Latest / Bloomberg Law / Weekend Law: SCOTUS to Decide Tariffs, Presidential Power & Music Piracy

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Weekend Law: SCOTUS to Decide Tariffs, Presidential Power & Music Piracy · Bloomberg Law

• 0:02
  Speaker 1: This is Bloomberg Law with June Grossel from Bloomberg Radio.
• 0:08
  Speaker 2: Why do you think Presidents Clinton, Bush Obama have not
• 0:15
  Speaker 2: used i EPA to impose tariffs.
• 0:18
  Speaker 3: It's one of the most important cases of the term,
• 0:21
  Speaker 3: a test of presidential power where President Trump's signature economic
• 0:26
  Speaker 3: policy is at stake and a decision against him could
• 0:30
  Speaker 3: mean the refunding of more than one hundred billion dollars.
• 0:34
  Speaker 3: And after nearly three hours of oral arguments in November,
• 0:38
  Speaker 3: Supreme Court justices across the ideological spectrum appeared skeptical that
• 0:43
  Speaker 3: Trump has the legal authority to impose the tariffs. Chief
• 0:48
  Speaker 3: Justice John Roberts and Justice Sonya Sotomayor said, the tariffs
• 0:52
  Speaker 3: are taxes, and the Constitution gives taxing power to Congress.
• 0:58
  Speaker 4: It's a congressional power or not a presidential power to tax.
• 1:02
  Speaker 4: And you want to say tarifts are not taxes, but
• 1:05
  Speaker 4: that's exactly what they are, degenerating money from American citizens revenue.
• 1:11
  Speaker 5: The vehicle is in position of taxes on Americans and
• 1:15
  Speaker 5: that has always been the core power of Congress.
• 1:17
  Speaker 3: Trump is arguing that the International Emergency Economic Powers Act
• 1:22
  Speaker 3: or AIPA, gives him virtually unlimited powers to impose tariffs
• 1:27
  Speaker 3: by executive order. But as several justices pointed out, the
• 1:32
  Speaker 3: word tariffs is nowhere to be found in that law.
• 1:36
  Speaker 3: Here are the Chief Justice and Justice Katanji Brown Jackson.
• 1:40
  Speaker 5: Well, but the exercise of the power is to impose tariffs, right,
• 1:44
  Speaker 5: and the statute doesn't use the word tariffs.
• 1:47
  Speaker 1: Your argument suggests that we should see the word imposed,
• 1:51
  Speaker 1: the phrase impose tariffs in that same series of things
• 1:55
  Speaker 1: that the president could do. We don't see that word.
• 1:58
  Speaker 1: And instead you take regulator and say that must mean that.
• 2:02
  Speaker 3: No other president has tried to impose tariffs under AEPA.
• 2:07
  Speaker 3: And Justice Neil Gorsuch, a Trump appointdee, expressed alarm at
• 2:12
  Speaker 3: the idea that Congress could delegate such seemingly unlimited power
• 2:17
  Speaker 3: to the president.
• 2:18
  Speaker 6: So Congress, as a practical matter, can't get this power
• 2:21
  Speaker 6: back once it's handed it over to the President's a
• 2:24
  Speaker 6: one way ratchet toward the gradual but continual accretion of
• 2:28
  Speaker 6: power in the executive branch and away from the people's
• 2:32
  Speaker 6: elected representative.
• 2:33
  Speaker 3: All three lower courts that ruled on the issue found
• 2:36
  Speaker 3: the tariffs to be unlawful. My guest is Timothy Bright Bell,
• 2:41
  Speaker 3: partner and co chair of the International Trade practice at
• 2:44
  Speaker 3: Wiley Rhin. Tim tell us what's at stake in this case?
• 2:49
  Speaker 7: This case involves the centerpiece of President Trump's economic agenda.
• 2:55
  Speaker 7: Is the biggest trade case the Supreme Court has ever heard,
• 2:58
  Speaker 7: and it goes straight to the key constitutional issue of
• 3:03
  Speaker 7: who has the power to impose tariffs, the US Congress
• 3:07
  Speaker 7: or the president. President Trump says the law that he used,
• 3:10
  Speaker 7: the International Emergency Economic Powers Act, gives him the power
• 3:15
  Speaker 7: to regulate imports, and that that includes the power to
• 3:19
  Speaker 7: impose tariffs, including entanyl tariffs on China, Canada, and Mexico,
• 3:25
  Speaker 7: and reciprocal economic tariffs on almost all countries. Whereas the
• 3:28
  Speaker 7: plaintiffs in this case say that Congress has that power
• 3:31
  Speaker 7: and cannot delegate that power, and that AEPA, which has
• 3:35
  Speaker 7: never before been used to impose tariffs, does not include
• 3:39
  Speaker 7: that power and authority. So that is what is at stake.
• 3:42
  Speaker 7: And of course the tariffs under AYEPA have led to
• 3:46
  Speaker 7: collection of hundreds of billions of dollars of tariffs already,
• 3:50
  Speaker 7: so it's very high economic stakes for the companies and
• 3:54
  Speaker 7: industries that have paid those tariffs as well.
• 3:56
  Speaker 3: There's always a textual analysis these days, and many of
• 3:59
  Speaker 3: the els his work concerned that the text of the
• 4:03
  Speaker 3: statute doesn't mention the word tariffs at all exactly.
• 4:08
  Speaker 7: The argument focused quite heavily on this law used by
• 4:11
  Speaker 7: President Trump AIPA and whether that law, which gives the
• 4:15
  Speaker 7: president the power to regulate imports, also includes the power
• 4:20
  Speaker 7: to impose tariffs. That really dominated most of the hearing,
• 4:23
  Speaker 7: and the justices asked very difficult questions on both sides.
• 4:28
  Speaker 7: The administration said that the ability to impose tariffs is
• 4:32
  Speaker 7: a core application of the ability to regulate imports in
• 4:36
  Speaker 7: a historical context, said that, of course, the power to
• 4:40
  Speaker 7: regulate imports would be read to include tariffs because tariffs
• 4:45
  Speaker 7: have been used throughout our country's history. On the other hand,
• 4:48
  Speaker 7: several justices were skeptical of that, and the plaintiffs in
• 4:51
  Speaker 7: this case said that when the delegation includes tariff authority,
• 4:57
  Speaker 7: there is always specific language to that effect, and that
• 5:00
  Speaker 7: there are always conditions and tests and agency decisions that
• 5:05
  Speaker 7: have to go into that tariff power. So there was
• 5:08
  Speaker 7: a good amount of the argument focused on those issues,
• 5:10
  Speaker 7: and again, whether power to regulate imports includes the power
• 5:14
  Speaker 7: to impose tariffs and.
• 5:15
  Speaker 3: What did you think about the Solicitor General's argument that
• 5:19
  Speaker 3: the Trading with the Enemy Act of nineteen seventeen gives
• 5:23
  Speaker 3: the president authority to impose these tariffs.
• 5:26
  Speaker 7: The Solicitor General argued, yes, that the Trading with the
• 5:30
  Speaker 7: Enemy Act was used to impose tariffs in a prior
• 5:34
  Speaker 7: situation by President Nixon, and that there's no reason to
• 5:38
  Speaker 7: think that anything had changed when AIPA had passed. On
• 5:41
  Speaker 7: the other hand, the plaintiffs had a response to that
• 5:45
  Speaker 7: in terms of the fact again that when tariffs are involved,
• 5:50
  Speaker 7: there are always conditions on their use, there are always
• 5:53
  Speaker 7: specific procedures, and also the fact that the reality is
• 5:57
  Speaker 7: that no other president in fifty years has used AIPA
• 6:01
  Speaker 7: to impose tariffs.
• 6:02
  Speaker 3: The Major Questions doctrine came up several times during the arguments.
• 6:07
  Speaker 3: It basically says that when the executive branch takes an
• 6:11
  Speaker 3: action with major political or economic significance, Congress has to
• 6:17
  Speaker 3: have expressly authorized it, and the Chief Justice made it
• 6:21
  Speaker 3: fairly clear that he thought the Major Questions doctrine applies here.
• 6:27
  Speaker 7: Yes, So the question here is does the Major Questions
• 6:30
  Speaker 7: doctrine require a clear statement in AIPA that it includes
• 6:35
  Speaker 7: the power to impose tariffs, and this Court has not
• 6:39
  Speaker 7: hesitated to start using that doctrine more broadly. But I
• 6:45
  Speaker 7: think you're right that the justices had some concerns about
• 6:49
  Speaker 7: pursuing it in this venue. And again, the question comes
• 6:53
  Speaker 7: to is the power to tariff implied in the power
• 6:57
  Speaker 7: to regulate imports or if it's not. Was this a
• 7:01
  Speaker 7: question that Congress was required to state clearly that tariffs
• 7:06
  Speaker 7: were a part of what was envisioned by the new law.
• 7:10
  Speaker 3: The Conservatives us the Major Questions doctrine to block several
• 7:14
  Speaker 3: of President Biden's initiatives, like his student loan forgiveness program.
• 7:19
  Speaker 3: If they allowed Trump to impose these tariffs, do you
• 7:23
  Speaker 3: think they'll have to explain why the Major Questions doctrine
• 7:27
  Speaker 3: applied to Biden but not Trump.
• 7:30
  Speaker 7: I think it's an interesting question whether they'll go there
• 7:32
  Speaker 7: or whether they will just focus on the language of
• 7:35
  Speaker 7: AIBA and this issue of whether the power to regulate
• 7:38
  Speaker 7: imports includes the power of tariff, and I think several
• 7:42
  Speaker 7: justices went down that road. I don't think just because
• 7:46
  Speaker 7: these doctrines have been used in other cases, such as
• 7:49
  Speaker 7: the Biden student bond forgiveness case, doesn't necessarily mean that
• 7:52
  Speaker 7: they will have to address it in this opinion if
• 7:55
  Speaker 7: they have other bases for finding that the tariffs were
• 7:59
  Speaker 7: legal or improper in any way.
• 8:02
  Speaker 3: And Justice Gorsuch in particular expressed alarm about the seeming
• 8:08
  Speaker 3: lack of limitations on the powers the President was claiming.
• 8:12
  Speaker 7: Here, Justice Corsa the hypothetical of if Congress can delegate
• 8:17
  Speaker 7: the tariff authority, what would prohibit Congress from delegating everything,
• 8:22
  Speaker 7: including the power to declare war, which is clearly given
• 8:25
  Speaker 7: in the Constitution to Congress. And so that was a
• 8:29
  Speaker 7: very interesting discussion. I'm certainly raising some concerns about the limits,
• 8:35
  Speaker 7: if any, on the authority that the government was claimed.
• 8:39
  Speaker 3: So where do you think the justices are going to
• 8:41
  Speaker 3: come out here.
• 8:42
  Speaker 7: Well, I'm not in the business of making predictions. Generally,
• 8:46
  Speaker 7: my own personal view is that the Court's three Democratic
• 8:49
  Speaker 7: justices probably vote against these tariffs. And then the question
• 8:52
  Speaker 7: is whether some of the majority of the Court have
• 8:55
  Speaker 7: similar concerns about the president's use of this law. And
• 8:59
  Speaker 7: I do think that it's still a very close decision.
• 9:02
  Speaker 7: It could go either way. I thought Chief Justice Roberts
• 9:05
  Speaker 7: and Justice Barrett and Justice Gorsich were perhaps more skeptical
• 9:10
  Speaker 7: of the president's tariff authority under I than the other justices.
• 9:14
  Speaker 7: I guess the only other point I would make is,
• 9:17
  Speaker 7: although it was discussed in the oral argument, I have
• 9:20
  Speaker 7: a hard time seeing this court making a split decision
• 9:24
  Speaker 7: that some of President Trump's tariffs are acceptable but others
• 9:27
  Speaker 7: are not.
• 9:28
  Speaker 3: So if the Court does rule against Trump, what happens
• 9:31
  Speaker 3: next as far as his tariffs are concerned.
• 9:34
  Speaker 7: Well, two things would happen. First of all, there would
• 9:37
  Speaker 7: likely be some sort of a refund process for importers
• 9:40
  Speaker 7: that paid the tariffs during this time, and there is
• 9:43
  Speaker 7: some precedent for that before that was discussed during the
• 9:46
  Speaker 7: oral argument a situation where the court struck down a
• 9:49
  Speaker 7: harbor maintenance tax and there was basically a process where
• 9:53
  Speaker 7: companies could file claims for the amount of the tax
• 9:56
  Speaker 7: that they paid. So Justice Barrett's was concerned that this
• 9:59
  Speaker 7: could be a and could be very unwieldy. I guess
• 10:02
  Speaker 7: the more important point is what will the president do
• 10:04
  Speaker 7: going forward? And I think it's clear that tariffs are
• 10:08
  Speaker 7: still a cornerstone of this administration's economic policy, and if
• 10:13
  Speaker 7: the Court says that the President cannot use AIPA, the
• 10:17
  Speaker 7: president will likely pivot to one of several other trade
• 10:21
  Speaker 7: tools that are available, and the Court mentioned many of these,
• 10:25
  Speaker 7: including Section one twenty two, the section two thirty two,
• 10:29
  Speaker 7: the National Security Law, which the administration has already made
• 10:33
  Speaker 7: quite a bit of use of in this administration, Section
• 10:36
  Speaker 7: three zero one, and so forth. The limit on those
• 10:39
  Speaker 7: laws is that they do require studies or actions by
• 10:43
  Speaker 7: other agencies. So Section two thirty two requires a study
• 10:46
  Speaker 7: and a report by the Commerce Department and consultation with
• 10:50
  Speaker 7: Defense Department in order to decide that imports of a
• 10:54
  Speaker 7: certain product like semiconductors or pharmaceuticals are a threat to
• 11:00
  Speaker 7: national security. Similarly, Section three oh one, which was the
• 11:04
  Speaker 7: law used to impose tariffs on China during the first
• 11:08
  Speaker 7: Trump administration, also requires a detailed study by the US
• 11:13
  Speaker 7: Trade Representative with public inputs. So those tools, for the
• 11:17
  Speaker 7: most part, cannot be used as quickly as AIPA was
• 11:21
  Speaker 7: used by President Trump.
• 11:22
  Speaker 3: The Court put this tariff's case on a fast track,
• 11:26
  Speaker 3: suggesting that the justices we'll try to resolve the case quickly,
• 11:30
  Speaker 3: so a decision could come down at any time. Thanks
• 11:33
  Speaker 3: tim that's Timothy Brightbill of Wilie Rhine Coming up next,
• 11:38
  Speaker 3: will the Supreme Court give the president control over dozens
• 11:42
  Speaker 3: of independent federal agencies. I'm June Grosso when you're listening
• 11:46
  Speaker 3: to Bloomberg. A ninety year old president maybe toppled this
• 11:52
  Speaker 3: year by the Supreme Court's conservatives, and reversing the Humphreys
• 11:56
  Speaker 3: executor ruling would give the president control over potentially dozens
• 12:01
  Speaker 3: of traditionally independent federal agencies. At oral arguments last month,
• 12:07
  Speaker 3: the conservative justices suggested they will allow President Trump to
• 12:12
  Speaker 3: fire Rebecca Kelly's slaughter from the Federal Trade Commission, despite
• 12:16
  Speaker 3: a law that says commissioners can be fired only for
• 12:20
  Speaker 3: specific reasons. The liberal justices like Sonya Soto Mayor and
• 12:24
  Speaker 3: Elena Kagan expressed alarm at giving the president such unchecked
• 12:29
  Speaker 3: authority over agencies that overlook crucial areas like nuclear energy,
• 12:35
  Speaker 3: consumer products safety, and labor relations.
• 12:39
  Speaker 4: You're asking us to destroy the structure of government and
• 12:43
  Speaker 4: to take away from Congress its ability to protect its
• 12:49
  Speaker 4: idea that the government is better structured with some agencies
• 12:55
  Speaker 4: that are independent.
• 12:57
  Speaker 8: So the result of what you want is that the
• 13:00
  Speaker 8: president is going to have massive, unchecked, uncontrolled power not
• 13:05
  Speaker 8: only to do traditional execution but to make law.
• 13:09
  Speaker 3: But the conservative justice is like Brett Kavanaugh and Neil
• 13:13
  Speaker 3: Gorsuch say the real concern is Congress's creation of agencies
• 13:18
  Speaker 3: that exercise executive power but can't be held accountable.
• 13:23
  Speaker 2: Independent agencies are not accountable to the people. They're not elected,
• 13:29
  Speaker 2: as Congress and the President are, and are exercising massive
• 13:33
  Speaker 2: power over individual liberty and billion dollar industries, whether it's
• 13:38
  Speaker 2: the FCC or the FTC or whatever it might be.
• 13:42
  Speaker 9: Tomorrow we could have the Labor Commission, the Education Commission,
• 13:46
  Speaker 9: the Environmental Commission, rather than Departments of Interior and so forth.
• 13:53
  Speaker 3: Opponents of regulation have long sought to reverse the nineteen
• 13:57
  Speaker 3: thirty five Humphreys Executor ruling, a decision that upheld FTC
• 14:02
  Speaker 3: job protections and cleared the way for the independent agencies
• 14:07
  Speaker 3: that proliferate across the federal government. My guest is constitutional
• 14:11
  Speaker 3: law expert William Traynor, a professor at Georgetown Law, Bill
• 14:16
  Speaker 3: tell us about the issues in Rebecca Slaughter's case against
• 14:20
  Speaker 3: Trump for firing her.
• 14:22
  Speaker 10: The issue before the screen Couard is that Congress puts
• 14:25
  Speaker 10: the limits on when the President and fire the heads
• 14:30
  Speaker 10: of independent agencies. So an independent agency is like the
• 14:33
  Speaker 10: Federal Trade Commission or the Federal Reserve. So really, since
• 14:38
  Speaker 10: the start of the Constitution, Congress has imposed limits on
• 14:42
  Speaker 10: when the president can fired these people. The question in
• 14:44
  Speaker 10: the case is whether that's unconstitutional, whether the president can
• 14:48
  Speaker 10: fire the head of an independent agency for any reason,
• 14:51
  Speaker 10: even if Congress has said they can only fire them,
• 14:54
  Speaker 10: you know, if they're engaged in bad behavior. So this
• 14:58
  Speaker 10: is a very big deal. So much of the government
• 15:00
  Speaker 10: structure that protects people in different ways or regulates the
• 15:04
  Speaker 10: economy is done through independent agencies. Congress has wanted to
• 15:07
  Speaker 10: insulate them from total executive control, and the Supreme Court
• 15:12
  Speaker 10: is deciding right now whether, in fact the president has
• 15:15
  Speaker 10: the kind of control that comes with being able to
• 15:17
  Speaker 10: fire the leaders of the agencies.
• 15:19
  Speaker 3: In these oral arguments, you often hear the Supreme Court
• 15:21
  Speaker 3: justices say, well, that's a job for Congress. You know,
• 15:25
  Speaker 3: that's not something that we should be interfering in. So
• 15:29
  Speaker 3: why are they interfering here where Congress has set up
• 15:32
  Speaker 3: these agencies and the rules.
• 15:35
  Speaker 10: That's a great question. There have been so many times
• 15:37
  Speaker 10: in which the Court is saying this is a political matter,
• 15:41
  Speaker 10: we shouldn't be deciding. But at the same time, the
• 15:44
  Speaker 10: conservative justices of the Court are very dedicated to what's
• 15:49
  Speaker 10: called the unitary executive theory, which means that the president
• 15:53
  Speaker 10: is in total charge of the executive branch. So what
• 15:57
  Speaker 10: they're saying here is Congress doesn't get to be involved.
• 16:00
  Speaker 10: The president is in total charge of the executive branch,
• 16:03
  Speaker 10: including what is historically been things like the independent agencies.
• 16:07
  Speaker 10: That is kind of one of the core commitments that
• 16:10
  Speaker 10: has really been at the basis of what Chief Justice
• 16:14
  Speaker 10: Roberts has thought, really going back to when he was
• 16:16
  Speaker 10: a young attorney, and that's the same thing for most
• 16:19
  Speaker 10: of the whole conservative wing.
• 16:21
  Speaker 3: What kind of concerns did the conservative justices express during
• 16:25
  Speaker 3: the oral arguments about this ninety year old President Humphrey's executor.
• 16:32
  Speaker 10: There are two things that we're seeing the conservative wing
• 16:35
  Speaker 10: of the Court struggle with. One is they want the
• 16:38
  Speaker 10: Federal Reserve to continue to be independent. They don't want
• 16:43
  Speaker 10: the president to be able to fire somebody on the
• 16:46
  Speaker 10: Federal Reserve. And they don't want that because you know,
• 16:49
  Speaker 10: that would be terrible for the economy. If the Federal
• 16:52
  Speaker 10: Reserve is setting interest rates just in order to help
• 16:55
  Speaker 10: the president rather than to help the economy, that would
• 16:58
  Speaker 10: be a disaster, a disaster for the market, the disaster
• 17:02
  Speaker 10: for the economy as a whole. So the conservative wing
• 17:04
  Speaker 10: of the Court I think wants to overturn Humphrey's executor.
• 17:08
  Speaker 10: But they're trying to come up with some rationale in
• 17:11
  Speaker 10: which they can say, the president can fire somebody on
• 17:15
  Speaker 10: the FTC, but he can't fire somebody on the Federal Reserve.
• 17:19
  Speaker 10: And they're going to be looking at the Federal Reserve
• 17:22
  Speaker 10: later in the term. That's a big concern for them.
• 17:25
  Speaker 10: So I think that animates all of the conservative justices
• 17:28
  Speaker 10: of the Court. I think also, you know, what I'm
• 17:31
  Speaker 10: hearing with the Chief Justices, what he's trying to do
• 17:34
  Speaker 10: is to come up with some way in which there's
• 17:37
  Speaker 10: some agencies where Congress can in fact limit the president's
• 17:41
  Speaker 10: ability to fire people. And he's thinking about, you know,
• 17:45
  Speaker 10: are the ones that are essentially kind of judicial in
• 17:48
  Speaker 10: their function, and you know, that may be an area
• 17:51
  Speaker 10: in which Congress can establish requirements for when the prison
• 17:55
  Speaker 10: can terminate somebody. But that's not the Federal Trade Commission.
• 17:58
  Speaker 10: Federal Trade Commission is not making the judicial decisions, you know,
• 18:01
  Speaker 10: it's very much deciding executive type rules. So I think
• 18:05
  Speaker 10: we're seeing two things on the conservative wing of the Court.
• 18:08
  Speaker 10: One is they're trying to come up with some way
• 18:11
  Speaker 10: in which they can say the president can fire somebody
• 18:13
  Speaker 10: the FDC, but not at the FED. And I think
• 18:16
  Speaker 10: the Chief is trying to come up with some way
• 18:19
  Speaker 10: in which there's some type of agencies in which the
• 18:22
  Speaker 10: president can be limited by Congress, but those would be
• 18:25
  Speaker 10: ones that are really deciding kind of fuzzi judicial matters,
• 18:28
  Speaker 10: not the FDC.
• 18:30
  Speaker 3: The liberals painted a dire picture of what would happen
• 18:33
  Speaker 3: if Trump wins here, just as sot Of Mayr said
• 18:36
  Speaker 3: to the Solicitor General, you're asking us to destroy the
• 18:39
  Speaker 3: structure of government. Do you think it's that serious.
• 18:44
  Speaker 10: I think that's absolutely right. You know, we have had
• 18:47
  Speaker 10: independent agencies which largely exists to protect people of limited power,
• 18:52
  Speaker 10: you know, and they've been in place really for one
• 18:55
  Speaker 10: hundred years. And the idea is that these should be
• 18:58
  Speaker 10: basically bipartisan or apolitical. They should not just be tools
• 19:03
  Speaker 10: of the president. So what the Court is considering right
• 19:05
  Speaker 10: now is whether that whole kind of structure gets got it.
• 19:08
  Speaker 10: So the stakes on this are huge.
• 19:11
  Speaker 3: Well, President Trump wasn't specifically mentioned by name. Two of
• 19:17
  Speaker 3: the liberal justices, Elina Kagan, and Katanji Brown Jackson did
• 19:22
  Speaker 3: make broad references to his firing of experts and dismantling
• 19:27
  Speaker 3: of the Department of Education.
• 19:29
  Speaker 8: The more realistic danger here is that we'll have an
• 19:33
  Speaker 8: Education Department, as authorized by Congress by law, that won't
• 19:37
  Speaker 8: have any employees in it.
• 19:40
  Speaker 1: Having a president come in and fire all the scientists
• 19:45
  Speaker 1: and the doctors and the economists and the PhDs and
• 19:48
  Speaker 1: replacing them with loyalists and people who don't know anything
• 19:53
  Speaker 1: is actually not in the best interest of the citizens
• 19:55
  Speaker 1: of the United States.
• 19:57
  Speaker 10: You know, what we're seeing right now is that in
• 19:59
  Speaker 10: the Trump admin the independent agencies and all of the
• 20:03
  Speaker 10: government watchtols, there's an attempt to politicize them in a
• 20:06
  Speaker 10: way that you know, we've never seen before. So the
• 20:09
  Speaker 10: stakes are very different, and they're much higher. You know,
• 20:12
  Speaker 10: if Humphrey's executor has been overturned in President Bush forty
• 20:17
  Speaker 10: three's administration, the stakes would have been very different because
• 20:21
  Speaker 10: President Bush was not focused on making independent agencies kind
• 20:26
  Speaker 10: of the tool for his politics. But that's what we're
• 20:28
  Speaker 10: seeing with President Trump, and that's why the stakes are
• 20:31
  Speaker 10: so high. They've always been big, but in this administration
• 20:35
  Speaker 10: where there's such an attempt to kind of move away
• 20:38
  Speaker 10: from scientific expertise and neutral decision making to control every
• 20:44
  Speaker 10: part of the executive branch. The stakes are huge, and
• 20:47
  Speaker 10: that's really a part of what those three liberal justices
• 20:51
  Speaker 10: we're questioning. You know, the other thing that they really
• 20:54
  Speaker 10: are focusing in and on. It's very, very hard to
• 20:58
  Speaker 10: come up with some law where you can say, Congress
• 21:01
  Speaker 10: can limit the president's ability to fire the heads of
• 21:04
  Speaker 10: the sec they can't fire at will the heads of
• 21:08
  Speaker 10: the set. And I can't think of any kind of
• 21:10
  Speaker 10: coherent way to distinguish those two cases. And that's one
• 21:13
  Speaker 10: of the things that the liberals were pressing on. You know,
• 21:16
  Speaker 10: I think they're also pressing on the history. If you
• 21:18
  Speaker 10: look at the constitutions, the text of the constitutions doesn't
• 21:21
  Speaker 10: say that the president gets to fire people in the
• 21:24
  Speaker 10: executive reruntion. It doesn't deal with removal at all. So
• 21:27
  Speaker 10: there's not a text that really helps the conservative way
• 21:30
  Speaker 10: of the Court and Congress really, starting in the Washington administration,
• 21:35
  Speaker 10: limited the president's ability to fire people running agencies kind
• 21:39
  Speaker 10: of what was analogous to modern agencies at the time.
• 21:41
  Speaker 10: So I think what the liberals on the Court are
• 21:44
  Speaker 10: focusing on are the text, the original understanding, as well
• 21:47
  Speaker 10: as the huge consequences of essentially giving the president the
• 21:51
  Speaker 10: power to politicize all of the independent agencies.
• 21:54
  Speaker 3: I wonder what happens when there is a democratic president.
• 21:57
  Speaker 3: Do the Conservatives then try to limit the ruling they're
• 22:01
  Speaker 3: expected to make here?
• 22:03
  Speaker 10: You know, one of the reasons why I think that
• 22:06
  Speaker 10: the court should not overturn Humphrey's Executor is to the
• 22:09
  Speaker 10: extent that you have any kind of political con terms,
• 22:13
  Speaker 10: you're giving a democratic president the power to do exactly
• 22:16
  Speaker 10: what President Trump is doing, to politicize every independent agency
• 22:20
  Speaker 10: in the way that that president wants, you know. And
• 22:22
  Speaker 10: then how does a conservative court say, well, you know,
• 22:25
  Speaker 10: Humphrey Executors is back. Once you establish a rule, you know,
• 22:29
  Speaker 10: it applies to everybody. And that's something that they really
• 22:32
  Speaker 10: have to think through because of the long term consequences,
• 22:35
  Speaker 10: because I don't think they would feel comfortable, you know,
• 22:38
  Speaker 10: with limiting a democratic president after they allow President Trump
• 22:42
  Speaker 10: to fire people whenever he wants.
• 22:44
  Speaker 3: So then you think this is the end of Humphrey's Executor.
• 22:48
  Speaker 10: No, I think they will completely overrule Humphrey's Executor. I
• 22:51
  Speaker 10: think the one question for me is whether the Chief
• 22:56
  Speaker 10: comes up with some limiting principle in which if there
• 23:00
  Speaker 10: are causing judicial independent agencies, then Congress can put limitations
• 23:06
  Speaker 10: on the president's ability to fire. But you know, the
• 23:08
  Speaker 10: basic point is, I think they're going to overturn Humphrey's
• 23:11
  Speaker 10: executive So I think what the Court will try to
• 23:14
  Speaker 10: do is to say the President can't fire Jerome Power,
• 23:17
  Speaker 10: can't fire Lisa Cook. But you know, I don't think
• 23:20
  Speaker 10: that that is a coherent approach because I think it
• 23:23
  Speaker 10: would be based on history, but the history doesn't support it.
• 23:26
  Speaker 2: Well.
• 23:26
  Speaker 3: We often see some strained interpretations of history from this court,
• 23:32
  Speaker 3: and we'll learn more about the carve out the Supreme
• 23:34
  Speaker 3: Court is indicating it wants to create for the FED
• 23:38
  Speaker 3: on January twenty first, that's when the justices we'll hear
• 23:42
  Speaker 3: oral arguments in the case over President Trump's attempt to
• 23:45
  Speaker 3: fire Federal Reserve Governor Lisa Cook. Thanks so much for
• 23:49
  Speaker 3: your insights, Bill. That's Professor William Traynor of Georgetown Law
• 23:54
  Speaker 3: coming up next on the Bloomberg Law Show. The Supreme
• 23:57
  Speaker 3: Court is weigh in giving Internet providers a stronger shield
• 24:01
  Speaker 3: from lawsuits when customer's pirate copyrighted works. At issue is
• 24:06
  Speaker 3: a jury's verdict of one billion dollars in a music
• 24:10
  Speaker 3: industry lawsuit against Cox Communications. I'm June Grosso and you're
• 24:15
  Speaker 3: listening to Bloomberg. The music industry faced off against internet
• 24:20
  Speaker 3: providers at the Supreme Court in December. At issue a
• 24:25
  Speaker 3: one billion dollar jury verdict against Cox Communications for not
• 24:29
  Speaker 3: shutting down the accounts of customers who pirated more than
• 24:33
  Speaker 3: ten thousand copyrighted songs by artists like Beyonce and Justin Timberlake.
• 24:39
  Speaker 3: The lawyers painted very different bleak pictures of the consequences
• 24:43
  Speaker 3: of a decision against their clients. Joshua Rosenkrantz represents the
• 24:48
  Speaker 3: internet provider Cox, and Paul Clement represents the record companies.
• 24:54
  Speaker 11: There is no short fireway for an ISP to avoid liability.
• 25:00
  Speaker 11: The only way it can is to cut off the Internet,
• 25:04
  Speaker 11: not just for the accused infringer, but for anyone else
• 25:08
  Speaker 11: who happens to use the same connection. That could be
• 25:12
  Speaker 11: entire towns, universities, or hospitals. If Cox is right on
• 25:17
  Speaker 11: the law, then Cox could take tens of thousands of
• 25:20
  Speaker 11: copyright notices and throw them in the trash.
• 25:23
  Speaker 6: And they could have its employees say f the DMCA.
• 25:26
  Speaker 3: The issue is whether Internet providers should be held responsible
• 25:30
  Speaker 3: for contributing to copyright infringement when they know their customers
• 25:34
  Speaker 3: are pirrating music but don't terminate their Internet access. Several
• 25:39
  Speaker 3: justices appeared skeptical that Cox had done enough to stop piracy,
• 25:44
  Speaker 3: and questioned whether a favorable ruling would allow Internet service
• 25:48
  Speaker 3: providers to ignore clear copyright infringement. Here are Justices Sonya
• 25:53
  Speaker 3: Sotomayor and Amy Cony Barrett.
• 25:56
  Speaker 4: You did nothing and in fact your clients sort of
• 26:02
  Speaker 4: lays a fair attitude towards the respondents is probably what
• 26:08
  Speaker 4: got the jury upset.
• 26:10
  Speaker 8: What incentive would you have to do anything? If you
• 26:13
  Speaker 8: want you if you win and mayor knowledge isn't enough.
• 26:17
  Speaker 1: Why would you bother to send out any notices in
• 26:19
  Speaker 1: the future.
• 26:20
  Speaker 3: But Justice Samuel Alito expressed concerns about the effect on
• 26:25
  Speaker 3: large institutions like universities or hospitals. If an Internet service
• 26:30
  Speaker 3: provider is forced to cut off infringers.
• 26:33
  Speaker 6: What is an ISP supposed to do with a university
• 26:37
  Speaker 6: account that has let's say, seventy thousand users? What is
• 26:41
  Speaker 6: the university supposed to do?
• 26:43
  Speaker 3: My guest is Intellectual property litigator Terrence Ross, a partner
• 26:47
  Speaker 3: at Katan Euchen Rosenman Terry, will you explain the issue
• 26:51
  Speaker 3: here and the process of policing music piracy.
• 26:56
  Speaker 12: The issue in the case involved process by which recording
• 27:00
  Speaker 12: companies track online sharing of musical compositions that they own.
• 27:07
  Speaker 12: The copyright in the process allows them to identify the
• 27:12
  Speaker 12: IP address and the ISP that is providing the service
• 27:18
  Speaker 12: to that IP address, and so the music companies recording
• 27:22
  Speaker 12: companies regularly on a daily basis, in fact, send notices
• 27:27
  Speaker 12: of infringement to the ISPs that are providing the internet
• 27:32
  Speaker 12: service to these infringers. And there are days in which
• 27:35
  Speaker 12: they're sending out ten thousand notices to each individual ISP service.
• 27:41
  Speaker 12: And the recording companies finally became fed up that the
• 27:44
  Speaker 12: ISPs were not doing something. They wanted the ISPs to
• 27:48
  Speaker 12: cut off service to these identified infringers, and the ISPs
• 27:53
  Speaker 12: dragged their heels doing anything taking any real concrete action
• 27:58
  Speaker 12: to stop it. And so oh the recording company's finally
• 28:02
  Speaker 12: sued cos Cable Company, which is one of the largest
• 28:07
  Speaker 12: ISPs in the nation, alleging that they had engaged in
• 28:11
  Speaker 12: contributory copyright infringement.
• 28:13
  Speaker 3: In its papers. Cox had argued that Grandma will be
• 28:17
  Speaker 3: thrown off the Internet because Junior visited and illegally downloaded songs.
• 28:23
  Speaker 3: Did some of the justices seem to pick up on
• 28:25
  Speaker 3: that concern.
• 28:27
  Speaker 12: There was only one justice who seemed to give some
• 28:30
  Speaker 12: credence that, and that was Justice the Lead of He
• 28:32
  Speaker 12: was the only justice who really seemed to buy into
• 28:36
  Speaker 12: the position by Cox that it was hesitant to kick
• 28:41
  Speaker 12: people off because of and then you can fill in
• 28:43
  Speaker 12: the blank as to what the reason is their grandmother,
• 28:46
  Speaker 12: their a university, their hospital. In fact, the hypothetically posed
• 28:50
  Speaker 12: at oral argument in the Supreme Court was what happens
• 28:53
  Speaker 12: when all you can do is identify that the IP
• 28:56
  Speaker 12: address belongs to university? Or you wereing to shut down
• 28:59
  Speaker 12: the entire universe? One of those odd hypotheticals that takes
• 29:03
  Speaker 12: the case the extreme. The facts are actually contrast to that,
• 29:07
  Speaker 12: and indeed none of the other justices seemed to buy
• 29:10
  Speaker 12: into that argument. The reality is that over the period
• 29:14
  Speaker 12: of time and issue, Cox had received one hundred and
• 29:17
  Speaker 12: sixty three thousand notices of infringement and had kicked off
• 29:22
  Speaker 12: of its service only thirty two customers. The policy of
• 29:29
  Speaker 12: compliance used by Cox was described in some detail, and
• 29:34
  Speaker 12: it was sub law. They fare to use the word
• 29:38
  Speaker 12: that one of the justices used to describe it. They
• 29:41
  Speaker 12: had originally started off to say, well, if we get
• 29:43
  Speaker 12: three notices about a particular user, we're going to tell
• 29:47
  Speaker 12: them we're cutting off their service. That rose gradually over
• 29:50
  Speaker 12: time from being a three strikes you're out policy to
• 29:53
  Speaker 12: being a thirteen strikes and you're aut policy. And the
• 29:56
  Speaker 12: thirteen strikes reset every six months, so if you didn't
• 30:00
  Speaker 12: get to thirteen within a six month period, you went
• 30:03
  Speaker 12: back to zero. They also capped the number of notices
• 30:06
  Speaker 12: that they were accepting from recording companies at three hundred
• 30:10
  Speaker 12: a day. And then probably the worst fact of all
• 30:14
  Speaker 12: in which got brought up at the Supreme Court, if
• 30:17
  Speaker 12: you could believe that was the head of copyright Compliance
• 30:20
  Speaker 12: at Cox sent out an email to the people in
• 30:23
  Speaker 12: charge of enforcing copyright policy in which he said, f
• 30:29
  Speaker 12: the DMCA. Now, the DMCA refers to the Digital Millennium
• 30:34
  Speaker 12: Copyright Act, which is one of the key statutes that
• 30:37
  Speaker 12: shoe here and which requires ISPs to set up a
• 30:43
  Speaker 12: policing mechanism against copyright infringement if they want to claim
• 30:48
  Speaker 12: the safe harbor. That is embedded in the Digital Millennium
• 30:51
  Speaker 12: Copyright Act. In response to that, one of the minions
• 30:55
  Speaker 12: for the head of Compliance wrote back, say, but we're
• 30:57
  Speaker 12: helping law breaking customers. And there were dozens of emails
• 31:01
  Speaker 12: like this amongst the compliance group of Cocks that just
• 31:04
  Speaker 12: manifested a complete disdain for copyright laws, which obviously impacted
• 31:10
  Speaker 12: the jury because the jury below had awarded a billion
• 31:13
  Speaker 12: dollars in damages against Cock, and in the Supreme Court
• 31:16
  Speaker 12: argument it was clear that outside of Justice Alito, none
• 31:19
  Speaker 12: of the eight other justices were buying what Cox was
• 31:23
  Speaker 12: trying to claim was their reason for not cutting off
• 31:27
  Speaker 12: people that you'd kick grandma's off of the Internet. The
• 31:31
  Speaker 12: other eight justices just didn't buy it, and it was
• 31:33
  Speaker 12: a loser argument for.
• 31:34
  Speaker 3: Cock, and some of the justices appeared pretty skeptical about
• 31:39
  Speaker 3: Cox's excuses for not stopping the piracy.
• 31:43
  Speaker 12: There's apparently one period of time at which twenty one
• 31:46
  Speaker 12: percent of all traffic on the Cocks Internet connections involved
• 31:50
  Speaker 12: copyright in fringe, and the lawsuit below didn't go after
• 31:54
  Speaker 12: every single mom and pop business or every single college student.
• 32:00
  Speaker 12: Was targeted only at distributors, not people who were downloading
• 32:05
  Speaker 12: the occasional song, but people who were copying music digitally
• 32:09
  Speaker 12: and distributing it on a mass scale. So there was
• 32:13
  Speaker 12: this enormous skepticism expressed by the justice, except for Justice Alita,
• 32:19
  Speaker 12: that Cox really wasn't fulfilling its obligation and needed to
• 32:24
  Speaker 12: do something differently. Now. On the other hand, there also
• 32:27
  Speaker 12: seemed to be some concern about the size of the
• 32:30
  Speaker 12: jury verdict and whether or not the actions of Cocks
• 32:36
  Speaker 12: were sufficient to constitute willful contributory infringement, which is what
• 32:41
  Speaker 12: set them up for much larger scale of damages than
• 32:45
  Speaker 12: if this had been found to be just ordinary copyright infringement.
• 32:49
  Speaker 3: So, Terry, where do you think the justices will come
• 32:51
  Speaker 3: out here?
• 32:52
  Speaker 12: I just don't know what they're going to do here.
• 32:56
  Speaker 12: I have to be frank, this is one of the
• 32:58
  Speaker 12: more opaque oral arguments I have listened to. Justice Soto
• 33:02
  Speaker 12: Mayor commented at one point during the argument that the
• 33:06
  Speaker 12: court was being forced to choose between two extreme positions,
• 33:10
  Speaker 12: and it was very skeptical of Cox's position, but also
• 33:14
  Speaker 12: didn't quite like the extreme argument being made by Sony
• 33:19
  Speaker 12: Music Corp. In the recording company seems really perplexed as
• 33:22
  Speaker 12: to what to do genuinely perplexed. The problem the Supreme
• 33:25
  Speaker 12: Court faces here is that the standard for contributory copyright
• 33:30
  Speaker 12: infringement has been pretty well settled in this court for
• 33:35
  Speaker 12: more than a century. As early as nineteen twelve, there
• 33:40
  Speaker 12: was a case that involved miniograph machines. They were Xerox
• 33:45
  Speaker 12: machines way of doing sort of a mass production. And
• 33:49
  Speaker 12: there was a case in which a publisher sued a
• 33:52
  Speaker 12: mimeograph company for knowingly selling mimeograph materials to a company
• 33:58
  Speaker 12: that it knew was in aged in infringing copyright works
• 34:02
  Speaker 12: by using the miniograph machine. And the standard was set
• 34:06
  Speaker 12: out there and has been repeated over and over since
• 34:10
  Speaker 12: that time nineteen twelve, and the standard is pretty simple.
• 34:14
  Speaker 12: If you provide something that you know is going to
• 34:17
  Speaker 12: be used by a person to commit copyright infringement, you've
• 34:20
  Speaker 12: engaged in contributory infringement. And the past cases haven't spoken
• 34:25
  Speaker 12: in terms of needing an affirmative act, although one could
• 34:28
  Speaker 12: argue this did not come up with the Supreme Court
• 34:30
  Speaker 12: hearing that providing the Internet service is an affirmative act.
• 34:34
  Speaker 12: The Cox company argued the Court that that's not an
• 34:38
  Speaker 12: affirmative act, but that's sort of a stretch in order
• 34:41
  Speaker 12: to try to get around that line cases, the Cox
• 34:45
  Speaker 12: Company argued that contributory infringement is really akin to aiding
• 34:50
  Speaker 12: and embedding liability in the context of torts and criminal laws,
• 34:55
  Speaker 12: and that's a real stretch that I think is just
• 34:57
  Speaker 12: dead wrong. It would give the court a way to
• 35:00
  Speaker 12: get out of this dilemma, but it would mean the
• 35:02
  Speaker 12: Court would have to overturn half a dozen cases going
• 35:06
  Speaker 12: back to nineteen twelve for over a century and say
• 35:08
  Speaker 12: now they're not good law anymore. I don't see the
• 35:10
  Speaker 12: Court doing that here.
• 35:12
  Speaker 3: Do you think we'll see that justices coming up with
• 35:14
  Speaker 3: some sort of middle ground.
• 35:17
  Speaker 12: So it's a shame that Justice Ginsburg is no longer
• 35:20
  Speaker 12: on the Court. And we've had many conversations about our
• 35:23
  Speaker 12: knowledge of copyright law and her ability to copy together
• 35:27
  Speaker 12: coalitions for positions under the Copyright Act that we're actually
• 35:31
  Speaker 12: quite pragmatic and useful. And I just don't see anybody
• 35:35
  Speaker 12: either with that depth of knowledge to copyright law or
• 35:38
  Speaker 12: the ability to do that sort of log rolling on
• 35:40
  Speaker 12: this court. And so I think it's going to be
• 35:42
  Speaker 12: a real struggle for this Court to come up with
• 35:44
  Speaker 12: some sort of middle ground, particularly in light of the
• 35:47
  Speaker 12: fact that the law here is just so set for
• 35:50
  Speaker 12: such a long period time, and the sort of odd
• 35:52
  Speaker 12: cases that cocksited to the Supreme Court, including this recent
• 35:56
  Speaker 12: gun distribution case. Topreme Court to site recently where the
• 35:59
  Speaker 12: gun companies were being sued for deaths in Mexico and
• 36:04
  Speaker 12: the argument was they were aiding embedding this criminal activity.
• 36:07
  Speaker 12: And the gun company said, well, we sold the guns
• 36:10
  Speaker 12: to dealers in Texas, not knowing what they were going
• 36:13
  Speaker 12: to do with them, and if anybody's contributed to them,
• 36:16
  Speaker 12: but it's not us. We had no knowledge of it.
• 36:18
  Speaker 12: And that case just doesn't fit here, either legally or factually.
• 36:24
  Speaker 12: And yet cops sort of beed a lot on that.
• 36:27
  Speaker 12: I mean, it was almost as if there's a oh, hey,
• 36:29
  Speaker 12: we cite to some case in which the second Circuit,
• 36:33
  Speaker 12: which everybody bleeds in on the Supreme Court, that'll get
• 36:36
  Speaker 12: us over the humpire. It's just such a strutch that
• 36:38
  Speaker 12: in fact backfires. One starts to think, well, what's wrong
• 36:42
  Speaker 12: with their case that that's the best they've got.
• 36:44
  Speaker 3: Yeah, gun distribution and pirated music don't seem to equate.
• 36:49
  Speaker 3: Thanks so much, Terry. As always, that's Terrence Fross of
• 36:52
  Speaker 3: Catain Euchen Rosenman, and that's it for this edition of
• 36:55
  Speaker 3: The Bloomberg Law Show. Remember you can always get the
• 36:58
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• 37:01
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• 37:06
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• 37:10
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• 37:13
  Speaker 3: Wall Street Time. I'm June Grosso and you're listening to
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