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- [00:00]
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- [02:01]
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Bloomberg Audio Studios Podcasts Radio News.
- [02:09]
Neil Katyal
This.
- [02:10]
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Is Masters in Business with Barry Ritholtz on Bloomberg Radio.
- [02:15]
Barry Ritholtz
I know I say it every week, but this week I have an extra, extra special guest. Neil Kadial is the former Solicitor General of the United States, where he focused on appellate and complex litigation on behalf of the Department of Justice. He has argued more than 50 cases before the Supreme Court. He is recipient of the highest civilian award by the U.S. department of justice, the Edmund Randolph Award, which he received in 2011. The Chief justice of the United States Supreme Court appointed him to the Advisory Committee on Federal Appellate Rules. He has won every accolade that an attorney can win. Litigator of the year top 100 lawyers 500 leading lawyers in D.C. the most financially innovative lawyer on and on the list goes. He just has a CV that is really not to be believed. I reached out to Neil because he was representing the plaintiffs in the big tariff case, VOS elections versus Donald Trump President, which he took over after the plaintiffs won at the International Court of trade in D.C. he argued the case in front of a full on bank hearing, all 11 judges in the D.C. court of Appeals. We recorded this on Wednesday, August 27th, a few days before Labor Day weekend. We finished the recording and lo and behold, two days later, the decision comes down. He wins a resounding victory, 7 to 4. The court very much bought into his arguments that the tariffs and any sort of taxes, duties, levies requires authorization from Congress. It is not within the purview of the executive branch of the President. So once we got that decision, I reached out to Neil again. And on Sunday, over the holiday weekends.
- [04:25]
I hopped off the beach.
- [04:26]
We got on a phone call for a half hour and recorded what he thought of the results, what he thought about the opinion, where the case is likely to go from here, how things look in terms of the odds that the Supreme Court are going to hear this. I thought the entire conversation was absolutely fascinating, not just because, hey, this is news right now, and because he won the case two days later. He's just such a thoughtful, intelligent lawyer who really takes his role as an officer of the court and helping to define the jurisprudence of American law very, very seriously. Just such a bright, thoughtful guy who just wants us to respect the Constitution. I thought the conversation was fascinating. I think you will also. We'll start out with our postscript, the conversation after we found out that Kadiel's clients won at the appellate level. And then we'll go to the entire hour conversation we had while we still didn't know what the outcome of the case was. With no further ado, my discussion with appellate attorney Neil Katial. First off, Neil, congratulations. You just won a major appellate case in VOS elections versus Donald Trump. So congrats.
- [05:54]
Neil Katyal
Thank you so much. Yeah, I think I saw you and we had our interview the day before the decision came down. The way the Court of Appeals works, like the U.S. supreme Court, they never tell you in advance when a decision is coming down. And indeed, it was a little, I think, past 5 o' clock on Friday, right before Labor Day, and I was about to leave the office and then I heard my email ding. And I look at it and I'm like, well, I might as well see what this is. I assumed it was just some, you know, minor thing. And they're like, whoa, it's the decision. And you know, Barry, they let me know the decision. At the very same time, they let the world know. Because otherwise, if they let me know in advance, you know, that's private information. This is the kind of information that does move markets. And so they let the entire world know, including me, at the very same time.
- [06:42]
Barry Ritholtz
So. So let's put this into a little timeline. We had our recording Wednesday, August 27th. The decision dropped around 5 o' clock on Friday, August 29th. Today is Sunday, August 31st. Everybody else is on the beach. I know you're leaving for Europe in a couple of days, but I wanted to just touch base with you and try and figure out where this goes from here. So. So let's start out with the decision. I thought the majority decision, 74 your way, I thought it was a pretty powerful refutation of the executive's ability to just impose tariffs. I don't want to say on a whim, but lacking the specific following of the IEPA rules and what an emergency actually is. Can you address that a little bit?
- [07:41]
Neil Katyal
Yeah, I think that the seven judges in the majority were saying exactly what we've said all along, which is, maybe these tariffs are a good idea, maybe they're a bad idea, but they can't be imposed by the President's pen alone. You got to go to Congress and get that authorization. That's our constitutional system. And what the seven judges said is, that's exactly right, that the Congress has never given the President such a sweeping power to just do it on his own. And if they did, they said it'd be unconstitutional, but they said that isn't what's going on here. And the President has an easy fix. If he wants to, he could go to Congress and seek approval for the tariffs that he wants. That's what he did the first time around. And as we talked about last week, you know, that's something that failed in Congress. And so I. Maybe that's why he doesn't want to do it. Obviously, these tariffs are highly unpopular, but nonetheless, you know, the Congress is controlled by his party and, you know, that's the place to start. Don't run to the federal courts to do what you can't do in Congress.
- [08:43]
Barry Ritholtz
So I want to talk about the dissent in a bit, but let's just talk about what the appellate court did, which I was somewhat confused by. Maybe you can clarify this. They remand it back to the International Court of Trade in D.C. which is a US court for findings about who this applies to. Like, it seems sort of odd to say, well, it only might apply to the litigants. What are we going to have 7 million cases on this tariffs? It would seem that either it's constitutional or unconstitutional and that applies to everybody. Or am I being naive?
- [09:22]
Neil Katyal
I think that's basically right, Barry, that I think ultimately the question is, are these tariffs legal or illegal? If, as the Court of Appeals said, they're illegal, then the vast, vast majority of Trump's tariffs are unconstitutional, legal, can't be imposed, and people who've been had them imposed may have remedies and recourses. What the court also did, though, and you're referring to a fairly technical part of the decision, is it sent a case back to the lower court to evaluate the scope of the remedies. And that's because the U.S. supreme Court just very recently in the birthright citizenship case, has announced some new ways of thinking about relief on parties, in particular in class actions and, and things like that. And so I think the Federal Circuit did the prudent thing here by just saying, with respect to that, I'd like the. We'd like the lower court to evaluate it. I think that's pretty much a sideshow at this point. My strong hunch is that the federal government has a strong interest in resolving this question. After all, this is a really, you know, initiative of President Trump's that's been declared unconstitutional. So I think they're going to go to the Supreme Court. I mean, again, I wish that weren't the case. I wish they'd go to Congress, which is the way that our Constitution commands things. But according to the president's tweets and the like, they want to go to the Supreme Court.
- [10:41]
Barry Ritholtz
So what is the process like for this to go up to SCOTUS first, the remand back to the district court? Not relevant. That's just a very specific remedy question. Assuming the petition for certiori is, is filed by the government, what. What are the options? What might the Supreme Court do?
- [11:06]
Neil Katyal
Yeah, so I think you're right to say that the, the lower court proceedings on relief are irrelevant here. Indeed, the Federal Circuit said that that lower court has no role, at least until October 14, because they wanted to give the government time to file what's called a petition for certiorari, which is. Or a formal request to the US Supreme Court to hear the case. The government is saying that in these tweets by President, the President and others, that they will file that petition for certiorari ask the Supreme Court to hear the case, and then it's obviously up to the Supreme Court to decide statistically when the government asks them to hear a case, particularly one that has important consequences, the court does hear the case. So the court very well may set the case for oral argument. And then there'll be the argument from the two sides as to whether or not this lower court decision that we won, declaring President Trump's tariffs unconstitutional, whether that will be upheld by the US Supreme Court.
- [12:06]
Barry Ritholtz
So I was kind of intrigued by the dissent, which I'm not a practicing attorney anymore, so I'm not up to date in what is the latest thinking in terms of art. But it sort of seemed like one of the dissents suggested that it's an emergency if the president declares it an emergency, kind of makes that word meaningless. How did you read the significance of the dissent and what might it mean to the hearing if this ultimately goes to the Supreme Court?
- [12:43]
Neil Katyal
I think that's exactly right, what you're saying, which is, if the dissent were right, it basically reads the word emergency out of the statute. It gives carte blanche deference to the president. And the Supreme Court in an earlier case back in 1911 said, you can't do that with the word emergency. And here I think, Barry, the other really important point is that the law that the president is citing, ipa, doesn't just talk about emergency. It requires it to be unusual and extraordinary. And the president's own executive order, when he imposed these tariffs, said that the trade deficits were persistent and gone on for 50 years. And the opposite of unusual and extraordinary. And look, of course you want the president in a genuine, true emergency that's unusual and extraordinary, to have extra powers. Because if Congress can't meet to repel some threat or some something like that, you want the president to have some gap filling power. This is the opposite of that. I mean, Congress is in session, they're passing bill after bill and the like. And of course, they're controlled by the same political party as the president. So the idea that Congress can't act is, you know, to use the technical legal term, poppycock.
- [13:55]
Barry Ritholtz
Coming up, we continue our conversation with appellate litigator Neil Kadial. I'm Barry Ritholtz. You're listening to Masters and Business on Bloomberg Radio.
- [14:04]
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This message is brought to you by Nuveen. How would you invest if you knew the future was watching at Nuveen? This isn't a theoretical question. It's a perspective that comes from navigating 125 years of market cycles, using foresight to innovate and adapt to the changing needs of investors around the world and remaining steadfast in the pursuit of lasting performance for clients, communities and the global economy. Nuveen Invest like the Future is watching visit Nuveen.com future to learn more. Investing involves risk, principal, loss as possible.
- [14:41]
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- [15:14]
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- [16:12]
Barry Ritholtz
Let'S broaden this out a little bit. I think this is an important, important case because I'm a market participant and tariffs are a tax. They're a headwind to consumer spending and other economic activities. But stepping back and looking at this from a constitutional standard, how much of this is focusing on how much authority the executive branch of the US Government has? Is this a an attempt to rebalance the three parts of government by this particular president, or is this just no, we want our tariffs and we want to stop all these bad things that the tariffs will cure.
- [16:59]
Neil Katyal
Yeah, I view this decision not as a rebalancing of our constitutional separation of powers, but rather a return to what our founders original concept was, which was Congress makes the laws, the President enforces them, the courts decide whether those laws are legal or not. And here what happened is you had a president who colored well outside of the lines and asserted an extraordinary power that no president in American history has ever asserted on his own. And I think the court is doing here what the courts have done time immemorial in other cases, whether it was the seizure of the steel mills by President Truman in 1952, whether it was President Bush's law free zone at Guantanamo after the horrific 9, 11 attacks, whether it was, you know, President Biden's student loan initiative programs. In all of these cases, you've had presidents that try and assert muscular powers and the court pushes back on them. And this is, I think, a pretty extreme illustration of a president who's asserting powers that he has no business asserting.
- [18:10]
Barry Ritholtz
So at the appellate level, it was 7, 4. The dissent was written by a justice appointed by President Obama. It's kind of a little bit surprising to me when you look at the lay of the Supreme Court. I know a lot of people tend to look at that as Democrats versus Republicans, but the appellate attorneys I know and the people who are constitutional lawyers tend to look at it as originalists versus more modern interpreters. How are you looking at this case when it gets assuming it goes up to the Supreme Court. How are you looking at the context of this case?
- [18:51]
Neil Katyal
I love the question because, you know, oftentimes people say things like, well, the Supreme Court is appointed by Republicans, so they only wrote Republican or nonsense like that. This is not my experience. I mean, I've been lucky to argue 52 cases there. And I just don't see it in the same way as those kind of pundits see it. And you know, I think you're right to say the decision by the seven to four courts, a good illustration of that, the dissent written by a judge who was appointed by a Democratic president. Our majority opinion, the senior most judge in the majority is Judge Laurie, who was appointed by President Bush but says that these terrorists are unconstitutional. So I don't think it's the right way to think about it. I think that there are people who take constitutional limits more seriously and others who want to defer and avoid getting the courts in the middle of something. And so maybe that's one axis that sometimes could be used to predict outcomes. But here I think no matter which way you look at it, the President doesn't have this power. We might wish he had this power. It might be a good idea for him to have this power. But our founders were as clear as day in Article 1, Section 8. They said specifically, the power over duties is one given to the Congress, not to the President.
- [20:11]
Barry Ritholtz
So there are a couple of key issues. This is going to turn on the constitutionality article on Section 8, the IEPA laws, and what is an emergency. Any other factors that might drive this that we should be aware of?
- [20:28]
Neil Katyal
Yeah, I think there's a couple. One is that the Supreme Court in recent years has announced something called the Major Questions Doctrine. And the idea of that doctrine is to say if Congress is giving the President some sort of power, they don't hide it in vague terms. They say it really expressly and clearly. Justice Scalia's phrase is that Congress doesn't hide elephants and mouse holes. And at the oral argument, I took that even further. I said, this isn't just an elephant in a mouse hole, it's a galaxy in a keyhole. It's an extraordinary set of powers given to the President, claimed by the President. And this doctrine, major questions doctrine, has been used very by the US Supreme Court repeatedly to strike down President Biden's initiatives, whether it's over greenhouse gases or whether it's over student loans or whether it was over Covid eviction moratoriums and things like that. And I think that, you know, what the majority said in this opinion that we won just a couple days ago is, hey, what? Sauce for the goose is sauce for the gander. This applies to other presidential initiatives and including, of course, this one here. And that it would be a violation of the Major Questions doctrine for Congress to have not even used the word tariff or duty or anything like that in ipa, and then to have a president come along and say, ha, I can now do whatever I want.
- [21:52]
Barry Ritholtz
So let's expand this a bit. How creative was it of the administration to try and get tariffs imposed under ipa? Is this something that's just wildly outside of what IPA originally was designed?
- [22:12]
Neil Katyal
About a hundred percent. Nobody, and I've read the legislative history behind IIPA very carefully, nobody thought that this was about the tariff power. And so, yes, they get a, A plus plus for creativity. The Trump administration, in coming up with an argument that not only no one in Congress thought, no president for 50 years has thought. Now, creativity only gets you so far because you have to be at least somewhat faithful and accurate to the original text and meaning of the law. And that's where I think, unfortunately, they get an F and they fall down on the job.
- [22:50]
Barry Ritholtz
So I have a pretty solid recollection of sitting in constitutional law classes and occasionally seeing a decision that was just perplexing. Although when you're looking at something that's a century old, a Dred Scott or a separate but equal type of decision. Obviously, you're bringing a modern perspective. It's very hard to see outside of that. I had the same you and I spoke before we had the decision come down. I was kind of perplexed that this was even like a debate. It seems pretty obvious. None of the normal rules for enacting tariffs, none of the procedures, policies, or allocation of powers amongst branches of government was followed. So what do you imagine the government's argument is going to be at the Supreme Court level?
- [23:50]
Neil Katyal
Barry?
- [23:50]
I think the secret about Supreme Court and presidential power advocacy is this. I mean, no matter how creative and ridiculous the argument is, if the President voices it, it's a court case and it's going to be taken seriously by everyone because it's, after all, the precedent. And that's why, when I was the President's top lawyer, courtroom lawyer, I was very careful to only make the arguments that I thought had very strong basis behind them because you don't want to diminish that credibility that the government has with the US Supreme Court here. I do think that the arguments are quite a stretch for the administration to be making, and I think, you know, that's what you saw reflected in the 7 to 4 opinion. So what do I think that the Solicitor General is going to say to the Supreme Court? I think he's going to say what he's been saying all along. The President says he needs this power. It'd be dangerous to unwind all of these deals and present it as a fait accompli. And I just think that's the wrong way to think about constitutional law to allow a President to do what he wants in the interim and then say, oh, it'd be too dangerous to unwind it. I think it's better to get the constitutional rules right the first. First time.
- [25:10]
Barry Ritholtz
So some of the arguments I've seen from the administration is not only are the tariffs complicated and we've spent all this time and effort negotiating them, which this would negate, but it would be a negative for the global economy. You will cause economic distress around the world if you throw these tariffs out. Seems like, seems like a little bit of a histrionic claim.
- [25:35]
Neil Katyal
Well, I have two things to say about that, and we can defer to the President about whether the claim is right or wrong, whether it's histrionic or the like. Let's just say it's right. Two things. One, if that's right, it walks right into the constitutional problem, which is the Major questions doctrine. Right. If the administration is saying, oh, the economy is going to collapse without these things, that's exactly the kind of major question that you think Congress has to decide side, not the President, number one. And number two, if it isn't histrionic, if it's really right that the economy is going to collapse, then it's the easiest thing in the world for the President to go to Congress and seek authorization. I mean, I don't think the Congress wants the US Economy to collapse. And they're, of course, members of his own political party that are running Congress. So there's not even a politics barrier or anything like that.
- [26:26]
Barry Ritholtz
So what are we missing? It seems like this doesn't survive on a constitutional basis. Ieber doesn't authorize it. If it's a major decision, take it to Congress. What else is going on other than I want these tariffs and I don't care how they. They get enacted? What am I missing here?
- [26:47]
Neil Katyal
I'm not sure you're missing anything, Barry. I think you've got a president who's taken an incredibly muscular view of his authority and has done all of this stuff to the international economy and is now saying, oh, too late to unwind it. I'm already done. And, you know, that isn't the way constitutional law works.
- [27:06]
Barry Ritholtz
Let's just play this out. So by the time people hear this, I don't think we'll find out if the Supreme Court is going to grant Sashirari immediately, but relatively soon, if they're interested, sometime in the next few weeks. Is that a fair timeline?
- [27:23]
Neil Katyal
It's possible. It requires the government to file a certiorary petition. And, you know, in other big cases, you know, like Guantanamo or healthcare or the like, there are those certiorary petitions filed by the government almost immediately. So we will see what the government does here. But certainly it's possible that they file soon, in which case the Supreme Court could give us guidance as to whether they're going to hear the case in a matter of a couple of weeks.
- [27:50]
Barry Ritholtz
So let's say that happens and the case is heard end of September. How soon do we get a decision?
- [27:57]
Neil Katyal
Yeah, I don't think they'd hear the case at the end of September because there's time for briefing for writing the legal papers and also for friends of the court to weigh in and write their own legal papers. So I think realistically we'd be talking about a court hearing and probably earliest November, December, and, you know, maybe as late as February or March, something like that. So it's going to take a little while. And it should take a little while. Barry, these are really important, momentous questions. And, you know, not just momentous for right now, but momentous for American history and the role of the president. Because what the court says here will govern, you know, maybe just the case at hand, but it may govern other things as well. And so I think the court is going to want to proceed with some caution and have time for adequate briefing from the parties. That's my gut.
- [28:47]
Barry Ritholtz
So what are the state of tariffs presently? The plaintiffs in the original case had said, hey, there's only so long we could stay in business with these tariffs, and we want a decision as rapidly as possible since they were found illegal by the appeals court. Do we have tariffs? Do we not have tariffs? What is going on?
- [29:09]
Neil Katyal
So what the Federal Circuit did is it kind of split the baby. It said that the terrorists will be on. The terrorists will be permitted, but only for 45 days while the government goes. And government may go and ask the US Supreme Court to hear the case. And if they don't hear the case, then the tariffs will be declared illegal and unconstitutional and void.
- [29:30]
Barry Ritholtz
What are the odds that the Supreme Court chooses to not hear the case?
- [29:35]
Neil Katyal
I'm not going to predict what the Supreme Court is going to do. That's just, you know, that's, that's their. I have to leave that for them. And I'm just an observer on the outside. But I did want to say that what hap. What the Federal Circuit did by saying 45 days is it cut the government's time in half to file a certiorary petition. Normally they have 90 days to do so. And what the court here said is basically, nope, this is too important. You've got to. If you want to have the Supreme Court hear the case, then you've got to do it in the next 45 days, otherwise these tariffs will be declared illegal.
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Barry Ritholtz
So there seems to be a judicial recognition of exactly how pressing this is. The. The Liberation day was April 2nd. The lower court case, I think, was filed April 14th. Then there was the decision in May, was heard pretty rapidly. The unbanked case was heard in July of July 31st, I believe.
- [30:32]
Neil Katyal
Correct.
- [30:33]
Barry Ritholtz
And then a month later, we. We just. About a month later, we get the decision. So it seems like, you know, I traditionally think of corporate litigation as a game of delay, delay, delay. This really seems to be moving quite rapidly.
- [30:49]
Neil Katyal
It is moving rapidly, and that's common in presidential power cases because there's so much at stake. And so you know, I've been heartened to work with the government attorneys, the Trump administration attorneys, on a fast time schedule. I think that's been, you know, beneficial to try and move this case and its ultimate resolution along. But I think, you know, I think the bottom line for what happened just on Friday, for all your viewers and listeners, is the Trump tariffs were declared unconstitutional and illegal by a 7 to 4 vote of our nation's second highest court, the US Court of Appeals for the Federal Circuit. And now the question is, will the Trump administration go to the Supreme Court court? And then, of course, what will the Supreme Court do?
- [31:33]
Barry Ritholtz
And the clock is ticking. They have 45 days, which by my calculation is around October 15th or so. Is that about right?
- [31:41]
Neil Katyal
Yeah, I think it's the 14th.
- [31:43]
Barry Ritholtz
Yeah, 14th.
- [31:44]
Wow.
- [31:45]
All right, so six weeks to go. We'll be watching this really closely. Again, Neil, congratulations on your appellate victory. If this goes up, are you going to be the one making the argument in front of the Supreme Court?
- [31:58]
Neil Katyal
No. That's all to be determined. Who knows?
- [32:02]
Barry Ritholtz
So that was my conversation over the Labor Day weekend, right after we found out that he and his clients had won the appeal. Now let's jump to the entire conversation that we had a week ago while the outcome of the case was still up in the air. My Masters in Business conversation with appellate attorney Neal Katyal.
- [32:27]
Let's spend a little time just talking about your background and career. Dartmouth undergrad, J.D. from Yale. What was the original career plan?
- [32:38]
Neil Katyal
The original plan was for me to be a professor of history. Really?
- [32:42]
Yeah.
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I had gone. I went to Dartmouth College. As you noted, I probably was one of the last kids admitted to Dartmouth. I was not a particularly great high school student. And I had this professor, Doug Haynes in history at Dartmouth, who basically taught me to write and taught me how to think. And I was so grateful to him. And I felt like I should do that with my life, is go and give back in the way that Doug had given me this incredible gift. And so in my senior year, I say to Doug, I was like, you know, I ask him to have lunch with me, and I say, I'd really like to be a history professor. And frankly, you're the one who inspired me, and I want to do this. And he thought about it and he said, honestly, Neil, I don't think you should be a history professor because it's really tough and it's hard to get tenure and you'll have to start in some small town in the middle of nowhere. It's hard to meet a spouse and so on. He said, look, at that point, I was a national champion debater. And he said, my advice to you is to go to law school. And in particular, he said, go to Yale Law School, which is known for creating law professors. And you can do all the same stuff you want to do, but as a law professor, where you would get paid three times, it's easier to get tenure. Your life is a lot easier. So I did that. I applied to Yale Law School. I got in again, probably one of the last kids admitted. And at the law school, I had these incredible professors who did the same thing that Doug Haynes did for me in history in other areas, constitutional law and criminal law and the like. And these incredible professors who taught me again how to think and how to write. And so I was committed to being a law professor. I clerked first for Guido Calabrese, who was the dean of the Yale Law School, was put on the Court of Appeals, and then for Justice Stephen Breyer. But all through that time, I knew I wanted to be a law professor. So I applied while I was clerking to teach. And at the age of, I think, 26 years old, I took a job teaching at Georgetown Law. And that was the plan for my life. To be a law professor and nothing but a law professor.
- [34:50]
Barry Ritholtz
And do you still do any teaching these days?
- [34:52]
Neil Katyal
I do, and I love it. And in many ways, it's my favorite job I've ever had. But there's a lot else going on in the world these days. And so it was a little bit by accident that I fell into this litigation thing. Yes, I was a national champion debater, and so I was comfortable being on my feet, but I was really dominating. My dominant thinking was, be a law professor, write these theoretical articles that change the way people think about the law, and teach students. So that's what I thought I was going to do. And then something happened, which was we had the horrific attacks on September 11th, and I was bumbling around, trying to figure out what to do. I was teaching at Yale Law School that year, and my students and I, we decided to try and help first responders get benefits and stuff. And we weren't particularly good at it, but it was something. And then President Bush announced that he was going to have these military trials at Guantanamo Bay for suspected terrorists. And I looked at that. I'd served in the Justice Department briefly, and we had the embassy bombings of Al Qaeda at the time. And so I looked into, could we have military trials? And we concluded they were obviously unconstitutional. So I went and Looked up, what's President Bush doing here? What's his source of authority for this? And, you know, it wasn't particularly compelling. In fact, it was really weak because the President was saying he was going to set up these trials from scratch. He was going to pick the prosecutors, pick the defense attorneys, write all the rules for the criminal trials, define the punishments and offenses, including the death sentence.
- [36:29]
Barry Ritholtz
Seems even handed and fair. What's your objection?
- [36:31]
Neil Katyal
Yeah, and, you know, even the last lines of the executive order said, the courts have no business reviewing what I'm doing. There's no writ of habeas corpus. So I went into my constitutional law class and said, you guys always tease me because I think the President should have such strong powers, and nothing the President does is unconstitutional. Well, here's something that's obviously unconstitutional. And in the class was a senator, was a staffer for Senator Leahy, who was then the chair of the Senate Judiciary Committee. And so she told him about me, and he had a hearing. And I testified and said, look, I don't know if you want to have these military trials or not, but the one thing I'm sure of is that it can't be done with the President's stroke of his pen. You need Congress to approve it. And this is, of course, going to be relevant as we talk about tariffs later. It's the exact same architecture of the argument. And so that's how I testified. Nobody listened. So then I go and I write a law review article with Lawrence Tribe, the nation's most preeminent constitutional law.
- [37:28]
Barry Ritholtz
So you at Yale, Lawrence A. Tribe at Harvard.
- [37:30]
Neil Katyal
Yeah, exactly. And so we write this article in the Yale Law Journal, we erase it to print, saying what's going on is unconstitutional. Nobody reads the article. My mom, maybe my mom read it, but, you know, I don't know. So then I said to myself, you know, you've got this piece of paper, Neil, a law degree. You could actually sue the President. And that's the.
- [37:50]
Barry Ritholtz
Well, you need a plaintiff, though, don't you?
- [37:52]
Neil Katyal
Exactly. So that was the hard question, because they'll launch a different interest groups had sued on Guantanamo, but they didn't have standing. They had no reason. And so I had a friend very high up at the Pentagon who got me the email address of a Pentagon lawyer who was representing the detainees. And I basically got a letter snuck to Guantanamo, and it wound up in the hands of Osama bin Laden's driver. And that became my client. And so, so I go from being a theoretical law professor to like, a real, like, hard Nosed litigator, all in the span of a few months. I file the case. Nobody thinks we're going to win.
- [38:33]
Barry Ritholtz
How far are you from law school now?
- [38:35]
Neil Katyal
I'm, like, six years out, so still relatively green. Yeah, very green. And never filed a lawsuit, you know, and so, and I, by the way, I don't have any help except for law students who are helping me. I tried with law firm, and initially I couldn't get them, but then ultimately Perkins Coie, a Seattle firm, decided to help me, and that was phenomenal. So we filed this thing. Nobody thinks we're going to win, and we win it in the trial court, we lose it in the Court of Appeals with a guy named John Roberts on the dissent panel. Three days later, he's nominated to the Supreme Court and then to the Chief Justiceship. So I have to ask the Supreme Court to hear this Guantanamo case. It's the most important case their new Chief justice has ever decided. And I'm going to say I'm trying to tell the Supreme Court the Chief justice is wrong about this. Nobody thinks we're going to win. It's my first Supreme Court argument. I'm arguing against President Bush's legendary Solicitor general. It's his 35th argument. I work my tail off, and we win, and then my life changes, and then companies want to hire me. And I meet a young senator, senator named Barack Obama, who heard me interviewed on an interview just like this one. And he calls me into the Senate and says, you know, asks me to advise him on some things on Guantanamo, and tells me he's thinking of running for president, and then started working with him. And then my life changes massively.
- [39:56]
Barry Ritholtz
Wow, that's amazing. You know, I want to talk about a couple of the other cases that you argued. One was more versus versus Harper, which former Judge Michael Luddick called the most important case for American democracy ever. Tell us about that case.
- [40:14]
Neil Katyal
Yeah, so that's a pretty recent one. I argued it, I think, about three years ago, and it involved something called the independent state legislature theory, which at that point was the greatest threat to democracy. I think when Judge Ludig was writing those remarks, we've now had some things which are arguably worse, but it was a significant one, because if you think back to the 2020 election, one of the things that President Trump tried to do then was to say that state legislatures can control elections and you can even throw out the popular vote and just have state legislatures decide where the electoral votes will go to who, which candidate. And this became. Became part of the RNC's playbook, and they invested heavily in state legislatures to try and develop, excuse me, this theory. So we challenge that again. This is one in which nobody thought we could win, because if the Republicans won, they would entrench control over presidential elections for decades, probably. And a lot of people think, oh, the Supreme Court, they're appointed by Republicans. They're very conservative. They're just going to do the Republican Party's bidding. And I looked at it, and I said, I don't think that's right. I mean, this is a court that does have fidelity to the original understanding of the Constitution. And I thought, if we could make the argument in that way, and this is what my scholarship is all about, the original understanding of the Constitution, I said, I thought we could win. And so that's what I developed as the strategy. And indeed, I knew that Justice Thomas, Clarence Thomas would ask the first question at oral argument. That's been happening now for the last few years.
- [41:56]
Barry Ritholtz
Just out of habit or like, how does that happen?
- [41:59]
Neil Katyal
Well, he's one of the more senior justices, and during COVID when we had to argue cases on speakerphones and we couldn't see each other, it went in order of seniority. And so Justice Thomas was right at the top. After Covid, that tradition continued in which Justice Thomas would ask the first question. And so I'd been thinking, how do I use that knowledge to my advantage? Justice Thomas gonna ask the first question. And what I did was I said to myself, okay, I can develop a set play. Justice Thomas is gonna ask me a question. Doesn't matter what the question is. I'm then gonna say, and this is what I do. Justice Thomas asked me a question at the argument. I don't remember what the question was. I answer it, and then I say, Justice Thomas, may I say, in nearly three decades of arguing before you, I've been waiting for this case because it speaks to your method of constitutional interpretation, the original understanding. And Here are the four things you need to know about Moore vs Harper in the original understanding of the Constitution. And I get to talk about Madison and Hamilton and Jefferson and so on, and it totally changes the dynamic in the courtroom. And sure enough, we win. Six to three. This case in the Republican theory is thrown out. I didn't win Justice Thomas vote, but I won a bunch of others.
- [43:14]
Barry Ritholtz
Huh. That's amazing. Let's quickly talk about the Voting Rights act that you successfully defended. Instead of trying to overturn it. Tell us how different it is to be playing defense.
- [43:27]
Or is it not?
- [43:28]
You're Just arguing Constitution and law. And this is the outcome that should come about.
- [43:34]
Neil Katyal
It is different, but I would say even back then I felt like I was playing defense. So this is a case I argued in maybe 2010, the Voting Rights act have been passed in 1965. It literally has the blood of patriots on it. It is what Selma and the bridge, Pateus Bridge is all about. And so, you know, in the case, basically it was right after President Obama had been elected and Southern states said, look, we don't need the Voting Rights act anymore. Look, you have an African American president, like that's proof that we don't need it. And I stood up in court and said, no, we do need it. And it's like, you know, the very fact that we've been able to have an African American president isn't alone enough to say there isn't discrimination in voting, particularly in particular areas, you know, even if the overall national result is one thing. And the Supreme Court at that point accepted that argument. In four years later, however, in a case called Shelby county, they reversed that position and struck down that part of the Voting Rights Act. And now there's only one part of the Voting Rights act that remains Section two. And the Supreme Court's agreed to hear a case to challenge that this fall. And so we very well may have a world in which there is no Voting Rights act left whatsoever, which is a very dangerous thing. And yes, I do think the court has become more conservative over my lifetime. I mean, the court has always been appoint majority Republican appointees since things.
- [45:04]
Barry Ritholtz
So this isn't just partisanship, this is ideological tilt, not necessarily party tilts.
- [45:11]
Neil Katyal
Yeah. So I would say, you know, know that the presidents now of both parties are sending to the Supreme Court more sure things that you know, than which the track record is really known. You know, the Republicans had this mantra, no more Souters, because David Souter, nominated by Republican President Bush, upheld things like abortion rights and so on. And the Democrats, I think, have had their own version of this for some time as well. And so we, we get, we don't tend to get justices without very defined positions anymore. Like when I started arguing, Justice Kennedy was on the court and you could see Barry, every time you argued, he was struggling with which is the right view, which is the right view of the law. And he's a very smart man. It wasn't that he wasn't smart. When I say struggling, it's not that he was struggling intellectually.
- [46:02]
Barry Ritholtz
He was pretty even handed arguments on.
- [46:04]
Neil Katyal
Both sides, the arguments. So seriously, without caricaturing them and just tried to make the right decision and certainly that still happens today. I don't mean to over claim it, but I would say in particularly some of the big cases, they're coming in a bit more with their minds made up than when I first started.
- [46:22]
Barry Ritholtz
Really interesting. Coming up, we continue our conversation with appellate litigator Neal Kadial talking about the tariff litigation which winding its way through the courts today. I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio.
- [46:39]
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- [47:09]
Bloomberg Green Announcer
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- [47:40]
Barry Ritholtz
You're listening to Masters in Business on Bloomberg Radio. My extra special guest this week is Neal Katial. He is the former Solicitor General under President Obama. He is an appellate attorney who's argued in front of the Supreme Court pretty much more than any living or at least any active attorney 52 times something.
- [48:02]
Neil Katyal
There's some more. There are people who have more. But. But I'm doing okay.
- [48:07]
Barry Ritholtz
You're doing okay. I want to talk about the VOS selections Trump tariff litigation that as we're recording this right before Labor Day continues to perplex me how little coverage this has gotten from media and not just political media, but financial and markets and economics media because this case has enormous potential to impact the broader economy. So first, let's start with Vos Elections and other plaintiffs. April 14 after Liberation Day sued the president saying you don't have the authority to issue tariffs on your own without meeting all these checklists, which you failed to do. How'd you get involved in this case? Tell us a little bit about what makes this case different than other challenges to presidential authority.
- [49:06]
Neil Katyal
So right after President Trump took Office in the started talking about this tariff position. I was reminded of the Guantanamo case I just described to you earlier, because it's the exact same problem, which is, look, a president motivated by any number of good reasons has a policy that he wants to implement, and instead of going to Congress, he just does it on his own with a stroke of his pen. And our founders thought that a very dangerous proposition, particularly in core areas like tariffs, because every King George, of course, every dictator, every leader would like the power to tariff, to tax the people in any way they see fit without limitation. And what our founders said is no. Article 1, section 8. They gave the power to tariff expressly to the President in a similar way to the. They gave the. Gave the power to Congress in the same way as they did over matters of military justice.
- [50:07]
Barry Ritholtz
Let me ask you a question about Article 1, Section 8, because it talks about levies, duties and taxes, but it doesn't specifically say tariffs. Does the nomenclature matter or are they all the same thing?
- [50:19]
Neil Katyal
No. I mean, even the Trump administration, which just made some bizarre legal arguments on this case, even they're not making that argument. A duty is done, definitely understood as a tariff. And the original understanding, very clear on that point.
- [50:32]
Barry Ritholtz
And Article one, Section eight says that authority lies exclusively with Congress.
- [50:38]
Neil Katyal
Exactly.
- [50:39]
Barry Ritholtz
So that's the initial claim. I'm assuming the President is saying, well, I was given authority by Congress either through the IEEPA act, which was 1976, or the Trade act of 1974. How do you see these other legislations modifying the Constitution?
- [51:01]
Neil Katyal
So the government is certainly, the Trump administration is trying to say that in 1977, Congress passed this International Economic Emergency act, which gave the power to tariff. There's only one problem with that. The law doesn't say anything about tariffs in it in 1977. And there's nothing in the, you know, history of the law to say so. No president for 50 years has ever thought that it includes the power to tariff. And then President Trump's lawyers come along and say, ah, here, that's how we're going to announce these massive tariffs. And I just think our Constitution demands more from the Congress than that simple thing. I mean, Congress can certainly tomorrow easily authorize all of President Trump's tariffs. You know, they could just do it with an up or down vote. The fact that they haven't, the fact that the President is scared to even ask, I think tells you all you need to know about this.
- [51:54]
Barry Ritholtz
Didn't he ask in his first term?
- [51:56]
Neil Katyal
In his first term, he asked and it was rejected by The Congress.
- [51:59]
Barry Ritholtz
So it seems kind of odd to say, please give me the authority to tariff. No, I can't. Okay, now I'm not even gonna ask. This is like a teenage kid who sneaks out after curfew.
- [52:11]
Neil Katyal
Right? I mean, a different way of putting the point is, look, even Donald Trump didn't believe his own IEEPA argument because he went to Congress back the first time around and lost. And so then he comes up with his backup plan, which is, oh, I have the power anyway, then I have no idea what he was doing in the first term by going and asking Congress for this power if he had it in the first place. And it's such a dangerous thing because if this president does it for tariffs because he sees trade imbalances, another president, and this is how I started my oral argument to the Federal Circuit, another president, to the Court of Appeals, another president could say, you know, climate's a real emergency and I am going to impose 100% tariffs or 1000% tariffs on any goods from an oil producing country. You know, that whole thing is something that constantly. Congress really needs to be deciding, not the president on his own.
- [53:05]
Barry Ritholtz
So before we get to the appellate litigation, let's start with the trial litigation. You're representing a group of small businesses that are all saying tariffs are going to hurt their business. Tell us what the. This was the Court of Trade, the International Court of trade in D.C. tell us a little bit about that litigation. How did that proceed?
- [53:25]
Neil Katyal
Yeah, and just to be clear, I wasn't involved in at that stage. I mean, this happens a lot with me is someone brings a case in the trial court, they win or lose, and then they want to firepower for the appeal stage in the Supreme Court. So that's what happened here.
- [53:39]
Barry Ritholtz
So they won at the trial level and then there was a stay on the enforcement at the trial level pending appeal.
- [53:47]
Neil Katyal
Right.
- [53:48]
Barry Ritholtz
So that's where you get involved in the case. How did this go up to the D.C. court of Appeal so rapidly? And why was it a full on bank, all 11 justices hearing the case at once?
- [54:00]
Neil Katyal
Yeah. So what you have is you have a trial court decision from the Court of International Trade that says President Trump's tariffs are illegal. The court then pauses that ruling so that it could be decided by the Appeals court and perhaps the U.S. supreme Court. And at that point I get involved. The Federal Court of Appeals says, on their own, this case is so important that we're going to have all 11 of our judges hear the case, not just three judges, which is normally the.
- [54:28]
Barry Ritholtz
Rule how often do you get a full on bank hearing like that?
- [54:31]
Neil Katyal
Very rarely.
- [54:32]
I mean the Federal Circuit, which is this Court of Appeals, Maybe once a year, maybe once every couple years. So it's a very rare thing and I think it does demonstrate the gravity of this. And to circle back to something at the start that you talked about, about the kind of degree of attention or around this case, I guess I want to push back a little because I do think there's been a lot of media attention around the case, a lot of jurisprudential attention around the case, but perhaps most important, a lot of business community interest. I mean, I think every major hedge fund called me while this case was pending in the trial court to ask for my views and they wanted to make financial decisions on the basis of it. I obviously can't answer those questions in quite the same way now that I'm involved in the case, but I do think that for the markets this is a case of enormous, enormous significance. And what happens at the Court of Appeals and what perhaps happens should the case go to the Supreme Court is something that a lot of people are thinking about.
- [55:29]
Barry Ritholtz
So let's walk before we run. So you argue the case on bank in front of the entire all 11 justices of the D.C. court of Appeals. Tell us what that hearing was like, how did it go?
- [55:43]
Neil Katyal
Yeah, so I mean, I'm obviously constrained. It's a pending case, so I want to just stick to the public record. I'm not going to try and litigate the case on your podcast or anything. I love your podcast, but. But I have to be very mindful of those kinds of things. But you know, in a big case like this, I think you're always looking, I'm always looking to try and make sure the judges understand the implications of the government's argument. Because anything can look reasonable when a President does it in the. For the immediate situation. But the question in constitutional law is if the President has this power here, what's to stop him from doing the next thing and the next thing and the next thing.
- [56:26]
Barry Ritholtz
It's a very slippery slope.
- [56:27]
Neil Katyal
Yeah, exactly. And that's something our founders, the whole architect of our government, and Madison really talks about this in Federalist 1051. The whole architecture of our government is to try and prevent that slippery slope through all sorts of different breaks. And obviously the most important break to our founders was the role of the Congress, that the Congress has to affirmatively authorize things before a President can do them.
- [56:50]
Barry Ritholtz
So if the President can levy tariffs, taxes, duties on his own without Congress.
- [56:59]
What can he do?
- [57:00]
Neil Katyal
Exactly. And so, Gino, you asked me, how did the argument go? I felt like the judges were circling in on that precise question, the one you just asked me. And it's available for anyone to listen to.
- [57:13]
Barry Ritholtz
It's on YouTube. It's available.
- [57:15]
Neil Katyal
Yeah, exactly. So listeners can decide for themselves. But I do think the government was on the defense in response to those questions. And, you know, I have some sympathy for that. I was the top lawyer for the federal government for a while. And, you know, sometimes governments, you know, have positions that are tough to defend. This one, I felt was particularly tough to defend.
- [57:39]
Barry Ritholtz
So what is, given what we've talked about with Article 1, Section 8 and IEEPA, what on earth was the government. Government's case, defending the tariff action?
- [57:51]
Neil Katyal
Most of the government's case was like a fait accompli, which was, oh, it's already done. The president's done it. It's had all these successes. If you undo it, it's going and declare it illegal, then it's going to wreck the economy.
- [58:03]
Barry Ritholtz
I am not aware of many having gone to law school and passed the bar. I don't recall a lot of constitutional cases where the judges shrugged and said, well, if you did it already, who are we to undo that?
- [58:17]
Neil Katyal
Exactly.
- [58:18]
Barry Ritholtz
It seems like a kind of bizarre argument to make.
- [58:21]
Neil Katyal
It is, but it is one that the governments have made. Prior governments have made it. President Truman made it when he sees the steel Mills in 1952, and that went up to the Supreme Court. Solicitor General made a version of this argument. And of course, there we were in a war and we needed the steel. And so the solicitor General said to the Supreme Court, look, you will gravely undermine our war fighting powers in the midst of a war if you reverse the president's decision to seize the steel mills. Supreme Court said, that's not a good enough reason in our constitutional system. They say it's Congress that makes the laws. And again, similar architecture to the Guantanamo argument. Similar architecture here in the tariffs case, huh?
- [59:03]
Barry Ritholtz
That's really fascinating. So the government subsequently did a filing pretty quickly after the hearing asking for a stay if they lose, pending Supreme Court review. That seems kind of unusual. It's almost as if, hey, we didn't do a great job and we think we're going to lose, but we don't want you to overturn this. How often does that happen? This quickly after an appeal is argued?
- [59:31]
Neil Katyal
I mean, it was an extraordinary letter. I don't really want to say more than that. People can listen to, people can read the letter for themselves. It was filed in the court. It's a two page letter and then we filed a quick response to it. But it is, it is an extraordinary letter.
- [59:46]
Barry Ritholtz
So typically we get a. This was argued in July 2025. It takes six months before we get a decision. Typically. My assumption is a full on banking hearing. Recognizing this is a really important case. You tend to get a decision faster than you would otherwise. I'm assuming that this can drop sometime in September, October, but this isn't a February 2026.
- [60:12]
Neil Katyal
I think nobody wants it to be something that's going to go long. And courts of appeals generally do take a while for decisions. The average time is about six months in the federal system here. I think the judges do want to try and decide this quickly. That was indicated to us by the fact that they gave us very little time to write our briefs. You know, they wanted us to go straight to argument, really.
- [60:36]
Barry Ritholtz
What's that timeline normally like to prep?
- [60:39]
Neil Katyal
It was truncated by about half the time and then oral arguments set for right away right after the briefs came in.
- [60:46]
Barry Ritholtz
So no fooling around. We're fast tracking this.
- [60:48]
Neil Katyal
Exactly.
- [60:49]
Barry Ritholtz
This isn't a Christmas decision. We're going to get this out a little after Labor Day.
- [60:54]
Neil Katyal
Exactly. I think the court did exactly the right and responsible thing there, which is us as lawyers, we can get the briefs done, we can get prepared for argument. So, you know, so do it more quickly because there are 11 judges and they do have to reach some sort of majority view. It is going to take some time in which, you know, 11 people to decide. Anything takes time, particularly something with the gravity and weight.
- [61:16]
Barry Ritholtz
Quite fascinating. Coming up, we continue our conversation with Neil Kadial, who is the plaintiff's attorney on the appeal for the VOS elections versus Trump, which is seeking to overturn all of the tariffs. Discussing where the case can go from here. I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio.
- [61:38]
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- [62:08]
Bloomberg Green Announcer
On September 25th, Bloomberg Green returns to New York to bring together leaders from business, finance and government during Climate Week nyc. Join us for a half day of timely insights and high impact networking backed by Bloomberg's global journalism and data expertise. Together we'll explore strategies for future proofing business and communities from the planet's most pressing climate challenges. Learn more@Bloomberglive.com GREENNY I'm Barry Ritholtz.
- [62:38]
Barry Ritholtz
You're listening to Masters in Business on Bloomberg Radio. My extra special guest today is litigation appellate attorney Neal Kadial. He has a tremendous cv. Former Solicitor General, dozens and dozens of cases argued in front of the Supreme Court and the most recent argument he did was the VOS selections versus Trump arguing that all of these tariffs are illegal. So, so let's pick up where we Left off. The D.C. court of Appeals agrees to hear the case. They expedite this. You don't have a lot of time to prep for the moving papers. You don't have a lot of time to prep for the oral argument. What is that argument like when you're in front of the court? How long does it go for? I know you've done this a million times. You still get those butterflies in your stomach before you get up there.
- [63:31]
Neil Katyal
Always get the butterflies. And you know, it helps me be a better lawyer. And the minute that I don't have those butterflies, I'm going to go do something else. John Roberts told me that I used to run his practice at his law firm practice and he said, you know, every time I go up there I got nervous and like, and he was an extraordinary advocate. And so I've come to actually appreciate the butterflies as opposed to trying to just push them away. My practice schedule is the same for any kind of big case, which is I take notes on the briefs that have been filed and then I relentlessly, relentlessly practice the argument in front of people both new to the case, like the judges will be and people who are experts on the case case. And they are throwing questions at me one after another for hours. And I do this sometimes, you know, as many as 6, 8, 10 times in the tariffs case I did it 8 times practicing the argument in front of all these people. And I then go and I listen to the arguments. These practice sessions on MP3, I put it on, you know, something that I can put on my, on my I phone and then I'll run to it or something like that. And so I'm just thinking to myself, a Can I answer the question better? B can I answer it more quickly? C can I answer the question in a way that doesn't invite a follow up Question that I really don't want to ask and then d the most dark arts part of it. Can I answer the question in a way that leads, leads them to ask the next question, which is one I do want.
- [65:11]
Barry Ritholtz
So there's a lot of tactical thinking and strategy beyond just legal knowledge and rehearsal.
- [65:18]
Neil Katyal
100%. Like, I mean, you know, in a big case, yes, you gotta know the law, you gotta know the history, you gotta have all of the, you know, finer points, you know, memorized.
- [65:29]
Barry Ritholtz
That's just table stakes though, right?
- [65:30]
Neil Katyal
At the end of it, in the big cases, what really matters is, is can you pivot the conversation in the way you want? Can you show maximum credibility with the court? Can you really be a true listener to the questions and not answer the question that you want asked? Because they may be asking you a different one and you got to answer that one. And so it is a really specialized skill, which is why, you know, I tend to be brought in for these, these cases which, like, you know, I don't know how to do a trial. In fact, I was special prosecutor in the George Floyd murder and. But I handed handled all the appeal stuff because, I mean, you know, I have no idea how to cross examine a witness or something. And so, you know, I, I do one thing, hopefully I do it kind of well and. But the practice sessions are really, I think the secret sauce kind of well.
- [66:22]
Barry Ritholtz
Do it kind of well. How long did the OR arguments last? How.
- [66:27]
Neil Katyal
I think they were a couple hours long.
- [66:29]
Barry Ritholtz
That's what it looked like when I saw it on YouTube. And I'm like, I don't know how much of this because I listened to a good chunk of it and kept starting and stopping. And I'm like, this feels like typical appellate arguments are not hours long, right? You know, like 15, 20 minutes for.
- [66:45]
Neil Katyal
23 minutes, I think for me. And I'm pretty sure I probably went for an hour or something like that. Yeah.
- [66:51]
Barry Ritholtz
And how did opposing counsel. So how much time did they use?
- [66:54]
Neil Katyal
And I think they used a fair amount of time as well. I think the court really did want to try and ask a lot of the hard questions to both sides and, and so, yeah, so I think it did go long.
- [67:05]
Barry Ritholtz
So the D.C. court of Appeals recognizes how significant this case is. They expedite it. It's a full on Bank. All 11 justices hear it. Where does it go from here? I was trying to figure out where, what options. So I'm going to assume for argument's sake that the plaintiff is successful in this case and they affirm the lower court's ruling against the president. Tariffs are Congress's venue, not the President's. Their. Their responsibility. What happens from here? What can the Supreme Court do? They could say, that's fine, let it stand. As far as I know, they could remand the case for further fact finding to the trial judge and say, we want to see more specific things, or they can take it up on a. On a full hearing. What am I missing? What am I forgetting from law school?
- [68:00]
Neil Katyal
That's exactly right. So if we win, you know, the government will try and take the case to the Supreme Court. They've already said they would do that, and we hope the Supreme Court at that point, wouldn't hear the case. I mean. I mean, I'm privileged to represent these plaintiffs. They're small businesses. Vos Selections is a small wine company. It's been around for a while. And if they're saying. And they filed briefs in the supreme, in the Court of Appeals that say, if we lose this case, our business may go under, and other businesses like ours may go under. And so, you know, we think from the perspective of small businesses in particular, it's really important if this issue gets settled and settled quickly, and if the Court of Appeals says, as I hope they will, that President Trump's tariffs are unconstitutional, we hope that's the end of it. It might not be. Of course, the Supreme Court may decide to hear the case. Conversely, if the government wins in the Court of Appeals and says these tariffs are okay, then we would presumably go to the Supreme Court and say, no, they're not, and then ask the Supreme Court, Supreme Court to hear it. And then there is, as you say, a third option in which the Court of Appeals might say, hey, you know, we think that this needs to go back to the trial court for further fact finding on something or the other. You know, I think that's in many ways the worst of every world, because everyone needs certainty around this, particularly the business community. And so, you know, you know, there's definitely been been floated as a possibility, but it's one that I think wouldn't be attractive to the government.
- [69:33]
Barry Ritholtz
And the facts in question are pretty clear. Here's what the President did, here's what the litigation has showed, and here's the. The legislation and the Constitution. The specific facts don't seem to matter that much other than what is pretty widely understood.
- [69:50]
Neil Katyal
Yes, that's correct. That's exactly our argument.
- [69:53]
Barry Ritholtz
So. So let's talk about remedies. Hypothetically. You win at the appellate level. There's been A stay for the prior victory at the district court level, at the International Court of Trade level. What sort of remedies do small businesses get? Can the tariffs be thrown out? Can companies that have paid tariffs, can they get refunds? How does this work?
- [70:19]
Neil Katyal
Right. So I think right now, all we have asked for, for, in our case is for the tariffs to be declared unconstitutional, illegal and void. There is a question, as you say, about companies, individuals that have paid tariffs, can they get a refund on that from the government? That's not something that's been briefed yet or argued. I think it is kicking around as an issue when President Trump issued some tariffs that were declared illegal before there were refund actions that were filed. And I think those refund actions are still pending years later in the courts. Yes. So, you know, it's a long process, that refund process, to the extent it's available. We have just not gotten into that at this point.
- [71:03]
Barry Ritholtz
And I look at tariffs as a VAT tax on consumers. I'm going to assume consumers are just that money's gone. They'll never be able to see that back.
- [71:11]
Neil Katyal
Yeah. I don't know if. You know, I think that may be the case. I think you're right to characterize tariffs as a tax. I think you're 100% right. That's what we're talking about. We're talking about the price because of President Trump's tariffs, the price of everything you're ordering on Amazon or at the grocery store, whatever, increasing the cost to you, the American consumer, indeed the Tax foundation, which is a nonpartisan group, has said that this is the largest tax increase increase on American consumers since Bill Clinton in 1993.
- [71:43]
Barry Ritholtz
That's a big tax increase, isn't it?
- [71:44]
Neil Katyal
Yeah.
- [71:45]
Barry Ritholtz
So let's talk about. I know you don't want to speculate about the Supreme Court. This Court seems to have been increasingly allowing presidential authority to expand. At what point is it a bridge too far? This is essentially, we're going to give the President the authority to tax, which is Congress's responsibility. How do you think about how the Supreme Court is going to contextualize this? Is there a narrow keyhole that they can sort of, you know, thread the needle and avoid the constitutional argument? I'm trying not to put words in your mouth and think about what are the possible scenarios we could go down.
- [72:33]
Neil Katyal
Yeah. So I think, you know, the Supreme Court has probably the same three options that we talked about earlier for the Court of Appeals. Declare the tariffs illegal and unconstitutional. Declare the tariffs constitutional and legal. Or send it back to the trial court for some fact finding. I do think that there's a deep concern that this President is asserting powers in very, very muscular ways, and some of those are legitimate and others are not. This is one that I think is pretty easy to characterize as falling on the latter side of that line. Others are more difficult. And, you know, and so I think there's a conversation at the court about that question, but I think they're going to approach this case as they do any on its own, in individual facts. And the facts are, I think here that the President hasn't done what the Constitution requires, which is to have him go to Congress and get the authority for the things that he says he claims he needs so desperately.
- [73:35]
Barry Ritholtz
So the middle E in IEEPA is emergency. Is there an argument to be had that, hey, we're in the middle of an emergency? Although, you know, some of the things that kind of surprised me about the tariffs he negotiated. The President negotiated the North American trade group trade laws and now threw that out and tariffed, and we have a free trade agreement with South Korea, and suddenly we're tariffing them. How is it an emergency if you're tariffing every country in the world, including those that do not have tariffs on our goods?
- [74:15]
Neil Katyal
It's 100% right. And I would point out that the language of this 1977 law that President Trump is relying on, IPA, it doesn't just say emergency. It says it must also be an unusual and extraordinary threat. And yet the President's executive order imposing these tariffs has said trade deficits have been a persistent feature of the American economy for the last 50 years. And so he basically pled himself out of court because his own executive order says these trade deficits are not unusual and extraordinary. They're commonplace and de rigueur in the American economy. So that was, I think, a big portion of my oral argument before the court. And I suspect that will get a bunch of attention in whatever decision the court of appeals will make. So I think, look, we want a circumstance, and our founders wanted a circuit, wanted a constitutional structure in which, if there is a true emergency, presidents get leeway.
- [75:15]
Barry Ritholtz
You're anticipating my next question, which is the Supreme Court doesn't want to tie the President's hand in cases of true emergencies. I'm hearing your argument. This should have nothing to do with that. There's no emergency.
- [75:31]
Neil Katyal
Exactly. You've got time to go to Congress. Think back to President Lincoln in the Civil War. He orders the blockade of the South. He suspends the writ of habeas corpus. And yet he says, I'm going to call a special session of Congress on July 4th to get people back to vote and say, do you ratify what I did, I had to do it in an emergency. Of course, then you didn't have to.
- [75:56]
Barry Ritholtz
Middle of civil war.
- [75:57]
Neil Katyal
Middle of the civil war. No telecoms, no instant email or anything like that. So he had to take certain actions in order to protect the American republic. And certainly I and the small businesses I'm privileged to represent. We're not saying in some true emergency in which Congress can't act, the president can't fill the void. Of course he can. This is the opposite of that. This is one in which Congress is operating normally. The trade deficits have been going on for 50 years. No president has ever sought this kind of sweeping power. And yet he comes along and says, I, Donald Trump, get this power. That's a very dangerous thing. Not just because for some people who are concerned about President Trump, but if you're concerned about President Hamdani or whomever in the future, you don't want presidents to have that kind of sweeping power on their own.
- [76:43]
Barry Ritholtz
What a perfect place to leave it. Thank you, Neil for being so generous with your time. We have been speaking with Neil Kadial. He is the appellate litigator for VOS Selections versus Trump, which seeks to declare the President's tariffs not only null and void, but unconstitutional. If you enjoy this conversation, well, check out any of the other 500 we've done over the past 12 years. You can find those at iTunes, Spotify, Bloomberg, YouTube. Wherever you find. Find your favorite podcast. I would be remiss if I did not thank the craft team that helps us put these conversations together each week. Alexis Noriega is my producer. Sage Bauman is the head of podcasts at Bloomberg. Sean Russo is my researcher. I'm Barry Ritholtz. You've been listening to Masters in Business on Bloomberg Radio.
- [77:39]
Neil Katyal
Foreign.
- [77:49]
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