Advisory Opinions - Chess Cheats and Hot Sauce

Episode Date: October 25, 2022

Scandal of scandals! Things get weird after a 19-year-old grandmaster is accused of cheating in a chess tournament against a world champion and David and Sarah are here for it. Plus: Let’s talk CFPB funding and a court decision that gets a direct ticket to SCOTUS. Out of context: “a limited public figure for the purposes of Donkey Kong.” Learn more about your ad choices. Visit megaphone.fm/adchoices

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I was born ready. Welcome to the Advisory Opinions Podcast. I'm David French with Sarah Isker. And Sarah, you know I don't like to brag. You know I hate to brag. But I feel like I'm particularly ready for this podcast because of a credential I've not really talked about very much. podcast because of a credential I've not really talked about very much. I was, in fact, eighth grade champion in chess, Scott County Middle School, Scott County, Kentucky, 1982. So... David, how many other eighth graders at Scott County Middle School could play chess?

How dare you? How dare you? The implication of that question. I just want to be clear. I couldn't play chess in eighth grade. As best I can recall, it might've been an eight person tournament. That is significantly larger than I would have expected. And I'm wondering if that is remotely accurate. I don't remember.

I remember three rounds. So three rounds would be an eight person tournament, right? So three rounds, eight people. I don't know. I'm not. Some people have just been told the rules of the game 10 minutes before the start of play. Again, how dare you? These, I don't know. I don't know how many of them went on to be chess grandmasters. Don't know how many of them went on to be chess grandmasters. It could have been zero to seven, okay, of the other eight players. But facts are facts. So I feel very ready to talk about the wildest lawsuit.

And we've had so many listeners who have written to us who've said, you've got to cover this chess world scandal that is culminating in a giant defamation lawsuit. And, you know, we heard your cry and we're going to answer it. We're also going to talk about a couple of circuit court decisions. One, essentially, is it too much to say? Gutting the CFPB, eviscerating the CFPB. Ending. Ending the CFPB. Okay. The Consumer Financial Protection Board, Elizabeth Warren's finest creation. Bureau. Bureau, sorry. Elizabeth Warren's finest creation. We've got an Eighth Circuit stay of the Biden Student loan forgiveness plan that we're going to talk about. And Sarah has some thoughts on salsa, the food.

Isn't there also a dance called- Not salsa, hot sauce. Hot sauce. Salsa is a very different thing. Okay. We're not going to talk salsa, actually. We're not talking salsa. We're just going to continue talking about hot sauce.

Hot sauce. All right. But let's move on to the main event. Sarah, let's move on to the main event. Sarah, let's talk chess. Do you want to introduce our listeners to the scandal of scandals? This resulted in a long conversation with husband of the pod over lunch on Friday. And I was looking around at other tables at the restaurant that we were seated at for date lunch and wondering how many other tables are discussing this because it was

breaking news. And I don't know, David, 50%, 75%? At least. It's hard to say. Where to start? Okay. So we've got two chess players here. Hans Niemann is a 19-year-old American who is ranked currently 39th in the world. I had not heard of him before, David. Was he on your radar at that point? He is not. I had kind of, having reached the pinnacle of my chess career in eighth grade, I've kind of dropped it since. So I'm not up on the players. I'm not up on chess celebrities. So a lot of this was new to me. Yeah, fair enough. So what happens is that Niemann, the 19-year-old, plays Sven Magnus Ohn Karlsson. Now that guy you probably have heard of. He's the 31-year-old chess player from Norway,

presently five-time reigning world chess champion, the highest ranked chess player in history, David. So they played at a tournament and Niemann won. Bum, bum, bum. Yeah, and didn't just win, won in dominating fashion when he didn't move first, which is apparently a big deal. How dare you, sir? Yeah, okay.

So Magnus was displeased, let's say, about losing. And for good reason. This game potentially would have given him a rank of 2,900, which would have been a big, big deal to break the 2,900 barrier. It's like the sound barrier in chess, basically. He has a deal going through with chess.com for $86 million to buy his own online chess platform. And maybe losing to a 19-year-old wouldn't look that good. Like maybe he's not as dominant as you'd think.

Could affect all sorts of things for Carlson, Magnus Carlson, the Norwegian. And so he accused Neiman of cheating, David. And let's just fast forward. We'll come back to some of these other facts. Neiman has then filed a $100 million lawsuit against Carlsen for defamation, slander, tortious interference with a business contract. You get the gist. The idea is that by accusing a chess player of cheating and by the number one chess player, it's basically cut him out of chess world. Chess.com has banned him. He's not invited to tournaments because Carlson refuses to play against him. And therefore people are picking Carlson over him.

No question. This has deeply affected his ability to play chess. But there's some other sort of weird things going on, frankly, David. So many weird things actually. Neiman comes out and admits that when he was 12 and 16 he did cheat on chess.com he says that they were just like they weren't for money or anything they were just games and that he cheated and that he was a child

which is true except that now he's 19, so it's only been three years since he admitted cheating, Chess.com released a 72-page report saying Neiman, quote, likely cheated on its site more frequently than he has publicly acknowledged, and that's why he was banned from the site and online events. But, David, at the same time, chess.com said its investigation failed to turn up an abundance of quote,

concrete statistical evidence that Neiman cheated in his win over Carlson, which is what kicked this whole thing off. So Carlson and chess.com have this very tight relationship now. And so the lawsuit allegation is that Carlson does this out of ego reasons, doesn't want to lose against a 19 year old. It hurts his career. So he accuses him of cheating chess.com and goes along with it because they've now spent $86 million,

not to mention just the general investment in Carlson's brand, et cetera. And that chess.com then pressured, persuaded, allowed, whatever their star like the tiktok equivalent star of chess.com world um to keep repeating the allegations that neiman cheated when he was doing his like online games now david we've talked about defamation quite a bit on this podcast in other contexts but this one's really interesting to me. What do you think about his chances of winning a trial

or even getting to trial? Yeah, so this is a really good question because I was reading it because a couple of other facts I think that are relevant here. One is, so Neiman and Carlson were set to play another match. And they started to play another match, and Carlson withdrew after one move. So essentially, there's one move, and Carlson's out. He resigns from the match, which again communicated that Carlson believes that cheating is going on.

Does it? Or does it communicate that Carlson freaked out that he might lose twice to a 19-year-old that could steal his crown? Well, that's another possibility, but the lawsuit certainly says the intent of the withdrawal was to communicate lack of confidence and fair play. And then Carlson puts out this statement

and he says, here's a key paragraph. I believe that Neiman has cheated more and more recently than he has publicly admitted. His over-the-board progress has been unusual and throughout our game in the Cinquefield Cup, readers tell me if I just mispronounced, I mean, listeners, please tell me if I mispronounced that, Cinquefield Cup. Readers tell me if I just mispronounced, I mean, listeners, please tell me if I mispronounced that. Cinqua Field Cup. I had the impression that he wasn't tense or even fully concentrating on the game in critical positions while outplaying me as black in a way that I think only a handful of players can do. This game contributed to changing my perspective. As cheating allegations go, that's super thin, Sarah. My subjective perception of the demeanor of my opponent was not what I thought it was. Therefore, he is cheating. Now, that's very thin. So here's where I think Carlson and Nakamura,

thin. So here's where I think Carlson and Nakamura, Hikaru Nakamura, the sort of Twitch star or online streaming star of chess, might be in some trouble here. Cheating is an allegation of fact. It is not an opinion. And so... Well, it's a little like losing the election, right, David? If I lose, there must have been cheating. Right, right. If I lose or like the proof of the cheating is that I lost. Right. So in this circumstance, now, of course, truth is a defense. Truth is a defense to a defamation claim. But in this circumstance, the evidence and I, and look, Neiman's complaint is not the last word. As we have said 50 million times on this podcast, you cannot get a full sense of a case by just reading the complaint. So I've tried to go outside the four corners of the complaint, see what other information is out there. And there just isn't any information that seems to concretely substantiate

the cheating allegation. And in that circumstance, it seems to me that Carlson and Nakamura have a problem on their hands because their statements, and Nakamura, who was pretty, the quotes from the complainer, pretty decisive. I mean, it's unambiguous is a better way of saying it, that Nakamura's quotes are pretty unambiguous in making that cheating allegation against Neiman. And so I think this

is a complaint that survives a motion to dismiss and dives into discovery. And Carlson and Nakamura are going to have to come up with something other than he was too calm and collected. Now, it is true that Neiman has admitted that he cheated through the use of what were called a chess engine, which is a term that I had not heard before, a chess engine. Because when I was winning in 1982, there was no such thing as a chess engine. But a chess engine is a computer that would suggest the optimal next move. Now, apparently, unless you have some really sophisticated electronic notification equipment, I'll say on your person, then a chess engine isn't really a viable option

in a quote, over the board game. This is where you have two human beings. It's not a streamed game. It's not online. You have two human beings literally sitting over the chess board. But what struck me about this was a cheating allegation was made

and I hadn't seen, and I still haven't seen evidence for it aside from, I hope more comes out. I need to say something more needs to be said. And then this allegation that he was just too calm, cool, and collected. And I'm sorry, that doesn't get you there. That doesn't get you there. And so I think there's some exposure here. What do you think, Sarah? We did not talk about this ahead of time, except to say like how pumped I was to talk about this case. And we are in the minority, David, the huge wild minority. I don't know why, but the world seems to be siding with Carlson on this.

And maybe it's because we're new to this. Yeah. But like, I don't know, man. Chess.com says they can't find any statistical evidence that he cheated in the only game that we're talking about here. It doesn't actually matter what he did on chess.com before this. It's worth noting that chess.com says that they think he cheated in more games than he's admitted to and that some of those games were for money,

for instance, and other things like that. But David, for instance, I can't find how they think he cheated except for sort of these very vague Astros style allegations of basically someone giving signals from the outfield in the room. Yeah. Or this idea that like he went to the bathroom and had a phone stashed somewhere.

This should be pretty easy to prove. Who else was in the room? Did anyone notice that person doing weird stuff with their ears? I don't know. And nobody went and looked in the bathroom to see if there were phones. Okay. Some legal questions though. First,

I think that Neiman is a public figure for the limited purpose of chess, which is the ball game here. Meaning you probably can't accuse, uh, uh, I don't know Neiman of being a serial killer and say he's a public figure, but I think you can't accuse him of being, of cheating at chess. I'd agree with serial killer and say he's a public figure, but I think you can't accuse him of being, of cheating at chess.

I'd agree with that. Saying that he's a public figure. And so therefore he does then have that additional bar he has to get over, which is the person Carlson in this case knew, or was reckless, had a reckless disregard for the truth, which is higher than just, it turns out what he said was false. That being said, if you can show that he had no evidence that he cheated other than that, he Carlson lost, right? The only reason Carlson thinks you cheated

is because Carlson lost and it was of a material detriment to Carlson to lose. And therefore he had a whole lot to gain by just saying, nope, you cheated. So this doesn't count against my record. This shouldn't affect my merger with chess.com, et cetera. I don't know. You're getting pretty close to reckless if he had no evidence and a lot of things that a jury could interpret as intent to lie. Yeah. Even if you can't prove that he knew it was false at some point, when you just say that someone cheated without evidence, knowing what it'll do to them and knowing that it'll really help you, you're getting pretty close to reckless disregard for the truth. That being said, David, people who like really follow chess world and believe it or not,

That being said, David, people who really follow chess world, and believe it or not, I know some of these people, really believe that Carlson is right here and that there's no way that this kid could sit calmly through the game and that he wasn't paying attention and he wasn't focusing according to them. But I feel like that's according to them, according to Carlson, right? Right, right. I don't know. And apparently, Neiman, at least as his own complaint says, kind of taunted or talked some smack to Carlson. Yeah. Both during and after the match. And before the cheating allegation. Yeah.

And before the cheating allegation. So, look, I think he has a few problems. A, he's got that higher bar because he's a public figure, at least limited public figure for the purposes of chess. Two, at the end of the day, even if he gets past that motion to dismiss stage, he's still got to convince a jury. And frankly, the jury's going to care about the law and the facts, but they're really going to want to know whether this kid's as good as he's supposed to be. Like, is he good enough to have beaten Carlson? And without cheating. I do think that Neiman's case would be significantly helped if he could find a high-ranked chess player

to play against. Interesting. It's high stakes. Interesting. But like, make sure there's no phones. Maybe there's no bathroom breaks. I don't know. No one else in the room. Like, there's no phones. Maybe there's no bathroom breaks. I don't know. No one else in the room.

There's no possible way to cheat. And win or lose, him actually performing very, very well as a 19-year-old, let's see if he's really the 39th ranked player in the world. But the way I interpreted Neiman's complaint was not that he was so good on that particular day it's that carlson was so bad yeah but do you know how bad the number one guy has to be and how good you have to be like serena williams can have a really bad day david and she's gonna crush you yeah i mean she'd crush me on with one leg, right? But number one. I take your point.

Yeah, but number one, tennis players do lose to people who are 30, 40 if they do have really bad days. I don't know chess well enough to know if the gap between one and 40 in chess is so big. Oh, no, no, no. I absolutely think that a 39th ranked player can beat the number one player no problem i think it happens pretty frequently but the issue here is did is he actually a 39th ranked player or has he cheated to get to that point and i think that's something that he can showcase you know his complaint is long it's uh 44 pages most of which is like facts about himself neiman is a 19 year old self-taught chess prodigy he became the youngest

ever winner of the tuesday night marathon at the mechanics institute chess club the oldest chess club in the united states earning him the title of U.S. Chess Federation Master. By December 2020, FIDE, the international governing body of professional chess, awarded Neiman its highest honor by naming him a chess grandmaster. By 2022, FIDE ranked Neiman as the 40th best chess player in the world,

tied for the fourth youngest player in the top 50. So are there any allegations that he cheated in any of those pivotal games? Well, and all of those were over the board, which is different from the chess.com. So yeah, look, I think a 12 year old cheating on chess.com. Would I encourage my 12 year old to cheat? No, but as part of learning chess, looking at those computer simulated moves, sure. And if you don't think the games matter and you're 12 and you're doing this on your own, that I think actually doesn't undermine his case very much. I think 16 years old, when you're only 19 now, I think chess.com saying, yeah, but that's not the only ones he

cheated on. He's lying about the cheating that he's admitting to. That would be pretty bad. I think that, and also this is something that's, I think, worth bringing up a distinction in the complaint because he sues, he sues Carlson, he sues Nakamura, he also sues chess.com, he also sues Carlson's own chess group that was being purchased by chess.com. I think the allegations that are related to chess.com's actions against him are shakier. If he's admitted to cheating on chess.com when he was 12 and he was 16, and remember when he's 16 is only three years ago, so he's not a 30-year-old player here. Chess.com taking action against him strikes me as more defensible than the cheating allegations leveled by first Carlson,

then Nakamura. So I think if you pull those two things apart, the cheating allegation on the over-the-board match, that's where Nakamura and Carlson are absolutely their weakest. Chess.com taking action against Neiman for allegedly cheating online when he'd admitted to doing it twice, that's going to be a lot more defensible, I think, as a matter of law. But I can easily imagine a situation where you actually end up with competing experts on the stand, with Carlson made, you know, in Neiman's view, a series of reckless mistakes or why Neiman in Carlson's view played unreasonably well?

What a dueling expert kind of case that would be. So, David, we have some cases that relate to this, at least brought to us by Stephen Carter and Bloomberg, by the way. One, 2004 decision from the Seventh Circuit, professional bridge player was suspended after allegations of cheating. The panel upheld the trial court's determination that the federal courts should not second guess either the findings of the American Contract Bridge League or the judgment of an appropriate punishment. Although the suit did not allege defamation, the plaintiff did allege what the court described as a vast conspiracy against him among the leadership of the league. But in the absence of strong and closely pleaded evidence, courts almost never accept such contentions. Then there's the 2010 Indiana case in which a golf teaching pro sued after a

colleague accused him of being a cheat because he claimed a different classification than the one to which he was entitled. The Professional Golf Association investigated the colleague's allegations and agreed. When the pro subsequently sued the person who'd leveled the original accusations, the court dismissed the defamation claim because, quote, the statements were true. So in both of those cases, of course, you see the courts deferring to the sort of adjudicative sports body, which gets back, by the way, David, to a podcast that we did with Professor Berman from the University of, formerly of the University of Texas, about the law of sports, which is super interesting.

But here's the case that's maybe more interesting to me. Last year, California appellate court ruled that the defamation lawsuit by the gamer Billy Mitchell against Twin Galaxies could go forward to trial. Mitchell had once been recognized as the world record holder at the company's popular arcade game Donkey Kong. game donkey kong but after questions were raised twin galaxies investigated and canceled his scores on the ground that they were not earned on quote an original unmodified version of the game asserting in effect that mitchell had cheated the key claim was that twin galaxies had acted with actual malice by allegedly refusing to look at evidence of the plaintiff's innocence so there innocence. So there the case goes ahead and that one looks actually less strong than this case. Right. Right. By the way, they did find that Mitchell was a limited public figure for the purposes of Donkey Kong. And there's actually, speaking of Billy Mitchell, there is actually a

September 13th of this year. Like this thing, this Billy Mitchell Donkey Kong saga has been going on forever. And it's something I'm actually interested in a great deal because of a 2007 documentary that I watched that is called King of Kong. That features Billy Mitchell as sort of the Darth Vader figure in it. That there's this underdog guy who's trying to challenge Billy Mitchell and Billy Mitchell is sort of like the, he's like the Cobra, not the Darth Vader or the Cobra Kai, you know, character in the King of Kong documentary. And it's incredibly gripping, incredibly gripping documentary. So ever since then, I've kind of followed this along.

And it's interesting because there's been some developments in the last couple of weeks where it appears that Mitchell, because of Twin Galaxies, has lost out of $900,000 in potential appearances in movies and at video games. And this is going to connect with the latter part of the podcast, his business, Ricky's World Famous Hot Sauce. It all comes back to hot sauce. It all comes back.

Well, I think that in this case, the, now, I mean, again, remember, this is California and it's a state court. Neiman filed in federal court in Missouri, in St. Louis district. So very curious. And don't worry about jurisdiction, personal jurisdiction over Carlson because the game, the SIGQA field, uh, match was played in St. Louis. So yep, you definitely made yourself amenable to suit when you played there,

made the cheating allegation there. It doesn't matter if you flew back to Norway afterward. Um, because it all gets around that actual malice thing. So here, twin galaxies may have acted with actual mouse by refusing to look at evidence of the plaintiff's innocence and in our chess example of course maybe magnuson you know spouts off at a press

conference and is like the only way anyone could beat me is cheating chess.com then does their 72 page report finding no statistical evidence of cheating and yet car Carlson's still refusing to play with him, still getting him blackballed from tournaments. At some point, you're getting much closer to the Twin Galaxies example. We will be following this case with a lot of interest, David, because it's nerdy and legal, and the chess world is a fascinating place. Oh, totally. Totally. One other thing on the Billy Mitchells. Not only did he lose sales of Ricky's World Famous Hot Sauce. Have you tried that in your hot sauce adventure?

I have not. That is not. But I'm big into hot sauces. I get boxes of different hot sauces to try. But an institute, the world famous PerfectPacman.com, Sarah, of which we're all no doubt familiar, published a 48-page forensic technical analysis by an independent electrical engineer, which claims to prove Mitchell did not use an original arcade machine. So anyway, this is all, we're far afield. We'll follow both. We'll follow the Mitchell case as it makes its way to trial in California, and we'll follow the Missouri chess case as it heads to a motion to dismiss phase, certainly.

And what a wild country and world in which you can have so many different subcultures and world in which you can have so many different subcultures with so many different lucrative avenues of celebrity and so many different governing bodies. It's fascinating. It is absolutely fascinating. And the other thing about this that I think is important as I was reading this, we have had a number of very high-profile defamation cases of late. So we've had the Oberlin verdict, $32 million that was paid. Oberlin's now going to pay, so they're going to make whole the bakery that was defamed. We have had now multiple verdicts with Alex Jones. with Alex Jones. We've had multiple cases filed in relation to the election,

the effort to steal the 2020 elections, some of which involve Fox News and Husband of the Pod, many of which do not. Now we have a defamation case involving chess. What's happening, it feels like to me, is you have a litigation corrective, maybe going too far in some cases, remains to be seen, but what you have is a litigation corrective emerging against the wild, wild west of online accusations. And so it's an interesting legal trend overall to see defamation litigation wielded in this way. Another one, I would be remiss if there was the Fox News settlement in the Seth Rich case. There was the Roy Moore. Roy Moore was successful in one of his defamation claims. So there is an interesting level of, there is an interesting defamation blowback

legally happening in the case of a lot of wild claims that have been made online. So it's going to be interesting to see this work through. And I never thought that one of the key cases would emerge from the world of chess. And yet it has. And we'll take a quick break to hear from our sponsor today, Aura.

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Use code ADVISORY at checkout to save. Terms and conditions apply. Do you want to talk CFPB? Ooh, yes. Okay. The trials and tribulations of the CFPB. Am I right? You are right.

So the Supreme Court, if you remember, had a CFPB lawsuit called Celia Law. And in that, they found that the head of the CFPB was insulated from removal from the president and that that was unconstitutional. The president has to be able to remove the head of the agency. But they also found that it was severable and it didn't actually affect, you know, the CFPB or anything they've done or any of the actions they've taken against you. Random yous out there who don't like the CFPB. Come once again, plaintiffs who don't like something the CFPB has done. In this case, it's the payday lender rule from 2017. And this has been going up and down and up and down since the Obama era. The original payday lending rule far predates the 2017 one.

This brought all sorts of challenges against the iterations of it under the Administrative Procedures Act. Arbitrary and capricious. Maybe the fact that the director wasn't removable, even though it didn't work in Celia, maybe it works here. They tried it all. And the Fifth Circuit said no to all those things. But, but, but,

another claim that they brought was that the CFPB is not correctly appropriated by Congress. And here, the Fifth Circuit was like, yep. And because the appropriations aren't correctly set up, as in the entire structure of the CFPB's money violates the appropriations clause of Article 1, and because they couldn't have taken any adverse actions or even promulgated this rule without, you know, money to do so. Yep, it all falls. Whoa, said everyone on the internet. That's the short version, David. It's worth just the brief

facts on the appropriropriations Clause and how CFPB is funded. So the Appropriations Clause, Article 1, Section 9, Clause 7, as we've all committed to memory. No money shall be drawn from the Treasury, but in consequence of appropriations made by law and a regular statement and account of the receipts and expenditures of all public money shall be published from time to time. Okay, so how is the CFPB actually appropriated? Well, through the Federal Reserve. So at any point, the director is vested with the authority to prescribe rules and issue orders and guidance as may be necessary or appropriate to enable the Bureau to administer and carry out the purposes and objectives of the consumer financial laws. And as such, the Bureau receives

funding directly from the Federal Reserve, which is itself funded outside the appropriate process, outside the appropriations process through bank assessments. The Bureau simply requests an amount determined by the director to be reasonably necessary to carry out the agency's function. The Federal Reserve must then transfer that amount so long as it does not exceed 12% of the Federal Reserve's total operating expenses. For the first five years of its existence, the Bureau was permitted to exceed the 12% cap by $200 million annually, so long as it reported those. Now, the Federal Reserve, as you may know, is also not done through appropriations. It's done through bank fees. And it turns out that the CFPB also is shielded from backward-looking assessments by Congress. Indeed, the legislation says that

funds derived from the Federal Reserve System shall not be subject to review by the committees on appropriations of the House of Representatives and the Senate. So as the Fifth Circuit said, the Bureau's funding is double insulated on the front end from Congress's appropriation power, and Congress relinquished its jurisdiction to review agency funding on the back end. In between, Congress gave the director its purse containing an off-books charge card that rings up unappropriated monies. Wherever the line between a constitutionally and unconstitutionally funded agency may be, this unprecedented arrangement crosses it.

All right, so this was a 3-0 decision from a Fifth Circuit panel. It was Willett, Englehart, and Wilson. Okay. Interestingly, David, Judge Corey Wilson is the most junior of those three. They're all Trump-appointed judges, but generally with a decision of this magnitude, you would actually expect the most senior judge to reserve that for themselves.

And here I went to the most junior judge, which is just sort of interesting. I can't quite figure out the reason for that unless it truly was a workload thing and they didn't realize. I don't know. Hard to come up with. So yeah, the internet melted down over this one. And Will Bode over at the Vala Conspiracy And citing Professor Zach Price about why this is definitely wrong has pretty compelling stuff. But David, I want your thoughts. Does it feel right? Does it feel wrong?

I mean, it seems right to me. But it's one of those cases where what you're looking at is a judicial decision'm very interested in Professor Bode's thoughts, but at what point do you say, okay, this thing that has been set up in this highly unusual way is almost a quasi as something that's not quite executive, not quite legislative kind of entity. How does this fit within the system of government that we have, which has always been sort of the issue with the CFPB? Let me just say I'm very intrigued by the decision. Intrigued as in potentially persuaded by the decision. But yeah, I'm very interested in Will Bode's rebuttal. So first of all, let's just be clear. This is definitely getting a ticket to SCOTUS. Oh, for sure.

Yeah. So let me read the very end of it. Although much of the CFPB's work strikes me as important, exempting the agency from the political constraint of ongoing appropriations was misguided, according to Professor Price. But the remedy is for Congress to change the law and claw it back. It is not for the courts to invent new, judicially unmanageable limits that are absent from the constitutional text. So that's kind of the summary. And the idea is that,

what is the line then? So we are used to, of course, Congress appropriating money in sort of that yearly or so basis, but that is a way for Congress to amplify its power. Clearly, it is not constitutionally mandated by the Appropriations Clause, which again, no money shall be drawn from the Treasury, but in consequence of appropriations made by law. Well, here, they did make a law. of appropriations made by law well here they did make a law it did draw money from the treasury through money that this gets weird but basically the federal reserve has to send back any money that it's not whatever for our purposes that it's not going to use it sends back to the treasury and so their argument is that that money is now going to the CFPB, and therefore, that's the money that's not going into the Treasury. Again, I'm simplifying this a little, believe it or not. So no money shall be drawn from the Treasury, but in consequence of appropriations made by law. funded the agency it funded it through this weird mechanism the purpose of which was to shield it from political capture by lobbyists and stuff and frankly let's be real to shield it from future

congresses when right someone else took power and wanted to just zero out the appropriations rather than actually end the agency which is now what is basically required um the key question this is again professor price quoting well professor bode posting professor price the key question, this is again, Professor Price, quoting, well, Professor Bode posting Professor Price. The key question in the CFPB case is whether this practice of annual appropriations is not only desirable, but also constitutionally required. When it established the CFPB in the wake of the 2008 financial crisis, Congress provided that the agency would not require annual appropriations, but could instead claim up to 12% of the Federal Reserve System's funds, even though the Fed itself is funded primarily through fees and interest income rather than annual statutory appropriations.

In a particular thumb in the eye of future Congresses, the CFPB statute even exempted the agency's Fed-derived funds from review by the Committees on Appropriations of the House of Representatives and the Senate. What should we make of this choice? Congress's unusual arrangements seem to have been motivated by concerns that powerful financial actors would seek to capture and undermine the CFPB's function. Congress has provided authority by statute for the CFPB's expenditures. That is all the text of the Constitution requires. Annual appropriations are generally a good idea, but there is no constitutional requirement that Congress employ them for this or any other civil agency. On the contrary, the Constitution negatively implies the opposite by specifying that, quote, no appropriation of money to raise

and support armies shall be for a longer term than two years. In practice, furthermore, Congress has previously provided permanent appropriations for some programs like social security benefits, government debt service. It has allowed entire agencies like the Federal Reserve itself to fund themselves with fees rather than annual appropriations. And it has authorized various other forms of, quote, backdoor spending that take place outside the normal appropriations process. backdoor spending that take place outside the normal appropriations process. And I think the big thing, David, is that like, okay, what is the line then? And are courts now drawing that line? This opinion doesn't really draw it. It just says,

whatever the line is, this is on the other side of it. It's only a 39- page opinion, which is relatively short considering it had to get through all of the claims that it rejected about the APA and Arbitrary and Capricious and the director and all of that. I was like definitely in the twenties in the opinion before I got to the appropriations argument, which felt short given the import of what power the courts were now claiming. Yeah, it's interesting because at some point, and I think the historical examples of parts of the government that are funded by fees, for example, parts of the government that receive a large appropriation that can last multiple years, all of the different ways in which appropriation has occurred, all of the different ways in which appropriation has occurred, does all of that mean that however Congress appropriates is going to be fine?

Or does a line exist at all? And if that line exists, where is the line? It's a really fascinating question, and it reminds me in some ways of non-delegation and some of the other administrative law controversies that we've seen emerge in the last couple of years as the Supreme Court is sort of saying, whoa, hold on here. There's some constitutional structural issues that we have to kind of put back into play. And this is a question for me as one of those that is this a constitutional structural issue that needs to be put back in play? And how much can Congress actually decide to create an entity that's less accountable than other entities created by Congress? It's, to me, a very live and interesting question. And, Sarah, you know I'm all about non-delegation doctrine.

I am all about getting rid of Chevron. I do not like this sort of parallel system of government that has been created through the administrative state, which magnifies the power of the presidency, which diminishes the power of Congress, upsets the balance of power established in the Constitution itself. So things like this are always going to kind of prick my interest.

So I'm going to be watching it very carefully. It's fascinating. All right. Well, as I said, that case will continue. So not to worry. We'll come back to it. that case will continue. So not to worry, we'll come back to it. Speaking of fascinating, follow this chain of events here. Okay, on October 20th, just a few days ago, the United States District Court for the Eastern District of Missouri dismissed State of Nebraska versus Joseph R. Biden. So this was one of the cases that we talked about earlier where a collection of six states challenged the legality of the loan forgiveness plan. Now, this is a case where a friend of the pod, Ilya Soman, had written in Volokh Conspiracy that this is one of the better standing cases, in part because Missouri has a higher education loan authority that services student loans, including some that will be partially or fully forgiven by the Biden plan.

forgiveness program will reduce the revenue from those loans, and even a small financial loss is enough to qualify for standing, Ilya thought this is one of your better standing cases. But the judge dismissed the case on the 20th, all right? And what about this injury in fact? What about the possibility that the Missouri Higher Education Loan Authority was going to be damaged? The judge concluded that Missouri lacks standing to sue on the loan authority's behalf. So, in other words, Missouri is the wrong party. party that the MOHELA, however you want to, M-O-H-E-L-A, we'll call it MOHELA, is a state entity that performs essential public functions, includes ensuring post-secondary education students have access to student loans. In other words, it is essentially its own entity that should sue if it's going to sue. So this is on the 20th. On the 21st, the next day, there was an entry in

the case of State of Nebraska et al. versus Joseph Biden Jr. et al. And this was circuit court decision that says, appellant's emergency motion for administrative stay prohibiting the appellees from discharging any student loan debt under the cancellation program until this court rules on the appellant's motion for an injunction pending appeal is granted. The request for expedited briefing on the motion for an injunction is granted as follows and gives a schedule. That's fast, Sarah. And that's pretty big. So you have a circuit court entering an injunction. No decision on the merits, but generally you don't enter an injunction unless there's a view of some sort of likelihood of success. Well, this is an administrative stay. It's different.

Yeah. An administrative stay is truly just like, hey, give us a couple days. We haven't had time to look at this right now. So it is not, there's none of those factors on irreparable injury, likelihood of success and the merits. That is a preliminary injunction or any injunction for the most part. An administrative stay, just administrative.

They're saying, nope, we haven't even looked at this at all. But it's weird. Was the loan forgiveness going to happen in the next few days? There wasn't actually, there's still not actually the loan forgiveness, the final plan. It still doesn't exist. They are accepting applications, which this does not affect, by the way, as the administration has said, they are still accepting applications. Go ahead and send it in if you'd like. But yeah, I mean, in fairness, the court doesn't know. Yeah. It's interesting. It is interesting. So right now there is no possibility of the Biden administration discharging any student

debt, at least for a few days, at least for a few days. But this is the case we're going to be taking a close look or keeping a close eye on. And then there's another update. Remember we talked about the Will taxpayer standing case? Yeah, which I said was like, please write me a case that will get immediately dismissed for generalized taxpayer standing problems because they literally, they were like, we are general taxpayers. We have no specific interest in this case except that our taxes could go up. Why would you plead that? What?

Very strange. That one's gone. That one's been dismissed. So they appealed that to the Supreme Court. Amy Coney Barrow is the justice that oversees that circuit, her old circuit? Yeah, I think so. And she did not even refer it to the full court. She just straight rejected.

Yep. Ouch. Yeah, ow. But always listen to advisory opinions because we've walked through these cases and we said the Nebraska, the multi-state case, keep an eye on it. There's an administrative stay in place blocking the student loan forgiveness.

We'll see what ends up happening. It was dismissed at the district court, but we'll see what ends up happening at the circuit court. But yeah, listen to advisory opinions. You're gonna sometimes, not every time, sometimes you're going to know the news in advance. Now, David, before we go. Yes.

We talked about that Pete's hot sauce lawsuit last time for misleading people because Texas Pete is not made in Texas. It's made in North Carolina. And so I decided to go peruse my own hot sauce collection and see what all I have up there. So first of all, my Louisiana hot sauce is Frank's, not Texas Pete's actually. My other hot sauces are Mark's Good Stuff Tex-Mex hot sauce. Highly recommend. It's made in Austin, by the way. And on the label, it says Lone Star Certified. It has a picture of the state of Texas,

cowboy boots, a cowboy hat, and it says Tex-Mex hot sauce. You cannot be confused about where this is made. I also have some bravado. That one's maybe not my favorite. You got to have the Cholula, but the Cholula I would say is more about flavor than heat. And that's made in Mexico, by the way. Aardvark, secret aardvark hot sauce. It's sort of like Cholula in that it's more flavor than heat. I highly recommend it for breakfast tacos

or anything involving eggs. It's particularly delicious with like a bagel egg sandwich or an egg taco that needs a little bump up. It's made in Portland, David. Whoa. Interesting. But they say that it's Tex-Mex style.

Okay. Yeah, Tex-Mex style made in Portland. And then a secret one that I don't feel like a lot of people have heard of is Humble House Poblano and Serrano. Now, this is going to bring you some heat. It's definitely going to add some flavor. And it's made in San Antonio, where you know they know how to make hot sauce. I'm really into trying new hot sauces.

As you may know, Kristen Soltis Anderson is one of my closest friends and she makes her own hot sauce. So also in my fridge is a coveted bottle of KSA's own, but that we use only for special occasions, only on the most delicious food. That's a great name for a hot sauce, KSA's own. I like that. So she actually made her own labels and it's called the Red Menace because we were playing Pandemic Legacy, the one where like the Russians are trying to take over with their virus.

And so that was the year that this first came out. But we're on like second or third generation Red Menace at this point. And it's incredible. Red Menace is a good name too. That's yeah. That's a good name. KSA's own kind of has a country flavor to it. It does. But Red Menace. She's from Florida. So Red Menace really, it makes you think that this hot sauce might be too much for me? So maybe, and just to be clear, if you're listening to this podcast and you make hot sauce and are like, Sarah sounds like she's asking people

to send her hot sauces to try. Sure. Yeah. Yeah. We'll take paid product placement on this podcast for hot sauce. Speaking of sending stuff, somebody has sent me Grizzlies gear with no name. Maybe a name is supposed to be attached. I don't know. But I got a sweatshirt. I got a t-shirt for my beloved Memphis Grizzlies. I have no idea where they came from. They just dropped out of the sky.

And so whoever did it, if you intended to be known and you haven't gotten like a thank you from me, it's because there's nothing on the package to indicate where it came from. David, you call the company, you ask for the billing information. You've never done this before? No.

Oh, I didn't even- Your investigative skills suck. Do you have the packaging? Of course not. I threw it away instantly. Oh my God. Well, then it's gone now. I'm sorry. I'm sorry.

I'm sorry. But thank you. Thank you. The t-shirt's cool. The sweatshirt's cool. My kids approve. So I appreciate it. Two other fun notes, David, from listeners.

One, as much as I hate to admit this, got an email that said, in the last AO podcast, David got the pronunciation of M-A-Z-A-R-S right. Thank you. Accent on the second syllable. Thank you. And Sarah got it wrong.

It rhymes with bazaars. So it's Trump V. Mazars. Very much offending my Texas sensibility on pronunciations. Mazars. And I was like, look, who's this person telling me how to pronounce Mazars? Right. And the email is signed, retired general counsel of Mazars USA. Fair enough.

I think they know. I think they know. Maybe, or maybe they've been mispronouncing their own company that they were general counsel of. But David, this email was amazing. Sarah, I was quite surprised to hear you talk about camping out for DCV Heller since I was number one in line. Amazing. I was extremely paranoid about not getting a seat for the biggest gun case to date.

So I arrived at 5.30 PM two nights before and ended up being first in line. It was very, very cold those nights, but someone in line had their spouse bring me a sleeping bag for the second night. There was a lot of camaraderie among the line sitters. And he sent, no joke, a picture of himself holding his number one ticket. And David, my legal pad with everyone's name and the time that they arrived and their number that I assigned to them. He had it in my handwriting. How crazy is that?

That's fantastic. So that's a fantastic email. Thanks for sending it. And I have a question for you since I know you're listening. Why didn't you bring a sleeping bag right away? Because there's nowhere to put it, David. You'd have to fit it in the locker, which they're small lockers. These aren't like high school lockers. They're little bitty, like, you know, like gym lockers. Okay. All right. They're going to fit your cell phone. They're going to fit a, you know, a leather bound pad thing why my portfolio leather bound pad thing yeah you know

but it's not gonna fit you know let's leave an umbrella a small umbrella so like him i brought nothing really okay all right question asked and answered good to know good to know i'm very interested to see what time people the people who actually get in will have to show up for the harvard case which is argued next monday david yeah that's good halloween we're going to next podcast we're going to preview the oral argument remind people about the case remind people about the stakes of this case um there are big cases this term. This is probably the biggest, probably the biggest. So we're going to give it that advisory opinions treatment. So be ready for a preview, be ready for an oral argument analysis. We're going to go all in on this case because it's a

big case legally. It's a very big case culturally. And it's not as big legally and culturally as Dobbs, but it's at least in shouting distance. So definitely tune in next podcast Thursday morning because we're going to be doing our Harvard preview along with other things. Anything else, Sarah? I think that's it for now.

I think so. Well, thank you guys for listening. Please rate us. Please subscribe. And please check out thedispatch.com. Yeah.