OA571: MTG DAO NGMI; and Why Palin v. NYT is Not Over

Transcript

This transcript was generated automatically and may contain errors — the audio is the record.

0:01:17 Thomas: Hello and welcome to Opening Arguments. This is episode 571. I'm Thomas, that's Andrew, and here's hoping nothing breaks during this recording. No orders handed down. How you doing?

0:01:28 Andrew: Oh, I'm fantastic but frazzled. How are you, Thomas?

0:01:33 Thomas: Good, we squeezed it all into last episode.

0:01:35 Andrew: Woo!

0:01:35 Thomas: It's tough, but there's even more to squeeze in this episode that I'm so excited about. It's Magic the Gathering, NFT bros doing really dumb things, I think, that we're going to get a breakdown on.

0:01:48 Andrew: It's, the union here is amazing, and no truth to the rumors that this was, you my effort to pay you back for you letting me do so many Transformers stories.

0:02:01 Thomas: And also the Sarah Palin lawsuit. Lots of open questions on that one for me, so I can't wait to get the opening arguments breakdown on that. And But first, quick, Andrew was right on Missouri Bill 666.

0:02:10 Andrew: Yep. Uh, we covered this a couple of weeks ago. I told you that the bill was bad and terrifying, but that the good news was, uh, it was unlikely to pass. And, uh, that is the case. Uh, it has failed to advance out of the Transportation Infrastructure and Public Safety Committee on a four-three vote. So, you know, but it's a short victory lap. Okay, I'm not I'm I

0:02:40 Thomas: Question though, are we sure it's not just because it was 666 and that's the devil's number and they're going to redo it as 667? Are we sure?

0:02:48 Andrew: Getting one Republican to change their mind in Missouri, I am not going to say that I think I am sure either way. Um, what I really think. Realistically, what I really think doomed this bill was the opposition of prosecutors and police to the notion that we're, um, not going to be able to, if you please, arrest people who shoot people in public. And if you're a prosecutor, you're not gonna be able to prove murder anymore.

0:03:16 Thomas: Wow.

0:03:16 Andrew: So those are really important constituencies to Republicans. And so I think that opposition was probably what killed this bill. And it would not surprise me to see somebody kind of take a second swing at this, right? Right. Patch up a couple of things, kind of, you listen to the the criticisms of this bill from the right and still basically give you, you know, a Kyle Rittenhouse kind of bill that says, yeah, go go out open carry and it becomes self-defense, you know, whenever you shoot somebody, because it's

0:03:32 Thomas: Yeah.

0:03:49 Thomas: Because I'm sure there was a business nearby that needed your defending.

0:03:53 Andrew: At some point, you we're going to have to have a cultural reckoning regarding these things. I just don't don't understand. I'm sure, you know, the folks who open carry guns would sit here and say, that's right, you don't understand what it's like to be us. Have to concede that that I do not.

0:04:08 Thomas: All right. Well, with that note, note, onto some fun here.

0:04:12 Andrew: Let's get to some fun.

0:04:15 Clip: Down the law, down the law.

0:04:19 Thomas: Okay, Andrew, I can't wait for you to explain exactly what happened here, but from the looks of it, we had some sort of NFT, that is NFT people, some sort of NFT like company that was like utilizing Magic the Gathering IP, and then they got a cease and desist. It seems delightful. Tell us what went on here.

0:04:38 Andrew: It it is even more delightful than it, it seems. I want to apologize in advance. I did a lot of research on this. I'm sure I am going to get some of this crypto stuff wrong. So, you know, in advance, openarguments@gmail.com when I have somehow managed to make an error, but I put a lot into this. Okay, here's what we start with. We start with MTGDAO. A DAO is a decentralized autonomous organization, what does that mean? Here's what it means in plain English, as best as I can do. It's, right, an effort to take the rules of corporate management and then write them into software.

0:05:19 Thomas: Huh?

0:05:20 Andrew: And that's it, right. That's

0:05:21 Thomas: That's what a DAO is in general, okay.

0:05:24 Andrew: So, so a DAO is not a real thing, it is not a legally recognizable organization. For obvious reasons that we're going to make kind of even more obvious, but the goal is, right, to have everything that the organization, because you can't call it a corporation, does uh, be public and then stuck on a blockchain, right? So if, put yourself in the mindset of one of these, anarcho-syndicalists, you... No.

0:05:29 Thomas: Uh-huh. Uh-huh. Well, I, is this an effort to democratize? Is this like seizing the means of production a little bit? Like instead of having a corporate infrastructure with the CEO and blah blah, like is this attempted a worker-owned thing?

0:06:01 Andrew: It is certainly not a worker seizing the means of production. It is a modification to normal corporate governance. So why don't we start with that? Under normal corporate governance rules, one share is one vote, Put an asterisk by that because there are non-voting shares and you can write whatever you want into the structure of the Articles of Incorporation. And we do that for my business clients all the time. But basically, that's kind of the idea. One share, one vote, you buy more shares, you get more votes. This does nothing to change that, except that instead of one share being one vote, this is, you take NFTs, you turn, you turn the NFT, uh, the non-fungible tokens, they then become, each one, one of those is your, one token becomes

0:06:11 Thomas: Yeah. Non-fungible.

0:06:52 Andrew: One vote.

0:06:53 Thomas: That Becomes the replacement for stock, oh. So that doesn't really do anything to change, yeah.

0:06:55 Andrew: Exactly right. Right. It absolutely does nothing to democratize. It Makes it, makes the problem of if you are super wealthy and control the corporation, you get to say what, what happens, it makes that more acute, right, and the idea is that you don't need any corporate governance at all because everything can just be decided by vote, and one token is one vote. So that's why I started with the anarcho-libertarian utopia, right, the idea

0:06:59 Thomas: No. Okay.

0:07:13 Thomas: Okay.

0:07:30 Andrew: Is that they look at, so you and I look at a corporation and go, well, the problem is that, that a corporation employs 10,000 workers who get no votes and the guy at the top gets to make all of the decisions, and maybe that should be more equitable.

0:07:44 Thomas: And And like sometimes the guy at the top gets in trouble if they do something wrong for the shareholders, you know, like if they mess anything, anything up for the shareholders, so this is like, let's just have the shareholders run the whole thing, but it does nothing about like, the, the employee, that, that, that problem of like, you the employees getting a say or getting more, more of, the, the revenue, crypto.

0:07:46 Andrew: Right, correct with an asterisk. So I want to do my very best to steelman the other side, even when the other side is crypto blockchain Bros, right? Right. Like they would argue that there are mechanisms that will enable you to earn more NFTs, the harder the work you put into the DAO, how that operates, rates, I, I do not know, and

0:08:13 Thomas: Bros. Yeah, oh.

0:08:30 Thomas: I can actually, see, see this being a good idea, if, and again, we're not talking about the MTG one, this is just general, whatever, whatever, this DAO structure is, uh, forget the Magic Gathering for a second, I could see this actually working if the people who hold those non-fungible tokens are the workers, are the, you know, like, so then it would be like a worker-owned, they would, would all have this, it would be the equivalent of like the company being owned by the workers because they controlled all the stock essentially, so like, I could see that being a good idea, yeah.

0:09:00 Andrew: Well, then let's, let's make the crypto bro argument a little stronger. Because, right, what they would say is, yeah, not only could you have all the employees own the NFTs and then get to vote, in order to get admitted into the D.O., you have to have a crypto wallet. Right. Well,

0:09:17 Thomas: That part, I'm doing a certain motion with my arm that I'm not going to describe, but yeah, that, that part, all is nothing, yeah.

0:09:24 Andrew: Let me give you their argument. They say, look, All of those transactions are on the blockchain, right, and then everything the DAO does as a matter of corporate governance, instead of being, you know, written down in the corporate minutes, would be recorded on the blockchain, right, so you know exactly who to hold accountable and something, something, something, right? So

0:09:26 Thomas: Uh-huh. Yeah. All right, instead, instead of being in the shared drive, it's in some stupid thing that doesn't really change a whole lot.

0:09:48 Andrew: Right and like all libertarian things, the minute someone breaks the rules, you want a government to come in and step in and regulate it,, so as it so happens, we're going to take a slight detour to this delightful Vice article, article from two days ago, because I think it might be slightly relevant. And it is entitled "Democratic DAO Suffers Coup, New Leader Steals Everything."

0:10:09 Thomas: Wow.

0:10:19 Andrew: And I'm just going to read. I'm going to reading from the article. So after explaining, and I had to translate some of what they've said into English, English, and uh, into lawyer, and then into English.

0:10:20 Thomas: Wow, what a headline.

0:10:31 Andrew: So yeah it's it's yeah it really is so then thanks I

0:10:31 Thomas: Oh, wow. Jeez. Real telephone situation here. Why didn't you just put it on the blockchain, though, Andrew, and then we can, yeah.

0:10:37 Andrew: Could have so, like, you right after kind of explaining sort of what a DAO is, uh, the author says, well, this sounds okay in theory, but a group called Build Finance DAO just suffered a coup in which one person amassed enough tokens to get a vote passed, then voted to give themselves full control of the DAO. Then using this power, took all the money. So in a sense, the DAO did replace a corporate activity with its own version. It's just, that was the hostile takeover.

0:10:46 Thomas: Yeah. Oh, God. Yeah. See? It's working. Yeah. Yeah. It's totally reproducing what you already have in corporate America. There you go. It works. The system works, Andrew. That was my whole point with this thing is that the crypto component, the NFT component of this adds almost nothing. It is more what you do with the structure, the architecture that you are describing, right?

0:11:17 Andrew: So well yes, except that you lack that, what they view as a feature is that no one is accountable, right? Like, it's all written in the blockchain, so, you know, who's accountable? Well, well, we're gonna see how that plays out in the Build Finance DAO in a minute, but there would be no corporate officers, no government oversight, right? Like, this is part of their anarcho-libertarian utopia, right?

0:11:55 Thomas: Well. What is the difference between that, and if the employees of a company owned all the stock, voted and on issues, and didn't have a CEO, et cetera? Is there any difference there?

0:11:57 Andrew: So Well, in order to have a corporation that is legally recognizable, you have to have a corporate form. You have to have a board. And so even if the employees own all the stock of a corporation, they still have to vote somebody in charge to make those decisions.

0:12:21 Thomas: Oh, so what kind of entity even is this legally? So that's the libertarian part you're talking about is they're trying to sidestep even having to be an entity. Is that it?

0:12:26 Andrew: Yep. Yep. Right. It isn't an entity. It is. This is why they say it's an organization. It is not recognized as an entity now. Again, it's just us guys, right? Right. Like and so I am sure the argument is right. Like, well, we're going to demonstrate the feasibility of this. And then. Right. You could put it into then you can make you can change the laws. Right. And look, that happened. We talked about how states began recognizing limited liability companies.

0:12:33 Thomas: Okay. Okay, sorry. Well, what's an organization? Okay. Yeah.

0:12:53 Thomas: Uh-huh. Yeah. Yeah, C-Corps, S-Corps, all those different ones weren't, didn't, all written into the law in 1776 or whatever.

0:13:00 Andrew: Right. That's exactly right. So let's go back to the feasibility, shall we? So that person, uh, for the Build Finance DAO had taken over the token contract. Well, first, what they what they did was, uh, you know, we described how they managed to buy enough tokens, uh, to win the vote. So this was a wallet named pseudo.eth made the initial proposal to put themselves in charge, and it failed. Uh, then they transferred their tokens to another wallet and offered the proposal once more, and that time it passed because they had slipped in under the timing on alerts between, you know, notices that go out, so I guess fewer people showed up to vote then, right? They assigned the token contract, the governance contract, minting the keys, and the project's treasury all to themselves, draining $500,000 worth of tokens from the project. So

0:13:58 Thomas: Wow. You know, I actually am proud of that person. That's like, all right, I'm showing how dumb this whole concept is, that. Is that going to be any sort of criminal thing though? Like, because if it was all within the rules of this organization, this structure, will that like person just get away with it? Will they be punished?

0:14:18 Andrew: Is not criminal. It is not a financial crime. It is not regulated. It's the kind of thing that that you would think that that that these anarcho

0:14:21 Thomas: Yeah. Oh, wow. Okay. I see what you're getting at now. Yeah.

0:14:29 Andrew: Libertarians might. You know, yeah, exactly.

0:14:33 Thomas: This is my new favorite person. I mean, I'm sure they're a douchebag, but like that, that's kind of awesome what they did. I, I love it.

0:14:33 Andrew: Right. I'm So the build Build Finance DAO, a Twitter account. Now, who gets to run the Twitter account is an interesting question, right? Like, do they subject it to a vote? Each letter is, who knows, right. They have somebody in charge of the Twitter accounts. So maybe we could have somebody in charge Of corporation. Anyway, admitted the attacker was able to access funds in this way due to the structure of the Build DAO governance model.

0:14:45 Thomas: Uh, yeah. Yeah. Yeah.

0:15:03 Andrew: It is believed that the attacker took extra steps to stop evidence of their activities by way of disabling the proposal bot, so they, they passed a vote that said, hey, we're going to shut down the proposal, but they had enough votes to, stop the proposal bot, uh, would have alerted the community to The new proposal.

0:15:02 Thomas: No shit, I love this. I Love this so much. I, like, we're gonna do a vote to mute alerts on your phone, essentially, like we're going to mute the alarm on your phone, and then you did, and because it's this automated blockchain thing, it just happens, and then he does, oh, that's amazing, I love this.

0:15:25 Andrew: Right. Right. It's the, like, the blockchain holds people accountable, like, yeah, they know exactly what happened and who he did it, right? So so they, they then minted one million, one hundred and seven thousand, six hundred new tokens, uh, drained the liquidity pools on decentralized exchanges, right, then, uh, they took the tokens out of the the Treasury, sold those on crypto exchanges, minted another billion of the tokens, and then went on to sell everything they could on the exchanges.

0:15:39 Thomas: Yeah. Oh, there you go. Well, That, that almost seems like it could be fraud though, right? I'm trying to think of what the analog is, like what the equivalent is, that's like you're, you're printing up a bunch of stock in the company kind of, and just like repeatedly selling it. Couldn't that be like a real, uh, be producer's situation, the best, the absolute best Mel Brooks movie. Well,

0:16:26 Andrew: The absolute best Mel Brooks movie. It could be, if there were any regulations on these things, which no one wants.

0:16:33 Thomas: I know there's no regulation on these things, but isn't there, I refuse to believe there's no crime when you misrepresent what you're selling someone and get a bunch of money for it.

0:16:41 Andrew: The defense would Be, it's all right there in the blockchain. Chain, I didn't misrepresent anything, right, you can see, you can trace back, it is a part of the fundamental structure of this that you can see every single thing that I did, and if you're still too greedy or dumb to buy the uh billion tokens that I have now created, well, that's on you.

0:17:01 Thomas: Isn't that a one weird trick, Andrew, isn't it, like, I sold you a thing with a super small fine print that said this, it will explode and ruin your house, well, it was in there, you knew what you were getting, like, come on.

0:17:13 Andrew: Except Except that this is not two crypto bros, saying it's in the blockchain is not like saying it's in the fine print, right. Like, that's the fundamental feature of this entire structure, right? I think it goes to show that it isn't a feature, so that, that leads to, and I have to read this because it is the funniest part of the article. It is with deep regret that we have to inform the community of this total and irrevocable loss of Build DAO treasury assets through the deeds of one malicious actor. Build team members have made direct contact with the attacker, because you find them on the other crypto wallet, but there seems to be no appetite for a dialogue, much less any reparations, end of quote. Of course not. Why

0:17:20 Thomas: Hmm. Okay. Oh, Uh-huh. Yeah. No.

0:17:58 Andrew: Why Hey.

0:17:58 Thomas: The guy who did the the trick, take over and got all the money, isn't from the kindness of his heart, gonna like, not undo it.

0:18:00 Andrew: Yeah. Yeah. Yeah, that is like writing back to the Nigerian prince and saying, come on, don't you feel bad about this? I love it.

0:18:09 Thomas: Yeah. Hey, I noticed you haven't replied to my emails. How's the how's the how's that all going down there?

0:18:12 Andrew: Yeah. We used to chat all the time before I sent you all my money. So, look, DAOs are bad and you should feel bad. So, of course, someone wants to create a Magic the Gathering DAO. They have released a seven-page white paper as to what it is. No, this is, I buy cards, uh, because I buy really really good cards, uh, that are expensive and then Magic the Gathering either changes the rules or or releases a new set that nerfs those cards.

0:18:16 Thomas: Yeah.

0:18:28 Thomas: Here we go. Uh-huh. Oh. Yeah. I mean, kind of.

0:18:47 Andrew: So the exact sentence is, the reality is that individual cards are unpredictable investments at best, and many lose value. Right.

0:18:47 Thomas: Yeah, sure. Mm-hmm. Of course. Yeah. I mean.

0:18:56 Andrew: So their fundamental complaints about the game are power creep. Wizards has built a great game that invites you to invest in its economy, but it's hard to justify investing any significant money into individual cards when the value of the card could change at any time. So they... Right.

0:19:10 Thomas: Says the crypto bro.

0:19:12 Andrew: Yeah. Yeah. And here's here's the I swear to God, I am not making this up. Talking about Wizards of the Coast, they say these negative aspects are not exactly the fault of Wizards of the coast. They're they're a for profit company that's built a business model on selling packs in crypto terms. They operate in the world of fiat, just like central banks.

0:19:32 Andrew: I swear to God I'm not making this up. They exist and profit by building an ecosystem that builds demand, managing a perception of scarcity, and then printing and selling into the demand curve that's what they're going to solve. How are they going to resolve this? By creating a DAO that uses as its voting mechanism NFTs of the cards that you already own.

0:19:32 Thomas: Oh, yeah. What? Oh, my God.

0:19:57 Thomas: Okay.

0:19:57 Andrew: So, um, as part of that, their FAQ on the white paper is golden, right? Like it has a question that says, what's fun here? And the answer to that does not persuade me. Like this seems desperately unfun, right.

0:20:09 Thomas: Yeah. Well, but already doesn't... it sounds like you already still have to buy the cards, then. Yeah.

0:20:15 Andrew: Yeah. So you buy the cards, but then card, right, gets a single NFT, right? So the first people in put NFT I get, get that's

0:20:18 Thomas: Uh-huh oh so one copy, like the whole group only needs one copy of each card? Is that what it is?

0:20:31 Andrew: You have to have a copy of the card that you want to play, but you also must own the NFT for that card in order to be able to play it in their system, and there's only one NFT, right?

0:20:40 Thomas: Well decks utilize four of a card routinely. How does that work in basic land cards you utilize somewhere between 18 to 26 of them but

0:20:47 Andrew: Don't know. No, I do know. I do know what those are. I assume that there is, I'm going to make two assumptions here. The first is for those stock kind of things, they would be a lower right. Those, they would come in later in the process, right, because this, again, has the... the way you generate the NFT is this kind of exponential, you know, it requires requires millions of units uh to move from uh NFT number eight to NFT number nine, and it continues to grow exponentially after that. But the idea is basically to take the good cards, and the NFTs on the good cards will be outrageously expensive so that you won't just have the same players playing with the same 200, 300 cards in various combinations. How that deals with the lands and the common cards. I don't know

0:21:42 Thomas: Who's paying who for those? Who is paying, who? What, for what? I don't even understand because

0:21:46 Andrew: Yep don't either. I can try and read this to you, but you're going to suffer as much as I will. Supply scare, slash, scarcity is determined by how many copies of a card will be printed when a card is introduced. The number that will exist is determined by the rarity of the card and how many packs will be sold, right? Okay.

0:22:09 Andrew: OK, so that's the way it is right now. OK, and then this combination of lack of scarcity and changing demand leads to a boring meta where 99 percent of all games being played at any given time are using the same few hundred cards. There is no strong scarcity for top cards. So any player who wants to have fun playing some games knows they must play with the same cards as everyone else. If you don't pay to keep up with the meta, you'll have a hard time finding

0:21:57 Thomas: Sure yep rarity yeah sure all good yes yeah uh-huh oh

0:22:34 Andrew: Equally equipped opponents. Okay so

0:22:34 Thomas: Man. Okay I get all this. Here's what, let me translate that.

0:22:38 Andrew: Please.

0:22:38 Thomas: As a magic player, what happens is a card pool comes out, they do four a year, and there's different formats, but to simplify it, essentially those cards will often change the metagame, and what happens in the metangame is like the top one, two, three best decks get figured out pretty quickly, um, with the cards, but it's a cool process, you know, and you'll see a tournament where someone like figured out a new combination to do, and the deck, you wins that tournament, stuff like that. But this person is saying it's too boring that the meta gets solved really fast, and you have to have the top cards, uh, the most expensive, the most, you're essentially forced into needing to own those to be competitive, and that's pretty much true. But it's also true that that like a metagame is called meta for a reason, like if everybody starts playing a certain deck, then usually a

0:22:40 Andrew: Do this

0:23:26 Thomas: Deck that's more focused on that can beat it, uh, and that prevents any one deck from being too common, uh, unless there's some major problem with the printing, like that, like some cards just too powerful or whatever. So it's not that big of a problem that they're describing, but, but okay.

0:23:39 Andrew: Is this is the absolute problem that that that they have, and what they want is for fewer people to be able to use the objectively best cards. So NFTs retains card scarcity in the format economy, limiting how many players can use the same card across the format this will create a new format that feels somewhere between constructed and limited. Players will lock MTG, that's the token for this, to mint card NFTs according to the scarcity formula as determined by the community governance of the DAO. Okay, I know that was a ton of acronyms, but I think I get what that means. Right, so you get the token, right, the token is locked to a mint card, an actual card, right, that exists. Then they come up with a scarcity formula of how rare it is. And then you get NFTs in accordance with that ratio.

0:23:49 Thomas: Okay. Sure. Okay. Yeah. Right. So it's like, we're all sharing a card pool that's, that's more limited. Yeah. Okay. I get that. I understand it.

0:24:40 Andrew: Okay. In order to be allowed to play a card in our format, players will need to show proof of ownership of an NFT for each card in their deck. In ordered to play the game, players need to own both the NFT for their card and the the actual card used to play. The NFTs aren't meant to establish ownership of the card. It will only be used to allow that card to be played in our format. We are not building gaming software printing copies of official cards. Games will still be played using Arena, Magic the Gathering Online, or tabletop with real cards. NFT's can be thought of as tickets to enter tournaments or a way to represent temporary ownership in a cube draft. I don't know what that is. Not as ownership of the copyrighted card.

0:24:50 Thomas: Okay. Oh, interesting. Hmm. Oh, interesting. Interesting. Do But I could explain it, but this Is all like a cube draft, basically. So that's like making your own, essentially, to again try to nerd explain it. It's making your own among friends. This. This actually makes the question more interesting to me. This so what they're trying to position themselves as is like a group of buddies, group of friends that's getting together. They all own, and I'll make the argument, is you best for them as possible. They all own the cards and they're agreeing among themselves, among a group. So it's like, you know, Andrew, you and I and your son and some other people, we got together in a room. We have, we own magic cards. We bought them. Uh, but we decide, like, well, we're going to play and we're gonna say, you only get to use such and such card. We're going kind of set some limitations as a game among us.

0:26:06 Thomas: That seems completely fair to do. However, I wonder where Where the problem comes about.

0:26:13 Andrew: Yeah, if you think about it, so I'm translating that in my mind to like, yeah, we all get together, we play Monopoly and like, do you use the free parking rule or not, right? You're we're just, it's just a larger, more complicated set of rules sitting on top until you get to this, the token generation event. All MTG that's the token that will ever exist will be either held by the community-controlled MTG DAO treasury or in circulation held by community members. No more MTG can ever be created.

0:26:20 Thomas: Yeah. Right. Totally. Hmm.

0:26:46 Andrew: MTG is used to control the scarcity of cards in the DAO format and is locked when a player wants to mint an NFT for a card they want to play with. Cards are minted by locking MTG. I do not know what this locking thing means. Um, locked MTG stays in the smart contract associated with that card and can be released if and only if the owner sends the NFT back to the contract to be burned. This would release the original amount of Mtge locked back tothe NFT holder. So that's a super complicated way of saying, if somebody holds the NFT for the card you want to pay, you want it to play, you have to pay them, you have to buy that NFT off of them, right?

0:27:15 Thomas: Huh. Oh, I didn't, I Didn't hear anything about

0:27:29 Andrew: Well, it. The locked token stays in the contract associated with that card and can be released if and only if the owner sends the NFT back to the contract to be burned. So why would you do that if if you own the NFT on the card, why, why would you send that back?

0:27:29 Thomas: Buying it. You have to buy it.

0:27:49 Andrew: Presumably because somebody's buying it.

0:27:48 Thomas: Okay. So you're assuming that would be a secondary market of.

0:27:52 Andrew: Exactly right.

0:27:52 Thomas: Okay. Gotcha.

0:27:53 Andrew: In this way, an investment of MTG locked into an NFT can always be recovered for the same amount of MTG. The value of the token may and certainly will change, but the investment of the tokens into an NFT can always be covered if desired. This allows players to determine the amount they are willing to invest in the player economy and then play with that amount of MTV without feeling like their investment is constantly being devalued when the token is locked to create an NFT, a fee, for example five percent, could be collected and sent to the DAO treasury. But the majority of MTG locked would be able to be recovered at any time. This fee could be one of the protocol parameters determined by the community through the DAA, right? Then they go on, and I, and mean, we've read a lot, lot of their gibberish.

0:28:16 Thomas: Okay. Ah, that feels like could be a problem.

0:28:38 Andrew: For so it

0:28:38 Thomas: Yeah. Yeah. Yeah, but I'm still translating all this. How is this any different from normal secondary market? Card shops, you buy magic cards from players. They sell them back. They make money on that. Is it different than that in some way?

0:28:52 Andrew: Is because of the the difference between an NFT and a card. When I buy your card from you, I am buying the physical object that you have sold to me, actually. I think, did you see the story, this, it's a related kind of crypto bros thing, uh, of the folks that bought the uh Jodorowsky's uh Dune bible, the screenwriter in the 1970s wrote like a bible and a script treatment and all this like super cool art for Dune, so these crypto bros bought uh this copy of Jodorowsky's Dune bible, right, looked like, I've seen the art, the art is beautiful, they bought it for like 2.4 million dollars.

0:29:06 Thomas: What Uh-huh. Wow.

0:29:34 Andrew: Thinking that what they were going to do is make derivatives, like sell a cartoon based on the art, that's in it, sell NFTs based on it, and somebody had to tell them, like, no, you bought a you bought a copy of a thing, right?

0:29:41 Thomas: Right. You don't actually own the thing. Yeah.

0:29:49 Andrew: Like that's like saying, oh, you, I, bought a copy of, you know, A Song of Ice and Fire, I have this great idea for a TV show, now, no, like, you're, you just uh, yeah, you just overpaid for a thing. Um, and that's the difference, right, between if you buy a magic card, you're not claiming to own any rights in the matter, you just own that copy of that magic card. So Wizards of the Coast does not care, uh, that, that, there's, you, a secondary market, that people sell those, because they are transferring all of the rights that they have, which is the right to own and to use that card, but not any of the copyright in that card.

0:29:55 Thomas: Yeah, no. Wow, okay. Okay. Mm-hmm. Mm.

0:30:26 Thomas: Right,

0:30:27 Andrew: And in fact, this is our old friend, 17 U.S.C. Section 106. Those are the six sticks that you have that are bundled together when you're a copyright owner.

0:30:27 Thomas: Ah, love the bundle of sticks.

0:30:37 Andrew: Yeah. And there are these three that are really, really relevant right here? So when you own the copyright, you have the exclusive right to do and to authorize any of the following. Following. One, to reproduce the copyrighted work in copies or phono records. Two, to prepare derivative works based on the copyright work. Or three, to distribute copies or photo records of the copyright worked to the public by sale or other transfer of ownership or by rental, lease, or lending. I'm not going to go to four through six. They're not relevant here. But Think about about what that means. That means when I produce something, I can sell a copy of it to you. You are prohibited from copying that thing that you have just bought.

0:31:09 Thomas: Mm, mm-hmm, oh, right, like, if I buy a book, we'll go with a book again, yes, I've bought the book, and I could even, you sell that book, physical book to somebody, Obviously, but I can't like print my own copy of the book and sell those copies as though I own the rights to the published work.

0:31:32 Andrew: Yep. Yep. And More so than that, you can't print that book and put it in a safe and go like, you know, this book is so important to me that I I don't want to lose it. So, right. So I'm going to make a copy just for myself and stick it in a safe. Now, the likelihood that you would ever be prosecuted for copyright violation for that is just about zero. But people think that if you want to photocopy and think about it now when you're talking about e-books, right, e-comics.

0:31:48 Thomas: Oh, huh. Okay. Yeah, yeah, yeah. But hypothetically, that's not allowed. Wow. Music. Oh, okay.

0:32:12 Andrew: Yeah. Well, again, music is its own. Let's let's put it. I don't want to get back into Weird Al again, but let's, yeah, let's think about non-musical copyright here for a minute.

0:32:14 Thomas: Okay. Not even Either. Either. Okay. Okay.

0:32:23 Andrew: Feels different. I've done this, for example, I buy the Transformers comics online? I'm perfectly happy to read them online. And, you I save my local copy that I have that, but I cannot make a copy of that file, legally speaking. Again, right.

0:32:40 Thomas: Practically.

0:32:40 Andrew: Practically speaking, who's, you know, IDW has no idea how many times I've done that. But but you can understand.

0:32:41 Thomas: Speaking, yeah. I mean, you just admitted to it on air. So I assume you're going to prison. Uh, okay, that's helpful. Hmm.

0:32:47 Andrew: Yeah, well. And in fact, this is the reason that there was later written in the 1990s where all stupid computer laws originate. Reason, right, that this was later written into the law was because people were buying software in the late 1980s and that they had the right to make a copy for themselves. Right. You were in the early 1980s. You knew that you didn't have the right to make copies. They, right, came on cartridges and it was very, very clear.

If, if it came on diskette, they, the diskettes often had, uh, bad sectors or other, what was called copyright, copy protection at the time, right, so it made it, you know, you put it in, I had two disk drives, uh, for my Atari, which was very, very rare at the time, I put copyrighted piece of software into drive A, I put blank disk into drive B, and I said copy, you know, D1 to D2, uh, And D1 would, yeah, make this horrible, drive one would make this horrible noise, because they would corrupt sectors that would prevent you from doing that, so if you grew up like I did, you knew that, don't you really own a license to that computer software? You don't really own the whole thing. Now flash forward to the late 1980s, the problem is we're still using, you know, five and a quarter disks, there's three and a half that are a little

0:33:23 Thomas: Uh-huh.

0:33:43 Thomas: Exploded. Oh. Wow. Right.

0:34:06 Andrew: Heavier, but like, they fail. And so the question was, come on, like, what if I've got a disc that goes bad? You ought to at least let me be able to make a backup copy for myself, right. And so a tiny little exception was carved into copyright law that said, uh, you can make a backup or an archive copy, but only, right, for computer software. In the 1990s, right? Yeah.

0:34:17 Thomas: Not

0:34:30 Andrew: So Yeah, now let's put all of this together. You have enough law to figure out, out what's going on. Um, the DAO was going to collect money off of NFTs, off of somebody else's intellectual property that of which all they own are the license to use that card. They do not own the intellectual property associated with it. And our friends over at Wizards at the Coast sent the nicest, the kindest, they clearly do not engage me, uh, they said the, the most polite, happy cease and desist letter I have ever seen. I'm going to read part of it. Your enthusiasm, dear asshole, your enthusiasm for MTG is evident and appreciated. The team at Wizards is also impressed by the work you have put into developing a new format for playing MTG. Unfortunately, your intended use of Wizards IP, including its trademarks and copyrights, would be unlawful.

You appear to be operating under the mistaken assumption that a project would be legal because you would allow the reproduction of Magic cards in the form of NFTs only by a player who had purchased a physical card, a card on Arena, or card on Magic Gathering Online. This is not correct. It is the exclusive right of the copyright owner to reproduce the copyrighted work, such as a Magic card, in any format.

While there is an exception to the copyright statute for making a backup or archival copy in some circumstances, this privilege extends only to computer programs and not to other types of works.

0:34:30 Thomas: Not magic cards. Yeah.

0:34:40 Thomas: Right. Right, right. Yeah, right,

0:35:53 Andrew: That's it. And when you get a super, and it says, so don't do this, right? When you get it's super nice cease and desist letter like that, that says, Hey, we love you. Like we get it. You're enthusiastic. Sadly, this would violate the law. So don't you say, thank you.

0:36:10 Thomas: This is a very, when someone asks you if you're a god, you say, yes, similar rule.

0:36:13 Andrew: You say yes. Oh, such a good quote. Yes, Exactly. Right, and and you say, "Thank you for not sicking your two thousand dollar an hour attorneys on me, right? You are a crypto bro." I had to look at, because yeah, I'm like reading their texts and it's like, "What does NGMI mean?" And it's their like internal language for "not gonna make it." Oh, yeah, uh, our

0:36:17 Thomas: Okay, yeah, yeah. Oh, so I was right about that. You, you asked me what MGMI was, I was like, "I think it's not gonna make it," but not sure,

0:36:40 Andrew: "Vision for MTG DAO is similar to a local game store. Here we would host tournaments, fund writers, and sponsor players. A DAO is the primary building tool of web 3. To forbid a Magic DAO was to forbid any authentic presence in web 3. And GMI, as web 3 becomes more popular, this attitude will not age well. Wizards of the Coast are digging their heels into the old world. Internet culture moves quickly, and Wizards on the coasters solidifying their position as dinosaurs on the the brink of extinction. Catching up will only become harder. NGMI."

Anyway, I, it it's Just, it, when you're an artist, and and this is this is legitimately, I think, the cause of the entire confusion, right? Because you see artists that then create and sell NFTs based on their work, when, right, you are an artist, you own all the copyright, you own that bundle of sticks. So yes, you can NFT based on your original work. Whether it's smart of people to buy, I don't know, right? It doesn't seem that way to me, but whatever, right? But if I buy a print of the Mono, this is the easiest way to think about it.

0:37:13 Thomas: Stupid lingo, god.

0:37:25 Thomas: Yeah yeah wait

0:37:44 Andrew: Right, if I buy a print of the Mona Lisa, I cannot NFT the Mona Lisa, right? And everything that, that seems to be a problem for these people winds up being reducible to, yeah, yeah, you bought a, you bought a poster of a famous painting.

0:37:57 Thomas: The Mona Lisa's not in the public domain by now?

0:38:00 Andrew: Well, a painting from the last 40 years. Right. Like a Picasso, let's say. Right. Excellent point.

0:38:00 Thomas: Okay, yeah, yeah, anyway, when did Picasso die? I

0:38:10 Andrew: Excellent point, but Pablo Picasso died fairly recently, I believe.

0:38:13 Thomas: Do you still think it's the year 2040? Died in 1973?

0:38:15 Andrew: Like There you go, 1973. So just, think about it that way, if, right, you've bought a poster for your bedroom, you do not own the rights to make NFT out of it. If you've created a unique artistic work of your own, you do have the rights to create NFT out of it, and you can't create wealth from nothing. So I think if you follow that, well, that's my, my friendly advice, which

0:38:18 Thomas: Right. Yeah that well, thanks for for the explanation, that all makes sense. I, I really was just trying to make sure I understood it fully. Along the way, I'm trying to come up with like, what is the okay version of this? Is there a way they could have, you forget, you can't sell anything, forget all that, but could you have used whatever, this weird, DAO kind of technology as something like a league? You, it's, group of friends, because I assume this is totally kosher. I would imagine, Andrew, If, again, if there's you, me, your son, and some other nerds, we want to get together. We make a little league. No money involved. This is just a little League of Magic that we're playing together. You know, we're scheduling. We're setting rules. We're saying there's only going to be one copy of this card among all of us. You know, stuff like that. That's fine, right? And if you did, okay.

0:39:31 Thomas: And if You did the technology version of that with the blockchain, whatever, that would be okay. OK, it's just you can't create the non fungible token off of the work that's not yours and incorporate it that way.

0:39:29 Andrew: That's all totally fine, yeah, the question is what are you using as the token, that is the base of what you get to vote on for the DAO structure, right? And they want to use as the token an NFT based off of IP that they don't own. If if they wanted, for something else they could do it, for something, but that would deprive them of their ability to create this like weird market based on you know, how popular, uh, individual cards are. And and that, as we draw this to a conclusion, I, I want to read my favorite question from the, from the FAQ page, which is: question, "So only rich players can win?" Answer, "Yes, but no, right? The the top of the ladder will theoretically be populated with the same deck as is winning outside of the DAO format. Those cards will be popular and will require a lot of, of MTG locked to mint them.

The real fun in the format will be outside of the top 10 or 50, where new decks are being tried by players with more limited funds. Each player is going to have their own idea on how much they want to invest, and they will have fun creatively pushing how high they can get on the ladder, in matches against other players with

0:39:58 Thomas: Right, right, right. Right. OK. Yeah.

0:40:56 Andrew: Similar restrictions." So yeah, they recognize that this structure will be instantly weighted towards whoever gets in, and, you know, gets to lock the good cards, or whoever has unbelievable, you know, metric tons of money to then spend to buy that out. This is, yeah, I, I like the "What's fun here" question because this this seems like just a transparent money-making scheme, uh, off of the backs of you know, and off of the backs of the community, of, "Hey, don't you wish, like, you had a more, different, I mean, you know, not for me, I'm going to keep the same

0:41:04 Thomas: Yeah. Yeah. Off of somebody else's product. I was going to say,

0:41:35 Andrew: Top level, right,

0:41:35 Thomas: Yeah, not exactly one or two people or whoever get the same top level cards that will make it. And by the way, those players would win even easier than in the real world. Like they would just completely dominate if they're the only ones allowed to have the best cards. What a silly idea there. Well, that was fun,

0:41:46 Andrew: Right. Well, well, there you go, I had a lot of fun.

0:41:56 Thomas: Thank you so much for doing that. That was a listener. Thomas S. requested story. But but also a lot of people, not just me. It wasn't just me, I promise. There were emails, there are, there are comments about it, that is a ton of fun, don't try to profit off of other people's intellectual property.

0:42:02 Andrew: But also I swear, it's a super easy rule, but you know, I had all the fun figuring out what these loons want, so, so, yeah.

0:42:11 Thomas: Yeah, yeah, but you know, do your own fun league with your friends, where you do, you know, whatever, you decide little rules about which card you can and can't play, just do that, is that so hard? And This show is brought to you by Athletic Greens. It's time to tell you once, that again, I don't have a lot of time in the morning. No, that's a lie. Again, I keep telling you the same lie. I have plenty of time the morning, I, not, I don't have the wherewithal. And if you're like me and and you want something to get your day started on the right foot, try Athletic Green. I love a good health drink, the greener the better, I think.

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0:44:33 Clip: Thank you, Dr. Hibbert. I rest my case. You rest your case? What? Oh, no. I thought that was just a figure of speech. Case closed.

0:44:43 Thomas: Now it's time for, uh, we're gonna squeeze this in but we have to, we have to hear the breakdown, Andrew, little bit of time limitation here, but the Sarah Palin lawsuit, really, really curious situation. It was, well, would I try to phrase what happened, but I don't fully understand it. So I'm going to let you do it. What happened with the Sarah Palin defamation lawsuit?

0:45:03 Andrew: Sure. And let Me first kind of tee up that this is part of the right wing's concerted effort over the last two years as signaled by Gorsuch and Thomas on the Supreme Court that they are open for your efforts to overturn New York Times versus Sullivan. Right. To make it easier for people to sue journalists in connection with what they print. And if that is not a terrifying. I mean, that's the future that conservatives want. It is absolutely terrifying. I don't think this will be the right case.

0:45:35 Thomas: Wouldn't that also really screw over Fox News and the liars that lie about, out the left constantly?

0:45:42 Andrew: It would, but disproportionately, right? Because It would, right now, if you are, right, the New York Times v. Sullivan standard is knowing falsity or reckless disregard for the truth, which often trips up Fox News, does not trip up the New New York Times because even when the New York Times is being sloppy, right, as happened in this case, which we're going to talk about, they're not being, they're not in reckless disregard of the truth, they still fundamentally do care about getting it right. And so making that standard more liberal, right, saying, "Oh, well, you just have to show negligence," right, like, I have no idea what they would replace it with, but a negligence standard would be an almost impossible deterrent against a free press, right? You would be terrified every time you talked about a billionaire to say anything other than the most flattering things on earth.

0:45:42 Thomas: Hmm, yeah, wow yeah

0:46:37 Andrew: You certainly would not. So, for example, article I read over the weekend about, uh, how crazy Elon Musk is, I, right, would not cover that on this show. I would not make the oblique reference to the time when, you know, he, uh, watched, like, Thai children who were needed to be rescued by minors and was like, "I'm going to send a special deep sea sub, mini sub, to come rescue you." That, spoiler alert, he didn't have and didn't happen. And then, you know, smeared the actual rescue workers as a pedophile. Like, yeah.

So you would never, ever post anything other than puff pieces about Elon Musk because Elon Musk, you knows, has 300 billion dollars and would sue you into, you you know, out of existence. So this is terrifying. This is a way to consolidate power in the hands of billionaires. And so Neil Gorsuch, Clarence Thomas already on board. This comes from a single editorial that was published on June 14th, 2017. The editorial harkens back to the Gabby Giffords shooting. So in 2011, January of 2011, Jared Loughner came to a political rally for Gabby Giffords in Tucson, Arizona, and opened fire with a semi-automatic assault rifle, killed six people, injured 13 others, including Gabby Gifford. And I'm assuming our listeners know who Gabby

0:47:05 Thomas: Wow naturally yeah yeah sure

0:47:57 Andrew: Differences, right? Um, before that, Sarah Palin's political action committee, Sarah Pack, had distributed a map of districts that they were going to look to fund competitive candidates in, okay? That map had each congressional district of these 19 races, uh, with the image of a crosshairs target over it, right? Because, you know, Sarah Palin and shooting and hunting and all that stuff, right? And so Gifford's district was one of those 19. Um, view, I'm curious your thoughts, but in my viewpoint, everything about Sarah Palin is in bad taste, right? But but saying we have your district in the crosshairs, saying this is a targeted district, right, using gun related lingo for, we're going to fund your competitors, I, I think it's a little bit of a stretch to then say, uh, you know, we're gonna connect that up with a mass shooting, uh, that occurs in your district a couple of days later and I don't, yeah I

0:48:36 Thomas: Yeah no I I agree, in poor taste, but it doesn't seem like it was specifically intended to fuel that kind of thing at all it

0:49:07 Andrew: I I, I think that's right in terms of intent and right

0:49:10 Thomas: Reminds me of the Simpsons where he gets the gun, he's using, he's shooting the light switch to turn it on, like, she's doing that, like, it, it's you, gun lingo is everything because they're gun nuts, uh, but not specifically, it doesn't seem like it was specifically meant maliciously toward that candidate, I don't think

0:49:27 Andrew: The the best line in that episode is the, "I'm gonna wait three days for a gun, but I'm mad now," and was the initial incident that, uh, the New York Times then decided to criticize as being a, you know, a debasement of American politics, go. So, kind of the underlying event that annoyed some folks on the New York Times editorial board, saying, "And we think that this was in poor taste." It is important to to note that the criminal investigation of Jared Loughner revealed not just no connection between, you, you know, he hadn't seen the the Sarah Pack ad, but also, you know, that he hated Gabby Giffords forever. He Right.

0:49:39 Thomas: Well Hmm. Oh,

0:50:13 Andrew: Was pre radicalized. Now I said that happened in 2011. The senatorial was was written on June 14th, 2017, when another political mass shooting happened. This was a congressional Republican baseball game. And James Hodgkinson went to the practice field, Alexandria, Virginia, and seriously injured four people, including Republican Congressman Steve Scalise. And so the Times wrote under the editorial board byline attributed to no one person, an editorial entitled America's Lethal Politics. That's still up. You can go read it now. They've made a couple changes to it. The way it reads now is, "Was this attack evidence of how vicious American politics has become?

Probably. In 2011, Jared Lee Loeffner opened fire in a supermarket parking lot, grievously wounding Representative Gabby Giffords and killing six people, including a nine-year-old girl. At the time we and others were sharply critical of the heated political rhetoric on the right before the shooting. Sarah Palin's political action committee circulated a map that showed the targeted electoral districts of Miss Giffords and 19 other Democrats under stylized crosshairs, but that in that case no connection to the shooting was ever established." Well, that's not the way that editorial initially read, right? The editorial initially said that, that Sarah Palin's political action committee circulated a map

0:50:14 Thomas: OK. Hmm.

0:51:38 Andrew: That showed Miss Giffords and 19 other Democrats under stylized crosshairs and didn't have the, you know, no connection stated. There was a connection between the map and the shooting. So immediately afterwards. Right. They issued a New York Times correction, which, again, you're reading this online. The correction runs concurrently with the article. It says an editorial on Thursday about the shooting of Steve Scalise incorrectly stated that a link existed between political rhetoric and the 2011 shooting of Representative Gabby Giffords. In fact, no such link was established. The editorial also incorrectly described a map distributed by a political action committee before that shooting. It depicted electoral districts, not individual Democratic lawmakers beneath stylized crosshairs. It's

0:51:46 Thomas: Yeah. Yeah, pretty big F up.

0:52:24 Andrew: Absolutely, you would not want to defend the editorial board process there. But if the dividing line is New York Times v. Sullivan, I would say this was lazy. This failed to fact check. This was a significant mistake. Stake it was not, and the court is determined on multiple occasions, uh, the standard of actual malice. It was NOT in reckless disregard of the truth, and it was not it with knowing falsity, right, and the minute that the actual truth came, that somebody said, "Hey, look, like that ad didn't have Gabby Gifford's face on it, it had her congressional district, can you fix that?" They they fixed it, right? That's the whole point, right, of the cease and desist letter is "stop publishing false information," and I don't want The New York Times to publish false information even in editorial columns, so, right, the threshold question is, should you be able to sue The New York Times for this level of mistake? And that's really, you the future that conservatives want. I, I want to pass very, very quickly on the procedural history, uh, because I this

0:52:39 Thomas: Mm hmm. Mm hm. Right.

0:53:26 Thomas: I was going to say this this has been a while, right?

0:53:29 Andrew: Has been a, a long time, and here's why we're, we're talking about a 2017 editorial in 2022 is because this has already been up through the appellate courts once already, um, and it was kind of weird, right? So that the judge, Judge here, Judge Rakoff, initially received the case and was entertaining a motion to dismiss. And, right, as you're thinking about it, a motion to dismiss seems like an uphill challenge on a case like this. Right. He would say, "Yeah, you know what, don't," it seems as though if you think about what we talked about last week. Right.

It seems as though there's probably a factual question of, right, whether this constitutes actual malice, I would want that to go to a jury in the abstract, or at least I would want to, the ability to develop evidence that says, look, here's the evidence that The New York Times had, uh, multiple contemporaneous reports that said, "This is what the ad really looks like," and they ran the editorial the other way, it wouldn't explain why they changed it two days later. But, you know, whatever. For those two days, you would say, all right, maybe this passes the standard. Instead, what Judge Rakoff did was held an evidentiary hearing. And at that evidentiary healing, from a witness for The New York Times, that talked about the standards and the process that went through. And then, on the basis of that hearing, granted the motion, motion to dismiss.

0:53:40 Thomas: Hmm. Yeah. Huh.

0:54:52 Andrew: And so the appellate court said, wait, wait wait, you can't do that. And they are 100% correct, Rule 12(d) gives district courts two options. Number one, the court may exclude extrinsic evidence and decide the motion based on the complaint alone. So motion to D dismiss, you are stuck to, we've talked about this before, the four corners of the document, that is what it says in the complaint plus any documents that are attached, directly referred to, or incorporated by reference into that. They become part of the four corners, right? So that's how you're testing the legal sufficiency of the complaint. Or if you introduce additional evidence and it is good pleading practice, whenever I file a motion to dismiss, I'll drop a footnote that says, to the extent the court wants to consider extrinsic evidence, they should convert the motion to one for summary judgment under Federal Rule 56, which the court can do on its own motion on Rule 12(d).

0:55:48 Andrew: And then we're all settled, right? So the court's like, "Yeah, yeah, I've considered this one or two additional facts, but they're so devastating that I don't think there's a need for discovery. I'm going to treat this like a summary judgment motion, and I'm going to grant summary judgment in favor of the movement," right? But, if the court's going to do that, the court has to give the other side the opportunity to rebut the material that it's saying.

0:56:10 Thomas: Right.

0:56:10 Andrew: Right, you know, hey, look, we're about to rule, we're, meant to kick you out of court on the law, you get a chance to respond, and one of the things you can do is file an of affidavit under Rule 56 that says, "I don't have the evidence to re but this now, but this is the kind of discovery that I would take if the court will allow it to go forward." I, thought, I filed those affidavits lots of times, right, to say, "Hey, look, um, there are unsettled questions," and the court will then take a look at your 56(f) affidavit, um, and say, uh, "Yeah," uh, or we'll say, "Yeah, you know what, even, um, if you get that discovery, that's not going to change the legal, legal basis, right?" So that's how that process works.

But Judge Rakoff didn't either. He just ruled on a motion to dismiss, said, yeah, I heard from the New York Times. Seems like there definitely wasn't any actual malice here, so I'm going to dismiss out the case. Sarah Palin appealed. The appellate court said, no, no. Go back down. We're vacating that opinion with instructions to to the district court to treat this like a normal motion to dismiss, right?

0:56:52 Thomas: And

0:57:15 Andrew: And either absolutely fair, a hundred percent the right result. So That's what happened. Went back down. Judge said, "Okay, well, I can't decide a motion to dismissed based on just the evidentiary hearing. I'm going to allow this to go forward" and allowed it to go all the way forward to trial. Now, the close of trial, the defense, the New York Times, moved for a directed verdict, a judgment notwithstanding the verdict, that is, again, like a summary judgment motion. It's like the very, very last summary judgment notion. Think about it that way. It says, "OK, not only have we had all the discovery, but we've heard testimony from all of the witnesses. All the facts are done and over. And on the basis of the facts that have been introduced, it does not meet the legal standard. There is no need to send this to a jury because the jury could not legally find this person responsible under the operative legal standard?

0:57:15 Thomas: That seems fair, right. Yeah, yeah.

0:58:14 Andrew: Standard. Well, Judge Rakoff held that motion sub curiae and said, OK, I'm going to think about this. In the meantime, I'm going to let the jury go, and deliberate. Well, after the jury had been out for a day, Judge Rakoff came back into court, summoned the parties, jury not present, and said, I've granting the New York Times motion for a JNOV. Can he do that while the jury is out? Yes, with an asterisk, okay yep

0:58:19 Thomas: Hmm. Huh?

0:58:38 Thomas: You know, the jury's out on it. No, I'm just kidding.

0:58:40 Andrew: Nice, I like it, uh, and Judge Rakoff said, look, um, the jury isn't sequestered but I've given them the instructions, you know, not to follow any, uh, press on this case

0:58:49 Thomas: Oh, yeah, Because that would be pretty prejudicial.

0:58:52 Andrew: So right yeah you don't you don'T WANT TO HAVE A JUROR GO YOU KNOW LOOK DOWN AT THEIR PHONE AND GO JUDGE RAKOFF YOU KNOW DISMISSES K and you're like wait that's me right so the jury is still still deliberating. The judge has said, I'm going to grant a JNOV. So if the jury comes back with a verdict for the plaintiff, I am overriding that. I am striking it out as a matter of law and replacing it with a directed defense verdict. By the way, it is also totally legitimate to wait for the jury and to just, using the JNOP process, just strike out the jury's verdict. Say, We thank you for your service, and then the second they leave the room go, okay, parties, yeah, we're going to strike down. Why he didn't do that, I don't know, right? He literally picked the only day. It's like, you know, He yeah. Picked the Only Day.

0:58:52 Thomas: Yeah.

0:59:27 Thomas: Those idiots. Yeah. Hmm. Yeah. Is this the same judge that effed up the other thing? Oh, this guy's just

0:59:41 Andrew: Yes, it is. It was remanded back to the same church. He's 78. Yeah, so, you Know.

0:59:43 Thomas: Uh, yeah. He's losing it, okay.

0:59:47 Andrew: Not to suggest everybody who's 78 is losing it. We love Our septuagenarian listeners. Um, but yeah, this judge, this is seemingly, is, um, has made some errors in judgment. So what happened is, of course, what you think happened, the, the jurors have subsequently admitted they came back the next day, uh, and with a verdict for the defense, um, and having gone home, right, they were not sequestered, they went home for the evening, admitted that, oh, yeah, look, like, I was following the rules of not following the news or anything, but I got a push notification on Twitter that says, "Judge dismisses Palin case." Did I see that? Yeah, I did see that. And of course, that's the risk. And of coarse, it's why I mentioned the age, not an insinuation of lack of capacity, but rather a not thinking about the reality, right? Right. Like if

0:59:50 Thomas: But this judge is, yeah.

1:00:38 Thomas: Don't

1:00:38 Andrew: You're thinking about a world in which you have given a jury instruction, and that means jurors don't go home and watch the 10 o'clock news, right, is a little different than, oh, yeah, my, my jurors have have phones. Right.

1:00:48 Thomas: Have a phone, yeah. Yeah.

1:00:51 Andrew: My jurors are on Twitter. And I didn't tell them that they had to surrender their phones or turn off Twitter because I didn'T think about that. It is absolutely a mess. I think that is absolutely going to give grounds for Sarah Palin to reverse this a second time on appeal.

1:00:59 Thomas: What a mess, oh, And then what happens, she has another yet, yet another trial.

1:01:11 Andrew: Yep. Yep, do the exact same thing all over again. Uh, but the question I, is whether the, the appellate court looks at the JNOV, which, by the way, is a deferential standard, right? It's a judicial discretion and says, we agree that there was prejudice here, right, that the jury could have come back with a verdict for the plaintiff on her defamation claims. But we agree with the trial court judge that that would have been legally insufficient as a matter of law. So that prejudice was, you know, with that was harmless error. So we're not going to reverse that would be, uh, you could imagine, uh, what would happen with respect to that

1:01:28 Thomas: Yeah. Oh, I can't wait for the right wing reporting on that. Leftist panel of judges overturns a jury verdict for Sarah Palin. Yeah.

1:01:49 Andrew: Yep. Never minding, right, that that this Second Circuit previously said, you know, was like, out of an abundance of caution, we want to make sure Sarah Palin has her day in court, but, right, you know, consistency is not crucial to the, uh, to the right wing. So, uh, that's what's going on on with that case, uh, lots of of crazy mistakes.

1:02:01 Thomas: Yeah. Wow. So this judge really messed it up. We wouldn't be having this conversation at all. Like it would have just it kind could have been routine had the judge not messed it up.

1:02:10 Andrew: Yeah, yes, absolutely. Could have, should have been routine. We do want to have, yeah, on our radar that this is one of the important battles that the right wing is trying to wage, right, to make it easier for disgruntled politicians to sue newspapers over editorials, and that's a terrifying future.

1:02:18 Thomas: Oh, Oh, my question, though, for you is, does this really have any bearing on that broader New York Times v. Sullivan debate if it's really just kind of an F-up by a judge?

1:02:45 Andrew: Yeah, the only way in, in which it would is if this vehicle were to. So let's, let's play this out. Sarah Palin appeals to the Second Circuit. The Second Circuit says, that there was error by the district court in failing to sequester the jury or otherwise exposing them to potential prejudice from the court's JNOV ruling, but notwithstanding that, the error is harmless because as a matter of law that the testimony was not sufficient to establish the New York Times v. Sullivan standard of actual malice. And then Sarah Palin appeals to the Supreme Court and the question is that legal standard is wrong, it should not be actual malice, it should, should be something else, and oh, absolutely.

1:03:22 Thomas: Yeah. Right. Couldn't that happen anyway, though? Like any, okay.

1:03:31 Andrew: Yeah, they are looking for cases

1:03:32 Thomas: So any day the Supreme Court could just be like, "This is the one." But maybe this is a case where they might be more inspired to do it because of the visibility and stuff errors

1:03:41 Andrew: Of the visibility and because of the, you know, sort of repeated, you would charitably call mistakes, right, by the trial court here that that seemed to be pretty prejudicial to Sarah Palin. Um, so yeah It's, it's a good case if you're a right winger going, yeah, the press just has it in for Sarah Payne, look at this, right, like this judge made made basic errors and then, and then compounded it. So that's the argument I expect. It is

1:03:46 Thomas: Yeah it gives them more of like cover, yeah. Yeah, okay, well, thanks for the breakdown, I, okay, there's a reason I wasn't understanding that, that's very complicated, and it's tough to, uh, to get the right reporting on it as well. Um, as we've talked about, all right, uh, wow, crammed a lot in, but, uh, excellent breakdown. Thanks, Andrew.

1:04:15 Andrew: Yeah

1:04:23 Clip: And thank you, Let's go!

1:04:24 Thomas: And now it's time to thank our Hall of Famers, our all-time greats on patreon.com/law. We are on the third quartile, I believe.

1:04:31 Andrew: The best, the best quartile.

1:04:33 Thomas: Obviously, yeah. I mean, I don't know why I even say it. Of course, the third is the best. And your turn first, Andrew.

1:04:38 Andrew: Thank you to my employer, evilly added an MBA clause, and HR reports zero people refuse to agree. I need a job to pay mortgage. I'm sorry to hear that. Christopher Brown, Seattle Pete, heat Philly live show 2022, and the new OA fantasy football league champion, London Jets. Oh, yeah, that was, um, that league was rough for me this year. Vaccinated Aussie in Germany. If I get the next T3BE right, can you top up my supply of Vegemite and Tim Tams, please? I love both Vegemote and Tim Tim Tam. So, ah, ah.

1:05:00 Thomas: Me too. Oh, God. I haven't tried either, but I'm scared to.

1:05:13 Andrew: The coin is rigging T3BE with a Chinese thermostat controlled by an Italian satellite. This is not the greatest tribute in the world. No, this is Stormy Decisis. Hey, Stormy, we love you. Darth Mandy Pants, judicial review is the original inhabitant of the constitutional penumbra. How do originalists justify that doctrine? They don't. Robert M. Lawful Copter says America, where we want our children to breed but not read. Loo thick penumbras, you make the legal reasoning sound, love it. Bob Loblaw's Law.... Podcast, Ball Arena live show after the cup, I don't know, where's Ball Arena? Polly Hernandez, these are just simple farmers, people of the land, the common clay of the New West, you know, morons, the impossible Hamburglar, I love that.

1:05:37 Thomas: Oh,

1:05:58 Andrew: Murderous crows, Jason Copas, Bob Coburn, and Objection, the witness is a badger, love that, take it away, Thomas.

1:06:06 Thomas: Thank you, too. Stop calling him Uncle Frank. Nate Drex has to call him Dad. Not a sports fan, but I like hearing sports ball a lot because I learn things and you guys have fun. Oh, how nice. Bad boys, bad boys, what you gonna do? What you gonna to do when Merrick Garland comes for you? Crime or no criming? Definitely not an MSNBC spy. Philly basement bar welcomes both OA and IL-45. Live show 2020X, pandemic permitting. You pick what's on tap. Oh, I can't wait for that. Civilpoliticsradio.com, Fridays at 7 p.m. Eastern on Valley Free Radio. John Bilderbach, Jeff Gelbach, Jennifer Krach. Aaron has to read this weekly, but Thomas only bimonthly. Explain this deontologically. Stop Aluata slander. I Sorry. My friend's cousin mixed Coke with Cop Rocks and he died. Stephen Balticate Sandoval, another Minneapolis waiting for our live show in Minneapolis.

1:06:57 Thomas: Now that Mazars has fired Trump, Thomas should apply for the job. What? As a client of Mazars? Interesting. Interesting. Medicon7, Philip Kizer, Andrea the Arbitrary and Capricious, Painstrumpet, Geyer Sergith, and When the Moon Hits Your Eye and the Nukes Start to Fly, That's a World War.

1:07:18 Thomas: All right. Thank you, top patrons. We love you so much.

1:07:22 Clip: Sometimes you eat the bar, and sometimes the bar will eat you.

1:07:27 Thomas: And now it's time for T3B Thomas tries to be ethical answer time. Let's see this one. Maybe a little tricky.

1:07:34 Andrew: A little tricky, this is about the disbursement of client funds. So in this case, we had an attorney, represents, presents a client as a plaintiff in a personal injury action. After the action had settled, the attorney gets a check for $10,000 payable to his law firm, which is, by the way, normal, standard procedure, the right? Attorney then deposits it in her client trust account. That is standard, normal, appropriate procedure. Then the next day gets a letter from the bank.

The, the bank says, hey, your client owes us $3,000, so we want you to pay us. The attorney goes to the client. The client's like, yeah, I definitely owe them the $3,000, but I am not concerned that they're going to foreclose on the property, because the property I owe it on is worthless, so I don't view that debt very highly. The client believed the building was worthless, assumed the bank would never foreclosed, instructed the attorney to take her legal fees from the settlement and then give the rest of the money over to the client, and the attorney followed the client's advice. So the attorney takes out, uh, their legal fees the other six to the, is the attorney subject to discipline? In other words, um, can they do that, or were they required to hold on to the funds for some reason?

Uh, you were pretty certain that lawyers, uh, can just, uh, turn over the funds, um, but, uh, the, the no answer you decided to go with was, yes, because the attorney knew that his client was planning to force the bank to foreclose the mortgage. Um, instead you went with the, uh, no answer, uh, no, the bank had no established right to the specific proceeds of the client's personal injury settlement, and Thomas, your streak continues, my my friend.

1:09:07 Andrew: Yeah, I want to make you sweat a little bit there.

1:09:06 Thomas: Oh, a little, little worried. Yeah, I was a little worried you did. You made me sweat.

1:09:11 Andrew: This is this is rule one point one five and specifically one point fifteen D and E, which say, "Upon receiving funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or third person except to state in this rule or otherwise permitted by law. A lawyer shall, shall promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive.

And upon request of the client, or third-person shall promptly render a full accounting regarding such property." So you look at that and you're like, well, I don't know, does that, how does that clearly articulate one way or the other? And the answer, where it's not absolutely clear from the face of the rules, one of the things that the Model Rules of Professional Conduct and some other legal documents do that I really like is is incorporating a comments section, that right, says, here's sort of what we mean by some of this, And right? So under the comments, comment four says, paragraph E recognizes that third parties may have lawful claims against specific funds or other property in a lawyer's custody, such as a client's creditor who has a lien on funds recovered in a personal injury action. A lawyer may have a a duty under applicable law to protect such third-party claims against wrongful interference by the client.

In such cases, when the third- party claim is not frivolous under applicable law, the lawyer must refuse to surrender the property to the client until the claims are resolved. A lawyer should not unilaterally assume to arbitrate a dispute between the client and the third party, but when there are substantial grounds for dispute as to the person entitled to the funds,

1:10:01 Thomas: Hmm. Huh?

1:10:44 Andrew: A lawyer may file an action to have a court resolve the dispute. So if I had this situation, I could say, "I received $10,000. My client says that they're entitled to a certain amount. This other party says that their entitled to some amount. I don't know. So I want the court to figure it out for me." Right. So that I don't violate the ethics rules. But the key word in there that I read and that you picked up on in your answer is "lawful claims against specific, specific funds," You have to show, yeah, and you, when you were working through this, right?

1:11:13 Thomas: Yeah. It's not just like somebody owes you money. Like your, your friend goes to the lawyer. Hey, he owes me 20 bucks by the way. So So out of that settlement, you got to give me that first.

1:11:25 Andrew: Well, yeah. And you correctly articulated that, like, what if he has a $10,000 credit card debt? Really? It's not your job as the lawyer to make sure that other people get the money that they've intended, You know, that your client has intended. But it is your job not to help your client evade priority claims, right? To to sort of launder the money by having it flow through your Iota account, right? So that's really the distinction, is there somebody that has a claim on the specific proceeds, right? And how would that happen? Think about like a forced sale context, right? Like if there is a mechanics lien on the property and there is forced sale, and I know that somebody, you know, was entitled to $5,000 for, you know, work on the windows, because that's entered as a mechanics lien in the property, and then they send me a demand for the $5000. That probably falls under this, this this rule, right? They say, hey, you sold the property.

1:11:33 Thomas: Yeah. Yeah.

1:12:23 Andrew: That's what had my lien on it. I'm entitled to be paid out of the proceeds of that property. And that would probably be correct. So here, Here, just an unspecified, unrelated debt, and you are exactly correct. Six for six.

1:12:35 Thomas: Wow. That was a roller coaster. I just, I'm so ethical. That's the thing. I can't be bought. I don't know. All right. Well, time for you to tell us who else is very ethical. Who's this week's winner?

1:12:39 Andrew: There you go.

1:12:48 Thomas: And it's me again somehow. Anyway, look, here's the thing. I don't want T3BE winner each week to turn into some sort of poetry reading hour, but if people are going to keep doing funny, high effort things, I'm going to keep choosing them as the winner because I feel bad if I don't. So this week's winner is at Matthew Cravat. Uh, he says, "If a limerick can win T3BE, a sonnet has to have a chance." Here we go. Everybody buckle up. And he, he put it in some like old-timey font too, just for fun. "Thomas takes the ethics part of the bar. T3BE is the name of the game."

1:12:48 Andrew: And

1:13:34 Thomas: Maybe a sonnet will make me a star. Play along with him. Win fortune and fame. After a personal injury trial, a lawyer got a letter from the bank. The client had a bill to reconcile, but said stiff them. Pay not one Uncle Frank. Thomas said the answer was D, no cash, established because right. Right. The question now is, did Thomas act rash or have his ethics reached reached a lofty height? The ethics streak is not one to be porked. The answer is D. The bank can get forked. This is ridiculous, but I can't. What am I supposed to do? Not pick that as the winner? I don't. That doesn't make sense. Oh, thanks, Matthew. I had a hearty I belly laugh half reading that ridiculous sonnet.

1:14:22 Thomas: Thanks for playing, everybody. And gosh, next is going to be like Maybe a a short story, then a screenplay, then a book. We'll see. Congratulations, Infinite Fame and Fortune, because Andrew is not here. And that's our show. Thanks for listening. We'll see you on Rapid Response Friday.

1:14:37 Clip: I move for a bad court thingy. You mean a mistrial? Yeah, that's why you're the judge and I'm the law talking guy.

1:15:11 Clip: www.openargs.com. Be sure to join the Facebook group at facebook.com/groups/Yodel Mountain and follow us on Twitter at OpenArgs. This podcast is a production of Opening Arguments Media LLC, all rights reserved. It is produced with the assistance of transcriptionist Heather Leverage, production assistant Ashley Smith, and additional contributions from Morgan Stringer and Debra Smith. Special thanks to Teresa Gomez, who runs our live shows and heads up the OA Wiki, follow at OA Wiki on Twitter. Additional thanks to the moderators of the Opening Arguments Facebook community, Emily Waters, Alicia Cook, Eric Brewer, Natalie Newell, Brian Ziegenhagen, and Teresa. And finally, thanks to Thomas Smith, who edits the show and created the fabulous theme music, which was used with permission.