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- [00:00]
The Hartford Representative
When you're running a business, the best days are the ones where priorities stay on track. For midsize and large companies, that isn't always easy. Risk can touch multiple parts of an organization at the same time, often in ways that aren't immediately obvious. It might involve property liability or cyber. It could stem from regulatory requirements or challenges tied to a specific industry or the scale of an operation. At that level, managing risk becomes an ongoing discipline, not a one time decision. the Hartford, the focus is on helping businesses manage risk before it turns into something more disruptive. That means working with companies to identify where they're exposed, decide what matters most, and put practical standards in place so risk is managed as part of day to day operations. And when losses do happen, the Hartford can pair that risk control work with insurance coverage grounded in underwriting, risk engineering and claims experience developed over time. Learn more@theheartford.com riskmitigation so there's a lot
- [00:59]
IBM Representative
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- [01:28]
Wise Representative
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- [02:14]
Elliot Stein
Hello and welcome to the Votes and Verdicts podcast hosted by the Litigation and Policy team at Bloomberg Intelligence, the investment research platform of Bloomberg LP on the Bloomberg Terminal BI has 500 analysts and strategists working across the globe and focused on all major markets. Our coverage includes over 2,000 equities and credits. We have outlooks on more than 90 industries and 100 market indices, currencies and commodities. This podcast series examines the intersection of business policy and law. My name is Elliot Stein. I'm an analyst with Bloomberg Intelligence covering litigation in the financial sector, and I'M delighted today, as always, to be joined by several of my BI colleagues on the litigation and policy team. Today is July 9, 2026. It's 11:30am here in New York, and this is our weekly look at some of the most important litigation and policy catalysts that our team is watching and that we think will impact companies across a number of different sectors in the coming weeks. As always, you can find all of our research on the Bloomberg terminal at BI Go, and you can access our litigation and policy dashboard on the terminal at bilawsgo. All right, so let's get started with the content. Let's. Let's start with Meta and bring in Matt Chittenhelm, our TMT litigation and policy analyst down in D.C. matt, you've been covering these many lawsuits by states and others against Meta, accusing them of, I guess, sort of fostering addiction among teens. You spoke about this. Well, you've spoken on this podcast previously about these cases, including last week. But it sounds like you have new data on how much might be at stake. An upcoming trial in August between the states and Meta.
- [04:03]
Matt Chittenhelm
Yeah, yeah, Elliot, it's starting to get a little more real. We've been warning clients about this August 18th trial that meta is facing. This is the portion of this litigation, this consolidated litigation brought by the state attorneys general. And for a week or two now, there have been filings in the docket about the potential remedies and civil penalties and disgorgement that the states seek. And most, most of those have been redacted. Those have been under seal. But we did see a filing this week as Meta started to push back against the ask by the states. When Meta let out that the states in aggregate are seeking $1.4 trillion against the company, which is beyond anything that I've ever seen before. So it really shows you the stakes and the pressure that the company, I think, will face as it heads into this trial in August.
- [05:06]
Elliot Stein
How do they get to that 1.4 trillion? I assume this is like statutory penalties.
- [05:12]
Matt Chittenhelm
Yeah, I think that's right. And a lot of this is still redacted in the docket, but you can kind of read between the lines and see. So a lot of these state attorneys general are relying on unfair competition, deceptive and unfair practice laws where they can pursue civil penalties that are set per violation. And there's a lot of argument about, okay, what is a violation? But in a case like this, where you have millions of potential teenagers that are Meta subscribers, Meta users who are harmed, the math with that million millions of teens multiplied times say, $2,000 per violation adds up, you know, very quickly to these very high numbers. And you combine that. So this is. The states are not only bringing claims under those. Those deceptive and unfair practices laws, there's also a federal law known as coppa, which also lets those states, in theory, pursue civil penalties. And again, it's per violation. So I suspect once these. These filings become unredacted, which I think. I think they will be down the road, we'll see that what the state AGs are doing here in calculating this potential remedy is adding up the per violation, per teen, and that leads you to an enormous number, like 1.4 trillion. Is that realistic at all? No, but I think it shows you what's in play here and that the stakes are high.
- [06:55]
Elliot Stein
Right. And it's not like you're coming up with that number. These are. I mean, these are in court filings. What does this mean for, like, settlement pressure on Meta?
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Matt Chittenhelm
Yeah. So to me, the big question for a company like Meta is, can you take the chance that you can win on this on appeal? Can you let the judge write down a number with that many zeros attached to it? And I. Even if you think Meta has a strong basis for appeal, which I think it might, this is sort of novel going after a media company on a claim like this. I'm still not sure as a company you can take the chance that, yeah, we'll get that overturned on appeal. With a number that big. I don't know that you can. And so, on the other hand, you know, the state AGs, you know, they're fundamentally political actors. They are trying to serve the constituents in their states, and they want to show they're protecting the youth in those states. And so I think they may be comfortable with some sort of figure, you know, in the low single billions of dollars to show, look, we are protecting teens from these social media practices. We are pushing them to be better. That's not 1.4 trillion, but I think it's the kind of number that a state AG can take back and put out a press release and feel like they accomplished something. So that's where I see this most likely landing. I think there's a lot of pressure around that trial in August to reach some sort of deal like that if the parties can get there.
- [08:35]
Elliot Stein
Got it. All right, well, we'll be watching for your updates. All right, thanks, Matt. Andrew Silverman, let's bring you in. Andrew is our tax guru. We're going to stick with Meta, because, Andrew, you're following an IRS case against Meta that seeks, I think about $22 billion you've written in connection with IP offshoring. You want to tell us more about that case and sort of what you're waiting for in it?
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Andrew Silverman
Sure. So I thought I was going to be really impressive with my 22 billion number and then Matt came in with one and a half trillion and now I feel very small.
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Matt Chittenhelm
Sorry about that, Andrew.
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Elliot Stein
But it's taxes, so it's so interesting. So go on.
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Andrew Silverman
O.
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Tony Ayo
Okay.
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Andrew Silverman
So, so this is actually one of the largest corporate tax disputes that's ever been litigated.
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Elliot Stein
Really?
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Andrew Silverman
Yeah, that's right. Microsoft has one that, that's being litigated right now. That's 70 billion and that would be the biggest ever. But this, this 22 billion is, is, is the second biggest in, in US history. And it's, it's a case about Meta sending its IP offshore. Essentially what happened was that the company created a, a patent in the United States, entered into a partnership with a, a foreign subsidiary in, in Ireland and then over time it sort of pushed the ownership of that IP to this, this Irish entity. And what happens in, in those cases is that the, the U S entity has to then pay for the use of the IP that is developed in the United States is now owned in, in Ireland and, and that reduces, that's a deductible payment. So it reduces the U S tax base of the, the US parent. So, so the IRS said for that the year that they transferred the IP in, in 2010, that was that that Meta had underpaid taxes by about $2.3 billion. And then over time it's missed out on paying billions of do. Odd reason. The, the, the cases involve 2010 and this, there's a, another case that was just filed. It's, it's, it involves 2017 to 2019 and there's a gap from, from 2011 to 2017. We don't know what happened to those years but, but it's possible that Meta has had some sort of settlement. But, so we're, we're really concentrating on 2010, 2017 to 2019.
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Elliot Stein
And what do you expect to happen in the case? How strong do you think Meda's defenses are?
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Andrew Silverman
So this is kind of, this is the classic for a tax case, but I guess odd for most other people following these cases, the Medicase was actually decided in May 2025. So you may, if you're following this at all, say like, okay, I don't really understand what's going on here. I thought this case was already over in the IRS won. But what happens in tax cases is you get a decision and then you wait. And especially in these big cases, you wait and you wait and you wait for the amount of money that the company is actually going to have to pay. And so that's called a Rule 155 procedure. So we're in that right now, and we've been in that since last May. And in these cases, it's interesting, the IRS can win these cases and the taxpayer can then pay. 10% of the IRS was seeking in this case. We think it's going to be more like, more like 40%. And that's because of some language in the opinion on the value of the intellectual property. The judge said that she thought that the amount that the IRS had valued in that was, was about, about 60% higher than it should have been valued. So, so we think that the amount that Metta will have to pay will be, will be about $10 billion less than what the IRS is asking for.
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Elliot Stein
And, and what's sort of like what's the next catalyst you're looking for? And sort of the overall timing.
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Andrew Silverman
Yeah, so we're waiting for, for that judgment on the amount that the Meta will have to pay. And then once they find out how much they have to pay, then the company can appeal. And we assume they're going to appeal mostly because, I mean, you know, $2.3 billion with interest, it's about 5 to 6 billion dollars. That's not terrible for, for, for a tax bill for Meta, even though it seems like a lot, although not 1.4 trillion, but, but for future years, it could be a big deal. So the 2017-2019 case is about $16 billion, and over time that could creep up to 20 some billion. So we think Meta is going to appeal. And so once it gets the amount that has to pay, then it'll Appeal. And this 27 to 2019 case is also proceeding. But interestingly, it's about that 2010 transaction. So what are they going to be discussing in that case? If we already know what the answer is on the 2010 case and the 2010 case that's going to be appealed now, how does the 2017-2019 case proceed when it's really all dependent on what happens in the 2010 case? So we're sort of waiting to see how this all wraps up and proceeds.
- [14:17]
Elliot Stein
All right, good stuff. Well, we'll stay tuned for more. All right, let's shift from Meta to SpaceX and data centers. Holly from let's bring you in. Holly is our consumer and industrial litigation and policy analyst up here in New York. So, Holly, you're following this lawsuit by the NAACP against Space's XAI unit that seeks to shut down gas plants to power the company's Colossus 2 data center in Tennessee. Tell us more about that, why it's so important.
- [14:54]
Holly
So thanks, Elliot. So in April, the NAACP sued a subsidiary of SpaceXzai on behalf of residents in Mississippi who live near a gas power plant that's powering its Colossus 2 data center. And what they say is that the, that the gas plant installed, that the company installed turbines, gas turbines, without necessary permits. And they want an order shutting down the gas turbines that are unpermitted. And the reason why that's important is because SpaceX has a contract with Anthropic, pursuant to which Anthropic is set to pay $45 billion over three years for use of its Colossus 1 and 2 data centers. So this would only affect Colossus 2, but it could jeopardize a part of that contract. And so what they say is that under the Clean Air act, new stationary sources of pollutants must be permitted. And the NAACP says that the way SpaceX's subsidiary avoided the permitting requirement is putting these turbines on flatbeds and calling them mobile sources which are exempt from permitting requirements. And they also say, and Mississippi, where the gas turbines are located, granted them an exemption because they were mobile and also because they're temporary, because they're going to be there for less than a year. But some of these turbines are as big as houses, the naac so and usually when you think of mobile sources of pollution, you think of vehicles, not stationary sources that are put on flatbeds. So I don't think the judge will accept that argument. The NAACP has moved for a preliminary injunction seeking to have the court shut down the turbines. But SpaceX also has argued that this case should be dismissed because the NAACP locks standing. First, they say the citizens provision under which they're suing in the Clean Air act requires them to sue on behalf of them. The, the citizen on behalf of this. Only the citizen can invoke that right. And the argument is that because the NAACP is not su. Is suing on behalf of other people and not itself, they don't have the right to invoke that citizen provision. And they also say that, you know, Mississippi, which is in charge of implementing ITS, the EPA's Clean Air act program that has been approved by The EPA said that these were fine. And finally, they also say that the citizens provision is unconstitutional. So they're seeking to have an order striking the citizens provision as unconstitutional because they say that that usurps the executive power. So it's an unconstitutional delegation of executive power to the people. So that's an interesting issue because that issue could find its way to the Supreme Court. But in the meantime, the government has also moved to intervene in the case, and they're saying that the turbines are critical for national security. There's a provision in the Clean Air act which allows the government to intervene and prosecute the case. But here the government wants to intervene and dismiss the case. So I don't think either of those motions will succeed either by SpaceX or the government. But there's a preliminary injunction hearing in August, August 24th. And so I think both the preliminary injunction and the motions to dismiss will be heard at that hearing.
- [18:23]
Elliot Stein
And you think both motions will be denied. So what do you expect to sort of happen in the case after that? Overall, what's your outlook?
- [18:30]
Holly
I think they're going to appeal right away. And if they appeal, both sides. Both sides? Yeah, I think that the court will grant an injunction, but I think saying that the turbines have to be shut down, but I think that she'll probably say give them time to get the necessary permits, but I think they'll appeal that right away to the Fifth Circuit, where this, where the district is located. And I think that the Fifth Circuit may reverse and say that, you know, she didn't have the power to order the permitting because the Mississippi, which is in charge of permitting, and the epa, which is in charge of permitting, have both said that this is fine.
- [19:05]
Elliot Stein
All right, thanks, Holly. All right, let's stick with data centers and bring in Justin Teresi, who covers many things for us, including looking at legislation in New York that appears to be the first of its kind in the country to ban data centers. You want to tell us more about that, Justin?
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Justin Teresi
Yeah, this definitely seems to be the topic of the month, maybe the topic of the year here with data centers. But, yeah, we're keeping an eye here on this legislation that was passed in New York State at the very end of this year's legislative session. And I think by all accounts, it's the first of its kind type of omnibus bill that really deals with data centers and what these should look like. A little bit moving forward, but a little bit of inside baseball here about the bill. A good friend of mine referred to this as a Frankenstein bill. And you Know who you are, whoever said that. But what's going on here is that there are a lot of separate bills pending in the state legislature that really tried to tackle issues with data centers. I think it's an election year in New York. The entire legislature is up for reelection. It's a gubernatorial election here in New York. So look, there's a lot of interest on this issue. I think folks are seeing it as something that's really politically interesting from, you know, from the standpoint of most voters, because we're seeing a lot of applications here in New York State, primarily upstate, where there are marginal districts where folks are interested in constructing these things. But what does the bill do? So there's a one year moratorium here on new large data centers in New York State. This would relate to existing permits, not projects that are already under construction. There are provisions in that bill that relate to cost shifting for energy upgrades for the grid to the actual operators or constructors of these data centers. So we're talking about perhaps tens of billions of dollars in grid updates in New York state alone. Over $1 trillion nation that we're looking at for potential grid updates. We're backed into the trillion dollar range we were looking at at the beginning of the podcast here. But those are the big risk factors here with the legislation. Also a brand new state environmental impact study, which I think what we'll take from that is probably some new levers to delay or halt projects that come from a study like that looking at the actual impacts from these data centers once they're constructed. New provisions around community hearings before new permits can be issued in the state. And there's a real tie in here too, to Rene Energies. Right. We're looking at provisions that would really require the energy that's used by these data centers in New York State in the future to come from those renewable sources like offshore wind, which really have had a strong focus from the state legislature here so far in New York State. So that's everything rolled into one. You know, it's the first moratorium that's passed the legislature in New York. The governor hasn't signed the bill yet. I think we're likely to see some version of this get through, you know, into law, enacted into law next January. How it works in New York is that the legislature kind of shoots first and asks questions later. What will happen now is they'll engage in negotiations with the governor's office between now and the deadline Dec. 31, for the law to be acted upon by the governor's office. And we'll see if there are any kind of changes that are made to the bill before I sign it to law. I think the big caveat here is that again, seeing how this is an election year, everybody kind of wants to take some credit for doing something around the issue. Governor Hochul already announced a rate making proceeding at the state Public Service Commission earlier this year about what utilities should do with their tariffs, how they should actually charge data center operators and constructors for putting these things together. So, you know, I think with that already taking place, the governor is probably going to want some credit for her action already. This thing, for this thing, probably that provision drops out of the bill. We address those in a chapter amendment and a new version of the legislation is passed when the session, when the legislature returns for its session in January.
- [22:54]
Elliot Stein
And you think that other states might try to replicate this?
- [22:58]
Justin Teresi
Yeah, I think absolutely. Look, we're seeing a lot of activity around this all over the country right now. Blackstone and Brookfield backed projects in Virginia were halted based on community opposition to those projects. Recently Tucson actually in Arizona rejected a $3 billion or voiced its opposition, I should say, to a $3 billion project by Amazon there. We're really seeing public NIMBYism rise, if you will, around this data issue. So I think it's highly likely that New York's word on this will not be the last. I think the state's proven to be influential on state level initiatives in so many places previously and this one really seems ripe for the, ripe for the picking, if you will, with considerations not only for 2026, but I think moving on to elections in 2028 as well. So I think that's absolutely the case. Oregon's already passed legislation related to these kind of energy cost shifting initiatives that has not been signed into law yet. Illinois Governor Pritzker there has really looked at rolling state tax incentives for data center construction or operation in that state. So this is really being looked at from all of these different kind of policy levels. And I think a moratorium similar to New York's is not something that's off the table moving forward into the future in other states as well.
- [24:14]
Elliot Stein
And is there any talk of the federal government trying to preempt laws like this?
- [24:19]
Justin Teresi
Yeah. So, you know, there's a little bit of discussion now popping up. What we have at the federal level is something called the Ratepayer Protection act that was introduced and that again, ties to these energy cost shifting kind of issues that we were just talking about with relation to updates of the actual electricity grid. Representative Frank Pallone, who is the ranking member on the House Energy subcommittee. Look, he's really called for a consideration of a moratorium similar to this at the federal level, but we haven't seen a bill introduce it. We haven't seen real discussions around that coming to fruition yet. But again, I really think heading into 2028, this one's not going away. Right. We're going to have a lot of talking and a lot of discussion about this. I think for demographics Democrats, this might be an issue of interest, you know, if we're looking to really flip things, you know, down the road here, maybe not this year, but in 28. So look, I think that this is not going anywhere. And the reality about how to address these data centers and their needs, it's going to be a big one, I think now and moving into 28. So.
- [25:17]
Elliot Stein
Yeah, absolutely. I mean, everything AI related is going to be an issue.
- [25:21]
Justin Teresi
Yeah, I think that's right. That's right.
- [25:24]
Elliot Stein
All right, good stuff. Thanks, Justin. All right, before we wrap up, I just wanted to flag a couple things I'm watching in prediction market litigation. Just as a quick reminder, these are cases between prediction market operators on the one hand, and states and Native American tribes on the other hand, to determine whether event contracts related to sporting events in particular should be treated as gambling, as the states argue, or as derivatives, as the CFTC and the prediction market operators argue. We've had a lot of conflicting decisions so far. The only federal appeals court to rule on one of these cases was the Third Circuit back in April, which ruled in Calce's favor over the State of New Jersey. So that case is now poised to go to the U.S. supreme Court. New Jersey has already said that it intends to ask the high court for review. The state's deadline to file its cert petition was originally July 6, but it asked for a two month extension. The Supreme Court sort of split the baby and gave them just one month. So that due date date is now August 4th. And we're pretty confident that once New Jersey files its cert petition, there'll be some briefing back and forth about that. But we're pretty confident the high court will grant cert and take up the case just because these cases involve issues of federal preemption. And we have a lot of conflicting decisions even at the circuit level already. So we think the high court takes up the case probably in early October. Then we'd have written arguments on the merits, likely to finish by year end. We'd have oral arguments probably in one Q and then a decision by the Supreme Court by the end of 2Q in 2027. The second thing I'm watching is a 9th Circuit hearing tomorrow, July 10, in a case by Native American tribes in California that sued Cauchy and Robin Hood. The companies beat the tribe's preliminary injunction motion back in November, I think, in the trial court. And this will be the first case by tribes being argued in the appeals courts. So, you know, slightly different issues than in the cases by the states, although Kalshi and the other prediction market operators would argue that it's largely the same issue and that the Commodity Exchange act preempts any efforts by states or tribes to try to regulate prediction markets. Our all right with that, I think we're going to wrap up this episode of Votes and Verdicts. As always, thank you for listening. If you have any questions about anything that we talked about on this episode, please don't hesitate to reach out to us at your convenience with questions. As a reminder, you can find all of our research on the Bloomberg Terminal at BI Go. You can find our litigation and policy dashboard at bilawsgo. We want to thank our producers Aditya Samani and Mariam Traori, without whom this podcast never publish. So thank you again for listening. Have a great day and we'll see you on the next episode.
- [28:50]
The Hartford Representative
When you're running a business, the best days are the ones where priorities stay on track. For midsize and large companies, risk can affect multiple parts of the organization at once, from property and liability to cyber and regulatory challenges. At that level, managing risk becomes an ongoing discipline. At the Hartford, the focus is on helping businesses manage risk before it turns into something more disruptive. And when losses do happen, that work is paired with insurance coverage shaped by years of underwriting, risk engineering and claims experience. Learn more@the Hartford.com riskmitigation policies provided by Hartford Fire Insurance Company and its property and casualty affiliates, Hartford, Connecticut this is
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Tony Ayo
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Arm and Hammer Representative
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Elliot Stein
Soldier.