November 21, 2025 • 39 mins
Key takeaways from Meta’s trial-court win over the FTC’s antitrust suit leads Bloomberg Intelligence’s Votes and Verdicts podcast this week. Jen Rie discusses that case, while BI litigation and policy analysts examine other critical issues, including potential preemption of state laws concerning artificial intelligence and President Donald Trump’s anticipated executive order on the subject. Nathan Dean discusses potential effects on companies like Apple, Skechers and Steve Madden of proposed bipartisan legislation to impose tariffs on countries that buy Russian oil. Elliott Stein analyzes the strength of the Justice Department’s investigation of JPMorgan and its ties to Jeffrey Epstein, and Holly Froum provides an update on an appeals court hearing that might revive claims alleging Tylenol causes autism and ADHD.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:15):
Hello, and welcome to the Votes and Verdicts 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 is our weekly look
at the litigation and policy catalysts and issues that we're
currently watching and that we think will impact companies across
a number of different sectors. My name's Elliott st I'm
(01:00):
an analyst with Bloomberg Intelligence covering litigation in the financials sector,
and I'm delighted today as always to be joined by
several of my BI colleagues. As always, you can find
all of our research on the Bloomberg terminal at BI go,
and you can also find the majority of our litigation
and policy research on our dashboard, which is available on
(01:21):
the terminal at BI laws go. Today is November twentieth.
It's about ten forty three am. Well, actually it's exactly
ten forty three am here in New York. And with that,
when don't we get going, Jen Reed, let's bring you in.
Jen is our anti trust guru, and she, along with
(01:44):
our colleague Justin TERESI have covered the case brought by
the FTC several years ago, I believe, at the end
of the first Trump administration against Meta over antitrust violations
related to its purchase of Instagram and WhatsApp, I believe,
And we got a decision this week from the trial
court and it was very good for Meta. It sounds like,
(02:06):
so jh and you want to come in and just
tell us more about the case and the decision.
Speaker 2 (02:10):
Yes, absolutely, I think it has to be a big
sigh of relief from Meta because the FTC was actually
seeking an order to force it to sell off Instagram
and WhatsApp, and those two parts of the Meta trilogy
of apps make up something like forty percent of the
revenue for the company, so this could have been a
really big deal. But on the other hand, the decision
(02:31):
against the FDC wasn't that much of a surprise. The
judge has expressed a lot of skepticism from the very
beginning about this case, and to be honest, I'm kind
of surprised he didn't just dismiss it on the summary
judgment and instead allowed it to go all the way
through trial. But it's really pretty simple. I mean, what
the FTC is saying is that Facebook is in pretty
much its own market in terms of competition, that it's
(02:55):
in a personal social networking market and really only competes
with its own product Instagram or with Snapchat, and that
is it in that market. And so to claim that
the FTC was saying Facebook, Instagram does not compete with TikTok,
substantially does not compete with YouTube, Twitter, some of the
other apps that are out there that people use for
(03:17):
putting out their opinions and sharing pictures and social networking.
And the judge essentially just didn't agree with that, you know,
he said, you have to look at the marketplace today.
With the evidence show that was presented at trial was
essentially that people users do switch back and forth between
mostly TikTok, YouTube and Instagram and Facebook, that they consider
them fairly interchangeable. And there were some natural studies that
(03:39):
were done that showed in different countries at different times
when some of these apps were blacked out. But there
was a demonstration of where users what users switched to
if they couldn't access TikTok. There was a short time
TikTok was blacked out in the US. Where did they go?
They went to Facebook. That shows that there's competition between
these apps.
Speaker 1 (03:58):
Yeah, that's so interesting. And I'll be honest, I didn't
read the decision, but I read articles about the decision,
and I think what really struck me because I use
you know, I use Facebook. I don't use TikTok, but
I use Facebook and Instagram, and I know some of
you on this call do too as well, because we're
connected and friends. But what struck me was the judge
(04:20):
talking about how so much of Facebook when it started
was you know, content from your net, your network of friends,
right like sort of a closed network, and how little
of that content now is related to your friends, and
how much of it is from strangers and these videos
that you know, we get fed by the algorithms, which
(04:43):
I think is more of a you know, probably related
to the fact that TikTok has had on a lot
of rece apps and that raised the question in my mind,
do you think the judge is on all these apps?
Speaker 3 (04:55):
No?
Speaker 2 (04:55):
I don't think the judge the charge is unlikely to
be on all of these apps. It's judge Bo's here
who's been kind of controversial during the Trump the second
Trump administration in general. I suspect he isn't. But you
know what happens in these kinds of tech cases with
judges is they have educational tutorials, which happened here, where
they're basically bring in executives from all of these companies
and they give them a very thorough demonstration of how
(05:18):
they're used to uses them. You know, they get to
know them pretty intimately. You have to do that for
antitrust because anti trust is about the way businesses operate,
and so you have to understand how a business operates
in order to make this kind of a decision. But
what's interesting Elliott is that he did make the observation
that everything's converged over time. That when TikTok started, it
was one thing, and when Facebook started, it was one thing.
(05:39):
But they both become closer to each other, where you know,
Facebook's sharing more content rather than sharing with friends and
family and that TikTok has also moved into the personal
share networking space too, that they've just kind of converged.
And maybe five years ago when the case was brought,
it was a different kind of market, but he had
to look at the realities of the market today, and
(06:00):
looking at it today, they all kind of do a
lot of the same stuff and people see them as substitutable.
And you know, in a nature trust monopolization case, the
very first thing that has to be proven is that
a company has monopoly power. And monopoly power is a
hazy concept, but it generally means about more than seventy
five percent share in a market. And to determine that,
you've got to define a market. And once the judge
(06:22):
said that the proper market is defined to include YouTube
and TikTok, Facebook's share is well below and when I
say Facebook, I'm including all of its apps Instagram, Facebook.
Speaker 4 (06:31):
Et cetera.
Speaker 2 (06:32):
It's well below that seventy five percent. The number was redacted.
I don't know what it is, but there was a
suggestion that it was well below forty fifty or forty.
So once there's a finding that there's no monopoly power, right,
you're not going to find there won't be a finding
that there was a legal monopolistic act. The one thing
I'll say was very odd to me about this decision
(06:53):
is that in most cases, even when the plaintiffs fail
at that first step, they fail to show that a
company has monopoly power, a judge will usually walk through
the rest of the analysis, even assuming that they did
show monopoly power. What the conduct that they engaged in
it's alleged to be unlawful? Was it anti competitive or not?
Here the conduct was these acquisitions of Instagram of WhatsApp
(07:17):
that were intended, according to the FDC, to remove competitive
threats from the market. Facebook wanted to buy rather than compete.
That's what Mark Zuckerberg said in one of his emails.
The judge never touched that. He basically said the relevant
market was wrong. FTC, you didn't show monopoly power. End
of story. And that's a little weird.
Speaker 1 (07:37):
That is weird. So just this is sort of non sequitive.
But one of my favorite Judge Bosberg factoids is that
he and Justice kavan On the Supreme Court were housemates
when they were at Yale Law School. I don't know,
I don't know if that protects Bosberg at all from
you know, taxing of Trumpet administration obviously probably doesn't. But
to your comment on sort of the weirdness of his
(07:58):
approach in this decision, you know, what does that mean
for a potential appeal by the FTC? And then my
only other question is is there any read across from
this decision to you know, many of the or any
of the other many anti trust cases that have been
brought by the FTC and DOJ.
Speaker 2 (08:16):
Yeah, I think it's really a complicated question here as
to whether the FTC will appeal. This was controversial from
the start. So it was brought during Trump's first administration,
and there were three Republicans and two Democrats at the
time on the commission, and it was a three to
two vote. Two Republicans voted against bringing the suit altogether,
and one Republican voted with the two Democrats to bring it,
(08:38):
and that's why it was brought. We now have an
FTC commission made up of two Republicans. They're a little
bit more on the populace side than the Republicans that
originally voted no on this case. But on the other hand,
because it's been kind of controversial and difficult and difficult
to win from the beginning. I wonder if that would
(09:00):
keep them from appealing. And the other thing, Elliott is
the politics at the time the case was brought that
Mark Zuckerbergen and President Trump were not particularly friends, and
in fact, the administration thought that this that the platform
was censoring conservative content, and that has since changed. So
I sort of leaned against an appeal here. And I
(09:21):
should say the FTC also just lost another case. It
was a small merger challenge in court, and they just
announced that they won't be appealing bad So I don't
know if there's any read through there now in terms
of the other cases. Right now, we've got FTC versus
Amazon pending, and we have the Department of Justice versus
a live Nation and the Department of Justice versus Apple pending,
and I think the facts are just so completely different
(09:45):
in those cases, and these cases are definitely backed by
fact basis in terms of defining relevant markets and things
like that, that I'm not so sure that there's a
lot of read through other than perhaps, you know, if
the FTC thinks things aren't going well, if they're getting
indications from the judge that things aren't going well on Amazon,
as they got indications in this case, maybe they'd be
(10:07):
more willing to settle. There was an attempt here by
Mark Sockerberg to settle, but.
Speaker 4 (10:10):
It was rejected by the FTC.
Speaker 1 (10:12):
Whoops.
Speaker 2 (10:13):
Yeah, would have been a better situation than they're in now.
Speaker 1 (10:17):
Yeah, exactly what was that settlement offer during the Trump
the first Trump administration, during the Biers administration. Oh so
it was. It was pretty recent. It was since January.
Speaker 2 (10:27):
And also a bit odd. Apparently it was very close.
The president was involved and we were very close, very close
to accepting it, but was talked out a bit. Now
this is all just ruberbillboard where's in the news reported stuff?
Was talked out of it by the Assistant Attorney General
for any Trust at the Department of Justice, Scale Slater.
It's not her case, but she is, you know, also
(10:47):
an anti trust enforcer because that responsibility shared between the
FDC and the DOJ.
Speaker 1 (10:52):
Not going to help her, uh her job security at
the FDC.
Speaker 2 (10:57):
I gotta think, well, she's at the DJ okay, which
is why it's a little strange. Because it was an
FTC case. It may it may not have been true,
It may not have been the case, but I had
heard through the news that they were close to settling,
and it was an odd settlement because it was also
for a sum of money, which isn't usually what happens
with government monopolizations too, so that.
Speaker 1 (11:18):
It's something this administration that money can go straight to
building the East room, the East Wing. All right, Jen,
good stuff, thanks as always. All right, Matt Chattanhell, let's
bring you in. So Matt covers all TMT litigation and
policy issues for US. Matt, So, you've been writing about
AI for a while and you've sort of been teeing
(11:38):
up this issue of sort of the big legal question
that's coming down the pipeline being, you know, whether the
federal government can preempt state laws on AI. Last night
we got news that the Trump administration or President Trump
is going to issue an executive order on eat on AI,
(12:02):
talking about, you know, his ways to preempt state laws
on in this area. What do you I mean? I
don't think we've seen the executive order yet, right, maybe
there's a draft out, but what do you know about
it so far? What are you expecting in it? And
maybe also just sort of talk more generally about what
this preemption issue is. Sure?
Speaker 5 (12:23):
Yeah, So, So This started this week a little bit
even before that, when when President Trump put out a
post on social media calling for Congress to preempt the
states into and to adopt a national standard. And then
after that we had reports of this executive order that
might be coming later this week. There is a draft,
(12:45):
as you said, circulating online that says it's you know,
it's not finished or you know, incomplete, not not final,
but looking looking at all that and all. And this
also builds you know, when when when Congress passed the
big beautiful bill in July earlier this year, there was
a big push to to adopt this by Congress to
(13:10):
preempt state limits of AI. All of this is a
huge sort of reversal from where Congress was just you know,
a couple of years ago they were having as soon
as AI jumped out of the scene. There are these
hearings even with Republicans saying, look, we need to regulate here,
we need we need an agency. We've kind of gone
(13:30):
one eighty on that, and and now we're the complete
focus of this administration is is deregulation and staying out
of the way of inhibiting this technology. And so I
think President Trump's his social media post and this report
of an executive order fits with with all of that.
(13:53):
But there, you know, there are real legal questions, real doubts.
I'm very skeptical that if Congress does doesn't passed something here,
that President Trump himself can step in and start suing
the states or taking away their funds on his own.
And and that's sort of what this executive order suggests.
Speaker 1 (14:15):
So so is that what happened with the one Big
Beautiful bill, like what was the pushback to China insert
up language? Was a bipartisan or not?
Speaker 5 (14:23):
Yeah, I think there were real concerns from from certainly
from Democrats and and from and from select Republicans as well,
that that you know, there are legitimate reasons that states
should be able to address risks related to AI, and
(14:47):
real concerns that a broad preemption may not be the
path to go. Lawmakers have held many hearings about social
media and in recent years that said, look, maybe we
went too far with not regulating social media and and
(15:07):
maybe that was a mistake. And I think you're you're
hearing echoes of that in this AI debate, because I
think there's a real concern if if we we remove
all regulations, what exactly what where where will we end
up and might it look like where we landed with
social media, which which which concerns a lot.
Speaker 1 (15:28):
Of people right and there's starting to be more litigation
around some of the ills related to social media as well.
What type of regulations are people even talking about though
when they're when they're talking about AI and like what
you know, what kind of valuations are states like California
starting to enact?
Speaker 5 (15:47):
Yeah, I mean, sort of the sky is the limit.
People are trying to figure out this technology, and and
so you know, there there's there's long been a concern
about discrimination with with AI, that it's going to that
there are going to be inherent biases worked into these
models and that that could lead to, you know, disadvantages
(16:09):
to to certain groups. It's it's, you know, it's sort
of the sky is the limit and and and and
so it's kind of consistent with the whole idea that
states are laboratories of democracy that we should sort of
they should experiment with. Okay, you've got a problem with
AI here, let's let's try to address that. And so
(16:31):
they're they're they're kind of ideas are brewing right now.
More than that, you know, anything concrete and material is passing,
it's they're exploring it. And and there's the industry is
concerned that if they have to deal with the patchwork
of fifty different you know ideas brewing and and those
all past different different standards, it's very difficult for them
(16:55):
to advance their their technology, and and and it all
plays into you know, geopolitical concerns as well. You know
that is China going to be able to race ahead
if that if we have all these these hoops that
the companies need to jump through, But real, real, I
think difficult without Congress stepping in the way this is
(17:15):
supposed to work under the law. Is exactly what we
talked about in the Big Beautiful Bill. If Congress wants
to preempt, they could pass a law to do that.
And but what what President Trump seems to be suggesting,
I think this is sort of an acknowledgment. Look, I
probably am going to have a difficult time getting legislation
(17:36):
to pass through this Congress. And the executive order that
that's being hinted at now says, look, we're going to
use some other legal claims, maybe the commerce clause, not
the supremacy clause not preempting, but the idea that only
Congress can regulate inner state commerce. And that's just such
a shaky basis to go after the states. I don't
(17:58):
I think it would have a real tough time and
court interesting. And what else do you think might be
in that executive order? You mentioned cutting off federal funding
as well. Yeah, so part of the debate related to
the One Big Beautiful Bill was maybe we withhold what's
known as bead funding, which was part of the Infrastructure
(18:20):
Act that passed in twenty twenty one. But it was
forty three billion dollars of funding for broadband that is
being passed out to all fifty states right now, and
Congress was looking at, well, let's let's let's not allow
states that regulate AI aggressively to get to keep those funds.
(18:40):
And so it seems that this executive order might be
trying to do that as well. Again, you know, Congress
already passed that law in twenty twenty one and it
didn't attach this condition to those funds, and Congress tried
to add it in the One Big Beautiful Bill. Congress
couldn't agree to do that. And so I think Trump
(19:02):
coming in now by executive order and saying, oh, put
put that condition in any way. The draft I saw
said you should do that to the maximum extent permitted
by law, and so I think that's sort of a hint. Okay,
we got probably have some problems here.
Speaker 1 (19:20):
So yeah, that aws to me always is like an
indication that the executive order is mostly symbolic. Right, It's
like recognizing there's other laws that really sort of, you know,
either address it or not going to allow what you
want to do.
Speaker 5 (19:34):
I agree, and we'll see what the final text looks
like when, when and if it comes out. But this
is probably mostly about threatening and trying to create momentum
in the direction of preemption and deregulation. But it's not
really much, in my view, of a serious legal threat
for states that are looking at regulation.
Speaker 1 (19:56):
All right, good stuff, thanks, Matt. I guess we'll follow
up when the EO actually comes out and you read
on it. All right, Nathan Dean, let's bring you in.
Let's talk some Russia sanctions potential legislation. You wrote this
week about a bill in the Senate that would impose
(20:17):
taris on countries that buy oil from Russia. But you
also wrote that this is probably mostly headline risk. Do
you want to just tell us what you're thinking there is? Yeah?
Speaker 3 (20:27):
And before I do, I want to give a shout
out to a certain high school soccer team for going
to the state championship.
Speaker 1 (20:31):
Yeah, Larnston High School in New Jersey. Let's go.
Speaker 3 (20:34):
Elliott wasn't supposed to be hosting this until they won
yesterday and got sent to the state championships. So kudos
to that team. So what we want to talk about
is the Sanctioning Russia Act of twenty twenty five. And
the story about this bill is headline risk because when
you look at the headlines associated with this, it could
be somewhat scary from the tariff portion of it. For
(20:54):
those investors that have exposure to China in India, this
could be somewhat scary. So what this bill does is
that it would allow the President and I should note
that this bill has eighty five co sponsors in the Senate,
so this is a bipartisan bill as they come. This
bill would allow the president a tool to essentially slap
(21:15):
both primary and secondary sanctions up to five hundred percent,
including acid freezes and bands on transactions with major Russian banks,
on any country that buys Russian oil, and there's four
that you should think of. It's China, India, Brazil and Turkey.
So if this bill goes forward, President Trump, and you know,
(21:36):
we've talked to Holly many many times about AIPA and
section two thirty two and section three oh one, but
this would give the President trumpet a tool to essentially
put up five hundred percent tariffs. Now you see the
headlines and you take five hundred percent tariffs on China,
five hundred percent sheriffs on India, and that scares companies
like Apple, Sketchers, Nike that have supply chains in these countries.
(21:58):
But that's where I think the story ends, is that
this is headline risk. So the bill as the most
recent status. Senator Lindsey Graham said that he had a
conversation with President Trump this week. They golfed over the weekend.
I think Senator Graham said that President Trump is okay
moving forward with this bill and it has his support.
But that's the story where it's always been is that
(22:19):
President Trump has always been, yeah, you can give me authority.
I have no problems with that. The challenge is where
does this follow in the UK and Russia negotiations because
at the same breath, you know, President Trump doesn't want
to essentially, and I'm you know, I'm paraphrasing one of
friends over Bloomberger Economics tell me in terms of the
US Ukraine Russian negotiations, is that this is a negotiation tool.
(22:43):
And so if President Trump thinks that this tool will
be useful in terms of bringing Vladimir Putin to the table,
you know, we're still waiting for that Budapest here meaning
to take place. You know, that's then the Senate is
going to actually vote on this bill. So you know,
I keep I always say my note is that there's
about an eighty percent chance this bill passes if the
(23:04):
White House wants it to pass. And so I don't
think the White House is going to say let's move
forward unless they need this bill passage as a way
to force Russia to come back to the table and
so forth.
Speaker 1 (23:15):
But why, I mean, why wouldn't the president want it regardless? Like,
what what's the downside to the legislation passing?
Speaker 3 (23:22):
You know, I honestly don't think there's much downside other
than the fact that it gives the president more power
and legislatively, you know, even though it has eighty five
co sponsors on this, you know, they're viewing this towards Russia.
In particular. The language is very the language is specifically
geared towards Russia. So, you know, I think this is
(23:44):
one of those things where President Trump offers a carrot
at the same time he offers you know, I'm trying
to think of the best analogy for you know, the
for the hammer. Maybe that's the best way of saying,
you know. And so I think this is one of
those things where the White House has been somewhat hesitant
to say, yes, let's go forward with this, because if
(24:06):
President Trump wants a deal and Congress signs the legislation
giving President Trump the ability to do five hundred percent
tariffs on countries like China and India, that just upends
a lot of geopolitical tension across the globe. And so
when I've talked to like Adam Ferrer and Jenny Welch,
you know who Jenny we had on the podcast last week,
when I've talked to the geoeconomists, you know, there's a
(24:28):
delicate balance here in terms of this legislation. And so
it's just sitting there and I don't think anybody anticipates
that we're going to get a situation where there's five
hundred percent tariffs. But you know, that's why I always
just put this in the headline risk perspective for now.
Speaker 1 (24:43):
Yeah, that makes sense. I suppose from President Trump's perspective,
if he has the tool and he doesn't use it,
it could look weak. So he just sort of buys
him some time by saying, I don't even you know,
I don't have this power yet, but uh it still
it still works out there.
Speaker 3 (25:00):
And look, President Trump already slapt tariffs on India for
buying ruff and oil, so I mean there are other
avenues for this, they go forward. So again it's headline risk.
Speaker 1 (25:10):
Yep, makes sense, good stuff. So you this is it
occurred to me. This is I think the first episode
we've had where you didn't talk about the shutdown in
you know, several weeks since we had like a month
and a half long shutdown.
Speaker 3 (25:24):
You know, yesterday I spoke at the DC Spotlight series,
so we had about one hundred individuals at the top
of a Hey Adam's hotel, and I did get that question.
So for the folks that are listening, which question is
the government going to shut down in January? And I'm
at thirty percent chance with the caveat that if the
White House puts out a recisions building, that would put
the Democrats back into the fight mode. But as of
(25:46):
right now, either side want to shut down, right.
Speaker 1 (25:49):
I was actually going to bring up your comment when
the shutdown ended that now that the shutdown has finally
ended and the government is open again, we can finally
get back to the real business of America, which of
course is the Epstein files, which leads me to what
I just wanted to talk about briefly, which is that
this week President Trump said the Justice Department should investigate
(26:11):
former President Clinton, former treasure Treasury Secretary Larry Summers, LinkedIn
CEO Reed Hoffman, and also JP Morgan for their connections
to Jeffrey Epstein. Attorney General Pam Bondi then said she
was assigning that task to Jake Clayton, who was the
(26:32):
US Attorney for the Southern District of New York. So
there does seem to be at this point some sort
of investigation. I want to talk about how it relates
to JP Morgan, since you know, I cover potential enforcement
actions in the related to financial institutions. And my overall
view is that any you know, potential claims or charges
(26:57):
against JP Morgan would be too little, too late. Just
you know, by way of background, Jeffrey Epstein banked was
a client of JP Morgan's from like the late nineties
to about twenty thirteen. Why do I say there's just
too little here against the bank? I just think it's
(27:18):
unlikely that the Justice Department has sufficient evidence to prove
a criminal case against the bank and connection with JP
Morgan in connection with Jeffrey Epstein. Just in July, the
FBI released a memo. July of this year, the FBI
released a memo where they concluded that there was no
evidence to support an investigation of anyone other than Epstein,
(27:43):
you know, and so to find that evidence now would
be a complete one eighty I you know, I doubt
they would have released that memo if they had any
smoking guns. Why do I think it's too late? So,
like I said, JP Morgan got rid of Epstein as
a client in twenty thirteen. The statute of limitations for
things like violations of the Bank Secrecy Act is only
(28:06):
five years for criminal cases or six years for civil claims.
Wire fraud and mail fraud. Again, statutes of limitations are
only five years or ten if it's if it involves
or effects a financial institution. But again we're here in
twenty twenty five. Epstein was no longer a client with
Jacob Morgan as of twenty thirteen, twelve years ago. So
(28:28):
what's interesting is the statute of limitations for violations of
the Trafficking Victims Protection Act, you know, in the anti
trafficking Statute. That's where there might be a little bit
of risk because for violations of that statute, for some
violations of that statute, there's no statute of limitations where
it involves human trafficking, and so you know, the bank
(28:52):
would really have to rely on the fact that there's
just no evidence of any criminal wrongdoing here, and you know,
I would I would note that in twenty twenty three
there were lawsuits filed by victims of Jeffrey Epstein against
JP Morgan as well as against Deutsche Bank under that
(29:14):
same statute, the Trafficking Victims Protection Act, and these claims
accused both banks of benefiting financially from a trafficking venture,
which is a claim under that statute, and the judge there,
Judge Rakoff and here in the Southern District allowed those
claims to survive a motion to dismiss. So claims by
these victims against JP Morgan for benefiting financially from Jeffrey
(29:37):
Epstein's trafficking venture survived emotion to dismiss, which just means
that they you know, that the claims that they put
in their complaint are plausible. It doesn't mean that they
were proven or anything like that. But again, this FBI
memo in July suggests that DOJ didn't think such claims
could be proven beyond a reasonable doubt, which is, you know,
(29:58):
what they need in order to bring a criminal case.
So there's a potential risk out there. But unless the
Justice Department uncovers smoking guns that they, you know, six
months ago, thought didn't exist, it doesn't seem to be
much there there. But we should talk about what's at
risk because it could be substantial. JP Morgan reported more
(30:19):
than one billion with the B dollars and potentially suspicious
transactions related to Epstein. This anti trafficking statute allows for
penalties up to two times to gross gain. There are
money laundering statutes that allow for we're up to two
times the transaction amounts. Again, the transaction amounts here could
potentially be up to a billion dollars. And then JP
(30:40):
Morgan in twenty twenty three settled those claims that were
brought by the victims. They settled them for two hundred
and ninety million dollars, and they settled with the US
Virgin Islands for seventy five million dollars, so three hundred
and sixty five million dollars in total, which gives you
a ballpark of what potential settlement value might be if
the bank thinks that the investigation is getting a little
(31:02):
too hot for its comfort and wants to sort of
resolve this without it, you know, getting uglier. So we'll
see what happens. As of now, my base case is
that there's not anything there there, but we shall see.
All right with that, Holly from Let's bring you in
to talk about ken View and Tail and all and
(31:23):
alleged links to autism. I think when we had you
discussed this case last time, you talked about a good
ruin for ken View and the trial cord which got
rid of some experts in the case that went up
on appeal. There was a hearing I believe this week
in the second circuit, and you think that it sounds
like you think it didn't go as well for ken View.
You want to come in and tell us about that, sure.
Speaker 4 (31:46):
Thanks Elliott. So yeah, So.
Speaker 6 (31:49):
Johnson and Johnson Consumernk is the manufacturer that made tail
and all and it was spun off, and so ken
you now has that risk. And what happened below, as
you said, was that the lower court dismissed the planet's
(32:11):
general causation experts. She dismissed like, I think, around five
of them in December of twenty twenty three, and then
the PLANEFFS tried to get another expert who testified as
to only ADHD in twenty twenty.
Speaker 4 (32:25):
Four that that expert was also dismissed.
Speaker 6 (32:28):
But on appeal it appears it seems like from the
questioning of the panel that they're going to reverse at
least remanded for the court to reconsider its ruling because
it seemed like they were concerned that the judge, you know,
improperly determined that the experts didn't reliably apply scientific methods.
(32:55):
So I think as to certain experts, she's probably going
to be reversed, or maybe one expert who testified only
as to ADHD, they that one is a closer call.
I think that they may affirm dismissal of that expert.
But if they reverse as to you know, the other experts,
where I think that they you know, they think that
the court made made the wrong you know, applied the
(33:17):
wrong standard. I think about five hundred cases could be
well as of you know, when she when she made
that ruling, I think there were about five hundred cases,
and so you know, the vast majority of the federal
cases could be reinstated.
Speaker 1 (33:35):
Well, and how many cases, how many cases are we
talking about.
Speaker 6 (33:38):
Well, there are like around seven hundred. There were around
seven hundred total filed in federal court. There were five
hundred at the time of the you know, the court's
granted summary judgment. And I think, uh, you know, the
vast majority of these will be you know, rely on
those experts that they're gonna say, you know, the court
(33:58):
should at least reconsider.
Speaker 1 (34:01):
And and what And there's state court cases as well, right.
Speaker 6 (34:06):
There are state court cases. I haven't been able to
sort of locate the you know, many of them, So
I don't know, and I don't think there's any disclosures
about how many there are, So I don't know how
many state court cases there are, but it's definitely going
to be you know, setback if these if the federal
cases are reinstated.
Speaker 1 (34:26):
And what what's the what's the wrong standard that that
the ap Piells Court thinks the trial court applied?
Speaker 6 (34:33):
Well, I think, well, I think that you know, the
court kept saying that that she you know, referred to
the or or seems to think that the the experts
reliant on junk science, and they said, you know, this
is not junk science.
Speaker 4 (34:48):
This is science.
Speaker 6 (34:50):
And so when you're reviewing a Dowbert decision or when
you're deciding dover, you have to say you can't look
at the conclusions of the expert or it's you know,
because they may may come up with a conclusion that
the court disagrees with. But if they're reliably applying scientific
methods like looking at studies and not cherry picking the studies,
(35:12):
and they are you know, saying why they don't think
one study is you know, one studies result is valid,
and they're doing things that you know scientists normally do
in the field, then you're supposed to admit them.
Speaker 4 (35:25):
If even if you disagree with their conclusion.
Speaker 6 (35:29):
So I think that that's you know, one of the
things that the appellate court had a problem with is
that the lower court seemed to think of John science
and the appellate court doesn't think.
Speaker 1 (35:37):
So very interesting. And so the argument was this week,
when do you expect a decision.
Speaker 4 (35:43):
By I think in six to twelve months?
Speaker 1 (35:46):
Oh that long?
Speaker 3 (35:47):
Wow?
Speaker 1 (35:47):
Yeah, okay, that's a lot of time.
Speaker 6 (35:50):
Yeah, well that that's the second circuit you know, typically
takes around seven months.
Speaker 4 (35:56):
There.
Speaker 6 (35:57):
You know, this is not an affirm they wouldn't affirm,
so they'd have to write out sort of you know,
because sometimes you know, I've seen decisions where they affirm
exclusion of dowvert and it's like, you know, a six
page order or something like that. This one they'd be reversing,
and so I would think that they'd have to write
out a pretty lengthy decision about why. So that's why
I've said it could take a little bit longer than
(36:18):
the typical timeframe for you know, affirming. But I've said
that even if even if they do admit the experts,
I think this is just.
Speaker 4 (36:28):
As to general causation.
Speaker 6 (36:30):
So this this phase is just answering whether you know,
experts can testify about whether the drugs cause autism or ADHD. Generally,
this is not a question of whether the drugs caused
the disorder in.
Speaker 4 (36:52):
In specific individuals.
Speaker 6 (36:53):
So that is a second level that the planets are
going to have to pass. So in other words, like
even if they can show this drug generally causes this
ADHD and autism, they have to show it caused their
autism as well, and.
Speaker 4 (37:10):
To do that they would have to exclude other risk factors.
Speaker 6 (37:13):
And one of the risk factors for autism is environmental
exposure air pollution. I mean, everybody's exposed to air pollution,
so I don't know how there. I think they're going
to have a tough time isolating this for you know,
exposure to to tile and all.
Speaker 4 (37:29):
And that's not to say they can.
Speaker 6 (37:31):
I mean we've seen them do it in other cases
where there's like many other risk factors or even the
you know, the the disease cause is idiopathic, where they
don't even know what causes the disease, And we've seen
them overcome those challenges. And you know what they call
like a differential diagnosis where a doctor will come in
and say why.
Speaker 4 (37:50):
They don't think it's this risk factor.
Speaker 6 (37:52):
They think it's you know, more likely that tile and
will cause the problem and not.
Speaker 4 (37:56):
Air pollution for example.
Speaker 6 (37:59):
But I think, you know, because everybody's exposed to air potion,
it's gonna be tough to rule that out.
Speaker 1 (38:05):
Very interesting, Hey speak for yourself. I like to think
I live in a very clean world here at seven
thirty one Lexington, Bloomberg Headquarters. All right, holly good stuff,
thank you. All right, with that, we will wrap up
this week's episode of Votes and Verdicts. As always, thank
you for listening. If you have any questions about any
of the matter as we discussed on this episode, please
(38:26):
don't hesitate to reach out to us at your convenience
with questions. As a reminder, you can find all of
our research on the Bloomberg terminal at BI go, or
you can find our litigation and policy research on our dashboard,
which is available at bi laws go. We also want
to thank our producer Aditya Somani, without whom this podcast
would never publish on time. Thank you again for listening,
(38:47):
and have a great day.
Hello, and welcome to the Votes and Verdicts 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 is our weekly look
at the litigation and policy catalysts and issues that we're
currently watching and that we think will impact companies across
a number of different sectors. My name's Elliott st I'm
(01:00):
an analyst with Bloomberg Intelligence covering litigation in the financials sector,
and I'm delighted today as always to be joined by
several of my BI colleagues. As always, you can find
all of our research on the Bloomberg terminal at BI go,
and you can also find the majority of our litigation
and policy research on our dashboard, which is available on
(01:21):
the terminal at BI laws go. Today is November twentieth.
It's about ten forty three am. Well, actually it's exactly
ten forty three am here in New York. And with that,
when don't we get going, Jen Reed, let's bring you in.
Jen is our anti trust guru, and she, along with
(01:44):
our colleague Justin TERESI have covered the case brought by
the FTC several years ago, I believe, at the end
of the first Trump administration against Meta over antitrust violations
related to its purchase of Instagram and WhatsApp, I believe,
And we got a decision this week from the trial
court and it was very good for Meta. It sounds like,
(02:06):
so jh and you want to come in and just
tell us more about the case and the decision.
Speaker 2 (02:10):
Yes, absolutely, I think it has to be a big
sigh of relief from Meta because the FTC was actually
seeking an order to force it to sell off Instagram
and WhatsApp, and those two parts of the Meta trilogy
of apps make up something like forty percent of the
revenue for the company, so this could have been a
really big deal. But on the other hand, the decision
(02:31):
against the FDC wasn't that much of a surprise. The
judge has expressed a lot of skepticism from the very
beginning about this case, and to be honest, I'm kind
of surprised he didn't just dismiss it on the summary
judgment and instead allowed it to go all the way
through trial. But it's really pretty simple. I mean, what
the FTC is saying is that Facebook is in pretty
much its own market in terms of competition, that it's
(02:55):
in a personal social networking market and really only competes
with its own product Instagram or with Snapchat, and that
is it in that market. And so to claim that
the FTC was saying Facebook, Instagram does not compete with TikTok,
substantially does not compete with YouTube, Twitter, some of the
other apps that are out there that people use for
(03:17):
putting out their opinions and sharing pictures and social networking.
And the judge essentially just didn't agree with that, you know,
he said, you have to look at the marketplace today.
With the evidence show that was presented at trial was
essentially that people users do switch back and forth between
mostly TikTok, YouTube and Instagram and Facebook, that they consider
them fairly interchangeable. And there were some natural studies that
(03:39):
were done that showed in different countries at different times
when some of these apps were blacked out. But there
was a demonstration of where users what users switched to
if they couldn't access TikTok. There was a short time
TikTok was blacked out in the US. Where did they go?
They went to Facebook. That shows that there's competition between
these apps.
Speaker 1 (03:58):
Yeah, that's so interesting. And I'll be honest, I didn't
read the decision, but I read articles about the decision,
and I think what really struck me because I use
you know, I use Facebook. I don't use TikTok, but
I use Facebook and Instagram, and I know some of
you on this call do too as well, because we're
connected and friends. But what struck me was the judge
(04:20):
talking about how so much of Facebook when it started
was you know, content from your net, your network of friends,
right like sort of a closed network, and how little
of that content now is related to your friends, and
how much of it is from strangers and these videos
that you know, we get fed by the algorithms, which
(04:43):
I think is more of a you know, probably related
to the fact that TikTok has had on a lot
of rece apps and that raised the question in my mind,
do you think the judge is on all these apps?
Speaker 3 (04:55):
No?
Speaker 2 (04:55):
I don't think the judge the charge is unlikely to
be on all of these apps. It's judge Bo's here
who's been kind of controversial during the Trump the second
Trump administration in general. I suspect he isn't. But you
know what happens in these kinds of tech cases with
judges is they have educational tutorials, which happened here, where
they're basically bring in executives from all of these companies
and they give them a very thorough demonstration of how
(05:18):
they're used to uses them. You know, they get to
know them pretty intimately. You have to do that for
antitrust because anti trust is about the way businesses operate,
and so you have to understand how a business operates
in order to make this kind of a decision. But
what's interesting Elliott is that he did make the observation
that everything's converged over time. That when TikTok started, it
was one thing, and when Facebook started, it was one thing.
(05:39):
But they both become closer to each other, where you know,
Facebook's sharing more content rather than sharing with friends and
family and that TikTok has also moved into the personal
share networking space too, that they've just kind of converged.
And maybe five years ago when the case was brought,
it was a different kind of market, but he had
to look at the realities of the market today, and
(06:00):
looking at it today, they all kind of do a
lot of the same stuff and people see them as substitutable.
And you know, in a nature trust monopolization case, the
very first thing that has to be proven is that
a company has monopoly power. And monopoly power is a
hazy concept, but it generally means about more than seventy
five percent share in a market. And to determine that,
you've got to define a market. And once the judge
(06:22):
said that the proper market is defined to include YouTube
and TikTok, Facebook's share is well below and when I
say Facebook, I'm including all of its apps Instagram, Facebook.
Speaker 4 (06:31):
Et cetera.
Speaker 2 (06:32):
It's well below that seventy five percent. The number was redacted.
I don't know what it is, but there was a
suggestion that it was well below forty fifty or forty.
So once there's a finding that there's no monopoly power, right,
you're not going to find there won't be a finding
that there was a legal monopolistic act. The one thing
I'll say was very odd to me about this decision
(06:53):
is that in most cases, even when the plaintiffs fail
at that first step, they fail to show that a
company has monopoly power, a judge will usually walk through
the rest of the analysis, even assuming that they did
show monopoly power. What the conduct that they engaged in
it's alleged to be unlawful? Was it anti competitive or not?
Here the conduct was these acquisitions of Instagram of WhatsApp
(07:17):
that were intended, according to the FDC, to remove competitive
threats from the market. Facebook wanted to buy rather than compete.
That's what Mark Zuckerberg said in one of his emails.
The judge never touched that. He basically said the relevant
market was wrong. FTC, you didn't show monopoly power. End
of story. And that's a little weird.
Speaker 1 (07:37):
That is weird. So just this is sort of non sequitive.
But one of my favorite Judge Bosberg factoids is that
he and Justice kavan On the Supreme Court were housemates
when they were at Yale Law School. I don't know,
I don't know if that protects Bosberg at all from
you know, taxing of Trumpet administration obviously probably doesn't. But
to your comment on sort of the weirdness of his
(07:58):
approach in this decision, you know, what does that mean
for a potential appeal by the FTC? And then my
only other question is is there any read across from
this decision to you know, many of the or any
of the other many anti trust cases that have been
brought by the FTC and DOJ.
Speaker 2 (08:16):
Yeah, I think it's really a complicated question here as
to whether the FTC will appeal. This was controversial from
the start. So it was brought during Trump's first administration,
and there were three Republicans and two Democrats at the
time on the commission, and it was a three to
two vote. Two Republicans voted against bringing the suit altogether,
and one Republican voted with the two Democrats to bring it,
(08:38):
and that's why it was brought. We now have an
FTC commission made up of two Republicans. They're a little
bit more on the populace side than the Republicans that
originally voted no on this case. But on the other hand,
because it's been kind of controversial and difficult and difficult
to win from the beginning. I wonder if that would
(09:00):
keep them from appealing. And the other thing, Elliott is
the politics at the time the case was brought that
Mark Zuckerbergen and President Trump were not particularly friends, and
in fact, the administration thought that this that the platform
was censoring conservative content, and that has since changed. So
I sort of leaned against an appeal here. And I
(09:21):
should say the FTC also just lost another case. It
was a small merger challenge in court, and they just
announced that they won't be appealing bad So I don't
know if there's any read through there now in terms
of the other cases. Right now, we've got FTC versus
Amazon pending, and we have the Department of Justice versus
a live Nation and the Department of Justice versus Apple pending,
and I think the facts are just so completely different
(09:45):
in those cases, and these cases are definitely backed by
fact basis in terms of defining relevant markets and things
like that, that I'm not so sure that there's a
lot of read through other than perhaps, you know, if
the FTC thinks things aren't going well, if they're getting
indications from the judge that things aren't going well on Amazon,
as they got indications in this case, maybe they'd be
(10:07):
more willing to settle. There was an attempt here by
Mark Sockerberg to settle, but.
Speaker 4 (10:10):
It was rejected by the FTC.
Speaker 1 (10:12):
Whoops.
Speaker 2 (10:13):
Yeah, would have been a better situation than they're in now.
Speaker 1 (10:17):
Yeah, exactly what was that settlement offer during the Trump
the first Trump administration, during the Biers administration. Oh so
it was. It was pretty recent. It was since January.
Speaker 2 (10:27):
And also a bit odd. Apparently it was very close.
The president was involved and we were very close, very close
to accepting it, but was talked out a bit. Now
this is all just ruberbillboard where's in the news reported stuff?
Was talked out of it by the Assistant Attorney General
for any Trust at the Department of Justice, Scale Slater.
It's not her case, but she is, you know, also
(10:47):
an anti trust enforcer because that responsibility shared between the
FDC and the DOJ.
Speaker 1 (10:52):
Not going to help her, uh her job security at
the FDC.
Speaker 2 (10:57):
I gotta think, well, she's at the DJ okay, which
is why it's a little strange. Because it was an
FTC case. It may it may not have been true,
It may not have been the case, but I had
heard through the news that they were close to settling,
and it was an odd settlement because it was also
for a sum of money, which isn't usually what happens
with government monopolizations too, so that.
Speaker 1 (11:18):
It's something this administration that money can go straight to
building the East room, the East Wing. All right, Jen,
good stuff, thanks as always. All right, Matt Chattanhell, let's
bring you in. So Matt covers all TMT litigation and
policy issues for US. Matt, So, you've been writing about
AI for a while and you've sort of been teeing
(11:38):
up this issue of sort of the big legal question
that's coming down the pipeline being, you know, whether the
federal government can preempt state laws on AI. Last night
we got news that the Trump administration or President Trump
is going to issue an executive order on eat on AI,
(12:02):
talking about, you know, his ways to preempt state laws
on in this area. What do you I mean? I
don't think we've seen the executive order yet, right, maybe
there's a draft out, but what do you know about
it so far? What are you expecting in it? And
maybe also just sort of talk more generally about what
this preemption issue is. Sure?
Speaker 5 (12:23):
Yeah, So, So This started this week a little bit
even before that, when when President Trump put out a
post on social media calling for Congress to preempt the
states into and to adopt a national standard. And then
after that we had reports of this executive order that
might be coming later this week. There is a draft,
(12:45):
as you said, circulating online that says it's you know,
it's not finished or you know, incomplete, not not final,
but looking looking at all that and all. And this
also builds you know, when when when Congress passed the
big beautiful bill in July earlier this year, there was
a big push to to adopt this by Congress to
(13:10):
preempt state limits of AI. All of this is a
huge sort of reversal from where Congress was just you know,
a couple of years ago they were having as soon
as AI jumped out of the scene. There are these
hearings even with Republicans saying, look, we need to regulate here,
we need we need an agency. We've kind of gone
(13:30):
one eighty on that, and and now we're the complete
focus of this administration is is deregulation and staying out
of the way of inhibiting this technology. And so I
think President Trump's his social media post and this report
of an executive order fits with with all of that.
(13:53):
But there, you know, there are real legal questions, real doubts.
I'm very skeptical that if Congress does doesn't passed something here,
that President Trump himself can step in and start suing
the states or taking away their funds on his own.
And and that's sort of what this executive order suggests.
Speaker 1 (14:15):
So so is that what happened with the one Big
Beautiful bill, like what was the pushback to China insert
up language? Was a bipartisan or not?
Speaker 5 (14:23):
Yeah, I think there were real concerns from from certainly
from Democrats and and from and from select Republicans as well,
that that you know, there are legitimate reasons that states
should be able to address risks related to AI, and
(14:47):
real concerns that a broad preemption may not be the
path to go. Lawmakers have held many hearings about social
media and in recent years that said, look, maybe we
went too far with not regulating social media and and
(15:07):
maybe that was a mistake. And I think you're you're
hearing echoes of that in this AI debate, because I
think there's a real concern if if we we remove
all regulations, what exactly what where where will we end
up and might it look like where we landed with
social media, which which which concerns a lot.
Speaker 1 (15:28):
Of people right and there's starting to be more litigation
around some of the ills related to social media as well.
What type of regulations are people even talking about though
when they're when they're talking about AI and like what
you know, what kind of valuations are states like California
starting to enact?
Speaker 5 (15:47):
Yeah, I mean, sort of the sky is the limit.
People are trying to figure out this technology, and and
so you know, there there's there's long been a concern
about discrimination with with AI, that it's going to that
there are going to be inherent biases worked into these
models and that that could lead to, you know, disadvantages
(16:09):
to to certain groups. It's it's, you know, it's sort
of the sky is the limit and and and and
so it's kind of consistent with the whole idea that
states are laboratories of democracy that we should sort of
they should experiment with. Okay, you've got a problem with
AI here, let's let's try to address that. And so
(16:31):
they're they're they're kind of ideas are brewing right now.
More than that, you know, anything concrete and material is passing,
it's they're exploring it. And and there's the industry is
concerned that if they have to deal with the patchwork
of fifty different you know ideas brewing and and those
all past different different standards, it's very difficult for them
(16:55):
to advance their their technology, and and and it all
plays into you know, geopolitical concerns as well. You know
that is China going to be able to race ahead
if that if we have all these these hoops that
the companies need to jump through, But real, real, I
think difficult without Congress stepping in the way this is
(17:15):
supposed to work under the law. Is exactly what we
talked about in the Big Beautiful Bill. If Congress wants
to preempt, they could pass a law to do that.
And but what what President Trump seems to be suggesting,
I think this is sort of an acknowledgment. Look, I
probably am going to have a difficult time getting legislation
(17:36):
to pass through this Congress. And the executive order that
that's being hinted at now says, look, we're going to
use some other legal claims, maybe the commerce clause, not
the supremacy clause not preempting, but the idea that only
Congress can regulate inner state commerce. And that's just such
a shaky basis to go after the states. I don't
(17:58):
I think it would have a real tough time and
court interesting. And what else do you think might be
in that executive order? You mentioned cutting off federal funding
as well. Yeah, so part of the debate related to
the One Big Beautiful Bill was maybe we withhold what's
known as bead funding, which was part of the Infrastructure
(18:20):
Act that passed in twenty twenty one. But it was
forty three billion dollars of funding for broadband that is
being passed out to all fifty states right now, and
Congress was looking at, well, let's let's let's not allow
states that regulate AI aggressively to get to keep those funds.
(18:40):
And so it seems that this executive order might be
trying to do that as well. Again, you know, Congress
already passed that law in twenty twenty one and it
didn't attach this condition to those funds, and Congress tried
to add it in the One Big Beautiful Bill. Congress
couldn't agree to do that. And so I think Trump
(19:02):
coming in now by executive order and saying, oh, put
put that condition in any way. The draft I saw
said you should do that to the maximum extent permitted
by law, and so I think that's sort of a hint. Okay,
we got probably have some problems here.
Speaker 1 (19:20):
So yeah, that aws to me always is like an
indication that the executive order is mostly symbolic. Right, It's
like recognizing there's other laws that really sort of, you know,
either address it or not going to allow what you
want to do.
Speaker 5 (19:34):
I agree, and we'll see what the final text looks
like when, when and if it comes out. But this
is probably mostly about threatening and trying to create momentum
in the direction of preemption and deregulation. But it's not
really much, in my view, of a serious legal threat
for states that are looking at regulation.
Speaker 1 (19:56):
All right, good stuff, thanks, Matt. I guess we'll follow
up when the EO actually comes out and you read
on it. All right, Nathan Dean, let's bring you in.
Let's talk some Russia sanctions potential legislation. You wrote this
week about a bill in the Senate that would impose
(20:17):
taris on countries that buy oil from Russia. But you
also wrote that this is probably mostly headline risk. Do
you want to just tell us what you're thinking there is? Yeah?
Speaker 3 (20:27):
And before I do, I want to give a shout
out to a certain high school soccer team for going
to the state championship.
Speaker 1 (20:31):
Yeah, Larnston High School in New Jersey. Let's go.
Speaker 3 (20:34):
Elliott wasn't supposed to be hosting this until they won
yesterday and got sent to the state championships. So kudos
to that team. So what we want to talk about
is the Sanctioning Russia Act of twenty twenty five. And
the story about this bill is headline risk because when
you look at the headlines associated with this, it could
be somewhat scary from the tariff portion of it. For
(20:54):
those investors that have exposure to China in India, this
could be somewhat scary. So what this bill does is
that it would allow the President and I should note
that this bill has eighty five co sponsors in the Senate,
so this is a bipartisan bill as they come. This
bill would allow the president a tool to essentially slap
(21:15):
both primary and secondary sanctions up to five hundred percent,
including acid freezes and bands on transactions with major Russian banks,
on any country that buys Russian oil, and there's four
that you should think of. It's China, India, Brazil and Turkey.
So if this bill goes forward, President Trump, and you know,
(21:36):
we've talked to Holly many many times about AIPA and
section two thirty two and section three oh one, but
this would give the President trumpet a tool to essentially
put up five hundred percent tariffs. Now you see the
headlines and you take five hundred percent tariffs on China,
five hundred percent sheriffs on India, and that scares companies
like Apple, Sketchers, Nike that have supply chains in these countries.
(21:58):
But that's where I think the story ends, is that
this is headline risk. So the bill as the most
recent status. Senator Lindsey Graham said that he had a
conversation with President Trump this week. They golfed over the weekend.
I think Senator Graham said that President Trump is okay
moving forward with this bill and it has his support.
But that's the story where it's always been is that
(22:19):
President Trump has always been, yeah, you can give me authority.
I have no problems with that. The challenge is where
does this follow in the UK and Russia negotiations because
at the same breath, you know, President Trump doesn't want
to essentially, and I'm you know, I'm paraphrasing one of
friends over Bloomberger Economics tell me in terms of the
US Ukraine Russian negotiations, is that this is a negotiation tool.
(22:43):
And so if President Trump thinks that this tool will
be useful in terms of bringing Vladimir Putin to the table,
you know, we're still waiting for that Budapest here meaning
to take place. You know, that's then the Senate is
going to actually vote on this bill. So you know,
I keep I always say my note is that there's
about an eighty percent chance this bill passes if the
(23:04):
White House wants it to pass. And so I don't
think the White House is going to say let's move
forward unless they need this bill passage as a way
to force Russia to come back to the table and
so forth.
Speaker 1 (23:15):
But why, I mean, why wouldn't the president want it regardless? Like,
what what's the downside to the legislation passing?
Speaker 3 (23:22):
You know, I honestly don't think there's much downside other
than the fact that it gives the president more power
and legislatively, you know, even though it has eighty five
co sponsors on this, you know, they're viewing this towards Russia.
In particular. The language is very the language is specifically
geared towards Russia. So, you know, I think this is
(23:44):
one of those things where President Trump offers a carrot
at the same time he offers you know, I'm trying
to think of the best analogy for you know, the
for the hammer. Maybe that's the best way of saying,
you know. And so I think this is one of
those things where the White House has been somewhat hesitant
to say, yes, let's go forward with this, because if
(24:06):
President Trump wants a deal and Congress signs the legislation
giving President Trump the ability to do five hundred percent
tariffs on countries like China and India, that just upends
a lot of geopolitical tension across the globe. And so
when I've talked to like Adam Ferrer and Jenny Welch,
you know who Jenny we had on the podcast last week,
when I've talked to the geoeconomists, you know, there's a
(24:28):
delicate balance here in terms of this legislation. And so
it's just sitting there and I don't think anybody anticipates
that we're going to get a situation where there's five
hundred percent tariffs. But you know, that's why I always
just put this in the headline risk perspective for now.
Speaker 1 (24:43):
Yeah, that makes sense. I suppose from President Trump's perspective,
if he has the tool and he doesn't use it,
it could look weak. So he just sort of buys
him some time by saying, I don't even you know,
I don't have this power yet, but uh it still
it still works out there.
Speaker 3 (25:00):
And look, President Trump already slapt tariffs on India for
buying ruff and oil, so I mean there are other
avenues for this, they go forward. So again it's headline risk.
Speaker 1 (25:10):
Yep, makes sense, good stuff. So you this is it
occurred to me. This is I think the first episode
we've had where you didn't talk about the shutdown in
you know, several weeks since we had like a month
and a half long shutdown.
Speaker 3 (25:24):
You know, yesterday I spoke at the DC Spotlight series,
so we had about one hundred individuals at the top
of a Hey Adam's hotel, and I did get that question.
So for the folks that are listening, which question is
the government going to shut down in January? And I'm
at thirty percent chance with the caveat that if the
White House puts out a recisions building, that would put
the Democrats back into the fight mode. But as of
(25:46):
right now, either side want to shut down, right.
Speaker 1 (25:49):
I was actually going to bring up your comment when
the shutdown ended that now that the shutdown has finally
ended and the government is open again, we can finally
get back to the real business of America, which of
course is the Epstein files, which leads me to what
I just wanted to talk about briefly, which is that
this week President Trump said the Justice Department should investigate
(26:11):
former President Clinton, former treasure Treasury Secretary Larry Summers, LinkedIn
CEO Reed Hoffman, and also JP Morgan for their connections
to Jeffrey Epstein. Attorney General Pam Bondi then said she
was assigning that task to Jake Clayton, who was the
(26:32):
US Attorney for the Southern District of New York. So
there does seem to be at this point some sort
of investigation. I want to talk about how it relates
to JP Morgan, since you know, I cover potential enforcement
actions in the related to financial institutions. And my overall
view is that any you know, potential claims or charges
(26:57):
against JP Morgan would be too little, too late. Just
you know, by way of background, Jeffrey Epstein banked was
a client of JP Morgan's from like the late nineties
to about twenty thirteen. Why do I say there's just
too little here against the bank? I just think it's
(27:18):
unlikely that the Justice Department has sufficient evidence to prove
a criminal case against the bank and connection with JP
Morgan in connection with Jeffrey Epstein. Just in July, the
FBI released a memo. July of this year, the FBI
released a memo where they concluded that there was no
evidence to support an investigation of anyone other than Epstein,
(27:43):
you know, and so to find that evidence now would
be a complete one eighty I you know, I doubt
they would have released that memo if they had any
smoking guns. Why do I think it's too late? So,
like I said, JP Morgan got rid of Epstein as
a client in twenty thirteen. The statute of limitations for
things like violations of the Bank Secrecy Act is only
(28:06):
five years for criminal cases or six years for civil claims.
Wire fraud and mail fraud. Again, statutes of limitations are
only five years or ten if it's if it involves
or effects a financial institution. But again we're here in
twenty twenty five. Epstein was no longer a client with
Jacob Morgan as of twenty thirteen, twelve years ago. So
(28:28):
what's interesting is the statute of limitations for violations of
the Trafficking Victims Protection Act, you know, in the anti
trafficking Statute. That's where there might be a little bit
of risk because for violations of that statute, for some
violations of that statute, there's no statute of limitations where
it involves human trafficking, and so you know, the bank
(28:52):
would really have to rely on the fact that there's
just no evidence of any criminal wrongdoing here, and you know,
I would I would note that in twenty twenty three
there were lawsuits filed by victims of Jeffrey Epstein against
JP Morgan as well as against Deutsche Bank under that
(29:14):
same statute, the Trafficking Victims Protection Act, and these claims
accused both banks of benefiting financially from a trafficking venture,
which is a claim under that statute, and the judge there,
Judge Rakoff and here in the Southern District allowed those
claims to survive a motion to dismiss. So claims by
these victims against JP Morgan for benefiting financially from Jeffrey
(29:37):
Epstein's trafficking venture survived emotion to dismiss, which just means
that they you know, that the claims that they put
in their complaint are plausible. It doesn't mean that they
were proven or anything like that. But again, this FBI
memo in July suggests that DOJ didn't think such claims
could be proven beyond a reasonable doubt, which is, you know,
(29:58):
what they need in order to bring a criminal case.
So there's a potential risk out there. But unless the
Justice Department uncovers smoking guns that they, you know, six
months ago, thought didn't exist, it doesn't seem to be
much there there. But we should talk about what's at
risk because it could be substantial. JP Morgan reported more
(30:19):
than one billion with the B dollars and potentially suspicious
transactions related to Epstein. This anti trafficking statute allows for
penalties up to two times to gross gain. There are
money laundering statutes that allow for we're up to two
times the transaction amounts. Again, the transaction amounts here could
potentially be up to a billion dollars. And then JP
(30:40):
Morgan in twenty twenty three settled those claims that were
brought by the victims. They settled them for two hundred
and ninety million dollars, and they settled with the US
Virgin Islands for seventy five million dollars, so three hundred
and sixty five million dollars in total, which gives you
a ballpark of what potential settlement value might be if
the bank thinks that the investigation is getting a little
(31:02):
too hot for its comfort and wants to sort of
resolve this without it, you know, getting uglier. So we'll
see what happens. As of now, my base case is
that there's not anything there there, but we shall see.
All right with that, Holly from Let's bring you in
to talk about ken View and Tail and all and
(31:23):
alleged links to autism. I think when we had you
discussed this case last time, you talked about a good
ruin for ken View and the trial cord which got
rid of some experts in the case that went up
on appeal. There was a hearing I believe this week
in the second circuit, and you think that it sounds
like you think it didn't go as well for ken View.
You want to come in and tell us about that, sure.
Speaker 4 (31:46):
Thanks Elliott. So yeah, So.
Speaker 6 (31:49):
Johnson and Johnson Consumernk is the manufacturer that made tail
and all and it was spun off, and so ken
you now has that risk. And what happened below, as
you said, was that the lower court dismissed the planet's
(32:11):
general causation experts. She dismissed like, I think, around five
of them in December of twenty twenty three, and then
the PLANEFFS tried to get another expert who testified as
to only ADHD in twenty twenty.
Speaker 4 (32:25):
Four that that expert was also dismissed.
Speaker 6 (32:28):
But on appeal it appears it seems like from the
questioning of the panel that they're going to reverse at
least remanded for the court to reconsider its ruling because
it seemed like they were concerned that the judge, you know,
improperly determined that the experts didn't reliably apply scientific methods.
(32:55):
So I think as to certain experts, she's probably going
to be reversed, or maybe one expert who testified only
as to ADHD, they that one is a closer call.
I think that they may affirm dismissal of that expert.
But if they reverse as to you know, the other experts,
where I think that they you know, they think that
the court made made the wrong you know, applied the
(33:17):
wrong standard. I think about five hundred cases could be
well as of you know, when she when she made
that ruling, I think there were about five hundred cases,
and so you know, the vast majority of the federal
cases could be reinstated.
Speaker 1 (33:35):
Well, and how many cases, how many cases are we
talking about.
Speaker 6 (33:38):
Well, there are like around seven hundred. There were around
seven hundred total filed in federal court. There were five
hundred at the time of the you know, the court's
granted summary judgment. And I think, uh, you know, the
vast majority of these will be you know, rely on
those experts that they're gonna say, you know, the court
(33:58):
should at least reconsider.
Speaker 1 (34:01):
And and what And there's state court cases as well, right.
Speaker 6 (34:06):
There are state court cases. I haven't been able to
sort of locate the you know, many of them, So
I don't know, and I don't think there's any disclosures
about how many there are, So I don't know how
many state court cases there are, but it's definitely going
to be you know, setback if these if the federal
cases are reinstated.
Speaker 1 (34:26):
And what what's the what's the wrong standard that that
the ap Piells Court thinks the trial court applied?
Speaker 6 (34:33):
Well, I think, well, I think that you know, the
court kept saying that that she you know, referred to
the or or seems to think that the the experts
reliant on junk science, and they said, you know, this
is not junk science.
Speaker 4 (34:48):
This is science.
Speaker 6 (34:50):
And so when you're reviewing a Dowbert decision or when
you're deciding dover, you have to say you can't look
at the conclusions of the expert or it's you know,
because they may may come up with a conclusion that
the court disagrees with. But if they're reliably applying scientific
methods like looking at studies and not cherry picking the studies,
(35:12):
and they are you know, saying why they don't think
one study is you know, one studies result is valid,
and they're doing things that you know scientists normally do
in the field, then you're supposed to admit them.
Speaker 4 (35:25):
If even if you disagree with their conclusion.
Speaker 6 (35:29):
So I think that that's you know, one of the
things that the appellate court had a problem with is
that the lower court seemed to think of John science
and the appellate court doesn't think.
Speaker 1 (35:37):
So very interesting. And so the argument was this week,
when do you expect a decision.
Speaker 4 (35:43):
By I think in six to twelve months?
Speaker 1 (35:46):
Oh that long?
Speaker 3 (35:47):
Wow?
Speaker 1 (35:47):
Yeah, okay, that's a lot of time.
Speaker 6 (35:50):
Yeah, well that that's the second circuit you know, typically
takes around seven months.
Speaker 4 (35:56):
There.
Speaker 6 (35:57):
You know, this is not an affirm they wouldn't affirm,
so they'd have to write out sort of you know,
because sometimes you know, I've seen decisions where they affirm
exclusion of dowvert and it's like, you know, a six
page order or something like that. This one they'd be reversing,
and so I would think that they'd have to write
out a pretty lengthy decision about why. So that's why
I've said it could take a little bit longer than
(36:18):
the typical timeframe for you know, affirming. But I've said
that even if even if they do admit the experts,
I think this is just.
Speaker 4 (36:28):
As to general causation.
Speaker 6 (36:30):
So this this phase is just answering whether you know,
experts can testify about whether the drugs cause autism or ADHD. Generally,
this is not a question of whether the drugs caused
the disorder in.
Speaker 4 (36:52):
In specific individuals.
Speaker 6 (36:53):
So that is a second level that the planets are
going to have to pass. So in other words, like
even if they can show this drug generally causes this
ADHD and autism, they have to show it caused their
autism as well, and.
Speaker 4 (37:10):
To do that they would have to exclude other risk factors.
Speaker 6 (37:13):
And one of the risk factors for autism is environmental
exposure air pollution. I mean, everybody's exposed to air pollution,
so I don't know how there. I think they're going
to have a tough time isolating this for you know,
exposure to to tile and all.
Speaker 4 (37:29):
And that's not to say they can.
Speaker 6 (37:31):
I mean we've seen them do it in other cases
where there's like many other risk factors or even the
you know, the the disease cause is idiopathic, where they
don't even know what causes the disease, And we've seen
them overcome those challenges. And you know what they call
like a differential diagnosis where a doctor will come in
and say why.
Speaker 4 (37:50):
They don't think it's this risk factor.
Speaker 6 (37:52):
They think it's you know, more likely that tile and
will cause the problem and not.
Speaker 4 (37:56):
Air pollution for example.
Speaker 6 (37:59):
But I think, you know, because everybody's exposed to air potion,
it's gonna be tough to rule that out.
Speaker 1 (38:05):
Very interesting, Hey speak for yourself. I like to think
I live in a very clean world here at seven
thirty one Lexington, Bloomberg Headquarters. All right, holly good stuff,
thank you. All right, with that, we will wrap up
this week's episode of Votes and Verdicts. As always, thank
you for listening. If you have any questions about any
of the matter as we discussed on this episode, please
(38:26):
don't hesitate to reach out to us at your convenience
with questions. As a reminder, you can find all of
our research on the Bloomberg terminal at BI go, or
you can find our litigation and policy research on our dashboard,
which is available at bi laws go. We also want
to thank our producer Aditya Somani, without whom this podcast
would never publish on time. Thank you again for listening,
(38:47):
and have a great day.
Host
Elliott Stein
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