The World and Everything in It - April 11, 2022

MARY REICHARD, HOST: Good morning!

Arbitration may be a cheaper and faster way to resolve disputes. But the details of how it works? Not settled.

NICK EICHER, HOST: That’s ahead on Legal Docket.

Also today the Monday Moneybeat, a first-quarter markets review and what does economist David Bahnsen think about how far the Federal Reserve will go to try to tame inflation.

Plus the WORLD History Book. Twenty-five years ago Tiger Woods became the youngest person to win the Masters.

REICHARD: It’s Monday, April 11th. This is The World and Everything in It from listener-supported WORLD Radio. I’m Mary Reichard.

EICHER: And I’m Nick Eicher. Good morning!

REICHARD: Now the news with Kent Covington.

KENT COVINGTON, NEWS ANCHOR: Ukraine bracing for Russian offensive in eastern region » Ukraine’s military is lining up more firepower as the country braces for a major Russian offensive in eastern Ukraine.

Kyiv Mayor Vitali Klitschko told ABC’s This Week.

KLITSCHKO: Whatever Russia is planning to do, we have our strategy, and this strategy is based on the confidence that we will win this war, and we will liberate our territories.

Experts say Russia could launch a new full-scale offensive in the east within days. And the Kremlin has reportedly appointed a new general to lead the attack.

Alexander Dvornikov is one of Russia’s most seasoned commanders.

The 60-year-old general gained prominence as head of the Russian forces that fought in Syria in 2015 to shore up dictator Bashar Assad’s regime.

White House Press Secretary Jen Psaki said the move is not a good sign.

PSAKI: Putting a general in charge who is responsible for the brutality and the atrocities we saw in Syria shows that there's going to be a continuation of what we have already seen on the ground in Ukraine, and that’s what we are expecting.

Russian forces led by Gen. Dvornikov destroyed whole cities while dropping barrel bombs that targeted civilians.

The West says the Russian military has already committed war crimes, including airstrikes on hospitals and a missile attack that killed 52 people at a train station on Friday. That’s in addition to the devastation of Mariupol and atrocities that came to light as Russian soldiers withdrew from the outskirts of Kyiv.

West sends more weapons to Ukraine » The West is sending more weapons to Ukraine as it tries to beat back the Russian invasion.

The U.S. government says it continues to rush defensive weapons to Ukraine. National security adviser Jake Sullivan:

SULLIVAN: We have developed plans to deliver those as rapidly as possible. Some have been delivered. Others are in the process of being delivered. And we will continue to work aggressively to get Ukraine what it needs to strengthen its hand on the battlefield and to strengthen its hand at the bargaining table.

Slovakia is supplying a powerful S-300 air defense system. The United States will replace that by sending a Patriot missile defense system to Slovakia.

But many in Ukraine are urging the West to stop placing limits on weapons it supplies for example, withholding fighter jets. Ukrainian Parliament member Kira Rudik:

RUDIK: We need the heavy weapons. We need the jets that we have been asking continuously. It will be very hard to win without them.

British Prime Minister Boris Johnson met with Ukrainian President Volodymyr Zelenskyy over the weekend in Kyiv to talk about what Ukraine needs to win the war. The two leaders were also seen touring the streets of the now-quiet streets capital city.

Texas Lt. Gov. fires back at White House over plan to bus migrants to Washington » Texas Lt. Gov. Dan Patrick fired back at the White House on Sunday over the state’s plan to start busing migrants to Washington D.C.

Thousands of migrants cross the border into Texas each week. Republican Governor Greg Abbott says Democrats in Washington are ignoring the problem, so his state will start dropping many of those migrants off on the steps of the U.S. Capitol.

The White House is calling it a “publicity stunt.” But Patrick said on Sunday …

PATRICK: Well, I don’t think it’s a gimmick. I think this is — you’re seeing the first step of a constitutional showdown between the governor and the legislature in the state of Texas and the federal government.

That showdown comes as the CDC prepares to lift Title 42. That's a pandemic measure that allows the government to limit who crosses into the country. The White House says Title 42 is an emergency pandemic measure, not an “immigration authority.” Jen Psaki said on Sunday …

PSAKI: It’s an authority given to the CDC, actually by Congress, to make a determination about whether it should still stay in place.

But GOP Congressman Jim Jordan countered …

JORDAN: You can’t say COVID is so serious still, we need billions of more dollars of American tax money, and at the same time say we’re getting rid of Title 42, which is the only thing keeping a chaotic situation from getting worse.

The CDC is set to end Title 42 on May 23rd. Republicans say that will further throw open the floodgates at the southern border. 

Maryland Democrats override governor to expand abortion access » Democratic lawmakers in Maryland over the weekend overrode the state’s Republican governor to expand access to abortion. WORLD’s Josh Schumacher reports.

JOSH SCHUMACHER, REPORTER: Until now, only physicians could legally perform abortions in Maryland. State lawmakers passed a bill that authorizes nurse practitioners, nurse midwives, and physician assistants to do the procedure.

Gov. Larry Hogan on Friday vetoed that measure. He said the legislation “endangers the health and lives of women by allowing non-physicians to perform abortions.”

But just a day later, the Democrat-controlled General Assembly overrode his veto.

The bill crates a—quote—“abortion care training program” with an annual price tag of $3.5 million.

It also requires most insurance plans to cover abortions without cost.

The measure comes at a time when the U.S. Supreme Court is reviewing protections for the unborn across the country.

Reporting for WORLD, I’m Josh Schumacher.

I’m Kent Covington. Straight ahead: challenging arbitration agreements.

Plus, a historic win in Augusta, Georgia.

This is The World and Everything in It.

MARY REICHARD, HOST: It’s Monday April 11th, 2022. You’re listening to The World and Everything in It from WORLD Radio. Good morning to you! I’m Mary Reichard.

NICK EICHER, HOST: And I’m Nick Eicher. It’s time now for Legal Docket.

Today, arbitration is on the menu. The Supreme Court heard three oral arguments on different flavors of arbitration law last month.

Today we’ll combine them for—what, got to stick with the metaphor here—maybe a legal stew.

REICHARD: Yeah, but you need to think Mexican because Taco Bell is at the center of one of these arbitration cases!

I do want you to know that Season 3 of Legal Docket Podcast that we’re cooking up for this summer does include a big serving of arbitration law. My partner Jenny Rough and I are right now preparing for this summer’s ten episodes.

And among them—as I say—is about the dispute between the owner of dozens of Taco Bell franchises and employees who claim they were denied overtime pay.

EICHER: Before we get into that, let's first understand what arbitration is: and that is, it’s a way to resolve disputes outside the court system. Contracts often include a clause that says parties must arbitrate their disputes instead of litigate them.

Employers tend to prefer arbitration because it’s cheaper and faster than going through the courts. No judge, no jury, usually resolved in months instead of years.

Employees may prefer to litigate in court, though, for various reasons. A class action lawsuit, for example, can be simpler than litigating one case at a time.

REICHARD: In the Taco Bell case, known as Morgan v Sundance, more than 500 employees—and they all signed arbitration agreements—they say the company cheated them out of overtime pay. They sued in court and they want the case to be heard by a judge.

The employer went along with the litigation for a time and filed court documents without raising the arbitration contract as a defense.

But now the employer wants to force arbitration.

The employees say, too late! Once you engage the litigation, that means you’ve waived arbitration. So the court case can continue.

But Justice Amy Coney Barrett took it back to what the contract actually said in this to the employees’ lawyer, Karla Gilbride:

BARRETT: Ms. Gilbride, what about this provision from the American Arbitration Association that was incorporated into your contract? If this is a matter of substantive contract law, which says that no judicial proceeding by a party relating to the subject matter of the arbitration shall be deemed a waiver of the parties' right to arbitrate?

Gilbride replied, no matter. The employer waived that language by going along with the court litigation.

And because this involves both state and federal law, complexity like that is best resolved in court.

But that’s not the way things have been done in the past. Justice Samuel Alito:

ALITO: You have a strong argument and you might be right, but it would represent a sea change, would it not? It would require all the courts of appeals to approach this question differently from the way they have, is that correct?

Justice Elena Kagan queried lawyer for Taco Bell about the danger of gaming the system:

KAGAN: And what that leads to is why wouldn’t anybody test the waters in federal court and see if they can get the case dismissed and only if they can’t say, okay, now I’m going to rely on my arbitration agreement and let’s go to arbitration.So it’s like two bites at the apple. There’s no incentive for anybody to go to arbitration fast.

Justice Stephen Breyer in his characteristic manner made note of all the words thrown out by both sides: 

BREYER: I used to have nightmares 
about teaching a class, and in my nightmare, 
someone in the class would ask me something, and 
I'd have to go into a long disposition on something I didn't know. 
So I've written down here laches, in 
default, forfeiture, waiver, estoppel, and there are probably about six or seven others, which are primarily contract or not entirely, but -- and state law questions, and I know very little 
about them. 
 And suddenly this Court, writing a treatise on that, could get laws in many, many 
places really mixed up because judges sometimes put the wrong words, if there are wrong words. 
And so I -- what have you read that would 
prevent me from getting into this nightmare?

A nice touch of humility in that. May it be contagious.

Another of the arbitration cases also deals with alleged wage violations.

Angie Moriana was a sales rep for Viking River Cruises who signed an arbitration agreement. But she filed a class action lawsuit on behalf of herself and other employees based on California state law and state supreme court precedent.

But her employer argues that the arbitration contract she and the others signed legally stops class action claims like this one.

Justice Kagan seemed skeptical of that in this exchange with Paul Clement, lawyer for Viking River Cruises.

In this clip, you’ll hear Justice Kagan use the initialism FAA. She’s talking about the law known as the Federal Arbitration Act.

KAGAN: I'm wondering whether anybody, when they were enacting the FAA… thought the FAA would end up precluding the ability of the state to structure its own law enforcement with respect to labor violations.

Final case today, and we’re staying on the FAA—again, the Federal Arbitration Act—and I stress that because this final case involves Southwest Airlines and so when you hear “FAA,” you may think of the agency that regulates aviation. Do resist that.

It’s not about aviation, broadly speaking, it’s about arbitration as applied to people who work in the airline industry.

The Federal Arbitration Act—FAA—applies broadly to many employment and contract situations. But it also contains an exception: That is, certain transportation workers are exempt from the FAA law.

And that’s what this final arbitration dispute is about.

Latrice Saxon was a ramp supervisor for Southwest Airlines. Her responsibility was to oversee the people who load and unload luggage.

She alleges Southwest didn’t pay overtime, so she sued, and did so under the Fair Labor Standards Act.

But Southwest points to that exemption language of the Federal Arbitration Act, exempted are those who work at sea, those who work in railroads, “or any other class of workers engaged in foreign or interstate commerce.”

By its reading, Southwest says that the employee Saxon is not engaged in interstate commerce by supervising bag handlers.

Saxon replies that well, she does work in transportation. So the broader exemption applies to her. And therefore, she’s free to sue in court.

But the airline’s lawyer Shay Dvoretzky argues that “working in transportation” isn’t the same as being “engaged in foreign or interstate commerce” as the supervisor of bag handlers.

DVORETZKY: Our test is clear. Does the class of workers predominantly work on the plane or the train? The way that would translate to the airline industry is as a distinction between flight crew and ground crew. Flight crew are analogous to seamen. Ground crew are not. The inquiry under the statute has to do with actually moving the goods.

A war of words. Saxon is only handling goods, he argued. That’s not the same as moving them.

But lawyer for Saxon says loading cargo onto a vehicle for transport is the very core of commerce; so she’s exempt from the FAA by its own terms.

Therefore, she need not arbitrate her wage dispute. Her lawyer, Jennifer Bennett:

BENNETT: If Congress wanted to exempt from the FAA just those workers aboard an instrumentality of commerce crossing state lines, it easily could have said so.

Congress did not do that, so she urged the justices simply to ask this question: Is the employee engaged “directly to the transportation function” of an industry? Yes or no. Her point is, yes, her client is and so that should settle the whole thing.

In 2019, the Supreme Court held that the FAA excludes independent contractors, not just certain employees. That’s opened up a whole new class of litigants, so now the court must find the parameters of that.

Whatever the court’s ruling, this dispute goes beyond the airlines. It has the attention of Amazon, Lyft, and Uber, they filed friend of the court briefs in support of Southwest Airlines.

And that’s this week’s Legal Docket.

MARY REICHARD, HOST: Next up on The World and Everything in It: the Monday Moneybeat.

NICK EICHER, HOST: Time now for our regular conversation on business, markets, and the economy. Financial analyst and adviser David Bahnsen is here. Morning, David.

DAVID BAHNSEN, GUEST: Good morning, Nick. Good to be with you. 

EICHER: I know I’m a week late to the first-quarter-market-review party, should’ve done that last week, but better late than never, right? So, first three months in the books. How do you size things up in the markets?

BAHNSEN: Yeah, the first quarter was actually quite interesting because you ended up with a negative quarter in the Dow, S&P and NASDAQ. And yet in all three cases, they were down half as much as they had been down. And so there was a recovery in the middle to end part of March that cut a lot of that downturn in half. You know, even as we're sitting here talking now, the Dow is up 500 points from where it was the day before Russia invaded Ukraine. So we're really not looking at anything all that extraordinary. The vast majority of the NASDAQ's downturn came before the invasion. And so you could argue that what we see as a correction in markets is really mostly related to the tech froth and the kind of overvaluation that existed in some of the consumer discretionary and technology parts of the market.

So one of the points that I've been making is, if the Dow is down 5% from its all time high, well, the market has gone down, on average, five to 10%, at some point in the middle of the year, 99% of the time, going back, you know, 100 years. So there really isn't anything that out of the ordinary this year. And yet the first quarter, I think most people would say that they perceived it to have been a really bad quarter for markets, and maybe blame it on Russia, Ukraine, or maybe blame it on energy prices. I think actually, at the end of the day, primarily what we have is this correction that it actually started in fourth quarter of last year around the overvalued technology stuff.

EICHER: And then the hypothetical critic will pipe in and say, “well, there’s always uncertainty.” To which you might reply, “the only certainty is uncertainty.”

BAHNSEN: Yes, you sound like someone who read my Dividend Cafe last Friday. That's exactly right, Nick. So the things that are uncertain change. People weren't talking about Russia, Ukraine a year ago, but they were talking about something else. And now it happens to be Russia, Ukraine. There's issues with the Fed.

One thing I would point out, so people don't think I'm being overly optimistic on where we are. It is very rare that stocks and bonds drop together. And bonds are down quite a bit, you know, this first quarter as interest rates have risen. And so, you know, when you have both stocks and bonds down together at once, that very rarely happens when you're not in a recession. And in this particular case, we're nowhere near recession. And I think that the work that the Fed has done to markets, you know, by causing people to sort of reprice and revalue assets, it does seem to me a lot of that has already been done. The question mark, now, again, it's another uncertainty that exists and there's always something uncertain is when the Fed starts tightening its balance sheet. Will it surprise markets that it came out in the minutes last week from the Fed that they're talking about doing $95 billion a month of tightening and by the end of the day, the markets are up and they were up quite a bit the next day? So I don't think the markets are looking at even that as a surprise and it's hard for me to understand how they could be surprised when pretty much everyone has known something in that range was coming. But there will be other uncertainties ahead and we live in, you know, certainly volatile times.

EICHER: And we’re always watching how the central bank will act or not act as the case may be. What’s your sense on the Fed? Obviously, it’s poised for some normalization, moving off the zero interest rates and moving off of quantitative easing—as we read and hear—tightening things up to try to head off recession.

BAHNSEN: There's a tension, Nick, as to will they normalize (which I would consider to be a very good thing - I want the Fed to normalize) versus will they create a recession from getting to normalization? And the different camps on this are A) those who think, “Yeah, they're gonna create a recession, it's a foregone conclusion,” versus those who think “No, the Fed is just going to hit this right down the middle and find that sweet spot.” And then there's those who would say, “They won't even end up doing it,” that the Fed is going to end up chickening out before they get to that point. And I'm sure you can find another camp as well. But there's sort of those are probably the three major camps as to what could end up happening with the Fed: either recession, capitulation - which is probably the camp I'm in - or perfection, they just somehow nailed it. And, and so that's an uncertainty - nobody can say at this time what will end up happening. Those are forecasts as to where it will go.

EICHER: Well, before we go, why do you place yourself in that middle ground? Why are you in the ‘Fed-will-capitulate’ camp?

BAHNSEN: It is because of history combined with prophecy. I don't I don't believe that the Fed can - even in the recession camp, I would be surprised if that many people thought that they were going to create a recession and then continue in their normalization, I think at the point in which people think that they tighten credit so much, and extract liquidity so much, that it ends up creating a wave of corporate defaults and substantially increasing the amount of money that the government pays to finance their own debt, and that they would continue in that, it strikes me as politically unfeasible, and unprecedented. And so the capitulation camp is based on history, but also the personality and the ideology of the Fed. The way in which people these days define price stability, which is one of their alleged mandates, and full employment, all of it is defined these days in the context of general stability in financial markets. And I don't believe it is part of the Fed mandate, but I believe the Fed believes it as part of the Fed mandate. And when you combine that with the overwhelming ‘underfundedness’ of pension funds in the country, then the just very practical matter of an overly indebted society having to finance its debt, I simply believe the Fed has cornered itself. So I can't time it and I can't say exactly how it plays out. But do I believe that in the end, they will end up leaning more dovish than hawkish? I most certainly do.

EICHER: All right, David Bahnsen, financial analyst and advisor, head of the financial planning firm The Bahnsen Group.

David writes daily at DividendCafe.com. Sign up there and receive his daily newsletter by email. David, thanks as always!

BAHNSEN: Thanks so much, Nick.

MARY REICHARD, HOST: Today is Monday, April 11th. Good morning! This is The World and Everything in It from listener-supported WORLD Radio. I’m Mary Reichard.

NICK EICHER, HOST: And I’m Nick Eicher. Next up: the WORLD History Book.

This week marks the 110th anniversary of one of history’s greatest tragedies and the 25th anniversary of a triumph in sports.

REICHARD: But first, we’ll go back 280 years, when one of the most popular pieces of choral music made its debut. Here’s WORLD correspondent Collin Garbarino.

MUSIC: Messiah “Hallelujah chorus”

COLLIN GARBARINO, CORRESPONDENT: On April 13th, 1742, George Frideric Handel debuted his Messiah in Dublin, Ireland, to a crowd of 700 people in the city’s Great Music Hall. That first performance of Messiah took place the Wednesday before Easter, and the show’s proceeds went to charity.

But Messiah got its start a year earlier, when Handel’s long-time collaborator Charles Jennens wrote the libretto. Jennens pulled the words straight from the pages of Scripture intending the oratorio to glorify the divinity of Christ. Fred Fehleisen of the Juilliard School of Music explains the frenzy that came over Handel when he received Jennens’ libretto.

Fred Fehleisen: Handel actually wrote out the Messiah score in 24 days. If you were working with a crow quill pen, dipping it in an inkwell, how fast could you write a page of music? It seems that we couldn’t even copy a score like Messiah in as little time as he actually composed it. But if you look at his handwriting while he’s doing it, he’s literally just flying across the pages.

Messiah would eventually become one of the most beloved oratorios in the English language. But Simon Carrington of Yale Schola Cantorum says Handel would be surprised his most popular work is performed mostly around Christmastime.

Simon Carrington: And he thought of it as a Lenten piece, and was performed in Lent around about Easter time and that was tradition for quite a while…

No matter the time of year, it’s always good to be reminded of the salvation offered to God’s people through Christ.

[Messiah “Worthy is the Lamb… Amen”]

From the heights of sacred music to the consequences of human arrogance.

One-hundred-ten years ago this week, the R.M.S. Titanic met with tragedy in the icy waters of the North Atlantic. On April 10th, 1912, the Titanic began its maiden voyage leaving Southampton, England for New York City. At almost 883 ft long, the Titanic was the largest passenger ship afloat. It was the pride of the White Star Line, but that pride would lead to disaster. People referred to the Titanic as an unsinkable ship, and this National Geographic documentary explains the consequences of that overconfidence.

Narrator: During its voyage, there were no passenger safety drills to give instructions on where to go or which lifeboats to board in case of emergency. But there weren’t enough lifeboats to begin with—only 20 available, which was enough to carry about half of the total passengers and crew. Bruce Ismay, the owner, thought having 64 lifeboats, enough for everyone on board, would make the ship look too cluttered.

The Titanic rushed toward New York at full speed despite receiving warnings of ice in the water. Just before midnight on April 14th, 1912, the Titanic sideswiped an iceberg causing long breaches in the supposedly impenetrable hull.

When the crew realized the danger, they began loading passengers into lifeboats. Because of their lack of training, the crew launched many of the scarce lifeboats only half full.

Less than three hours after striking the iceberg, the Titanic slipped under the surface. About 700 people survived the disaster, while 1500 died in the icy waters of the North Atlantic.

From oceanic tragedy to triumph on the green.

On April 13th, 1997, 21-year-old Tiger Woods became the youngest person to win the Masters Tournament at Augusta National Golf Club. It was the phenom’s first major championship and the beginning of one of the most successful careers in sports history.

But things didn’t start out well. Woods shot four-over-par on the first nine holes of day one. But as the tournament progressed, he got better and better.

Tiger Woods: When I stepped onto 17 tee, I just kind of thought about how many under I was. I saw the scoreboard and saw that I was 18, and I thought, yeah, if I par the last two holes I could have it. And that’s what I tried to do.

On the final day of the tournament, Woods finished 18-under-par—a course record—12 strokes ahead of his nearest competitor. After sinking his last putt from four feet out, Woods gave his caddy a big hug. The next hug was for his father.

Tiger Woods: We made it. We made it. We made it.

Woods would go on to win the Masters four more times, the most recent being in 2019.

That’s this week’s WORLD History Book. I’m Collin Garbarino.

NICK EICHER, HOST: Tomorrow: Divided by war. We’ll talk to pastors in Russia and Ukraine about how the Russian invasion is spilling over into personal relationships.

And, vaccine mandates and the military. We’ll hear from the lawyer who’s defending service members who refuse the COVID shot.

That and more tomorrow.

I’m Nick Eicher.

MARY REICHARD, HOST: And I’m Mary Reichard.

The World and Everything in It comes to you from WORLD Radio.

WORLD’s mission is biblically objective journalism that informs, educates, and inspires.

Jesus said: Blessed are you when others revile you and persecute you and utter all kinds of evil against you, falsely on my account. Rejoice and be glad, for your reward is great in heaven. (Matthew 5:11-12 ESV)

Go now in grace and peace.

WORLD Radio transcripts are created on a rush deadline. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of WORLD Radio programming is the audio record.