Weekend Law: Comey's Motions, Meta Wins & Texas Maps

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1:50June Grasso:This is Bloomberg Law with June Grosso from Bloomberg Radio. The Justice Department's indictment of James Comey was riddled with problems that may give the former FBI director legal grounds to have it dismissed. And that's according to a federal judge. Comey's been charged with making false statements and obstructing Congress. And Magistrate Judge William Fitzpatrick cited 11 potential missteps by the Justice Department in the lead-up to filing those charges, including fundamental misstatements of the law to the grand jury by the prosecutor, Lindsay Halligan, and the use of potentially privileged communications.

2:35And he's ordered an extraordinary remedy, the release of all grand jury materials to the defense. That's been put on hold pending a review by the district court judge. Joining me is former federal prosecutor Robert Mintz, a partner at McCarter & English. Bob, in some ways, the judge's opinion seems like a guideline for the defense to ask for a dismissal of the indictment. He outlined the procedural and substantive irregularities that occurred before the grand jury and said they may give Comey legal grounds to have one or more of the counts dismissed. Pretty harsh condemnation of the government's actions.

3:15It was extremely unusual because it's extremely rare in the first place for a judge to be reviewing conduct in front of a grand jury. So what the magistrate judge was tasked with in this circumstance was to decide whether Mr. Comey had met the very high bar for a defendant to be given full access to the transcripts and recordings of a grand jury proceeding. What ended up happening here was that in addition to the reasons that Comey's lawyers had argued for access to the grand jury material, the judge found from his own review of the materials a host of new problems, new issues that could ultimately lead to the dismissal of the case.

3:57The judge went through a series of potential issues that he decided the defense was entitled to probe and to raise before the court as a basis to possibly dismiss the indictment. One of the original issues that Comey's lawyers raised as a basis for accessing the grand jury material had to do with search warrants that were executed by the Department of Justice in 2019 and 2020 in connection with an entirely separate earlier investigation, which took place during President Trump's first presidency and had to do with the potential leaking of information to the media about ongoing investigations by the FBI.

4:38And the search warrants were focused on a Columbia University law professor, Daniel Richman, who was a friend of Mr. Comey's, but who would also end up representing him as his lawyer. And that created the question of whether or not the information might have been covered by the attorney-client privilege. The judge here raised a number of issues as to whether or not there could have been a violation of Mr. Comey's rights and whether or not privileged information might have seeped into the grand jury presentation. And that would have been entirely improper and would have tainted the presentation and could potentially be a basis to dismiss the indictment.

5:16So, Bob, the prosecutor here, the interim U.S. attorney, Lindsay Halligan, was Trump's former personal lawyer, had never been a prosecutor before, and she presented the case to the grand jury by herself. It appears that she suggested to the grand jury that the fact that Comey didn't testify in his defense should be interpreted as a sign of guilt. Even a first-year law student should know that a defendant doesn't have to testify. Well, that's exactly right, And the magistrate judge described these as, quote, fundamental misstatements of law by the prosecutor in front of the grand jury. And one of the issues that he identified was this Fifth Amendment right issue.

6:02Apparently, during the course of the grand jury presentation, a grand juror raised questions, as grand jurors often do, to the prosecutor. and the prosecutor has to respond with the proper law in order to give the grand jurors the framework by which to consider whether or not to return an indictment. Here, apparently, a grand juror asked a question, and as you say, the exact response has been redacted. But according to the magistrate judge, it suggested that Mr. Comey may have had a burden to explain away the government's evidence. In other words, the inference was that the burden shifted to Mr.

6:39Comey to have to explain why he did what he did when, in fact, under the Fifth Amendment, a defendant has no obligation whatsoever to testify. And the fact that they choose not to testify cannot be used against him. And more fundamentally, in a criminal prosecution, the burden never shifts to the defense. It's always the prosecution's burden to prove its case beyond a reasonable doubt. So any suggestion that Mr. Comey's decision not to testify, not to explain away his conduct, could somehow be used by grand jurors to infer that he committed a crime would have been improper. The judge also noted that Ms.

7:20Halligan may have suggested to the grand jury that they did not have to rely only on the record that was presented to them during the grand jury presentation in order to reach a finding of whether or not there was probable cause, but that they could assume and they could be assured of the fact that the government had even more evidence, perhaps better evidence, than was presented to them during the presentation that could be used at trial. and therefore that the case was even stronger than the evidence presented to them during the grand jury proceeding. If that was done, that too would be entirely improper.

7:55The grand jury has to make a decision as to whether or not there is probable cause based solely on the evidence presented to them during the grand jury proceeding. It's really no different than a trial in which jurors have to make a determination as to whether or not the government has met its burden of proof beyond a reasonable doubt, based solely on the evidence that's presented to them during the trial. They can't rely on anything outside of the record during the trial proceeding. The same holds true for grand jurors and for prosecutors to suggest that there is other more powerful evidence that they should consider but has not been presented to them would be entirely improper.

8:35I mean, her comments basically come down to a defendant has to testify before a grand jury and trust me, grand jurors, we have a lot more evidence that will prove his guilt, but we're not showing it to you now. Well, I think that's why you saw the opinion written by the magistrate judge to be as strongly worded and as detailed as it was. It was a 24-page opinion that went through not only the issues that Mr. Comey's lawyers had raised in order to try to gain access to the grand jury transcripts, but also a litany of other issues that he discovered when he reviewed in camera those grand jury transcripts.

9:16And he raised serious questions in his mind, I believe, as to whether or not there were serious constitutional errors in the presentation, not only the Fifth Amendment question, not only the question that there was evidence outside of the grand jury's purview that they should consider, even the way the grand jury returned the indictment. In this case, the original indictment presented to the grand jurors was a three-count indictment. When the grand jurors went back to deliberate, they chose not to return a true bill, which means they voted not in favor of one of the three counts. And now there's a question as to whether or not an entirely new indictment with only the two counts that the grand jurors voted in favor of was ever presented to them.

9:58If that did not happen, if the grand jurors did not deliberate on the exact indictment that was ultimately presented to the court, that is another issue that could be very problematic. And there's a lot of confusion about whether the grand jury actually reviewed the final indictment or not, with Halligan first saying in a hearing that they didn't, and then in court papers saying that they did. During the hearing, the district court judge was very clear in asking the government whether the second indictment containing only the two counts that the grand jury voted in favor of was actually represented to all of the grand jurors so that they voted on the actual indictment that was ultimately presented to the court.

10:41At that time, the government said that the full indictment was not presented, but now they've come back with evidence in the transcript that suggests that perhaps it was repackaged and presented to all of the grand jurors. So the record on this question of whether the grand jurors actually voted on the indictment that Mr. Comey is now facing is muddled at best. At the end of the day, the question of whether they voted on the actual indictment or not is probably not the issue that's going to drive the decision. The judge will more likely look at some of the constitutional questions that have been raised by Comey's defense team with regard to some of the comments that were made during the grand jury process and make a determination as to whether or not this indictment will stand based upon those arguments rather than this procedural question about whether the proper indictment was presented to the full grand jury.

11:37This is a prosecutor's nightmare. The case should not be about the prosecutor's conduct right out of the gate. It should be about the defendant's conduct and about whether or not the government can prove that the defendant committed a crime beyond a reasonable doubt. The probe into the conduct by the government is exactly where you want to be if you're on the defense side, But it's the worst place you can possibly be as a prosecutor. Yet another judge is involved in this case, and that's the judge considering whether Lindsay Halligan was lawfully appointed. The federal judge is actually a judge from South Carolina because the question before the court is whether or not the U.S.

12:18attorney for the Eastern District of Virginia has been properly appointed. and the decision was made by the circuit court that it would be best to have a judge not in that judicial district making this decision. So the judge from South Carolina, Judge Curry, is looking at the convoluted process by which Lindsey Halligan was appointed as the interim U.S. attorney for the Eastern District of Virginia. There had been a career prosecutor who was appointed by President Trump to serve on an interim basis. That interim basis lasts 120 days after that time period, the judges in the district can then extend that appointment.

12:58And that's exactly what happened here with that career prosecutor, Eric Siebert. The attorney general then fired Mr. Siebert and appointed a new prosecutor, Lindsay Halligan, for a new 120-day period. And the question is whether or not the executive branch can continue with these 120-day interim appointments sort of ad infinitum, or whether they can do it only one time, and after that time, it's up to the district court judges to appoint the U.S. attorney. There are so many interesting legal questions in this case. Thanks, Bob. That's Robert Mintz of McCarter in English. Coming up next, a huge win from Meta.

13:39I'm June Grosso, and you're listening to Bloomberg. The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand, but by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. Support for this show comes from Public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions.

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16:20Restrictions and limitations apply. Cards are issued by JPMorgan Chase Bank N.A., member FDIC. A landmark antitrust decision on Tuesday was a massive blow to the Federal Trade Commission and a huge win for Meta as it prevailed over an existential challenge to its business that could have forced the tech giant to spin off Instagram and WhatsApp. A federal judge ruled that the FTC failed to prove that those acquisitions allowed Meta to illegally monopolize the social networking market. The question now is whether the government will even appeal this significant loss especially factoring in one dynamic.

17:04Meta CEO Mark Zuckerberg has been courting President Trump. We're going to work with President Trump to push back on governments around the world that are going after American companies and pushing to censor more. And it was Zuckerberg who was seated right next to the president during a high-profile dinner of technology executives in September. My guest is antitrust expert Harry First, a professor at NYU Law School. Harry, how big a blow is this to the FTC?

17:35June Grasso:Well, it's a blow, all right. So this is the first big loss in these high-tech platform cases. So two of them have now come to a conclusion of the trial, both against Google, both successful for the Justice Department. Remedy, another story maybe. So this is the third. There are five total, and it's the first loss. It's sort of not a surprising loss because this judge has been skeptical of this case, clearly from the very beginning. He had dismissed it originally. So he's been very skeptical, and he's said it in his opinions. So this case has not been well received by the judiciary, shall we say.

18:16June Grasso:So it's not surprising. The opinion itself is a little surprising, but the result is not so surprising. Why do you say the opinion is surprising? So in two ways. First of all, he's taken a very novel approach to time in the opinion. So he says that the proof has to be as of the time I make my decision almost. I mean, this is an impossible standard. He said maybe they were a monopoly. Maybe this was a properly defined product market in 2020 when the suit was filed. But as time has gone by, it's not that much time. By now, it's not. And the question is not whether it was then, but whether it is now.

18:59June Grasso:I mean, if you take that literally, that's a completely moving standard. You could never try a case because your evidence is always outdated. I mean, it's always about the past. You can't try a case about the future. So that's a departure. He's got some legal reasoning for why he does that, but that's a serious problem, and I think it's a serious antitrust problem. So there is that part of it. The second part is this judge is very confident of his opinion. So normally a district court judge, he's got seven things to decide in front of him, and they proceed logically. Well, if you go for this, you know, then you're done.

19:36June Grasso:But if you go for this and it's okay, you go to number two, three, four, five. So he has a long trial, but he only decides the first issue. Now, normally a judge would say, okay, here's what I decide. This isn't a market. The market has to include such and such. They don't really have monopoly power. Okay. But if I'm wrong, here are the facts that I found about the conduct. And the conduct wasn't any competitive. So even if you had monopoly power, this was not exclusionary conduct. It wasn't any competitive. And so you go through all the things. Because if a court of appeals disagrees with you, Now what?

20:11June Grasso:You've got to retry the whole case? So this is a judge who thinks, no one's going to disagree with me, man. And maybe, maybe part of it is because the narrative of the case is at least potentially stronger than the market definition. So, you know, all the emails about how Mark Zuckerberg's theory was to buy them or bury them and, you know, what he tried to do with competitors and why he paid so much for them. Instagram and for WhatsApp. WhatsApp drops out of this case like right away. I don't know, third word or something. He says at some point, we're done with them. We don't have to talk about them anymore.

20:50June Grasso:So that's pretty unusual, I think. And it's either hubris or confidence. I don't know which. But he does not do what I think most district court judges would do, which is decide the full case. I thought the focus would be on the market when Meta bought Instagram and WhatsApp. and whether it was anti-competitive conduct when it's alleged that Meta couldn't compete with these two apps and Zuckerberg said it's better to buy than compete. What he tried to say was, well, we've got to do it as of now, in part because of the FTC's remedy powers. They're asking for an injunction and they can only stop conduct that is illegal now.

21:34June Grasso:So I've got to decide what's illegal now. Now, he could have very well said that's a remedy question, we'll decide that when we get to remedy, whether it's a continuing violation or not, we should look at whether there was a violation then. So for example, if this were a suit for damages, you wouldn't say, well, we have to see whether it's a violation today. You would say, let's see whether there was a violation at the time that the offense was committed and what damages were caused. So those two things are separate. So it's really quite odd. And you're right. The argument that the commission makes is that we look at what they did and why they did it, that this was an effort to maintain their monopoly.

22:19June Grasso:These two acquisitions for which they wildly overpaid. Why were they paying$19 billion for a company that didn't have any revenue? That was WhatsApp. And the answer was they didn't want them to develop into competing social network platforms. So, you know, now that part also had problems. It had issues. You know, the Federal Trade Commission and its earlier guys let those acquisitions go through. So there were issues with it. So in that sense, that's a really strange aspect. As far as the definition of the market, The FTC had argued that MetaZaps, Facebook and Instagram, are primarily used for personal social networking, while TikTok and YouTube are video entertainment apps.

23:05But the judge rejected that and put them all in one market.

23:09June Grasso:Yeah, so the first question, you have to show that a defendant has monopoly power in a relevant market. So he says, OK, we have to start with market definition. So that's true. That's the way it's normally done. And then he says, OK, yes, let's look at the market. You know, he says these platforms have converged. These are all sort of similar. And particularly TikTok, you know, was posing a competitive threat. He says people don't want to talk to their friends anymore. They just want unconnected videos. so you know tiktok comes along they're posing some threat and facebook responds with reels short videos and so that has now changed how we define the market because users switch back and forth between the two and we have to include tiktok and we have to include youtube where users switch to those videos later it's sort of at the end of the opinion says well the argument for youtube actually is a little thinner.

24:08June Grasso:But even if it's just TikTok, that's enough. We would include that in however we define the market, whatever we want to call it. It doesn't really give it a name. And at that point, if we include TikTok, then Meta does not have monopoly power. TikTok takes away too much time. All those kids are frittering where their time on TikTok instead of frittering were of their time on Facebook. He had various evidence of, you know, the willingness to switch and that people switch between those two. Now, the odd thing in some ways is if so many people are switching, how come so many people are still on Facebook?

24:50June Grasso:He gives 240 million active users in the United States and ad revenues of$161 billion. So when you read his description, it sounds like this is a company that is just in the throes of death from TikTok. And then he says, this is an amazingly successful product. Give people a compelling product for free, then sell ads that can be seen by millions. I guess he thinks those are good. 240 million active users in the United States. That's a lot of people. So apparently they haven't been dissuaded by TikTok, which is also free. And they don't give all their time there. They're still on Facebook. So the argument from the government is that by incorporating Reels, they've managed to defend their core business.

25:44June Grasso:And their core business is social network, putting people together. And they still get a lot of people who like that product, even though some people also use different products. Harry, it sounds like the government should appeal because of the unusual way the judge defined the market. But this is not an administration that always follows what's best for the legal landscape. So might they decide not to appeal because of political reasons? Who knows exactly? It's hard to assess the political wins. And the wins may go the other way because, you know, a populist wing of the party feels that these platforms have too much power and need to be cut down.

26:29June Grasso:So who knows exactly? But if you look straight at the legal issues, usually appeals from adverse decisions of trial courts are hard to win on appeal because they're mostly fact-based. So you have to look for legal issues. And there's an important legal issue of whether he applied the correct standard for defining the market and for assessing when a violation occurred. And that one's sort of a very pointed legal issue. How it will fare in the court of appeals if they do take it. I don't know. And does this decision have any implications for the other antitrust cases against tech platforms? Yeah, that's a good question.