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

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Speaker 2: About one point six million school children currently use e cigarettes.

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Speaker 2: Flavored vapes with colorful names that evoke candy and sweets

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Speaker 2: are particularly appealing to young people, which has prompted the

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Speaker 2: Food and Drug Administration to curb access to the products.

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Speaker 2: The FDA turned down two companies' applications to market e

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Speaker 2: cigarettes with names like Jimmy the Juiceman, Peachy Strawberry, and

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Speaker 2: Suicide Bunny, Mother's Milk and Cookies. The agency's attorney, Curtis Gannin,

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Speaker 2: defended its position at the Supreme Court.

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Speaker 1: Research has long shown that flavors increased youth appeal of

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Speaker 1: tobacco products, and evidence accumulates further confirming that youth are

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Speaker 1: particularly attracted to flavored ends products. The concern would be

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Speaker 1: that their getting addicted to tobacco at a time when

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Speaker 1: when tobacco to a nicotine, at a time when nicotine

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Speaker 1: is dangerous to their developing brains, and may be, you know,

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Speaker 1: sensing them to a long life of needing to satisfy

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Speaker 1: that addiction.

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Speaker 2: The vaping companies say the FDA changed its standards with

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Speaker 2: little warning as it blocked the sale of more than

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Speaker 2: a million new flavored products. But just as Elena Kagan

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Speaker 2: said that the FDA's position has been clear, do.

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Speaker 3: You know that FDA thinks that flavors? I mean, FDA

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Speaker 3: has been completely upfront about this, and I think that

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Speaker 3: the point you know that flavors you give people blueberry vapes.

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Speaker 3: The difficulty with that, and FDA I think has tried

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Speaker 3: to document this is that blueberry vapes are very appealing

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Speaker 3: to sixteen year olds, not to forty year olds.

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Speaker 2: Aside from legalities, the practical question is what's the remedy

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Speaker 2: even if the court rules for the vaping companies, because,

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Speaker 2: as just as Brett Kavanaugh pointed out to the company's attorney,

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Speaker 2: Eric Higher, the companies can always reapply to the FDA

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Speaker 2: for sales authorization.

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Speaker 4: And while they won this case, they can reapply.

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Speaker 1: Yes, if they won this case or if they lose

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Speaker 1: this case, they will be able to reapply.

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Speaker 4: That's my question about what the relief really accomplishes here

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Speaker 4: that is being sought as a practical matter. I understand

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Speaker 4: the legal point the FDA acted arbitraining capriciously, but either way,

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Speaker 4: it's going to be that they can reapply and hope

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Speaker 4: to succeed.

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Speaker 2: This case is an appeal from the conservative Fifth Circuit's

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Speaker 2: decision finding that the agency unfairly shifted its standards for

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Speaker 2: approving the vaping products while deciding on applications from the

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Speaker 2: two companies. Joining me is Sean Collins, a partner at

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Speaker 2: Straddling Yoguck, Carlson and Rauth give us some background on

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Speaker 2: the FDA and these flavors eat cigarettes.

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Speaker 5: Let's start with what the FDA's mandate is. The FDA's

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Speaker 5: mandate is to look out for the health and well

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Speaker 5: being of the general American public, meaning they are supposed

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Speaker 5: to certify all foods and drugs and certify that they

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Speaker 5: are healthy and beneficial for the well being of the

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Speaker 5: citizens of the United States of America. And so what

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Speaker 5: we have going on between the FDA and the e

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Speaker 5: cigarette companies right now, I call it a bit of

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Speaker 5: the game of whack a mole. And so it's like anything.

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Speaker 5: You know, if you regulate one product and you're successful

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Speaker 5: in getting a certain product regulated, another product is going

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Speaker 5: to pop up. And so you know, the FDA spent

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Speaker 5: fifty years or more trying to get people to stop

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Speaker 5: smoking cigarettes, right, and they were pretty successful at doing that.

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Speaker 5: When you look at the statistics of how many people

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Speaker 5: actually smoke cigarettes. You know, I remember growing up in

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Speaker 5: the eighties and everybody smoked. You know, people smoked indoors,

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Speaker 5: people smoked in offices, and everybody smoked. Nowadays, you know,

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Speaker 5: I live in California, so it's probably more skew than

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Speaker 5: anywhere else. But you can't smoke anywhere. I don't see

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Speaker 5: anybody smoking. And you know, you look at the statistics,

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Speaker 5: I think they say two percent of America smoke cigarettes now,

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Speaker 5: which is negligible. That's pretty much nobody smokes cigarettes. So

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Speaker 5: obviously the people that still do smoke cigarettes. You know,

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Speaker 5: business and enterprise are always wanting to come up with

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Speaker 5: an alternative, so they came up with the e cigarette.

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Speaker 5: And so the e cigarette was designed as a mechanism

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Speaker 5: to help wean adults who are otherwise addicted to cigarettes,

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Speaker 5: that try to help them stop smoking cigarettes and smoke

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Speaker 5: something that would be a better alternative for them. Now,

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Speaker 5: like any business, e cigarette companies, they want to advertise

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Speaker 5: and market their products and make it look cool. So

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Speaker 5: think the Marlboro Man. You know, I used to always

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Speaker 5: think when I would drive a billboard, look at their

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Speaker 5: cowboy It looks really cool with the cigarette and mouth,

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Speaker 5: and that attracts a lot of people that want to

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Speaker 5: smoke cigarettes. So e cigarette companies obviously came up with

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Speaker 5: creative ways to advertising market their e cigarette fronduct. Now

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Speaker 5: that's all well and good, and the FDA probably wouldn't

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Speaker 5: have cared if their marketing was being successful with adults.

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Speaker 5: The problem is is e cigarettes became cool amongst younger

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Speaker 5: demographics and particular teenagers, and so what you saw is

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Speaker 5: a spike in teams using e cigarette. So it was

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Speaker 5: one of those situations. The reason why I said whack

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Speaker 5: the mo mole was because you whacked one problem and

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Speaker 5: were able to successfully pretty much negate that problem, and

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Speaker 5: then another problem popped up over on the right, which

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Speaker 5: as teenagers are now really into e cigarette and explain.

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Speaker 2: The issue in the case the Supreme Court heard this week.

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Speaker 5: So the issue that you currently have before the Supreme Court,

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Speaker 5: it's more of what is the authority of the FDA.

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Speaker 5: That's the actual legal question the Supreme Court is looking at.

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Speaker 5: But I will say that one of the balancing tests

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Speaker 5: that the Supreme Court is having to deal with is well, okay,

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Speaker 5: I understand that the FDA is trying to regulate, you know,

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Speaker 5: the advertising and marketing of cigarettes. Two teams. But the

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Speaker 5: question becomes, one, do they have the authority to do that?

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Speaker 5: And whether or not they have the authority to do

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Speaker 5: that is more of a great question, because I think

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Speaker 5: the Supreme Court is looking at it as well. What

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Speaker 5: they're doing is coming from a good place. They're trying

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Speaker 5: to protect the help of the future generation. And so

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Speaker 5: I think that's the particular that the Supreme Court is

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Speaker 5: grappling with right now, which is why when you listen

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Speaker 5: to the oral argument, the oral argument, even you know,

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Speaker 5: everybody said, oh, it's the conservative court. They're probably going

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Speaker 5: to side with big business. They're going to side with

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Speaker 5: the e cigarette companies. And what you heard oral argument

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Speaker 5: is it sounded like the Supreme Court was kind of

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Speaker 5: deferring to the regulatory authority of the SPA.

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Speaker 2: Yeah, that was surprising. Just as Kagan said, I guess

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Speaker 2: I'm not really seeing what the surprise is here or

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Speaker 2: what the change is here, because basically everyone knew the

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Speaker 2: FDA's position on e cigarettes. So the question that Ret.

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Speaker 2: Kavanaugh brought up as well, what's the relief here? Even

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Speaker 2: if you win the cigarette.

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Speaker 5: Companies exactly, And that's the big question, and that's usually

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Speaker 5: the biggest problem. You know, It's funny everybody spends all

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Speaker 5: their time in law school thinking about the big legal

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Speaker 5: arguments of why I'm right on a particular issue, but

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Speaker 5: nobody ever thinks, okay, well what if I win? What's

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Speaker 5: the remedy? Which is why when I talked to the young

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Speaker 5: law students, I always tell them, probably the most important

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Speaker 5: class you will take while you're in law school is remedy.

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Speaker 5: And they look at me confused, like nities, like what

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Speaker 5: are you talking about? That's like what happens after the

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Speaker 5: case is over? And it's like, yeah, I know, but

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Speaker 5: think about it. You can spend ten million dollars arguing

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Speaker 5: that you're right, and then the court days you're right,

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Speaker 5: and then they ask you, well, what do you want?

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Speaker 5: And so that's the issue here is you know, for

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Speaker 5: the e cigarette companies, it's like, okay, well, even if

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Speaker 5: you are correct in saying that the laws that the

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Speaker 5: isn't imposing here are arbitrary and capricious, which is the

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Speaker 5: core legal argument that the e cigarette companies are making,

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Speaker 5: which is a good legal argument. They're basically saying you're

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Speaker 5: making up rules and regulations that are effectively a moving target.

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Speaker 5: So me as a company, I can't even craft policy

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Speaker 5: to address your concerns because every month you're moving the

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Speaker 5: goalpost on me. And so the Supreme Court has it

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Speaker 5: technically said, Okay, let's say that we do tell the

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Speaker 5: FDA that they need to be more definitive with their

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Speaker 5: rule making and say these are the laws and regulations

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Speaker 5: that governing the advertising and marketing and the regulation and

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Speaker 5: e cigarettes. How does that help you?

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Speaker 2: Are the e cigarette companies just looking for more time

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Speaker 2: to start the process over again or do they not

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Speaker 2: want to start the process over again?

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Speaker 5: I think timing is definitely of concern because, if you

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Speaker 5: think about it right now, one of the biggest things

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Speaker 5: and nobody really talks about it when it comes to

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Speaker 5: businesses and advertising and marketing. But they currently have has

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Speaker 5: the attention of a generation, so they have captivated a

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Speaker 5: particular generation. So when you look at cigarette companies, cigarette

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Speaker 5: companies effectively capture the imagination of the baby boomers, and

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Speaker 5: that's a very large demographic. So if you're selling a

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Speaker 5: product and you have a captive audience and a whole

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Speaker 5: generation of you know, so for e cigarette companies. I

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Speaker 5: guess you would call it gen Z. The other day

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Speaker 5: I heard that the granted the gen A.

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Speaker 6: Now I've lost track of the gen So gen Z.

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Speaker 5: I believe is effectively sixteen year old to young professionals.

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Speaker 5: So let's go sixteen to thirty right now. That is

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Speaker 5: the demographic that is very captivated by e cigarette And

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Speaker 5: I think the sense of urgency from the e cigarette

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Speaker 5: generation right now is that they are now being prohibited

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Speaker 5: from advertising and marketing to gen Z, which could be

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Speaker 5: a very lucrative demographic because the thing about especially products

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Speaker 5: like this, if you develop brand loyalty right now, this

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Speaker 5: is the type of product that they will use throughout

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Speaker 5: their lives. It's not like a toy or a video

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Speaker 5: game where a person may grow out of it or

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Speaker 5: phase out of it. You know, if you're an e

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Speaker 5: cigarette person, you may be using the e cigarettes for

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Speaker 5: the next thirty forty fifty years.

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Speaker 2: Do vaping companies have problems getting regular e cigarettes approved

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Speaker 2: or is it just about the flavored e cigarettes.

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Speaker 5: For this particular case, And that's a very important question.

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Speaker 5: For this particular case, you're talking about the flavored e

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Speaker 5: cigarette because that's what the FDA is saying. They're saying,

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Speaker 5: the E cigarette companies with the flavored cigarette, you're no

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Speaker 5: longer targeting the forty year old who is trying to

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Speaker 5: win themselves off a cigarette. You were targeting the thirteen,

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Speaker 5: fourteen to fifteen year old to try to entice them

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Speaker 5: and to hook them on e cigarette so that you

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Speaker 5: have them for a generation, so that you have them

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Speaker 5: for the next forty to fifty years.

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Speaker 2: Now.

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Speaker 5: E cigarette company will probably deny that, but that's absolutely

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Speaker 5: what they're trying to do, and I'm not saying that

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Speaker 5: there's anything wrong with it. That's smart marketing and business strategy.

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Speaker 5: The focus of this particular case that before Supreme Court

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Speaker 5: is the flavored e cigarettes, and the reason why it's

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Speaker 5: the focus of the court is because the FDA is arguing,

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Speaker 5: you are advertising and marketing these flavored cigarettes in a

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Speaker 5: manner whereby you are trying to make them incredibly attractive

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Speaker 5: to gen Z thirteen, fourteen, fifteen, sixteen, seventeen, eighteen year old,

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Speaker 5: and by doing that, you are compromising their health now

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Speaker 5: and for a future generation. E cigarette companies are arguing, well,

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Speaker 5: you can't create an arbitrary and capricious rule that says

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Speaker 5: you as an e cigarette company can advertise and market

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Speaker 5: your e cigarettes, you just can't do it in this manner.

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Speaker 5: You can't have flavors.

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Speaker 2: Coming up next on the Bloomberg Law Show, I'll continue

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Speaker 2: this conversation with Sean Collins. How the President elect's name

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Speaker 2: came up in the oral arguments over flavored east cigarettes.

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Speaker 2: This is Bloomberg. Supreme Court justices seemed skeptical that they

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Speaker 2: could give any relief to companies whose applications to sell

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Speaker 2: flavored e cigarettes were denied by the Food and Drug Administration.

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Speaker 2: Several of the justices pointed out that even if the

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Speaker 2: companies reapplied, the FDA would continue to deny the applications.

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Speaker 2: Perhaps the vaping company's best hope is the incoming Trump administration.

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Speaker 2: Here's the attorney for the vaping companies, Eric Higher.

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Speaker 7: And Frankly, we don't know what FD is, HOWFT is

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Speaker 7: going to approach it on remand we have a new

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Speaker 7: administration coming in. The President elect is on record saying

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Speaker 7: I'm going to say flavored vapes. We don't know exactly

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Speaker 7: what that's going to look like. It maybe that the

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Speaker 7: approach the agency takes is much more aligned with the

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Speaker 7: statute and looks at all the risks and benefits.

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Speaker 2: I've been talking to Sean Collins, a partner at Straddling.

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Speaker 2: So this is an appeal from the ultra conservative Fifth Circuit.

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Speaker 2: There is a circuit split. The second, third, fourth, fifth, sixth, seventh, ninth, tenth,

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Speaker 2: and DC circuits have sided with the FDA and denied

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Speaker 2: the petitions or requests to stay the agency's marketing denial

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Speaker 2: orders for flavored e cigarettes. So the Supreme Court almost

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Speaker 2: had to take this case to straighten it out, even

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Speaker 2: though more than one of the justices said there was

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Speaker 2: no real relief to be had here.

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Speaker 5: That sounds like what's happening here. I was surprised that

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Speaker 5: the Fifth Circuit was the lone wolf here for lack

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Speaker 5: of a better word. You know, it's not the type

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Speaker 5: of ruling that I would have expected out of the

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Speaker 5: Fifth Circuit. But yeah, now, I mean, that's that's what

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Speaker 5: the Supreme Court is up against right now, the effectively

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Speaker 5: overruling the Fifth Circuit.

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Speaker 2: Is it surprising that the justices seemed to be crediting

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Speaker 2: the FDA's expertise here. I mean, this is a court

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Speaker 2: that has been skeptical of the power of federal regulators,

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Speaker 2: including by striking down the Chevron doctrine that had judges

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Speaker 2: deferring to agencies and interpretations of the law.

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Speaker 5: I personally don't think this is kind of outside of

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Speaker 5: what's to be expected from this particular court. I think

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Speaker 5: that this court is very fixated on not necessarily tearing

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Speaker 5: down the authority of a particular agency, but making sure,

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Speaker 5: especially with this particular Supreme Court, they are very focused

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Speaker 5: on making sure that a particular agency does not exceed

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Speaker 5: the authority that was originally granted to it. And so,

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Speaker 5: for instance, I use the FTC as an example. Obviously

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Speaker 5: we're talking about the FDA with this particular case, but

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Speaker 5: and you know those probably I think it was three

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Speaker 5: or four years ago now, there was a ruling that

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Speaker 5: effectively said, hey, the FTC has gone lead beyond the

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Speaker 5: bounds of what the authority that was originally given to

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Speaker 5: them by commas. You know, in the military, you called

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Speaker 5: a mission increase and you set out for objective A,

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Speaker 5: and then the next thing you know you're going after

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Speaker 5: be F and it's like, you know, before you know it,

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Speaker 5: everybody started asking the question of all, right, well, when

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Speaker 5: did the FTC get into the business of going after

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Speaker 5: these types of cases, and so with this particular issue,

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Speaker 5: I think the Supreme Court is looking at it and saying, again,

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Speaker 5: this is kind of how I started my comments was, well,

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Speaker 5: at a very high level, why did we create the FDA? Well,

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Speaker 5: the FDA was created because back in the eighteen hundred

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Speaker 5: there was a severe problem with the quality of food

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Speaker 5: and there were effectively snake oil salves and out there

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Speaker 5: selling drugs that were doing series armed particulars. And so

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Speaker 5: as a society, we decided we should probably have an

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Speaker 5: agency that's responsible for regulating the food and the drugs

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Speaker 5: that are sold and marketed in the United States of America.

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Speaker 5: And when we cut to the red tape of that,

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Speaker 5: what does that mean? How do we keep Americans safe?

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Speaker 5: And so when you look at what the FDA is

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Speaker 5: doing here, they're saying, we are creating these oles because

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Speaker 5: when you're trying to keep teenagers safe, you know, we

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Speaker 5: have eighty years worth of literature and research that pretty

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Speaker 5: convincingly proved that smoking is bad for you. It's really

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Speaker 5: bad for your lungs. It causes lung cancer. And I

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Speaker 5: don't think there's anybody that disagrees with that. And these cigarettes,

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Speaker 5: while they are a better alternative, it's still not great

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Speaker 5: for your health. And the FDA has presented some pretty

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Speaker 5: convincing evidence again that kind of goes beyond whatever your

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Speaker 5: political views may be, and it's kind of unequivocal that

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Speaker 5: e cigarettes are probably not good for the lungs of teenagers.

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Speaker 5: And so the Supine Court is looking at this and saying, well,

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Speaker 5: the FDA has been tasked with keeping teenagers safe, and

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Speaker 5: they are now passing involves in regulations that are very

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Speaker 5: focused on keeping teenagers safe. Kind of straightforward, you know,

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Speaker 5: even in this concern, Supreme Court has to look at

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Speaker 5: it and say, the job, FDA, you're doing.

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Speaker 2: Your job is Joining his campaign, Trump said that he

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Speaker 2: was going to save vaping basically, and during the oral arguments,

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Speaker 2: the attorney for the companies pointed to that, so, what's

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Speaker 2: the effect of a new administration? Can the FDA just

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Speaker 2: do a one to eighty on E flavored cigarettes?

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Speaker 5: Obviously, whenever there's a new administration, there's always every federal

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Speaker 5: agency there's going to be a significant shift in policy.

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Speaker 5: So whoever takes over the FDA is going to be

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Speaker 5: a Donald Trump appoint to e and they are going

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Speaker 5: to execute me. What the wishes of President Trump. Now,

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Speaker 5: I will say that when President Trump says, you know,

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Speaker 5: I'm going to support e cigarette, he can do that

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Speaker 5: and still kind of ad yere to what the Supreme

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Speaker 5: Court is talking about here, because keep in mind, thinking

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Speaker 5: about who did he appoint as his head of Department

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Speaker 5: of Health and Human Service Arekji, And they've already talked

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Speaker 5: about saying, all right, we're going to, you know, use

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Speaker 5: a lot of scrutiny with respect to the drugs that

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Speaker 5: we are administering to the American public. So when you

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Speaker 5: look at what's going on here, let me say this

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Speaker 5: because I want to be quit. I am by no

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Speaker 5: means beaten up on the e cigarette industry at all.

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Speaker 5: What's that state here is the fact that the SBA

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Speaker 5: believes that the e cigarette company are advertising and marketing

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Speaker 5: their products to people who are not legally authorized to

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Speaker 5: buy their products. I probably should have started with that.

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Speaker 5: And so what the FDA is saying here is, hey,

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Speaker 5: e cigarette companies, if you want to put billboards up

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Speaker 5: on every single billboard along every major freeware in the

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Speaker 5: United States to say, if you are eighteen and up,

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Speaker 5: you should really buy my product, knock yourself out but

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Speaker 5: the problem is is the data suggests that the flavored

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Speaker 5: products that you are marketing, more fourteen, fifteen and sixteen

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Speaker 5: year olds are buying your product than eighteen and ups.

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Speaker 5: And we think that is very intentional on your part,

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Speaker 5: and that you are aware of the fact that you're

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Speaker 5: advertising in marketing is targeting and being more effective with

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Speaker 5: people who are not even legally authorized to buy your product.

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Speaker 5: That's what they're taking issues with. And I think that

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Speaker 5: handedly when you look at who President Trump depicted for

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Speaker 5: his Department of Health and Human Services are As K. Junior,

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Speaker 5: and then his other mandate of I will support e

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Speaker 5: cigarette companies, I don't really I think he can achieve

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Speaker 5: both of those objectives. He's effectively saying, hey, e cigarette companies,

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Speaker 5: if you want to increase your profits themselves to the

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Speaker 5: eighteen and up, so be it. As long as you

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Speaker 5: don't break any laws, go forward, but you can't market

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Speaker 5: your products at thirteen, fourteen, fifteen year old.

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Speaker 2: Thanks so much, Sean. That's Sean Collins, a partner at

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Speaker 2: Straddling Yoga, Carlson and Ralth And for those who are

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Speaker 2: counting on President elect Trump to change the rules for

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Speaker 2: flavored e cigarettes, so let's take a look at his

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Speaker 2: various positions. During his first administration. In twenty nineteen, Trump

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Speaker 2: threatened to ban most flavored East cigarettes from the market

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Speaker 2: due to concerns over the appeal to children. He later

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Speaker 2: backed off the ban after it was met with industry resistance.

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Speaker 2: In twenty twenty, his ban on certain East cigarette pods

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Speaker 2: made by companies like Jewel Labs prohibited flavored e liquids,

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Speaker 2: but allowed menthol and tobacco products on the market. He

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Speaker 2: also signed a law that raised the federal legal age

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Speaker 2: for purchasing tobacco from eighteen to twenty one, which vaping

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Speaker 2: proponents say lowered youth vaping numbers. So stay tuned. Coming

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Speaker 2: up next on the Bloomberg Law Show, The Justice has

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Speaker 2: once again faced a question over the role that US

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Speaker 2: court should play in returning properties stolen from Holocaust survivors

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Speaker 2: by foreign countries during World War II. I'm June Grosso

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Speaker 2: and you're listening to Bloomberg. The Supreme Court once again

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Speaker 2: struggle with the role that US courts should play in

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Speaker 2: returning properties stolen by foreign countries during World War two

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Speaker 2: to its original owners. In several cases brought by Holocaust survivors,

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Speaker 2: against foreign nations. The justices have wrestled with how to

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Speaker 2: balance the international friction that can result from hauling sovereign

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Speaker 2: nations into US courts, while at the same time fulfilling

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Speaker 2: Congress's intent to allow suits in some cases. In a

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Speaker 2: case the Justice is heard on Tuesday, Holocaust survivors and

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Speaker 2: their families say Hungary and its National Railroad stole property

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Speaker 2: from Jews while transporting them to concentration camps. The question

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Speaker 2: is whether the US is the proper place to resolve

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Speaker 2: the legal dispute. Joining me is mc Sanaila, a partner

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Speaker 2: at Complex Appellate Litigation Group. So MC, we have seen

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Speaker 2: similar cases before. In fact, we've seen this case at

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Speaker 2: the Supreme Court before.

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Speaker 6: You know, this isn't an art case. This is the

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Speaker 6: really all kinds of property case. Most of these cases

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Speaker 6: are involved in some kind of Holocaust art. But this

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Speaker 6: is yes, we sent the people off to the camp,

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Speaker 6: and we also took all of their property and transported

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Speaker 6: that on the rail line. So they've been trying to,

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Speaker 6: you know, make this claim and have been really, like

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Speaker 6: many of these Holocaust claims, really bouncing back and forth

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Speaker 6: between the Supreme Court, the Federal Court of appeal the

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Speaker 6: district court on some very threshold issues which often come

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Speaker 6: up in these cases involving sovereign immunity. You know, under

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Speaker 6: the foreign Sovereign mediac can you do the Hungarian government

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Speaker 6: or some other countries government for these activities.

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Speaker 2: We've talked about this so many times. I'm surprised this

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Speaker 2: issue isn't more settled.

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Speaker 6: Yeah, I mean, I was just looking back at some

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Speaker 6: of the sovereign immunity questions that have come up in

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Speaker 6: the Holocaust context, and really one of the last, you know,

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Speaker 6: ultimately successful ones was Altman back in two thousand and four,

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Speaker 6: where the question there was just whether the Foreign Sovereign

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Speaker 6: Immunity that applied retroactively or not and therefore allowed Maria

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Speaker 6: Altman to bring her claim against Austria for her paintings

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Speaker 6: that Austria had taken. And in that case, of course, yes,

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Speaker 6: you know, Foreign Sovereignity Act applies retroactively and therefore property

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Speaker 6: taken in violation of international law, which her case qualified for. Yes, Okay,

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Speaker 6: that's the standards and it can you can see governments

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Speaker 6: for that. But since then it's been this case and

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Speaker 6: others have really dealt with Okay, now that we know

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Speaker 6: that it applies retroactively. What are the you know, sort

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Speaker 6: of exceptions within that statute that allow these kinds of

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Speaker 6: claims to be brought? And how do all of those

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Speaker 6: various exceptions you know, kind of worked out and end

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Speaker 6: up applying. And so here this expropriation exception. And really

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Speaker 6: it seems like the DC Circuit has been trying very

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Speaker 6: hard to find a way to allow these clients to

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Speaker 6: be brought. Right, it's all various aspects of expropriation that

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Speaker 6: they've been hanging their hat on to say, no, no, no,

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Speaker 6: you really need to look at this more carefully, just

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Speaker 6: a court or there's a possibility here, you know that

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Speaker 6: a claim could be brought. We need to we need

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Speaker 6: to look at that again. And each time it's been

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Speaker 6: sent back on the particular theory that the that the

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Speaker 6: Circuit may have relied on. But the Spring Court has

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Speaker 6: even opened up other avenues for consideration. And so that's

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Speaker 6: why it keeps coming back, is you think we haven't

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Speaker 6: solved these problems already, we haven't figured out the scope

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Speaker 6: of sovereign immunity, and it seems like here is this

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Speaker 6: effort to make sure we have turned over every rock,

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Speaker 6: you know, to make sure that we have fully investigated

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Speaker 6: every potential for acclaim against Hungary. It keeps coming back

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Speaker 6: for that reason.

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Speaker 2: The cases we've discussed before involved artworks, particular artworks that

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Speaker 2: were stolen. This case involves property. And it's unclear to

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Speaker 2: me what kind of property that the Hungarian government stole

434
00:25:27,160 --> 00:25:31,280
Speaker 2: and then liquidated and the money went into the national

435
00:25:31,320 --> 00:25:34,800
Speaker 2: treasury and then that fund was used to issue bonds

436
00:25:34,840 --> 00:25:38,480
Speaker 2: in the US. But how would they trace the stolen

437
00:25:38,520 --> 00:25:39,880
Speaker 2: property to the bonds?

438
00:25:40,440 --> 00:25:42,439
Speaker 6: Well, that's the question, and I think that was the

439
00:25:42,560 --> 00:25:46,719
Speaker 6: concern that really animated or argument really on both sides.

440
00:25:46,960 --> 00:25:52,040
Speaker 6: Some of the justices suggested, well, this question of commingling

441
00:25:52,119 --> 00:25:56,679
Speaker 6: and the proof of commingling and what percentage of the

442
00:25:56,720 --> 00:26:00,639
Speaker 6: money here in the US needs to be either theoretically

443
00:26:00,720 --> 00:26:05,600
Speaker 6: or you know, potentially traceable to this nationalized property that

444
00:26:05,800 --> 00:26:10,119
Speaker 6: had been taken from Jewish families. And that was really

445
00:26:10,320 --> 00:26:13,560
Speaker 6: kind of the rub right of the petition of what

446
00:26:13,680 --> 00:26:16,639
Speaker 6: level of proof and who needs to prove it? And

447
00:26:17,160 --> 00:26:21,200
Speaker 6: the justices were kind of scratching their heads saying, well,

448
00:26:21,240 --> 00:26:25,119
Speaker 6: on the one hand, were concerned that you as a

449
00:26:25,200 --> 00:26:28,680
Speaker 6: claimant could almost make any claim right, sure, there's still

450
00:26:28,760 --> 00:26:31,800
Speaker 6: must be some trace element of co mingling, or there

451
00:26:31,880 --> 00:26:34,560
Speaker 6: could be and as a result of there could be

452
00:26:34,680 --> 00:26:37,080
Speaker 6: even a small amount that now you can make a

453
00:26:37,160 --> 00:26:42,080
Speaker 6: claim against another country in US courts. That seemed concerning

454
00:26:42,160 --> 00:26:46,040
Speaker 6: because this is an exception to the Sovereign Community Act,

455
00:26:46,160 --> 00:26:51,280
Speaker 6: the General Provision saying you cannot do countries in US courts.

456
00:26:51,800 --> 00:26:54,840
Speaker 6: And on the other hand, there were the concerns raised, well,

457
00:26:56,080 --> 00:26:59,360
Speaker 6: if you don't have some kind of allow some kind

458
00:26:59,400 --> 00:27:03,520
Speaker 6: of claims for co mingling and giving some kind of

459
00:27:03,600 --> 00:27:09,320
Speaker 6: laxity for that definition, then any bad actor could just go, oh, well,

460
00:27:09,680 --> 00:27:12,080
Speaker 6: I'm going to I'm going to take this property and

461
00:27:12,119 --> 00:27:13,600
Speaker 6: then the next thing I'm going to do is I'm

462
00:27:13,600 --> 00:27:15,639
Speaker 6: going to co mingle it with something. I'm going to

463
00:27:15,720 --> 00:27:17,960
Speaker 6: put it somewhere else, and then that will immunize me

464
00:27:18,440 --> 00:27:22,919
Speaker 6: from this exception to have clean spot against me. And

465
00:27:23,000 --> 00:27:25,080
Speaker 6: so there's also that concern that, like, well, if you

466
00:27:25,080 --> 00:27:29,120
Speaker 6: make it too easy for someone to kind of hide

467
00:27:29,119 --> 00:27:32,360
Speaker 6: the ball and get themselves outside of this exception, then

468
00:27:32,720 --> 00:27:35,920
Speaker 6: what's the point of having the exception. So those both

469
00:27:35,960 --> 00:27:39,760
Speaker 6: of those concerns concerned about going too far and concerned

470
00:27:39,800 --> 00:27:45,040
Speaker 6: about you know, letting letting folks who are violating international

471
00:27:45,119 --> 00:27:49,480
Speaker 6: law off off the hook more easily. Those were the tensions.

472
00:27:49,520 --> 00:27:53,399
Speaker 6: But the members of the Court identified.

473
00:27:53,280 --> 00:27:57,000
Speaker 2: I feel like I've heard these same concerns from the

474
00:27:57,200 --> 00:28:02,080
Speaker 2: justices about, you know, the risk of reciprocal actions by

475
00:28:02,119 --> 00:28:05,840
Speaker 2: other countries and it's a big deal to haul a

476
00:28:05,880 --> 00:28:08,840
Speaker 2: foreign country into US court. I mean, those are the

477
00:28:08,840 --> 00:28:11,280
Speaker 2: same things they've been saying for years.

478
00:28:11,960 --> 00:28:15,480
Speaker 6: Yeah, exactly, it's the same. It's the same because it's

479
00:28:15,560 --> 00:28:20,960
Speaker 6: the same concerns and policies animating US foreign policy and

480
00:28:21,040 --> 00:28:25,520
Speaker 6: the State Department's view on these things. And also they're

481
00:28:25,680 --> 00:28:28,000
Speaker 6: looking at the Foreign Sovereign I Meanity Act and the

482
00:28:28,119 --> 00:28:34,359
Speaker 6: various things that they congressated in enacting those. So yes,

483
00:28:34,440 --> 00:28:38,280
Speaker 6: they come up with the same concerns because they're looking

484
00:28:38,320 --> 00:28:43,280
Speaker 6: at various aspects of the same statues and so the

485
00:28:43,360 --> 00:28:45,120
Speaker 6: same policy concerns.

486
00:28:45,480 --> 00:28:48,800
Speaker 2: Could you tell it all from the oral arguments which

487
00:28:48,800 --> 00:28:51,240
Speaker 2: way it was going. It seemed to me like the

488
00:28:51,440 --> 00:28:53,000
Speaker 2: justices were all over the place.

489
00:28:53,400 --> 00:28:56,200
Speaker 6: I mean, I think it's hard. I think it's harder

490
00:28:56,240 --> 00:28:59,720
Speaker 6: to tell here. But if you look at their overarching

491
00:29:00,120 --> 00:29:03,160
Speaker 6: concerns that you mentioned before, which is, we don't want

492
00:29:03,200 --> 00:29:07,520
Speaker 6: to open the door to everyone to bring their concerns

493
00:29:07,560 --> 00:29:11,120
Speaker 6: to US courts, and maybe somebody could do this to us,

494
00:29:11,160 --> 00:29:13,719
Speaker 6: and we want to be careful about that too, of

495
00:29:13,760 --> 00:29:17,600
Speaker 6: being called into other courts. That that is the general,

496
00:29:17,880 --> 00:29:21,560
Speaker 6: you know, conservative sort of reaction to this is to say,

497
00:29:21,640 --> 00:29:24,320
Speaker 6: we don't want to do anything that would make that easier.

498
00:29:24,600 --> 00:29:28,000
Speaker 6: We want to be very cautious about that. And so

499
00:29:28,400 --> 00:29:31,400
Speaker 6: you'd say, oh, well, if you want to go with

500
00:29:31,480 --> 00:29:34,680
Speaker 6: where the court ends up going normally or typically in

501
00:29:34,720 --> 00:29:38,280
Speaker 6: these cases, they typically end up being, you know, very

502
00:29:38,360 --> 00:29:42,680
Speaker 6: narrowly construing the exceptions to the Foreign Common Community Act.

503
00:29:43,000 --> 00:29:44,960
Speaker 6: But on the other hand, every once in a while

504
00:29:45,000 --> 00:29:47,840
Speaker 6: you have a case like Altman where they said, okay,

505
00:29:48,280 --> 00:29:50,520
Speaker 6: you know, we're opening this, we're opening this up, we're

506
00:29:50,520 --> 00:29:55,600
Speaker 6: applying the Act retroactively and you know, allowing this claim

507
00:29:55,640 --> 00:30:01,240
Speaker 6: to be brought. So it's possible, but those concerns are

508
00:30:01,880 --> 00:30:06,000
Speaker 6: still animating the court, and so it's possible, but most

509
00:30:06,080 --> 00:30:09,640
Speaker 6: likely that they will close the door to this one too.

510
00:30:10,320 --> 00:30:13,480
Speaker 2: And the Altman Court, I don't know what justices were

511
00:30:13,480 --> 00:30:15,880
Speaker 2: on the court at that point, but most of them

512
00:30:15,920 --> 00:30:18,160
Speaker 2: are certainly not on the court now.

513
00:30:18,520 --> 00:30:21,640
Speaker 6: A completely different court. I mean that's two thousand and four,

514
00:30:21,840 --> 00:30:23,920
Speaker 6: so we're talking, you know, twenty years ago.

515
00:30:24,200 --> 00:30:27,040
Speaker 2: It doesn't seem like they're split ideologically.

516
00:30:27,600 --> 00:30:31,440
Speaker 6: No, No, that's a good point, June. You can't say, oh, well,

517
00:30:31,960 --> 00:30:35,400
Speaker 6: you know, the conservatives are this way and the more

518
00:30:35,440 --> 00:30:39,160
Speaker 6: liberal folks are spar to lean another way on these issues.

519
00:30:39,440 --> 00:30:44,080
Speaker 6: That's really this larger concern about their role, the Court's role,

520
00:30:44,320 --> 00:30:49,080
Speaker 6: the executive branch's role in sovereign immunity. So it's not

521
00:30:49,120 --> 00:30:54,160
Speaker 6: an ideological question, but it is a question that across

522
00:30:54,480 --> 00:30:57,720
Speaker 6: you know, multiple iterations of the Court that they've had

523
00:30:57,960 --> 00:31:00,320
Speaker 6: this concern they want to make sure that they are

524
00:31:01,320 --> 00:31:05,400
Speaker 6: executing on what Congress has legislated and that they're not

525
00:31:05,480 --> 00:31:06,560
Speaker 6: going any further than that.

526
00:31:07,840 --> 00:31:10,680
Speaker 2: It seems like they might have taken the case to

527
00:31:10,760 --> 00:31:14,360
Speaker 2: reverse the DC's circuit. Is that your conclusion that they're

528
00:31:14,400 --> 00:31:17,240
Speaker 2: going to end up reversing the DC circuit in some

529
00:31:17,320 --> 00:31:18,960
Speaker 2: way through some argument.

530
00:31:19,760 --> 00:31:22,760
Speaker 6: Yeah, it's possible. Although in the past they've opened up

531
00:31:22,800 --> 00:31:24,960
Speaker 6: you know, they've closed one door and opened another one

532
00:31:25,280 --> 00:31:27,480
Speaker 6: or for this case, which is why it keeps coming

533
00:31:27,520 --> 00:31:30,400
Speaker 6: back too, so you know, perhaps that will happen again,

534
00:31:30,560 --> 00:31:33,560
Speaker 6: that one door gets closed another door is you know,

535
00:31:33,600 --> 00:31:36,800
Speaker 6: at least slightly a jar, and then the case continues.

536
00:31:37,080 --> 00:31:40,400
Speaker 6: It's because the DC Circuit at least seems very interested

537
00:31:40,440 --> 00:31:43,440
Speaker 6: in making sure that they have explored every potential avenue

538
00:31:43,520 --> 00:31:46,560
Speaker 6: before they they say, absolutely, you should not be bringing

539
00:31:46,600 --> 00:31:48,920
Speaker 6: your claims here, and before I let you.

540
00:31:48,960 --> 00:31:51,320
Speaker 2: Go, tell me about your big win yesterday at the

541
00:31:51,440 --> 00:31:52,160
Speaker 2: Ninth Circuit.

542
00:31:52,440 --> 00:31:55,800
Speaker 6: So my case yesterday was another long running piece of

543
00:31:56,840 --> 00:32:01,840
Speaker 6: litigation for the city of Costanisa, and I've worked on

544
00:32:01,920 --> 00:32:05,160
Speaker 6: various appeals for them involving challenges to their sober living

545
00:32:05,160 --> 00:32:09,480
Speaker 6: home ordinances. So they have they allow sober living homes

546
00:32:09,520 --> 00:32:14,080
Speaker 6: in their city, but they have certain permitting requirements for

547
00:32:14,120 --> 00:32:20,800
Speaker 6: them that are you know, allowing requiring certain distances. So

548
00:32:20,840 --> 00:32:23,840
Speaker 6: in other words, you can't have a residential street with

549
00:32:24,400 --> 00:32:28,280
Speaker 6: you know, multiple of these homes or sober living homes

550
00:32:28,280 --> 00:32:31,000
Speaker 6: on them, because that would be a bad thing not

551
00:32:31,040 --> 00:32:35,360
Speaker 6: only for the residential environment, but for the residents who

552
00:32:35,440 --> 00:32:38,880
Speaker 6: are there, who are trying to be integrated back into

553
00:32:41,200 --> 00:32:49,360
Speaker 6: a traditional living arrangements after they've been in recovery. So

554
00:32:49,360 --> 00:32:53,360
Speaker 6: so this has been challenged as you know, violating various

555
00:32:53,360 --> 00:32:58,120
Speaker 6: their housing federal and states, their housing laws and harming

556
00:32:58,160 --> 00:33:02,320
Speaker 6: the disabled and to day or yesterday, the Ninth Circuit

557
00:33:02,480 --> 00:33:05,160
Speaker 6: agreed with the City of Costa Mesa that just there

558
00:33:05,240 --> 00:33:10,680
Speaker 6: was no discrimination. Oh various, whether it's spacially discriminatory, whether

559
00:33:10,760 --> 00:33:15,120
Speaker 6: it's dispread treatment there, you know, there's just there was

560
00:33:15,120 --> 00:33:22,200
Speaker 6: no discrimination. And in fact, these ordinances were designed to

561
00:33:22,360 --> 00:33:27,120
Speaker 6: benefit uh, the residents, the disabled residents of these towns.

562
00:33:27,800 --> 00:33:31,840
Speaker 6: It's a really wonderful result for a city that has

563
00:33:31,920 --> 00:33:35,000
Speaker 6: been standing up, you know, for its ordinances for for

564
00:33:35,080 --> 00:33:41,160
Speaker 6: many years, and helpful to other cities and counties and

565
00:33:41,240 --> 00:33:45,560
Speaker 6: local governments who want to have similar kind of land

566
00:33:45,680 --> 00:33:49,200
Speaker 6: use regulations that help all of their sort of balance

567
00:33:49,240 --> 00:33:52,160
Speaker 6: the interests of all of their residents, including those who

568
00:33:52,200 --> 00:33:53,000
Speaker 6: live in these homes.

569
00:33:53,120 --> 00:33:54,880
Speaker 2: It's great to talk to you as always.

570
00:33:55,000 --> 00:33:55,200
Speaker 5: MC.

571
00:33:55,720 --> 00:33:59,800
Speaker 2: That's MC san Gila, a partner at Complex Appellate Litigation Group.

572
00:34:00,480 --> 00:34:02,800
Speaker 2: And that's it for this edition of the Bloomberg Law Show.

573
00:34:03,120 --> 00:34:05,440
Speaker 2: Remember you can always get the latest legal news on

574
00:34:05,520 --> 00:34:09,160
Speaker 2: our Bloomberg Law podcasts. You can find them on Apple Podcasts,

575
00:34:09,200 --> 00:34:14,120
Speaker 2: Spotify and at www dot Bloomberg dot com, Slash podcast

576
00:34:14,320 --> 00:34:18,040
Speaker 2: Slash Law. I'm June Grosso and you're listening to Bloomberg