangerous. You look at what
0:24
Speaker 1: they've done from a security standpoint, from a military standpoint,
0:27
Speaker 1: it's very dangerous.
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Speaker 2: While the U.S. government lobbied Western allies to avoid using
0:33
Speaker 2: the Chinese company's products in their high-speed wireless networks, U.S.
0:38
Speaker 2: prosecutors charged Huawei with stealing technology, plotting to steal trade secrets,
0:44
Speaker 2: defrauding banks, and violating trade sanctions. Eight years after those
0:50
Speaker 2: charges were brought, the criminal racketeering trial against Huawei is
0:55
Speaker 2: finally kicking off in Brooklyn, New York. in the shadow
0:59
Speaker 2: of a September 24th summit in D.C. between Trump and
1:03
Speaker 2: China's President Xi Jinping. Joining me is business law professor
1:07
Speaker 2: Eric Talley of Columbia Law School. Eric, the government is
1:11
Speaker 2: really bringing a sprawling case against Huawei. Tell us about
1:15
Speaker 2: the charges.
1:17
Speaker 1: The government's trial against Huawei basically has three clusters of allegations.
1:21
Speaker 1: One is sort of bankrupt. and wire fraud actions that
1:26
Speaker 1: are related to business with sanctioned countries like Iran and
1:31
Speaker 1: North Korea. That's one cluster. A second has to do
1:33
Speaker 1: with trade secret theft, kind of industrial espionage. And the
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Speaker 1: third is kind of a throw-in. It's a racketeering charge
1:40
Speaker 1: that basically is a conspiracy theory that ties all three
1:44
Speaker 1: of these claims together.
1:46
Speaker 2: The RICO charges are traditionally used to target organized crime conspiracies.
1:52
Speaker 2: How does the government prove a RICO case here?
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Speaker 1: The thing that holds the same as the other two
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Speaker 1: is that RICO basically requires what's sometimes known as a
2:03
Speaker 1: predicate offense, that there's got to be some underlying wrongdoing
2:06
Speaker 1: that is then sort of part of an overall strategy
2:10
Speaker 1: that is about a continuous organized pattern of criminal activity.
2:15
Speaker 1: So the triggers for RICO are actually still going to
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Speaker 1: be the same as the first two allegations. trade secret
2:21
Speaker 1: theft and bank and wire fraud. But in addition, the
2:25
Speaker 1: government's going to actually have to bring evidence that these
2:28
Speaker 1: weren't just sort of one-off events, but that they were
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Speaker 1: part of a continuous, organized, orchestrated pattern of Huawei and
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Speaker 1: not just, you know, spot, cherry-picked examples.
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Speaker 2: During the opening statements, the federal prosecutor told jurors that
2:45
Speaker 2: crime was a business strategy for Huawei. Theft lies corruption
2:51
Speaker 2: for 20 years. But the company's attorney countered with, it's
2:55
Speaker 2: about competition, not conspiracy. Innovation, not theft. Ordinary business dealings,
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Speaker 2: not criminal conduct. Which argument do you think the jury
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Speaker 2: will find more convincing?
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Speaker 1: Well, one of the reasons this is going to trial
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Speaker 1: is that both of these types of arguments are actually
3:12
Speaker 1: reasonably good. Huawei is 100% correct that this is an
3:16
Speaker 1: incredibly competitive industry in which different manufacturers are essentially trying
3:22
Speaker 1: to one-up one another. And if you can sort of
3:25
Speaker 1: outflank your competition, even by a little, you can take
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Speaker 1: an awful lot of market share. That's in many ways very,
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Speaker 1: very healthy forms of competition. But because employees go back
3:35
Speaker 1: and forth, because there are different business dealings, because there
3:38
Speaker 1: are trade fairs, it often can give rise to claims
3:41
Speaker 1: that you got your edge wrong. through an impermissible sort
3:46
Speaker 1: of approach. But Huawei's overall claim is that this is
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Speaker 1: a really, really competitive industry, and it's unfair to look
3:53
Speaker 1: at specific anecdotes as a way to lay out some
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Speaker 1: kind of a systematic pattern. They're just anecdotes. On the
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Speaker 1: other hand, the government's got some decent anecdotes. You know,
4:02
Speaker 1: particularly on the trade secret dimension, they have got some
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Speaker 1: pretty vivid examples of unauthorized stealing of source code for
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Speaker 1: routers and user manuals and antenna technology. They even have
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Speaker 1: some evidence of one Huawei employee physically breaking off a
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Speaker 1: piece of T-Mobile's phone testing robot to take back home
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Speaker 1: and to study it. And so these are going to
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Speaker 1: be pretty vivid, particularly for a jury, but they are
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Speaker 1: also consistent with this being a very, very competitive industry.
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Speaker 1: I think there's really going to be this sort of
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Speaker 1: question about whether these specific events that the government has
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Speaker 1: seemingly hard evidence about are are going to be enough
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Speaker 1: to convince the jury that this is really, you know,
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Speaker 1: not only significant events that themselves constitute episodes of criminal activity,
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Speaker 1: criminal trade secrets, but they're also part of this overarching,
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Speaker 1: longstanding conspiracy.
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Speaker 2: The Trump administration has moved away from criminally charging corporations.
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Speaker 2: Now it's pursuing this really ambitious prosecution against a Chinese company.
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Speaker 2: What are the political overtones here?
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Speaker 1: Well, it's an interesting political setting because this case started
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Speaker 1: under the first Trump administration. It was then inherited by
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Speaker 1: President Biden, and now it's being tried in a broader
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Speaker 1: sort of U.S.-China technology race and competition under the second
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Speaker 1: Trump administration. It's relevant to note that even the Biden
5:31
Speaker 1: administration pushed the ball forward on this case. Huawei employee
5:35
Speaker 1: who was living in Vancouver was, in fact, subject to
5:39
Speaker 1: extradition orders and entered into a deferred prosecution agreement. Some
5:43
Speaker 1: of the things that she essentially put into that settlement
5:47
Speaker 1: have now evidently been accepted publicly. as statements of fact
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Speaker 1: by the trial court judge that are going to be
5:54
Speaker 1: difficult for Huawei to sort of push back against because
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Speaker 1: it's from one of their own former employees. But one
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Speaker 1: of the bigger stages here is not just Huawei itself
6:03
Speaker 1: or the Trump administration's attitude towards businesses and whether it
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Speaker 1: takes a more hands-off approach or hands-on approach. There's an
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Speaker 1: overarching U.S. versus China theme to this as well that
6:15
Speaker 1: has played a big role in the first Trump administration.
6:18
Speaker 1: continues to play a role in this Trump administration. And,
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Speaker 1: you know, in many ways, some of the allegations had
6:24
Speaker 1: already been substantially served up on a platter before the
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Speaker 1: second Trump administration actually was in power.
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Speaker 2: How successful have federal prosecutors been in prosecutions of Chinese companies?
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Speaker 1: There have been some successes. This is a large company, however.
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Speaker 1: This is not sort of a fly-by-night company that is
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Speaker 1: you know, essentially pilfering trade secrets here or there. And so,
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Speaker 1: you know, in terms of the target of the size
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Speaker 1: of Huawei, this is a significant move to make. And
6:55
Speaker 1: so one would expect also that Huawei would, in fact,
6:59
Speaker 1: they are putting up a pretty steep defense because, you know,
7:03
Speaker 1: the stakes are enormous. A couple of things that are
7:06
Speaker 1: also kind of worth noting, however, is that this is
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Speaker 1: a criminal case against a company. So success by the
7:13
Speaker 1: government is doesn't necessarily mean that someone's going to go
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Speaker 1: to prison. There aren't individuals who are basically co-defendants along
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Speaker 1: Huawei here. And Huawei is already heavily restricted in terms
7:24
Speaker 1: of its presence in the U.S.
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Speaker 3: Market.
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Speaker 1: And typically, in addition to whatever fines that might be
7:30
Speaker 1: levied against a defendant company in this position, usually the
7:34
Speaker 1: most potent form of remedy would be, you know, you
7:38
Speaker 1: basically have to leave the US market. But Huawei's presence
7:41
Speaker 1: in the US market is already because of, you know,
7:43
Speaker 1: US trade policy, relatively small. But the US still could
7:47
Speaker 1: take a verdict in its favor in this case to
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Speaker 1: try to persuade allies, suppliers and others to to keep
7:54
Speaker 1: a distance from Huawei because it has been criminally convicted
7:58
Speaker 1: if the government ends up getting some sort of conviction
8:01
Speaker 1: in this case.
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Speaker 2: Would it be better as far as presenting a case
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Speaker 2: that appeals to a jury if the prosecutors charged some
8:09
Speaker 2: people along with this nameless, faceless, giant tech company?
8:15
Speaker 1: In some cases, it would. I think sometimes when you're
8:18
Speaker 1: dealing with these sort of corporate alleged misconduct cases, the
8:22
Speaker 1: jury might actually push back against that sort of saying, look,
8:26
Speaker 1: these are large, multi-person organizations. You're trying to throw one
8:30
Speaker 1: individual under the bus when really it was the organization
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Speaker 1: that was at fault. And a jury, particularly if an
8:36
Speaker 1: individual defendant is looking at potential for prison time, that
8:40
Speaker 1: could actually induce them to be less anxious to vote
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Speaker 1: to convict. On the other hand, you know, I think
8:46
Speaker 1: there is a sense in which the measure of success
8:49
Speaker 1: for the government is, is going to be a little
8:51
Speaker 1: bit less concrete than it would be in the context
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Speaker 1: of an individual criminal defendant who's a natural person. So
8:58
Speaker 1: the government, you know, clearly has sort of decided for
9:01
Speaker 1: jurisdictional and possibly strategic reasons, they want to sort of
9:04
Speaker 1: keep this about Huawei. Hopefully, from their perspective, seize on
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Speaker 1: a sentiment amongst the jurors that Huawei is an example
9:13
Speaker 1: of an unfair form of competition that is essentially skirting
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Speaker 1: the rules both of intellectual property and international sanctions and
9:21
Speaker 1: visiting a penalty on the company itself is the best
9:25
Speaker 1: way to move. You know, one thing that's going to
9:27
Speaker 1: be pretty interesting from the jury's perspective, and this particularly
9:30
Speaker 1: relates to the RICO charge, is how likely is it
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Speaker 1: that the jury is going to be able to take
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Speaker 1: this set of examples, some of which are quite vivid,
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Speaker 1: like the breaking off of the piece of the robot,
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Speaker 1: and say, oh, wait, no, that's part of an entire
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Speaker 1: pattern and practice, as opposed to some cherry-picked anecdotes, which,
9:48
Speaker 1: you know, quite frankly, all prosecutors can usually find one
9:51
Speaker 1: or two examples of something that looks a little bit
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Speaker 1: sketchy and then try to weave a story of a
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Speaker 1: longstanding criminal enterprise. And that's going to be one thing
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Speaker 1: to really watch here about whether the government is going
10:02
Speaker 1: to be able to stitch together these anecdotes and basically say,
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Speaker 1: these aren't just anecdotes. These are a pattern. While Huawei
10:09
Speaker 1: is basically going to say, look, you just cherry picked
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Speaker 1: some of the worst possible situations involving individual isolated employees,
10:16
Speaker 1: former employees, contractors of Huawei. But that was never part
10:20
Speaker 1: of our corporate strategy.
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Speaker 2: What's the government looking for if it wins? Huawei is
10:24
Speaker 2: already on a blacklist. And would any financial penalties that
10:28
Speaker 2: could be obtained really hurt this company?
10:31
Speaker 1: I think the financial penalty, though, given the fact that
10:35
Speaker 1: a lot of these assets are offshore, is going to
10:37
Speaker 1: be a harder one to pursue, at least in some circumstances.
10:41
Speaker 1: And as you noted, Huawei is not going to be
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Speaker 1: in a position where suddenly it's going to lose a
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Speaker 1: bunch of customers in the U.S. since it currently doesn't
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Speaker 1: have many customers in the U.S. since it's been blacklisted.
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Speaker 1: So my sense is the real grab that a successful
10:54
Speaker 1: outcome for the Department of Justice would have is in
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Speaker 1: effectively trying to throttle back Huawei's market share outside of
11:03
Speaker 1: the U.S., amongst trading partners who basically are told, look,
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Speaker 1: if you continue to trade with what would then be
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Speaker 1: a criminally convicted enterprise, that's going to have implications for
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Speaker 1: your own dealings. with US markets. The Trump administration has
11:19
Speaker 1: wielded that club many times thus far with tariffs and
11:23
Speaker 1: other contexts. So I could imagine that having a little
11:26
Speaker 1: bit of mileage, but there really is kind of a
11:29
Speaker 1: question given how global this market is and how several
11:32
Speaker 1: of our historical allies seem to be getting a little
11:36
Speaker 1: bit closer to China as the US levies tariffs on them.
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Speaker 1: There really is a question whether that's going to convince them.
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Speaker 2: This trial is expected to go into December, so we'll
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Speaker 2: talk again, Eric. Thanks so much. That's Columbia Law School
11:49
Speaker 2: professor Eric Talley. Coming up next, the Justice Department is
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Speaker 2: ramping up an investigation into Trump's perceived enemies that goes
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Speaker 2: back a decade. I'm June Grosso, and you're listening to Bloomberg.
12:04
Speaker 2: On the campaign trail, President Trump loved to regale audiences
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Speaker 2: with his list of grievances over what he saw as
12:12
Speaker 2: a conspiracy to get him, whether it was the investigation
12:16
Speaker 2: into Russian interference in the 2016 election or the investigation
12:21
Speaker 2: into his mishandling of classified documents.
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Speaker 1: From the beginning, the Democrats spied on my campaign.
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Speaker 2: Remember that?
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Speaker 1: They attacked me. with an onslaught of fraudulent investigations. Russia, Russia, Russia. Ukraine, Ukraine, Ukraine.
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Speaker 1: Impeachment hoax number one. Impeachment hoax number two. The illegal
12:46
Speaker 1: and unconstitutional raid on Mar-a-Lago right here.
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Speaker 2: Well, now that he's president, Trump is turning the tables
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Speaker 2: on those who investigated him, all in service of his
13:00
Speaker 2: theory of a grand conspiracy by Democrats to sabotage him
13:05
Speaker 2: over the course of a decade. And the Justice Department
13:09
Speaker 2: is following in step, wrapping up a criminal investigation into
13:13
Speaker 2: whether former government officials conspired to undermine Trump going back
13:18
Speaker 2: 10 years. The department is adding prosecutors to the investigation,
13:23
Speaker 2: convening a grand jury and sending out subpoenas to people
13:27
Speaker 2: like former CIA director John Brennan. Joining me is Bloomberg
13:32
Speaker 2: legal and national security reporter Chris Strom. Chris, tell us
13:36
Speaker 2: about this Justice Department investigation that's been referred to as
13:41
Speaker 2: the Grand Conspiracy Investigation.
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Speaker 3: Well, the investigation is an extremely broad probe into multiple
13:50
Speaker 3: actions that were taken at the end of the Obama
13:53
Speaker 3: administration and during the Biden administration, ranging from the investigation
13:59
Speaker 3: into Russia's interference in the 2016 election, and whether the
14:04
Speaker 3: Trump campaign had any involvement in that, ranging all the
14:08
Speaker 3: way through to the investigation that was done under the
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Speaker 3: Biden administration into Trump's activities, including his efforts to overturn
14:17
Speaker 3: the 2020 election and his taking of classified documents down
14:22
Speaker 3: to Mar-a-Lago after he left office.
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Speaker 2: I mean, it sounds like, especially the allegations involving Russia...
14:30
Speaker 2: have been investigated over and over again, including by John Durham,
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Speaker 2: who was appointed by Trump, right?
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Speaker 3: One of the things that's so bizarre about what the
14:40
Speaker 3: Justice Department is doing is that they're retreading ground that
14:44
Speaker 3: has already been well plowed by other investigations. There's been
14:47
Speaker 3: multiple investigations into what happened in 2016 with regard to
14:52
Speaker 3: the Trump-Russia investigation. There was an Inspector General investigation yesterday
14:58
Speaker 3: into all of the activity that took place. And then
15:01
Speaker 3: there was a special counsel appointed during the first Trump administration,
15:05
Speaker 3: John Durham, and he took a deep dive look into
15:09
Speaker 3: whether there were any crimes committed during the Trump-Russia investigation.
15:13
Speaker 3: And he was only able to find one low-level FBI
15:17
Speaker 3: lawyer who lied on a document that And that individual
15:22
Speaker 3: pled guilty. No other individuals were ever charged with any
15:27
Speaker 3: crimes based on the previous investigations. And so a lot
15:31
Speaker 3: of people are questioning now what the Justice Department is
15:34
Speaker 3: currently doing by going back 10 years and looking at
15:38
Speaker 3: activity that has already been well investigated without any findings
15:42
Speaker 3: of wrongdoing.
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Speaker 2: And they're seriously pursuing a theory that Democrats... were involved
15:47
Speaker 2: in a conspiracy to sabotage Trump over the years.
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Speaker 3: Part of the theory of the case that prosecutors are
15:54
Speaker 3: pursuing is that there was a conspiracy against Trump ranging
15:58
Speaker 3: over the last 10 years from the Trump-Russia investigation that
16:03
Speaker 3: was done in 2016 to the Mar-a-Lago classified documents investigation
16:08
Speaker 3: that was done in 2023. And prosecutors are trying to
16:11
Speaker 3: stitch together kind of a Frankenstein of a case that
16:15
Speaker 3: says that there is a grand conspiracy against Trump ranging
16:19
Speaker 3: over 10 years.
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Speaker 2: I mean, there were pictures of boxes and boxes of
16:23
Speaker 2: classified documents piled up at Mar-a-Lago, so I'm not sure
16:28
Speaker 2: where the conspiracy would be there. And investigations go awry
16:34
Speaker 2: all the time. What kind of charges could they bring
16:37
Speaker 2: against these former officials for pursuing investigations?
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Speaker 3: What's happening here is that Trump has demanded that the
16:45
Speaker 3: Justice Department investigate and potentially prosecute his perceived political enemies.
16:51
Speaker 3: And some of the major figures that Trump wants to
16:54
Speaker 3: be investigated were people who were involved in in the
16:58
Speaker 3: Trump-Russia investigation of 2016 and putting together an intelligence assessment
17:04
Speaker 3: during that time, as well as government officials who were
17:08
Speaker 3: involved in the investigation into Trump's retention of classified documents.
17:13
Speaker 3: And so the Justice Department, during the second Trump administration,
17:17
Speaker 3: has set out to conduct a sweeping investigation to look
17:22
Speaker 3: for any potential wrongdoing or criminal activity that was done
17:28
Speaker 3: over the last 10 years that they can find any
17:32
Speaker 3: potential crime where they could bring a charge. There's a
17:36
Speaker 3: lot of skepticism that the Justice Department is going to
17:40
Speaker 3: be able to find anything new given that a lot
17:44
Speaker 3: is already known about these investigations. But they've convened a
17:48
Speaker 3: grand jury and they've sent a bunch of prosecutors down
17:52
Speaker 3: to Florida and they're looking under as many rocks as
17:56
Speaker 3: they possibly can and bringing people in before the grand
18:00
Speaker 3: jury to testify with the hopes of finding something that
18:07
Speaker 3: they can pin to somebody who Trump once investigated. And
18:13
Speaker 3: as of now, there's no indication that they found any
18:16
Speaker 3: criminal wrongdoing or have any justification to bring charges against anybody.
18:23
Speaker 3: But the investigation is ongoing. They do have an active
18:27
Speaker 3: grand jury. They are taking testimony. They have been receiving
18:31
Speaker 3: documents and they've put a bunch of people under investigation
18:35
Speaker 3: and they are moving forward with an undefined scope of
18:41
Speaker 3: investigation that doesn't have any clear ending in sight.
18:45
Speaker 2: Trump has a long enemies list. Are they targeting anyone
18:49
Speaker 2: in particular?
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Speaker 3: Individuals that we know who are under investigation include John Brennan,
18:55
Speaker 3: the former CIA director, James Clapper, the former director of
19:00
Speaker 3: national intelligence, and other senior officials who were either in
19:05
Speaker 3: the Obama administration or the Biden administration and worked for
19:09
Speaker 3: either the FBI or intelligence agencies. It's pretty clear that
19:13
Speaker 3: Trump wants certain individuals who are well-known, such as John Brennan,
19:19
Speaker 3: James Clapper, and James Comey, to be under investigation and ideally,
19:25
Speaker 3: from Trump's point of view, face criminal charges. But at
19:29
Speaker 3: this point, there's not been any indication that evidence exists
19:33
Speaker 3: to actually bring charges against any of these individuals. So
19:36
Speaker 3: what might happen is that prosecutors will eventually write up
19:40
Speaker 3: a report and talk about activity that they believe was
19:45
Speaker 3: not justified and was done in the spirit of trying
19:49
Speaker 3: to make Trump look bad. But in the end, they
19:52
Speaker 3: just issue a report without any criminal charges.
19:55
Speaker 2: I mean, sometimes it seems like the point is the
19:58
Speaker 2: investigation itself, the news about the investigation and just bringing
20:04
Speaker 2: charges like the Comey charges over the seashells on the beach.
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Speaker 3: Yeah, part of what the Justice Department seems to be
20:10
Speaker 3: doing at this point is making the prosecution the punishment.
20:15
Speaker 3: That by prosecuting individuals and putting them under investigation, they
20:19
Speaker 3: have to spend a lot of money and they have
20:21
Speaker 3: to spend a lot of time. They have to hire lawyers.
20:24
Speaker 3: They have to go into court. They have to file documentation.
20:29
Speaker 3: And so part of what the Justice Department appears to
20:31
Speaker 3: be doing right now is putting people under investigation just
20:35
Speaker 3: for the sake of putting them under investigation as a punishment.
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Speaker 2: Has the investigation ramped up since Todd Blanche became Attorney General?
20:43
Speaker 3: Yes. By all accounts, the investigation has entered a new phase. Previously,
20:49
Speaker 3: the investigation has been going in fits and starts. When
20:52
Speaker 3: the Trump administration first began, it was being done under
20:56
Speaker 3: former Attorney General Pam Bondi. It is based in the
21:00
Speaker 3: Southern District of Florida. And the Investigators were spending a
21:04
Speaker 3: lot of time cooking up the theories of the case
21:08
Speaker 3: and then started sending out subpoenas for documentation. And then
21:12
Speaker 3: the investigative pace seemed to stall. And of course, Bondi
21:16
Speaker 3: was removed in April and Todd Blanche was confirmed as
21:20
Speaker 3: attorney general in August 2017. And since then, we've seen
21:24
Speaker 3: an uptick in the activity. And the most significant thing
21:28
Speaker 3: is that prosecutors in Florida are now sending out subpoenas
21:32
Speaker 3: for individuals to come in and testify in person before
21:36
Speaker 3: the grand jury. And so this marks kind of a
21:38
Speaker 3: new and aggressive phase for the investigation.
21:41
Speaker 2: And why is this huge investigation based in Florida?
21:45
Speaker 3: The reason why the Justice Department based the investigation in
21:48
Speaker 3: Florida has always been a mystery. There is plenty of
21:51
Speaker 3: activity that is under investigation that doesn't seem to have
21:54
Speaker 3: any connection to Florida. Obviously, the Mar-a-Lago documents case has
21:59
Speaker 3: a connection to Florida. And so prosecutors are making the
22:03
Speaker 3: case that they are able to base their investigation in
22:07
Speaker 3: Florida because they have activity that occurred in Florida that
22:11
Speaker 3: is connected to a 10-year grand conspiracy against Trump. But
22:16
Speaker 3: what really appears to be going on is that the
22:18
Speaker 3: Justice Department did not want to bring any of the
22:21
Speaker 3: case in any other jurisdiction where they might not have
22:25
Speaker 3: a favorable jury or they might not have a in
22:32
Speaker 3: Fort Pierce. Fort Pierce just happens to be where Judge
22:36
Speaker 3: Eileen Cannon is located. And Judge Eileen Cannon oversaw the
22:41
Speaker 3: classified documents case against Trump. And she made a lot
22:45
Speaker 3: of rulings that were favorable to Trump and ultimately dismissed
22:49
Speaker 3: the case against Trump. And so it appears what the
22:52
Speaker 3: Justice Department is now trying to do is engineer a
22:56
Speaker 3: way to get any kind of charges that they bring
22:59
Speaker 3: in front of Judge Cannon.
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Speaker 2: And Judge Cannon was reversed twice by the 11th Circuit
23:04
Speaker 2: during that case. Now, in April, conservative lawyer and Trump
23:09
Speaker 2: ally Joe DiGenova was brought in to lead the investigation.
23:14
Speaker 2: Why did he resign suddenly?
23:16
Speaker 3: Joe DiGenova previously served in the Justice Department as the U.S.
23:20
Speaker 3: attorney for the District of Columbia back in the 1980s.
23:24
Speaker 3: And he's had kind of a storied reputation as being
23:27
Speaker 3: an experienced professional prosecutor and went into private practice. But
23:33
Speaker 3: in April, the Justice Department reached out to have him
23:37
Speaker 3: come in and lead the investigation based in Florida. And
23:41
Speaker 3: he had been working on it. But last week, he
23:45
Speaker 3: abruptly resigned. And there's a lot of questions over what
23:48
Speaker 3: actually took place behind the scenes. What we've been able
23:51
Speaker 3: to report is that he was very frustrated and mad
23:56
Speaker 3: at the heavy-handed approach that was coming out of Washington
24:01
Speaker 3: and the Justice Department leadership to dictate what the pace
24:05
Speaker 3: and scope of the investigation should be. And he was
24:08
Speaker 3: pushing back on how fast the Justice Department wanted to
24:13
Speaker 3: do grand jury activity and potentially bring charges against individuals
24:18
Speaker 3: like John Brennan, and eventually reached a boiling point where
24:22
Speaker 3: he could not continue doing the investigation the way that
24:26
Speaker 3: he believed it should be done. And so he ended
24:28
Speaker 3: up resigning.
24:29
Speaker 2: It says a lot when you have an experienced lawyer
24:32
Speaker 2: leaving an investigation after five months. And of course, the
24:35
Speaker 2: Justice Department so far has not fared well in its
24:39
Speaker 2: attempts to prosecute Trump's enemies. Thanks, Chris. That's Bloomberg's Chris Strom.
24:45
Speaker 2: Coming up next, how to fix the Supreme Court's shadow docket.
24:49
Speaker 2: I'm June Grosso, and you're listening to Bloomberg. The Supreme
24:55
Speaker 2: Court's emergency or shadow docket has grown exponentially in size
25:00
Speaker 2: and importance, with rulings in consequential cases often issued without explanation,
25:07
Speaker 2: leaving lower courts to puzzle over their meaning. Justice Katonji
25:11
Speaker 2: Brown-Jackson is just one of the justices who've criticized the
25:16
Speaker 2: shadow docket for its lack of transparency and accountability.
25:21
Speaker 4: So the court has left confusion. in its wake. And
25:25
Speaker 4: it offers little guidance because it ordinarily does not spell
25:28
Speaker 4: out the circumstances, giving rise to its own equities evaluation,
25:33
Speaker 4: making it incredibly difficult for lower courts to understand which
25:38
Speaker 4: facts were important to the state determination and thus identify
25:43
Speaker 4: like cases.
25:44
Speaker 2: Joining me is Columbia Law School professor Thomas Schmidt, who's
25:48
Speaker 2: written a paper along with his colleague, Professor Kellen Funk,
25:52
Speaker 2: suggesting some fixes for the emergency docket. Before we get
25:56
Speaker 2: to the fixes, can you explain why the shadow docket
26:00
Speaker 2: has ballooned, both in size and significance?
26:05
Speaker 5: Well, it's a difficult question. And let me just begin
26:07
Speaker 5: with some numbers, June, just to remind everybody how important Dramatically,
26:12
Speaker 5: this has grown in the last decade or so. So
26:14
Speaker 5: during the eight years of the Obama administration, plus the
26:18
Speaker 5: eight years of the Bush administration, the court got six
26:21
Speaker 5: or eight applications from the government to intervene and lift
26:26
Speaker 5: the lower court's injunction with respect to a federal policy.
26:29
Speaker 5: That has exploded in recent years. So the latest number
26:32
Speaker 5: that I saw was about 37 applications from the second
26:35
Speaker 5: Trump administration to in the first year and a half,
26:39
Speaker 5: almost two years of the administration. So there's just been
26:41
Speaker 5: a dramatic increase. And I think that's due to a
26:45
Speaker 5: number of different reasons. I think one is that the
26:48
Speaker 5: executive branch and the president in particular has gotten a
26:51
Speaker 5: little bit more aggressive over time in invoking legal authorities
26:55
Speaker 5: to implement its preferred policies without Congress. And that's led
27:00
Speaker 5: to some litigation that has created a series of injunctions
27:03
Speaker 5: in lower courts, and the Supreme Court itself has felt
27:06
Speaker 5: pressure to intervene and has intervened in a lot of cases.
27:09
Speaker 5: So that's one piece of the story. But I think
27:12
Speaker 5: another piece of the story, unquestionably, is that the court
27:14
Speaker 5: has been more open to these sorts of applications, and
27:18
Speaker 5: it's applied its own stay and injunction standards in a
27:21
Speaker 5: way that invite these applications. So to a certain extent,
27:24
Speaker 5: litigants are pushing on an open door, and that's another
27:27
Speaker 5: reason that there's been so much of a growth in
27:30
Speaker 5: this side of the court's business.
27:31
Speaker 2: There's a four-part test for equitable intervention that courts use.
27:36
Speaker 2: Does the Supreme Court take into account and decide on
27:40
Speaker 2: each of those four factors?
27:42
Speaker 5: So the four-factor test that the court has given is
27:46
Speaker 5: irreparable harm, the likelihood of success on the merits, the
27:49
Speaker 5: balance of the equities, and the public interest. Now, it's
27:53
Speaker 5: a little bit difficult to answer your question for a
27:55
Speaker 5: couple reasons, right? So first of all, so often these
27:59
Speaker 5: rulings on what we call the equity docket are unexplained.
28:03
Speaker 5: So when a ruling is unexplained, there's just no way
28:05
Speaker 5: to assess which of the factors the court considered. Second,
28:09
Speaker 5: sometimes when they are explained, they only focus in on
28:11
Speaker 5: one factor and don't really address the other factor. So again,
28:14
Speaker 5: it's not really clear in that circumstance what was an
28:16
Speaker 5: ingredient in the court's decision making. And then in other cases,
28:20
Speaker 5: the court kind of recites the factors in a rote
28:22
Speaker 5: sort of way, but doesn't really address all of them.
28:24
Speaker 5: So one thing that Kellen, Professor Funk, and I argue
28:28
Speaker 5: for in this paper is a little bit more transparency
28:31
Speaker 5: in the rationale for rulings and just a little bit
28:33
Speaker 5: more attention to the traditional balance of the equities of.
28:38
Speaker 2: Is that why you think a better name for the
28:40
Speaker 2: emergency docket would be the equity docket?
28:43
Speaker 5: I think it's better because that fundamentally describes what the
28:46
Speaker 5: court is doing, right? I mean, what litigants are doing
28:49
Speaker 5: when they come to the court in this posture is
28:51
Speaker 5: asking the court to set the status of a legal
28:54
Speaker 5: policy or to set the status between the parties while
28:57
Speaker 5: a lawsuit is pending. And traditionally, historically, that was one
29:02
Speaker 5: of the core functions of courts of equity.
29:04
Speaker 2: As you mentioned, the Trump administration's emergency applications to the
29:09
Speaker 2: Supreme Court have dwarfed that of any prior administration. And
29:14
Speaker 2: their claims of an emergency cover everything from firing someone
29:18
Speaker 2: to changing birthright citizenship. So should the court draw a
29:22
Speaker 2: line in the sand somewhere and say, this isn't a
29:25
Speaker 2: real emergency?
29:27
Speaker 5: Yeah, I think there's a lot to that, June. And
29:29
Speaker 5: I would think about it in a couple different ways.
29:31
Speaker 5: First of all, One of the most important requirements for
29:35
Speaker 5: getting on the equity docket and historically to get into
29:37
Speaker 5: a court of equity was that you had to show
29:39
Speaker 5: irreparable harm. And the reason you had to show irreparable
29:42
Speaker 5: harm is that the courts of law, in the case
29:44
Speaker 5: of the Supreme Court, right, the merits docket, are open
29:47
Speaker 5: for adjudication of the case in this non-expedited posture, right?
29:51
Speaker 5: So One way that the court could respond to this
29:54
Speaker 5: circumstance is to just insist on government showing of irreparable
29:59
Speaker 5: harm in every case when they come to the court.
30:01
Speaker 5: And I think the pattern so far is that the
30:04
Speaker 5: court has been taking the administration at its word when
30:07
Speaker 5: it claims harm. And the result has been that the
30:10
Speaker 5: door to the equity docket has swung open. So I
30:12
Speaker 5: think one way to deal with this problem is for
30:15
Speaker 5: the court to insist in a more granular factual sense
30:18
Speaker 5: on what exactly the emergency is and why the government
30:21
Speaker 5: is going to suffer irreparable harm. But the second part
30:25
Speaker 5: of my answer to your question, June, is that you're right,
30:27
Speaker 5: that not all of these cases present genuine emergencies. A
30:31
Speaker 5: petition from non-citizens hours before deportation would be an obvious case, right?
30:36
Speaker 5: If you think about the AARP case, for example, that's
30:39
Speaker 5: an emergency. Other cases, it's much less clear that these
30:42
Speaker 5: are emergencies, right? If you think about the Lisa Cook case,
30:45
Speaker 5: that was technically resolved on the equity docket, right? The
30:48
Speaker 5: court never granted certiorari in the case, but it was
30:51
Speaker 5: pending for several months. It was pending at least as
30:54
Speaker 5: long as the typical merits case, right? So in that circumstance,
30:58
Speaker 5: we think there's no danger in slowing down a little bit,
31:01
Speaker 5: and issuing an opinion that explains kind of point by
31:04
Speaker 5: point why the equitable standard is met.
31:07
Speaker 2: Another favorite Trump administration argument that I've noticed on the
31:12
Speaker 2: shadow docket is an invocation of national security as a
31:16
Speaker 2: justification for its actions. Does the Supreme Court almost always
31:20
Speaker 2: bow to the administration when it says national security?
31:25
Speaker 5: There's no question that historically courts have been reluctant to
31:30
Speaker 5: involve themselves in cases where the executive branch is making
31:34
Speaker 5: strong claims of national security. On the other hand, the
31:37
Speaker 5: court has said again and again that the invocation of
31:39
Speaker 5: national security is not a talisman, right? It doesn't ward
31:43
Speaker 5: off judicial review sort of automatically. And I think the
31:45
Speaker 5: broader pattern of litigation in the Trump administration, not just
31:49
Speaker 5: in the Supreme Court, but in the lower courts, is
31:51
Speaker 5: a certain amount of skepticism to claims that the Justice
31:56
Speaker 5: Department is making, right? This is sometimes couched in terms
31:59
Speaker 5: of the erosion of the presumption of regularity. The idea
32:02
Speaker 5: being we can't necessarily take the Justice Department at its
32:06
Speaker 5: word and all of the claims that it makes in
32:08
Speaker 5: its various briefs. So I think the Trump administration is
32:11
Speaker 5: trying to tap into a history or a tradition of
32:15
Speaker 5: judicial reticence, but I'm not sure that it's always working.
32:19
Speaker 2: Justice Jackson talked about the difficulty for lower courts— to
32:24
Speaker 2: follow the Supreme Court's orders on the emergency docket. And
32:28
Speaker 2: there was that case last year where Justice Gorsuch took
32:32
Speaker 2: a federal judge to task for not following Supreme Court precedent.
32:37
Speaker 2: Is there any wiggle room for lower courts?
32:41
Speaker 5: So last year, in a case called Boyle, the Supreme
32:44
Speaker 5: Court made clear that when it rules on the emergency docket,
32:48
Speaker 5: the lower court should follow it in like cases. That
32:51
Speaker 5: is to say, by ruling on the emergency docket or
32:53
Speaker 5: the equity docket, the court has shown how it regards
32:57
Speaker 5: the equities in the case to balance out and lower
33:00
Speaker 5: court should follow that lead. Now, having said that, following
33:04
Speaker 5: the Supreme Court is perhaps easier said than done, right?
33:07
Speaker 5: To the extent many of these orders are unreasoned, it's
33:10
Speaker 5: not clear what the basis was and therefore not clear
33:12
Speaker 5: exactly what it is that a lower court has to follow.
33:15
Speaker 5: The second thing is that Often the court's rulings on
33:19
Speaker 5: the equity docket are foreshadowing changes in the law that
33:23
Speaker 5: make it very difficult for a lower court to understand
33:27
Speaker 5: what the law is right now. So one thing is
33:29
Speaker 5: the old equitable maxim that equity follows the law. And
33:33
Speaker 5: when the court takes a case on the equity docket,
33:36
Speaker 5: it should be applying existing law, not anticipating a change
33:39
Speaker 5: in law that might happen down the road. To make
33:42
Speaker 5: this a little less abstract, maybe I'll mention the Slaughter
33:45
Speaker 5: case in which the Supreme Court overturned Humphrey's executor and
33:49
Speaker 5: the principle of independent agencies that have been embodied in
33:52
Speaker 5: that case. Now, if you're a lower court judge before Slaughter,
33:56
Speaker 5: on the one hand, you're looking at a unanimous majority
33:59
Speaker 5: opinion in Humphrey's executor upholding the FTC. On the other hand,
34:03
Speaker 5: you're looking at a mostly unreasoned order by the Supreme
34:07
Speaker 5: Court just relying on harm to the executive branch while
34:10
Speaker 5: purporting not to disturb Humphrey's executor that allowed the Trump
34:14
Speaker 5: administration to move forward with firing a commissioner of the FTC.
34:18
Speaker 5: It's not clear to me that looking at that, it's
34:20
Speaker 5: plain what the duty of a lower court judge is.
34:22
Speaker 2: Do you think some of the justices may be reluctant
34:25
Speaker 2: at times to write full decisions because it slows down
34:29
Speaker 2: the process? They have to exchange decisions and perhaps there'll
34:34
Speaker 2: be concurrences and dissents to write?
34:37
Speaker 5: I think that's quite possible. And whether to write an
34:39
Speaker 5: opinion and how long an opinion to issue, those are
34:43
Speaker 5: inevitably sort of prudential judgments that are going to be
34:46
Speaker 5: happening within the court. But I don't necessarily think that
34:49
Speaker 5: issuing opinions slows things down. And the most important reason
34:53
Speaker 5: is that the court does not necessarily have to issue
34:56
Speaker 5: a full-fledged opinion at the moment that it rules, right? So,
34:59
Speaker 5: for example, an individual justice alone can issue an administrative
35:04
Speaker 5: stay while an opinion is being worked out.
35:07
Speaker 3: Right?
35:07
Speaker 5: So that would preserve the status quo or allow the
35:09
Speaker 5: court at least to set the status quo while it's
35:12
Speaker 5: issuing an opinion. It can also issue an order as
35:14
Speaker 5: a majority and then issue an opinion afterwards. I mentioned
35:17
Speaker 5: the AARP case a moment ago. That's exactly what happened there.
35:21
Speaker 5: A very brief order on the night that the non-citizens
35:24
Speaker 5: first approached the court about their imminent deportation and then
35:28
Speaker 5: a much longer opinion a few days later.
35:30
Speaker 2: Speaking about preserving the status quo or rather not preserving
35:34
Speaker 2: the status quo, Let's turn to the White House ballroom,
35:37
Speaker 2: where the majority went off on standing and twisted itself
35:42
Speaker 2: in knots to come to the conclusion that the National
35:46
Speaker 2: Trust for Historic Preservation didn't have standing. So they allowed
35:52
Speaker 2: President Trump to go forward to complete the project that
35:56
Speaker 2: lower courts concluded was likely illegal. What happened to preserving
36:01
Speaker 2: the status quo while litigation proceeds?
36:04
Speaker 5: I agree with you, June. And I think the equity
36:06
Speaker 5: docket idea is a helpful way to think this through, right?
36:10
Speaker 5: So one thing that courts of equity would do is
36:13
Speaker 5: to preserve the status quo while litigation is pending to
36:16
Speaker 5: enable a court to rule on the merits of a case.
36:19
Speaker 5: And as you point out here, it is very possible
36:22
Speaker 5: that by the time a plaintiff withstanding under the court's
36:25
Speaker 5: new opinion comes along and is able to sue, the
36:28
Speaker 5: ballroom will be built and there will in fact be
36:30
Speaker 5: no way to adjudicate the merits of the case because
36:32
Speaker 5: it will be too late. So one way to think
36:35
Speaker 5: about this in equitable terms is just to say, this
36:39
Speaker 5: looks illegal under the relevant authorities for the reasons that
36:43
Speaker 5: Chief Justice Robert gave in his dissent. I have not
36:46
Speaker 5: seen a plausible legal justification for moving ahead with this
36:50
Speaker 5: without other kinds of approvals. And essentially, what the administration
36:54
Speaker 5: was doing in coming to the Supreme Court was asking
36:57
Speaker 5: for its equitable intervention to allow it to get away
37:01
Speaker 5: with in a legal project. And that's a fundamentally inequitable
37:05
Speaker 5: use of a court of equity. The way you could
37:07
Speaker 5: put that in more legal or litigation terms would be
37:10
Speaker 5: to say the administration came to the court with unclean hands,
37:14
Speaker 5: or you might say that he who seeks equity must
37:16
Speaker 5: do equity. And essentially, enlisting the Supreme Court in this circumstance,
37:20
Speaker 5: I think, violated those equitable maxims.
37:23
Speaker 2: I always feel that the doctrine of unclean hands presents
37:26
Speaker 2: a vivid image of Thanks for sharing your insights with us.
37:32
Speaker 2: That's Columbia Law School Professor Thomas Schmidt.