Courts Are Stopping Trump's Cuts to Funding

17:49Michael Green:We know that the Department of Government Efficiency, which was the Elon Musk driven project, even though Elon Musk is no longer part of the administration. Doge said that they saved$215 billion and that savings covered terminated spending streams. It covered government employees' salaries or the cost of running agencies that were trimmed or shut down. There's also some nuance to that number where Bloomberg reported that spending still went up in other ways over the past fiscal year. So that might cancel out whatever those savings were. But that said, we have this number of like$215 billion. We know that states, state AG offices, state attorney general offices have offered their own estimates of money that they say they've protected.

18:40Michael Green:They'll usually say like they've protected or secured for their residents. And that can mean both literal money going back out the door to grantees. It can mean the conditions on funding streams. It can mean, you know, they've preserved access to a pool of money, even if it's not clear who will get it in the end. But they've offered up their own estimates sometimes in the billions of dollars that they've won in litigation. And it's very fluid. You know, in one day last month, there was an order lifting a freeze on something like$10 billion in aid funding for low-income families. So, you know, in an instant, the numbers can fluctuate by the billions as far as what's at stake in these legal fights.

19:28June Grasso:And these funding freezes are continuing. Recently, Trump tried to freeze the$16 billion gateway rail tunnel between New York and New Jersey. And that's been unfolding rapidly.

19:41Michael Green:That's right. I mean, speaking of fluid, that case, I think it's been a week, a week and a half. And that has already gone through so many iterations where I think it was$16 billion that was frozen. A judge ordered it unfrozen for this massive rail tunnel project between New Jersey and New York. The government appealed, and then the district judge sort of suspended her own order for a few days to give the government a chance to go to the appeals court to get a longer term pause on that injunction. The states then went to the district judge and said, can you lift your own pause of your own order, lifting the freeze?

20:24Michael Green:So it's one of those cases where, you know, as I said earlier, when it's about money going out the door, things have moved often very quickly in a way that if we were just talking about, you know, conditions on accessing that money long term, it likely wouldn't have unfolded at such a rapid clip.

20:44June Grasso:You're anticipating, I'm anticipating too, we're all anticipating that there are going to be a lot more funding freezes connected with Trump's immigration crackdown and his railing against sanctuary cities and states.

21:00Michael Green:You know, it's a big question mark. They have not had success defending these types of funding decisions tied to, you know, whether a city or state is a so-called sanctuary jurisdiction. There's an order still in effect from a San Francisco federal judge last year that's being appealed at the moment. But there's already an order finding a similar effort was unlawful. So the president more recently had again said that they would pull funding from these types of jurisdictions that they feel are failing to be as cooperative as they would like on immigration enforcement. And, you know, we, as part of this story, talked with municipal services, including the Seattle City Attorney's Office, which was part of the earlier sanctuary city's fight.

21:49Michael Green:And the message very broadly, not addressing specific litigation, but broadly was if there's grounds to sue, you know, they're ready to sue. If something is threatening, they're funding money that they need for their municipal services. They're ready and able and prepared to go back to court as needed.

22:09June Grasso:And I'm sure you'll be looking at that lawsuit if they do. Thanks so much, Zoe. Great research. That's Bloomberg Legal Reporter Zoe Tillman. This is Special Agent Regal, Special Agent Bradley Hall. The time is approximately 11.15 a.m. About to start a consensual telephone call with Dr. Daiwa Zhang. China's Ministry of State Security is one of the most mysterious and powerful spy agencies in the world. But in 2017, the FBI got inside.

23:01June Grasso:I've never seen that much evidence in my entire career, and I don't think we'll ever see that much evidence again.

23:07Zoe Tillman:I now have several terabytes of an MSS officer, no doubt, no question, of his life. And that's a unicorn. This is a story of the inner workings of the MSS.

23:19June Grasso:and how one man's ambition and mistakes opened its vault of secrets. Listen to The Sixth Bureau from Bloomberg Podcasts, starting on February 13th on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

23:38June Grasso:Uber is facing some 3 ,000 cases from around the country over passengers' sexual assault claims. Last week, an Arizona jury found the ride-sharing giant liable for not preventing an alleged sexual assault of a passenger by a driver, returning an$8.5 million verdict for the passenger. The jurors found that the driver was acting as an apparent agent of Uber. However, they rejected claims that the ride-share company itself acted negligently in its safety standards or designed a deceptive product. Now, jurors came to a different result in a similar case in California state court last year. Uber says it's going to appeal the Arizona verdict, but are these bellwether cases likely to lead to a global settlement?

24:29June Grasso:My guest is Michael Green, a tort law professor at Washington University School of Law. Uber has been fighting sexual assault claims for a decade. And the argument is that the company can't be blamed for the misconduct of its drivers, that they're contractors rather than employees. Has that been working until now?

24:53Zoe Tillman:Just the basics here is that Uber can be liable in two respects. One is if Uber acts wrongfully, negligently on its own. Suppose Uber hires a known sexual offender to drive cars. In that case, we would say, Uber, you're negligent and you are subject to liability. The second basis, and this is what you are inferring to, is employers can be vicariously liable for the torts of their employees. OK, and that's where the dean verdict was based. Uber says two things. One is these drivers are not our employees. They are independent contractors. And the law is that a person who hires an independent contractor is not normally vicariously liable for that independent contractors towards.

25:58Zoe Tillman:And then secondly, it says, alternatively, even if the driver is our employee, we are not vicariously liable when an employee goes off and does things that are not for our benefit. That is, goes off on a personal detour and frolic. Well, almost all of these sexual assaults, virtually all of them, are not for the benefit of Uber. They are personal, whatever they are, by the drivers. So Uber really has two claims with regard to why it's not vicariously liable.

26:41June Grasso:Tell us what the jury found in the case in Arizona.

26:46Zoe Tillman:So that's the Dean case. And interestingly, what the jury found was that Uber was not negligent. So they didn't find anything that Uber did wrong vis-a-vis protecting its passengers from sexual assaults. But what they did find was that Uber was vicariously liable for its driver based on a subtle doctrine that exists in Arizona but is not widespread across the state and that would not apply, for example, in the next case that Judge Breyer is planning to try, which is in North Carolina. That is, if we had the law of North Carolina applied in the Dean case, the plaintiff would not have succeeded on vicarious liability.

27:42June Grasso:The jury award of$8.5 million was substantial, but it was far below the$24 million she'd asked for for compensatory damages for her past and future sufferings. And she asked for$120 million in punitive damages, and the jury awarded no punitive damages. So what do you make of the actual amount awarded?

28:06Zoe Tillman:Well, first of all, I don't pay any attention to what plaintiffs seek. They can seek the moon. And there's no cost to them seeking the moon, right? So plaintiff's lawyers typically will ask for lots and lots of, in the hope that somehow that will stick with the jury. Often it does not. And the Dean case is an example where that was the case. I'm not surprised that they did not award punitive damages, given their finding that Uber did nothing wrong. That is, they found Uber did not act negligently. It's very difficult to get punitive damages based on vicarious liability, which was the basis for liability in Dean.

28:52Zoe Tillman:you need really bad behavior, more even than acting unreasonably to get punitive damages, to convince a jury that this is really something heinous that deserves punitive damages. So I'm not surprised there were no punitive damages. Now, that's not to say that in another case, The evidence about Uber's bad behavior might not be stronger and might not influence a jury to think, wow, what Uber did here was unconscionable. And I think that would probably be much stronger for cases that occurred later rather than back in the mid-2010s, particularly the case in California.

29:44June Grasso:The jury came to a different verdict in the case in California. So tell us about that.

29:49Zoe Tillman:That was a case in state court in California, not part of this federal multi-district litigation. And in that case, interestingly, the jury found that Uber was negligent for its own conduct. But they also found another element, of course, of a tort is not just that the defendant acted wrongfully, but that that wrongful conduct caused the plaintiff's harm. And what the jury found in that case was that Uber's negligence was not a cause of the plaintiff's harm. That means that the jury felt that even if Uber had done better, the plaintiff in that case would still have suffered the assault that she suffered.

30:38June Grasso:Is there a way to reconcile those two verdicts? I mean, is it the facts of each of the cases are different? Is it the law is different in Arizona and California? Or is it just two juries looking at the same thing and saying different things?

30:55Zoe Tillman:Well, of course, we don't know what evidence was introduced in those two cases and whether it was the same or it varied. That could very well be the case. But it could also be the case that juries simply respond to evidence differently. Earlier in my career, I was looking at a very interesting trial that was conducted by Judge Robert Parker of the Eastern District of Texas. At the time, his docket was just flooded with asbestos cases, and he was looking for a way to try and handle what was a Sisyphean task. The more he resolved, the bigger the pile got. And so what Judge Parker did was to have a trial of five cases, five asbestos cases, in the same courtroom before five different judges.

31:54Zoe Tillman:The evidence was the same in those five cases. The juries, five juries, heard the same evidence for each of what was their case. And then they rendered verdicts. And Judge Parker gave me access to those verdict forms. And it was remarkable how on the difficult issues, the difficult issues, the jury split and did not find consistent. I've taken that as pretty good evidence of the way in which juries can come to different outcomes. And that's part of the purpose of these bellwether trials that Judge Breyer is conducting, to see how a variety of juries will react to the evidence in these cases.

32:47June Grasso:As you mentioned, and this goes to the bellwether part, there are something like 3 ,000 cases, obviously different facts, but also different laws in the jurisdiction. So can it still be a bellwether when you have different laws that are applied?

33:05Zoe Tillman:Well, that's part of the reason for trying cases in different jurisdictions. He's got six cases teed up for bellwether trials. Two are in California, two are in Arizona, two are in North Carolina. My guess is that he wants to see how those come out before scheduling more. But you're right that different state laws, differences in the fact, some of these plaintiffs suffered horrific sexual assaults. I think that may be important to a jury in deciding these cases. So there's factual variation, legal variation across states, and jury variation that could affect and produce different outcomes.

33:58June Grasso:In response to the Arizona verdict, Uber said this verdict affirms that Uber acted responsibly and has invested meaningfully in riders' safety. But it is going to appeal the finding that the driver was acting as an agent of the company, saying the judge erred on the instructions given to the jury. When Uber looks at this behind closed doors, should they be motivated to start settling cases or should they look at it and say, well, different juries can bring different results. So let's forge ahead.

34:34Zoe Tillman:The first thing I hope is that this motivates Uber to find better ways to protect their passengers. When tort law is working right, it results in better safety precautions being taken. And we can go across a whole lot of areas. Asbestos is a great example of that. So that's the first thing. I think it's probably too early. Publicly, of course, Uber is going to deny that they have any liability and appeal and do all the things that defendants who are held liable do. I think it's probably too early for Uber to say, okay, what we need to do now is figure out a global settlement. In other mass torts, as the cases develop, you see defendants seek global peace.

35:35Zoe Tillman:and that's a complicated dance that occurs. And I think that's what Judge Breyer in those federal cases that you referred to is trying to develop. But first, Uber needs to get a feel and then the plaintiff's lawyers need to get a feel on really how much is their exposure here. And these first two cases give us a little bit of information. It might be different if the first two cases both came in with very high liability and very high damage awards or vice versa. That hasn't happened. That may suggest we're going to need to try more cases to see how juries respond.

36:24June Grasso:The American Law Institute amended its restatement of torts. Yeah, so there have been a lot of suits, not just against Uber, but by women who have been sexually assaulted in a variety of contexts.

36:40Zoe Tillman:Think a woman who's arrested by a police officer. Think a woman who is incarcerated in a jail or a prison. Think about patients in the hospital. What we also found as we were doing this research is that there has been a trend, despite what I said earlier about no vicarious liability for sexual assaults because they're not for the benefit of the employer. And that was the Hornbuck black letter rule. We found a number of courts finding ways to permit those plaintiffs to continue to pursue their case, vicarious liability case, against the employers of these people, employees who are committing sexual assaults.

37:33Zoe Tillman:And there were enough cases where we found that, that the American Law Institute, which develops restatements of the law, decided last May to promulgate a special rule that says that employers of employees who are given power or control over vulnerable potential victims, and who use that position to commit a sexual assault, a special rule that says vicarious liability can be imposed there by a jury. That would be a significant game changer for these cases if courts that do not have, have not adopted that rule, decide to adopt it. I'm very interested to see how that provision that the ALI adopted last May plays out when plaintiff's attorneys try to use that to convince a court in Kansas or Alaska or New Mexico to expand the scope of vicarious liability for sexual assaults.

38:48June Grasso:Thanks so much for joining me on the show. That's Professor Michael Green of the Washington University School of Law. And that's it for this edition of the Bloomberg Law Show. Remember, you can always get the latest legal news on our Bloomberg Law podcast. You can find them on Apple Podcasts, Spotify, and at www.bloomberg.com slash podcast slash law. And remember to tune into the Bloomberg Law Show every weeknight at 10 p.m. Wall Street time. I'm June Grosso, and you're listening to Bloomberg.

39:25June Grasso:April 29th and 30th, Bloomberg House arrives in Miami at the Formula One Grand Prix. Set against one of the world's most electrifying sporting events, Bloomberg House brings business, investment, and culture together, powered by Bloomberg journalism, real-time data, and forward-looking conversations. From onstage discussions to exclusive networking with global leaders, this is where ideas connect. Bloomberg House Miami. Learn more at BloombergLive.com slash BloombergHouseMiami.