October 24, 2025 • 33 mins
An update on the US government shutdown leads Bloomberg Intelligence’s Votes and Verdicts podcast this week. Nathan Dean examines that topic and the SEC’s effort to revitalize the IPO market, while BI litigation and policy analysts discuss other key catalysts. Matt Schettenhelm explores developments over the easing of FCC rules for TV broadcasters, as well as President Donald Trump’s amended defamation suit against the New York Times. Justin Teresi discusses the FTC case against pharmacy benefit managers like UnitedHealth’s Optum, CVS Health’s Caremark and Cigna’s Express Scripts over unfair drug-rebate practices. Holly Froum analyzes a lawsuit by victims of the Palisades Fire against the Los Angeles Department of Water and Power. Elliott Stein explores an Oct. 17 verdict in favor of three Sudanese refugees against BNP Paribas.
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Episode Transcript
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Speaker 1 (00:15):
Hello, and welcome to the Votes and Verdict podcast, hosted
by the Litigation and Policy team at Bloomberg Intelligence, the
investment research platform of Bloomberg LP on the Bloomberg Terminal.
Bloomberg Intelligence has five hundred analysts and strategists working across
the globe and focused on all major markets. Our coverage
includes over two thousand equities and credits, and we have
(00:37):
outlooks on more than ninety industries and one hundred market indices,
currencies and commodities. This podcast series examines the intersection of
business policy and law, and today's our weekly look at
the litigation and policy catalysts that we're currently watching and
that we think will impact companies across a number of
different sectors. My name is Elliott Stein, analysts with Bloomberg
(01:01):
Intelligence covering litigation in the financial sector, and I'm delighted
today as always to be joined by several of my
BI colleagues, and just a quick word. As always, you
can find all of our research on the Bloomberg terminal
at BI go, and you can find our litigation on
policy coverage on our Litigation and Policy Dashboard, which is
(01:22):
available at BI laws go. Just the time stamp this
Today is Thursday, October twenty third. It's about three twenty
pm New York time, although I'm in Washington, DC, but
that's the same time as New York. Speaking of Washington, DC,
Nathan Dean, let's bring you in. Nathan's our chief policy
(01:43):
analyst here at BI. He's sitting about ten feet away
from me right now, but we don't actually see each other.
So Nathan, how are.
Speaker 2 (01:52):
You doing good? Stick my hand up so you can
see me waving from a couple of roseway.
Speaker 1 (01:56):
I see it all right. So Nathan, we're still going
a shutdown. It started our over first, so I guess
that makes this the point. It's third day any end
in sight.
Speaker 2 (02:04):
Well, it's going to go at least twenty seven days
because I'm glad you time stamped it. Because the Senate
announced just about an hour and a half ago that
they're out of here and they are leaving for the weekend.
They're not going to come back until Monday night. The
Republicans are still offering these votes to reopen the government.
There was a bill today to potentially pay military, TSA
and ATC workers. That bill failed to get attracted three
(02:27):
Democrats but ultimately didn't get the sixty vote threshold.
Speaker 1 (02:29):
Atc IS air Traffic Controller is right correct, And.
Speaker 2 (02:33):
You know, that's one of the reasons why I'm it's
important to talk about the air traffic controllers because I
think there's two points in which this shutdown could end
in the next month. The first is probably towards the
tail end of next week, think Halloween, because on November first,
a couple of things happen. Well, actually before that, you
have the second military paycheck. It still remains to be
(02:54):
seen whether President Trump will try and pay that using
other funds. But you also have a lack of Snap
benefits going out the SNAP. The Snap Benefit administrator even
just said that he doesn't think the money will be
there for the forty two million Americans that you take
advantage of the food program formerly known as food stamps.
(03:14):
That's certainly a pressure point. But you also have these
ACA subsidies and the ACA open romans starting a number first,
and so Americans who are under Obamacare are going to
see these premiums go up two to three times with
they're paying. Anecdotally, we've seen people say that they're paying
four hundred and fifty dollars a month starting November first,
for twenty twenty six coverage, you're going to be looking
(03:35):
at sixteen hundred dollars seventeen hundred dollars something around there.
So the thought is is that the Democrats could potentially say, Okay,
we're not going to get a deal on this, let's
reopen the government and let's hang that issue onto the
Republicans and say, look, folks, we tried. Republicans don't want this.
As a result, they have to deal with it now.
That is something that people are talking about. But I
(03:58):
don't think that's what's going to happen here. I think
what's going to happen here is is that we're going
to go through November first and the government's going to
remain shut. So what's the next pressure point is Thanksgiving?
Because at that point TSA, workers in the air traffic
controllers will have been working for almost two months without pay.
And right now, the general's delay due to air traffic
(04:21):
controllers without a shutdown is around five percent and this
came from the Secretary of Transportation. With the shutdown, delays
associated with air traffic controllers is around fifty percent right now,
that's the correct number. Wow, correct? And these aren't This
is not fifty percent of flights, but fifty percent. You know,
of the delays that are associated with air traffic controllers,
(04:43):
you're sent a tenfold increase in delays associated with that.
As we get closer to Thanksgiving, there's gonna be a
lot of angry air traffic controllers. And so the general
thought around.
Speaker 1 (04:53):
Washington work that angry passengerason tavlins.
Speaker 2 (04:56):
Correct And at this point it's the thought here is
that that would be the next major pressure point the
Congress to make a deal.
Speaker 1 (05:03):
Wow. So that would mean it's like a fifty plus
day shutdown, which is a record. That would be a record.
Speaker 2 (05:12):
Yeah. I mean there's a thirty five days shutdown in
the end of twenty eighteen. It's a partial shutdown, and
that came over the December January holiday, so a lot
of people were home anyway, they didn't feel it. But
you know, this one is a little bit different because
the polling numbers that came in over the weekend. Both
parties look at those pulling numbers and both parties think
that they're winning. The Republicans get slightly more of the
(05:34):
blame than the Democrats. But if you are a Democrat,
you are blaming the other party. If you're a Republican,
you're blaming the other party. And Independence are split mostly
about sixty forty towards the Republicans, so meaning they blame
the Republicans sixty forty. So where I'm going with this
is the polling numbers haven't changed, so the parties aren't
changing either.
Speaker 1 (05:53):
Classic DC status where both sides think they're winning and
everyone's just like, come on, guys, all right, let's move
to the SEC. Because you put down a note this
week sort of about the SEC's efforts to make IPOs
great again. Let just tell us just to that.
Speaker 2 (06:13):
Yeah, so you know this was this came from Chaera Atkins.
So the SEC chairman, Paul Atkins gave a speech a
couple of weeks ago and he said he would like
to make IPOs great again. So we took a stab
of what does that mean? And there's really a couple
of three couple of things here. First one is the
thing that we've already talked about eliminating this quarterly reporting.
You know, we talked about how Chair Atkins will most
(06:35):
likely de emphasize what's required in one Q and three
Q for smaller companies. You know, you had talked about
in some one of your prior pieces of research about
how mandatory arbitation changes, the changes associated with mandatory arbitration
reduces litigation risks, reduces costs UH. And then the third
thing that is really is streamlining registration statements, because the
(06:59):
SEC had is something they have a potential rulemaking on
their agenda called rationalization of disclosure Practices, and I think
this is one of those things where they're going to
go through regulation SK, which is the regulation that governs
what you have to file to give any type of filing,
whether it's a quarterly or annual or when you're applying
for an IPO, and they're going to start streamlining what's required,
(07:21):
de emphasizing what's required for smaller companies. And as a result,
I don't think it's going to lead to a dramatic
increase in IPO volume, but should reduce legal and compliance
expenses for those smaller companies. And the last thing I
would say on it is is that even though chair
Mankins has said that he wants to make IPOs great again,
there's nothing in here that's going to harm private credit.
Nor is there anything in here that I think the
(07:43):
SEC is going to do the change the popularity of
private credit at the moment, because I think the SEC
is also trying to make sure that private credit markets
are just as well supported as the public markets. So
it's one of those things where I love my left hand,
I love my right hand. I'm just going to make
sure both pieces go out there and do what it
is that I can do.
Speaker 1 (08:02):
Yeah, And the mandatory arbitration provision, So the what happened
there is that the SEC used to say that if
a company had mandatory arbitration provisions in there, you know,
in their by laws, essentially, the SEC would not expedite
uh those register registration statements for I pos And so
(08:24):
as a result, you know a lot of companies didn't
didn't have mandatory arbitration provisions and their by laws, which
you know, means that shareholders were more likely to bring
their any claims they had in court and sue. So
that's a change, although it should be noted that states
like Delaware can still bar companies from having mandatory arbitration provisions,
(08:49):
so we'll see, you know, how many companies actually changed
TAC there. And it's also you know, one question to
me is like investors really even care about that, Like,
if a company has a mandatory arbitration provision, is that
going to dissuade an investor from investing in that company?
So that's sort of TVD.
Speaker 2 (09:08):
There's a lot here that the SEC could do that's
going to really make House Republicans and the House Financial
Services Committee happy. I mean, you hear often the Republicans
up in the Capital. They'll talk about the burden on
small companies. That's what this is designed for. I mean,
this is not for the IPOs that you know, get
the red line on the Bloomberg terminal and gets the
TV folks talking about it. You know, this is designed
(09:28):
for those smaller companies that are just trying to go public.
Speaker 1 (09:31):
Yep, that makes sense. All right, good stuff. All right.
Let's move on to Matt Suttenhelm, who's also here in DC,
sitting just a couple of rows down from Nathan.
Speaker 2 (09:41):
So.
Speaker 1 (09:41):
Matt covers litigation and policy in the TMT sector for US. Matt,
you've been tracking the easing of FCC rules, the Federal
Communications Commission rules for TV broadcasters, and you had an
important real development. It sounds like in that space this week.
(10:02):
You want to tell us what that was about.
Speaker 3 (10:03):
Yeah, thanks Elliott. So, yeah, we've been tracking the deregulation
that's that's been coming from the agency, and there's really
two pieces of it. One of them is the national
ownership cap, the rule that says the f that that
that companies can only reach thirty nine percent of US household.
And there's a second component too that you can in
(10:25):
each local market you can you could the FCC's rules
have long prevented a company from owning two of the
top four TV stations in that market, and this development
concerns that ladder half of this the owning of two
top four stations. The Ace Circuit Court of Appeals issued
(10:47):
a decision in July that struck down that rule and
and and said that it would be removed from the
books in ninety days unless the FCC did something about it.
And that also was the deadline for the for petitions
to the Supreme Court to challenge that a Circuit decision.
(11:09):
That deadline came and went this week, uh, and no
one filed a petition to the Supreme Court. So that
means that the A Circuit's decision wiping that long standing
rule off the books it stands. And so as as
these companies like next Star look at consolidation and and
(11:32):
acquiring more stations in more markets. That's one less hurdle
it needs to overcome, I should say. And and with
Jen re covering the anti trust side of this, she
points out that look, even if you remove the FCC rule,
that doesn't mean you're home free. There's still anti trust
(11:53):
review for for for acquisitions of two top four stations,
and so it's not the the end of the road,
but it is an important hurdle I think that has
long stood in the way of these acquisitions, and it's
off the books. The FCC is not going to revive
it under this administration.
Speaker 1 (12:12):
It's interesting. So the big leal development is that there
wasn't It was a development by omission, right, there was
no no cert petition.
Speaker 3 (12:22):
That's right and sort of surprising this is this stuff
has been litigated so aggressively for for decades, and the
rules have have withstood all of those challenges. But this
time the FCC would have been the primary party to
bring a challenge because it was its rule that was
struck down. But the chairman actually sort of likes it
(12:43):
that this rule was struck down. So the FCC wasn't
going to bring the case. There were interveners in the
case who could have challenged it, but they didn't. So
this this removes the book the rule from the books,
so positive for broadcast.
Speaker 2 (12:57):
Yep.
Speaker 1 (12:57):
All right, So there's an interesting case that you're following
that had some developments this week. That's President Trump's defamation
case against the New York Times. If I recall, this
is the case in Florida where the judge essentially dismissed it,
you know, without prejudice, for the complaint being too long
(13:21):
and unfocused, if I recall correctly, so he gave you know,
the president another shot at amending the complaint. You want
to just sort of remind us of specifics of the
case beyond what I what I just mentioned.
Speaker 2 (13:34):
That's that's exactly right.
Speaker 3 (13:35):
And we've covered this case on this podcast before, so
I'll just kind of keep it pretty high level.
Speaker 2 (13:40):
But that's exactly right.
Speaker 3 (13:43):
In the first version of the complaint, it took until
page forty six before you could actually get to the
allegedly false statements.
Speaker 1 (13:52):
You know, sort of ironic it was page forty six.
Should have been like page forty five or forty seven.
Speaker 3 (13:56):
Yeah, Okay, Yeah, I see, I see what you did there.
But Judge Mary Day came in and said, look, this
is ridiculous. Cut this whole thing down to forty pages.
And so an eighty five page complaint got cut down
to page forty. Now the legal claims start on page seven.
It's so fascinating development in that sense, But that was
(14:18):
purely procedural and and now I think we we turned
to the merits of of of does this suit really
have legs or not? When when when Trump filed this suit,
there was sort of a reaction in the stock I
think for as investors watched this, you know, because it's
it's claiming a fifteen billion dollars in damages is the
(14:40):
number that President Trump put put on this suit. The
amended complaint is very much when you cut out the
forty pages of extra stuff that the actual claims are
are the same, and the statements that that he alleges
are false or defamatory. He removed three of thirty six,
(15:01):
so thirty three of those, you know, thirty six false
allegedly false statements remain. So it's really the same case
that he initially proposed. Basically, this is about two originally
three articles that The New York Times wrote in twenty
twenty four about how President Trump acquired his wealth, how
(15:22):
he became a star on The Apprentice, and how he
operates his business. And there there he highlights in those
thirty three statements, statements that that don't present him in
a real positive light, and he alleges their defamatory How
do I think it will play out?
Speaker 2 (15:43):
To me?
Speaker 3 (15:43):
Look, any defamation case against a public figure is difficult
to win. And it's what we've talked about before, the
actual malice standard. It's not enough to show that the
reporters were careless. You have to show that the actually
acteds with with actual malice, meaning they they actually knew
(16:08):
that their statements were false, or that they recklessly disregarded
the possibility that they could be. That's that's a demanding standard.
And and and what when you read through this complaint,
you can go through those thirty three statements, you can
find you know, I think a number of them will
be dismissed as just characterizations or opinion, not something that
(16:28):
can be proven true or false.
Speaker 2 (16:30):
But some of them probably can be.
Speaker 3 (16:32):
But then you have that second and I think the
biggest turtle is is does Trump plausibly allege that these
reporters acted knowing that the statements were false or at
least recklessly acting in that regard, and just saying it
isn't enough. You need to plead facts plausibly alleging it.
(16:54):
And I think if President Trump's going to run into problems,
I think Judge mary Day, Mary Day is probably going
to be along those lines. So I expect a motion
to dismiss to come fairly soon here along those lines.
Expect a ruling in the first half of the year.
On that basis, I see about a seventy percent chance
that the suit has dismissed New York Times prevails on
(17:15):
that point. If New York Times fails on that point
and Judge Meriday lets it go into discovery, that's when
the pressure to settle is going to be significant, because
just litigating a case like this can you know, for
a couple of years potentially in discovery, can can cost
tens of millions of dollars. And President Trump has been
(17:36):
settling these cases with media companies. He settled with ABC
for fifteen million, Paramount for sixteen million, YouTube for twenty
four million. So if you know there's going to be
real pressure on the company to make this go away
and not spend that money in a real drawn out
legal fight. So I but as I said, I think
(17:58):
the key, the key thing to watch will be the
fight over the motion to dismiss, which should be the
first round of this case.
Speaker 1 (18:04):
Got it? And I like part of your headline, which
I think captures everything you just said very well, was
quote shorter but not stronger.
Speaker 3 (18:15):
So yeah, at least it was a little bit easier
to read. I had some sympathy for Judge Mary Day
after having to work through that first version. This one
is much tighter, but it's still it's tough to win
a defamation case against the public figure.
Speaker 1 (18:30):
So we'll see. Yep, all right, good stuff. All right,
let's bring in Justin Teresi. Justin is one of our
antitrust analysts based in New York. Justin, you have been
following the FTC, the Federal Trade Commission's lawsuit against various
PBMs pharmacy benefit managers over unfair drug rebate practices. Your
(18:55):
headline in part said delayed again more hit ups ahead.
So you want to just tell us what's going on there?
Speaker 4 (19:03):
Yeah, yeah, definitely. So there's a couple of big procedural
things happening with this case in the coming month. So
that's really the reason talk about it right now, But
just to back up a little bit and remind everybody
a little bit about what this case is. So this
case had so much fanfare associated with it when it
came out last fall. It was one of the last
cases that was filed that was filed under Elena Kahn's FTC.
(19:25):
But the basic allegation in the lawsuit is that the
big three pharmacy benefit managers that's United Health, optim CVS
healths Care Mark, and Sickness Express Expressed Scripts basically engage
in activity related to drug rebates and seeking big drug
rebates from more expensive pharmaceuticals for their formularies that have
(19:46):
the effect of raising list prices for drugs. And what
does that mean. The allegation is that those higher prices
really have a detrimental effect on the uninsured and folks
that have really high deductible coverages. So that's the basically
central allegation of the case. There's been a lot of
problems with the litigation though since it got out of
the gate. First and foremost, it's a really broad claim
(20:09):
under the FTC. Act Section five. There's a lot of
questions about whether or not the power associated with the
FTC Act really expands the reaches with which the litigation
was brought. That's kind of number one, the big issue
with the litigation. But the FTC brought the case at
its own internal tribunal, so that's really the procedural issue.
I think we're seeing bubble up right now as a
(20:30):
major issue. The PBMs finally have got an a motion
to dismiss on file with the internal Tribunal at the FTC.
But also coming up relatively soon, the Eighth Circuit, a
penalty circuit, is going to hear an appeal about whether
or not the case should even continue due to constitutional
grounds that were raised earlier this year by the PBM.
So there's a lot going on here. Things are stayed
(20:50):
again though as a result of the government shut down too.
Speaker 1 (20:54):
So what are you looking for next?
Speaker 4 (20:56):
Yeah, so two things. First, you know, I think what's
really interesting here internally at the FTC is that, look,
you've got a chair Andrew Ferguson. Now you've got Commissioners
Mater and Commissioner Holyyok who's recused from this case. But
the commissioners that you do have active with the litigation.
They're all kind of on the record in the past
being really really questioning the expanse of nature of Section
five and just how far that actual power goes at
(21:19):
the FTC. So it's really kind of a Queshowie too
here in the sense that I think you have a
White House and an administration that very much wants to
do something around the issue of pharmacy benefit managers and
pharmaceutical prices. But the way the lawsuits styled, it's really
kind of a big issue in terms of the ideologies
associated with the commissioners who are actually going to be
hearing this case. So there's a motion to dismiss on file.
(21:41):
A little bit saved by the bell right now, i'd
say for them in the sense that a shutdown is happening.
And later on this month, on November ninth, or next month,
on November nineteenth, this penelty the Eighth Circuit is going
to hear a lot of those constitutional questions in the
context of an appeal related to an injunction that was
denied previously to halt the case. Right, what are we
talking about there, right?
Speaker 2 (22:02):
You know?
Speaker 4 (22:02):
Is the internal tribunal constitutional due to removal powers and
you know the actual double removal issues that exist with
the administrative law judges there. And beyond that too, we
have the Supreme Court's decision in Jarkasey last year and essentially,
is this too big of a case with too much
on the line for an internal tribunal to actually be
hearing it. Those are the big questions that the Eighth
(22:23):
Circuit's going to hear this coming month. And I've got
to say, as far as the PBMs are concerned, they
got fairly a panel that's likely going to be beneficial,
I think to their particular viewpoints here in the sense
that we have three judges who all entered the judiciary
under President George W. Bush, right, So I think more
traditional Republicans with probably a more traditional view of powers
(22:43):
and administrative powers, and we otherwise might get with more
populist judges on the bench.
Speaker 1 (22:48):
Interesting, and that's the Eighth Circuit twice in the twice
on this episode at.
Speaker 4 (22:53):
That, yeah, look at that, but typically business friendly circuit too.
I think the PBMs know that. I think they filed
in the right place. So look, at the end of
the day, you know, we're kind of saying there's a
sixty percent chance this complaint probably is going to get
tossed in one way or another. The question is how
does that actually happen, right, and whether that's the commissioners
pulling the case and refiling it a different way that's
a possibility, or the circuit perhaps says nope, this doesn't
(23:16):
work with the way it's been styled the internal tribunal.
So there's all these different threats of the case. The
DOJ is still investigating United Health as far as we
know with regard to pharmacy benefit managers as well, so
there's a lot of different things that can happen here.
But I think the takeaway is the litigation probably doesn't
look the same way a year from now as it
currently does at the moment.
Speaker 1 (23:36):
Got it, well, Well, we can discuss it again at
that point, probably sooner, I'm sure, many times, and see
how correct you were? All right, justin good stuff, Holly,
Let's bring you in. Holly covers litigation and policy in
the consumer and industrial sectors for US, and Holly, I
know you want to talk today about some developments and
(23:59):
loss suit you've been tracking against the Los Angeles Department
of Water and Power brought by victims of the Palisades
fires last year. Sounds like the complaint was amended recently.
You want to just remind us more about the case
and what that means that the complaint was recently revised.
Speaker 5 (24:17):
Sure, thanks Elliott. So, the LA Department of Water Power,
or DEWOP as I've heard it been called, has been
sued by victims of the Palisades fire in California. As
of September, there were losses filed on behalf of thirteen
hundred people, but plan fs say they expect that number
to grow to ten thousand. So, as you mentioned, the
(24:40):
planets filed this master complaint, this revised complaint on October eighth,
and what they say is that the utility drained water
from the Saint Anas Reservoir, which fed the pumps that
were by their houses, and because of that, firefighters lacked
sufficient water and water pressure to fight the fire. And
they also say that the utility failed to energize power lines.
(25:06):
Those power lines fell and then caused spot fires which
spread the conflim the fire. So I think the primary
issue will be whether inverse condemnation applies. And what that
is is this doctrine in California which says that if
a public entity puts a public improvement on someone's property
(25:27):
and that improvement ends up causing damage, it's considered a
taking a private property, and the utility is liable as
long as the damage was caused by their equipment, the
equipment posed inherent danger, and that the end damage was
a likely result. So even though the utilities equipment didn't
(25:48):
start the fire, the question is, does inverse condemnation apply?
So I think it's a pretty strong case for inverse
condemnation with regard to the down power lines, And then
the question would be, well, the fire had already started,
did that Would that fire have caused the damage anyway?
But I think that's a fact issue, and that's but
that's certainly I think that you know, that probably gets
(26:11):
them past emotion to dismiss and maybe even a motion
for summary judgment barring certain expert testimony that could be presented.
But with regard to the draining of the reservoir and
the lack of water in the pumps, which I think
is a primary complaint, I think it's a closer call
on whether in verse condemnation applies, because I'm not sure
(26:34):
that the fire hydrants count as a public improvement or
the reservoir accounts as a public improvement. There's only one
lower court case on point where a court applied in
verse condemnation to a water authority that failed to provide water,
and that was this case out of Orange County that
was originally filed in twenty ten. I think eventually that
(26:56):
issue will go up to the Supreme Court of California.
And though it's very cool, I think that ultimately the
Supreme Court could find that inverse condemnation applies.
Speaker 2 (27:05):
Wow.
Speaker 1 (27:05):
So you think this case might actually wind up at
the Supreme Court.
Speaker 5 (27:08):
The California Supreme Court. Yeah, I think that the California
Supreme Court will have to answer this issue.
Speaker 1 (27:14):
Interesting, And I mean I assume this is interesting for
investors in Mouni bonds, right, can you sort of give
us a flavor of baluches at stake?
Speaker 5 (27:25):
Well, in this case, so the plainiffs are saying that
there was over fifty billion dollars worth of damages.
Speaker 1 (27:32):
Wow, I mean, do you think that's realistic in terms
of what they could recover?
Speaker 5 (27:36):
In terms of what they could recover, I haven't said,
but I think it's realistic in terms of the damages
for sure.
Speaker 2 (27:43):
Wow.
Speaker 1 (27:43):
All right, So what are you watching flanxt the motion
to dismiss It sounds like, so the motion to dismiss.
Speaker 5 (27:49):
I don't think we'll be decided until twenty twenty six,
but that's the next step. And then if it gets
past that, they're going to go into discovery. But this complaint, like,
you know, this is a massive complain. It was two
hundred pages long. There's like over twenty defendants named, and
it's you know, they're they're alleging all kinds of causes
of action. I don't envy the planists who have to
(28:11):
prove this case, but you know, because they're trying to
go after everyone because you know, I'm sure that there's
probably like multiple things that caused different fires there that
they're calling the Palisades fire. But yeah, but it's you know,
the next step would would be for the plane EUS
is like the is to get this, you know, ruling
on in res condemnation on a motion to dismiss, and
(28:33):
that's going to decide what planes go forward against the utility.
Speaker 1 (28:37):
Gotcha? All right, good stuff, Hollie, Thank you. So you
just talked about a case I was fifty billion dollars,
I'd be remiss if I didn't talk about the case
I'm covering that got a lot of client interests this week,
which potentially, in theory, could have even more at risk.
And this is a case against the French bank BNP
(28:59):
Paribar brought by Suitan, these refugees in the US who
claimed the bank helped finance the Suitanese government's genocide in Sudan,
you know, going back to about nineteen the mid nineties.
Really what happened in the case was that on Friday,
October seventeenth, there was a trial verdict in a bell
(29:24):
Weather trial against three of the plaintiffs in the case.
This was roughly a month and a half long jury trial,
and the jury wound up awarding these three plaintiffs twenty
one million dollars. The risk the issue that I see
is that you potentially have about twenty thousand other potential plaintiffs.
(29:47):
If you go back to May twenty twenty four, the
court certified a class estimated to be up to twenty
three thousand plaintiffs. Parties have gone through the process of
notifying you know, potential plaintiffs, and it sounds like as
of July of this year, you had about sixteen and
a half thousand who had opted into the class. You
had about another fifteen hundred who opted out. So you know,
(30:11):
if you do the mass, if these other thousands of
plaintiffs are able to win as much as these three
bell Weather plaintiffs did, you're looking at over one hundred
billion dollars in potential damages. You know, obviously we're not
going to get to something like that, but I do
believe it puts pressure on the bank to settle at
some point. And you know, I do think the bank
(30:34):
actually has some decent arguments on appeal, and I think
it's best leverage for getting a manageable settlement is to
leverage its appellate arguments, and I do expect an appeal
to be filed as to these three bell Weather plaintiffs
pretty soon. And you know, in my mind, if it's
(30:56):
a bank you know, doesn't settle and they wind up
losing on appeal, some of those issues may translate and
carry over to a lot of these other plaintiffs, and
at that point the bank won't have any leverage with
respect to a lot of its legal issues. So I
do think it's anticipated appeal will be its best leverage
(31:17):
for getting a good settlement. I think it's notable that
the plaintiff's lawyers, in an interview earlier this week following
that verdict, sort of hinted at that they valued this
case sort of in the single digit the mid single
digit billion dollars, so you know, something in the five
(31:38):
billion dollar range. The bank has contested that. They said
they don't have any pressure to settle. They do report
earnings on October twenty eighth, and so we'll see if
they say anything more at that point. But for now,
I'm waiting to waiting for them written for the bank
to file its appeal with respect to this verdict against
these three bell Weather plaintiffs and Eliott.
Speaker 2 (32:00):
I just checked. The stock is still down twelve point
three eight percent since the verdict.
Speaker 1 (32:04):
Yeah, the bank stock took a pretty big hit on Monday.
In particular, the bank then held a call where CFO
talked about the case. That was Tuesday morning, and I
think the stock was actually a little lower after the
call than it was at the beginning of the call,
(32:25):
So I'm not sure that's that eased investors' minds. I
think the stock went back up a little today, but again,
we'll see what the bank says on October twenty eighth,
after earnings, and again I'm waiting for the bank to
file it's appeal, which I think will be soon. All right,
(32:46):
I think with that we will wrap up this episode
of Votes and Verdicts. As always, thank you for listening.
If you have any questions about anything we talked about today,
please don't hesitate to reach out to us have your
convenience with questions. As a reminder, you can find all
of our research on the blue Umberg terminal at big
and you can find our litigation and policy research on
our dashboard at bi laws Go. We also want to
(33:07):
thank our producer at Jasemani, without whom this podcast would
never publish on time. Thank you again for listening, and
have a great day.
Hello, and welcome to the Votes and Verdict podcast, hosted
by the Litigation and Policy team at Bloomberg Intelligence, the
investment research platform of Bloomberg LP on the Bloomberg Terminal.
Bloomberg Intelligence has five hundred analysts and strategists working across
the globe and focused on all major markets. Our coverage
includes over two thousand equities and credits, and we have
(00:37):
outlooks on more than ninety industries and one hundred market indices,
currencies and commodities. This podcast series examines the intersection of
business policy and law, and today's our weekly look at
the litigation and policy catalysts that we're currently watching and
that we think will impact companies across a number of
different sectors. My name is Elliott Stein, analysts with Bloomberg
(01:01):
Intelligence covering litigation in the financial sector, and I'm delighted
today as always to be joined by several of my
BI colleagues, and just a quick word. As always, you
can find all of our research on the Bloomberg terminal
at BI go, and you can find our litigation on
policy coverage on our Litigation and Policy Dashboard, which is
(01:22):
available at BI laws go. Just the time stamp this
Today is Thursday, October twenty third. It's about three twenty
pm New York time, although I'm in Washington, DC, but
that's the same time as New York. Speaking of Washington, DC,
Nathan Dean, let's bring you in. Nathan's our chief policy
(01:43):
analyst here at BI. He's sitting about ten feet away
from me right now, but we don't actually see each other.
So Nathan, how are.
Speaker 2 (01:52):
You doing good? Stick my hand up so you can
see me waving from a couple of roseway.
Speaker 1 (01:56):
I see it all right. So Nathan, we're still going
a shutdown. It started our over first, so I guess
that makes this the point. It's third day any end
in sight.
Speaker 2 (02:04):
Well, it's going to go at least twenty seven days
because I'm glad you time stamped it. Because the Senate
announced just about an hour and a half ago that
they're out of here and they are leaving for the weekend.
They're not going to come back until Monday night. The
Republicans are still offering these votes to reopen the government.
There was a bill today to potentially pay military, TSA
and ATC workers. That bill failed to get attracted three
(02:27):
Democrats but ultimately didn't get the sixty vote threshold.
Speaker 1 (02:29):
Atc IS air Traffic Controller is right correct, And.
Speaker 2 (02:33):
You know, that's one of the reasons why I'm it's
important to talk about the air traffic controllers because I
think there's two points in which this shutdown could end
in the next month. The first is probably towards the
tail end of next week, think Halloween, because on November first,
a couple of things happen. Well, actually before that, you
have the second military paycheck. It still remains to be
(02:54):
seen whether President Trump will try and pay that using
other funds. But you also have a lack of Snap
benefits going out the SNAP. The Snap Benefit administrator even
just said that he doesn't think the money will be
there for the forty two million Americans that you take
advantage of the food program formerly known as food stamps.
(03:14):
That's certainly a pressure point. But you also have these
ACA subsidies and the ACA open romans starting a number first,
and so Americans who are under Obamacare are going to
see these premiums go up two to three times with
they're paying. Anecdotally, we've seen people say that they're paying
four hundred and fifty dollars a month starting November first,
for twenty twenty six coverage, you're going to be looking
(03:35):
at sixteen hundred dollars seventeen hundred dollars something around there.
So the thought is is that the Democrats could potentially say, Okay,
we're not going to get a deal on this, let's
reopen the government and let's hang that issue onto the
Republicans and say, look, folks, we tried. Republicans don't want this.
As a result, they have to deal with it now.
That is something that people are talking about. But I
(03:58):
don't think that's what's going to happen here. I think
what's going to happen here is is that we're going
to go through November first and the government's going to
remain shut. So what's the next pressure point is Thanksgiving?
Because at that point TSA, workers in the air traffic
controllers will have been working for almost two months without pay.
And right now, the general's delay due to air traffic
(04:21):
controllers without a shutdown is around five percent and this
came from the Secretary of Transportation. With the shutdown, delays
associated with air traffic controllers is around fifty percent right now,
that's the correct number. Wow, correct? And these aren't This
is not fifty percent of flights, but fifty percent. You know,
of the delays that are associated with air traffic controllers,
(04:43):
you're sent a tenfold increase in delays associated with that.
As we get closer to Thanksgiving, there's gonna be a
lot of angry air traffic controllers. And so the general
thought around.
Speaker 1 (04:53):
Washington work that angry passengerason tavlins.
Speaker 2 (04:56):
Correct And at this point it's the thought here is
that that would be the next major pressure point the
Congress to make a deal.
Speaker 1 (05:03):
Wow. So that would mean it's like a fifty plus
day shutdown, which is a record. That would be a record.
Speaker 2 (05:12):
Yeah. I mean there's a thirty five days shutdown in
the end of twenty eighteen. It's a partial shutdown, and
that came over the December January holiday, so a lot
of people were home anyway, they didn't feel it. But
you know, this one is a little bit different because
the polling numbers that came in over the weekend. Both
parties look at those pulling numbers and both parties think
that they're winning. The Republicans get slightly more of the
(05:34):
blame than the Democrats. But if you are a Democrat,
you are blaming the other party. If you're a Republican,
you're blaming the other party. And Independence are split mostly
about sixty forty towards the Republicans, so meaning they blame
the Republicans sixty forty. So where I'm going with this
is the polling numbers haven't changed, so the parties aren't
changing either.
Speaker 1 (05:53):
Classic DC status where both sides think they're winning and
everyone's just like, come on, guys, all right, let's move
to the SEC. Because you put down a note this
week sort of about the SEC's efforts to make IPOs
great again. Let just tell us just to that.
Speaker 2 (06:13):
Yeah, so you know this was this came from Chaera Atkins.
So the SEC chairman, Paul Atkins gave a speech a
couple of weeks ago and he said he would like
to make IPOs great again. So we took a stab
of what does that mean? And there's really a couple
of three couple of things here. First one is the
thing that we've already talked about eliminating this quarterly reporting.
You know, we talked about how Chair Atkins will most
(06:35):
likely de emphasize what's required in one Q and three
Q for smaller companies. You know, you had talked about
in some one of your prior pieces of research about
how mandatory arbitation changes, the changes associated with mandatory arbitration
reduces litigation risks, reduces costs UH. And then the third
thing that is really is streamlining registration statements, because the
(06:59):
SEC had is something they have a potential rulemaking on
their agenda called rationalization of disclosure Practices, and I think
this is one of those things where they're going to
go through regulation SK, which is the regulation that governs
what you have to file to give any type of filing,
whether it's a quarterly or annual or when you're applying
for an IPO, and they're going to start streamlining what's required,
(07:21):
de emphasizing what's required for smaller companies. And as a result,
I don't think it's going to lead to a dramatic
increase in IPO volume, but should reduce legal and compliance
expenses for those smaller companies. And the last thing I
would say on it is is that even though chair
Mankins has said that he wants to make IPOs great again,
there's nothing in here that's going to harm private credit.
Nor is there anything in here that I think the
(07:43):
SEC is going to do the change the popularity of
private credit at the moment, because I think the SEC
is also trying to make sure that private credit markets
are just as well supported as the public markets. So
it's one of those things where I love my left hand,
I love my right hand. I'm just going to make
sure both pieces go out there and do what it
is that I can do.
Speaker 1 (08:02):
Yeah, And the mandatory arbitration provision, So the what happened
there is that the SEC used to say that if
a company had mandatory arbitration provisions in there, you know,
in their by laws, essentially, the SEC would not expedite
uh those register registration statements for I pos And so
(08:24):
as a result, you know a lot of companies didn't
didn't have mandatory arbitration provisions and their by laws, which
you know, means that shareholders were more likely to bring
their any claims they had in court and sue. So
that's a change, although it should be noted that states
like Delaware can still bar companies from having mandatory arbitration provisions,
(08:49):
so we'll see, you know, how many companies actually changed
TAC there. And it's also you know, one question to
me is like investors really even care about that, Like,
if a company has a mandatory arbitration provision, is that
going to dissuade an investor from investing in that company?
So that's sort of TVD.
Speaker 2 (09:08):
There's a lot here that the SEC could do that's
going to really make House Republicans and the House Financial
Services Committee happy. I mean, you hear often the Republicans
up in the Capital. They'll talk about the burden on
small companies. That's what this is designed for. I mean,
this is not for the IPOs that you know, get
the red line on the Bloomberg terminal and gets the
TV folks talking about it. You know, this is designed
(09:28):
for those smaller companies that are just trying to go public.
Speaker 1 (09:31):
Yep, that makes sense. All right, good stuff. All right.
Let's move on to Matt Suttenhelm, who's also here in DC,
sitting just a couple of rows down from Nathan.
Speaker 2 (09:41):
So.
Speaker 1 (09:41):
Matt covers litigation and policy in the TMT sector for US. Matt,
you've been tracking the easing of FCC rules, the Federal
Communications Commission rules for TV broadcasters, and you had an
important real development. It sounds like in that space this week.
(10:02):
You want to tell us what that was about.
Speaker 3 (10:03):
Yeah, thanks Elliott. So, yeah, we've been tracking the deregulation
that's that's been coming from the agency, and there's really
two pieces of it. One of them is the national
ownership cap, the rule that says the f that that
that companies can only reach thirty nine percent of US household.
And there's a second component too that you can in
(10:25):
each local market you can you could the FCC's rules
have long prevented a company from owning two of the
top four TV stations in that market, and this development
concerns that ladder half of this the owning of two
top four stations. The Ace Circuit Court of Appeals issued
(10:47):
a decision in July that struck down that rule and
and and said that it would be removed from the
books in ninety days unless the FCC did something about it.
And that also was the deadline for the for petitions
to the Supreme Court to challenge that a Circuit decision.
(11:09):
That deadline came and went this week, uh, and no
one filed a petition to the Supreme Court. So that
means that the A Circuit's decision wiping that long standing
rule off the books it stands. And so as as
these companies like next Star look at consolidation and and
(11:32):
acquiring more stations in more markets. That's one less hurdle
it needs to overcome, I should say. And and with
Jen re covering the anti trust side of this, she
points out that look, even if you remove the FCC rule,
that doesn't mean you're home free. There's still anti trust
(11:53):
review for for for acquisitions of two top four stations,
and so it's not the the end of the road,
but it is an important hurdle I think that has
long stood in the way of these acquisitions, and it's
off the books. The FCC is not going to revive
it under this administration.
Speaker 1 (12:12):
It's interesting. So the big leal development is that there
wasn't It was a development by omission, right, there was
no no cert petition.
Speaker 3 (12:22):
That's right and sort of surprising this is this stuff
has been litigated so aggressively for for decades, and the
rules have have withstood all of those challenges. But this
time the FCC would have been the primary party to
bring a challenge because it was its rule that was
struck down. But the chairman actually sort of likes it
(12:43):
that this rule was struck down. So the FCC wasn't
going to bring the case. There were interveners in the
case who could have challenged it, but they didn't. So
this this removes the book the rule from the books,
so positive for broadcast.
Speaker 2 (12:57):
Yep.
Speaker 1 (12:57):
All right, So there's an interesting case that you're following
that had some developments this week. That's President Trump's defamation
case against the New York Times. If I recall, this
is the case in Florida where the judge essentially dismissed it,
you know, without prejudice, for the complaint being too long
(13:21):
and unfocused, if I recall correctly, so he gave you know,
the president another shot at amending the complaint. You want
to just sort of remind us of specifics of the
case beyond what I what I just mentioned.
Speaker 2 (13:34):
That's that's exactly right.
Speaker 3 (13:35):
And we've covered this case on this podcast before, so
I'll just kind of keep it pretty high level.
Speaker 2 (13:40):
But that's exactly right.
Speaker 3 (13:43):
In the first version of the complaint, it took until
page forty six before you could actually get to the
allegedly false statements.
Speaker 1 (13:52):
You know, sort of ironic it was page forty six.
Should have been like page forty five or forty seven.
Speaker 3 (13:56):
Yeah, Okay, Yeah, I see, I see what you did there.
But Judge Mary Day came in and said, look, this
is ridiculous. Cut this whole thing down to forty pages.
And so an eighty five page complaint got cut down
to page forty. Now the legal claims start on page seven.
It's so fascinating development in that sense, But that was
(14:18):
purely procedural and and now I think we we turned
to the merits of of of does this suit really
have legs or not? When when when Trump filed this suit,
there was sort of a reaction in the stock I
think for as investors watched this, you know, because it's
it's claiming a fifteen billion dollars in damages is the
(14:40):
number that President Trump put put on this suit. The
amended complaint is very much when you cut out the
forty pages of extra stuff that the actual claims are
are the same, and the statements that that he alleges
are false or defamatory. He removed three of thirty six,
(15:01):
so thirty three of those, you know, thirty six false
allegedly false statements remain. So it's really the same case
that he initially proposed. Basically, this is about two originally
three articles that The New York Times wrote in twenty
twenty four about how President Trump acquired his wealth, how
(15:22):
he became a star on The Apprentice, and how he
operates his business. And there there he highlights in those
thirty three statements, statements that that don't present him in
a real positive light, and he alleges their defamatory How
do I think it will play out?
Speaker 2 (15:43):
To me?
Speaker 3 (15:43):
Look, any defamation case against a public figure is difficult
to win. And it's what we've talked about before, the
actual malice standard. It's not enough to show that the
reporters were careless. You have to show that the actually
acteds with with actual malice, meaning they they actually knew
(16:08):
that their statements were false, or that they recklessly disregarded
the possibility that they could be. That's that's a demanding standard.
And and and what when you read through this complaint,
you can go through those thirty three statements, you can
find you know, I think a number of them will
be dismissed as just characterizations or opinion, not something that
(16:28):
can be proven true or false.
Speaker 2 (16:30):
But some of them probably can be.
Speaker 3 (16:32):
But then you have that second and I think the
biggest turtle is is does Trump plausibly allege that these
reporters acted knowing that the statements were false or at
least recklessly acting in that regard, and just saying it
isn't enough. You need to plead facts plausibly alleging it.
(16:54):
And I think if President Trump's going to run into problems,
I think Judge mary Day, Mary Day is probably going
to be along those lines. So I expect a motion
to dismiss to come fairly soon here along those lines.
Expect a ruling in the first half of the year.
On that basis, I see about a seventy percent chance
that the suit has dismissed New York Times prevails on
(17:15):
that point. If New York Times fails on that point
and Judge Meriday lets it go into discovery, that's when
the pressure to settle is going to be significant, because
just litigating a case like this can you know, for
a couple of years potentially in discovery, can can cost
tens of millions of dollars. And President Trump has been
(17:36):
settling these cases with media companies. He settled with ABC
for fifteen million, Paramount for sixteen million, YouTube for twenty
four million. So if you know there's going to be
real pressure on the company to make this go away
and not spend that money in a real drawn out
legal fight. So I but as I said, I think
(17:58):
the key, the key thing to watch will be the
fight over the motion to dismiss, which should be the
first round of this case.
Speaker 1 (18:04):
Got it? And I like part of your headline, which
I think captures everything you just said very well, was
quote shorter but not stronger.
Speaker 3 (18:15):
So yeah, at least it was a little bit easier
to read. I had some sympathy for Judge Mary Day
after having to work through that first version. This one
is much tighter, but it's still it's tough to win
a defamation case against the public figure.
Speaker 1 (18:30):
So we'll see. Yep, all right, good stuff. All right,
let's bring in Justin Teresi. Justin is one of our
antitrust analysts based in New York. Justin, you have been
following the FTC, the Federal Trade Commission's lawsuit against various
PBMs pharmacy benefit managers over unfair drug rebate practices. Your
(18:55):
headline in part said delayed again more hit ups ahead.
So you want to just tell us what's going on there?
Speaker 4 (19:03):
Yeah, yeah, definitely. So there's a couple of big procedural
things happening with this case in the coming month. So
that's really the reason talk about it right now, But
just to back up a little bit and remind everybody
a little bit about what this case is. So this
case had so much fanfare associated with it when it
came out last fall. It was one of the last
cases that was filed that was filed under Elena Kahn's FTC.
(19:25):
But the basic allegation in the lawsuit is that the
big three pharmacy benefit managers that's United Health, optim CVS
healths Care Mark, and Sickness Express Expressed Scripts basically engage
in activity related to drug rebates and seeking big drug
rebates from more expensive pharmaceuticals for their formularies that have
(19:46):
the effect of raising list prices for drugs. And what
does that mean. The allegation is that those higher prices
really have a detrimental effect on the uninsured and folks
that have really high deductible coverages. So that's the basically
central allegation of the case. There's been a lot of
problems with the litigation though since it got out of
the gate. First and foremost, it's a really broad claim
(20:09):
under the FTC. Act Section five. There's a lot of
questions about whether or not the power associated with the
FTC Act really expands the reaches with which the litigation
was brought. That's kind of number one, the big issue
with the litigation. But the FTC brought the case at
its own internal tribunal, so that's really the procedural issue.
I think we're seeing bubble up right now as a
(20:30):
major issue. The PBMs finally have got an a motion
to dismiss on file with the internal Tribunal at the FTC.
But also coming up relatively soon, the Eighth Circuit, a
penalty circuit, is going to hear an appeal about whether
or not the case should even continue due to constitutional
grounds that were raised earlier this year by the PBM.
So there's a lot going on here. Things are stayed
(20:50):
again though as a result of the government shut down too.
Speaker 1 (20:54):
So what are you looking for next?
Speaker 4 (20:56):
Yeah, so two things. First, you know, I think what's
really interesting here internally at the FTC is that, look,
you've got a chair Andrew Ferguson. Now you've got Commissioners
Mater and Commissioner Holyyok who's recused from this case. But
the commissioners that you do have active with the litigation.
They're all kind of on the record in the past
being really really questioning the expanse of nature of Section
five and just how far that actual power goes at
(21:19):
the FTC. So it's really kind of a Queshowie too
here in the sense that I think you have a
White House and an administration that very much wants to
do something around the issue of pharmacy benefit managers and
pharmaceutical prices. But the way the lawsuits styled, it's really
kind of a big issue in terms of the ideologies
associated with the commissioners who are actually going to be
hearing this case. So there's a motion to dismiss on file.
(21:41):
A little bit saved by the bell right now, i'd
say for them in the sense that a shutdown is happening.
And later on this month, on November ninth, or next month,
on November nineteenth, this penelty the Eighth Circuit is going
to hear a lot of those constitutional questions in the
context of an appeal related to an injunction that was
denied previously to halt the case. Right, what are we
talking about there, right?
Speaker 2 (22:02):
You know?
Speaker 4 (22:02):
Is the internal tribunal constitutional due to removal powers and
you know the actual double removal issues that exist with
the administrative law judges there. And beyond that too, we
have the Supreme Court's decision in Jarkasey last year and essentially,
is this too big of a case with too much
on the line for an internal tribunal to actually be
hearing it. Those are the big questions that the Eighth
(22:23):
Circuit's going to hear this coming month. And I've got
to say, as far as the PBMs are concerned, they
got fairly a panel that's likely going to be beneficial,
I think to their particular viewpoints here in the sense
that we have three judges who all entered the judiciary
under President George W. Bush, right, So I think more
traditional Republicans with probably a more traditional view of powers
(22:43):
and administrative powers, and we otherwise might get with more
populist judges on the bench.
Speaker 1 (22:48):
Interesting, and that's the Eighth Circuit twice in the twice
on this episode at.
Speaker 4 (22:53):
That, yeah, look at that, but typically business friendly circuit too.
I think the PBMs know that. I think they filed
in the right place. So look, at the end of
the day, you know, we're kind of saying there's a
sixty percent chance this complaint probably is going to get
tossed in one way or another. The question is how
does that actually happen, right, and whether that's the commissioners
pulling the case and refiling it a different way that's
a possibility, or the circuit perhaps says nope, this doesn't
(23:16):
work with the way it's been styled the internal tribunal.
So there's all these different threats of the case. The
DOJ is still investigating United Health as far as we
know with regard to pharmacy benefit managers as well, so
there's a lot of different things that can happen here.
But I think the takeaway is the litigation probably doesn't
look the same way a year from now as it
currently does at the moment.
Speaker 1 (23:36):
Got it, well, Well, we can discuss it again at
that point, probably sooner, I'm sure, many times, and see
how correct you were? All right, justin good stuff, Holly,
Let's bring you in. Holly covers litigation and policy in
the consumer and industrial sectors for US, and Holly, I
know you want to talk today about some developments and
(23:59):
loss suit you've been tracking against the Los Angeles Department
of Water and Power brought by victims of the Palisades
fires last year. Sounds like the complaint was amended recently.
You want to just remind us more about the case
and what that means that the complaint was recently revised.
Speaker 5 (24:17):
Sure, thanks Elliott. So, the LA Department of Water Power,
or DEWOP as I've heard it been called, has been
sued by victims of the Palisades fire in California. As
of September, there were losses filed on behalf of thirteen
hundred people, but plan fs say they expect that number
to grow to ten thousand. So, as you mentioned, the
(24:40):
planets filed this master complaint, this revised complaint on October eighth,
and what they say is that the utility drained water
from the Saint Anas Reservoir, which fed the pumps that
were by their houses, and because of that, firefighters lacked
sufficient water and water pressure to fight the fire. And
they also say that the utility failed to energize power lines.
(25:06):
Those power lines fell and then caused spot fires which
spread the conflim the fire. So I think the primary
issue will be whether inverse condemnation applies. And what that
is is this doctrine in California which says that if
a public entity puts a public improvement on someone's property
(25:27):
and that improvement ends up causing damage, it's considered a
taking a private property, and the utility is liable as
long as the damage was caused by their equipment, the
equipment posed inherent danger, and that the end damage was
a likely result. So even though the utilities equipment didn't
(25:48):
start the fire, the question is, does inverse condemnation apply?
So I think it's a pretty strong case for inverse
condemnation with regard to the down power lines, And then
the question would be, well, the fire had already started,
did that Would that fire have caused the damage anyway?
But I think that's a fact issue, and that's but
that's certainly I think that you know, that probably gets
(26:11):
them past emotion to dismiss and maybe even a motion
for summary judgment barring certain expert testimony that could be presented.
But with regard to the draining of the reservoir and
the lack of water in the pumps, which I think
is a primary complaint, I think it's a closer call
on whether in verse condemnation applies, because I'm not sure
(26:34):
that the fire hydrants count as a public improvement or
the reservoir accounts as a public improvement. There's only one
lower court case on point where a court applied in
verse condemnation to a water authority that failed to provide water,
and that was this case out of Orange County that
was originally filed in twenty ten. I think eventually that
(26:56):
issue will go up to the Supreme Court of California.
And though it's very cool, I think that ultimately the
Supreme Court could find that inverse condemnation applies.
Speaker 2 (27:05):
Wow.
Speaker 1 (27:05):
So you think this case might actually wind up at
the Supreme Court.
Speaker 5 (27:08):
The California Supreme Court. Yeah, I think that the California
Supreme Court will have to answer this issue.
Speaker 1 (27:14):
Interesting, And I mean I assume this is interesting for
investors in Mouni bonds, right, can you sort of give
us a flavor of baluches at stake?
Speaker 5 (27:25):
Well, in this case, so the plainiffs are saying that
there was over fifty billion dollars worth of damages.
Speaker 1 (27:32):
Wow, I mean, do you think that's realistic in terms
of what they could recover?
Speaker 5 (27:36):
In terms of what they could recover, I haven't said,
but I think it's realistic in terms of the damages
for sure.
Speaker 2 (27:43):
Wow.
Speaker 1 (27:43):
All right, So what are you watching flanxt the motion
to dismiss It sounds like, so the motion to dismiss.
Speaker 5 (27:49):
I don't think we'll be decided until twenty twenty six,
but that's the next step. And then if it gets
past that, they're going to go into discovery. But this complaint, like,
you know, this is a massive complain. It was two
hundred pages long. There's like over twenty defendants named, and
it's you know, they're they're alleging all kinds of causes
of action. I don't envy the planists who have to
(28:11):
prove this case, but you know, because they're trying to
go after everyone because you know, I'm sure that there's
probably like multiple things that caused different fires there that
they're calling the Palisades fire. But yeah, but it's you know,
the next step would would be for the plane EUS
is like the is to get this, you know, ruling
on in res condemnation on a motion to dismiss, and
(28:33):
that's going to decide what planes go forward against the utility.
Speaker 1 (28:37):
Gotcha? All right, good stuff, Hollie, Thank you. So you
just talked about a case I was fifty billion dollars,
I'd be remiss if I didn't talk about the case
I'm covering that got a lot of client interests this week,
which potentially, in theory, could have even more at risk.
And this is a case against the French bank BNP
(28:59):
Paribar brought by Suitan, these refugees in the US who
claimed the bank helped finance the Suitanese government's genocide in Sudan,
you know, going back to about nineteen the mid nineties.
Really what happened in the case was that on Friday,
October seventeenth, there was a trial verdict in a bell
(29:24):
Weather trial against three of the plaintiffs in the case.
This was roughly a month and a half long jury trial,
and the jury wound up awarding these three plaintiffs twenty
one million dollars. The risk the issue that I see
is that you potentially have about twenty thousand other potential plaintiffs.
(29:47):
If you go back to May twenty twenty four, the
court certified a class estimated to be up to twenty
three thousand plaintiffs. Parties have gone through the process of
notifying you know, potential plaintiffs, and it sounds like as
of July of this year, you had about sixteen and
a half thousand who had opted into the class. You
had about another fifteen hundred who opted out. So you know,
(30:11):
if you do the mass, if these other thousands of
plaintiffs are able to win as much as these three
bell Weather plaintiffs did, you're looking at over one hundred
billion dollars in potential damages. You know, obviously we're not
going to get to something like that, but I do
believe it puts pressure on the bank to settle at
some point. And you know, I do think the bank
(30:34):
actually has some decent arguments on appeal, and I think
it's best leverage for getting a manageable settlement is to
leverage its appellate arguments, and I do expect an appeal
to be filed as to these three bell Weather plaintiffs
pretty soon. And you know, in my mind, if it's
(30:56):
a bank you know, doesn't settle and they wind up
losing on appeal, some of those issues may translate and
carry over to a lot of these other plaintiffs, and
at that point the bank won't have any leverage with
respect to a lot of its legal issues. So I
do think it's anticipated appeal will be its best leverage
(31:17):
for getting a good settlement. I think it's notable that
the plaintiff's lawyers, in an interview earlier this week following
that verdict, sort of hinted at that they valued this
case sort of in the single digit the mid single
digit billion dollars, so you know, something in the five
(31:38):
billion dollar range. The bank has contested that. They said
they don't have any pressure to settle. They do report
earnings on October twenty eighth, and so we'll see if
they say anything more at that point. But for now,
I'm waiting to waiting for them written for the bank
to file its appeal with respect to this verdict against
these three bell Weather plaintiffs and Eliott.
Speaker 2 (32:00):
I just checked. The stock is still down twelve point
three eight percent since the verdict.
Speaker 1 (32:04):
Yeah, the bank stock took a pretty big hit on Monday.
In particular, the bank then held a call where CFO
talked about the case. That was Tuesday morning, and I
think the stock was actually a little lower after the
call than it was at the beginning of the call,
(32:25):
So I'm not sure that's that eased investors' minds. I
think the stock went back up a little today, but again,
we'll see what the bank says on October twenty eighth,
after earnings, and again I'm waiting for the bank to
file it's appeal, which I think will be soon. All right,
(32:46):
I think with that we will wrap up this episode
of Votes and Verdicts. As always, thank you for listening.
If you have any questions about anything we talked about today,
please don't hesitate to reach out to us have your
convenience with questions. As a reminder, you can find all
of our research on the blue Umberg terminal at big
and you can find our litigation and policy research on
our dashboard at bi laws Go. We also want to
(33:07):
thank our producer at Jasemani, without whom this podcast would
never publish on time. Thank you again for listening, and
have a great day.
Host
Elliott Stein
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