Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every
Speaker 1: day we bring you insight and analysis into the most
Speaker 1: important legal news of the day. You can find more
Speaker 1: episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud
Speaker 1: and on Bloomberg dot com slash podcasts. Shares of Internet
Speaker 1: retailers plunged after a decision by the Supreme Court today.
Speaker 1: In a five to four vote, the Court ruled that
Speaker 1: states can start collecting billions of dollars in sales taxes
Speaker 1: from Internet retailers that don't currently charge tax to their customers.
Speaker 1: The Justice has reversed in ruling that had made most
Speaker 1: of the Internet at tax free zone. Joining me Bloomberg,
Speaker 1: New Supreme Court reporter Greg Store Greg Justice Kennedy wrote
Speaker 1: the majority opinion. What did he base the reversal on?
Speaker 1: He based it both on the fact that he didn't
Speaker 1: think the physical presence rule made a whole lot of
Speaker 1: sense in and he said, it really doesn't make a
Speaker 1: lot of sense today when commerce is uh is the
Speaker 1: way so much business gets done. UH. South Dakota's law
Speaker 1: uses instead of a physical presence requirement that says you
Speaker 1: have to have an economic connection to the state by
Speaker 1: having a certain minimum amount of sales. And uh, he
Speaker 1: said that's a better way to determine whether a state
Speaker 1: should have the right to impose tax collection responsibilities. It
Speaker 1: wasn't a typical lineup of justices joining Justice Kennedy in
Speaker 1: the majority, where Justices Clarence Thomas, Ruth Bader Ginsburg, Samuel Alito,
Speaker 1: and Neil Gorst. So to what do you attribute this? Yeah,
Speaker 1: this the underlying legal doctrine which is known as the
Speaker 1: dormant Commerce clause, which sounds like something that would put
Speaker 1: you to sleep, but it's basically the idea that states
Speaker 1: can't interfere with interstate commerce, at least unless Congress lets
Speaker 1: them explicitly says they can. That underlying doctrine, for whatever reason,
Speaker 1: just cuts across ideological lines. It has never divided the
Speaker 1: Court the way so many other issues UH do. And
Speaker 1: in this case, it was very clear that the arguments
Speaker 1: UH that Justice Ginsburg was poised to overturn this physical
Speaker 1: presence requirement. Uh. She didn't see any reason why a
Speaker 1: state should not be allowed to UH impose tax collection responsibilities,
Speaker 1: and she joined with people like Justice Thomas, who thinks
Speaker 1: that the whole Dorman's dormant commerce clause idea actually isn't
Speaker 1: in the Constitution. So he was even uh more excited
Speaker 1: about overturning the Quill decision. What did the descent say
Speaker 1: and who wrote out well that the you know, it
Speaker 1: wasn't so much. He was written by the Chief Justice
Speaker 1: John Roberts, and it was so much that he was
Speaker 1: saying the physical presence requirement was a good one, but
Speaker 1: basically that this is going to have a lot of implications,
Speaker 1: implications we can't fully understand. And Congress is the one
Speaker 1: who should deal with us. So this entire area of
Speaker 1: law is one where uh, you know, both before this
Speaker 1: ruling and after this ruling, Congress can come in and
Speaker 1: set the rules for the states in terms of what
Speaker 1: they can what they can do, and and Chief Justice
Speaker 1: Roberts essentially said, it would be much better if we
Speaker 1: let Congress overturn the physical presence rule and therefore be
Speaker 1: able to set whatever, you know, sort of minimum requirements.
Speaker 1: It would want, uh for first states to avoid imposing
Speaker 1: too much of a burden on small businesses. So Congress
Speaker 1: has never been able to pass that kind of a
Speaker 1: of a law, but might states Now all the states
Speaker 1: having different kinds of requirements. Might that lead Congress to
Speaker 1: move intet a federal standard, Yeah, it's sure might. Um,
Speaker 1: there are you know, some of the internet retailers Amazon has,
Speaker 1: for example, has wanted for a while for Congress to
Speaker 1: step in and do something like that. Uh. So you
Speaker 1: have both the concern of a patchwork of state laws
Speaker 1: and a concern that uh small businesses might be forced
Speaker 1: to collect taxes. And there will be a push for
Speaker 1: Congress to set a clear minimum threshold. Uh. You know,
Speaker 1: I mean, obviously it's it's it's tough to get much
Speaker 1: through Congress these days at all, but there is certainly
Speaker 1: a lot of talk about trying to get Congress to act.
Speaker 1: At this point. Another ruling could effect about a hundred
Speaker 1: cases currently at the SEC, along with a dozen that
Speaker 1: are on appeal. Tell us about that it hasn't gotten
Speaker 1: as much play, obviously as the Internet ruling. No, it
Speaker 1: has it. Um. It is uh involving a guy UH
Speaker 1: named Ray Lucia who UH was an investment office investment advisor,
Speaker 1: and he uh touted his investment strategy as buckets of money,
Speaker 1: and he was accused by the SEC of misleading potential
Speaker 1: investors and his arguments, which could be really important for
Speaker 1: the way administrative agencies work, is that the judge who
Speaker 1: decided his case and find him and banned them from
Speaker 1: the investment advisory business UH wasn't properly appointed under the constitution.
Speaker 1: So basically, the Constitution says, there are certain people who
Speaker 1: are called officer and because they're pretty darn important, more
Speaker 1: important than just the run of the mill employee, they
Speaker 1: have to be appointed in a specific way, like directly
Speaker 1: by the Commission and the SECS administrative law judges were
Speaker 1: not appointed. It was through UH the federal government's Personnel
Speaker 1: Office was involved. They weren't appointed directly by the Commission UH,
Speaker 1: and so he challenged the finding against him on those grounds.
Speaker 1: The Supreme Court agreed with them. And what could be
Speaker 1: really important about this more broadly is that UM, it's
Speaker 1: all part of a doctrine that could give the president
Speaker 1: more control and ultimately give the president more ability to
Speaker 1: have somebody fired for not going along with administrative priorities.
Speaker 1: Explain how that could happen, GREG, and what kind of circumstances.
Speaker 1: So if if UM, the so now we know that
Speaker 1: administrative law judges are officers. UM. The argument from some
Speaker 1: other cases. Is that it's you're an officer, you have
Speaker 1: to have a certain level of accountability, and at least
Speaker 1: the agency, which is politically appointed, the SEC has to
Speaker 1: have ability to file to fire you for not going
Speaker 1: along with administrative administration priorities. UM. So that issue wasn't
Speaker 1: directly before the court in this case, but it seems
Speaker 1: very likely that soon we'll get a case saying uh
Speaker 1: that the SEC um whose members are are you know,
Speaker 1: we're appointed by the president. Uh, you should have more
Speaker 1: ability to fire people like administrative law judges and potentially
Speaker 1: other people who work for for the agency. Does this
Speaker 1: mean that the SEC now has to go back and
Speaker 1: appoint all the judges are already on the stats, so
Speaker 1: they've already tried to do that. Um. But what the
Speaker 1: court said in this case is that's not good enough. Uh.
Speaker 1: Mr Lucia has a right to a hearing before a
Speaker 1: different administrative law judge because you you um, uh you know,
Speaker 1: even if this person will be able to stay in
Speaker 1: the job. Uh while he was while this a l
Speaker 1: J was considering uh the Luccia case. Uh, he had
Speaker 1: not been properly appointed. And it doesn't make any sense
Speaker 1: that we need to send it to another person to
Speaker 1: kind of give him a fresh start in front of
Speaker 1: a judge who was properly appointed. It's a technical issue
Speaker 1: that actually has a lot of repercussions. Let's talk about
Speaker 1: what's coming up. I understand that we're having opinions on
Speaker 1: a Friday as well. Tomorrow. We are having opinions on
Speaker 1: a Friday bonus opinion day tomorrow at the Supreme Court.
Speaker 1: We are now down to tin cases that are still
Speaker 1: to come. The biggest, the one that people are really
Speaker 1: watching for, of course, as a Trump travel band. Another
Speaker 1: really big business case that that is important involves American
Speaker 1: Express UH and an anti trust case against them for
Speaker 1: with what's known as its anti steering rules, those bar
Speaker 1: merchants who accept American Express cards from steering customers to
Speaker 1: another card that may h charge the merchant lower fees.
Speaker 1: In other words, the merchant can't say, hey, if you
Speaker 1: pay with X card, will give you a discount. Um.
Speaker 1: There's an trust case against that. The Court could revive
Speaker 1: that case. There's also a big case involving mandatory union
Speaker 1: fees by public sector workers and whether they have a
Speaker 1: government Workers have a First Amendment right to say I
Speaker 1: don't want to contribute to to my union. All right,
Speaker 1: Thanks so much, Greg. We will check back with you
Speaker 1: tomorrow for all the latest opinions. Thanks for listening to
Speaker 1: the Bloomberg Law Podcast. You can subscribe and listen to
Speaker 1: the show on Apple podcast, SoundCloud, and on Bloomberg dot
Speaker 1: com slash podcast. I'm June Basso. This is Bloomberg yea