This is Bloomberg Law with June Brusso from Bloomberg Radio. In her first campaign rally as the presumptive Democratic presidential nominee, Vice President Kamala Harris targeted Donald Trump and what she called his Extreme Project twenty twenty five.
Donald Trump wants to take our country backward.
He and his Extreme Project twenty twenty five.
Agenda will weaken the middle class.
Like we know, we got to take this serious thing.
Can you believe they put that thing in writing?
Read it as nine hundred pages.
But here's the thing.
When you read it, you will see Donald Trump intends to cut Social Security and Medicare.
Project twenty twenty five, the nine hundred page conservative manifesto by the right leaning Heritage Foundation, proposes a massive overhaul of the federal government, including scrapping climate change rules, stopping sales of the abortion pill, lessening worker protections, replacing civil servants with Trump loyalists, and dismantling the Education, Commerce, and
Homeland Security departments. Harris is putting it in the spotlight, although Democrats, including President Joe Biden, have been using it to showcase the threats to the country if Trump wins the White House again.
It's a blue crid for the second Trump term that every American should read and understand. Now. Of course Trump is lying about him now, he said, tries to this is himself, just like he's tried to this himself for Overturny Grovy Wade.
And recent polling shows there's been a dramatic uptick in awareness and negative views of Project twenty twenty five since late June, when Democrats began emphasizing the plan as it's a central plank of their campaign against Trump. Trump has tried to distance himself from Project twenty twenty five. The critics point out that it was led by former officials in his administration. Joining me is Bloomberg Lobbying and legal
affairs reporter Emily Burnbaum. Emily tell us the point of Project twenty twenty five what it's aimed at.
So, this is an effort spearheaded by the Heritage Foundation, which is a right leaning think tank in Washington. They brought together over one hundred conservative groups to create a playbook for a second Trump administration. It lays out a very expansive vision for how to push a far right agenda through every federal agency. Essentially, you know some of The proposals that have gotten the most attention include using power of the federal government to ban abortion, dismantling the
Department of Education, banning pornography. So there's a ton in there, and the thrust of it is in visioning a truly conservative government.
Trump has said his campaign isn't affiliated with Project twenty twenty five, but there are connections there, definitely.
So there have been tallies showing that over one hundred and forty people associated with Project twenty twenty five served in the Trump administration. It's led by former Trump administration officials. A lot of the proposals in the plan itself echo Trump campaign promises. So the connections are undeniable and they're increasingly difficult to shake as Democrats keep hammering on this. You know, Trump tied to Project twenty twenty five. Trump tied to the Project twenty twenty five ideas.
So this has been out for a while.
Why suddenly is it coming, you know, into focus for the public.
Democrats have really leaned into this messaging around Project twenty twenty five. You know, they're using it as a way to say, here's what the world will look like if Trump is re elected. You know, sort of to scare people. And also it was brought into the news just a couple of weeks ago because the head of the Heritage Foundation, Kevin Roberts, said that we are in the process of carrying out a second American Revolution to take back power from the elite, and he said it'll be bloodless as
long as the left allowed it to be. So that was really scary rhetoric, and I think that created another opportunity for Democrats to point to this as a boogeyman.
And here's a clip of that Robert's statement, in.
Spite of all this nonsense from the left, we are going to win. We're in the process of taking this country back, and we are in the process of the Second American Revolution, which will remain bloodless if the left allows.
It to be.
Do you think that Roberts and conservatives like him want to get attention for this, even if it's negative A.
I think so. I think that they've been a little frustrated by how much they've been tied to Trump. You know, the Trump campaign has continually pushed back. They say, we don't know these people. That doesn't make them look great. But I do think that they are standing by everything in the plan. You know, they're proud that they brought together so many conservatives to come up with an agenda. You know, when Trump came into power last time, one of the issues was that they didn't really know how
to wield power effectively. They had some policy ideas you know about immigration, et cetera, but they didn't know how to use the government to make that happen. So this is an effort to fill in that vacuum. So I think the more attention is on the plan, you know, the more they're getting out their message.
If they didn't want to be tied to Trump, then why did they have so many people who were in the Trump administration writing these things.
It's a good.
Question, and they say, you know, this playbook could be used by any few Republican administration. I think they want to create some daylight because they want to differentiate between the conservative movement and the Trump campaign. You know, conservative movement has a broader vision, has more long term momentum than just the next four years.
Project twenty twenty five proposes that the entire federal bureaucracy, including independent agencies like the Department of Justice, be placed under direct presidential control and In the nine hundred pages, they take each of the departments and give suggestions about what should be done. So let's start with the Department of Labor. The section was written by Jonathan Berry, who
headed the regulatory office at Trump's Labor department. What's the sort of message here, anti working class, anti unions.
Yes, it's definitely very anti union, pro employer. And that's according to labor experts who I talk to. A lot of the proposals would just make life easier for companies, so, you know, it would make it harder to create unions. It would allow them to avoid paying over time. It would even allow miners to take on some potentially dangerous work as long as their parents that it was okay. So it lays out a pretty pro employer visions under Republican administration.
I thought that was so odd to let miners take on dangerous work.
What is that about.
That's an increasingly popular position among Republicans. You know, a lot of this comes down to the administrative state. You know, there's this frustration among conservatives that Democrats have effectively taken over the government bureaucracy. They're imposing all these rules to push their vision of society. You know, and so this is their respond to that, and I think that, you know, this is just a small piece.
Of that, and apparently wanting to undo labor laws that protect children. I thought it was strange that he denied in an email that Corporate America backs all of his proposals, pointing out he favors phasing out temporary guest work of visas, eliminating use of forced labor abroad, and giving workers time off for Sabbath observance. Those particular things seem so odd to single.
Out to me.
Yeah, I mean, you know, there's a lot of wonky policy proposals in there. But you know, Jonathan Barry himself, he worked at Trump's labor department, like you said, then he revolved out to a corporate law firm called Boyden Gray. They take on a lot of conservative cases. Now he's representing companies, including a coalition of home care companies that are accused of feeling to pay over time. You know, he's plotting how to get back in the administration. I
think it's a very Washington story. You know, the pro corporate agenda in government outside government, and then back in government.
Then you have the Department of Energy and This was written by Bernard mcnamie, a Trump appointee of the Federal Energy Regulatory Commission. What are they looking to do with the Energy Department?
Among other proposals, they should eliminate offices that work on net zero carbon goals.
You know.
They basically say the Biden administration has moved too fast with green policies. They're trying to accelerate the energy transition too quickly. So he's calling for an end to the so called war on oil and natural gas, trying to pull back a lot of government efforts to fight climate change, you know, create a much more oil and gas friendly energy department.
The Department of Transportation.
Note was written by Diana I don't know if I'm pronouncing this correctly.
Firch got Roth, a deputy.
Assistant director in Trump's Transportation Department. I just want to note that so far all of the authors has worked in the Trump administration. Tell us about her proposals.
Yeah, so the main message is that the Biden administration has moved too fast on electric vehicles, that they are subsidizing EV producers like Tesla at the expense of legacy automakers. So a lot of her positions align with the positions of you know, Ford and other automakers.
So how would Elon Musk, who's already given fifty million dollars to a Trump back, how would you.
React to this?
I think Elon Musk definitely wouldn't be happy with a lot of the proposals in this chapter. But I think part of his play is getting close to Trump in order to push his agenda to the Republican administration. So something a lot of people say about Trump is his opinion is informed by whoever he talked to last. So for Elon Musk, it's the very strategic play to get really close to him.
The EPA chapter in Project twenty twenty five was written by the former chief of staff for Trump's EPA administrator. We can sort of imagine what it is, but tell us a little more so her.
Vision of the EPA. They would cut a lot of offices, so in general, it's a lot about shrinking the EPA, which she says is bloated and bureaucratic, especially cutting offices dedicated to climate protection. It would expand oil and gas leases. It would shrink the workforce, so it would also halt grants to advocacy groups, so it would disentangle itself from a lot of the you know, pro climate groups that
are operating on the ground. So it would it would really make the EPA much less effective as an agency.
Which Trump also did during his presidency. Now, the Department of Justice chapter was written by Gene Hamilton, who served as counselor to the AGE during the Trump administration. Here a lot of of sort of endorsement of conspiracy theories that we've been hearing, you know, since the Trump administration.
I want to read a quote from that chapter. Quote, large swaths of the Department have been captured by an unaccountable bureaucratic menagerial class and radical left ideologues who have embedded themselves throughout its offices and components.
Yeah, a lot of this chapter is focused on, you know, this anxiety that the dj has been captured by what he calls the radical left, you know, pointing to the FBI bringing back up some of the concerns around Hunter Biden's laptop. So it really lays out a plan to ensure that conservatives are calling the shots at the Justice Department. It you know, envisions pivoting away from a focus on
domestic terrorism, rejecting federal probes of police abuse. It calls for actor duty military personnel and National guardsmen at the border, so kind of totally revamping the DJ turning away from civil rights, turning towards violent crime. That's the gist of that chapter.
And the chapter on the White House by a former Trump Deputy Chief of Staff. Of course, wokism has got to be in this somewhere.
Focism is basically in every chapter, and it's especially in this chapter, which is one of the first. So it's about combating wokeism. It's about, you know, creating better connections with conservative media, you know, how to use the media to promote the president's agenda. And it focuses a lot on pushing back on what he says is the less
aggressive attacks on life and religious liberty. So Rick Dearborn, you know, he's a lobbyist for a lot of companies, a lot of well known companies, you know, City Group, Rizon, Meta, Amazon, and he is calling for a White House that is, you know, corporate friendly and anti woke.
I think most people haven't read through this whole nine hundred pages and just know about the bullet points. Do you know how many of these they've distributed or sent to people.
They're definitely trying to get this out across Washington, you know, like Project twenty twenty five is more than just a playbook.
Two.
They're also soliciting resumes for conservatives who want to serve in a Trump administration. They're doing trainings about how to use the levers of government to push a conservative agenda. So they're trying their best to push this across the conservative movement. Interestingly, there have been a few conservative groups that were associated with it at the beginning that have
distanced themselves as it becomes more controversial. So we'll see, you know over the next month how many conservative groups are left standing as supporters of this agenda.
Looks like the Democrats are not going to let it go easily. Thanks so much, Emily. That's Bloomberg Lobbying and legal affairs reporter Emily Burnbaum turning out a corporate law
in the Delaware courts. The Delaware judge whose landmark ruling on shareholder agreements landed him at the center of a month's long legal drama, issued a novel decision yesterday in a dispute involving a Morgan Stanley subsidiary Vice Chancellor Jay Travis Laster handed six billion dollars to XRI Investment Holdings, ruling again for the water recycling company, two years after he took the rare step of asking Delaware's top court
to overturn his decision in the company's favor. Joining me to sort all this out is business law professor Eric Tally of Columbia Law School. Eric, this is a very confusing set of facts.
Can you walk.
Us through it?
Yes. The case itself was kind of an interesting case because it involved, you know, setting up various type of business structures to try to create what essentially amounted to kind of like a second mortgage or a subordinated loan, and so there were all kinds of constraints in doing it. But the person that was trying to basically use stock that he had in a company called XRI. He had some stock in this company and he wanted to you know, basically borrow money for another company to try to turn
that company into a more profitable venture. But the problem was that he had already entered into this agreement not to use the stock that he owned as direct collateral. He couldn't, you know, do what's called getting secured loan secured against that because the company he owned a stock and had lent him money as well, and they basically were saying, look, if you don't pay it back, we're going to use that stock as the collateral for our
first loan. He ended up working with his own lawyer, but then also worked with like the CEO of the company that he owned stock in, to try to set up a way to structure things so that he could still kind of borrow more money against the value of these these shares that he owned, but not to step on the toes of the company that already had that claim on those shares as collateral. So it was a little bit complicated because there are all kinds of balls
in the air at the same time. But even though it was really complicated, it was also true that he, you know, had been working kind of hand in glove with the CEO of the company he owned stock in to try to you know, design this thing. And this was an old friend of his as well. And so you know where things ended up getting is things didn't go particularly well for this new business that he was
trying to create. He wasn't able to make payments on his various loans, including that original one, and only then when relationships began to sour, did the guy that he was working with, the CEO, basically blow the whistle and say, oh, he set up this elaborate scheme and violated some of the contractual restrictions that he had agreed to long ago when he borrowed that first amount secured against the stock.
So it was a you know, a kind of a big Rube Goldberg machine that absolutely this person had built, but he kind of was working with someone that was the CEO of the other side that would make a complaint about it, and they never really sort of voiced their own concerns until it was really really late in the game, and then they did.
So that was the case that Laster got tell us what he.
Did with it.
He had to deal with what was kind of an odd situation in that, you know, when you sort of look at the from sixty thousand feet, you know this guy, yes, he probably built a Rube Goldberg machine that violated some of the terms in the deal that he had struck, but by the same token to the other side, at least the CEO the other side knew what he was doing and they didn't object to it until things really
went south. And that's what Vice Chancellor Laster in his opinion, he wanted to sort of recognize this fact that you know, they kind of acquiesced in what he was up to, but the way that the law works didn't give him the ability to use this, this idea that you know they were in on it, and therefore they shouldn't be
able to just foreclose and seize the shares away. So when he wrote that opinion, that first opinion, he almost asked the Delaware Supreme Court please overruled me on this, because I kind of don't like the outcome that I got to here, but it seems to be the outcome that our precedents have suggested for this case. And so then goes to the Delaware Supreme Court and they come back and said, no, by Standsley last year, you got
it exactly right. We're not going to overrule you. The fact that you know that you know this guy had done something that was not allowed in his original loan, even if he was helped by this CEO, does not does not foreclose the conclusion that this was something that was in violation of his loan, And from the very moment he did it, it was void and they could
just seize the shares back from him. So this this gentleman, mister Hollyfield, really kind of took at the chops from multiple directions, and by Standley Laster you kind of get the sense he sort of felt for the guy, but didn't see the law on the books to give him much relief. In the Delaware Supreme Court wasn't willing to go there either.
Have you ever heard of a judge sort of asking to.
Be reversed, Well, it's not as unusual as you might think it would be, because I think a lot of times when judges sort of say, look, the law is clear on this, this seems somewhat inequitable, and it would be a good idea if someone at a higher level, whether it's a legislature or a supreme court, would sort of, you basically say we're going to do things differently, either with a new statute or by overruling an existing precedent.
So a lot of times this is not a completely surprising thing for a trial court judge to say, look, I'm bound by the precedents that have been handed to me by, among other folks, the Supreme Court of Delaware. I've got to live within them. I think that leads me to kind of an outcome that seems kind of unfair here, and I want to signal to the Supreme Court, don't worry, I won't take it personally if you reverse me here, and in fact I invite you to consider
doing so. What was sort of interesting, particularly in this instance, is that while by chances the last probably does get reversed more than the average judge for reasons largely having to do with his creativity, this is a situation where they chose not to reverse him and basically sort of continued the outcome that he got to that he felt uncomfortable with, but the Supreme Court of Delaware evidently felt more comfortable with it.
Coming up next on the Bloomberg Law Show, I'll continue this conversation with Columbia Law School professor Eric Tally, and we'll talk about that landmark ruling on shareholder agreements that landed Judge Laster at the center of a month's long legal drama and led to the Delaware legislature taking action. I'm June Grosso, and you're listening to Bloomberg. I've been talking to business law professor Eric Tally of Columbia Law School. What's with the length of these opinions? One with his
was one hundred and fifty four pages. The Delaware Supreme Court came back with a seventy eight page opinion.
Delaware Chancer Court opinions tend to be a little bit longer than others. I think this is in large part because they realize that people are watching right, that this is a transaction that has caused a dispute. But regardless of the holding that they have, there may be fifty sixty two thousand other future transactions that may be designed
around the very holding of this situation. And so, because Delaware is such a focal area, even its trial court opinions can tend to be a little bit more on the on the lengthy side, simply to anticipate a bunch
of the different ways that people might read it. Now, add on top of that the fact that that by chance the Last himself, you know, he does sort of relish the idea of trying to excavate the historical origins of some of these doctrines, and he did so in multiple ways here and sort of developed that in his early opinion. For someone who's sort of a student or a researcher in the origins of Delaware jurisprudence or just common law jurisprudence. It's actually quite a tree to read
these opinions. However, I have to confess and that when I a sign a Vice Chancellor Laster opinion, to my own students, there's a sort of a collective groan because they know they're going to be reading something that's one hundred and fifty hundred and sixty two hundred pages long.
And then he had ten months of additional proceedings. This case is never ending. What took ten months.
Well, one of the things that the court basically said, the Supreme Court said, is no, no, no. It turns out that they were well within their rights to just seize this stock away from this guy because he had violated his original loan agreements. But now you've got to go back and determine whether there are additional damages that are due to the original lender. And those took a couple of different forms. One because our defendant in this case held stock in this company. That company had lent
him money. He was also a board member of that company, and most companies have an indemnification provision in their governance Dockments basically says, if we get into litigation with you, we have to pay for your attorney spees. And they had one with this guy as well. Now that seems a little bit weird when you are suing someone and then you're having to pay your own attorney and pay theirs as well. And so a lot of these indemnification provisions,
and this one was true. In addition, have a kind of an off switch that says, you know, if you behave in a way that was either fraudulent or willful or grossly negligent, then we get to claw back the attorney speed. So part of what by stance Laster had to do once the case came back is to ask what does it mean to willfully breach one of these agreements?
And did this individual do so? And ultimately he determined that the person had willfully breached the agreement and because of that, the company got to claw back the attorney spees that they had been paying. You know, this guy's attorney spees that they got to claw back those those payments. The other thing that he had to inherit, you know, there was this initial loan and then this defendant had had a loan with another you know, with this other lender,
and the shares were kind of caught up. Who who, you know basically could claim these shares as collateral. So the two lenders were litigating against each other, and then that eventuated in a big settlement. So our plane iff in this case said, not only should we have been able to claw back the shares, but we had to spend all this money on this other lawsuit, and that should be part of our damages that he could have
foreseen that we were going to have to suffer. And so by Chancellor Alaster had to adjudicate that as well, and he also said, yeah, there were payments in that
external lawsuit that they also had to pay. So when this case came back and by Chancellor Alaster got it, not only did the Supreme Court, hell know, your original opinion is going to hold water and we're not going to reverse it, but now you need to assess further damages against this person that he's going to have to pay because of his original violation of his contractual obligation.
So this most recent opinion was basically by chance Or Laster then trying to unpack what those additional damages would be you really need to.
Make a diagram to try to keep this all straight. Is this latest opinion controversial.
Well, in some ways it's not amazingly controversial, But there are a couple things that I think are really interesting about it. So one is this idea. And when you read the opinion, you do kind of get this sense that the person who ends up being held liable here, you know, he wasn't completely above board on everything. But there was also a sense to the other side knew
what was going on as well. So the fact that the Supreme Court didn't give by chances laster here or more generally, other trial courts the discretion to kind of pull back to sixty thousand feet and say we're going to try to do what's fair under the circumstances, that I think is a little bit controversial, right, that the Supreme Court basically said, now, if you've done something that basically causes the deal that you've made to be to be void from the very beginning, even if people have
acted in you know, possibly less than completely upfront ways, we're not going to give judges the discretion to kind of try to do justice on a broader plane, and I think that in some ways limits what the Delaware Chancery Court has historically done. So I think that's that's one thing that is possibly going to be a little bit controversial. There may be some other things about how do you calculate damages in this case that you know
could stay alive. You know, one of the things that you know, if ice changed the last didn't try to do in the opinion, is to try to say, well, like, just how valuable were these shares that got seized back? Did these guys get overcompensated when they seized back these shares? And as a result, should I have shaved my damages but a little bit more to reflect the fact that
they might I got it overcompensated. So I think there may be a few things that are you know, certainly for someone like myself who teaches and does research and contracts that are kind of in the weeds of contract damages law that are super interesting. And this case may end up casting a longer shadow, and it may not even be done at the Dallas Supreme Court level if in fact some of the computations of damages themselves get appeal.
Tell us a little about last he had this decision that got a lot of attention that invalidated many shareholder agreements.
Yeah, so this was a decision not that long ago actually that invalidated some side shareholder agreements that had become a little bit more popular, particularly outside of the public company space, but also had never really been tested in courts. That basically gave a favored shareholder extra special rights to control what the board of directors does, and you didn't really even have to get the consent sometimes that even have to tell other stockholders about the existence of these contracts.
And by chance to the laster had one of these opinions less than a year ago, and he came out with an opinion that basically invalidated those contracts. They said, look, you can't do this on a side contract. These are about sort of fundamental governance provisions that you know pretty much have to be in the charter of a company or its bylaws, but you can't hide him in a contract.
And so he invalidated the contracts. It caused a huge storm when that came out, and a lot of folks who had you know, already advised their clients so it's okay to get into these side contracts. I think felt a little bit of a danger that, you know, there might be some egg on their face and they're they're already knee deep and executing even more of these contracts.
And so over the summer this past summer, there was a concerted effort that was ultimately successful in getting the Delaware Assembly to essentially, you know, pass a new law that basically overruled Vice Chancellor Laster's opinion before it even went up to the Delaware Supreme Court. And that itself was quite controversial. I was one of several co authors of a letter to the Delaware Assembly is that this is a little bit hasty, it's a little bit fast.
It seems to be that rather than you know, waiting for this appeals process to play out, parties have just decided to turn to the legislature to use the legislature to overrule a trial court opinion, which seemed somewhat unprecedented. And I can't think of other circumstances where it's happened. So five chances of Laster. Interestingly enough, in the span of you know, of a year, he got overruled by
the Delaware legislature. But he didn't get overruled by the Supreme Court, which is what he really wanted to get overruled by. So this, this law now has been signed into effectiveness by the Governor of Delaware, and the legal permissibility of these side contracts now is evidently okay under Delaware law. But there's all kinds of open questions about how is that law going to come out? And much of this kind of started by what seemed to be kind of a strong pushback against a Vice Chances the
Laster opinion. The opinion itself, you know, I've taught it, I've read it many times. It really is a kind of a by the book opinion. So so my sense is that, you know, Vice Chansor Laster's reasoning in the case was pretty consistent with Delaware law, and the fact that, you know, there had been so many examples of people basically saying, oh, don't don't worry, this is going to be okay. You know, if this is tested, it's not
going to come out against us. That expectation got deeply disappointed, and I think that's what caused this really, you know, fairly fairly forceful rush to try to change Delaware law through its statutes.
And what's his reputation.
Well, Vice Chancel Laster is well known be an extremely thoughtful person. Uh he is. He is a person that like tries to to to reason from first principles and to try to sort of think where does this practice fit within the longer role that uh that you know, the Delaware Court of Chancery has you know, historically and institutionally. Now that sometimes rankles people because he is not a kind of I'm just going to go with the flow of what the cool kids are doing these days type
of judge. And if if he can't find a way to reason to the outcome, he may well end up resisting that outcome. And and so that inevitably causes some frictions inside Delaware law. I find when I when I teach Vice Chancellor Laster's opinion, they're very long. So the students are a little bit are a little bit grumpy by the time I'm teaching the case because they've had to spend so much time reading it. But they're very well reasoned and they build up in a logical way
to where they're going to end up getting. And this opinion that was you know, effectively nullified or at least going forward, was nullified by the legislature. It was similar. It was not a quick or slap dash and it's reasoning. It sort of built it up piece by piece, and so by chance to the last year, absolutely has a reputation of being a very smart, very articulate judge who also you know, is going to you know, try to
reason his own way to the outcome. And if the reasoning doesn't hold together, it's unlikely he's just gonna you know, wave his hands at it and say, well, that's still good to the outcome, because that's just what everyone else is doing. So he's you know, maybe a little bit more of an iconoclastic judge than you will have elsewhere, but he's also a very engaged thinker. In the opinions that he writes.
He certainly sounds like an interesting judge. Thanks so much, Eric, Best, Professor Eric Talley of Columbia Law School. And that's it for this edition of the Bloomberg Law Podcast. Remember you can always get the latest legal news by subscribing and listening to the show on Apple Podcasts, Spotify, and at Bloomberg dot com slash podcast Slash Law.
I'm June Grosso and this is Bloomberg