Ep 212 — Trump Comes Up With Magical Insurance Plan To Make Tankers Cross Strait of Hormuz

Okay. When I first saw this, my initial reaction was, well, that's stupid. And it is. Well, yes. But it wasn't until I started researching exactly what the administration wants to do that I realized just how stupid it is. Readers, this is me handing Andrew an article and saying, run with it. Because I know that he'll be like, huh, that's interesting. And then five hours later, we'll have something amazing. Welcome to Law and Chaos where the doge bros don't like when you put their picture on the internet and Live Nation doesn't like when you look at their text joking about reaming you for fees. And the Trump administration has a genius plan to use insurance to open up the Strait of Hormuz. We've got a lot to cover. So let's get after it. Happy Friday, cast monkeys. I'm Liz Dye. And with me as always is Andrew Torres. Andrew, how are you? I'm good, Liz, although I was better yesterday when it was 82 degrees. Why snow? I don't. And we had a tornado warning last night. This is ridiculous. And I demand a recount. This simulation is crashing. That's what I think. All right. So you guys know how when you work with somebody like all day, every day, you get so you can kind of read their minds. You guys, I came across this story yesterday in the Wall Street Journal about Trump plotting to use magical federal insurance powers to ensure that tankers will be brave enough to sail through the Strait of Hormuz in the middle of a hot war with Iran. And I was like, I will give this story to Andrew, a person who used to represent the biggest reinsurance company in the world, and he will wander off and make funny noises and thousands of words. It will be amazing. And friends, that is exactly what happened. Not fake news. So will Trump's plan work? No, no, we'll not. Well, this is my shock face. Okay. We have updates in the Live Nation anti-trust case and the National Endowment for the Humanities case we talked about on the blog yesterday. And of course, we will have Andrew Torres waxing lyrical on the subject of marine insurance. But first, ta-da, talk it alerts. Okay, let us start in Virginia, where FBI Director Cash Patel has a plan to make us all forget about the FBI agents squiring his girlfriend around the country on taxpayer dollars and also our taxpayer dollars funding his junkets to the Olympics. FBI Director Cash Patel is going to invite the UFC to Quantico to train government agents in the art of hand-to-hand combat. I'm laughing, but you know, Liz, I too grew up thinking that I could sign up for summer camp at the Aquino Dojo and come back in September and I'd be ripped in a 12th degree black belt and then I turned 11. These people have the weirdest ideas about masculinity. Like, this is a whole, every day is just like a whole PhD thesis. But like, why do these men with guns need to learn how to do high kicks to someone's head and grapple on the ground? I take it you've not seen a lot of UFC fights, but look, I gotta say, I am happier with Cash Patel flying around the country for photo ops than, you know, trying to do actual law enforcement. But that being said, given a choice between a peacocking idiot and an actual professional, I yearn for the days of the latter. Yeah. Okay. Moving north to our home state of Maryland, the best state. I take back my own tepid criticism of Attorney General Anthony Brown. On Monday night when we recorded the show, I said that the state had indeed sued on February 23 to block the construction of an ice detention facility in Hagerstown, but that the state had not filed the motion for temporary restraining order. So maybe they weren't all that serious. Well, I guess Attorney General Brown is a show listener. Hi. Hi. Since on Tuesday, as the show released, he actually did move for a TRO, arguing that the Department of Homeland Security entered into an agreement to retrofit the warehouse in Hagerstown without conducting the required environmental impact assessment. I guess they were waiting for the actual renovation agreement to be signed, which happened on Friday when ice signed the contract to start work on the facility. And so with construction imminent, they figured they were finally in a position to demonstrate irreparable harm and seek the TRO. Which the state did in fact get. Judge Brendan Herson entered an ex parte TRO barring construction for 14 days. So mad props to Attorney General Brown. I should not have doubted you. I was not familiar with your game. Well, no props for Donald Trump Solicitor General John Sauer, who is back at the Supreme Court asking for emergency relief, allowing the government to immediately deport some 350,000 Haitians who have been living here for years under temporary protective status and doing no one any harm obeying the law, paying taxes, checking in with immigration. We talked about this problem in episode 204, but briefly under 8 USC section 1254A, immigrants from countries where there is a declared environmental or political disaster and who meet a list of very, very stringent criteria can receive temporary protected status or TPS, protecting them from deportation for 18 months unless that gets extended. Christine Ohm systematically revoked that status for various countries, including Honduras, Afghanistan, Venezuela, Syria, Cameroon, and Haiti. And she did it while loudly announcing that she was getting what she described as leeches and criminals out of the United States, not because the facts on the ground or the emergencies in those countries have changed in any way that would make the refugees safer. At the same time, on the shadow docket, the Supreme Court allowed Homeland Security to terminate TPS for Venezuelans in October. Judge Ana Reyes in DC tried very, very hard to differentiate her rule protecting Haitian TPS holders from the California ruling protecting Venezuelans that was stayed by the Supreme Court. So she refused to stay her order and the DC Circuit also refused to stay it. So the consequence of that procedurally is that right now Haitians who have been here with legal status for 25 years since the 2001 Haitian earthquake cannot be summarily deported. Trump administration is hoping for another shadow docket stay from the Supreme Court so that they can shift those people out of TPS status and start terrorizing, deporting them and running their usual playbook. I mean, what can you say? It is all of the things, right? These TPS cases are all of the things. It's racism, it's manipulation of administrative procedures to deny people due process, it's demand for extraordinary relief from the court on the theory that infringing on the president's authority is this emergency, but uprooting literally hundreds of thousands of people from their homes is an emergency. And I have to say, I suspect that Sauer is going to get what he wants. I unfortunately think you're right. I do want to go back to the point you made immediately before that. It's obviously not the main thing here, but I really was struck by the government's insistence that shadow docket orders are binding precedent and how dare those trial judges not follow or try and guess at what the Supreme Court is likely to do. Because there is a similar case right now with respect to Syrian TPS holders that is peddling at the Supreme Court. And last Friday, a group of 175 former federal and state judges filed an amicus brief saying, hey, Supreme Court, have you forgotten? We're all judges here. Shadow docket orders are not presidential and we all used to know that until a year ago. Yeah, remember, the Supreme Court is supposed to be a court of review. It is not a court of original jurisdiction. And so it is not supposed to be making decisions without full briefing and argument, except in the most exceptional circumstances, like death penalty cases, where if you don't do something, somebody will be dead and there will be no review. But in the Trump era, the conservative justices basically used the shadow docket to jump in and tell trial courts how they intend to rule and to ensure that rulings that they will not agree with eventually are never allowed to go into effect and so that they stay those orders, which is totally abnormal. The normal appropriate order is that trial judges make a ruling that ruling goes into effect while the case is on appeal. That lower court order is binding for the pendency of the litigation unless it is overturned by an appeals court. And the Trump administration has just turned that presumption on its head with all these shadow docket orders blocking lower court orders from going into effect. But even so, unreason shadow docket orders cannot possibly bind lower courts. That's just black letter law, although Justice Gorshch has indignantly pretended otherwise and excoriated lower court judges for not reading the tea leaves in the shadow docket orders. Yeah. And just to draw that out a little bit, we've talked about the shadow docket before, but one of the reasons it has that name is that typically those orders are just a paragraph long. They say the request for a stay presented to Justice Gorsuch and by him referred to the entire Supreme Court is granted. That's it. Sometimes there's a concurrence that will offer some reasoning. Oftentimes in the era of Trump, there is a lengthy dissent usually by Justice Sonia Sotomayor explaining all of the horrible implications of the decision. But the holding itself, the binding part of this decision is nothing. It doesn't give any reasoning whatsoever. And so that by definition cannot give any guidance to lower courts. And so what's happening here is that the Trump administration is basically trying to leverage the Supreme Court's shadow docket order with respect to the Venezuelan TPS holders back in October of 2025 into binding precedent with respect to Syrians and Haitians. And what I like about this amicus brief is that the amici are arguing that the courts, the lower courts cannot treat Supreme Court shadow docket orders that way. I want to read one paragraph. They say, whatever the force of the orders that this meaning the Supreme Court issues, in cases on the emergency docket that explain the basis for this court's decision, it's unexplained emergency decisions are not binding or even especially informative when lower courts exercise their judicial power in a different case involving different facts and circumstances. Absent reasoned direction from this court, lower courts must determine the applicable law in the cases before them and apply that law to the different facts in those cases. That is how the lower courts proceeded in this instance. Yeah. So Chief Justice Roberts, who presides over the DC circuit, has given the plaintiffs until Monday to respond. I suppose that we will hear something pretty soon. I don't think that there's been a ruling yet in the Syrian TPS case either. I assume that those cases will rise and fall together. Okay. Now that we are all good and mad, let's talk about the return of a trope that you and I grew up with, Andrew, and that is the welfare queen buying lobster. Thank you, Ronald Reagan. Only this time, she's buying monster energy drinks. I know where this is going. And all I could think of is the one woman in my neighborhood who walks her dog in a maha hat and how I never say anything because this is Baltimore and we don't do that here but also ma'am. Yeah, right. This is the joint initiative by the Department of Agriculture, which manages snap benefits and health and human services, which is led by that sentient strip of beef jerky Robert Kennedy, who popularized the maha slogan. It stands for Make America Healthy Again. So the idea of this project is that the USDA will sign a waiver to allow states who wish to participate in a pilot project, and you can hear the scare quotes there, to further restrict what food assistance recipients can buy. Essentially, the states are changing the definition of food to exclude things like soda and candy. Yeah. Two things here. Number one, I don't think the federal government should be in the position of policing the food choices of anyone, let alone those who are at the margins of society. And point number two, the federal government already constrains their choices by the legislative developments over the past 50 years, whereby we subsidize massively unhealthy food. That is, that becomes the most tempting things to acquire when you're on a fixed budget. So my blood pressure was already up. Yeah. My cardiologist does not thank you for this story, Liz. Yeah, I mean, I'm not a libertarian, but honest to Pete, these people love the nanny state when it lets them harass their own neighbors. After all of that bullshit about, you know, how dare Mrs. Obama, we don't want to make school lunches a little bit healthier. The whole premise of this law is that people who rely on food stamps are dumb and profligate and fat and need the government to tell them what to put in their own mouths. I seem to recall massive outrage about how liberals were going to ban slurpees in New York or Big Bugs or whatever. Yeah. Okay. Meet. Meet. Is that what they said during the election, even in 2024? You know, and I'm right. But look, we're not just here to be mad, although we are obviously mad. We are here because a group of plaintiffs has sued in federal court in DC to block this pilot project, which has been signed on to by 22 states already. The plaintiffs say that the project was undertaken without observing the statutorily required procedural notice and comment requirements in violation of both the SNAP Act and the larger Administrative Procedure Act. Yeah. So the complaint here is interesting. And it also, it talks about all of the reasons which I sort of reject the framing that a lot of people on our side have had about people need a treat and people whatever. Like the plaintiffs here talk about the ways that they need these products, that they are affirmatively choosing these products, which have been labeled as unhealthy, right? They talk about having to manage their blood sugar because they work on long shifts, right? They have to manage insomnia, so they need hypercaffeinated things that like monster energy drink that keep them awake so that they don't spend all night up, right? That they can stay awake all day and fall asleep at night, that they have to manage children with developmental disabilities and allergies and food avoidances. They have to, they just have to manage lives that are hard and that we don't know what, what, why people are buying and it's none of our goddamn business why people are putting into their carts, what they're putting into their carts. And this law has no waiver for people whose individual needs and circumstances are not going to be responsive to the Trump administration shaming and yelling at them to be better. Yeah, as has become a mantra of the Trump era. The cruelty is the point. It sure is. Okay, we will be back in a minute to catch up on a couple cases we talked and wrote about this week. Stick around for Live Nation and those smirking little shits from Doge who destroyed the National Endowment for the Humanities unless you're a subscriber at patreon.com slash law and chaos pod or lawandcaospod.com in which case, there will not be an ad for you right now. There will not be an ad for you ever. And we're back. Okay, let's talk about our post yesterday on the Doge Bros destruction of the National Endowment for the Humanities, a 60 year old independent agency established by Congress to quote, foster and support a form of education and access to the arts and the humanities designed to make people of all backgrounds and wherever located, masters of their technology and not its unthinking servants, which is a little on the nose. Okay, so a year ago, two nasty little 20 something code monkeys named Justin Fox and Nate Kavanaugh barged in to the NEH and canceled, functionally, all the grants that it had had promised for being D.I. or just what they considered to be a waste of taxpayer dollars. And now the organization has been repurposed to talk about basically nothing but George Washington, Thomas Jefferson and our glorious American fatherland, plus plus now they talk about anti semitism because white minorities are good if you can use them as a cudgel to beat your enemies on the left and your brown minorities. Tell us how you really feel is no, no, actually do that. But first, let's play the clip of Nate Kavanaugh's deposition. This is courtesy of 404 media. You don't regret that people might have lost important incomes. No, no, I think it was more important to reduce the federal deficit from $2 trillion to close to zero. Did you reduce the federal deficit? No, we didn't. This is the history of the HIV AIDS prison movement and its legacies in the United States. My book project narrates how activists spot the convergence of HIV AIDS and incarceration from inside and outside prisons across the Reagan through Clinton years and argues that this organizing holds legacies in the prison abolition movement of the 1990s to today. This is one of the grants that you or Mr. Fox identified as craziest in NEH. Is that right? That's right. Why did you identify this as one of the craziest friends? Because it references feminist and queer insights into prison abolition and LGBTQ studies. Any other reasons? No. Examining military service from the margins, the complicated service discussion series will bring together veterans and community members to examine the experiences of service members who identify themselves as female, black, Native American, LGBTQ, or an immigrant, the dynamics, reasoning, the strength behind serving a country that does not always serve you in return. Did I read that correctly? Yes. You and Mr. Fox identified this as one of the craziest grants at NEH? Yes, it appears so. Why did you do that? Because it explicitly says LGBTQ. Do you have any history in scholarly peer review? No. But this judgment call was made by you and your personal judgment combined with Justin's personal judgment to cancel grants based on DEI? Yes. Do you think it's inappropriate in any way that someone in their 20s with no experience with grants or federal government was making personal judgment calls about what grants to cancel? No, I don't think it's inappropriate. Why not? I think a person can have enough judgment from reading books and being well informed outside of traditional experience to make judgment calls about obvious things like a grant that literally lists DEI in its description to know whether it violates an executive order. I'm saying books because you said books. What books would you have read that would have informed your opinion on what grants to cancel based on DEI? There were no books. That little shit. But we laugh, but we are watching our society be destroyed by literal children. Yeah. Okay. So what happened is that these dipshits took the entire database of NEH grants, fed it to chat GPT to flag anything that was quote DEI, and then cut all of it. Neither one of them could define DEI under oath, but they were pretty sure that anything which mentioned people other than white men counted. So Tulsa Race Massacre, Holocaust Scholarship, Indigenous Peoples Cultural Museums, all of that in their estimation equals DEI. Yeah. One of the things that struck me along with obviously their total lack of understanding of American scholarship was that they seemed to have a really bad grasp of math. In their depositions, Fox and Kavanaugh defended themselves by saying they were just cutting wasteful government spending. In fact, Fox said, doge wasn't a failure even though it didn't cut the deficit because they proved that you really could spend less if you cut out all the crap that no one needs. But that betrays such a fundamental lack of understanding anything about the US budget. I mean, Congress has the power of the purse. So if you know anything about civics, you know that Congress allocated $207 million to the National Endowment for the Humanities for the fiscal year 2025 with $192 million designated for grants. Crossing out a grant to the High Point Museum in North Carolina because allowing it to fix its HVAC benefited a diverse audience, real cut, that didn't save the government any money. That money does not go back into the public fisk. Congress, the elected representatives of the people, decided to spend that money on the humanities. So if you take away that grant, it must go to a different humanities beneficiary to dipshits with all excess passes to all of our data cannot change that. They seem to think that they've saved money that could go to Medicaid or be allocated to some other government programs, something which that's not how any of this works. Right, it's not going to spend down the debt. It's just going to go to a different grantee because Congress is the decider, not these two assholes. Yeah. Okay. So procedurally, a bunch of plaintiffs sued to block the grant terminations, but last year the Supreme Court was already kind of casting around for a reason to stop lower courts from forcing Trump to discourage money allocated by Congress, right? That they didn't want to force Trump to spend the money because they're crazy. Anyway, they seem to have alighted on something called the Tucker Act. That is a law which says if you are seeking to collect on a claim against the federal government, you have to go to this tiny court called the Court of Federal Claims. Now, a lot of these cases seeking to force the government to hand over money allocated by Congress are mixed claims, right? Obviously, the plaintiffs are making, among other things, a First Amendment claim since their grants were canceled because of the content of their speech because the two doged dipshits thought that these grants were DEI, whatever that is, and that is obviously speech. But Judge Colling McMahon in the Southern District of New York knew that if she told NEH to just give the plaintiffs their money, the grant recipients, the six conservative justices would likely block her order. So instead, in July, she issued a preliminary injunction blocking NEH from reallocating that money that was in the 2024 Appropriations Act, it was funds for 2025. She said they couldn't give it instead to the MAGA Oral History Project or whatever. So that if the plaintiffs, in this case, win, the money's still there. It's not gone, right? They can still get it. Yeah. And the plaintiffs have moved for summary judgment. Also, today, after the American Council of Learned Societies published the full depositions of Fox and Kavanaugh on YouTube, from which we played that clip earlier, the Department of Justice asked Judge McMahon to order them to be taken down. They say that the ACLS basically tricked DOJ into not objecting and designating those depositions as confidential. And now, poor Nate and Justin are in danger of being harassed. Look, I mean, I appreciate that it is not fun being on the end of public appropriation, right? We all laughed at those two assholes all day long. And I would not advocate to harass them. That's not appropriate. It's not justified. Although I don't think any corporation that hires them is anyone I would give money to. But I can't get myself worked up about poor Justin and poor Nate, considering the absolute wreckage they unleashed on the world. Like, if you're proud, kid, show your face. Either way, that genie is not going back in the bottle, even if the depots are ordered to take it. We have all seen the videos. We have played clips of them on this show at this point, ordering them to be removed. Is the definition of feudal? Like, good luck. Yeah. Okay, next up, everybody's bestest buddy, Ticketmaster. Ticketmaster pulls lower than Trump, lower than the Ebola virus. Right, right. I think it's like maybe just tied with genital warts. Anyway, on Monday, we spent the subscriber bonus breaking down the antitrust lawsuit against Live Nation, which is the parent company of Ticketmaster. I did a long piece on that, which ran Wednesday on Public Notice. We can link to it in the show notes. But I suspect that most of you have a personal feeling about Live Nation because it promotes hundreds of artists and owns hundreds of arenas and amphitheaters. And I suspect most of you feel like it rips you off because it does. In 2024, the Justice Department and 40 states sued Live Nation, demanding that it spin off Ticketmaster, which it actually only merged with during the Obama administration. Great job. Thanks, Obama. So this lawsuit deals with exactly how egregious the market manipulation was. And continues to be. Live Nation threatens arenas that don't use Ticketmaster and says, you know, we managed 300 of the biggest artists in this country. And if you want the shows, you better use Ticketmaster as your vendor. And they've contrived to keep competitors out of the marketplace. And, you know, they've done all of the all of the evil monopoly things that you think of, they've more or less done them to ensure that they never face competition. Even as they're making these insane profits, like I think I read that it's like $45 is the average ancillary fee per ticket, you know, they've got all these fees on top of it, whatever. Yeah, this is literally the textbook definition of a vertical monopoly. I suspect that it will be used in future econ textbooks to illustrate that. So this antitrust lawsuit has been going on for almost two years. It was initiated by the Biden Department of Justice. And in the meantime, Live Nation has been desperately trying to buy its way out of it. They made a paltry half million dollar donation to Trump's inauguration. They hired Kellyanne Conway and mega lawyer Mike Davis, that's a deep cut for listeners, to lobby on its behalf. They put Rick Grinnell, another Trump loon on Live Nation's board. Grinnell is the guy that Trump put in charge of the Kennedy Center. Well, that's going bang up. Yeah, right. How those Marvel armrests working out. Okay, so the antitrust trial starts two weeks ago and federal government, as is expected, is leading the charge, which is that's how these cases go. The states are there, there are 40 additional plaintiffs, but the feds are the ones running the witnesses, planning the trial strategy, taking the lion's share of the opening statements, presenting all of the witnesses, right? Then on Monday morning, the federal government announced that it had reached a settlement with Live Nation and was gnoping out of the case, which totally screws the states because they are in absolutely no position to take this thing over in the middle of trial. We went into that in a lot of detail in the subscriber bonus of Monday's episode. It's actually worse than that because the Department of Justice is going to need approval from the court to settle with Live Nation under a law called the Tunny Act. We've also talked about that. The court is tasked with ensuring that the settlement is in the public interest. That is a law passed in 1973 after a company called International Telephone and Telegraph, ITT, donated $400,000 to the Republican National Committee. Then after being reelected, Richard Nixon ended the antitrust case against ITT. Trump is like Nixon, but like dumber, greedier. It's the checker speech only about a Qatari judge. Oh my God. Okay. But the point is that the Department of Justice is almost certainly going to use its own trial experts to prove that the settlement is in the public interest, which means that the states are now going to cross-examine those experts and be on the other side and they will then be useless as trial experts if this were to go forward with the states' lead plaintiffs because now they've given contrary testimony. Any claim that the states make going forward is going to rest on a claim that the settlement does not resolve all the issues and therefore wipe the books clean. Yeah, which the settlement clearly doesn't resolve all the issues. Live Nation pays like a $200 million fine. They would pay more if all of the states opted into the settlement, which they clearly won't. But the company took in more than $25 billion in 2025. So this is like a tiny, tiny fraction. Live Nation did agree to allow partner arenas to use other ticket sellers and to divest themselves of a few arenas in mid-market towns and to cap ticket fees at 15% in arenas, which it owns. But that's more or less it. And one more piece of history, which is that Live Nation was subject to a prior consent decree and they violated that repeatedly. So it is pretty clear why the states oppose a settlement here. Right? So the states asked for a mistrial. I said it and Andrew was wrong moment that I thought Aaron Subramanian, the trial judge was going to grant it. Instead, what he said was, I'm going to hold that subcarrier. I'm not going to reserve ruling on it for now. But states, Live Nation, you get together, you spend a week trying to negotiate a global settlement. And states, try and get what you can before I take my foot off the gas here, which is where we are now. So the case has not been dismissed. That means all of the filing deadlines are still operative. And then a couple of days ago, there was a flurry of filings from Live Nation, Motions and Limine, asking to keep a lot of stuff under seal because soon this case was all going to be settled. And judge said no. Yeah. And now we know why they put all of those filings. Let me read you the first paragraph of this filing by the plaintiffs on Wednesday. They say, in their opening statement, defendants, that's Live Nation, presented a polished narrative that they invest in amphitheaters so fans have a choice of going someplace where they can actually enjoy the concert. So artists have a choice to go to a place that is a really great place to play. Now they seek to exclude candid internal messages in which the individual who is currently head of ticketing for those amphitheaters calls fans so stupid, explains that he gouges them and brags that Live Nation is robbing them blind, baby. Awkward. Yeah, a little bit. Okay. So top line, this is of course yet more evidence that this case would have gone very badly for Live Nation if the government hadn't willingly torpedoed its own case. Specifically, from a practitioner's perspective, this is an argument over slack messages between Ben Baker and Jeff Winehold, who are two regional directors of ticketing for Live Nation amphitheaters. These two guys are just shooting the shit about all the ways that they're gouging people on ancillaries or ancillars as they call them in their slack messages. In one exchange, Baker jokes about 50 bucks to park in the grass and 60 bucks for closer grass with literal quote, robbing them blind, baby. That's how we do it. Yeah. And you and I talked about this because you have been a lawyer for corporations, big companies, and like there's always people shooting their mouth off where they shouldn't be. I mean, there will be less of that in the age of signal, obviously. Yeah, right. Because it's all set to auto-delete. But yeah, every single case I've ever had on behalf of a Fortune 100 company, you find bad documents and it's sort of the price of doing business if you're Microsoft or Live Nation or ExxonMobil or whatever. I once did a case in which there was a company called Asarco, the American Smelting and Refining Company. It's not like a joke, right? Oh yeah. There was this member that kept getting updates stapled to it in which one of its employees would say, people are starting to complain about how it stinks in downtown Omaha again. And the response was, add another 30 feet to the smokestack. And there's like four of those stapled on. You can actually see it on the old plant, like it's slightly discolored up there. That's what they actually did. They just dispersed it over wider. That's a real bad document. And you just know that that's going to come out. Don't feel too bad for the Microsofts and ExxonMobil's of the world in general. It was all like, they have all the money in the world. They have a dozen Coat Factory law firms on speed dial. They can pay them. This part of the price of doing business. And by the way, moving from the abstract back to this case, Live Nation, as we said, has moved FODMotions and Limit A to exclude those messages is that's what their lawyers are paid to do. And I was not joking. Live Nation is represented by Latham and Watkins, Sullivan and Cromwell, Cravath Swain and Moore, and Sidley and Austin. And if you Google, what are the most expensive law firms in the United States, those four firms are on that list. So again, don't cry for them, Argentina. Okay. But the state's arguments here in opposing that motion in Limit A, and I think it's a good one, is that Live Nation was the one saying, what we are doing here is good for the fans actually, because we've made all these investments in our arenas that improve fan experience. Well, the fact that your executives are joking about gouging the rubes to park in the grass is at least arguably relevant to disputing that. You're not trying to improve fan experience. You're just trying to milk your monopoly for all that it's worth. So I guess I want to ask you a kind of practitioner meta type question, which is, when you and I talked in the subscriber bonus, you said, look, the states are never going to take this to trial. They never intended to take this to trial. They know that their case will be fatally damaged by having the government walk away in the middle. They don't have time to find experts like this case is boned. And so, you know, they're not going forward. New York, California, I think Wisconsin has said, oh yeah, yes, we are going forward. So I guess I would ask you, like, can you kind of speculate what do you think is going to happen here? Right? There was a letter today since that's happened about 50 lawyers have entered their appearance, Prohawk Viche, on behalf of the various states. I think 13 of the states have said they'll take the deal, but a lot of them have said that they're not. And there was even a letter today talking about how they're still arguing over the exhibits. And the state's lawyer said, the ruling will have a material impact on plaintiff states witness selection and order of witnesses as they prepare to resume trial next week. And so, you know, do you think that's just bombast? What do you think, Andrew? Okay, I want to bracket this with this is entirely speculation. This is based on my reading of the situation in view of my experience and being in these cases. Here's what I think is happening. Judge Subramanian, deferring ruling on the motion from his trial, not granting it immediately came as a surprise to me. You, I think came as a surprise to the states as plaintiffs, right? Because Judge Subramanian has been very, very critical of the way in which the US government behaved in negotiating the settlement. That's a matter of public record. He knows, and the states know that when you say, I am not granting your motion to dismiss this case and for a new trial, I'm going to reserve but spend a week and work out a global settlement. That puts a tremendous amount of leverage in the hands of live nation. Yeah, just to, you know, translate that into non lawyer. If the judge had granted the mistrial, the states would have a lot of, a lot of runway to build up their own case and get going some point in the future, maybe in several months from now. But since they didn't get that mistrial, there is a very strong possibility that they're going to have to proceed with litigation in a really weak posture and live nation knows that. And so it's probably been negotiating pretty aggressively not to give the states anything because the state's choice is to take what live nation offers or go ahead with its hands tied behind its back because it's taking over this case in the middle of the game. You cannot. There is, I'd be happy to be proven wrong about this. There is no way you could take over this case and resume trial next week. It is not possible in this kind of condition. And so when you see this kind of gets back to the gravamen of your original question, when you see all of this flurry of activity, the filing of the Prohac Fiche motions, contesting motions in limine, talking as if you are going to trial, I think that is the work you need to do as the plaintiffs to say, oh yeah, oh no, we absolutely are prepared to go to trial. And I'm telling, they absolutely are not prepared to go to trial. And I think that is part of how they're pushing back. I infer from that that live nation has probably been reluctant to give much. Reluctant. That's so lawyer-y. Yeah. Yeah. Yeah. Live nation has been dicks, okay? They're all in settlement conference. Live nation is like, eat it. We outmaneuvered you because we had better lobbyists than you. You're screwed, haha. That's really what's going on. Yeah. And it's the state's attorneys general who are going to have to appear before Judge Supermanian next week and describe whether they have reached a settlement or not. And when a judge says, take a week and come back to me with a settlement and you have to come back and say, we were unable to reach a settlement, that's a really good way to have a judge be very, very bad at you. Yeah. Okay. I believe that there is a status conference on Friday afternoon. If it's a we can listen in, we definitely will. And if not, we will report back to you on the Tuesday show. And we're back. Okay. For our main story, we want to talk about the Trump administration's super genius plan to convince oil tankers and cargo ships to sail into a war zone. Oh, yeah. Yeah. So I guess before we laugh about that, we should describe the very real problem, right? Which is after we bombed Iran and killed its supreme leader, the Iranian military essentially closed the Strait of Hormuz through which one fifth of the world's oil flows. Iranian missiles have struck multiple cargo ships and oil tankers. And as a result, traffic through the Strait has dropped to virtually nothing. And almost all of that is outgoing, right? Ships that were in the Strait leaving, not new ones coming in. Over 150 ships dropped anchor outside the Strait, and they are still there. And again, not that this compares to killing 170 middle school girls, but gas went up a dollar a gallon last week, right? And until the Strait is open, I don't see that going down. Well, a counterpoint. Relax, guy. President has a plan. All right. He says, effective immediately, I have ordered the United States Development Finance Corporation, DFC to provide any very reasonable price, political risk, insurance and guarantees for the financial security of all maritime trade, especially energy traveling through the Gulf. If necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz as soon as possible. No matter what, the United States will ensure the free flow of energy to the world. The United States economic and military might is the greatest on earth, more actions to come. Okay. When I first saw this, my initial reaction was, well, that's stupid. And it is. Well, yes. But it wasn't until I started researching exactly what the administration wants to do that I realized just how stupid it is. Readers, this is me handing over an article and saying, run with it because I know that he'll be like, huh, that's interesting. And then five hours later, we'll have something amazing. Indeed. I was saying, I suppose I should start with the fact that technically Trump has two plans. One is insurance. We're going to talk about that at length. The other part is that last bet that you read, I sort of, I don't know, call of duty style escort mission. I'm not a gamer. I'm going to take your word for that. Those are the least for escort missions are the ones that no one wants to play. But I have to say, as a matter of law, the president as commander in chief of the armed forces, absolutely can instruct the United States Navy funded with our tax dollars and risking our soldiers lives to be used to draw fire from foreign owned ships in order to protect the profits of international oil and shipping companies. Now, that seems a little weird coming to me from the red mega hat wearing America first crown, but, but he can do it. Amazing. Okay. Two days ago, energy secretary Chris Wright bragged on social media that the US Navy successfully escorted an oil tanker through the straight of hormones to ensure oil remains flowing to global markets. I think I would have heard about that. Anyway, half an hour later, he deleted said post at a press briefing that afternoon, White House press secretary Caroline Levitt said, I know the post was taken down pretty quickly and I can confirm that the US Navy has not escorted a tanker or vessel at this time. When Caroline Levitt calls you a lie. I mean, so Wright says he wasn't lying. It was just that his staff incorrectly captioned the post. Oh, alternate captions. Yeah. So, okay. The actual facts are that while lots of foreign cargo vessels have indeed asked for military escort through the straight of hormones, the Navy keeps turning them down because the people who actually pilot ships for a lit is a pilot. It's not dry. Whatever you do to steer the ship. Anyway, those people understand this is not a video game, right? And not for nothing. After Wright lied and said that the Navy had escorted the ship through the straight of hormones, the price of oil dropped a lot. And then when he deleted the tweet, it went back up. So, I'm not saying I'm not accusing a bunch of administration insiders to have made bank day trading oil futures. But I'm saying if they didn't, they sure left a lot of easy money on the table with that calcium shit. Okay, I have it on good authority though, that we don't even need to escort the ships anymore. Oh, the Navy is gone. It's all lying at the bottom of the ocean 46 ships. Can you believe it? In fact, I got a little upset with our people. I said, what quality of ship? Excellent, sir. Top of the line. I said, why did we just capture the ship? We're going to use it. Why did we sink them? They said it's more fun to sink them. They said, they like sinking them better. They say it's safer to sink them. I guess it's probably true. Well, it's definitely not true, which is why ships aren't going through the straight of hormones. And for nothing, why this administration is trying to come up with a plan to have them do so, which I got one, stopping the war. That would do it. Yeah, but instead, what we got was a statement by the US International Development Finance Corporation, DFC, we're going to link to it in the show notes that says it will re-insure losses up to $20 billion on a rolling basis, Andrew, to walk up the music. I have so many thoughts about that. I had ludicated high-level re-insurance treaties for over a decade. I know a little bit about this area. But before we get there, can we talk for a minute about Trump misusing yet another government agency? This one's amazing because the DFC was created in 2018 by one President Donald J. Trump. It is the successor to the Nixon era overseas private investment corporation, OPIC, and the DFC's mission is to facilitate private sector investment in the economic development of lesser developed nations, which I know sounds pejorative, but whatever. That's the language of the law. The DFC was built in response to China's Belt and Road Initiative and the idea is to encourage American businesses to invest in poor countries, not to provide financial guarantees to huge multinational oil companies. And that invest in poor countries? That's not just a vague aspirational language in the preamble of the statute. 22, USC, section 9612c, says that the DFC shall prioritize the provision of support in less developed countries with a low-income economy or a lower middle-income economy, language of the statute. And in fact, the DFC is prohibited from using its funds to support even a mixed economy, which is defined as a less developed country with an upper middle-income economy, unless the president makes explicit fact-finding certifications to Congress that by doing so, it will, quote, provide developmental benefits to the poorest population of that country. Again, we have an Article 1 problem here, because Trump is deliberately using an agency created by Congress to promote international development for poor people. That's clearly not what Congress intended, but no one can stop him because the only plaintiff was standing to sue is Congress, and Congress is, you know, checked out. So assume that this DFC policy will go through. Let's talk about the proposed specifics. First, DFC says it's going to offer $20 billion in, quote, rolling reinsurance. I know that reinsurance is insurance for insurance policies, but Andrew, do you want to kind of draw that out for us? Do I? I thought you might. So when an insurance company issues a policy, think about what they're doing, right? They take a fixed sum, which is the policy premium, in exchange for a variable risk, like does the ship sink, right? If that happens, the insurance company loses. If it doesn't, the insurance company wins. The way you make money as an insurance company is to price that balance appropriately, right? The riskier the investment, either in terms of the likelihood of the loss or the magnitude of the loss, or both, the more you need to collect in premiums. That's why your auto insurance company raises your rates after you bet on an accident or, you know, anytime. But if an insurance company has taken on too much risk in its overall portfolio measured against its reserves and other things, then the insurance company can offload some or all of that risk by buying insurance of its own, right? And that's reinsurance. So the insurer still has to pay out the policyholder if there's a covered loss, if the bad thing happens. But then they can get that money back from the reinsurer and in exchange, the insurer pays that reinsurance premium whether the event happens or not. Right. So this plan has the government taking on up to $20 billion in insured risk. The insurance companies would pay the government, what Trump says is a quote, very reasonable price. And if an insured ship gets blown up in the Strait of Hormuz, which may well happen, right, the insurance company would look to the government to pay it back for whatever it has to pay off on its policies. So the DFC proposal would cover two kinds of insurance policies, cargo insurance for whatever's in the ship, and hull and maintenance insurance for the damage or loss of the ship itself. Exactly. So, okay, let's see if we can't steal about the Trump administration's argument. Right now, if you're a shipper, you can't get insurance for your ship or your cargo. And that's because the insurance companies aren't willing to take on the risk of ensuring a ship that might travel anywhere near a war zone. So if the US government steps in and says, don't worry about it, insurance company issued a policy and we will reinsure it, will that solve the problem? Right. The government will take some of the risk and maybe insurance companies will be more willing to insure these ships in a war zone. So what's wrong with that argument? I have to say, I think you put more thought into it than anyone in this administration. All of that makes total sense. How can you slander Pete Hegson in this way? Right. As a matter of logic, A, B, C. But as it turns out, marine insurance doesn't really work that way. Right? And so to understand why, we've got to get into the nuts and bolts of the specific language of marine insurance policies. So insurance policies reimburse the policy holder up to the limits of the policy. But then the policies have what are called exclusions, right? Something that would otherwise be a covered loss, but it's just specifically written out from cover. Yes. The way to think about policy exclusions is life insurance. Right. The covered loss is that the policy holder dies and then their family gets paid off. The bet here is that you don't want to die. You'd rather be living than get the money. Good bet. Yeah. But suicide is a specific exclusion because obviously some people don't want to continue living and the policy doesn't want to pay you to take your own life. So suicide is excluded. Yeah. And the suicide exclusion is actually an application of the larger principle that insurance doesn't cover losses that are, and here's the language, expected or intended from the standpoint of the insured. And that's just a legal way of saying, you can't get insurance for a thing that you then bring about, right? I can't buy property insurance for the building and then burn it down. Right? Right. Okay. So you probably see where this is going. Marine insurance policies all have a default exclusion with language that excludes, and I'm going to quote a standard form policy, consequences of hostilities or warlike operations, whether there be a declaration of war or not or the equivalent. Excursions is what Trump has been saying. Somebody clearly told him the word incursion and he got scrambled and he said, we're having an excursion, like a day trip or whatever. You know, we're important by art or something like that. He said, All included. Yeah. He said excursions about 15 times today and nobody will tell him because they probably can't pick up their feet because they're all wearing the shoes. If you've been following the news, you'll see. This is an excursion. I will leave it here. Okay. But that war exclusion is the default language. And so that means if you buy cargo insurance, if you buy hull and machine insurance, it pays off if your ship is hit by a freak storm and the cargo where your ship is lost to sea, but doesn't pay off if your ship is hit by a missile. But if you want that, you have to buy a specific war rider to your policy that gets rid of that exclusion, which by the way, you can do. Okay. We will talk about that after the break. But the takeaway here is that the problem isn't that insurers are unwilling to underwrite marine insurance policies right now or even that they won't issue war riders. It's that the price of those war riders is a lot. It's really high because the likelihood that the insurance company is going to have to pay out just went up because we attacked Iran. So we're going to pick up this story when we come back from this ad break, unless you're a subscriber in which case, not today. And we are back. So right now, Lloyds of London, your former employer, Andrew, will still happily sell you a war rider at a new astronomically higher rate. We will link to it in the show notes. So the problem here isn't that the insurance companies aren't willing to sell you a war rider. It's that the shipping companies don't want to pay it because it's prohibitively expensive. Yeah. Yeah. So a few things to unpack from that. First, Lloyds of London isn't exactly an insurance company. It's an insurance market. It's kind of like a mutual fund for insurance. And the reason that's significant beyond kind of being technically correct, the best kind of correct is that you go to Lloyds and what you do is shop your risk around to multiple different insurers that are all part of that market and they can whack up the risk into tinier and tinier pieces. And that means that Lloyds has expertise not only in unusual and extreme risks, but also they have centuries of experience as the market leader in insurances. But MAGA, you know, won't get a throw cash in a bunch of linies, right? So they selected the CHUB group to be their lead underwriter and partner in this endeavor. And okay, as far as I chub as a huge insurance company, it looks like their maritime portfolio is mostly like rich people's yachts. But leave all that aside. They probably do have some experience with war riders, but they were chosen because they're an American based company. So now let's contextualize that that second part, the higher premiums bit. Ordinarily, war riders are a de minimis expense. I mean, such that sometimes on big policies, the broker can get the insurance company to throw it in for nothing, right? That otherwise the premiums would be, you know, pennies on the dot, right? I'm going to link to another report from Lloyds list, which is a report from Lloyds of London in the show notes on this practice. Right now, for high risk targets, which I'm not kidding, in the insurance industry are called missile magnets right now. You're going to see that in the insurance community, that rate is now gone from zero to 10% of the whole value or perhaps more. So what that means in practical terms is your ship is insured for $100 million. The war rider is going to cost you $10 million instead of nothing. Which is a lot. Yeah. So Chris Jones, the CEO of the London market company said, trade has been halted not by a lack of available insurance, but by obvious safety concerns, the market for marine war risks is operating in the manner we would expect. Which is like, if it's riskier, the premium goes up. Yeah, you're 16 year old with three accidents. Their car insurance costs a little bit more than yours in mind. Of course. So the question here is, could the DFC bring down the premiums by serving as a reinsurer? Yeah. I don't want to say no, because you come up with a scenario under which it might, but I almost certainly won't. And even if it did, it would be hideously inefficient with us taxpayers being the ones who get cash. It would be much cheaper to just release money from the strategic oil reserve to pay for alternative share. Direct subsidies would be far more efficient. So there are four pretty big reasons why this insurance based approach is not going to work. So first, I want us to think about what are the reasonable insurance premiums that the DFC is going to try to write? Trump has said, must be a very reasonable price. But like, what does that mean? Right? And more importantly, from a legal perspective, how is the DFC going to figure it out? As you pointed out, it's a development organization designed to spur investment throughout the developing world. They don't have actuaries that work for them. Is some doge bro just going to ask Jack GPT what the premiums should be? Yeah. Well, maybe we can get Nate and Justin back. I hear they've set up a healthcare company, but maybe they'll reappear. I don't even know if you're joking. I can't even tell. No, no, I'm not. I'm not. They 100% Of course they did. Okay. I think that the plan is for DFC to lean on Chubb as its partner. But like, that is a whole host of problems, not the least of which is if DFC then engages in reinsurance agreements with Chubb that Chubb wrote. Yeah, that's going to be crazy. And self-dealing and rife for corruption. And more importantly, the only way that this scheme has a chance of working is if the government deliberately underprices those reinsurance premiums, right? Here's why. If it's priced at market rates, then they just go get reinsurance from a market participant. If it's overpriced, then they'll never buy it from the government, right? So the policy won't do anything in order to induce a change in behavior by the insurance companies in order to get them to underwrite more policies. The US government is going to have to charge much less than the market in order to reinsure the companies for their war riders. Yeah, let me see if I can make it clear because I think I follow you. What you're saying is a reinsurance policy, if the reinsurance policy was going to cost, let's just say a million dollars, that to incentivize people to take it, the government is going to have to do it for half a million dollars, which is going to incentivize all kinds of, it's going to warp the market and leave all kinds of space for self-dealing. Is that what you're saying? Exactly. And it is actually worse because in a typical reinsurance treaty, that the reinsurer doesn't get to dictate the terms of the underlying policy. So in English, what that means is that the insurance companies could still charge huge rates for the war riders and still offload all of those risks at discount rates to the US government. But okay, maybe DFC will come up with some new kind of reinsurance contract we've never seen before that says we will only do this if you offer the war rider at lower rates. Put Jared Kushner on the case. Yeah, that doesn't solve the second problem, which is that hull and machinery and cargo policies, the two policies that they're going to reinsure, are the kinds of losses that the government cares about, but they are probably not the biggest risks that either the vessel operators or the insurer care about. Like say, die again. Like die again. And having their crew die and sometimes being on the hook for paying the families of the crew when that happens, that will either be the insurer or the shipper, but it will not be the government. And since we're talking about oil tankers, we're also talking about the risk of environmental contamination. British Petroleum, for example, paid out $25 billion in cleanup damages penalties from the Deepwater Horizon oil spill about 10 years ago. Yeah. When asked, the DFC said, we are providing environmental coverage baked within that hull and machinery product. I don't know what that means. I don't think he knows what that means. Yeah, this sent me down a multi hour rabbit. I am assuming that that unnamed official who was quoted in the news stories just mistaken and not lying because I think I found what he misunderstood. So the standard for, remember, hull and machinery policies protect you against the integrity, the structural integrity of the ship if it's sunk because of a storm at sea, they pay off. The standard form hull and machinery policy does have what's called a pollution hazard clause. And here's the language. This policy covers accidental physical loss of or damage to the insured, even if caused by the decision of a governmental authority to prevent or mitigate either a pollution hazard or damage to the environment. And you see pollution hazard or damage to the environment and you think, okay, we are providing environmental coverage baked in within the policy. But that's not how you read an insurance policy, right? It covers physical damage to the insured. That is the company that owns the ship, right? And so it does not mean that that policy will reimburse you for your environmental cleanup costs. It means that if you run your oil tanker aground and then the government further damages it, has to move it out of the way in order to clean up the oil spill or save lives, then your policy will pay you for the additional damage to your ship, not pay to clean up the environment. Okay. Well, let's say we get magic our way around that problem. I would say the government is actually going to pay infinity money to reinsure all the policies, not just hull and machinery, not just cargo, but life. Environmental hazards is not going to happen. That's not even what their proposal happened. But there would be a third problem. And that has to do with the gap in how reinsurance works. So if a policyholder makes a covered claim to their insurance company, the insurer has to pay that claim whether they get reimbursed or not. And if they don't, if they fail to pay that claim for pretextual reasons, there's a very well-developed body of bad faith law that gives the policyholder additional tort claims against an insurer. They can get punitive damages now. They can get right all sorts of multiples. So you see the problem. Right. If the insurance company issues a war rider and the ship goes down, they definitely have to pay the policy holder. And then afterward, go to the reinsurer to get the money back. In the ordinary course, if the reinsurer decides not to pay, then the insurance company can file suit in federal court. And you know, they're both huge companies. They have armies of lawyers. It's a level playing field. Fine. That's how it happens all the time. And the reinsurer is the U.S. government. You're at a huge disadvantage for all the reasons that we've talked about over and over on the show. You can't sue them in a regular district court. You've got that Tucker Act problem. And you've got to take yourself and get in line at the court of federal claims. And, you know, we talked about how they suck and how a lot of times the court of federal claims doesn't pay out. Right. The government wins 65 to 70% of those cases. So not only are you taking on the risk that your crew is going to get dead because the Strait of Hormuz is mine, you also have to factor in the fact that the government might stiff you. Right. Okay. Oh, but really, what are the odds that Donald Trump would back out of the... Crazy. Okay. But imagine that the government intends to pay out all that, right? This is just magic away that problem as well. You still have a fourth problem. Amazing. I know. And that is, even if you have a war rider, policy holders are going to be worried that the insurer isn't going to pay out under that expanded coverage. And that's because of general insurance principles that we've alluded to earlier in the story. And I don't think any governmental program can fix this problem. So let's go back to exclusions, right? Policies always exclude intentional acts by the insurer, right? And they typically also ensure some kind of gross negligence, right? So, you know, again, let's go back to the, I have my building insured with property insurance. I can't... It's be an intentional act to burn it down. It would be gross negligence to wait for a small fire to start and then cheer it rather than spray it out with a fire extinguisher, right? Because I'm trying to get more from the policy than the building is worth, right? Standard form hull and marine insurance policy says they will not cover any act committed recklessly and with knowledge that such damage would probably result, right? Cargo insurance is similarly excluded willfulness conduct. So the war rider adds back in coverage for damage suffered as a result of war warlike activities. But it is also going to have the same exclusion for something like willful misconduct. So here's how war insurance works. You buy it, you do your best not to get shot, and then if you get shot, it pays off. But if you buy war insurance and then you point your boat towards a narrow straight where you know there are hostile ships willing to shoot you down, an insurance company, like the lawyer for the insurance company is going to say that's willful misconduct. You knew what was going to happen. And I don't know how... I'm not saying that the insurance company would 100% win, but they're not going to 0%. That's not a crazy argument. And so what that means is that if you're a shipper, even if you bought the war rider, you know that there's a risk if you do this anyway, that you don't get paid. You know at minimum you're going to be engaged in costly litigation against the insurer for a very, very long time and you might lose. So bottom line, if it's not the insurance that's the problem with international trade, then reinsurance can't fix it. Yeah, I am shook. Shocked and saddened that Donald Trump is once again full of shit. Okay, that is it for us today. Unless you are a subscriber, in which case, please join us in the bonus for a big muzzle tub to Ed Martin, MAGA lawyer extraordinaire who managed to finally catch a bar charge. We always knew you could do it, Ed. And for everybody else, we will see you on Monday with more written content on Tuesday with another show. Please support us at patreon.com slash lawandchaospod or lawandchaospod.com. And please do leave us a five star review on your podcast platform of choice. Have a lovely, lovely weekend.