Weekend Law: DOJ Defies Judge, Guns and Drugs & Knicks Tickets

18:52Amy Powell:I mean, the standards for getting a preliminary injunction are pretty high. Did the judge find that the plaintiffs or some of the plaintiffs had standing?

19:01Louis Michael Seidman:No. As far as I know, the court has not ruled on that. She decided to turn first to this question of mootness. She hasn't ruled on the merits of the underlying claim, but she has strongly suggested that if the government could produce this declaration that says more or less what she suggested it needs to say, that the case would be new. Candidly, I think that is a bit of a stretch even if the government does produce a declaration that says the weaponization fund is not going forward in any way, shape, or form unless the government gives a reason as to why. The reason for that is that if these plaintiffs have standing, which she seemed to assume in her order, proving mootness is an uphill battle for the government.

19:42Louis Michael Seidman:They have to do more than just change their conduct. It's a settled matter of law, what we call the voluntary cessation doctrine, that when one party voluntarily changes its conduct, that's not enough to get rid of a lawsuit as moot because they could change their conduct back. So a declaration that says we changed our conduct might not be good enough unless it explains why and offers some sort of commitment.

20:04Amy Powell:And of course, the Justice Department refused to even submit those sworn declarations. So this fund is supposedly in settlement of President Trump's$10 billion lawsuit against the IRS. Explain why most legal experts say the fund is illegal.

20:22Louis Michael Seidman:Well, there's a lot going on in the weaponization fund, right? So the lawsuit that it purported to settle was a lawsuit brought by Donald Trump, some of his family members and associates against the IRS for leaking his tax returns. And it also purported to settle two other matters which were pending as administrative claims. So someone had gone to the agency and said, you wronged me. Those claims were brought by Donald Trump personally against the U.S. government for alleged misconduct related to the classified documents case and related to the Russia investigation. Now, those underlying administrative claims, first of all, are meritless, near frivolous.

21:00Louis Michael Seidman:I know less about the leak of the tax returns. It's possible there is something there. But what you don't do is settle a case, even if it were of some marginal validity. You don't settle it by signing over that huge amount of money to third parties. The weaponization fund seems like a fairly transparent attempt to reward the president's supporters, even if, in fact, because of their engagement in misconduct and illegal activity.

21:27Amy Powell:And let's talk about the part of the settlement that bars the IRS forever from auditing Trump. his family and his businesses. Blanche testified that that part of the agreement was still in place, although he referred to it as ordinary. Here he is being questioned by Democratic Congresswoman Rosa DeLauro.

21:48Louis Michael Seidman:Part of the settlement included the second order that you just held up. And that is still nothing has changed with that. What I said today, what I've said a couple of times today, as what we talked about yesterday, is we're not moving forward with the anti-weaponization fund. Okay.

22:05Amy Powell:But you are moving forward with this second order.

22:09Louis Michael Seidman:It's not moving forward. There's a settlement. There's a settlement that the IRS entered into with President Trump and others, his family and his companies. And I find that particular document to be a puzzle, if not shocking. First, as an initial matter, it's not entirely clear to me that it is part of the settlement agreement. When DOJ announced the settlement agreement, included the agreement itself and the attorney general order that creates the weaponization fund. Nothing in the agreement itself mentions a waiver for Trump and his family of tax returns or anything else. In fact, it only purports to resolve the pending Trump lawsuit.

22:47Louis Michael Seidman:But don't actually think that waiver document is legitimately considered part of the settlement because it's not actually mentioned in the settlement itself. It was published as a separate document a day later, signed by someone else, not signed by the Treasury Department is wildly inconsistent with certainly normal DOJ policy or practice in this area.

23:06Amy Powell:And does the suit before Judge Brinkema include that immunity deal for Trump and his family?

23:13Louis Michael Seidman:I don't think it does because it is focused on the weaponization fund and the creation of that fund, how it harms this particular group of plaintiffs. I don't think they asserted any claims related to the waiver language itself.

23:27Amy Powell:And it seems like the immunity piece of this is being lost or forgotten in all the controversy over the anti-weaponization fund.

23:36Louis Michael Seidman:And it's egregiously overbroad, right? It's not just tax audit. It says any matter currently pending or that could be brought by any federal agency. Like if some Trump grandchild has a pending parking ticket from a national park ranger, like that is wiped out by this. I cannot imagine that they followed any proper procedures or got consent from the relevant agencies or that such a settlement could ever be justified.

24:03Amy Powell:So now another judge, a D.C. federal judge, Richard Leon, denied a request for an order blocking the fund, saying he wasn't persuaded that there was a live controversy based on the government's representations. But he also issued a warning to the Justice Department during the proceedings, quote, don't play possum with this court.

24:26Louis Michael Seidman:I don't necessarily agree with Judge Leon's decision, but I imagine the skepticism you just quoted, you know, based on experience and also just based on the somewhat bizarre posture here where the government is insisting it's moot, but has refused to put in any competent evidence to show it.

24:41Amy Powell:And yet another federal judge in Miami is taking another look at the fund after nearly three dozen retired federal judges called it a fraud on the court.

24:53Louis Michael Seidman:Yes, that's fascinating. That is the original case, right, that was brought by the Trumps against the government. The Trumps dismissed it with prejudice upon reaching a settlement agreement with the federal government. The court dismissed it. Well, I don't even know that she had an option at that point, but assumed that the dismissal was valid. She was not asked to evaluate any settlement, but a group of federal judges filed, I think they filed it as an amicus motion to reopen the case because the dismissal was part of a fraud and that the court was being used in perpetrating a fraud, which we're in uncharted territory here.

25:31Louis Michael Seidman:I'm reluctant to opine on the merits of the motion or what the court should do in the situation. But I think what the court has done in reopening the case and asking for briefing is indicative, but she's very troubled.

25:43Amy Powell:There are indications that people in the Trump administration are looking for other ways to compensate these people they claim were victimized by the Biden administration. Republican Senator Lindsey Graham, in a social media post, backed the idea of pursuing payouts through the Federal Tort Claims Act. And then Stanley Woodward, the third top official at the Justice Department, responded with, quote, we're working on it. That post was deleted. But that's another way for them to compensate these people, right?

26:17Louis Michael Seidman:Yes, that clearly appears to be their strategy, and they've done it before, right? They made giant payouts under Federal Tort Claim Act and similarly styled cases. Mike Flynn and Carter Page, I assume there are others as well, those were just the headline ones, but people who clearly weren't entitled to any payout from the federal government under the Federal Tort Claims Act received enormous payouts. And I assume they're imagining they can do something based on individualized administrative claims by others as well. It's possible that the weaponization fund was an attempt to bypass the normal Department of Justice machinery that would have attorneys look at and opine on such claims.

26:56Louis Michael Seidman:It didn't stop the payouts to Mike Flynn, as far as I know. So it is possible it will be a viable avenue for them for other claims as well.

27:04Amy Powell:So you mentioned Michael Flynn and Carter Page. The Justice Department made separate$1.25 million settlements in two lawsuits they filed. Other agreements included $4 million to FBI employees who claim political retaliation under Biden. The DOJ agreed to pay half a million dollars to cover the attorney's fees for a litigation against the Biden administration for allegedly coercing social media companies. And Amy, the Justice Department decides itself whether to pay these off. There's no second opinion. There's no approval from a judge.

27:44Louis Michael Seidman:That's correct. That's how they work. And, you know, the Justice Department has had in the past a pretty robust process for evaluating those. The agency looks at them. The Department of Justice looks at them. It's all enshrined in regulation. If anything, they historically have been very protective of the taxpayer fisc. So even when somebody has a valid claim, frequently the Justice department will push back against overpayments and evaluate the litigation risk. It's a pretty serious process or has been historically. I don't know whether it's being bypassed or ignored or it's just controlled by political officials at this point.

28:18Amy Powell:Thanks for joining me, Amy. That's Amy Powell, Litigation Director at Lawyers for Good Government. Coming up, big law with big tickets to sporting events. I'm June Grosso and this is Bloomberg. What if you could make that stop?

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30:45Amy Powell:The most envied ticket holders in New York City were those with tickets to watch the Knicks play in the NBA Finals at Madison Square Garden. Prices soared into the six figures for some seats, and so the audience was a who's who of celebrities, power players, and big law partners. Many Wall Street firms had suites for the games and an avalanche of requests from clients for tickets. In fact, this summer, New York City is playing host to several hot sporting events, leaving big law partners walking a corporate-tinged tightrope deciding which clients get those tickets. Joining me is Roy Strom, Bloomberg Law Senior Correspondent.

31:31Amy Powell:So, Roy, the law firms were swamped with requests from clients for Knicks tickets?

31:36Louis Michael Seidman:That's right. I think big law firms were inundated with requests from clients to get into Madison Square Garden to see the New York Knicks finals game. Of course, a lot of big law firms are well known for their hospitality, bringing clients to big events. And a lot of them have suites or box seats at Madison Square Garden for the finals, which clients, of course, know. And they were all sort of rushing to get in to see the biggest sporting event in New York City in a long, long time.

32:06Amy Powell:Do the law firms have the suites year-long for every event at MSG?

32:11Louis Michael Seidman:I don't know about every event. I just don't know the way Madison Square Garden operates, if you have the suite for every event that goes there. But certainly a long list of firms had suites for the Knicks playoffs games. They included Davis Polk, Kirkland & Ellis, Prost Gower-Rose, Paul Weiss, Sidley Austin, Vincent & Elkins, Simpson Thatcher, Skadden. Plenty of firms had great seats for the big games.

32:35Amy Powell:I read that some seats were going for upwards of$100 ,000. Do you know how much the law firms pay for these suites?

32:43Louis Michael Seidman:I don't know what the suites go for, but we do know that one law firm, Gibson Dunn, and one of its clients, a private equity firm, Veritas Capital, won a charity raffle for two courtside seats sitting right near all the celebrities that everybody saw. You know, Timothée Chalamet and the Ben Stillers of the world and the law firm and its private equity client paid a million dollars to get those seats, which was donated to a charity. So certainly a lot of money for those seats, at least.

33:12Amy Powell:So the law firms are getting all these requests for a limited amount of tickets. How do they decide which clients to give the tickets to?

33:22Louis Michael Seidman:Yeah, it's really funny because we were reporting about, you know, just the access that the firms had. And that was a question that I was really wanting to get at. You could imagine a scenario where you've got 10 tickets, but you've got 100 clients and you have to figure out, my goodness, how are we going to do this without upsetting people? And even in the reporting process, you could get the sense that the firms were very wary of having any clients feel left out. And from the partners I spoke with, they described basically two types of clients. One would be sort of asking without asking, sort of a soft pitch to get into the games.

33:59Louis Michael Seidman:You know, the calls would be wrapping up and they'd say, hey, if you have any tickets, you know, keep me in mind. I'd love to go. And then the other group of clients were just very direct. I need seats. What do you have? You know, they were much more comfortable asking for things from their lawyer. And I think the lawyers were all navigating that. And I think the one sort of unspoken thing is they kind of know which client. expect to be asked even without raising it. You know, the most important clients would be the ones that the law firm says, I got to get this ticket. I got to get them this ticket because I know it'll mean a lot to them.

34:34Louis Michael Seidman:And they're the ones that we really need to take care of. But certainly in a big event like this, the head of sports practice at Davis Polk told me that the client interest in the Knicks was just absolutely unprecedented. The demand significantly exceeds supply. Part of that was just because it's so rare to see everyone in New York focused on the same thing. The Knicks, I'm not in New York, but from what I gather, really brought the city together.

34:58Amy Powell:Oh, it did. Absolutely. So obviously, clients are grateful to lawyers when they get these sought-after tickets. Are there other benefits that lawyers see in having their clients attend these sporting events with them?

35:13Louis Michael Seidman:Yeah, it's really interesting. I spoke to a handful of partners about this. What does being at a sporting event with a client do that a client dinner or a lunch or grabbing a drink doesn't do? One of them was even mentioning this sort of psychology of shoulder-to-shoulder conversations being much more sort of vulnerable or candid than face-to-face interactions. You're sitting next to somebody, you're focusing on the same thing, but you're also engaging with the person. a partner at Simpson Thatcher, Michael Kuh, co-head of their sports group, who has plenty of experience being at these sporting events.

35:52Louis Michael Seidman:Many of his clients are even the owners of these sporting teams. And he says that the conversations that he has with clients at these games are often just very deep. They're about their families, their children, people who are at the top of their careers talking about whether they are satisfied in their jobs. He says it's conversations he just would never have otherwise. Something about, you know, being at these games in a setting where you're experiencing, you know, the highs and the lows of this competitive event really opens people up. People just thought it was priceless.

36:25Amy Powell:What are some of the other events that clients are clamoring for tickets to?

36:30Louis Michael Seidman:Yeah, well, what's interesting is that New York City is having just a huge sports summer. We had the Knicks games, obviously. This week, there's the U.S. Open. at Shinnecock Hills out in the Hamptons. Golf in New York is popular for the corporate crowd, the big law crowd included, because it's scheduled in advance. It's a week-long event, and there's plenty of space on the golf course to have tents, have people enjoy an entire day and kind of go out and mingle. So golf is a popular one, or at least it will be this week with the U.S. Open. There's the U.S. Open tennis, which of course is in New York every year.

37:11Louis Michael Seidman:Then there's the World Cup. And the lawyers told me that the World Cup final, which will be played at what football fans know as MetLife Stadium, where the Giants and the Jets play next month. The lawyers told me that's the hardest ticket to get, in part because it's really only one entity that has tickets, which is FIFA, the governing body of the sport that puts on the World Cup tournaments, whereas other events, big lists of people have tickets, like the firms themselves have tickets and are giving them out.

37:40Amy Powell:So is it that the tickets to the World Cup finals are the most expensive or they're the hardest to get? I mean, harder to get than a ticket to the NBA finals at MSG was?

37:54Louis Michael Seidman:What I was told is that the FIFA ticket is harder to get. The World Cup final game is almost an impossible ticket to get. The big law sports lawyers that I spoke with, they basically, they typically always have a way of getting to a game that they want to get to, or that somebody they know is trying to attend. But this is different for the World Cup final, because it is an international event. People traveled here to go there. So the demand is just huge. And also the entity that controls the tickets is FIFA. Whereas if you were trying to go to say the Super Bowl, for instance, the NFL gives tickets to the teams.

38:36Louis Michael Seidman:The teams then distribute those tickets. Some advertisers likely get tickets. So there's like a myriad group of people or entities that are giving out tickets. It seems like for the World Cup final, it's just a much stronger grip that FIFA wields on the tickets. And so they're harder to get. But apart from that, it sounded like sporting events are branching out. One firm was planning an F1 event in Miami. And so it seems like sports, they're kind of the last thing in culture or one of the remaining things in culture that spans across all kinds of demographic groups that we participate in collectively that people know about.

39:16Louis Michael Seidman:So much of entertainment, I think, is split up now. Nobody watches the same TV shows the way they did decades ago. Sports are still sort of the one common denominator for culture that even the law firms are realizing getting their clients out to these events can be, you know, worth the price.

39:33Amy Powell:And are the law firms staging events at the events or is it just they're giving clients the tickets?

39:41Louis Michael Seidman:It's certainly more than the tickets. They are planning corporate hospitality events around these big sporting games. And they plan dinners around them. They get people out there. They spend the day there. They'll have tents or things at a golf outing, for instance. The other two good examples was the NFL's Super Bowl and the NBA's All-Star Game. Those are sort of two marquee events that everybody knows what city they're going to be in every year. They last for a week or close to a week. And so you have the opportunity to bring clients to these cities, to have dinners, have other events, and stay in touch for longer than just the duration of a sports game.

40:24Amy Powell:This is all tax deductible, too, for the law firms, right? It's a business expense.

40:29Louis Michael Seidman:I suppose that would probably be true. We didn't dive into that part of it in our reporting, but it sounds right.

40:36Amy Powell:I'm assuming that. We were talking about World Cup finals tickets being the hardest to get. But there are tickets that some lawyers and law firms can't get at all, no matter how much they're willing to pay. Lawyers who are suing Madison Square Garden Entertainment are barred from attending any event at Madison Square Garden because of a ban by owner James Dolan. Tell us about that.

41:03Louis Michael Seidman:That's correct. MSG Sports, which is of course owned by the Knicks owner James Dolan, has a policy that forbids attorneys adverse to the companies from going to the venue. Supposedly, the companies use facial recognition technology and their own in-house counsel to enforce the bans. I think ESPN reported last year that this attorney exclusion list runs more than a thousand lawyers at 90 law firms since it came into being in 2022. I think one of the more prominent attorneys who's found himself on that list is John Morgan, the personal injury lawyer behind the Morgan and Morgan firm, which people have probably seen.

41:45Louis Michael Seidman:John Morgan in a statement to us during our reporting was really not kind to James Dolan. And he, of course, wouldn't be at the game, but he did wish the Knicks fans the best of luck. He was at least gracious toward the fans.

41:59Amy Powell:And surprisingly, at least surprising to me, a New York appeals court ruled that Dolan can ban these lawyers. I'm going to have to read that decision to find out how the court came to that conclusion. when the lower court had issued an injunction against the ban. Big law and big tickets. It was such an interesting conversation. Thanks so much, Roy. That's Bloomberg Law Senior Correspondent Roy Strom. 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.

42:42Amy Powell: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.

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