This is Bloombird Law with June Brusso from Bloomberg Radio.
It's the twenty nine lawsuit brought by Texas to challenge Biden administration policies, and this week the Supreme Court justices seemed divided over the administration shifting its deportation priorities the law meant reality when the justices were confronted with the fact that Congress has never provided the funds that would be needed to arrest and report all of the estimated eleven million undocumented immigrants in the US despite what the
law says. Here are the Chief Justice and Justice Brett Kavanaugh. Now, it's our job to say what the law is, not whether or not it can be possibly implemented or whether there are difficulties there um. And I don't think we should change that responsibility just because Congress and Executive can't agree on something that's possible to address this this problem. I don't think we should let them off the hook. Trying to figure out how this will play out if
you were to prevail. Uh So the government uh uh says we don't have the money to comply, then then what do you do? And Justice Elena Kagan question the right of states like Texas to challenge and frequently block every new immigration policy. Immigration policy is supposed to be the zenith of federal power, and it's supposed to be the zenith of executive power. And instead we're creating a system where a combination of states and courts can bring
immigration policy to a dead halt. My guest is immigration law expert Leon Fresco, a partner at Hollanden Knight. Leon, there are several issues going on in this case. Explain
the basics for us well. This case is about a memorandum that was issued by the Biden administration that said that they're going to prioritize basically violent offenders, national security risk, and very very recent border crossers as the people that are prioritizing for removal and everybody else would be de prioritized for removal, including some people and people with certain criminal convictions that the statute would require that they be
detained and removed if they were apprehended by I Because the idea of the memo is that even though some people might nominally fit these categories, such as someone, for instance, who stole a chocolate bar from a store, that individual in the parameters of all of the equities, might not be someone you would want to remove if they had five U. S. Citizen children and where the sole breadwinner for that family, And so that memmo says to look
into all of that information and make a decision. And what the State of Texas is doing, is it challenging that memo saying that at the end of the day, there shouldn't be any discretion to de prioritize anybody from removal. I find someone, they should remove someone. End of the story, no further discussion. The first question is a threshold question whether Texas has standing or the legal right to challenge
the administration's guidelines. Correct. The Court was actually very concerned about this fact because what they were looking at was, first of all, to the Administrative Procedure Act, did someone have to be specially affected? And even just as the Leado sort of said, you know, specially offended, I think, was the m used to have standing as opposed to what states have been doing previously and what the courts
have been ruling previously. The states get whatever it's called a special solicitude, which is they get a little bit of an exception from standing because they have these interests in terms of all of their state residents that they could bring that prompt any individual resident couldn't bring. And so the court was talking about that issue. But then the court was also talking about, well, what about these Texas actually affected even if you make them give a
standing analysis? So, first of all, do they even have to have one? Could they just have this special collissitude to sue? But if they have to have one, well what about their justification that they gave that their healthcare costs are going to be higher because of this demo that the prioritizes people. And at the end of the day, that's sort of such a speculative claim because I don't think there's any economic analysis that really works these things
out in terms of a very large picture. I mean, you sort of have, in general, more people equals more GDP equals more government revenue, and then you have to figure out where each person is from the point of view of how much they take, and the standing require that kind of analysis or does it require just a harm irrespective of the benefit. And so they're trying to weigh all of that. But I think they will continue by allowing the standing. I think that's ultimately not going
to be the issue where this case gets decided. I think the court will do something it familiarly does in many cases, which they will assume but not decide that Texas has standing and punt that issue for another day and get to other issues. In this case, probably another issue, perhaps the issue is that the law says that some immigrants quote shall be taken into custody or removed. Correct.
There's a law called iron A Section to thirty six or tital A U. S Coat, depending on where you're looking in the statutes that says that there's a specific type of foreign national. If you commit certain types of crime, you have to be detained mandatorially and removed from the country.
And so there was some gradation there with Avy Coney, Barrett and Neil Morrisage where they were saying to the Department of Justice, well, look, maybe you have this broad power for people you haven't maintained that you don't know anything about it. They're just your run of the mill undocumented person that overstayed their visa or that crossed the
border on lawfully ten years ago. But that's different than when you literally know of somebody who's one of the two thirty six foreign nationals who has a criminal conviction. What gives you the authority to have a memo that the prioritizes within that category when Congress clearly said prioritize
people in that category. And so there I can see a compromise decision which strikes maybe that part of the memo, but says that the administration has broad this present with regard to people for border crossers and visa overstays to figure out what groups of those people to prioritize or not prioritize, given that there isn't sufficient funds for all of those people. Some of the justices, particularly the Chief Justice, said,
challis shall and we follow the law. We don't decide how the law is going to be implemented, But then question how you could force the government into doing something it just doesn't have the money to do. So I think there was a very interesting philosophical debate that Justice Roberts was saying, which is, look, at the end of the day, there isn't probably funding to enforce any law. But the point is that's a different question than whether
the government can exempt people. So you know, you say we're gonna exempt this group of offenders from tax prosecution or this group of labor law offenders from labor law prosecents. Sure, you don't have enough fun each to prosecute every labor law by later. But that's a different thing than writing a memo for people. And so what Justice Roberts says is, look, and we just say, there's a world where you can't write a memo, but you just do your best within
the limited constraints that you have. And I think that is an important discussion. But then it gets balanced with the question of Okay, let's say it's true. What now what does the agency do. Now do you actually let it sort of run as this rudderless agency without any priorities, or does the state of Texas actually get the rights the priorities for I or does the judge get to write the priority for ice enforce them to support specific people.
And I think that's where this thing falls apart. That's where I think you'll see a comment together coalition of justices say, look, you can't write a memo that the prioritizes people that Congress prioritize a k A. People with certain criminal convictions. But within the categories of people where there's clearly not enough funding, those you can actually create
a prioritization. Given the historical basis of immigration law and the broad authority it gives to the federal government, the executive brank to deal with these issues so lely on what happened to the federal government being in charge of immigration policies not the states. Well, I think that's going to be the underlying issues, And I think you're gonna get a topple together group of justices. You already had Justice Cony Barrett who would have granted an injunction in
the first place. So now the question is can you get I don't think you're gonna get Alito. I don't think you're gonna get Thomas. I don't think you're gonna get Kavanaugh. But can you get either one of Roberts or Gorsage to come along to the principle of fine? Even if we say that this memo is unlawful, what's the remedy really, at the end of the day, Are we gonna have a court system that dictates to the federal government what they do via the Immigration Enforcement No,
of course not. And so because of that, what we're gonna do is we're going to basically write out the little section of this memo that we think actually violates the statute, the one that basically tells people to be prioritize even the people with criminal convictions, but give broad latitude during the rest of the group of people who are basically eleven million border crossters and these over space that they be prioritized into groups where some are more
serious and some are less serious. I thought it was really interesting that Justice Kagan brought out the fact that has been forum shopping for judges that will issue nationwide injunctions in these cases. In Texas, there are divisions within districts. You can pick your trial court judge. Um. Uh, you know you played by the rules. That's fine, but you picked your trial court judge. One judge stops a federal
immigration policy in its tracks. It's certainly an issue that, no matter who's doing it, needs to be addressed that there perhaps needs to be three judge panels that get convened in cases where people are challenging the constant and tumality and pumping. But in the end that won't be the basis upon which this case is the side of You've given hints here and there, but tell us what you think the decision will be based on the oral argument. I think they will say we will assume enough the
fighting that they're staying it. We will say that at the end of the day, we're not going to get to the issue here as to whether a vacant or is the same thing as a as an injunction, because all we're gonna do here is we're gonna say that this memo can survive, but no part of the memo can survive moving forward if it conflicts with a federal statute.
And so the parts of the memo that conflict with the shall detain parts have to be written again, and we're gonna leave that to the disrecord to figure out which parts conflict with that. Something like that I could see happening, and then we will see where that goes moving forward. But I think that's where this is likely to go. I think they're likely to fund a lot of the big issues. I could be proven wrong, and
and that would certainly not be the first time. But you know, it would take one justice moving a a from where they were in previous court decisions to do this. So we'll see if that ends up being the way. But I think given what we saw in the remain in Mexico case, I think you'll see a practical five judge coelligence created that basically allows the federal government to create these priorities, but not for places where they clearly conflict with PATO. Thanks Leon be'st Leon Fresco of Hollanden
Night coming up. F t X investors, SUS celebrities. This is Bloomberg. I call it the wheel. Sure, I don't think so. What does it do? Yeah? So does a bagel? Okay, bagel? You KENI one of the worst ideas I've ever heard. Larry David played a skeptic about f t X in a Super Bowl ad that went viral, and it turned out it was smart to treat the crypto cur and cy platforms claims with skepticism. But David is now being sued for luring unsophisticated investors into the f t X debaco.
And he's not the only celebrity. Tom Brady, Gisele Bunch and Shaquille O'Neal and Steph Curry are also being sued, and some of their endorsements were more straightforward. Okay, chryp, messing around, man, give me some tips from crypto, but you are an expert. Right now, I'm not an expert, and I don't need to be with f t X. Everything I need to buy, sell, and trade crypto safely. My guest is Shane's Sappini, founder of Subpini l LP.
There are lots of people to sue here, lots of entities as well, So why sue celebrity some with a tenuous connection to what happened? I think what's going on here mostly is that the celebrities aren't individually bankrupt, So if the Blankets were to sue f t X, that lawsuit would be paused during the pendency of the bankruptcy, or at least for parts of the bankruptcy. And you don't have that same issue if you see somebody like
Chiquille O'Neill, who is certainly not bankrupt. But is there also an added factor of drawing attention to the lawsuit. I think there is definitely an aspect of wanting to draw attention to the lawsuit by bringing in people whose
names are regularly in the news. For example, I don't think that Larry David was included in this lawsuit necessarily because of the claims against him are particularly strong, but rather because he was participant in one of the most popular and widely shared Super Bowl ads of all time. I don't think that's a coincidence. The celebrity's liability depends on whether the products they promoted. Our Securities tell us
more about that. Securities law is something that's developed over hundreds of years to protect the investing public from the exact types of issues that have arisen in the wild wild West of cryptocurrency trading. They're there to make sure that when people are promoting stocks and other types of securities that what they're promoting actually is real and actually exists,
and isn't just a complete sham or a fraud. And if it turns out that it is a shammera fraud, then the investing public has some modicum of protection at least. And so basically you have everybody other than crypto boosters who say that cryptocurrencies should or our securities. They have
many of the hallmarks of a traditional security. The problem is that people who boost cryptos say what's great about it is the lack of regulation, so to the extent that they are found to these securities, it's a big problem for the cryptocurrency industry as a whole because it will bring them under much tighter and in my opinion, much needed regulatory scrutiny, And the Securities and Exchange Commission
has indicated that it thinks their securities. So let's say they're found to be securities, what are the implications the security should have been registered with the state so that they could be reviewed and monitored and regulated for compliance
of all types of different consumer protection laws. The reason I think, from a legal perspective, why they're bringing unregistered security actions rather than say outright fraud is with a fraud action, they would have to approve knowledge on the part of the celebrities as well as intent to defraud the consumers. And from all the reporting that I've seen and read, it was Sam Bankman, Freed and maybe only a few other people who had any intimate knowledge of
what was actually going on at the company. So that would be a much harder hill to climb than just saying these are actually securities. They in fact were not registered, and then when they were marketed, they were illegally marketed as unregistered security, whether the celebrity knew that at the time or not. So now does it matter the kind of commercial I mean we talked, Larry David was actually saying, you know, I don't buy it. And you know, the
Golden State Warriors are named. They unveiled the company's logo on the court at the team's arena, but then other celebrities, you know, promoted it more directly. I think it does depend on how they're moded. Putting the name of a company up on something or saying you know, they're the official sponsor of Golden State Warriors or whatever. You know, that's a far cry from somebody specifically saying, you know, they have these yield bearing accounts, these are great. You
basically earned free money for nothing. Those kinds of statements are very different. And the thrust of your question, I think is correct that there's going to be a much harder time showing that link between the yield bearing accounts if they are deemed to be securities and uh commercial activity like naming something after ft X or doing a commercial where the celebrity like Larry David stays, you know, no,
no thanks, I'll pass on this. But that said, I mean those commercials were all about getting people to put money into the yield bearing accounts. It's not like f t X ran the Larry David commercial to scare people away from their company. They did it because they know that he's like, you know, the curmugion that everybody loves to disagree with. So what might the Aberti's defense be
at trial. I mean, it's unlikely that any of these cases will get before a jury, but if they did, the kind of argument they would make, like, look, we had no idea, and even if we had done reasonable due diligence, we couldn't have figured this out. Even you know, some of the smartest people in the most important executive agencies disagree on this question. Courts disagree on this question. How could you expect Steph Curry, who in the advertisement
itself was saying, I don't know anything about crypto. I trust somebody else about it to determine whether these are securities or not. But they may run up against the old adage that every lawyer learns in law school, which is that ignorance of the law is not a defense. Why do you say that this is unlikely to get
to a jury. I think there is so much uncertainty on both sides, and there's a lot of money at stake, and I think the celebrities realize that they're the only solvent parties here, and so I think it's highly likely that this is the type of case that will settle before going to trial, like most cases do. There may not be any they're solving parties besides these celebrities. But if you're talking about what thousands of people in this class action, what can they settle for that will satisfy
a class like this? That's the potentially billion dollar question. I can't give a coaching answer on that, and I think that they're probably pretty intense discussions on this exact question going on between plaintiffs Council and the various defense council in this case. It's anybody's guests, what a number like that will look like a lot of litigation going on over f t X. Thanks so much, Shane. That's Shane Sabpoini of Sabboini LLLP. Coming up next on the
Bloomberg Law Show. What do Jack Daniels, a Squeaky dog toy, and Ginger Rogers have in common? I'm June Grosso and you're listening to Bloomberg