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Speaker 1: This is Bloomberg Law with June Grossel from Bloomberg Radio.

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Speaker 1: President Donald Trump started his second administration with the blitz

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Speaker 1: of executive orders on issues ranging from trade, immigration, and

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Speaker 1: US foreign aid to demographic diversity, civil rights, and the

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Speaker 1: hiring of federal workers. Some orders were challenged in federal

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Speaker 1: lawsuits before the end of his first day in office.

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Speaker 1: Attorneys general from twenty two states have filed suits to

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Speaker 1: block his executive order aimed at ending birthright citizenship, and

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Speaker 1: the National Treasury Employees Union, which represents federal government employees

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Speaker 1: and dozens of agencies, has launched a legal attack against

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Speaker 1: Trump's Schedule F executive order. It's a directive to reclassify

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Speaker 1: federal employees that makes it easier for his administration to

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Speaker 1: fire career employees, basically reinstating the order Trump issued at

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Speaker 1: the end of his first term, which was quickly revoked

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Speaker 1: by President Joe Biden. Joining me is Anne Lafasso, a

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Speaker 1: professor at the University of Cincinnati Law School and a

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Speaker 1: former attorney at the NLRB, and will you explain what

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Speaker 1: Schedule F is.

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Speaker 2: Schedule F is a new classification of employees or sub

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Speaker 2: classification that will remove employees that are currently in the

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Speaker 2: Competitive Service into the Accepted Service. So there's three main

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Speaker 2: classifications of employees. They are the Competitive Service, the Accepted Service,

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Speaker 2: and the Senior Executive Service. So the Senior Executive Service

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Speaker 2: are the super politicals that's you know, like cabinet members

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Speaker 2: and the deputy to the General Council of sending the

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Speaker 2: General Council. Those are the ones that have absolutely no

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Speaker 2: job protection, and then the Competitive Service has all job protection.

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Speaker 2: It's almost all federal jobs. And that was put in

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Speaker 2: place over one hundred years ago by I think it

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Speaker 2: was President Arthur. They were trying to get rid of

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Speaker 2: cronyism that really started in the Andrew Jackson era to

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Speaker 2: the Victor Goes the Spoils, which was the idea of

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Speaker 2: just putting only loyalists into the government and then there'd

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Speaker 2: be a lot of corruption. And Teddy Roosevelt was really

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Speaker 2: involved in the Competitive Service and think this was really

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Speaker 2: important to have civil servants. I mean, obviously everyone has

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Speaker 2: their politics as citizens, but as government employees, they would

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Speaker 2: just serve whoever the administration is and they would be experts.

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Speaker 2: They're the ones who have to take the Civil Service

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Speaker 2: exam and they're the ones who are the vast majority

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Speaker 2: of employees for the federal government. The accepted service then

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Speaker 2: are just exceptions to the competitive service where it doesn't

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Speaker 2: make sense to give them this civil service exam like

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Speaker 2: all attorneys or accepted service. In other words, the presumption

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Speaker 2: is everyone in the government is competitive service unless there's

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Speaker 2: an reception or unless you're a political appointee. The political

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Speaker 2: appointees are very very few. They're the very top top people,

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Speaker 2: and they have no job security. They often get fired

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Speaker 2: when there's a new administration. That makes sense because they're

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Speaker 2: calling the shots. They're saying, we're implementing the new administration's policies.

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Speaker 2: The schedule S is essentially a way of reclassifying these

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Speaker 2: competitive service employees so that they no longer have any

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Speaker 2: job security. Now, the administration feels that they need to

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Speaker 2: do this because it's hard to fire people, and they

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Speaker 2: have made a case so that they need to be

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Speaker 2: able to fire people because people are not doing their

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Speaker 2: job well. And the president does have power to make

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Speaker 2: changes in classifications where they're necessary for good administration.

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Speaker 1: I mean, the theory of having career employees is that

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Speaker 1: every time the administration changes, you don't want all the

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Speaker 1: workers changing that would mean no institutional memory at all, exactly.

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Speaker 2: So you have to have a balance between implementing policy

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Speaker 2: and stability of a government. And so the civil service

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Speaker 2: basically is running the governments and there's a few people

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Speaker 2: that are the boss and they're implementing policy. But you know,

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Speaker 2: I worked for the federal government ten years. I worked

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Speaker 2: five years for the Clinton administration and five years for

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Speaker 2: the Bush to administration, and my job did not change.

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Speaker 2: The only thing that changed was the type of decisions

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Speaker 2: that were coming down. And the Clinton administration they were

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Speaker 2: more pro union and in the Bush administration they were

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Speaker 2: more pro management. But I did the same exact thing.

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Speaker 2: My job was to enforce whatever decision came down.

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Speaker 1: This executive order from Trump complained that accountability among federal

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Speaker 1: employees is currently sorely lacking. Any power they have is

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Speaker 1: delegated by the president, and they must be accountable to

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Speaker 1: the resident. What does this order actually do.

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Speaker 2: It makes it easier for the president, through his administrators

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Speaker 2: like general counsels and people like that, to fire employees. Basically,

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Speaker 2: there's about fifty thousand people that they think could be

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Speaker 2: affected by this order. I mean, there's three million little

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Speaker 2: under three million people who look for the federal government.

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Speaker 2: But this is going to have large effects. It's also

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Speaker 2: possibly going to not just take away their due process rights,

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Speaker 2: but also all their union rights because a lot of

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Speaker 2: these competitive service people are actually unionized. Some of the

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Speaker 2: accepted services are also unionized. They're in unions. And what

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Speaker 2: this administration believes is that anything that gets in its

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Speaker 2: way of efficiently firing someone is too much. It is said,

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Speaker 2: it takes too long and it's too hard to fire people.

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Speaker 2: That is just not true. Managers need to manage the

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Speaker 2: way that you can fire someone. You just have to

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Speaker 2: give them due process. In fact, all of Europe that way,

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Speaker 2: all of Europe, there's no such thing as at will employment.

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Speaker 2: You have to give people due process if you're going

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Speaker 2: to fire them. So if you want to fire a

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Speaker 2: poor performer, and this is what Trump is mostly saying,

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Speaker 2: he's complaining about it, poor performers, then you just have

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Speaker 2: to document them and then you fire them. They get

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Speaker 2: their due process and you prove your case. Yeah, it's

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Speaker 2: different than if they're at will. You could fire them

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Speaker 2: in one day. That is true, unless your reasons for

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Speaker 2: firing them is unlawful under federal Estate law. But here,

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Speaker 2: what he's really doing is taking away their due process rights. Now,

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Speaker 2: federal law says that once an employee has due process

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Speaker 2: rights under the Constitution, then you can't just take them away.

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Speaker 2: So the NTU is saying that they're taking away these rights. Well,

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Speaker 2: you can't just take away property right.

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Speaker 1: So the National Treasury Employees Union sue Trump in DC

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Speaker 1: federal Court on Monday to block the Schedule F executive order.

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Speaker 1: They argue that it's contrary to congressional intent and violates

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Speaker 1: the Administrative Procedure Act. So explain why they say it's

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Speaker 1: contrary to congressional intent.

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Speaker 2: First, Well, Congress created this whole system in order to

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Speaker 2: give specifically to give job security to employees, so there

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Speaker 2: wouldn't be a changeover for most employees from administration administration

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Speaker 2: for one's ability and to combat cronyism, and so this

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Speaker 2: would be contrary to the whole idea of stability. So

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Speaker 2: that's I think is the most important thing that the

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Speaker 2: union is arguing.

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Speaker 1: And tell us about their claim that this order violates

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Speaker 1: the Administrative Procedures Act.

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Speaker 2: Well, the Administrative Procedures Act is the basis for making regulations,

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Speaker 2: and these are regulations that have been put in and

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Speaker 2: they have to be done in a certain way. And

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Speaker 2: what Trump is trying to do by executive order is

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Speaker 2: what is supposed to be done by m implementing regulations

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Speaker 2: through a congressional act. So an argument is he's essentially

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Speaker 2: usurping or commandeering the power of the legislature. Now he

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Speaker 2: says he can do this because of his powers that

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Speaker 2: Congress gave him under the Administry of the Procedures Acts,

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Speaker 2: and the Union saying no, you have very limited powers

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Speaker 2: under the Administrative Procedures Acts, and those are to create

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Speaker 2: accepted service in the most limited circumstances, which is pretty

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Speaker 2: much what the Act does say. But of course we

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Speaker 2: know that words can be interpreted different ways depending on judges,

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Speaker 2: and so they're going to litigate that. This is definitely

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Speaker 2: going to be litigated. I mean, it's not going to

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Speaker 2: be thrown out of court.

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Speaker 1: Trumpett enacted this Schedule F executive order at the end

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Speaker 1: of his first term, and Biden revoked it, and then

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Speaker 1: the Biden administration's Office of Personnel Management published a final

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Speaker 1: rule in May of twenty four to protect against this

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Speaker 1: kind of executive action. So is that rule an obstacle

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Speaker 1: in the way of Trump enforcing this executive order on

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Speaker 1: Schedule F.

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Speaker 2: So it's actually really basic constitutional law if you think about. So,

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Speaker 2: what he's saying is that one I have constitutional power

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Speaker 2: to do this, and two I have congressional power to

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Speaker 2: do this, and no regulation basically can tell me that

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Speaker 2: I can't do this. So what he's saying is that

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Speaker 2: he has this authority and they have to be accounted

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Speaker 2: directly to him. I think he would probably go so

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Speaker 2: far as to say that to the extent that Congress

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Speaker 2: took away that power, that it was unconstitutional. I'm going

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Speaker 2: to guess that they will make that argument. Okay, So

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Speaker 2: you see how that works is that there's a congressional act.

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Speaker 2: Then there are the regulations, and that's an administrative act,

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Speaker 2: which means this executive branch that was done through Brden

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Speaker 2: to implement these what you're allowed to do. That's all

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Speaker 2: administrative law. Then there's what the President is doing now,

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Speaker 2: which is executive orders. And of course the courts will

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Speaker 2: interpret these things. Now, remember Chevron has been overturned, which

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Speaker 2: means none of these agencies getting different. So the courts

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Speaker 2: are going to decide with very little input from the agencies,

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Speaker 2: what this means. I mean, yes, the agencies can say

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Speaker 2: what they think these regulations mean, and in the meantime,

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Speaker 2: Trump will make its own regulations based on Congress's Act.

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Speaker 2: But remember they have to implement what the Act says,

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Speaker 2: unless under two circumstances can change. One is Congress has

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Speaker 2: to change the Act to give the president more power,

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Speaker 2: or two the president's can have to argue that to

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Speaker 2: the extent that the Act is read as taking away

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Speaker 2: power to do this from the president, it's unconstitutional.

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Speaker 1: Stay with me and coming up, continue this conversation with

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Speaker 1: Professor Ann Lafasso of the University of Cincinnati Law School.

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Speaker 1: The Trump administration has ordered federal employees in DEI offices

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Speaker 1: to be placed on paid leave by Wednesday at five

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Speaker 1: pm as the agencies wind down diversity initiatives. I'm June

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Speaker 1: Grosso and you're listening to Bloomberg. The National Treasury Employees

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Speaker 1: Union launched a legal attack against President Donald Trump's Schedule

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Speaker 1: F executive order. It's a directive that makes it easier

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Speaker 1: for his administration to fire career employees who work across administrations.

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Speaker 1: It's the latest lawsuit seeking to block Trump's efforts to

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Speaker 1: cull the federal workforce. On Monday, unions and other groups

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Speaker 1: file complaints in federal court seeking to end the Department

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Speaker 1: of Government efficiency. I've been talking to an expert in

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Speaker 1: labor law, Professor Ann Lafasso of the Universe Have Cincinnati

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Speaker 1: Law School. It takes a while to change a regulation.

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Speaker 1: Does the Trump administration have to change your regulation before

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Speaker 1: they can start, let's say, firing people.

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Speaker 2: Not according to them. First of all, they can always

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Speaker 2: fire a b ses to senior executive service, but they

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Speaker 2: want to fire more people. So what they're saying is

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Speaker 2: that the mere executive order does the trick and that

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Speaker 2: they can just do this now. Or what they're saying

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Speaker 2: is they're reclassifying people, which under the Act they're allowed

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Speaker 2: to do. Okay, so that's what they're really doing. So

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Speaker 2: they're just saying, we are reclassifying people right now. Then

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Speaker 2: what the Union is saying is the whole purpose of

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Speaker 2: the reclassification is so they can fire them more easily. Now.

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Speaker 2: They're not just taking that out of thin air. These

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Speaker 2: are statements by Trump that you know, if you look

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Speaker 2: at the twenty twenty executive Order that's been reinstated, it

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Speaker 2: says all of this. I we read it last night.

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Speaker 2: It says all of it. So what they're saying is,

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Speaker 2: you know, listen to his words, this is what he

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Speaker 2: wants to do, and he said he wants to do

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Speaker 2: this also, so I don't think there's any doubt that

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Speaker 2: that's the fact. So then the question is is he

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Speaker 2: allowed to do this under these regulations and under this law,

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Speaker 2: And even if he's not, are the laws unconstitutional which

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Speaker 2: and he's allowed to do it anyway, or are the

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Speaker 2: laws somehow wrong, incorrect or not being interpreted correctly. It

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Speaker 2: is very complicated, and.

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Speaker 1: What's your opinion of this executive order?

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Speaker 2: If I were a judge, I would say, he can't

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Speaker 2: do this. I don't know what the courts are going

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Speaker 2: to do, but my guess is that he's going to

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Speaker 2: be cut back severely, and generally, the courts have not

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Speaker 2: surprised me. I wasn't surprised by Roe being overturned. I

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Speaker 2: wasn't surprised by a lot of things. So I'm not

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Speaker 2: a person who just always picks the progressive side, because

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Speaker 2: that's what I wish would happen. If you try to

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Speaker 2: really think through and it seems like this is a

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Speaker 2: step too far, but you know, you don't know. You know,

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Speaker 2: you could get as a trial judge, you'd get someone

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Speaker 2: like an alien cannon who does get overturned quite a bit.

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Speaker 2: You might see the President win initially, and then it

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Speaker 2: goes up to court appeals, and then it might go

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Speaker 2: to an no bounk even which is the full court

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Speaker 2: of appeals, and then it could go to the Supreme Court.

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Speaker 2: So this could take years.

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Speaker 1: If this litigation is going to go on for years,

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Speaker 1: the key then would be whether the district court would

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Speaker 1: grant some kind of injunction to stay the enforcement of

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Speaker 1: this while the litigation proceeds.

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Speaker 2: They may very well put in a planmary junction because

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Speaker 2: they make a really good case for harm. Now I

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Speaker 2: don't see a tro though a temporary restraining order, but

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Speaker 2: then again it hasn't been implemented yet. Maybe if they

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Speaker 2: try to implement it, they would. They're asking for a

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Speaker 2: full restraining order right now, so this is just the lawsuit.

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Speaker 2: So then if they do go into court for a

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Speaker 2: preliminary or temper restraining order, which is before a full

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Speaker 2: hearing could be made, then they have to do the

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Speaker 2: four factor tests and the balance of equities, and with

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Speaker 2: this would there be harm which basically which side would

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Speaker 2: have greater harm. My guess is that it would be

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Speaker 2: greater harm to fire all these people. Then the president

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Speaker 2: will make some sort of national security argument that he

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Speaker 2: has to have these people fired because it's turning the

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Speaker 2: entire government. The other side goes, they, no, the government

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Speaker 2: hasn't collapsed, and all these people are gonna be fired,

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Speaker 2: and it's gonna not only hurt these fifty thousand people,

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Speaker 2: but it's also going to hurt it's gonna have tertiary

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Speaker 2: effects on the economy. Again, if you're gonna ask me

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Speaker 2: what I thought, I would issue the temporary restraining order.

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Speaker 2: But again it's going to depend on the judge, and

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Speaker 2: then it will go to the DC Circuit, and then

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Speaker 2: that could go much quicker, the temporary part, and then

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Speaker 2: maybe that even goes to the Supreme Court, or maybe

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Speaker 2: the Screme Court denies Tergerri on that and just lets

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Speaker 2: whatever the DC Circuit does.

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Speaker 1: And let's turn for a moment to the Department of

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Speaker 1: Government Efficiency, which Trump established and is led by billionaire

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Speaker 1: Elon Musk to cut federal government spending. Unions have filed

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Speaker 1: in federal court against that department. Are the same issues

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Speaker 1: involved or different issues.

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Speaker 2: Well, I think they're overlapping issues there because that department

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Speaker 2: is trying to get rid of what they see is

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Speaker 2: a lot of government waste. And part of that, you know,

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Speaker 2: what's the easiest thing to get rid of if you

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Speaker 2: were a private company and this is being headed by well,

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Speaker 2: I think Romaswani's out of it, but it's still with

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Speaker 2: people with private enterprise experience, you know, like Elon Musk.

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Speaker 2: Then the fastest thing to do always is to cut labor,

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Speaker 2: because you can't just cut capital meaning leases and buildings

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Speaker 2: and things like that right away. You know, you can't

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Speaker 2: just get rid of a government contract right away, but

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Speaker 2: you can get rid of employees. We can't because they're

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Speaker 2: competitive service. So you see, that's what's going on here,

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Speaker 2: and so that I think they are very very closely related.

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Speaker 2: But remember the old adage that democracy stuck except for

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Speaker 2: all the rest, the worse form of government, except for

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Speaker 2: all the rest. You know, we trade a little bit

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Speaker 2: of efficiency for freedom. Democracy means we're free. It means

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Speaker 2: that we get a say. Getting a say is definitely

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Speaker 2: less efficient than one person dictating what is going to happen.

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Speaker 2: So there is built into a democracy from inefficiency it's

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Speaker 2: not profit runs. And I think that the Trump administration

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Speaker 2: has done a great job of marketing of government employees.

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Speaker 2: There's slackers. They are not doing their jobs, and that's

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Speaker 2: like a stereotype. I worked for ten years and I'm

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Speaker 2: going to tell you I worked. I also worked till

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Speaker 2: nine o'clock at night. I worked from home, you know,

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Speaker 2: addition to what I was working in the office. And

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Speaker 2: I didn't see a lot of slackers. I know that

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Speaker 2: say I'm a godal, but that's my experience at the

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Speaker 2: National Air Relations Board. So it's not that it's just

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Speaker 2: the things take time, just like lawsuits take time, and

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Speaker 2: it's because we have a democracy and that's about freedom.

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Speaker 2: So the other side, I think, if they were going

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Speaker 2: to market this properly, should be talking about that this

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Speaker 2: is really a war on democracy. And then and Trump's

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Speaker 2: going to say, no, this is to make our democracy stronger.

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Speaker 2: That's the rhetoric that I think is going to be employed.

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Speaker 2: And the counter to what Trump is saying is that

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Speaker 2: it's actually a war in democracy. Democracy has built into

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Speaker 2: it a certain amount of inefficiency because you get to

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Speaker 2: hear different points of view. By the way, also, I

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Speaker 2: want to make this point when I was in the government,

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Speaker 2: and this is the true for every attorney in the government.

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Speaker 2: It is our job when political tells us we want X,

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Speaker 2: and we want it done using why means, let's say

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Speaker 2: why means is unlawful. It was my job to tell them, one,

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Speaker 2: you can't do it that way because why is unconstitutional

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Speaker 2: or it's unlawful or whatever it is. However, I'm looking

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Speaker 2: for solutions to still try to get you to X. So,

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Speaker 2: for example, one thing he could do is the long solution,

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Speaker 2: go to Congress, put a new bill in, change the

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Speaker 2: laws right. That takes time. I think some of the

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Speaker 2: things he's done are actually unconstitutional. I might be wrong,

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Speaker 2: but it's certainly an argument. And what I would be

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Speaker 2: telling someone is it would be my job as a

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Speaker 2: lawyer to say, hey, you can't necessarily do it this way.

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Speaker 2: It's going to take longer. In fact, I did that

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Speaker 2: at the NRB. I never thought my job was in

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Speaker 2: danger because I did my job and the politicals didn't

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Speaker 2: like it. I never had a problem with you. It's

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Speaker 2: not one Republican, not one Democrat, telling them what I

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Speaker 2: thought the law was and showing them my reasons, and

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Speaker 2: they could reject it. They were lawyers also if they

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Speaker 2: didn't like what I said, but it was my job

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Speaker 2: to be as honest as possible about what the law

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Speaker 2: was so that they don't get in trouble. So I

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Speaker 2: think that's another thing that people have to understand. It's

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Speaker 2: not disloyal to tell the president or his agents that

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Speaker 2: what they're doing is unconstitutional. It's actually loyal to protect them.

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Speaker 2: So I think that's a really important point for people

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Speaker 2: to understand.

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Speaker 1: Trump has directed that all federal employees of diversity, equity

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Speaker 1: and inclusion offices be placed on administrative leave with pay

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Speaker 1: by five pm Wednesday. This follow is an executive order

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Speaker 1: he's signed on Monday, ordering a sweeping dismantling of the

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Speaker 1: federal government's diversity and inclusion programs.

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Speaker 2: So what he's doing is he's limiting the damages because

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Speaker 2: if you put them on paid leave, then they're not

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Speaker 2: being injured. Well, they're being injured psychologically, but they're not

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Speaker 2: being injured monetarily, So it's terribly inefficient. Well, I guess

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Speaker 2: he doesn't see it as inefficient because he doesn't believe

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Speaker 2: in DEI, so there's no job to perform. So what

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Speaker 2: he's essentially saying is these jobs no longer really exist.

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Speaker 2: But to be on the safe side, we're going to

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Speaker 2: give them paid leaves, and that would only be a

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Speaker 2: monetary loss if they're forced to take their own annual leave.

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Speaker 2: So he's just giving extra leave to them, because each

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Speaker 2: of them is entitled to a payout of their annual

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Speaker 2: leave when they leave if they separate from service, not

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Speaker 2: their sick leaves, but they are entitled to their annual leave,

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Speaker 2: and you can you can accumulate that. At least when

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Speaker 2: I was there, you were able to accumulate that. And definitely,

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Speaker 2: so if you have a year's worth of annual leave,

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Speaker 2: then they would owe them a year's worth of staff.

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Speaker 2: So if you have two weeks, you get two weeks

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Speaker 2: of salaries. So if he's just giving them leave right now, additionally,

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Speaker 2: there's no harm to them.

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Speaker 1: But what about the firing. Is he allowed to fire?

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Speaker 1: If he's doing away with DEI completely.

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Speaker 2: That would have to be litigated. Let's just say let's

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Speaker 2: do it a little less controversially. Okay, let's say there

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Speaker 2: really is something that's redundant, like we don't need this

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Speaker 2: anymore because we don't need people who run copy machine.

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Speaker 2: You remember back in the seventies. How you like xerox things. Okay,

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Speaker 2: we don't do that anymore, and we can't find new

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Speaker 2: positions for them. You can make a position redundant, so

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Speaker 2: that's easy. The question would be that would be litigated.

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Speaker 2: Is allowed to just say we don't need any of

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Speaker 2: these people. Oh and by the way, we can't find

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Speaker 2: jobs for them anywhere, So that's going to have to

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Speaker 2: be litigated, and his position will be that these jobs

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Speaker 2: no longer exist, and then that's a finding of fact

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Speaker 2: and law that some judge is going to have to decide.

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Speaker 1: I see so much litigation ahead for so many of

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Speaker 1: these executive orders. We'll have to see how the courts

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Speaker 1: respond to them. Thanks so much, Anne. That's professor Ann

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Speaker 1: Lafasso of the University of Cincinnati Law School. Coming up

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Speaker 1: next on the Bloomberg Law Show. The Supreme Court justices

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Speaker 1: seem skeptical of the government's arguments that it should curb

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Speaker 1: where e cigarette manufacturers can sue in order to cut

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Speaker 1: back on form shopping. I'm June Grosso, and you're listening

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Speaker 1: to Bloomberg. A case at the Supreme Court about the

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Speaker 1: proper place to sue the federal government highlights how far right.

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Speaker 1: The nation's most conservative appeals court has shifted with opinions

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Speaker 1: that the Supreme Court has increasingly had to push back on.

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Speaker 1: It's one of thirteen cases this term out of the

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Speaker 1: US Court of Appeals for the Fifth Circuit. That's more

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Speaker 1: than twenty percent of the Supreme Court's current workload. The

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Speaker 1: statute at the heart of the oral arguments on Tuesday

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Speaker 1: limits where tobacco companies can challenge the Food and Drug

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Speaker 1: Administration's denial of an application to sell their products. The

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Speaker 1: Fifth Circuit is the only circuit to sign with manufacturers,

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Speaker 1: and the government said that has led almost all challenges

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Speaker 1: to FDA denials to be brought in that circuit. Joining

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Speaker 1: me is healthcare attorney Harry Nelson, a partner at Leech

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Speaker 1: Tishman Nelson Hardiman. Harry tell us about the issue before

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Speaker 1: the Justices.

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Speaker 3: And the ability of private parties to essentially shop for

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Speaker 3: where they want to challenge the FDA. Right, the FDA

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Speaker 3: has the authority under this law It's fifteen years old,

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Speaker 3: called the Family Poking Prevention and Tobacco Act to regulate

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Speaker 3: tobacco products. And so when R. J. Reynolds had a

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Speaker 3: FDA denial on an attempt to market mental labored e

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Speaker 3: cigarette even though based in North Carolina, and they could

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Speaker 3: have filed in federal court there in the fourth federal circuits,

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Speaker 3: they looked around and they realized that they would get

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Speaker 3: a much more favorable audience in the fifth Circuit down

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Speaker 3: in Texas and Mississippi, and so they went over to

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Speaker 3: shop as people adversely affected by the law to get

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Speaker 3: a decision. And so the FDA essentially is challenging that,

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Speaker 3: and now the federal government is pushing back, and the

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Speaker 3: question is where does this case need to be heard.

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Speaker 3: So it's an interesting case because it goes to the

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Speaker 3: ability of people challenging the federal government generally the FBA

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Speaker 3: in particular, to shop for places where they may have

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Speaker 3: a strategic advantage based on the judges that we'll hear it,

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Speaker 3: based on private previous decisions, and so you know, it's

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Speaker 3: an interesting case that sort of pits on the one side,

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Speaker 3: sort of the free market and the opportunity for in

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Speaker 3: this case, tobacco product manufacturer and retailers to choose a

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Speaker 3: place where they think they're going to have the best

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Speaker 3: chance of preventing their case, and on the other side,

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Speaker 3: a federal agency the FDA that's afraid of its regulations

434
00:26:13,040 --> 00:26:17,160
Speaker 3: being more vulnerable because of that of that choice. Even

435
00:26:17,160 --> 00:26:19,200
Speaker 3: though its specifically a tobacco case, it has a lot

436
00:26:19,200 --> 00:26:22,600
Speaker 3: of implications for other industries, for drugs, for food, about

437
00:26:22,640 --> 00:26:24,240
Speaker 3: you know, the power of federal agencies.

438
00:26:24,600 --> 00:26:28,040
Speaker 4: Just to clarify, the Fifth Circuit, which is the most

439
00:26:28,080 --> 00:26:32,600
Speaker 4: conservative circuit in the country, is the only circuit that

440
00:26:32,880 --> 00:26:35,840
Speaker 4: sided with manufacturers on this issue.

441
00:26:36,200 --> 00:26:39,320
Speaker 3: Exactly. Yeah, the Fifth Circuit has reliably over the last

442
00:26:39,359 --> 00:26:42,679
Speaker 3: few years become the most conservative circuit and it's the

443
00:26:42,680 --> 00:26:46,679
Speaker 3: only one that really where the FDA didn't prevail on

444
00:26:46,800 --> 00:26:50,439
Speaker 3: its authority to limit these tobacco products from the market.

445
00:26:50,880 --> 00:26:55,480
Speaker 4: The law says that any person adversely affected by a

446
00:26:55,520 --> 00:26:59,360
Speaker 4: denial can challenge in their home circuit or the DC Circuit.

447
00:27:00,000 --> 00:27:01,960
Speaker 4: They certainly don't want to go to the DC Circuit,

448
00:27:02,359 --> 00:27:06,520
Speaker 4: which has expertise and administrative law. So the question then

449
00:27:06,720 --> 00:27:09,920
Speaker 4: was whether these retailers were adversely affected.

450
00:27:10,320 --> 00:27:13,480
Speaker 3: That's a big question. The FDA is making other arguments,

451
00:27:13,480 --> 00:27:16,040
Speaker 3: you know, is challenging whether retailers can go to court

452
00:27:16,200 --> 00:27:17,639
Speaker 3: whole The question is do they have the right to

453
00:27:17,680 --> 00:27:20,639
Speaker 3: go to court to challenge a public health decision by

454
00:27:20,640 --> 00:27:22,360
Speaker 3: the sea in the first place. And then the other

455
00:27:22,400 --> 00:27:24,880
Speaker 3: question is where if they are allowed to go, where

456
00:27:24,880 --> 00:27:27,200
Speaker 3: do they get to go in the time when we're

457
00:27:27,200 --> 00:27:31,000
Speaker 3: watching the power of federal agencies sort of the weekends.

458
00:27:31,200 --> 00:27:35,800
Speaker 3: This is another case that would strengthen certainly anyone challenging regulations.

459
00:27:36,119 --> 00:27:40,119
Speaker 1: Several justices suggested that the plain language of the statute

460
00:27:40,240 --> 00:27:45,919
Speaker 1: includes retailers because they're adversely affected by the denial, just

461
00:27:45,960 --> 00:27:50,280
Speaker 1: as Sprett Kavanaugh said, retailers are losing money by not

462
00:27:50,400 --> 00:27:53,159
Speaker 1: being allowed to sell these products, and that sounds like

463
00:27:53,320 --> 00:27:57,199
Speaker 1: adversely affected. So did it seem like a majority of

464
00:27:57,240 --> 00:28:03,280
Speaker 1: the justices were leaning toward RJR and threetailers here?

465
00:28:03,680 --> 00:28:06,359
Speaker 3: I think there is going to be some sympathy within

466
00:28:06,520 --> 00:28:11,960
Speaker 3: the particularly within the conservative justices, for giving more freedom

467
00:28:12,200 --> 00:28:16,480
Speaker 3: to parties to choose where to file their cases. You know,

468
00:28:16,640 --> 00:28:19,119
Speaker 3: On the one hand, r JR Is based in North Carolina.

469
00:28:19,200 --> 00:28:21,240
Speaker 3: On the other hand, they sell their products nationally, so

470
00:28:21,960 --> 00:28:24,600
Speaker 3: you know, so there certainly is an argument if you're

471
00:28:24,640 --> 00:28:28,840
Speaker 3: interested in the freedom of companies, of private actors who

472
00:28:28,960 --> 00:28:31,040
Speaker 3: are selling products all over the country. It's not like

473
00:28:31,240 --> 00:28:33,400
Speaker 3: r J. Reynolds has no tie. It's just that they

474
00:28:33,400 --> 00:28:36,119
Speaker 3: have the strongest tie in the place where they're based.

475
00:28:36,480 --> 00:28:39,480
Speaker 3: So I think that the conservative justices are going to

476
00:28:39,480 --> 00:28:44,080
Speaker 3: be receptive to the idea that plaintiffs as long as

477
00:28:44,120 --> 00:28:46,640
Speaker 3: they have some basis for why they're choosing the place

478
00:28:46,640 --> 00:28:50,760
Speaker 3: they're choosing, they should have more choices in filing their cases.

479
00:28:51,080 --> 00:28:53,160
Speaker 3: And I think they'll be less sympathetic to the FDA,

480
00:28:53,440 --> 00:28:55,760
Speaker 3: which is warning that you know, essentially this is like

481
00:28:56,400 --> 00:28:59,560
Speaker 3: forum shopping, where basically you get to choose the most

482
00:28:59,600 --> 00:29:03,160
Speaker 3: favorable I mean, ironically, a lot of this actually highlights

483
00:29:03,200 --> 00:29:05,520
Speaker 3: the way that our courts have become so politicized, and

484
00:29:05,560 --> 00:29:08,040
Speaker 3: that there is that's a difference, you know, in this

485
00:29:08,080 --> 00:29:11,400
Speaker 3: one area where the Fifth Circuit has been a reliable

486
00:29:11,840 --> 00:29:15,080
Speaker 3: sort of gadfly for conservative causes, I mean, an interesting flight.

487
00:29:15,120 --> 00:29:17,880
Speaker 3: But I would not bet against the private party here.

488
00:29:18,120 --> 00:29:19,920
Speaker 3: I would not be betting on the FAA in the case.

489
00:29:20,560 --> 00:29:24,200
Speaker 1: The Assistant Solicitor General said about seventy five percent of

490
00:29:24,240 --> 00:29:28,040
Speaker 1: e cigarette cases were filed in the Fifth Circuit, all

491
00:29:28,080 --> 00:29:30,880
Speaker 1: of them by out of circuit applicants trying to use

492
00:29:30,920 --> 00:29:31,520
Speaker 1: the tactic.

493
00:29:31,760 --> 00:29:34,640
Speaker 4: So, since the Fifth Circuit is often.

494
00:29:34,800 --> 00:29:38,000
Speaker 1: The outlier among the circuits.

495
00:29:37,560 --> 00:29:40,600
Speaker 4: Does that mean that the Supreme Court's going to have

496
00:29:40,640 --> 00:29:43,080
Speaker 4: to intervene in all these cases.

497
00:29:43,840 --> 00:29:46,000
Speaker 3: Yeah, I mean, I think it's putting the pressure on

498
00:29:46,000 --> 00:29:48,480
Speaker 3: the Supreme Court not only to decide what the power

499
00:29:48,520 --> 00:29:51,080
Speaker 3: of the FEA is, but to decide on these important

500
00:29:51,680 --> 00:29:56,440
Speaker 3: jurisdictional questions that really drives strategy of where litigation gets filed,

501
00:29:56,480 --> 00:29:59,320
Speaker 3: how it gets processed. So I do think this case

502
00:29:59,400 --> 00:30:00,959
Speaker 3: is one of self world that's putting more and more

503
00:30:01,000 --> 00:30:04,040
Speaker 3: pressure on the Supreme Court to you know, be the

504
00:30:04,120 --> 00:30:07,680
Speaker 3: referee about our entire legal framework when it comes to

505
00:30:07,680 --> 00:30:08,520
Speaker 3: sederal agencies.

506
00:30:09,120 --> 00:30:12,480
Speaker 1: And there is another case before the Supreme Court on

507
00:30:12,520 --> 00:30:18,480
Speaker 1: the vaping issue and whether federal regulators misled companies before

508
00:30:18,680 --> 00:30:24,720
Speaker 1: refusing to allow them to sell those sweet flavored vaping products.

509
00:30:25,160 --> 00:30:27,840
Speaker 3: The other case before the Supreme Court it relates to

510
00:30:27,880 --> 00:30:31,800
Speaker 3: flavority cigarettes. This is the FDA versus Wages in White

511
00:30:31,800 --> 00:30:35,920
Speaker 3: Lions case, and that case is really focused on the

512
00:30:35,960 --> 00:30:39,360
Speaker 3: fact that the FEA denied an application to market flavored

513
00:30:39,520 --> 00:30:43,160
Speaker 3: e liquid with names like Rainbow Road and Cremberula, and

514
00:30:43,200 --> 00:30:46,280
Speaker 3: the FDA basically argued that these products were just too

515
00:30:46,360 --> 00:30:50,200
Speaker 3: risky because they're going to you know, recruit more young

516
00:30:50,280 --> 00:30:53,680
Speaker 3: people to smoke so that case was actually already heard

517
00:30:53,800 --> 00:30:57,120
Speaker 3: in December, and there seems here also to be like

518
00:30:57,160 --> 00:31:01,760
Speaker 3: a divide between the justices about the FDA's power and

519
00:31:01,800 --> 00:31:05,360
Speaker 3: whether the FDA had given sufficient guidance to manufacturers to

520
00:31:05,800 --> 00:31:11,440
Speaker 3: allow them to respect public health norms while still creating

521
00:31:11,520 --> 00:31:15,200
Speaker 3: legitimate products that met public safety standards. So it's another

522
00:31:15,280 --> 00:31:18,280
Speaker 3: case that sort of hinges on the FDA authority in

523
00:31:18,400 --> 00:31:21,880
Speaker 3: enforcing public health protection, particularly with the products that appeal

524
00:31:21,920 --> 00:31:25,360
Speaker 3: to kids. Yeah, it's interesting to see as we're starting

525
00:31:25,360 --> 00:31:28,080
Speaker 3: a new presidential administration, you know, with a lot of

526
00:31:28,160 --> 00:31:31,880
Speaker 3: questions about power federal agencies, whether we're in an environment

527
00:31:31,920 --> 00:31:34,200
Speaker 3: where where some of the public safety and public health

528
00:31:34,240 --> 00:31:35,640
Speaker 3: protection is going to get rolled back.

529
00:31:36,040 --> 00:31:38,360
Speaker 4: And that was also out of the Fifth Circuit.

530
00:31:38,680 --> 00:31:40,520
Speaker 3: Yes, the Fifth Circuit also, by the way, was the

531
00:31:40,560 --> 00:31:44,400
Speaker 3: circuit where we had the challenge to the abortion medication

532
00:31:44,480 --> 00:31:49,360
Speaker 3: at the FDA. So the FDA has been a significant

533
00:31:49,600 --> 00:31:52,400
Speaker 3: sort of brick in the wall of our public health

534
00:31:52,400 --> 00:31:56,120
Speaker 3: and safety architecture, and so a lot of the challenges

535
00:31:56,320 --> 00:31:59,040
Speaker 3: to how we're doing things, to what you know private

536
00:31:59,080 --> 00:32:02,160
Speaker 3: parties can do, to what you know companies can sell,

537
00:32:02,480 --> 00:32:05,840
Speaker 3: to you know, what kind of reproductive health medications are

538
00:32:05,840 --> 00:32:08,480
Speaker 3: on the market. These are all questions that run through

539
00:32:08,520 --> 00:32:11,800
Speaker 3: the FDA, and the fifth Circuit seems to be the

540
00:32:12,440 --> 00:32:15,240
Speaker 3: home address for people who want to challenge those might.

541
00:32:15,120 --> 00:32:20,360
Speaker 4: The FDA change its approach to vaping in the Trump administration,

542
00:32:20,880 --> 00:32:24,280
Speaker 4: he has promised to save vaping, right.

543
00:32:24,360 --> 00:32:27,560
Speaker 3: I do think that you know, with RFK, I presumably

544
00:32:27,560 --> 00:32:30,280
Speaker 3: at the HELM, you know, we have this really interesting

545
00:32:30,480 --> 00:32:32,720
Speaker 3: split where you have, on the one hand, make America

546
00:32:32,760 --> 00:32:36,520
Speaker 3: healthy again and a lot of initiatives to push public health,

547
00:32:36,600 --> 00:32:41,240
Speaker 3: but also this greater sort of Trump push for more

548
00:32:41,480 --> 00:32:45,760
Speaker 3: personal autonomy, more personal freedom, and for companies to have

549
00:32:45,840 --> 00:32:49,760
Speaker 3: more freedom from regulations. And so I do think we

550
00:32:49,840 --> 00:32:53,880
Speaker 3: are going to see more permissive activity, and I think

551
00:32:53,960 --> 00:32:57,200
Speaker 3: one of the questions will be how the public reacts.

552
00:32:57,280 --> 00:33:00,200
Speaker 3: And I think there is a divide between, you know,

553
00:33:00,200 --> 00:33:03,720
Speaker 3: people who take seriously the risk that more kids get

554
00:33:03,760 --> 00:33:07,680
Speaker 3: hooked on tobacco and all the public health risks that

555
00:33:07,760 --> 00:33:11,719
Speaker 3: come with that, versus this push for more personal freedom

556
00:33:11,760 --> 00:33:14,960
Speaker 3: in the sense that we went too far. The predictions

557
00:33:14,960 --> 00:33:17,920
Speaker 3: about what's going to happen at the FDA are you know,

558
00:33:18,000 --> 00:33:19,880
Speaker 3: all over the place. It's a dangerous time to be

559
00:33:20,120 --> 00:33:22,480
Speaker 3: doing too much guess work with the new administration and

560
00:33:23,000 --> 00:33:24,320
Speaker 3: a lot of new cooks in the kitchen.

561
00:33:24,600 --> 00:33:29,000
Speaker 1: I mean, even after the oral arguments, the Trump administration

562
00:33:29,160 --> 00:33:32,360
Speaker 1: could come in and say we've changed our position on this,

563
00:33:32,920 --> 00:33:34,000
Speaker 1: and the Supreme coolu.

564
00:33:34,320 --> 00:33:37,680
Speaker 3: The Trump administration can use the rule making process to

565
00:33:37,840 --> 00:33:41,760
Speaker 3: go back and reevaluate FDA standards. It could certainly liberalize

566
00:33:41,760 --> 00:33:45,800
Speaker 3: some of the rules or establish new public safety standards.

567
00:33:45,840 --> 00:33:48,600
Speaker 3: And you know, for example, you could have people who

568
00:33:48,600 --> 00:33:52,520
Speaker 3: are satisfied with labeling warning on the outsides of these products,

569
00:33:52,520 --> 00:33:55,640
Speaker 3: but not actually preventing you know, products from coming into

570
00:33:55,640 --> 00:34:00,720
Speaker 3: the marketplace just because they seem to be targeting appealing

571
00:34:00,920 --> 00:34:02,200
Speaker 3: to kids.

572
00:34:02,280 --> 00:34:05,640
Speaker 1: So two vaping cases to watch out of the Supreme Court.

573
00:34:05,920 --> 00:34:09,360
Speaker 1: Thanks so much, Harry. That's Harry Nelson of Leech Tishman

574
00:34:09,560 --> 00:34:12,440
Speaker 1: Nelson Hardiman. And that's it for this edition of The

575
00:34:12,480 --> 00:34:15,440
Speaker 1: Bloomberg Law Show. Remember you can always get the latest

576
00:34:15,480 --> 00:34:18,600
Speaker 1: legal news on our Bloomberg Law Podcast. You can find

577
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578
00:34:23,239 --> 00:34:27,040
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579
00:34:27,040 --> 00:34:30,280
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580
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581
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