Speaker 1: Bloomberg Audio Studios, podcasts, radio News. This is Masters in
Speaker 1: Business with Barry Ritholt on Bloomberg Radio.
Speaker 2: I know I say it every week, but this week
Speaker 2: I have an extra extra special guest. Neil Kadial is
Speaker 2: the former Solicitor General of the United States, where he
Speaker 2: focused on appellate and complex litigation on behalf of the
Speaker 2: Department of Justice. He has argued more than fifty cases
Speaker 2: before the Supreme Court. He is the recipient of the
Speaker 2: highest civilian award by the US Department of Justice, the
Speaker 2: Edmund Randolph Award, which he received in twenty eleven. The
Speaker 2: Chief Justice of the United States Supreme Court appointed him
Speaker 2: to the Advisory Committee on Federal Appellate Rules. He has
Speaker 2: won every accolade that an attorney can win, Litigator of
Speaker 2: the Year, Top one hundred Lawyers, five hundred leaving Lawyers
Speaker 2: in DC, the most financially innovative lawyer, on and on
Speaker 2: the list goes. He just has a CV that is
Speaker 2: really not to be believed. I reached out to Neil
Speaker 2: because he was representing the Plainiffs in the big tariff
Speaker 2: case Vos Selections versus Donald Trump, President, which he took
Speaker 2: over after the Plainiffs won at the International Court of
Speaker 2: Trade in DC. He argued the case in front of
Speaker 2: a full on bank hearing all eleven judges in the
Speaker 2: DC Court of Appeals. We recorded this on Wednesday, August
Speaker 2: twenty seventh, a few days before Labor Day weekend. We
Speaker 2: finished the recording and lo and behold. Two days later,
Speaker 2: the decision comes down. He wins a resounding victory, seven
Speaker 2: to four. The court very much bought into his arguments
Speaker 2: that the tariffs and any sort of taxes, duties, levies
Speaker 2: requires authorization from Congress. It is not within the purview
Speaker 2: of the executive branch of the President. So once we
Speaker 2: got that decision, I reached out to Neil again, and
Speaker 2: on Sunday, over the holiday weekends, I hopped off the beach.
Speaker 2: We got on the phone call for a half hour
Speaker 2: and recorded what he thought of the results, what he
Speaker 2: thought about the opinion, where the case is likely to
Speaker 2: go from here, how things look in terms of the
Speaker 2: odds that the Supreme Court are going to hear this.
Speaker 2: I thought the entire conversation was absolutely fascinating, not just
Speaker 2: because hey, this is news right now, and because he
Speaker 2: won the case two days later. He's just such a thoughtful,
Speaker 2: intelligent lawyer who really takes his role as an officer
Speaker 2: of the court and helping to define the jurisprunes of
Speaker 2: American law very very seriously. Just such a bright, thoughtful
Speaker 2: guy who just wants us to respect the Constitution. I
Speaker 2: thought the conversation was fascinating. I think you will also.
Speaker 2: We'll start out with our PostScript the conversation after we
Speaker 2: found out that Katiel's clients won at the appellate level,
Speaker 2: and then we'll go to the entire our conversation we
Speaker 2: had while we still didn't know what the outcome of
Speaker 2: the case was, with no further ado, my discussion with
Speaker 2: Appellet attorney Neil Kadial. First off, Neil, congratulations, you just
Speaker 2: won a major repellate case in Vos Selections versus Donald Trump.
Speaker 2: So congrats, Thank you so much.
Speaker 3: Yeah, I think I saw you and we had our
Speaker 3: interview the day before the decision came down. The way
Speaker 3: the Court of Appeals works like the US Supreme Court,
Speaker 3: they never tell you in advance when a decision's coming down.
Speaker 3: And indeed it was a little I think past five
Speaker 3: o'clock on Friday, right before Labor Day, and I was
Speaker 3: about to leave the office, and then I heard my
Speaker 3: email ding and I look at it and I'm like, well,
Speaker 3: I might as well see what this is. I assumed
Speaker 3: it was just some you know, minor thing, and they're like, whoa,
Speaker 3: it's the decision. And you know, Barry, they let me
Speaker 3: know the decision at the very same time. They let
Speaker 3: the world know, because otherwise, if they let me know
Speaker 3: in advance, you know, that's private information. This is the
Speaker 3: kind of information that does move markets. And so they
Speaker 3: let the entire world know, including me, at the very
Speaker 3: same time.
Speaker 2: So let's put this into a little timeline. We had
Speaker 2: our recording Wednesday, August twenty seventh. The decision dropped around
Speaker 2: five o'clock on Friday, August twenty ninth. Today is Sunday,
Speaker 2: August thirty. First, everybody else is on the beach. I
Speaker 2: know you're leaving for Europe in a couple of days,
Speaker 2: but I wanted to just touch base with you and
Speaker 2: try and figure out where this goes from here. So
Speaker 2: let's start out with the decision. I thought the majority
Speaker 2: decision seven to four your way. I thought it was
Speaker 2: a pretty powerful refutation of the executive's ability to just
Speaker 2: impose tariffs I don't want to say on a whim,
Speaker 2: but lacking the specific following of the AIBA rules and
Speaker 2: what an emergency actually is, can you address that a
Speaker 2: little bit?
Speaker 3: Yeah, I think that the seven judges and the majority
Speaker 3: were saying exactly what we've said all along, which is,
Speaker 3: maybe these terrifts are a good idea, maybe they're a
Speaker 3: bad idea, but they can't be imposed by the president's
Speaker 3: pen alone. You got to go to Congress and get
Speaker 3: that author as a that that's our constitutional system. And
Speaker 3: what the seven judges said is that's exactly right. That
Speaker 3: the Congress has never given the president such a sweeping
Speaker 3: power to just do it on his own, and if
Speaker 3: they did, they said it'd be unconstitutional. But they said
Speaker 3: that isn't what's going on here. And the president has
Speaker 3: an easy fix if he wants to. He could go
Speaker 3: to Congress and seek approval for the tariffs that he wants.
Speaker 3: That's what he did the first time around, as we
Speaker 3: talked about last week. You know, that's something that failed
Speaker 3: in Congress, and so maybe that's why he doesn't want
Speaker 3: to do it. Obviously, these tariffs are highly unpopular, but nonetheless,
Speaker 3: you know, the Congress is controlled by his party, and
Speaker 3: you know that's the place to start. Don't run to
Speaker 3: the federal courts to do what you can't do in Congress.
Speaker 2: So I want to talk about the dissent in a bid,
Speaker 2: but let's just talk about what the appellate court did,
Speaker 2: which I was somewhat confused by, and maybe you can
Speaker 2: clarify this. They remand it back to the International Court
Speaker 2: of Trade in d State, which is a US court
Speaker 2: for findings about who this applies to. Like, it seems
Speaker 2: sort of odd to say, well, and only might apply
Speaker 2: to the litigants. What are we going to have seven
Speaker 2: million cases on this tariffs? It would seem that either
Speaker 2: it's constitutional or unconstitutional and that applies to everybody. Or
Speaker 2: am I being naive?
Speaker 3: I think that's basically right Berry that I think ultimately
Speaker 3: the question is are these tariffs legal or illegal? If,
Speaker 3: as the Court of Appeals said, they're illegal, then the
Speaker 3: vast vast majority of Trump's tariffs are unconstitutional, illegal, can't
Speaker 3: be imposed, and people who've have them imposed, you know,
Speaker 3: may have remedies and recourses. What the court also did, though,
Speaker 3: and you're referring to a fairly technical part of the decision,
Speaker 3: is it sent it case back to the lower court
Speaker 3: to evaluate the scope of the remedies. And that's because
Speaker 3: the US Supreme Court, just very recently, in the birthright
Speaker 3: citizenship case, has announced some new ways of thinking about
Speaker 3: relief on parties, in particular in class actions and things
Speaker 3: like that. And so I think the court Federal Circuit
Speaker 3: did the prudent thing here by just saying with respect
Speaker 3: to that, i'd like we'd like the lower court to
Speaker 3: evaluate it. I think that's pretty much a sideshow at
Speaker 3: this point. My strong hunch is that the federal government
Speaker 3: has a strong interest in resolving this question. After all,
Speaker 3: this is a really you know, initiative of President Trump's.
Speaker 3: It's been declared unconstitutional. So I think they're going to
Speaker 3: go to the Supreme Court. I mean, again, I wish
Speaker 3: that weren't the case. I wish they'd go to Congress,
Speaker 3: which is the way that our constitution commands things. But
Speaker 3: you know, according to the President's tweets and the like,
Speaker 3: they want to go to the Supreme Court.
Speaker 2: So what is the process like for this to go
Speaker 2: up to Scotus first, the remand back to the district
Speaker 2: court not relevant, that's just a very specific remedy question.
Speaker 2: Assuming the petition for sociari is filed by the government,
Speaker 2: what are the options? What might the Supreme Court do?
Speaker 3: Yeah, so I think you're right to say that the
Speaker 3: lower court proceedings on relief are relevant here. Indeed, the
Speaker 3: Federal Circuit said that lower court has no role at
Speaker 3: least until October fourteenth, because they wanted to give the
Speaker 3: government time to file what's called a petition for cucuare,
Speaker 3: which is a formal request to the US Supreme Court
Speaker 3: to hear the case. The government is saying that in
Speaker 3: these tweets by President the President and others, that they
Speaker 3: will file that petition for cuchuari, ask the Supreme Court
Speaker 3: to hear the case, and then it's obviously up to
Speaker 3: the Supreme Court to decide. Statistically, when the government asks
Speaker 3: them to hear a case, particularly one that has important consequences,
Speaker 3: the court does hear the case. So the court very
Speaker 3: well may set the case for oral argument, and then
Speaker 3: there'll be the argument from the two sides as to
Speaker 3: whether or not this lower court decision that we want
Speaker 3: declaring President Trump's Taristan constitutional, whether that will be upheld
Speaker 3: by the US Supreme Court.
Speaker 2: So I was kind of intrigued by the descent, which
Speaker 2: I'm not a practicing attorney anymore, so I'm not up
Speaker 2: to date in what is the latest thinking in terms
Speaker 2: of art. But it sort of seemed like one of
Speaker 2: the descents suggested that it's an emergency. If the president
Speaker 2: declares in an emergency, kind of makes that word meaningless.
Speaker 2: How did you read the significance of the descent and
Speaker 2: what might it mean to the hearing if this ultimately
Speaker 2: goes to the Supreme Court.
Speaker 3: I think that's exactly right on what you're saying, which is,
Speaker 3: if the descent were right, it basically reads the word
Speaker 3: emergency out of the statute. It gives carte blanche deference
Speaker 3: to the president, and the Supreme Court in an earlier
Speaker 3: case back in nineteen eleven, said you can't do that
Speaker 3: with the word emergency, And here, I think Verry, the
Speaker 3: other really important point is that the law that the
Speaker 3: President is citing AIPA doesn't just talk about emergency. It
Speaker 3: requires it to be unusual and extraordinary. And the president's
Speaker 3: own executive order when he imposed these tariffs, said that
Speaker 3: the trade deficits were persistent and gone on for fifty years,
Speaker 3: and the opposite of the unusual and extraordinary. And look,
Speaker 3: of course you want the president, in a genuine, true
Speaker 3: emergency that's unusual and extraordinary, to have extra powers, because
Speaker 3: if Congress can't meet to repel some threat or something
Speaker 3: like that, you want the president to have some gap
Speaker 3: billing power. This is the opposite of that. I mean,
Speaker 3: Congress is in session, they're passing bill after bill and
Speaker 3: the like, and of course they're controlled by the same
Speaker 3: political party as the president. So the idea that Congress
Speaker 3: can't act is you know, to use the technical legal
Speaker 3: term poppycock.
Speaker 2: Coming up, we continue our conversation with a pellet litigator.
Speaker 2: Neil Tu. I'm Barry Ridults. You're listening to Masters in
Speaker 2: Business on Bloomberg Radio. Let's broaden this out a little bit.
Speaker 2: I think this is an important case because I'm a
Speaker 2: market participant and tariffs are attacks. They're a headwind to
Speaker 2: consumer spending and other economic activities. But stepping back and
Speaker 2: looking at this from a constitutional standard, how much of
Speaker 2: this is focusing on how much authority the executive branch
Speaker 2: of the US government has. Is this an attempt to
Speaker 2: rebalance the three parts of government by this particular president,
Speaker 2: or is this just no we want our tariffs, and
Speaker 2: we want to stop all these bad things that the
Speaker 2: tariffs will cure.
Speaker 3: Yeah, I view this decision not as a rebalancing of
Speaker 3: our constitutional separation of powers up but rather a return
Speaker 3: to our founder's original concept was, which was Congress makes
Speaker 3: the laws, the president enforces them, the courts decide whether
Speaker 3: those laws are legal or not. And here what happened
Speaker 3: is you had a president who colored well outside of
Speaker 3: the lines, and you know, asserted an extraordinary power that
Speaker 3: no president in American history has ever asserted on his own.
Speaker 3: And I think the court is doing here what the
Speaker 3: courts have done time immemorial in other cases, whether it
Speaker 3: was the seizure of the steel mills by President Truman
Speaker 3: in nineteen fifty two, whether it was President Bush's law
Speaker 3: free zone at Guantanamo after the horrific nine to eleven attacks,
Speaker 3: whether it was you know, President Biden's student loan initiative programs.
Speaker 3: In all of these cases, you've had presidents that try
Speaker 3: and ascertain muscular powers and the court pushes back on them.
Speaker 3: And this is I think a pretty extreme illustration of
Speaker 3: a president and whose asserting powers that he has no
Speaker 3: business asserting.
Speaker 2: So at the appellate level. It was seven to four
Speaker 2: of the dissent was written by justice appointed by President Obama.
Speaker 2: It's kind of a little bit surprising to me when
Speaker 2: you look at the lay of the Supreme Court. I
Speaker 2: know a lot of people tend to look at that
Speaker 2: as Democrats versus Republicans. But the appallate attorneys, I know,
Speaker 2: and the people who are constitutional lawyers tend to look
Speaker 2: at it as originalists versus more modern interpreters. How are
Speaker 2: you looking at this case when it gets now, assuming
Speaker 2: it goes up to the Supreme Court, how are you
Speaker 2: looking at the context of this case?
Speaker 3: I love the question because you know, oftentimes people say
Speaker 3: things like, well, the Supreme Court is appointed by Republicans,
Speaker 3: so they only wrote republican or nonsense like that. This
Speaker 3: is not my experience. I mean, I've been lucky to
Speaker 3: argue fifty two K is there, and I just don't
Speaker 3: see it in the same way as those kind of
Speaker 3: pundits see it. And you know, I think you're right
Speaker 3: to say the decision by the seven to four courts
Speaker 3: a good illustration of that. The dissent written by a
Speaker 3: judge who was appointed by a democratic president. Our majority opinion,
Speaker 3: the senior most judge, and the majority is Judge Lourie,
Speaker 3: who was appointed by President Bush, but says that these
Speaker 3: terrorists are unconstitutional. So I don't think it's the right
Speaker 3: way to think about it. I think that there are
Speaker 3: people who take constitutional limits more seriously and others who
Speaker 3: want to defer and avoid getting the courts in the
Speaker 3: middle of something. And so maybe that's one axis that
Speaker 3: sometimes could be used to predict outcomes. But here I think,
Speaker 3: no matter which way you look at it, the president
Speaker 3: doesn't have this power. You know, we might wish he
Speaker 3: had this power. It might be a good idea for
Speaker 3: him to have this power. But our founders were as
Speaker 3: clear as day in Article one, Section eight they said specifically,
Speaker 3: the hour over duties is one given to the Congress,
Speaker 3: not to the president.
Speaker 2: So there are a couple of key issues. This is
Speaker 2: going to turn on the Constitutionality article on section eight,
Speaker 2: the i EPO laws, and what is an emergency? Any
Speaker 2: other factors that might drive this that we should be
Speaker 2: aware of.
Speaker 3: Yeah, I think there's a couple. One is that the
Speaker 3: Supreme Court in recent years has announced something called the
Speaker 3: Major Questions Doctrine, and the idea of that doctrine is
Speaker 3: to say, if Congress is giving the president some sort
Speaker 3: of power, they don't hide it in vague terms. They
Speaker 3: say it really expressly and clearly. You know Justice Scalia's
Speaker 3: phrases that Congress doesn't hide elephants and mouseholes. And at
Speaker 3: the oral argument, I took that to even further. I said,
Speaker 3: you know, this isn't just an elephant in a mousehole,
Speaker 3: it's a galaxy in a key hole. It's an extraordinary
Speaker 3: set of powers given to the president that claimed by
Speaker 3: the president. And you know, this doctrine Major Questions doctrine
Speaker 3: has been used very by the US Supreme Court repeatedly
Speaker 3: to strike down President Biden's initiatives, whether it's over greenhouse gases,
Speaker 3: or whether it's over student loans, or whether it was
Speaker 3: over COVID eviction moratoriums and things like that. And I
Speaker 3: think that you know what the majority said in this
Speaker 3: opinion that we won just a couple of days ago,
Speaker 3: is hey, what's sauce for the goose? The sauce for
Speaker 3: the gander. This applies to other presidential initiatives and including
Speaker 3: of course this one here, and that it would be
Speaker 3: a violation of the Major Questions doctrine for Congress who
Speaker 3: have not even used the word tariff for duty or
Speaker 3: anything like that in APA, and then to have a
Speaker 3: president come along and say, ha, I can now do
Speaker 3: whatever I want.
Speaker 2: So let's expand this a bit. How creative was it
Speaker 2: of the administration to try and get tariffs imposed on RYEPA?
Speaker 2: Is this something that's just wildly outside of what AEPA
Speaker 2: originally was designed about.
Speaker 3: One hundred percent. Nobody, and I've read the legislative history
Speaker 3: behind AEPA so very carefully, nobody thought that this was
Speaker 3: about the tariff power. And so yes, they get a
Speaker 3: a plus plus for creativity the Trump administration and coming
Speaker 3: up with an argument that not only no one in
Speaker 3: Congress thought, no president for fifty years has thought. Now,
Speaker 3: creativity only gets you so far, because you have to
Speaker 3: be at least somewhat faithful and accurate to the original
Speaker 3: text and meaning of the law. And that's where I
Speaker 3: think unfortunately they get n f and they fall down
Speaker 3: on the job.
Speaker 2: So I have a pretty solid recollection of sitting in
Speaker 2: constitutional law classes and occasionally seeing a decision that was
Speaker 2: just perplexing. Although when you're looking at something that's a
Speaker 2: century old, a dread Scott or a separate but equal
Speaker 2: type of decision. Obviously, you're bringing a modern perspective. It's
Speaker 2: very hard to see outside of that. I had the
Speaker 2: same You and I spoke before we had the decision
Speaker 2: come down. I was kind of perplexed that this was
Speaker 2: even like a debate. It seems pretty obvious. None of
Speaker 2: the normal rules for enacting tariffs, none of the procedures, policies,
Speaker 2: or allocation of powers amongst branches of government was followed.
Speaker 2: So what do you imagine the government's argument is going
Speaker 2: to be at the Supreme Court level.
Speaker 3: It's very I think the secret about Supreme Court and
Speaker 3: presidential power advocacy is that, I mean, no matter how
Speaker 3: creative and ridiculous the argument is, if the president voices it,
Speaker 3: it's a court case and it's going to be taken
Speaker 3: seriously by everyone, because it's after all, the press. And
Speaker 3: that's why, you know, when I was the president's top lawyer,
Speaker 3: courtroom lawyer, I was very careful to only make the
Speaker 3: arguments that I thought had very strong basis behind them,
Speaker 3: because you don't want to diminish that credibility that the
Speaker 3: government has with the US Supreme Court. Here, I do
Speaker 3: think that the arguments are quite a stretch for the
Speaker 3: administration to be making. And I think, you know, that's
Speaker 3: what you saw reflected in the seven to four opinion.
Speaker 3: So what do I think that the Solicitor General is
Speaker 3: going to say to the Supreme Court. I think he's
Speaker 3: going to say what he's been saying all along. The
Speaker 3: President says he needs this power. It'd be dangerous to
Speaker 3: unwind all of these deals and present it as a
Speaker 3: fade to complete. And I just think that's the wrong
Speaker 3: way to think about constitutional law, to allow a president
Speaker 3: to do what he wants in the interim and then say, oh,
Speaker 3: it would be too dangerous to unwind it. You know,
Speaker 3: I think it's better to get the constitutional rules right
Speaker 3: the first time.
Speaker 2: So some of the arguments I've seen from the administration
Speaker 2: is not only are the tariffs complicated, and then we've
Speaker 2: spent all this time and effort negotiating them, which this
Speaker 2: would negate, but it would be a negative for the
Speaker 2: global economy. You will cause economic distress around the world
Speaker 2: if you throw these tariffs out. Seems like seems like
Speaker 2: a little bit of a history onic claim.
Speaker 3: Well, I have two things to say about that, And
Speaker 3: you know, and you know, we can defer to the
Speaker 3: president about whether the claim is right or wrong, whether
Speaker 3: it's histrionic or the like. Let's just say it's right.
Speaker 3: Two things. One, If that's right, it walks right into
Speaker 3: the constitutional problem, which is the major questions doctrine. Right
Speaker 3: if the administration is saying, oh, the economy is going
Speaker 3: to collapse without these things, that's exactly the kind of
Speaker 3: major question that you think Congress has to decide, not
Speaker 3: the president. Number one and number two, If it isn't histrionic,
Speaker 3: if it's really right that the economy is going to collapse,
Speaker 3: then it's the easiest thing in the world for the
Speaker 3: President to go to Congress and seek authorization. I mean,
Speaker 3: I don't know the Congress wants the US economy to
Speaker 3: collapse in there, of course, members of his own political
Speaker 3: party that are running Congress, so there's not even a
Speaker 3: politics barrier or anything like that.
Speaker 2: So what are we missing? It seems like this doesn't
Speaker 2: survive on a constitutional basis. AIBA doesn't authorize it. If
Speaker 2: it's a major decision, take it to Congress. What else
Speaker 2: is going on other than I want these tariffs and
Speaker 2: I don't care how they get and acted what am
Speaker 2: I missing here?
Speaker 3: I'm not sure you're missing anything very I think you've
Speaker 3: got a president who's taken an incredibly muscular view of
Speaker 3: his authority and has done all of this stuff to
Speaker 3: the international economy and is now saying, oh too late,
Speaker 3: tone wind it. I'm already done. And you know that
Speaker 3: isn't the way constitutional law works.
Speaker 2: Let's just play this out so by the time people
Speaker 2: hear this, I don't think we'll find out if the
Speaker 2: Supreme Court is going to grant soshiiari immediately, but relatively
Speaker 2: soon if they're interested, sometime in the next few weeks.
Speaker 2: Is that is that a fair timeline.
Speaker 3: It's possible. It requires the government to file a cchuared petition,
Speaker 3: and you know, in other big cases, you know, like
Speaker 3: Guantanamo or healthcare or the like, there are those cecuary
Speaker 3: petitions filed by the government almost immediately. So we will
Speaker 3: see what the government does here. But certainly it's possible
Speaker 3: that they file soon, in which case the Supreme Court
Speaker 3: could give us guidance as to whether they're going to
Speaker 3: hear the case in a matter of a couple of weeks.
Speaker 2: So let's say that happens and the case is heard
Speaker 2: end of September. How soon do we get a decision?
Speaker 3: Yeah, I do think they'd hear the case in the
Speaker 3: end of September, because there's time for briefing, for writing
Speaker 3: the legal papers, and also for friends of the court
Speaker 3: to weigh in and write their own legal papers. So
Speaker 3: I think realistically we'd be talking about a court hearing
Speaker 3: and probably earliest November December, and you know, maybe as
Speaker 3: late as February or March something like that. So it's
Speaker 3: going to take a little while, and it should take
Speaker 3: a little while. Bary. These are really important momentous questions,
Speaker 3: and you know, not just momentus for right now, but
Speaker 3: momentous for American history and the role of the president,
Speaker 3: because what the court says here will govern you know,
Speaker 3: maybe just the case at hand, but it may govern
Speaker 3: other things as well. And so I think the court
Speaker 3: is going to want to proceed with some caution and
Speaker 3: have time for adequate briefing from the parties. That's my gun.
Speaker 2: So what are the state of tariffs presently? The plaintiffs
Speaker 2: in the original case had said, Hey, there's only so
Speaker 2: long we could stay in business with these tariffs, and
Speaker 2: we want a decision as rapidly as possible since they
Speaker 2: were found illegal by the appeals court. Do you have tariffs?
Speaker 2: Do we not have tariffs? What is going on?
Speaker 3: So what the Federal Circuit did is it kind of
Speaker 3: split the baby. It said that the terrorifts will be on.
Speaker 3: The terifts will be permitted, but only for forty five
Speaker 3: days while the government goes and government may go and
Speaker 3: ask the US Supreme Court to hear the case, and
Speaker 3: if they don't hear the case, then the tariffs will
Speaker 3: be declared illegal and unconstitutional and void.
Speaker 2: What are the odds that the Supreme Court chooses to
Speaker 2: not hear the case.
Speaker 3: I'm not going to predict what the Supreme Court is
Speaker 3: going to do. That's just you know, that's that's there.
Speaker 3: I have to leave that for them, and I'm just
Speaker 3: an observer on the outside. But I did want to
Speaker 3: say that what happened with the Federal Circuit did by
Speaker 3: saying forty five days, is it cut the government's time
Speaker 3: and half to file a cerciar I petition. Normally they
Speaker 3: have ninety days to do so. And what the court
Speaker 3: here said is basically, Nope, this is too important. You've
Speaker 3: got to if you want to hear have the Supreme
Speaker 3: Court hear the case, then you've got to do it
Speaker 3: in the next forty five days, otherwise these tariffs will
Speaker 3: be declared illegal.
Speaker 2: So there seems to be a judicial recognition of exactly
Speaker 2: how pressing this is. The Liberation Day was April second.
Speaker 2: The lower court case I think was filed April fourteenth,
Speaker 2: and then there was the decision in May was heard
Speaker 2: pretty rapidly. The on Bank case was heard in July
Speaker 2: of July thirty first, I believe, right, and then a
Speaker 2: month later we just about a month later, we get
Speaker 2: the decision. So it seems like, you know, I traditionally
Speaker 2: think of corporate litigation as a game of delay, delay, delay.
Speaker 2: This really seems to be moving quite rapidly.
Speaker 3: It is moving rapidly, and that's common in presidential power
Speaker 3: cases because there's so much at stake, and so, you know,
Speaker 3: I've been hardened to work with the government attorneys, the
Speaker 3: Trump administration attorneys on a fast time schedule. I think
Speaker 3: that's been you know, beneficial to try and move this
Speaker 3: case and as ultimate resolution along. But I think, you know,
Speaker 3: I think the bottom line for what happened just on Friday,
Speaker 3: for all your viewers and listeners is the Trump tariffs
Speaker 3: were declared unconstitutional and illegal by a seven to four
Speaker 3: vote of our nation's second highest court, the US Court
Speaker 3: of Appeals for the Federal Circuit. And now the question
Speaker 3: is will the Trump administration go to the Supreme Court?
Speaker 3: And then, of course what will the Supreme Court do?
Speaker 2: And the clock is thinking they have forty five days,
Speaker 2: which by my calculation is around October fifteenth or so.
Speaker 2: Is that about right?
Speaker 3: Yeah? I think it's the fourteenth, fourteenth.
Speaker 2: Wow, all right, so six weeks ago we'll be watching
Speaker 2: this really closely. Again, Neil, congratulations on your appellate victory.
Speaker 2: If this goes up, are you going to be the
Speaker 2: one making the argument in front of the Supreme Court?
Speaker 3: No, that's all to be determined. Who knows.
Speaker 2: So that was my conversation over the Labor Day weekend,
Speaker 2: right after we found out that he and his clients
Speaker 2: had won the appeal. Now let's jump to the entire
Speaker 2: conversation that we had a week ago while the outcome
Speaker 2: of the case was still up in the air. My
Speaker 2: Master's in business conversation with a Palette attorney Neil Tatiall,
Speaker 2: let's spend a little time just talking about your background
Speaker 2: and career Dartmouth undergrad jd from Yelle. What was the
Speaker 2: original career plan.
Speaker 3: The original plan was for me to be a professor
Speaker 3: of history, and yeah, I had gone. I went to
Speaker 3: Dartmouth College. As you noted, I probably was one of
Speaker 3: the last kids admitted to Dartmouth. I was not a
Speaker 3: particularly great high school student. And I had this professor,
Speaker 3: Doug Haynes in history at Dartmouth who basically taught me
Speaker 3: to write and taught me how to think. And I
Speaker 3: was so grateful to him, and I felt like I
Speaker 3: should do that with my life as go and give
Speaker 3: back in the way that Doug had given me this
Speaker 3: incredible gift. And so in my senior year I say
Speaker 3: to Doug, I was like, you know, ask him to
Speaker 3: have lunch with me, and I say, I'd really like
Speaker 3: to be a history professor. And you know, frankly, you're
Speaker 3: the one who inspired me and I want to do this.
Speaker 3: And he thought about it and he said, honestly, Neil,
Speaker 3: I don't think you should be a history professor because
Speaker 3: it's really tough, and it's hard to get tenure, and
Speaker 3: you'll have to start in some you know, small town
Speaker 3: in the middle of nowhere. It's hard to meet a
Speaker 3: spouse and so on. He said, look, you're at that
Speaker 3: point I was a national champion debater, and he said,
Speaker 3: my advice to you is to go to law school.
Speaker 3: And in particular, he said, go to Yale Law School,
Speaker 3: which is known for creating law professors, and you can
Speaker 3: do all the same stuff you want to do. But
Speaker 3: as a law professor, where you would get paid three times,
Speaker 3: it's easier to get tenure, your life is a lot easier.
Speaker 3: So I did that. I applied to Yale Law School.
Speaker 3: I got in again, probably one of the last kids admitted.
Speaker 3: And at the law school I had these incredible professors
Speaker 3: who did the same thing that Doug Haynes did for
Speaker 3: me in history, in other areas constitutional law and criminal
Speaker 3: law and the like, and these incredible professors who taught
Speaker 3: me again how to think and how to write, and
Speaker 3: so I was committed to being a law professor. I
Speaker 3: clerked first for Guido Calibrazy, who was the dean of
Speaker 3: the ill Law School, who was put on the Court
Speaker 3: of Appeals, and then for Justice Stephen Bryer. But all
Speaker 3: through that time I knew I wanted to be a
Speaker 3: law professor. So I applied while I was clerking to teach,
Speaker 3: and at the age of I think twenty six years old,
Speaker 3: I took a job teaching at Georgetown Law and that
Speaker 3: was the plan for my life, to be a law professor,
Speaker 3: and nothing but a law professor.
Speaker 2: Do you still do any teaching these days?
Speaker 3: I do, and I love it, and in many ways
Speaker 3: it's my favorite job I've ever had. But there's a
Speaker 3: lot else going on in the world these days, and so,
Speaker 3: you know, it was a little bit by accident that
Speaker 3: I fell into this litigation and thing. Yes, I was
Speaker 3: a national champion debater, and so it was comfortable being
Speaker 3: on my feet, but I was really, you know, dominated
Speaker 3: My dominant thinking was be a law professor, write these
Speaker 3: theoretical articles that change the way people think about the law,
Speaker 3: and teach students. So that's what I thought I was
Speaker 3: going to do. And then something happened, which was we
Speaker 3: had the horrific attacks on September eleventh, and I was
Speaker 3: bumbling around trying to figure out what to do. I
Speaker 3: was teaching at Yale Law School that year, and and
Speaker 3: you know, my students and I we decided to try
Speaker 3: and help first responders get benefits and stuff, and you know,
Speaker 3: we weren't particularly good at it, but it was something.
Speaker 3: And then President Bush announced that he was going to
Speaker 3: have these military trials at Guantanamo Bay for suspected terrorists.
Speaker 3: And I looked at that. I had served in the
Speaker 3: Justice Department briefly, and we had the embassy bombings of
Speaker 3: al Qaeda at the time, and so I looked into
Speaker 3: could we have military trials? And we concluded they were
Speaker 3: obviously unconstitutioned. So I went and looked up what's President
Speaker 3: Bush doing here? What's the source of authority for this?
Speaker 3: And you know, it wasn't particularly compelling. In fact, it
Speaker 3: was really weak because the President was saying he was
Speaker 3: going to set up these trials from scratch. He's going
Speaker 3: to pick the prosecutors, pick the defense attorneys. Right. All
Speaker 3: the rules for the criminal trials defined the punishments and offenses,
Speaker 3: including the death pennel.
Speaker 2: Even handed and fair. What's your objection? Yeah?
Speaker 3: And you know, even the last lines of the executive
Speaker 3: orders said the courts have no business reviewing what I'm doing.
Speaker 3: No rid of habeas corpus. So I went into my
Speaker 3: constitutional law class and said, you guys always tease me
Speaker 3: because I think the President should have such strong powers,
Speaker 3: and nothing the president does is unconstitutional. Well, here's something
Speaker 3: that's obviously unconstitutional. And in the class was a senator.
Speaker 3: It was a staffer for Senator Lahy, who was then
Speaker 3: the chair of the Senate Judiciary Committee. And so she
Speaker 3: told him about me, and he had a hearing, and
Speaker 3: I testified and said, look, I don't know if you
Speaker 3: want to have these military trials or not, but the
Speaker 3: one thing I'm sure of is that it can't be
Speaker 3: done with the president's stroke of his pen. You need
Speaker 3: Congress to approve it. And this is of course going
Speaker 3: to be relevant as we talk about tariffs later. It's
Speaker 3: the exact same architecture over the argument. And so that's
Speaker 3: how I testified. Nobody listened. So then I go and
Speaker 3: I write a lare of your article with Lawrence Tribe,
Speaker 3: the nation's most most pre eminent constitutional.
Speaker 2: Law Lawrence Private Harvard.
Speaker 3: Yeah, exactly. And so we write this article in the
Speaker 3: Yale Law Journal. We race it to print, saying what's
Speaker 3: going on is unconstitutional. Nobody reads the article.
Speaker 2: My mom.
Speaker 3: Maybe my mom read it, but you know, I don't know.
Speaker 3: So then I said to myself, you know, you got
Speaker 3: this piece of paper, neil a law degree, you could
Speaker 3: actually sue the president, and that's what it is exactly.
Speaker 3: So that was the hard question because a bunch of
Speaker 3: different interest groups had sued on Guantanamo, but they didn't
Speaker 3: have standing, they had no reason. And so I had
Speaker 3: a friend very high up at the Pentagon who got
Speaker 3: me the email address of a Pentagon lawyer who was
Speaker 3: representing the detainees, and I basically got a letter snuck
Speaker 3: to Guantanamo and it wound up in the hands of
Speaker 3: Asama bin Laden's driver, and that became my client. And
Speaker 3: so I go from being a theoretical law professor to
Speaker 3: like a real, like hard nosed litigator, all in the
Speaker 3: span of a few months. I filed the case. Nobody
Speaker 3: thinks we're going to win.
Speaker 2: How far are you from law school now?
Speaker 3: Yeah, I'm like six years out.
Speaker 2: So still relatively green.
Speaker 3: Yeah, very green, and never filed a lawsuit, you know.
Speaker 3: And so and by the way, I don't have any
Speaker 3: help except four law students who are helping me. I
Speaker 3: tried with law firms and initially I couldn't get them,
Speaker 3: but then ultimately Perkins Cooy, a Seattle firm, decided to
Speaker 3: help me, and that was phenomenal. So we filed this thing.
Speaker 3: Nobody thinks we're going to win, and we win it
Speaker 3: in the trial court. We lose it in the Court
Speaker 3: of Appeals with a guy named John Roberts on the
Speaker 3: descit panel. Three days later, he's nominated the Supreme Court
Speaker 3: and then to the Chief Justiceship. So I have to
Speaker 3: ask the Supreme Court to hear this Guantanamo case. It's
Speaker 3: the most important case their new Chief Justice has ever decided.
Speaker 3: And I'm going to say, I'm trying to tell the
Speaker 3: Supreme Court the Chief Justice is wrong about this. Nobody
Speaker 3: thinks we're going to win. It's my first Supreme Court argument.
Speaker 3: I'm arguing against President Bush's legendary solicitor general. It's his
Speaker 3: thirty fifth argument. I work my tail off and we win,
Speaker 3: and then my life changes, and then companies want to
Speaker 3: hire me, and I meet a young senator named Barack
Speaker 3: Obama who heard me interviewed on an interview just like
Speaker 3: this one, and he calls me into the Senate and says,
Speaker 3: you know, ask me to advise him on some things
Speaker 3: on Guantanamo, and tells me he's thinking of running for president,
Speaker 3: And then started working with him and then my life changes.
Speaker 2: Mass. Wow, that's amazing. You know. I want to talk
Speaker 2: about a couple of the other cases that you argued.
Speaker 2: One was More versus Harper, which former judge Michael Luddick
Speaker 2: called the most important case for American democracy ever. Tell
Speaker 2: us about that, kiss.
Speaker 3: Yeah, so that's a pretty recent one. I already it,
Speaker 3: I think about three years ago, and it involved something
Speaker 3: called the independent state legislature theory, which at that point
Speaker 3: was the greatest threat to democracy. I think when when
Speaker 3: Judge Ludig was writing those remarks, We've now had some
Speaker 3: things which you know are arguably worse. But it was
Speaker 3: a significant one because if you think back to the
Speaker 3: twenty twenty election, one of the things that President Trump
Speaker 3: tried to do then was to say that state legislatures
Speaker 3: can control elections, and you can even throw out the
Speaker 3: popular vote and just have state legislatures decide where the
Speaker 3: electoral votes will go to which candidate. And this became
Speaker 3: part of the rnc's playbook, and they invested heavily in
Speaker 3: state legislatures to try and develop, excuse me, this theory.
Speaker 3: So we challenge that again, this is one in which
Speaker 3: nobody thought we could win because if the Republicans won,
Speaker 3: they would entrench control over presidential elections for decades probably,
Speaker 3: And a lot of people think, oh, this Supreme Court,
Speaker 3: they're appointed by Republicans, they're very conservative, they're just going
Speaker 3: to do the Republican party's bidding. And I looked at
Speaker 3: it and I said, I don't think that's right. I mean,
Speaker 3: this is a court that does have fidelity to the
Speaker 3: original understanding of the Constitution. And I thought, if we
Speaker 3: could make the argument in that way, and this is
Speaker 3: what my scholarship is all about, the original understanding of
Speaker 3: the Constitution, I said, I thought we could win. And
Speaker 3: so that's what I developed as the strategy. And indeed
Speaker 3: I knew that Justice Thomas, Clarence Thomas would ask the
Speaker 3: first question at oral argument that's been happening now for
Speaker 3: the last few years.
Speaker 2: Just out a habit or like, how does that well.
Speaker 3: He's one of the more senior justices, and during COVID,
Speaker 3: when we had to argue cases on speaker phones and
Speaker 3: we couldn't see each other, it went in order of seniority,
Speaker 3: and so Justice Thomas was right at the top. After COVID,
Speaker 3: that's tradition continued in what Justice Thomas would ask the
Speaker 3: first question. And so I've been thinking, how do I
Speaker 3: use that knowledge to my advantage? Justice Thomas going to
Speaker 3: ask the first question. And what I did was, I
Speaker 3: said to myself, Okay, I can develop a set play.
Speaker 3: Justice Thomas is going to ask me a question. Doesn't
Speaker 3: matter what the question is. I'm then going to say,
Speaker 3: and this is what I do. Just Thomas asked me
Speaker 3: a question at the argument. I don't remember what the
Speaker 3: question was. I answer it, and then I say, Justice Thomas,
Speaker 3: may I say, in nearly three decades of arguing before you,
Speaker 3: I've been waiting for this case because it speaks to
Speaker 3: your method of constitutional interpretation, the original understanding, And here
Speaker 3: are the four things you need to know about more
Speaker 3: versus Harper in the original understanding of the Constitution. And
Speaker 3: I get to talk about Madison and Hamilton and Jefferson
Speaker 3: and so on, and it totally changes the dynamic in
Speaker 3: the courtroom, and sure enough, we win six to three.
Speaker 3: This case in the Republican theory is thrown out. I
Speaker 3: didn't win Justice Thomas's vote, but I won a bunch
Speaker 3: of others.
Speaker 2: Huh, that's amazing. Let's quickly talk about the Voting Rights
Speaker 2: Act that you successfully defend it instead of trying to
Speaker 2: overturn it. Tell us how different is to be playing
Speaker 2: defense or is it not? You're just arguing constitutional law
Speaker 2: and this is the outcome that should come about.
Speaker 3: It is different. But I would say even back then,
Speaker 3: I felt like I was playing defense. So this is
Speaker 3: a case I argued in maybe twenty ten. The Voting
Speaker 3: Rights Active and passed in nineteen sixty five. It literally
Speaker 3: has the blood of patriots on it. It is what
Speaker 3: Selma and the Bridge Potatos Bridge is all about. And
Speaker 3: so you know, in the case, basically it was right
Speaker 3: after President Obama had been elected and Southern States said, look,
Speaker 3: we don't need the Voting Rights Act anymore. Look you
Speaker 3: have an African American president, Like that's proof that we
Speaker 3: don't need it. And I stood up in court and said, no,
Speaker 3: we do need it. And it's like, you know, the
Speaker 3: very fact that we've been able to have an African
Speaker 3: American president isn't alone enough to to say there isn't
Speaker 3: discrimination in voting, particularly in particular areas, you know, even
Speaker 3: if the overall national result is one thing. And the
Speaker 3: Supreme Court at that point accepted that argument. And four
Speaker 3: years later, however, in a case called Shelby County, they
Speaker 3: reversed that position and struck down that part of the
Speaker 3: Voting Rights Act. And now there's only one part of
Speaker 3: the Voting Rights Act that remains, Section two, and the
Speaker 3: Supreme Court's agreed to hear a case to challenge that
Speaker 3: this fall. And so we very well may have a
Speaker 3: world in which there is no Voting Rights Act left whatsoever,
Speaker 3: which is a very dangerous thing. And yes, I do
Speaker 3: think the Court has become more conservative over my lifetime.
Speaker 3: I mean, the Court has always been a point majority
Speaker 3: Republican appointees since things.
Speaker 2: This isn't just too hard in ship. This is an
Speaker 2: ideological tilt, not necessarily party tilts.
Speaker 3: Yeah, so I would say, you know that the presidents
Speaker 3: now of both parties are sending to the Supreme Court
Speaker 3: more sure things that you know than which the track
Speaker 3: record is really known. You know, the Republicans had this
Speaker 3: mantra no more suitors because David Sudor, nominated by Republican
Speaker 3: President Bush upheld things like abortion rights and so on.
Speaker 3: And the Democrats, I think, have had their own version
Speaker 3: of this for some time as well. And so we
Speaker 3: get we don't tend to get justices without very defined
Speaker 3: positions anymore. Like when I started arguing, Justice Kennedy was
Speaker 3: on the court and you could see Barry every time
Speaker 3: you argued. He was struggling with which is the right view?
Speaker 3: Which is the right view of the law. And he's
Speaker 3: a very smart man. It wasn't that he wasn't smart.
Speaker 3: When I say struggling, it's not that he was struggling intellectually.
Speaker 2: They were pretty even handed argument yeah, and he really.
Speaker 3: Took the arguments so seriously without caricaturing him and just
Speaker 3: tried to make the right decision. And certainly that still
Speaker 3: happens today. I don't mean to overclaim it, but I
Speaker 3: would say in particularly some of the big cases, they're
Speaker 3: coming in a bit more with their minds made up
Speaker 3: than when I first started.
Speaker 2: Really interesting. Coming up, we continue our conversation with a
Speaker 2: Pellet litigator, Neil Kadil, talking about the tariff litigation winding
Speaker 2: its way through the courts. Today. I'm Barry Ridults. You're
Speaker 2: listening to Masters in Business on Bloomberg Radio. I'm Barry Ridults.
Speaker 2: You're listening to Masters in Business on Bloomberg Radio. My
Speaker 2: extra special guest this week is Neil Kadial. He is
Speaker 2: the former Solicitor General under President Obama. He is an
Speaker 2: appellet attorney who's argued in front of the Supreme Court
Speaker 2: pretty much more than any living or at least any
Speaker 2: active attorney fifty two times something more.
Speaker 3: There are people who have more. But I'm doing okay.
Speaker 2: You're doing okay. I want to talk about the Vos
Speaker 2: Selections Trump tariff litigation that, as we're recording this right
Speaker 2: before Labor Day, continues to perplex me how little coverage
Speaker 2: this has gotten from media, and not just political media,
Speaker 2: but financial and markets and economics media, because this case
Speaker 2: has enormous potential to impact the broader economy. So first,
Speaker 2: let's start with Vos Selections and other planiffs. April fourteenth,
Speaker 2: after Liberation Day sued the President, saying you don't have
Speaker 2: the authority to issue tariffs on your own without meaning Well,
Speaker 2: these checklists which you fail to do. How did you
Speaker 2: get involved in this case? Tell us a little bit
Speaker 2: about what makes this case different than other challenges to
Speaker 2: presidential authority.
Speaker 3: So right after President Trump took office and started talking
Speaker 3: about this tariff position, I was reminded of the Guantanamo case.
Speaker 3: I just described to you earlier, because it's the exact
Speaker 3: same problem, which is, look, a president had may, motivated
Speaker 3: by any number of good reasons, has a policy that
Speaker 3: he wants to implement, and instead of going to Congress,
Speaker 3: he just does it on his own with the stroke
Speaker 3: of his pen. And our founders thought that a very
Speaker 3: dangerous proposition, particularly in core areas like tariffs, because you
Speaker 3: know every King George, of course, you know every dictator,
Speaker 3: every leader would like the power to tariff, to tax
Speaker 3: the people in any way they see fit, without limitation.
Speaker 3: And what our founder said is no Article one, section eight.
Speaker 3: They gave the power to tariff expressly to the president
Speaker 3: in a similar way to they gave the gave the
Speaker 3: power to Congress, and in the same way as they
Speaker 3: did over matter of military justice.
Speaker 2: Let me ask you a question about Article one, section eight,
Speaker 2: because it talks about Levy's duties and taxes, but it
Speaker 2: doesn't specifically say tariffs. Does the nomenclature matter or are
Speaker 2: they all the same things? Now?
Speaker 3: I mean, even the Trump administration, which just made some
Speaker 3: bizarre legal arguments in this case, even they're not making
Speaker 3: that argument. A duty is definitely understood as a tariff,
Speaker 3: and the original understanding very clear on that point.
Speaker 2: And Article one, section eight says that authority lies exclusively
Speaker 2: with Congress exactly. So that's the initial claim. I'm assuming
Speaker 2: the president is saying, well, I was given authority by
Speaker 2: Congress either through the IEPA Act, which was nineteen seventy seven,
Speaker 2: or the Trade Act of nineteen seventy four. How do
Speaker 2: you see these other legislations modifying the Constitution?
Speaker 3: So the government is certainly so the Trump administration is
Speaker 3: trying to say that in nineteen seventy seven and Congress
Speaker 3: passed this International Economic Emergency Act which gave the power
Speaker 3: to tariff. There's only one problem with that. The law
Speaker 3: doesn't say anything about tariffs in it in nineteen seventy seven,
Speaker 3: and there's nothing in the you know, history of the
Speaker 3: law to say so. No president for fifty years has
Speaker 3: ever thought that it includes the power to tariff. And
Speaker 3: then President Trump's lawyers come along and say, ah, here,
Speaker 3: that's how we're going to announce these massive tariffs. And
Speaker 3: I just think our Constitution demands more from the Congress
Speaker 3: than that simple thing. I mean, Congress can certainly tomorrow
Speaker 3: easily authorize all of President Trump's tariffs. It would you
Speaker 3: know they could just do it with an up or
Speaker 3: down vote. The fact that they haven't, the fact that
Speaker 3: the president is scared to even ask, I think, tells
Speaker 3: you all you need to know.
Speaker 2: Didn't he ask in his first term?
Speaker 3: In his first term, he asked and it was rejected
Speaker 3: by the Congress.
Speaker 2: So it seems kind of odd to say, please give
Speaker 2: me the authority to tariff. No, I can't. Okay, now
Speaker 2: I'm not even going to ask. This is like a
Speaker 2: teenage kid who sneaks out after curfew.
Speaker 3: Right, it's it's I mean, a different way of putting
Speaker 3: The point is. Look, even Donald Trump didn't believe his
Speaker 3: own AEPA argument because he went to Congress back the
Speaker 3: first time around and lost, And so then he comes
Speaker 3: up with his backup plan, which is, oh, I have
Speaker 3: the power anyway. Then I have no idea what he
Speaker 3: was doing in the first term by going and asking
Speaker 3: Congress for this power if he had it in the
Speaker 3: first place. And it's such a dangerous thing because you know,
Speaker 3: if this president does it for tariffs because he sees
Speaker 3: trade imbalances, another president, and this is how I started
Speaker 3: my oral argument to the Federal Circuit. Another president to
Speaker 3: the Court of appeals. Another president could say, you know,
Speaker 3: climate's a real emergency, and I am going to impose
Speaker 3: one hundred percent tariffs or one thousand percent tariffs on
Speaker 3: any goods from an oil producing country. You know, that
Speaker 3: whole thing is something that Congress really needs to be deciding,
Speaker 3: not the president on his own.
Speaker 2: So before we get the appellate litigation, let's start with
Speaker 2: the trial litigation. You're representing a group of small businesses
Speaker 2: that are all saying tariffs are going to hurt their business.
Speaker 2: Tell us what the this was the Court of Trade,
Speaker 2: the International Court of Trade in DC. Tell us a
Speaker 2: little bit about that litigation. How did that proceed?
Speaker 3: Yeah, and just to be clear, I wasn't involved at
Speaker 3: that stage. I mean, this happens a lot with me.
Speaker 3: Is someone brings the case in the trial court, they
Speaker 3: win or lose, and then they want a firepower for
Speaker 3: the appeal stage and the Supreme Court. So that's what
Speaker 3: happened to you.
Speaker 2: Sure, So they won at the trial level, and then
Speaker 2: there was a stay on the enforcement at the trial
Speaker 2: level pending appeal. Right, So that's where you get involved
Speaker 2: in the case. How did this go up to the
Speaker 2: DC Court of Appeal? So rapidly, and why was it
Speaker 2: a full on bank all eleven justices hearing the case
Speaker 2: at once.
Speaker 3: Yeah, So what you have is you have a trial
Speaker 3: court decision from the Court of International Trade that says
Speaker 3: President tree Trump's tariffs are illegal. The court then pauses
Speaker 3: that ruling so that it could be decided by the
Speaker 3: appeals Court and perhaps the US Supreme Court. And at
Speaker 3: that point I get involved. The Federal Court of Appeals says,
Speaker 3: on their own, this case is so important that we're
Speaker 3: going to have all eleven of our judges here the case,
Speaker 3: not just three judges, which is normally the rule.
Speaker 2: How often do you get a full on bank hearing
Speaker 2: like that?
Speaker 3: Very rarely, I mean the Federal Circuit, which is this
Speaker 3: Court of Appeals, maybe once a year, maybe once every
Speaker 3: couple of years. So it's a very rare thing, and
Speaker 3: I think it does demonstrate the gravity of this. And
Speaker 3: to circle back to something at the start that you
Speaker 3: talked about about the kind of degree of attention around
Speaker 3: this case, I guess I want to push back a
Speaker 3: little because I do think there's been a lot of
Speaker 3: media attention around the case, a lot of jurisprudential attention
Speaker 3: around the case, but perhaps the most important a lot
Speaker 3: of business community interest. I mean, I think every major
Speaker 3: hedge fund called me while this case was pending in
Speaker 3: the trial court to ask for my views, and they
Speaker 3: wanted to make financial decisions on the basis of it.
Speaker 3: I obviously can't answer those questions in quite the same
Speaker 3: way now that I'm involved in the case. But I
Speaker 3: do think that for the markets, this is a case
Speaker 3: of enormous, enormous significance, and what happens at the Court
Speaker 3: of Appeals and what perhaps happens should the case go
Speaker 3: to the Supreme Court is something that a lot of
Speaker 3: people are thinking about.
Speaker 2: So let's walk before we run. So you argue the
Speaker 2: case on bank in front of the entire all lemonjustices
Speaker 2: of the DC Court of Appeals. Tell us what that
Speaker 2: hearing was, like, how did it go?
Speaker 3: Yeah, So, I mean, I'm obviously constrained. It's a pending case,
Speaker 3: so I want to just stick to the public record.
Speaker 3: I'm not going to try and litigate the case on
Speaker 3: your podcast or anything. I love your podcast, but I
Speaker 3: have to be very mindful of those kinds of things.
Speaker 3: But you know, in a big case like this, I
Speaker 3: think you're always looking I'm always looking to try and
Speaker 3: make sure the judges understand the implications of the government's argument,
Speaker 3: because anything can look reasonable when a president does it
Speaker 3: in the you know, for the immediate situation. But the
Speaker 3: question and constitutional law is, if the president has this
Speaker 3: power here, what's to stop him from doing the next.
Speaker 2: Thing and the next thing in the next slope.
Speaker 3: Yeah, exactly, And that's something our founders the whole architecture
Speaker 3: of our government, and Madison really talks about this in
Speaker 3: Federalists ten fifty one. The whole architecture of our government
Speaker 3: is to try and prevent that slippery slope through all
Speaker 3: sorts of different breaks. And the obviously the most important
Speaker 3: break to our founders was the role of the Congress.
Speaker 3: That the Congress has to affirmatively authorize things before a
Speaker 3: president can do them.
Speaker 2: So if the president can levy tariff's taxes duties on
Speaker 2: his own without congress, what can he do exactly?
Speaker 3: And so, you know, you asked me, how did the
Speaker 3: argument go? I felt like the judges were circling in
Speaker 3: on that precise question, the one you just asked me.
Speaker 3: And you know it's available for anyone to listen to exactly,
Speaker 3: So you know, listeners can decide for themselves. But I
Speaker 3: do think the government, you know, was was on the
Speaker 3: defense in response to those questions. And you know, I,
Speaker 3: you know, I have some sympathy for that. I was
Speaker 3: the top lawyer for the federal government for a while,
Speaker 3: and you know, sometimes governments, you know, have positions that
Speaker 3: are tough to defend. This one I felt was particularly
Speaker 3: tough to defend.
Speaker 2: So what given what we've talked about with Article one,
Speaker 2: Section eight and NIPA, what on earth was the government's
Speaker 2: case defending the Tara faction.
Speaker 3: Most of the government's case was like a fate of
Speaker 3: complete which was, Oh, it's already done, the President's done it,
Speaker 3: it's had all these successes. If you undo it, it's
Speaker 3: going in declared illegal. Then it's going to wreck the economy.
Speaker 2: I am not aware of many having gone to law
Speaker 2: school and passed the bar. I don't recall a lot
Speaker 2: of constitutional cases where the judges shrugged and said, well,
Speaker 2: if you did it already, who are we to undo that?
Speaker 3: Exactly?
Speaker 2: It seems like a kind of bizarre argument to make.
Speaker 3: It is, but it is one that the governments have made.
Speaker 3: Prior governments have made it. President Truman made it when
Speaker 3: he sees the steel mills in nineteen fifty two, and
Speaker 3: that went up to the Supreme Court. Solicitor General made
Speaker 3: a version of this argument, and of course there we
Speaker 3: were in a war and we needed the steal. And
Speaker 3: so the Solicitor General said to the Supreme Court, look,
Speaker 3: you will d it gravely undermine our war fighting powers
Speaker 3: in the midst of a war if you reverse the
Speaker 3: president's decision to seize the steel mills. Supreme Court said,
Speaker 3: that's not a good enough reason. In our constitutional system,
Speaker 3: they say, it's Congress that makes the laws. And again,
Speaker 3: similar architecture to the guantanam argument. Similar architecture here in
Speaker 3: the tariff's case.
Speaker 2: Huh, that's really fascinating. So the government's substance equently did
Speaker 2: a filing pretty quickly after the hearing, asking for a
Speaker 2: stay if they lose, pending Supreme Court review. That seems
Speaker 2: kind of unusual. It's almost as if, hey, we didn't
Speaker 2: do a great job and we think we're going to lose,
Speaker 2: but we don't want you to overturn this. How often
Speaker 2: does that happen this quickly after an appeal is argued.
Speaker 3: I mean, it was an extraordinary letter. I don't really
Speaker 3: want to say more than that people can listen to
Speaker 3: people can read the letter for themselves. It was filed
Speaker 3: in the court. It's a two page letter, and then
Speaker 3: we filed a quick response to it. But it is
Speaker 3: it is an extraordinary.
Speaker 2: Letter, so typically get a this was argued in July
Speaker 2: twenty twenty five. It could take six months before we
Speaker 2: get a decision. Typically, my assumption is a full on
Speaker 2: bank hearing. Recognizing this is a really important case, you
Speaker 2: tend to get a decision faster than you would otherwise.
Speaker 2: I'm assuming that this can drop sometime in September October.
Speaker 2: But this isn't a February twenty twenty six.
Speaker 3: I think nobody wants it to be something that's going
Speaker 3: to go long, and courts of appeals generally do take
Speaker 3: a while for decisions. The average time is about six
Speaker 3: months in the federal system. Here, I think the judges
Speaker 3: do want to try and decide this quickly. That was
Speaker 3: indicated to us by the fact that they gave us
Speaker 3: very little time to write our briefs. You know, they
Speaker 3: wanted us to go straight to argument.
Speaker 2: And really, what's that timeline? Normally they like to prep.
Speaker 3: It was truncated by about half the time, and then
Speaker 3: oral arguments set for right away, right after the briefs
Speaker 3: came in.
Speaker 2: So no falling around. We're fast tracking this exactly. This
Speaker 2: isn't a Christmas decision. We're gonna we're gonna get this
Speaker 2: out exactly left Lay.
Speaker 3: I think the court did exactly the right and responsible
Speaker 3: thing there, which is us as lawyers. We can get
Speaker 3: the briefs done, we can get prepared for argument, so
Speaker 3: you know, so do it more quickly because there are
Speaker 3: eleven judges and they do have to reach some sort
Speaker 3: of majority view. It is going to take some time,
Speaker 3: in which you know, eleven people to decide. Anything takes time,
Speaker 3: particularly something with this gravity and.
Speaker 2: Wait, quite fascinating. Coming up, we continue our conversation with
Speaker 2: Neil Kadial, who is the planeff's attorney on the appeal
Speaker 2: for the Vos selections versus Trump, which is seeking to
Speaker 2: overturn all of the tariffs, discussing where the case can
Speaker 2: go from here. I'm Barry Ridolts. You're listening to Masters
Speaker 2: in Business on Bloomberg Radio. I'm Barry Redults. You're listening
Speaker 2: to Masters in Business on Bloomberg Radio. My Extra Special
Speaker 2: guest today is litigation Appellet attorney Neil Kadial. He has
Speaker 2: a tremendous CV former Solicitor General, dozens and dozens of
Speaker 2: cases argued in front of the Supreme Court, and the
Speaker 2: most recent argument he did was the Vos Selections versus Trump,
Speaker 2: arguing that all of these tariffs are illegal. So let's
Speaker 2: pick up where we left off. The DC Court of
Speaker 2: Appeals agrees to hear the case. They expedite this. You
Speaker 2: don't have a lot of time to prep for the
Speaker 2: moving papers, You don't have a lot of time to
Speaker 2: prep for the oral argument. What is that argument like
Speaker 2: when you're in front of the court. How long does
Speaker 2: it go for? I know you've done this a million times.
Speaker 2: You still get those butterflies in your stomach before you
Speaker 2: get up there.
Speaker 3: Always get the butterflies, And you know it helps me
Speaker 3: be a better lawyer. In the minute that I don't
Speaker 3: have those butterflies, I'm going to go do something else.
Speaker 3: John Roberts told me that I used to run his
Speaker 3: practice at his law firm practice, and he said, you know,
Speaker 3: every time I go up there, I got nervous. And
Speaker 3: he was an extraordinary advocate. And so I've come to
Speaker 3: actually appreciate the butterflies as opposed to trying to just
Speaker 3: push them away. My practice schedule is the same for
Speaker 3: any kind of big case, which is, I take notes
Speaker 3: on the briefs that have been filed, and then I relentlessly,
Speaker 3: relentlessly practice the argument in front of people both new
Speaker 3: to the case like the judges will be, and people
Speaker 3: are experts on the case, and they are throwing questions
Speaker 3: at me one after another for hours. And I do
Speaker 3: this sometimes, you know, as many as six, eight, ten times.
Speaker 3: In the tirest case, I did it eight times, practicing
Speaker 3: the argument in front of all these people. And I
Speaker 3: then go and I listen to the arguments these practice
Speaker 3: sessions on MP three, I put it on you know,
Speaker 3: something that I can put on my iPhone and then
Speaker 3: I'll run to it or something like that. And so
Speaker 3: I'm just thinking to myself, A. Can I answer the
Speaker 3: question better? B? Can I answer it more quickly? C?
Speaker 3: Can I answer the question in a way that doesn't
Speaker 3: invite a follow up question that I really don't want
Speaker 3: to ask? And then D the most dark arts part
Speaker 3: of it. Can I answer the quest question in a
Speaker 3: way that leads them to ask the next question, which
Speaker 3: is one I do want.
Speaker 2: So there's a lot of tactical thinking and strategy beyond
Speaker 2: just legal knowledge and rehearsal.
Speaker 3: One hundred percent. Like I mean, you know, in a
Speaker 3: big case, yes, you got to know the law, you
Speaker 3: got to know the history, you got to have all
Speaker 3: of the you know, finer points, you.
Speaker 2: Know, memorized table mistakes though, but at the end.
Speaker 3: Of it, in the big cases, what really matters is
Speaker 3: can you pivot the conversation in the way you want?
Speaker 3: Can you show maximum credibility with the court? Can you
Speaker 3: really be a true listener to the questions and not
Speaker 3: answer the question that you want asked, because they may
Speaker 3: be asking you a different one and you've got to
Speaker 3: answer that one. And so, uh, it is a really
Speaker 3: specialized skill, which is why you know, I tend to
Speaker 3: be brought in for these cases which, like you know,
Speaker 3: I don't know how to do a trial. In fact,
Speaker 3: I was special prosecutor in the George Floyd murder, and
Speaker 3: but I handled all the appeal stuff because I mean,
Speaker 3: you know, I have no idea how to cross examine
Speaker 3: a witness or something, and so you know, I do
Speaker 3: one thing, hopefully I do it kind of well, and
Speaker 3: but the practice sessions are really I think the secret sauce.
Speaker 2: Kind of well, kind of well, how long did the
Speaker 2: oral arguments last? How?
Speaker 3: I think there are a couple hours long.
Speaker 2: That's what it looked like when I saw it on YouTube.
Speaker 2: And I'm like, I don't know how much of this
Speaker 2: because I listened to a good chunk of it and
Speaker 2: kept starting and stopping, and I'm like, this feels like
Speaker 2: typical appellate arguments are not hours long, right.
Speaker 3: You know, set for twenty minutes, except for twenty three
Speaker 3: minutes I think for me, and I'm pretty sure I
Speaker 3: probably went for an hour or something like that.
Speaker 2: Yeah, And how did opposing counsel? How much time did
Speaker 2: they use it?
Speaker 3: And I think they used a fair amount of time
Speaker 3: as well. I think the court really did want to
Speaker 3: try and ask a lot of the hard questions to
Speaker 3: both sides, and so yeah, so I think it did
Speaker 3: go long.
Speaker 2: So the DC Court of Appeals recognizes how significant this
Speaker 2: case is, they expedite it. It's a full on bank.
Speaker 2: All eleven justices hear it. Where does it go from here?
Speaker 2: I was trying to figure out what options So I'm
Speaker 2: going to assume for argument's sake that the plaintiff is
Speaker 2: successful in this case, and they affirm the lower court's
Speaker 2: ruling against the president. Tariffs are Congress's venue, not the
Speaker 2: president's their responsibility. What happens from here? What can the
Speaker 2: Supreme Court do? They could say that's fine, let it
Speaker 2: stands as far as I know. They could remand the
Speaker 2: case for further fact finding to the trial judge and
Speaker 2: say we want to see more specific things, or they
Speaker 2: can take it up on a full hearing. What am
Speaker 2: I missing? What am I forgetting from law school?
Speaker 3: That's exactly right. So if we win, you know, the
Speaker 3: government will try and take the case to the Supreme Court.
Speaker 3: They've already said they would do that, and we hope
Speaker 3: the Supreme Court at that point wouldn't hear the case.
Speaker 3: I mean, I'm privileged to represent these plaintefs. They're small businesses.
Speaker 3: Bos Selections is a small wine company. It's been around
Speaker 3: for a while. And if they're saying, and they filed
Speaker 3: briefs in the Supreme Court, in the Court of Appeals,
Speaker 3: it's say, if we lose this case, our business may
Speaker 3: go under, and other businesses like ours may go under.
Speaker 3: And so you know, we think from the perspective of
Speaker 3: small businesses in particular, it's really important that this is
Speaker 3: you get settled and settled quickly. And if the Court
Speaker 3: of Appeals says, I hope they will that President Trump's
Speaker 3: tariffs are unconstitutional, we hope that's the end of it.
Speaker 3: It might not be. Of course, Supreme Court may decide
Speaker 3: to hear the case. Conversely, if the government wins in
Speaker 3: the Court of Appeals and says these tariffs are okay,
Speaker 3: then we would presumably go to the Supreme Court and
Speaker 3: say no, they're not, and then ask the Supreme Court
Speaker 3: to hear it. And then there is, as you say,
Speaker 3: a third option, which the Court of Appeals might say, hey,
Speaker 3: you know, we think that this needs to go back
Speaker 3: to the trial court for further fact finding on something
Speaker 3: or the other. You know, I think that's in many
Speaker 3: ways the worst of every world because everyone needs certainty
Speaker 3: around this, particularly the business community, and so you know,
Speaker 3: you know, there's definitely been floated as a possibility, but
Speaker 3: it's one that I think wouldn't be attractive to the government.
Speaker 2: And the facts in question are pretty clear. Here's what
Speaker 2: the president did, he is what the litigation has showed,
Speaker 2: and here's the legislation and the constitution. The specific facts
Speaker 2: don't seem to matter that much other than what is
Speaker 2: pretty widely understood.
Speaker 3: Yeah, so that's correct, That's exactly our argument.
Speaker 2: So let's talk about remedies. Hypothetically, you win at the
Speaker 2: appellate level. There's been a stay for the prior victory
Speaker 2: at the district court level, at the International Court of Trade.
Speaker 2: What sort of remedies do small businesses get? Can the
Speaker 2: tariffs be thrown out? Can companies that have paid tariffs?
Speaker 2: Can they get refunds? How does this work? Right?
Speaker 3: So, I think right now, all we have asked for
Speaker 3: in our case is is for the tariffs to be
Speaker 3: declared unconstitutional, illegal and void. There is a question, as
Speaker 3: you say about about companies individuals that have paid tariffs,
Speaker 3: can they get a refund on that from the government.
Speaker 3: That's not something that's been briefed yet or argued. I
Speaker 3: think it is kicking around as an issue. When President
Speaker 3: Trump issued some tariffs that were declared illegal before, there
Speaker 3: were refund actions that were filed, and I think those
Speaker 3: refund actions are still pending years later in the courts. Yes,
Speaker 3: so you know, it's a long process, that refund process
Speaker 3: to the extent it's available. We have just not gotten
Speaker 3: into that at the time.
Speaker 2: And I look at tariffs as of that tax on consumers.
Speaker 2: I'm going to assume consumers are just that money's gone.
Speaker 2: They'll never be able to see that back.
Speaker 3: Yeah, I don't know if that, you know, I think
Speaker 3: that may be the case. I think you're right to
Speaker 3: characterize tariffs as a tax. I think you're one hundred
Speaker 3: percent right. That's what we're talking about. We're talking about
Speaker 3: the price because of President Trump's tariffs, the price of
Speaker 3: everything you're hurting on Amazon or at the grocery store, whatever,
Speaker 3: you know, increasing the cost to you, the American consumer. Indeed,
Speaker 3: the Tax Foundation, which is a nonpartisan group, has said
Speaker 3: that this is the largest tax increase on American consumers
Speaker 3: since Bill Clinton in nineteen ninety three.
Speaker 2: That's a big tax increase, isn't it. Yeah, So let's
Speaker 2: talk about I know you don't want to speculate about
Speaker 2: the Supreme Court. This court seems to have been increasingly
Speaker 2: allowing presidential authority to expand. At what point is it
Speaker 2: a bridge too far? This is essentially we're going to
Speaker 2: give the president the authority to tax, which is Congress's responsibility.
Speaker 2: How do you think about how the Supreme Court is
Speaker 2: going to contextualize this. Is there a narrow keyhole that
Speaker 2: they can sort of, you know, thread the needle and
Speaker 2: avoid the constitutional argument. I'm trying not to put words
Speaker 2: in your mouth and think about what are the possible
Speaker 2: scenarios we could go down.
Speaker 3: Yeah, so I think, you know, the Supreme Court has
Speaker 3: probably the same three options that we talked about earlier
Speaker 3: for the Court of Appeals, declare the tariffs illegal and unconstitutional?
Speaker 3: Declare the tariffs constitutional and legal, or send it back
Speaker 3: to the trial court for some fact finding. I do
Speaker 3: think that there's a deep concern that this president is
Speaker 3: asserting powers in very, very muscular ways, and some of
Speaker 3: those are legitimate and others are not. This is one
Speaker 3: that I think is pretty easy to characterizes, falling on
Speaker 3: the latter side of that line. Others are more difficult,
Speaker 3: and you know, and so I think there's a conversation
Speaker 3: at the court about that question. But I think they're
Speaker 3: going to approach this case as they do any on
Speaker 3: its own individual facts, and the facts are I think
Speaker 3: here that the president hasn't done what the Constitution requires,
Speaker 3: which is to have him go to Congress and get
Speaker 3: the authority for the things that he says he claims
Speaker 3: he needs so desperately.
Speaker 2: So the middle e in AIPA is emergency. Is there
Speaker 2: an argument to be had that, hey, we're in the
Speaker 2: middle of an emergency, although you know some of the
Speaker 2: things that kind of surprise me about the tariffs he
Speaker 2: negos to the president negotiated the North American Trade Group
Speaker 2: of trade laws and now threw that out in tariff
Speaker 2: and we have a free trade agreement with South Korea
Speaker 2: and suddenly with tariffing them. How is it an emergency
Speaker 2: if you're tariffing every country in the world, including those
Speaker 2: that do not have tariffs on our goods.
Speaker 3: It's one hundred percent right. And I would point out
Speaker 3: that the language of this nineteen seventy seven law that
Speaker 3: President Trump is is relying on AIPA. It doesn't just
Speaker 3: say emergency. It says it must also be an unusual
Speaker 3: and extraordinary threat. And yet the president's executive order imposing
Speaker 3: these tariffs has said trade deficits have been a persistent
Speaker 3: feature of the American economy for the last fifty years.
Speaker 3: And so he basically pled himself out of court because
Speaker 3: his own executive order says these trade deficits are not
Speaker 3: unusual and extraordinary, They're commonplace and de raguer in the
Speaker 3: American economy. So that was I think a big portion
Speaker 3: of my oral argument before the court. And you know,
Speaker 3: I suspect that we'll, you know, get a bunch of
Speaker 3: attention in whatever decision the Court of Appeals will make.
Speaker 3: So I think, look, you want a circumstance, and Founders
Speaker 3: wanted a wanted a constitutional structure in which, if there
Speaker 3: is a true emergency, presidents get leeway.
Speaker 2: You're anticipating my next question, which is the Supreme Court
Speaker 2: doesn't want to tie the president's hand in cases of
Speaker 2: true emergencies. I'm hearing your argument. This should have nothing
Speaker 2: to do with that there's no emergency.
Speaker 3: Exactly. You've got time to go to Congress. Think back
Speaker 3: to President Lincoln in the Civil War. He orders the
Speaker 3: blockade of the South, he suspends the rid of habeas corpus,
Speaker 3: and and yet he says, I'm going to call a
Speaker 3: special session of Congress on July fourth to get people
Speaker 3: back to vote and say did I do Do you
Speaker 3: ratify what I did? I had to do it in
Speaker 3: an emergency, And of course then you didn't have middle
Speaker 3: of Civil War, middle of Civil War, no telecoms, no
Speaker 3: instant email or anything like that. You know, so he
Speaker 3: had to take certain actions in order to protect the
Speaker 3: American Republic. And you you know, certainly I and the
Speaker 3: small businesses and privilege to represent. We're not saying in
Speaker 3: some true emergency in which Congress can't act, the president
Speaker 3: can't fill the void. Of course he can. This is
Speaker 3: the opposite of that. This is one in which Congress
Speaker 3: is operating normally. The trade deficits have been going on
Speaker 3: for fifty years. No president has ever sought this kind
Speaker 3: of sweeping power. And yet he comes along and says, I,
Speaker 3: Donald Trump get this power. That's a very dangerous thing,
Speaker 3: not just because for some people who are concerned about
Speaker 3: President Trump, but if you're concerned about President Mamdani or
Speaker 3: whomever in the future. You don't want presidents to have
Speaker 3: that kind of sweeping power on their own.
Speaker 2: What a perfect place to leave it. Thank you, Neil
Speaker 2: for being so generous with your time. We have been
Speaker 2: speaking with Neil Kadial. He is the appellate litigator for
Speaker 2: VOS Selections Versus Trump, which seeks to declare the president's
Speaker 2: tariffs not only null and void, but unconstitutional. If you
Speaker 2: enjoy this conversation, well, check out any of the other
Speaker 2: five home we've done over the past twelve years. You
Speaker 2: can find those at iTunes, Spotify, Bloomberg YouTube, wherever you
Speaker 2: find your favorite podcasts. I would be remiss if I
Speaker 2: did not thank the craft team that helps us put
Speaker 2: these conversations together each week. Alexis Norieger is my producer.
Speaker 2: Sage Bauman is the head of podcasts at Bloomberg. Sean
Speaker 2: Russo is my researcher. I'm Barry Ritolts. You've been listening
Speaker 2: to Masters in Business on Bloomberg Radio.