Special Edition: Neal Katyal on Challenging Trump's Global Tariffs

On this special edition of the show, Barry sits down with Neal Katyal, Milbank LLP partner and former acting Solicitor General of the US. Barry speaks with Katyal just days after his team won its challenge to President Donald Trump's sweeping global tariffs. They discuss the process of challenging President Trump's authority to impose steep tariffs on imports from other countries and what next steps could look like as the case makes its way through the US legal system. Plus, they talk about Katyal's career working on appellate and complex litigation, including arguing over 50 cases before the US Supreme Court. See omnystudio.com/listener https://omnystudio.com/listener for privacy information.

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• 2:04Speaker 01

  This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

• 2:10Barry Ritholtz?

  I know I say it every week, but this week I have an extra, extra special guest. Neil Cardell 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.

• 2:54Barry Ritholtz?

  Litigator of the Year, Top 100 Lawyers, 500 Leaving 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

• 3:38Barry Ritholtz?

  of Appeals. We recorded this on Wednesday, August 27th, a few days before Labor Day weekend. We finished the recording and low and behold, two days later, the decision comes down. He wins a resounding victory, seven to four. The court very much bought into his arguments that the tariffs and any sort of taxes duties levies, uh, requires authorization from Congress. It is not within the purview of the executive branch or the president. Uh, the, so once we got that decision, I reached out to Neil again, and on Sunday over the holiday weekends, I hopped off

• 4:21Barry Ritholtz?

  the beach. We got on a phone call for a half hour and recorded what he thought of the results, uh, what he thought about the opinion, where the case is likely to go from here, how things look in terms of the, the odds that the Supreme Court are going to hear this. Uh, 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

• 5:04Barry Ritholtz?

  such a bright, thoughtful, uh, 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 Cattiel's clients won at the appellate level, and then we'll go to the entire, uh, hour conversation we had while we still didn't know, uh, what the outcome of the case was. Uh, with no further ado, my discussion with appellate attorney Neil Cattiel. First off, Neil, congratulations. You just won a major appellate case in VOS elections versus Donald Trump. So, congrats.

• 5:49Speaker 03

  Thank you so much. Um, 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 US Supreme Court, they never tell you in advance when a decision's coming down. And indeed, it was a little, I think past five 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.

• 6:33Speaker 03

  And so they let the entire world know, including me, at the very same time.

• 6:37Barry Ritholtz?

  So, so let's put this into a little timeline. We had our recording Wednesday, August 27. The decision dropped around 5 o'clock on Friday, August 29. Today is Sunday, August 31. 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, 7 for your way. I thought it was a pretty powerful refutation

• 7:20Barry Ritholtz?

  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 IIPA rules and what an emergency actually is. Can you address that a little bit?

• 7:37Speaker 03

  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.

• 8:20Speaker 03

  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.

• 8:38Barry 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 remanded it back to the International Court of Trade in DC, 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? Seven million cases on this tariffs? It would seem that either it's constitutional or unconstitutional, and it applies to everybody, or am I being naive?

• 9:17Speaker 03

  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, illegal, can't be imposed, and people who have been had them imposed, you know, 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 it case back to the lower court to evaluate the scope of the remedies. And that's because the US 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 things like that. And so I think the court, Federal Circuit,

• 10:01Speaker 03

  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, you know, according to the president's tweets and the like, they want to go to the Supreme Court.

• 10:36Barry 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 certiorari is filed by the government. What are the options? What might the Supreme Court do?

• 11:01Speaker 03

  Yeah, so I think you're right to say that 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 14th, because they wanted to give the government time to file what's called a petition for certiorari, which is a formal request to the US Supreme Court to hear the case. The government is saying that in these tweets by 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, you know, one that has important consequences, the court does hear the case.

• 11:44Speaker 03

  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.

• 12:01Barry 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?

• 12:38Speaker 03

  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, AIPA, 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

• 13:23Speaker 03

  emergency that's unusual and extraordinary to have extra powers because if Congress can't meet to, you know, repel some threat or 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.

• 13:50Barry Ritholtz?

  Coming up, we continue our conversation with appellate litigator Neil Cardiall. I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio.

• 13:59Speaker 00

  At KKR, we've spent 50 years understanding what matters to our clients and companies. From pioneering private equity to investing across credit, real assets, insurance, and sports, KKR has built the experience to navigate complexity, the judgment to recognize opportunity, and the conviction to create lasting value. Because when people and institutions are counting on us, understanding what matters isn't just important, it's everything. KKR, understanding what matters. Visit kkr.com/whatmatters.

• 14:31Speaker 01

  This is the Bloomberg Tech Minute, brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Businessweek's Lauren Grush. She reports that the company culture is defined by Musk, and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty. To Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs. And hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw, innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting and hiring practices.

• 15:14Speaker 01

  But according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company. And Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute, brought to you by ChatGPT. Get started at ChatGPT.com.

• 15:54Barry Ritholtz?

  Let's broaden this out a little bit. I think this is an 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 an attempt to rebalance the three parts of government by this particular president? Or is this just, no, we want our tariffs

• 16:36Barry Ritholtz?

  and we want to stop all these bad things that the tariffs will cure?

• 16:42Speaker 03

  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, you know, 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,

• 17:24Speaker 03

  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 doing a 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.

• 17:52Barry Ritholtz?

  So at, um, at the appellate level, it was seven four. 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?

• 18:34Speaker 03

  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 Lory, who was appointed by President Bush, but says that these tariffs are unconstitutional. So I don't think it's the right.

• 19:15Speaker 03

  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. Um, you know, 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 One, Section Eight. They said specifically, the power over duties is one given to the Congress, not to the president.

• 19:53Barry Ritholtz?

  So there are a couple of key issues this is going to turn on. The constitutionality, Article One, Section Eight. Um, the AIPA laws and what is an emergency? Any other factors that might drive this that um, we should be aware of?

• 20:11Speaker 03

  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. Um, you know, Justice Scalia's phrase is that Congress doesn't hide elephants in mouse holes. And at the oral argument, I took that even further. I said, you know, this isn't just an elephant in the mouse hole. It's a galaxy in a keyhole. It's an extraordinary set of powers given to the president. Um, that claimed by the president. And, you know, this doctrine, major questions doctrine, has been used buried

• 20:53Speaker 03

  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 of days ago is, hey, what sauce for the goose? The 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 AIPA, and then to have a president come along and say, ha, I can now do whatever I want.

• 21:35Barry Ritholtz?

  So let's, let's expand this a bit. Um, how creative was it of the administration to try and

• 21:45Barry Ritholtz?

  Get tariffs imposed under AIPA. Is this something that's just wildly outside of what AIPA originally was designed about?

• 21:55Speaker 03

  100%. Nobody, and I've read the legislative history behind AIPA very carefully. Nobody thought that this was about the tariff power. And so, um, yes, they get a A++ 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.

• 22:32Barry Ritholtz?

  So I have a pretty solid recollection of, 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.

• 23:12Barry Ritholtz?

  None of the normal rules for enacting tariffs, none of the procedures, policies, um, or allocation of powers amongst, uh, branches of government was, was followed. So what do you imagine the government's argument is going to be at the Supreme Court level?

• 23:32Speaker 03

  Right. So Barry, 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, you know, 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. Um, here, I do think that the arguments are quite a stretch for the administration to be making.

• 24:16Speaker 03

  And I think, um, you know, that's what you saw reflected in the seven to four 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. Um, and I just think that's the wrong way to think about constitutional law. Um, to allow a president to do what he wants in the interim and then say, oh, it'd be too dangerous to unwind it. Um, you know, I think it's better to get the constitutional rules right the first time.

• 24:52Barry Ritholtz?

  So some of the arguments I've seen from the administration is not only are the tariffs complicated and then 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.

• 25:18Speaker 03

  Well, I have two things to say about that and, you know, and, you know, 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, 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.

• 25:59Speaker 03

  And there are, of course, members of his own political party that are running Congress. So, um, there's not even a politics barrier or anything like that.

• 26:09Barry Ritholtz?

  So what are we missing? It seems like this doesn't survive on a constitutional basis. AIBA 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 get enacted? What am I missing here?

• 26:29Speaker 03

  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.

• 26:49Barry 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 certiorari immediately, but relatively soon if they're interested, sometime in the next few weeks, is that a fair timeline?

• 27:05Speaker 03

  It's possible. It requires the government to file a certiorari petition. And, you know, in other big cases, you know, like Guantanamo or healthcare or the like, there are those certiorari 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.

• 27:32Barry Ritholtz?

  So let's say that happens and the case is heard end of September. How soon do we get a decision?

• 27:39Speaker 03

  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 in probably earliest November or 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.

• 28:21Speaker 03

  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.

• 28:29Barry 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?

• 28:52Speaker 03

  So what the federal circuit did is it kind of split the baby. It said that the tariffs 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.

• 29:13Barry Ritholtz?

  What are the odds that the Supreme Court chooses to not hear the case?

• 29:17Speaker 03

  I'm not going to predict what the Supreme Court is going to do. That's just, you know, 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 the federal circuit did by saying 45 days is it cut the government's time in half to file a certiorari petition. Normally, they have 90 days to do so. And what the court here said is basically, no, 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.

• 29:52Barry Ritholtz?

  So there seems to be a judicial recognition of exactly how pressing this is. The liberation day was April 2nd. The lower court case, I think, was filed April 14th. Then there was a decision in May, was heard pretty rapidly. The on-bank case was heard in July, July 31st, I believe.

• 30:15Speaker 03

  Correct.

• 30:15Barry Ritholtz?

  And then a month later, 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.

• 30:32Speaker 03

  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 of you, or your viewers and listeners is the Trump tariffs were declared unconstitutional and illegal by a seven to four 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? And then, of course, what will the Supreme Court do?

• 31:16Barry Ritholtz?

  And the clock is ticking. They have forty-five days, which by my calculation is around October fifteenth or so. Is that about right?

• 31:24Speaker 03

  Yeah, I think it's the fourteenth.

• 31:25Barry Ritholtz?

  Fourteenth, wow. Um, 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?

• 31:40Speaker 03

  No, that's all to be determined. Who knows?

• 31:45Barry 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, uh, Masters in Business conversation with appellate attorney Neil Caddell. Let, let's spend a little time just talking about your background and career. Dartmouth undergrad, uh, JD from Yale. What was the original career plan?

• 32:20Speaker 03

  Uh, the original plan was for me to be a professor of history.

• 32:23Barry Ritholtz?

  Really?

• 32:24Speaker 03

  Um, yeah, 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 asked him to have lunch with me and I say, I'd really like to be a history professor and, um, and, you know, frankly, you're the one who inspired me and I want to do this. And he thought about it and he said, honestly,

• 33:07Speaker 03

  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, you know, small town in the middle of nowhere. It's hard to meet a spouse and so on. He said, "Look, you're, you're..." 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

• 33:51Speaker 03

  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.

• 34:32Barry Ritholtz?

  And do you still do any teaching these days?

• 34:34Speaker 03

  I do, and I love, 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, you know, 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, you know, 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 gonna 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

• 35:17Speaker 03

  that year. And, you know, my students and I, we decided to try and help first responders get benefits and stuff. And, you know, 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 the source of authority for this? And, you know, it wasn't particularly compelling. In fact, it was really weak. Because

• 36:00Speaker 03

  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 penalty.

• 36:12Barry Ritholtz?

  Seems even-handed and fair. What's your objection?

• 36:14Speaker 03

  And, you know, even the last lines of the executive order said, "The courts have no business reviewing what I'm doing. 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, it 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.

• 36:59Speaker 03

  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, most preeminent constitutional law professor.

• 37:11Barry Ritholtz?

  So you at Yale, Lawrence, at the tribe at Harvard?

• 37:13Speaker 03

  Yeah, exactly. And so we write this article in the Yale Law Journal. We race 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.

• 37:32Barry Ritholtz?

  Well, you needed a plaintiff, though, don't you?

• 37:35Speaker 03

  Exactly. So that was the hard question, because a bunch of 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 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 filed the case, nobody thinks we're gonna win.

• 38:15Barry Ritholtz?

  How far are you from law school now?

• 38:17Speaker 03

  I'm like, six years out.

• 38:19Barry Ritholtz?

  So, still relatively green?

• 38:20Speaker 03

  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 firms, 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 gonna 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 Justice Ship. 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 gonna say, I'm trying to tell the Supreme Court, the Chief Justice is wrong about this.

• 39:05Speaker 03

  Nobody thinks we're gonna 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 wanna hire me, and I meet a young senator named Barack Obama who heard me interviewed on a 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.

• 39:38Barry Ritholtz?

  Wow, that's amazing. You know, I want to talk about a couple of the other cases that you argued. One was Moore versus Harper, which former Judge Michael Luttig called "the most important case for American democracy ever." Tell us about that case.

• 39:57Speaker 03

  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 Luttig was writing those remarks, we've now had some things which, you know, 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 which candidate. And this became part of the RNC's playbook,

• 40:40Speaker 03

  and they invested heavily in state legislatures to try and develop, excuse me, this theory. So, we challenged 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, this 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,

• 41:22Speaker 03

  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.

• 41:39Barry Ritholtz?

  Just out of habit, or like, how does that?

• 41:42Speaker 03

  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 what Justice Thomas would ask the first question. And so I'd been thinking, how do I use that knowledge to my advantage? Justice Thomas is going to ask the first question. And what I did was I said to myself, okay, I can develop a set play. Justice Thomas is going to ask me a question. Doesn't matter what the question is. I'm then going to 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

• 42:24Speaker 03

  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 versus Harper and 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, and sure enough, we win six to three. This case, in the Republican theory, is thrown out. I didn't win Justice Thomas's vote, but I won a bunch of others.

• 42:56Barry Ritholtz?

  Huh, that's amazing. Let's, 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. Or is it not? You're just arguing Constitution and law, and this is the outcome that should come about?

• 43:16Speaker 03

  It is different, but I would say even back then, I was, felt like I was playing defense. So this is a case I argued in maybe 2010. The Voting Rights Act had been passed in 1965. It literally has the blood of patriots on it. It is what Selma and the bridge, Patea's Bridge is all about. And so

• 43:37Speaker 03

  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. And 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

• 44:21Speaker 03

  there's only one part of the Voting Rights Act that remains, Section 2, 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 a majority Republican appointees since, I think, 1972.

• 44:48Barry Ritholtz?

  So this isn't just partisanship. This is ideological tilt, not necessarily a party tilt?

• 44:54Speaker 03

  Yeah, so I would say, you know, that the presidents now of both parties are sending to the Supreme Court more sure things, that, you know, in which the track record is really known. You know, the Republicans had this mantra, "No more suitors," 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 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

• 45:37Speaker 03

  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.

• 45:45Barry Ritholtz?

  They were pretty even-handed arguments on both sides.

• 45:47Speaker 03

  Yeah, and he really took the argument so seriously without caricaturing him, and just tried to make the right decision. And certainly, that still happens today. I don't mean to overclaim 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, than when I first started.

• 46:04Barry Ritholtz?

  Really interesting. Coming up, we continue our conversation with appellate litigator Neil Caddiel, talking about the tariff litigation winding its way through the courts today. I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio.

• 46:23Speaker 01

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• 48:45Barry Ritholtz?

  I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. My extra special guest this week is Neil Cardiell. 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 like that?

• 49:09Speaker 03

  There's some more. There are people who have more, but I'm doing OK.

• 49:13Barry Ritholtz?

  You're doing OK. 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 14th, after Liberation Day, sued the president, saying, "You don't have the authority

• 49:58Barry Ritholtz?

  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.

• 50:13Speaker 03

  So, right after President Trump took office and 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 the stroke of his pen. And our founders thought that a very dangerous proposition, particularly in core areas like tariffs. Because, you know, every, you know, King George, of course, you know, every dictator, every,

• 50:53Speaker 03

  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 one, section eight, they gave the power to tariff expressly to the president in a similar way to they gave the, they gave the power to Congress and in the same way as they did over matters of military justice.

• 51:14Barry Ritholtz?

  Let me ask you a question about Article one, section eight, 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?

• 51:25Speaker 03

  No, I mean, even, even the, the Trump administration, which has made some bizarre legal arguments in this case, even they're not making that argument. A duty is definitely understood as a tariff. And the original understanding, very clear on that point.

• 51:39Barry Ritholtz?

  And Article one, section eight, says that authority lies exclusively with Congress.

• 51:45Speaker 03

  Exactly.

• 51:46Barry Ritholtz?

  So, so that's the initial claim. The, I'm assuming the president is saying, well, I was given authority by Congress either through the IEPa Act, which was 1977, or the Trade Act of 1974. How do you see these other legislations modifying the Constitution?

• 52:07Speaker 03

  So, the government is certainly, so 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 gonna 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.

• 52:52Speaker 03

  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.

• 53:01Barry Ritholtz?

  Didn't he ask in his first term?

• 53:03Speaker 03

  In his first term, he asked, and it was rejected by the Congress.

• 53:06Barry 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 going to ask. This is like a teenage kid who sneaks out after curfew.

• 53:17Speaker 03

  Right. It's, I mean, a different way of putting the point is, look, even Donald Trump didn't believe his own AIBA 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, you know, 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

• 53:58Speaker 03

  100% tariffs or 1,000% tariffs on any goods from an oil-producing country. You know, that whole thing is something that Congress really needs to be deciding, not the president on his own.

• 54:11Barry 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 DC. Tell us a little bit about that litigation. How did that proceed?

• 54:32Speaker 03

  Yeah, and just to be clear, I wasn't involved 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 firepower for the appeal stage in the Supreme Court. So that's what happened here.

• 54:46Barry Ritholtz?

  So they won at the trial level, and then there was a stay on the enforcement at the trial level pending appeal.

• 54:53Speaker 03

  Right.

• 54:54Barry Ritholtz?

  How did, so that's where you get involved in the case. How did this go up to the DC Court of Appeals so rapidly? And why was it a full-on bank, all 11 justices, hearing the case at once?

• 55:07Speaker 03

  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 US 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 rule.

• 55:35Barry Ritholtz?

  How often do you get a full-on bank hearing like that?

• 55:38Speaker 03

  Very rarely. I mean, the Federal Circuit, which is this Court of Appeals, maybe once a year, maybe once every couple of 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 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.

• 56:21Speaker 03

  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.

• 56:36Barry Ritholtz?

  So let's, let's walk before we run. So you argue the case on bank in front of the entire, all 11 justices of the DC Court of Appeals. Tell us what that hearing was like. How, how did it go?

• 56:50Speaker 03

  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, you know, 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?

• 57:32Barry Ritholtz?

  It's a very slippery slope.

• 57:33Speaker 03

  Yeah, exactly. And that's something our founders, the whole architecture 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 the, 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.

• 57:57Barry Ritholtz?

  So if the president can levy tariffs, taxes, duties on his own without Congress, what can he do?

• 58:06Speaker 03

  Exactly. And so, you know, 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, you know, it's available for anyone to listen to.

• 58:20Barry Ritholtz?

  It's on YouTube, it's available, yeah.

• 58:22Speaker 03

  Exactly. So, you know, listeners can decide for themselves. But I do think the government, you know, was, was on the defense in response to those questions. And, you know, I, 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.

• 58:46Barry Ritholtz?

  So what it, given what we've talked about with Article One, Section Eight and AIPA, what on earth was the government's case defending?

• 58:56Barry Ritholtz?

  Uh, the tariff action.

• 58:57Speaker 03

  Most of the government's case was a like a fait accompli, which was.

• 59:01Barry Ritholtz?

  Oh, it's already done.

• 59:02Speaker 03

  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.

• 59:10Barry 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?

• 59:23Speaker 03

  Exactly.

• 59:24Barry Ritholtz?

  It seems like a kind of bizarre argument to make.

• 59:28Speaker 03

  It is, but it is one that the governments have made. Prior governments have made it. President Truman made it when he seized the steel mills in nineteen fifty-two, 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 greatly undermine our warfighting 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.

• 1:00:09Barry Ritholtz?

  Huh, that 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 a an appeal is argued?

• 1:00:38Speaker 03

  I mean, it was an extraordinary letter. I don't really want to say more than that. People can listen to, look, 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.

• 1:00:52Barry Ritholtz?

  So typically we get a, this was argued in July twenty twenty-five. It could take six months before we get a decision typically. My assumption is a full-on bank 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.

• 1:01:18Speaker 03

  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.

• 1:01:31Speaker 03

  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.

• 1:01:42Barry Ritholtz?

  Really? What's that timeline normally like to prep?

• 1:01:45Speaker 03

  It was truncated by about half the time and then oral argument set for right away, right after the briefs came in.

• 1:01:52Barry Ritholtz?

  So no fooling around, we're fast tracking this.

• 1:01:55Speaker 03

  Exactly.

• 1:01:55Barry Ritholtz?

  This isn't a Christmas decision. We're gonna, we're gonna get this out a little after Labor Day.

• 1:02:00Speaker 03

  And 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 this gravity and weight.

• 1:02:22Barry Ritholtz?

  Quite fascinating. Coming up, we continue our conversation with Neil Cardiell, who is the plaintiff's attorney on the appeal for the VOS selections 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.

• 1:02:46Speaker 04

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands. On experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting and hiring practices.

• 1:03:29Speaker 04

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• 1:05:08Barry Ritholtz?

  I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. My extra special guest today is litigation appellate attorney Neil Cardiell. He has a tremendous CV. Former Solicitor General, dozens and dozens of cases argued.

• 1:05:26Barry Ritholtz?

  In front of the Supreme Court and the most recent argument he did was the V O S 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, 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?

• 1:06:02Speaker 03

  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, I got nervous and like, and he was an extraordinary advocate. And so I've, 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

• 1:06:45Speaker 03

  people who are experts on the case. And they are throwing questions at me, one after another for hours. And I do this sometimes, you know, as many as six, eight, 10 times. In the tariffs case, I did it eight times, practicing the argument in front of all these people. And I then go and I listen to the arguments, these practice sessions on M P three. I put it on, you know, something that I can put on my, on my iPhone 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?

• 1:07:24Speaker 03

  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 them to ask the next question, which is one I do want?

• 1:07:41Barry Ritholtz?

  So there's a lot of tactical thinking and strategy beyond just legal knowledge and rehearsal?

• 1:07:49Speaker 03

  A hundred percent. 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 in your

• 1:08:00Barry Ritholtz?

  head. That's just head stakes, though, right?

• 1:08:02Speaker 03

  But at the end of it, in the big cases, what really matters 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 gotta answer that one. And so, it is a really specialized skill, which is why, you know, I tend to be brought in for these cases, which is 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 handled all the appeal stuff, because, I mean, you know, I have no idea how to cross-examine a witness or something.

• 1:08:43Speaker 03

  And, so, you know, I do one thing, hopefully I do it kinda well, and, but the practice sessions are really, I think, the secret sauce.

• 1:08:51Barry Ritholtz?

  Kinda well. Do it kinda well. How long did the oral arguments last? How?

• 1:08:58Speaker 03

  I think they were a couple hours long.

• 1:08:59Barry 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.

• 1:09:13Speaker 03

  Right.

• 1:09:14Barry Ritholtz?

  You got like fifteen, twenty minutes.

• 1:09:15Speaker 03

  It was set for twenty-three minutes, I think, for me.

• 1:09:17Barry Ritholtz?

  Okay.

• 1:09:18Speaker 03

  And I'm pretty sure I probably went for an hour or something like that.

• 1:09:21Barry Ritholtz?

  Wow. And how did opposing counsel, how much time did they use?

• 1:09:24Speaker 03

  And I think they used a fair amount of time as well. I think the court really did wanna try and ask a lot of the hard questions to both sides. Um, and, uh, and so, yeah, so I think it did go long.

• 1:09:36Barry Ritholtz?

  So the D C Court of Appeals recognizes how significant this case is. They expedite it. It's a full on bank, all eleven justices hear it. Where does it go from here? I was trying to figure out 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, uh, Congress's venue, not the president's, their, 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, I know.

• 1:10:17Barry Ritholtz?

  Um, they could remand the case for further fact finding to the trial judge and say, we want to see more specific things. Or, or they can take it up on a, on a full hearing. What am I missing? What am I forgetting from law school?

• 1:10:31Speaker 03

  That's exactly right. So if we win, um, you know, the government will try and take the case to the Supreme Court. They've already said they would do that.

• 1:10:38Barry Ritholtz?

  Mm hmm.

• 1:10:38Speaker 03

  Um, and we hope the Supreme Court at that point wouldn't hear the case. I mean, I'm privileged to represent these plaintiffs. They're small businesses. V O S 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, um, 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, Supreme Court may decide to hear the case.

• 1:11:20Speaker 03

  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 this, ask the 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 floated as a possibility, but it's one that I think wouldn't be attractive to the government.

• 1:12:03Barry 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 legislation and the constitution. The specific facts don't seem to matter that much, other than what is pretty widely understood.

• 1:12:20Speaker 03

  Yes, that's correct. That's exactly your argument.

• 1:12:23Barry 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?

• 1:12:49Speaker 03

  Right. So I think right now, all we have asked 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.

• 1:13:23Barry Ritholtz?

  Really?

• 1:13:23Speaker 03

  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.

• 1:13:33Barry 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.

• 1:13:41Speaker 03

  Yeah, I don't know if that, 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 hurting on. Amazon or at the grocery store, whatever, you know, 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 on American consumers since Bill Clinton in 1993.

• 1:14:13Barry Ritholtz?

  That's a big tax increase, isn't it?

• 1:14:15Speaker 03

  Yeah.

• 1:14:15Barry Ritholtz?

  So, 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

• 1:14:56Barry Ritholtz?

  trying not to put words in your mouth and, and think about what are the possible scenarios we could go down?

• 1:15:04Speaker 03

  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

• 1:15:48Speaker 03

  to approach this case, as they do any, on its own 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.

• 1:16:05Barry Ritholtz?

  So the middle E in AIPA 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, uh, 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?

• 1:16:45Speaker 03

  It's 100% right, and I would point out that the language of this 1977 law that President Trump is relying on, AIPA, 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.

• 1:17:27Speaker 03

  And, you know, I suspect that you will, you know, get a bunch of attention in whatever decision the Court of Appeals will make. So, I think, look, we want a circumstance, our founders wanted a constitutional structure in which if there is a true emergency, presidents get leeway.

• 1:17:45Barry 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.

• 1:18:01Speaker 03

  Exactly, you've got time to go to Congress. Think back to President Lincoln in the Civil War. He, you know, orders the blockade of the South, he suspends the writ of habeas corpus, and... 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, 'Did I do, do you ratify what I did? I had to do it in an emergency.'"

• 1:18:26Barry Ritholtz?

  Middle of Civil War.

• 1:18:27Speaker 03

  Middle of Civil War, no telecoms, no instant email or anything like that. You know, so he had to take certain actions in order to protect the American Republic. And, you know, 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 M'Donny or whomever in the future, you don't

• 1:19:10Speaker 03

  want presidents to have that kind of sweeping power on their own.

• 1:19:14Barry Ritholtz?

  What a perfect place to leave it. Thank you, Neil, for being so generous with your time. We have been speaking with Neil Cardiell. He is the appellate litigator for VOS Elections 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 your favorite podcasts. I would be remiss if I did not thank the crack team that helps us put these conversations together each week. Alexis Noriega is my producer. Sage Baumann is the head of podcasts at Bloomberg.

• 1:19:57Barry Ritholtz?

  Sean Russo is my researcher. I'm Barry Ritholtz. You've been listening to Masters in Business on Bloomberg Radio.

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