Litigation Nation

Luke Behnke: Welcome Litigation Nation. I'm your host, Luke Banky, alongside my co-host Jack Sanger. For those of you new to the show, this is the podcast where we recap the most interesting legal news stories and talk to you about what you need to know, some new stories for you. This week the ABA is trying to eliminate the law school admissions.

Luke Behnke: Jack, what do you got?

Jack Sanker: Top ranking state legislators convicted of a massive money laundering and corruption scene highlighting the downsides of the so-called dark money political contributions, and a story about the merger of JetBlue and Spirit Airlines, what the merger means and why the United States Department of Justice is seeking to block it.

Luke Behnke: All that and more coming your way. Here's what you need to.

Luke Behnke: According to Reuters, the ABA is trying to eliminate the law school admissions test, lsat as it's commonly known. The section of the American Bar Association that oversees law schools recently revived its push to let schools go test. The ABA a's Council of the section of Legal Education and admissions to the bar overwhelmingly voted to resubmit a controversial proposal to end by 2025.

Luke Behnke: The longstanding requirement that schools use, the law school admissions test, or other standardized tests when admitting new students. Now that decision comes on the heels of the ABA a's policymaking body. It's called the house of. Rejected that change in mid warnings that law student diversity would suffer at first, attempted to get rid of the admission test rule in 2018, but backed off when it was clear that the House of Delegates wouldn't go along with the plan.

Luke Behnke: The proposal, of course, has divided the legal academy. Essentially down the middle opponents, including a group of 60 law school deans and the law school admissions council. That's the group that designs and administers the LSAT warn that eliminating the test requirement would make admissions offices more dependent on subjective measures such as the prestige, sorry, prestige of an applicant's college that could disadvantage minority applicants.

Luke Behnke: They say those who wanna get rid of the test require. Have argued that the LSAT is a barrier for minority would be lawyers because on average they scored below white test takers and because law schools rely too heavily on those scores. Indeed, a 2019 study found the average score for a black LSAT taker was 1 42 compared to 1 53 for white and Asian test take.

Luke Behnke: Lsac, that's L S A C, offered an alternative proposal under which the A B A would enable law schools to admit up to 20% of their classes from applicants who did not submit a standardized test. In rejecting that proposal, the figure was called arbitrary and said it wouldn't break the regulatory monopoly that admissions test makers enjoy in legal education.

Luke Behnke: So, Jack, I know you had to take the lsat Going to law school, I had to take it. I remember that was not a pleasant experience. What's your take on getting rid of standardized testing in general before entry into law school?

Jack Sanker: Oh, man. I mean, I complicated topic I. Necessarily love standardized tests in a lot of areas.

Jack Sanker: I think, I mean, it's multiple questions you can ask and answer here, whether the LSAT itself should be replaced with something, which I think maybe I'm open to that. But the idea of eliminating standardized testing for admissions in general, I think I'm probably, probably don't like the negative externalities that I understand that Law school perform, or LSAT performance probably doesn't correlate well to law school performance.

Jack Sanker: I think it does correlate well to first year law school performance in terms of gpa, at least from what I remember reading about it. And it doesn't really matter much after that. And it, it certainly probably doesn't correlate strongly at all to bar passage rates or, you know, how good of an attorney someone is, which is really what we're trying to do here is train good lawyers.

Jack Sanker: So it, it's probably not super important. However, I think that. What you mentioned is what are you replacing it with? And if it's down to the strength of like intangible aspects of an application, such as where once someone went to undergrad what other connections that person may have and you're taking it away from an objective measure and into the more subjective, I think you'll probably see worse diversity outcomes in that scenario than in the current scenario.

Jack Sanker: And like, You know, I, I think the explanations as for like minority performance on standardized tests are, are, are well established. I think there's correlates to income level and exposure to, you know, tutors and getting basically trained to take standardized tests, which is something that you.

Jack Sanker: More well off social classes are just better at because of the opportunities that they've had, maybe prepping for the s a t, maybe AP courses at their school that aren't offered in other schoolers. So, you know, that doesn't surprise me. That's, it's really unfortunate and I think that that probably plays out in most standardized tests for entry into professional school for all those reasons.

Jack Sanker: But I would be cautious in just eliminating it. A competent replacement to make sure that the less objective measures for entry aren't even more discriminatory. And I would, and, and also while ensuring the quality of candidate, which is something that, I mean, it seems like the law school deans are con, are concerned with.

Jack Sanker: And I think there has been trends recently in terms of bar passage rates and things like that that are. And, you know, balancing those issues is, is gonna be something that the ABA is gonna have to think really hard about.

Luke Behnke: Yeah, I don't, I don't disagree with you at all. I, that was a, a thoughtful analysis.

Luke Behnke: I, I think my issue is that the, the lsat, you know, forever has been sort of the great equalizer, right? It's the one thing that every candidate that wants to do this for a living, Had to do, right? You, you had to, you had to take and, and perform on the lsat. And then it was a way for schools, you know, to analyze this student's potential in law school.

Luke Behnke: And it's not a subjective measure, right? It's a, it's an objective score on an exam that everyone's gotta take. And so that was a way to sort of distinguish between. You know, those candidates that whatever schools thought would turn into better attorneys. Now I think you, you hit the nail on the head, right?

Luke Behnke: What is the, what is the purpose of, of the lsat and what are we trying to do in law school in general? If the LSAT is not a good predictor of you know, students who are gonna do well in law school or it's not a good predictor of you know, someone who's gonna turn out to be a good lawyer then, then I, then you're right that, that question that you sort of asked rhetorically, it's like, what is, what is the LSAT doing for us?

Luke Behnke: If it's not a good indicator of someone's success in the profession, then then why do we. On the other hand, I would hate to be in the admissions office sort of looking at all of these kind of different subjective factors and not having, you know, at least one or two kind of objective things that you can compare applicants on.

Luke Behnke: Otherwise it's like, you know, you're going off of you know, this student at a three, four, at, you know, Wisconsin and another one had a, you know, a three. Six at, you know, Bradley in Illinois. It's like, well, what, you know, what, how do you, how do you sort of compare those two applicants?

Jack Sanker: Yeah. And, and, and if the other thing that comes to mind is like, you know, is someone who, I mean, I, I didn't like hit a home run on the LSAT personally.

Jack Sanker: But we all have, especially in our, I would say our age. And maybe a little bit older. The folks that that came outta law school right after the financial crisis, 2008, 2009 came outta school with loads of student debt and then couldn't get a job or got a really low paying job. I mean, the LSAT is a gatekeeping mechanism to.

Jack Sanker: Loading up a debt, frankly. And if I were, if I couldn't, and I'm not saying the LSAT is a great measure for measuring this, but the argument for doing a standardized test or something upfront before law school, one of the arguments has gotta be keeping people that aren't gonna do well in law school from taking out $200,000 worth of student loans.

Jack Sanker: And you know, if I'm one of those people, and there's nothing wrong with that by the way, but if I'm one of those people, I certainly wanna know. Rather than later. And and the LSAT does serve that function. It really does. So I, I mean, I don't design standardized tests all four, getting rid of it and replacing it with something different.

Jack Sanker: I'm sure the logic game section and all that stuff is like, you know, you learn it long enough to take the test and then you'd never think about it again. But and to eliminating those things entirely, I think. The negative externalities of that may outweigh the the laudable and, you know, important goals of diversity and inclusion and everything else, but you're gonna end up harming a lot of those people too.

Jack Sanker: So, something you need to counterbalance.

Luke Behnke: Yeah, that's a great point. I think I'm looking at this as, okay, well how are these admissions departments gonna distinguish between candidates without, you know, some sort of objective measure? Your point is something I hadn't even thought of, where it's like, okay, this is also good for those taking the test.

Luke Behnke: Like, yeah, it sucks studying for the lsat and you know taking it is can be nerve wracking, but, You're right. It is an indicator, right? You, if you come back and it's like, boy, I just don't get this, or I can't perform well on this, or I can't get a good score, like then you're right. Maybe you should reconsider, you know, kind MBA, what

Jack Sanker: you're doing right.

Jack Sanker: Yeah, yeah. Go to business school or, or you know, whatever. Like, and, and that's not like it's easier or, or anything else. People's brains are, are wired differently. And I think given enough time and effort, anyone can take the LSAT and do fine, frankly. It's not, it, it's just a unique set of things that people have to have the time and And effort and circumstances around them lined up in such a way that they can perform well enough on this, frankly, arbitrary set of standards that aren't particularly indicative of practicing in the legal world.

Jack Sanker: So I mean, if, but we gotta have something, I think is what we kind of have settled on here.

Luke Behnke: Yeah, I agree. I I think it goes back to what, what is the objective? What are you trying to do? By getting rid of the, the lsat, it appears it's to create more diverse. You know, more diverse student bodies. And if, and if that's the case, I don't know.

Luke Behnke: Maybe there are better ways to do it. I'm not sure.

Jack Sanker: Up next, a federal jury in Ohio just found a former Ohio Speaker of the House, Larry Householder, and former Ohio Republican Chair Matt Borg's, guilty of felony racketeering charges in connection with a billion dollar utility bailout. Both of these men are looking at sentences up to 20 years max, and what prosecutors say is the biggest bribery and money laundering scandal in Ohio history.

Jack Sanker: And here's a brief summary of the scheme that they were involved in from the Ohio Capitol Journal as part of the racketeering scheme. Akron based first energy and other utilities paid tens of millions in in effort to elect friendly lawmakers in 2018, who would then vote to make householders speaker the following year.

Jack Sanker: Immediately after taking the speaker's gavel, householder worked furiously to pass a 1.3 billion bailout, the vast majority of which benefited first energy subsidiary first energy services. Now, the company was being dragged down by losses from its nuclear in coal plants and executives were seeking a bailout when it got more than 1 billion outta the deal, householder got political power as well as more.

Jack Sanker: A half a million dollars. Personally, jurors found Borgs played a smaller role, but he paid a $15,000 bribe to help defeat an attempt to repeal the bailout, and he received more than a hundred thousand in funds that originated from First Energy prosecutors said on quote. So according to the prosecutors, and I guess according to the jury verdict now, householder was strapped for cash in 20.

Jack Sanker: At the same time, first Energy, a massive energy corporation that owns nuclear plants and coal plants, things like that was also bleeding money. First Energy was seeking a bailout from the state of Ohio. At the same time, householder was trying to be reelected to speaker of the State House, and that's how this relationship started.

Jack Sanker: According to the article, householder was seen at the World Series game in 2016 with the first energy box with the ceo. He flew on a private jet owned by First Energy to Donald Trump's inauguration in 2016. 2017, I guess. Prosecutors had pictures of householder's son and first energy executives riding around in limousines and going to steakhouses together.

Jack Sanker: Eventually what happened is householder in his organization set up a 5 0 1 four. Our organization called Generation Now. It's a bit of a digression here. 5 0 1 organizations are known by the IRS as social welfare organizations and the key distinction between them and 5 0 1 , which are kind of your normal charitable organizations is that 5 0 1 can be set up for the benefit of private citizens or private institutions.

Jack Sanker: While 5 0 1 four s are supposed to be for the benefit of public or communities. It's kind of nebulous as to the definition of 5 0 1 four s and. It seems to be for intentional reasons. Importantly in this case, and what's important to this larger overall story is that 5 0 1 do not have to disclose who their donors are.

Jack Sanker: These kind of organizations are like a black box where money can come from basically anywhere and then be spent on anything that can be loosely defined as, you know, community benefit, and this is an example of what you'll hear in the news as a dark money fund that you may have heard about over the past few.

Jack Sanker: Anyways, this dark money fund generation now, a few weeks before the election started pouring tens of millions of dollars to fund support staff for candidates who would pledge to vote to make householder speaker and to finance tack eds on their opponents. In additional 36 million was put in an effort to block a repeal of the bailout law.

Jack Sanker: So householder and the lesser player in the story Republican chair, Matt Borges, received straight up bribe of about $600,000. In return, they hammered through 1.3 billion bailout, consolidated power through the dark money lobbying to defeat a ballot measure. To repel the repel, repeal, the bailout, and for that, householder and borgs are likely going to jail for a long time.

Jack Sanker: The story I think is an important one because it's obviously on its face, a massive corruption scheme in a time where there seems to be at least some revival in public infrastructure spending. And recall that the Biden administration passed a 1.2 trillion infrastructure bill in 2022 that I don't really think has hit the accounts of the federal, state, and local governments and agencies that'll be responsible for administering the funds, but they will be soon.

Jack Sanker: I'm, I'm sure, Massive money laundering, bribery, corruption, corruption scheme around the infrastructure, spending bills crazy and hopefully not a harbinger of things to come, but it also hides a pretty nasty element of the current state of political lobbying. The impact of 5 0 1 dark money on local politics.

Jack Sanker: As this infrastructure bill rolls out and other federal money comes in, I would be surprised as this is the last time we hear a story like this over the next few years. Luke, what do you.

Luke Behnke: Yeah, I mean, what I think is that these are always really difficult things to, to, to spot. You know, so in light of the very recent sort of Silicon Valley bank collapse and bailout you see, you, you always hear of, you know, the public sort of upset rightfully so, at these folks who are able to, you know, sort of privatize their gains and then publicize their, their losses here.

Luke Behnke: You know, obviously the Silicon Valley Bank bailout is, it's much different than what is, than the story that you just. But the, the goal is no different, right? I mean, these, these folks are part of a, a fledgling company and or, or, or a company that's going under and they manage to get some politicians in their pockets and and secure a, a bailout.

Luke Behnke: What makes this, and maybe you can help me, Jack, cuz you've done, you've done some obviously more research on it than I have. What was the bribe? I mean, was this just money going straight to a bank account or was this going to like a private bank account? Or was this going to, you know, some sort of fund to help these guys get reelected?

Luke Behnke: Or, or what, what makes this a bribe versus just money that, you know, you can use for whatever purported free speech purposes?

Jack Sanker: So, I, I, according to the, the verdict and some of the filings, which I glanced at, You know, money that goes into a fund that a can, a candidate can use to pay for things related to their campaign.

Jack Sanker: Sounds like a bribe, but it's not. That's just regular campaign. Yeah. Right, right. And and so the fact that the, the jury returned a verdict, which said it was a $500,000 bribe, I think means, you know, straight up quid pro quo transfer of funds, you know, from one account to another now, like a lot of this stuff and, and people don't always connect the dots.

Jack Sanker: When you have political spending on candidates, that money is limited to being used for the, the campaign itself. But the campaign itself can mean like private jet trips to go give speaking engagements your hotel while you're there, all the meals that you expense as part of that. So like it ends up being funding your private lifestyle quite a bit.

Jack Sanker: And that's been the complaint on this stuff is it's, you know, it's not just money that gets. Printing pamphlets of stuff in people's mailboxes, which is like, I think the, you know, the old timey understanding of how campaign contributions work. It's, it's being used to fund these people's lifestyles. So it, this seems like an a straight up bribery case on top of the renewable levels of corruption that, you know, are probably legal but still smell kind of dirty.

Jack Sanker: And I mean, it's 1.3 billion of Ohio taxpayer money and those numbers get thrown around a lot at the federal level. But the state level, that's like, that's a lot. That's a big part of what I imagine, Ohio. Operating budget is. And so, you know, it's, it's a huge scandal. And with the amount of money that's coming in from the federal government over the next couple years on infrastructure spending, which I think is a good idea but like, it didn't even seem that hard to get to do this.

Jack Sanker: It seemed like pretty easy to, to get this, this this bailout through and to get these, you know, Nothing was, probably, nothing was illegal up until that bribe happened, frankly. So you're gonna see a lot of that I, I expect over the next couple years is everyone's lobbying for that juicy infrastructure money.

Jack Sanker: And, you know, we'll see what

Luke Behnke: happens. I think that's my point, is that it, it's so, it is so easy to, that's why it's so hard to catch is because it's so sort of easy to do. And, and I think the distinction I'm hearing you make is like you, you know, you can fly somebody on a, on a private jet, but you can't buy 'em a private.

Luke Behnke: You know, there's a difference there. Right. And so the next question for me then is how do we we, how does Ohio claw back these losses? I mean, is this, is this company gonna go bankrupt since they, you know, are, are they at fault here? Or what, what happens? Or is that money just gone?

Jack Sanker: Great question.

Jack Sanker: I don't know if the, if the Ohio Attorney General is, is going after, after the energy company. I mean, I don't know if they can or, or, or not. It seems like they tried to repeal the bailout and that was defeated. So I mean, by law, the bailout probably already happened. This was 2018. That money's probably.

Jack Sanker: Probably gone, frankly.

Luke Behnke: Exactly. Presumably they secured it legally. Right. I mean, it passed the Ohio's state legislature. Right. And, you know, and the money got there. It said these guys just got enriched on the way. And so there's gonna be, you know, criminal charges for them. But looks like the company might might walk away.

Luke Behnke: Pretty happy,

Jack Sanker: huh? Yeah. Well, I hope that Coal plants and power plants and all that stuff are at least up and running and providing some electricity for the money. I don't know. We'll see. Me

Luke Behnke: too.

Jack Sanker: In our last story, the Department of Justice and Department of Transportation are looking to block a merger of airlines, JetBlue, and Spirit, which is a 3.8 billion merger. This is from an article in the conversation written by Joe Mazer, who's an assistant professor of Economics at Purdue, who according to his bio, specializes in the study of com competition.

Jack Sanker: With application to the US airline industry. So he's got an interesting perspective. Professor Maser writes that the issue is really twofold. First, yet another merger in an industry already dominated by heavily, heavily consolidated companies cutting down the competition and which is bad for all of the obvious reasons.

Jack Sanker: But besides that, he says the following quote, But it is more nuanced than that. JetBlue and Spirit have very different business models. JetBlue has positioned itself at the higher end of low cost carrier space where spirit is a through and through no frills, ultra low-cost carrier. It keeps prices down by sacrificing things such as complimentary snacks and drinks, entertainment and comfort.

Jack Sanker: Although the deal is framed as a merger, it is really an attempted hostile takeover of spirit by JetBlue, as such as not just the department, the Justice department that is worried about the impact of losing spirit according to the official complaint. So to our spirit's Board of directors, the presence of an ultra low cost service like Spirit has a disciplining effect on prices across the entire market.

Jack Sanker: That is, it helps keep ticket prices down, especially in the markets where it competes. And the biggest concern is that if the merger is allowed to. Ahead. JetBlue would simply reconfigure the assets of Spirit to match the service level and prices of JetBlue, for example, as cited in the complaint, JetBlue has indicated it plans to remove some seats from spirits planes in order to bring them in line with the rest of the JetBlue fleet.

Jack Sanker: The piece goes on to detail the series of mergers over the last 20. Merger of Delta and Northwest Airlines in 20, in 2008. United in Continental in 2010, Southwest and Air Trans in 2011. American Airlines and US Airways in 2013 Virgin America and Alaska Airlines in 2016. Based on that, the government estimates that the largest four airlines represent about 80% of all airline traffic.

Jack Sanker: He notes in the past that the Department of Justice has intervened in these mergers only to ultimately greenlight the mergers after certain concessions were made. Although I would say that the Biden administration has shown signs of life. With what has previously been an active area from the federal government, anti-competition practices under the Sherman Act, and in this case under the Clayton Act.

Jack Sanker: I'm not an anti-trust expert, but at least from a kind of vibes perspective, as someone flies a a decent amount, it sure feels like airline travel has gotten much, much worse over the past 10 years as companies have consolidated. Truly it's been really awful even on short domestic flights. I don't know if you can necessarily blame that on consolidation, but I could.

Jack Sanker: I think we can safely conclude that consolidation probably hasn't helped airlines rise above, rise above the moment over the past few years, and all of that goes without mentioning the numerous bailouts that airline operators have received from the federal government over the past 10 years. Now, assuming the Biden administration 60 of its guns on this, I think it would be a step in the right direction to preserving what little competition remains in the airline industry, hopefully not allowing the condition to get worse.

Jack Sanker: Luke, what do you think?

Luke Behnke: Yeah, it's a, it's a bit counterintuitive, right? Because you've got this one airline, JetBlue is going to make spirit better, right? So it, the idea would be that those issues that you mentioned, You know, with low cost airlines you know, flights being miserable, entertainment being bad that they're gonna remedy that on the other a merger like this, I, I get the argument makes the industry as a whole worse.

Luke Behnke: And I, you know, you, you do wanna have different levels of competition in whatever industry you're in. You know, when you only have one or two competitors and you've got you. That Rockefeller sort of antitrust problem. So you know, there is a place for, for low cost carriers and, and if it's true that that sort of keeps the industry in line, then, you know, then so be it.

Luke Behnke: I, I just, I I don't know. I, I, I think it underestimates. You know, the power that we have is, you know, sort of Americans to, or, or, or frankly, anybody that flies on a plane, right? To vote with your wallet. I mean, if, if you, if you're not liking what you see out of more expensive carriers you know, you go somewhere else

Jack Sanker: I think the issue is, you know, there are decreasingly less places to go with your, with your wallet.

Jack Sanker: And this would be, you know, one less place that you could spend your money and vote on, you know, what you like. And I think what's interesting is at least according to the complaint that JetBlue just basically take, is trying to take Spirit Airlines and turn it into more JetBlue and. We talked about before we started recording, we've both flown Budget Airlines, and it's like, it's not fun.

Jack Sanker: It's it's, it sucks. But but there's a time and a place for it. I mean, when I was in college, that's, that's how I could get around. And you know, if you, if you can deal with the with, with what flying on one of these Budget airlines entails then that option ideally should be there. Versus kind of being placed into a market that only caters towards higher end service and, and all these other bells and whistles.

Luke Behnke: So, but isn't that what we're complaining about? I mean, that's like, we've got kind of cruddy flights and services been bad over the last decade. Like, isn't, isn't JetBlue fixing that? Are they saving us from that problem?

Jack Sanker: I would say at least with spirit, you get what you pay. And on the other ones, like you pay for a service and then they delay your flight and screw you over 50 other ways and you don't get the savings.

Jack Sanker: I, you know, that's just a personal opinion, but I, I see some value in that.

Luke Behnke: Well, one thing I know for sure Spirit's not gonna be sponsoring this show anytime soon.

Jack Sanker: Look, I'm a fan. I'm I'm a fan, and I'm, I'm the one who's trying to, to, I'm in favor of keeping them independent. So if the board of directors wants to call me more than happy to, to sub in on that case.

Jack Sanker: You'll pick up the phone. All right. Yeah. But I, I just think more of the general trend that you are seeing more antitrust litigation, more Sherman Act. Out of the Biden administration, we've talked about on this show issues with supply chain management the ways in which market consolidation has affected things like inflation, of course, supply side economics and all of that.

Jack Sanker: And, and yeah, I mean, to have basically a robust competitive field of like 20 plus airlines reduced to like five over the course of 20 years. At the same time that period coincides with, I think what we all agree with is a decrease in service. Those thi two things have gotta be related. You know, i I, I, maybe some economists can, can point out and tell me I'm wrong, but I, I think that they probably are related.

Jack Sanker: And so doing the bare minimum here to preserve a little bit of competition, especially on the low end of pricing, is probably the right move for the Department of Justice, in my opinion.

Luke Behnke: That's the show for today. You can find us, as always, wherever you get your podcasts, and if you have any thoughts on any of these stories, let us know what you think. Until next time.