June 13, 2025 • 36 mins
An update on the GENIUS Act stablecoin bill making its way through Congress — which is important to companies like Coinbase, Robinhood and Circle — was among the key catalysts Bloomberg Intelligence litigation and policy analysts are watching this week. The team also discussed potential bills to increase credit-card competition and cap credit-card fees, which could affect Visa, Mastercard, American Express and Discover. We also discussed pending motions to dismiss in a pair of antitrust cases - one by Texas and other red states against BlackRock, Vanguard and State Street alleging collusion to reduce coal output, and the other a Justice Department monopolization case against Visa over debit transactions. Finally, we discussed the status and outlook of lawsuits challenging US “Liberation Day” and fentanyl-related tariffs.
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Episode Transcript
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Speaker 1 (00:14):
Hello, and welcome to the Votes and Verdicts podcast, hosted
by the Litigation and Policy team at Bloomberg Intelligence, the
investment research platform of Bloomberg LP on the Bloomberg Terminal.
Bloomberg Intelligence has five hundred analysts and strategists working across
the globe and focused on all major markets. Our coverage
includes over two thousand equities and credits, and we have
(00:36):
outlooks on more than ninety industries and one hundred market industries,
currencies and commodities. This podcast series examines the intersection of
business policy and law, and today's our weekly check in
on the litigation and policy catalysts that we're watching and
that we think will impact companies and markets and sectors
(00:57):
and industries. My name is Elliot Stein. I'm in analysts
with Bloomberg Intelligence covering litigation in the financial sector. I'm
delighted as always to be joined by a handful of
my colleagues from the Litigation and policy team here at BI.
As a reminder, you can find all of our research
on the Bloomberg terminal at BI go, and you can
find all of our litigation and policy research on our
(01:20):
dashboard which is available at BI laws Go. Today is
June twelfth. It's about one pm. And we always timestamp
things because inevitably things happen quickly, and sometimes they happen
as we're talking on this podcast. All right, So Nathan Dean,
let's bring you in. Nathan is our chief policy analyst
(01:43):
down in Washington, DC. He's been following the stable coin
bill that seems like it's about to pass the Senate
and eventually get to the President's desk. I guess pretty soon.
Why don't you tell us what the latest is and
what happens next.
Speaker 2 (02:03):
Yeah, So last night, so Thursday night, Senator John Thune
filed cloture, which means that's the first vote of several
votes that ultimately ends up with this bill passing the Senate.
And that vote went sixty eight to thirty. And just
as a reminder, you need sixty to get past the filibuster.
There were significant number of Democrats who came on board
(02:25):
to vote for this, and so when the bill does
come up for vote on Monday, we do think this
bill is going to pass. And just as a reminder,
this is called the Genius Act. This bill would require
stable coin issuers like Circle that have a greater ten
billion dollar the market capitalization to register with either the
Federal Reserve or the Office of the Control or the Currency.
(02:46):
If you're under ten billion, you have to register with
a state regulator, and you're required to have one hundred
percent high quality liquid assets backing up your stable coin,
and you're not allowed to pay yield. And so you know,
there was a lot of discussion in the stable coin
community about whether or not they could pay interest. Under
this bill, you were prohibited from paying yield. Now, I
do think this is going to pass the Senate on
Monday night. Then it goes to the House, and while
(03:08):
the House could tinker with it, I don't think they will.
I think they more likely than not just want to
get this over the line, and the question on whether
or not passes the House.
Speaker 3 (03:16):
It should pass the House fairly easily.
Speaker 2 (03:18):
The biggest issue has always been to pass the Senate,
and that's something that I think you know now that
it's the culture votes, and this is the second culture
vote for what it's worth that has attracted enough Democrats
to get above that sixty vote threshold.
Speaker 3 (03:31):
So I think this passes probably.
Speaker 2 (03:32):
Late June, but more likely early July, and then it
goes to the regulators to implement their proposals. That would then,
you know, for those of you with Bloomberg terminals come back.
You know, we'll be writing about how that rulemaking process
plays out. But if you're a stable cooid issue or
you should be feeling pretty good right now. But the
regulatory clarity that's coming down the line.
Speaker 1 (03:52):
Did the House pass its own version before the Senate
worked on theirs?
Speaker 2 (03:56):
Yeah, so the House has their own version and that
had a lit a little bit more technical differences between
that and the Senate version, and I think for the
sake of speed, and one of the bigger questions is
this idea to pay yield. You know, there are some
folks in Congress that think stable coin issuers can pay yield.
But the problem is is that you'll then if stable
cooin issuers are paying yield, the banks aren't gonna like that,
(04:19):
and then the banks all of a sudden start to
get upset. And you know, that's the other major hiccup
that I should have said earlier is there is an
amendment process that was playing out behind the scenes that
potentially could.
Speaker 3 (04:29):
Have derailed this bill.
Speaker 2 (04:31):
And that comes to the form of this bill called
the credit card Competition Act. So if you've flown through
LaGuardia or Rayan or hair, keep your eyes out and
I think over in the Guardia, it's over in the
new Delta or not Delta. It's probably what's the new
terminal the New Yorkers or Guardia.
Speaker 1 (04:47):
I'd never find I title avoid LaGuardia. There's so many
Jersey guy. I just got into work.
Speaker 2 (04:52):
There's this new terminal, and I the New Yorkers listening
to this podcast and to be like, yep, I know
exactly what you're talking about. It's not the Delta terminal.
Last time I was in the ne La Guardia, keep
your eyes out, because I did see the advert there.
And this advertisement is because Senator Marshall of Kansas, Roger
Marshall is teamed up with Senator Dick Durban of Illinois,
a Republican and a Democrat, to come together and they
(05:15):
want to put forth this bill that increases competition for
Visa MasterCard. Now, without getting into the great details, what
you need to know is is that the airlines think
that's going to kill the credit card rewards programs for
these airlines. So you've got an issue that has banks
versus retailers versus airlines. And when you have that, all
the senators are just like, I can't vote for this.
(05:36):
This is too dangerous. And had Senator Marshall gotten amendment's
vote on this bill, it could have derailed the stablequin invote.
Speaker 1 (05:44):
So why did he even try to put it in there?
I mean, it seems sort of like so random.
Speaker 2 (05:48):
It Well, it's the easiest way to get passage, and
you avoid committee, and you avoid the ability of having
tough votes, and you put it through at the final hour,
and so you only need one vote to get it
over across the line. And when you have something that
has like luke warm bipartisan support but has a lot
of detractors and not it's a way of jamming up
(06:11):
the final bill.
Speaker 3 (06:12):
And trying to force passage.
Speaker 2 (06:14):
There's been other instances of where this has worked over
the last fifteen twenty years that I've covered Washington. But
the problem with this one is that everybody knows it's coming,
and also Senator Thune had so the funny thing that
happened here is that Senator Marshall put this amendment on.
The next thing that happened Senator Holly Republican from Missouri
said no, no, no, no, no, I'm gonna put my amendments
(06:36):
that caps all credit card interest rates at ten percent.
That he's teamed up with Senator Bernie Sanders. He's like, no, no, no,
I'm putting my amendment on there. And next thing, you know,
everybody had amendments. So Senator John Thune on Monday night
of earlier this week came said, no, we're done.
Speaker 3 (06:52):
We tried it. I'm actually devoiding all the amendments. Called
an amendment tree, he invoided all the amendments.
Speaker 2 (06:57):
He brought forth a new amendment tree that only was
really related to the stable coin bill and.
Speaker 3 (07:02):
Said that's what we're going forward with.
Speaker 2 (07:04):
So that process does it and could potentially play out
in the House, but I don't think it will.
Speaker 3 (07:11):
I think the House will just pass it and be
done with it.
Speaker 1 (07:13):
And so what happens to those credit card amendments. I mean,
it's two different bills. I assume they're going to try
to raise them later this time.
Speaker 2 (07:20):
So I think watch out for the September Continuing Resolution
period just because I think that's where they'll try and
attach it next. Senator Durbin tried this with the NDAA
last year, the National Defense Authorization Act. So between now
and the end of the congressional term, if there's any
must pass piece of legislation, watch out probably about three
(07:42):
to four weeks in advance. Senator Marshall and Senator Durbin
will try and attach it. I still think it's not
going to happen. I still think a forty percent chance.
Speaker 1 (07:50):
Both of that, both bills. I mean, it sounds like
the credit card competition maybe might be able to get
more bipartisan support than capping credit card f viesa ten percent.
Speaker 2 (07:59):
Yeah, our Holly's build the cap credit card fees that
that we're at a twenty percent chance of that. But this,
this Credit Card Competition Act, it's one of those things.
Speaker 3 (08:08):
Where I think it's like, you know, I call it
bipartisan warmth.
Speaker 2 (08:11):
Because there was a hearing in the Senate Judiciary Committee
hearing last December, it was like novembery December, and they
had it was about Visa MasterCard, and I was surprised
at the amount of Republicans who came out against Visa MasterCard.
And what this bill does is it requires banks to
issue their retailers so their merchants. Requires these banks to say, Okay,
(08:33):
we're going to offer you Visa and somebody else or
MasterCard and somebody else. And the way the bills written,
it can't be Visa and MasterCard. It either has to
be Visa, an American Express or MasterCard. And Discover still Discover,
even though it Discovers taken over by Capital One, it's
still the Discovered network according to our greater according to
our great equity animals, Benelliot, they're keeping the Discovered network
(08:56):
as is right now, but until they change it, it's
the Discover Net.
Speaker 3 (09:00):
Okay, interesting and so, but you know this bill.
Speaker 2 (09:05):
The reason why the banks hate it is because it
lowers the fees that they get from the retailers.
Speaker 3 (09:10):
The retailers love it.
Speaker 2 (09:11):
So now you have Walmart and Target and Home Depot
lobbying their folks saying we want this. And you've got
Bank of America and JP Morgan in the United Airlines
and American Airlines telling their folks, we hate this.
Speaker 3 (09:23):
And from a senatorial perspective.
Speaker 2 (09:25):
They're like, I got two of my kids fighting here, right,
go and get out of the room.
Speaker 1 (09:29):
So wow, yeah, that's like battle of a heavyweight lobbyists exactly.
That's gonna be fascinating.
Speaker 3 (09:35):
But that's why we can definitely do another podcast on
this one. But yeah, that's what we will.
Speaker 2 (09:40):
Yeah, that's why it didn't you know, that's why the
Senators were like, no, no, no, you can't attach into
the Genius Act.
Speaker 3 (09:45):
Let's get the stable Coin Bill without the other.
Speaker 1 (09:48):
So here's a stupid question. Why are they calling the
stable Coin Bill the Genius Act and not the Stable Act?
Or what there was a Stable Act? What did that
refer to?
Speaker 2 (09:57):
So the Stable Act was from the last Congressional I'm sorry,
the Stable Act was taken by the House.
Speaker 1 (10:05):
Oh, so you have this Stable Act and the Genius Act,
the Stable Genius Acts.
Speaker 2 (10:08):
So the Genius Acting, if you give me about two
seconds to look up what the Genius stands for, it's
the Guiding and Establishing National Innovation for US stable Coins
of twenty twenty five or the Genius Act of twenty
twenty five.
Speaker 1 (10:22):
All right, good stuff, Nathan. Let's move over to antitrust
and bring in one of our anti trust analysts, Justin Tesi. So, Justin,
let's talk about this case brought by the State of
Texas and a dozen other Red states against Black Rock,
(10:43):
Vanguard and State Street accusing these companies of colluding to
reduce coal output. You've been following this case since it
was filed, and even before that when it was threatened
and discussed. I guess you know, why don't you come
in tell us about the case, give us your thoughts
on the strengths and the weaknesses of it.
Speaker 4 (11:02):
Yeah, yeah, definitely, But really important before I jump into this, Nathan,
the name of the new terminal quaritia is Terminal B.
They really went for the stars, the stars in the
moon on that one. That is it, Big Fountain, great
food Cork, food court, terminal be that that's what they
got there for you.
Speaker 3 (11:18):
I was really impressed with the food court, Like, yeah,
I mean I loved it.
Speaker 4 (11:22):
Yeah, yeah, No, It's definitely a step in the right direction,
I think. But all right, back back to business as
usual here. But yeah, this case that we saw file
last year right around Thanksgiving in Texas was brought by
Attorney General Ken pax And representing Texas and a whole
host of Red states, and it really was the first
of I think what we're probably about to see a
(11:44):
wave of new anti trust litigation kind of directing the
anti trust laws at things like ESG initiatives or other
corners of anti trust worty. Maybe haven't seen these kinds
of cases brought before, but in a nutshell, what's been
a last year is that these really large asset managers,
so think black Rock, Vanguard and State Street in this
case many of times, who are holding index funds right
(12:07):
and by virtue of holding funds in these kind of
index you know, mutual funds have really large shareholder ownership
in a wide array of companies, including in this case
coal companies, coal mining and core production companies. So what's
the issue. The issue is that you know, these banks
and several others have joined on to these climate change initiatives,
(12:29):
in this case net zero and Climate Action one hundred plus.
Those the two kinds of climate initiatives that are that
are issue in this case, these ESG initiatives and further
participation in these initiatives. You know, what's alleged here is
that those agreements that participate in these these kinds of
accords basically are an anti trust violation and that these
(12:50):
these managers have come together and agreed to kind of
act in a way that limits coal production and turn
raises coal prices for consumers and turned electricity process or whatever,
and all these different things were coals coming into play.
That's the kind of novel theory behind this case, that
the participation in those climate accords just.
Speaker 1 (13:10):
A participation, not even like some yeah, agreement to morrow.
Speaker 4 (13:14):
Right right, you know. And that's the interesting thing that
was kind of a hanging chat, if you will, as
as to whether or not they were they were hanging
their hat on those kinds of agreements being the subject matter,
you know, that forms the anti trust violation itself. But
if there was any question, really in Attorney General Paxton's case,
there was a statement of interest file by the Department
of Justice and the Federal Trade Commission that really said
(13:36):
or it took the position that that participation in and
of itself can be the foundation for an anti trust violation.
So whether or not, you know, the complaint itself actually
made that allegation, the federal agencies that filed that statement
of interest in the case and support really took it
a step further and said, yes, that participation in and
of itself can can really lay the found word for
(13:56):
liability from an anti trust perspective. So that's interesting, you know,
I think our view is that look there's still really
is that this whole aspect of an agreement here, a
specific agreement to really step in and somehow limit coal
production that at the end of the day, probably hampers
this case from getting too much further than the motion
to dismiss where it's at now. But there's that issue
(14:18):
and also just one of causation.
Speaker 3 (14:20):
Right.
Speaker 4 (14:20):
Did these companies, you know, these independent companies like Peabody
Coal and our Tree Sources, did they limit coal production
because these asset managers were exerting their pressure, you know,
via other participation in these accords? Were there real external
factors involved in lowering coal production? Perhaps there was a
decline in demand for coal, Perhaps there were countervailing kind
(14:41):
of political realities, good decline and coal you know, coming
from Ukraine? Did that somehow affect the price of coal worldwide?
Speaker 2 (14:47):
Right?
Speaker 4 (14:48):
So those kinds of things seem to be missing from
the complaint, and I think for that reason it runs
into semantic trust issues, you know, in terms of liability
down the road.
Speaker 1 (14:56):
Here, although some of those things could be factual questions. Right,
the judge sort of uses to let the case get
pass this initial motion to dismiss.
Speaker 4 (15:05):
I think that's right. And I think I think between
the fact questions and the if quite frankly, the political
the political players involved here. You know, the case is
filed in federal just recording Tyler, Texas. We're talking about
a conservative forum in the Fifth Circuit, you know, and
I think, you know, with with the fact questions being
what they are and with the political actors involved, I
would imagine it's really hard press to shut this thing
(15:27):
down at a motion to the Smiths phase.
Speaker 1 (15:28):
Speaking of the Fifth Circuit, it was interesting that I
think it was black Rocks. The lawyer representing black Rock,
I think in this case was Greg Costa, who's a
former Fifth Circuit judge the point of my democrat, I believe,
so not not not the traditional conservative Fifth Circuit judge,
but still you know, obviously know it's the Circuit.
Speaker 4 (15:49):
I would imagine quite intentional on the part of black Rock.
Speaker 3 (15:52):
Yes, exactly.
Speaker 1 (15:53):
Also interesting to see Gibson Done you know, representing the
companies in this case, because in so many cases that
we follow, Gibson Gun represents you know, the trade groups
challenging uh, you know, a government policy. So just going
back to the statement of interest by DOJ and the FTC,
(16:14):
you know, how how common is that and have you
seen that in other cases?
Speaker 4 (16:17):
Yeah, you know, we have. You know, the one that
comes to mind, you know, most recently is that DJ
stepped in in terms of these real page algorithm cases
that where we're kind of saying, hey, you know, this
kind of sharing through an independent AI algorithm by by landlords,
you know, about what the rental prices or vacancy rates
might be. You know, there was a big question whether
or not that itself could be this kind of anti
(16:38):
trust you know, violation in terms that it's this hub
and spoke agreement between the software provider and the landlords
all working together to kind of you know, uh collude
to price fixed rental prices and for apartments nationwide. Right,
DOJ stepped into that case of file the statement of
interest there, so that you know, these things are fairly common.
What wasn't you know, really common about this is that
typically it's DOJ that steps in and does that on
(17:01):
its own, to have the FDC and do o J
kind of jointly filing this statement of interest here, especially
at a time where the FDC is anti trust authority,
you know, and of itself has been under attack by
some Congressional Republicans. Well, that was a really interesting, uh
you know wrinkle on all of this too, to see
kind of a joint statement that both of those those
agencies here.
Speaker 1 (17:18):
What do you think that means?
Speaker 4 (17:19):
Yeah, I think there's a probably a real effort here,
no surprise by by FDC share Ferguson, to really cement
the anti trust authority at the FTC that you know,
that goes part and parcel with its actual consert protection authority.
You know, it's interesting from from that angle, I think
we're we're we're seeing a very strong FTC in terms
of anti trust enforcement here, and I think probably you know,
(17:42):
a push to really maintain that authority, uh, you know,
in the face of some questioning, you know, for folks
on the hill whether or not there should be this
dual enforcement regime between the two agencies.
Speaker 1 (17:52):
And you know, I mean what another interesting rinkle in
that case is that a lot of these companies have
left these climate accords right sort of to avoid the
anti trust issues. You know, does that matter in this
case and does it matter for potential future cases?
Speaker 4 (18:11):
Yeah? You know, I think in this case, you know,
so you've seen folks like State Street and JP Morgan
completely leave clevi At Action one hundred plus for example.
As you know, I would say likely as a result
of wanting to avoid litigation like this in the future,
if not just you know, this case in and of itself,
but Black Rocks still you know, it's cons curtailed, it's involvement.
You know, there's still this tangential kind of involvement in
(18:33):
ESG agreements or coords like this. So I don't think
it means the end of this case, you know, I think,
by by and large, I think the goal of the case,
if it was to get folks to leave these initiatives,
that's been successful. But I think there's also this desire
probably to scare of folks from joining them again in
the future. You know, I think the creation of precedent
around that is probably something that Paxson and the plaintiffs
(18:55):
here are are interested in doing. And we're kind of
seeing the same thing in relation to this advertising book
co question right with the the X case. And you
know what, you know, can you this whole idea of
a group of boycott by advertisers, you know, not placing
adds on X. Yeah, the trust liability there is really
dubious in my mind, that's a tough case.
Speaker 3 (19:13):
To really prove.
Speaker 4 (19:14):
I don't know that the facts line up with the
with the with the assertions of the complaint in terms
of what the counts that have been alleged. But you know,
it's it's seemed to be getting folks to buy advertising
on X right. So I think the goal of these cases,
the goals of these cases, you know, they're kind of
coming to fruition whell or not the case that kicks
gritting across the finicial line.
Speaker 1 (19:31):
Got it? All? Right, let's pivot slightly. We'll stick with
anti trust, but we'll pivot to Visa and the Justice
Environments monopolization case against Visa leging a series of anti
competitive contracts with merchants and would be rivals that you know,
allegedly would exclude competition from from the debit transaction processing market.
(19:52):
I know you've been following this case. You went to
the motion to dismiss hearing I think on May twenty nine.
Speaker 4 (19:57):
Yes, that's right, right right after the royal It was
a great time right after.
Speaker 1 (20:02):
Yeah, so what's the latest in that case?
Speaker 4 (20:06):
Yeah, So, you know, this case really zeros in on
you know, Visa's behavior following the implementation of Dodd Frank
and rolls around debit transactions that came out of that
that bill when it was past twenty ten, right, And
really what Don Frank did was create the situation where
debit cards had to be able to be processed over
more than one network.
Speaker 1 (20:27):
Right.
Speaker 4 (20:27):
So let's say you've got Visa on the front of
the card. Sometimes you'll see a secondary network like Pulse
or Plus on the back of your card, which is
another network that those debit transactions can be processed over,
typically at a lower fee than whatever Visa would charge
for that transaction to go over its network. Now, I
think seeing the thread of competition here, what DOJ's alleging
Visa did in response to this is they created all
(20:49):
these kind of new fees, if you will, following Dodd
Frank and then Visa said, hey, will either reduce or
eliminate the fee that we charge you if you promise
to send a certain percentage of your debit transactions over
in our network instead of the cheaper networks that might
appear on the back of a cart. Who loses in
that are the merchants, right? Do end up paying these fees,
so that that's the central allegation of the case. There's that,
(21:12):
and then there's also some other allegations, you know, claiming
that Visa basically paid off Apple and others from developing
their own kind of debit networks, you know, and by
kind of you know, giving them fee concessions and things
of that of that sort too, right, are saying, hey,
we don't have to work with you in the future
if you develop your own network. Right, So, those are
the two central themes of this this case. You know,
(21:34):
I think the second the second set of allegations against
Apple and you know, regarding Visa's behavior with Apple, PayPal, others,
you know, to stop them from building a competitor's network,
those seem a little bit more questionable. There's you know,
there there have been heavily redacted but versions of contracts
between Visa and those entities that were submitted to the court.
The argument seems to be that those contracts are what
(21:56):
they are, and they don't really spell out the kind
of antitrust violation in those documents that DJ is saying,
you know, actually happened, so that one seems a little
bit more shaky. But regardless of that, the judge certainly
is saying these are all facts questions, and there's certainly
not issues that I'm willing to set aside right now
in a motion to dismiss hearing. So I think we
probably see that denied, you know, relatively soon, and then
(22:18):
you know what rolls up through discovery does.
Speaker 1 (22:20):
But yeah, right, right, yeah, so that's still pretty early stages.
So is this similar to the interchange feed litigation that's
been going on for twenty years now?
Speaker 4 (22:30):
You know, it's not related to it, but in an
interesting wrinkle, I think, you know, Visa is trying to
say that the fees that are covered that were covered
as part of its class settlement with merchants and the
interser change fee litigation, that it also covers the debit
fees that are at issue here in private suits that
are brought kind of as a copycats the DJ case.
You know, whether or not that's going to be successful,
(22:52):
I really question that because there's been of a different
factual nexus here in terms of, you know, the case
that is being brought here versus what was brought you know,
twenty years ago now, right, things are a bit different,
and the thing the behavior being alleged, the bad behavior
being alleged on the part of VISA here wasn't even
occurring right at the time that the interchange fee case
was brought originally in two thousand and five, allegedly, So
(23:13):
I think that's a bit of a stretch, but certainly
a different case, same kind of you know, network fees
we're talking about in some ways, but different kind of
set of allegations and facts altogether, and.
Speaker 1 (23:23):
Trying to fold it into I guess the settlement with
the merchants case that would have affected this DOJ case anyways.
Speaker 4 (23:31):
No, No, I think absolutely not. You know, a DOJ. You know,
the previous deals made between VISA and DUJ and merchants
all really, you know, I think are kind of especially DJ.
Speaker 3 (23:42):
It's just it's.
Speaker 4 (23:42):
Separate factual predicates altogether. So I think we're separate apart
from that, definitely don't affect the DOJ litigation, got it.
Speaker 1 (23:49):
All right, So you're waiting for some emotion decisions. Emotions
are dismissing this case and in the cultivation they come after.
Speaker 4 (23:54):
Summer Relli'll absolutely that's the rule.
Speaker 1 (24:00):
So all right, good stuff, justin thanks, all right, let's
bring in Holly from Holly has been doing a ton
of work on tariffs, both in terms of the lawsuits
challenging them. She also spearheads our deep dive reports here
at Bloomberg Intelligence related to tariffs, which are like huge
(24:21):
collaborative efforts where she has to heard like fifty different
analysts into one report. But it's really great content, which
I highly recommend. If you have a terminal, you can
find it all at BI space. Tariffs Go. All right, Holly,
let's bring you in for an update on where these
lawsuits are. When we had you on last a couple
(24:42):
of weeks ago, it was I think the day after
the Court of International Trade ruled. Then the following morning
we got a decision from a judge in Federal Court
in Washington, d C. Both those courts essentially found the terriffs,
the AIPA tariffs to be unlawful. And then while we
(25:05):
were recording the podcast two weeks ago, the Federal Circuit
put an administrative stay on the Court of International Trades decision.
Why don't you come in and tell us, you know
what's happened since then and sort of what the latest is.
Speaker 5 (25:20):
Yeah, So the ucit the Court of International Trade issue
it's ruling. On May twenty eighth, the District Court's decision
was me twenty ninth, and the District Court on its
own stated decision pending appeal. The May twenty decision by
the International Trade Court was immediately stayed by the Federal well,
not immediately, but the next day, on May twenty ninth,
(25:41):
was stayed pending the appellate court's consideration of whether it
would stay the the ruling pending appeal, so whether the
terriffs would be kept in place while it considers the appeal,
and so. On June tenth, the Federal Circuit decided that
(26:04):
it would keep the tariffs in place, it would grant
the government a stay of that ruling until it issues
a decision on the appeal. So I don't expect a
decision from the Federal Circuit until three Q because they
they said that be put in it at an order
saying you know, we intend to hold or a argument
(26:27):
on July thirty first, So I don't expect a decision
until you know, earliest to August.
Speaker 1 (26:35):
So in that same decision where they put the Court
of International Trade decision on hold, that effectively let the
tariffs stay in place while the appeal plays out. But
at the same time they said they would expedite the
proceedings on appeal, right, so, like you said, or an
argument will be July thirty first out. That'll be fun.
Speaker 5 (26:55):
Yeah, And it's also going to be bank caring. So
the entire panel is going to be deciding this appeal.
Speaker 1 (27:02):
Which is pretty unusual. Right, Usually in the initial instance
it's three judges and then you know, whichever party loses
can ask for the full and bank hearing. So obviously
the Federal Circuit I guess has taken this very seriously.
Speaker 5 (27:14):
Yeah, I mean they said in the order that due
to like the importance of this decision, that the entire
panel is going to be on it, and also truncates
the process so they don't take to wait for, you know,
a ruling from the three member panel and then on
bank they could just go straight to on bank.
Speaker 1 (27:31):
And so what do you make of them? I mean,
how much would we read into them put in the
lower courts decision on hold and allowing the tariffs to
play out, because you know, I mean, one of the
factors is likelihood of success on the merits, but then
you know it's also a reparable harm and the equities
(27:51):
and like public interest, you know, and I mean, their
decision like did not give any details, right, it was like, oh,
we just considered the factors, but what do you make
of it?
Speaker 2 (28:02):
Right?
Speaker 5 (28:02):
Well, I mean they did say that, you know, we're
considering the equities. This is not a ruling on the merits.
So I think they're implying that they're you know, that
that this is not based on the you know, the merits,
not that factor of you know, because when when you
do try to get a stay, you have to show
these four different factors in one of them is, as
(28:23):
you said, likelihood of success on the merits, and I
don't think that was the you know, determining factor in
this case. I think they probably didn't want to be
you know, they probably don't know how they're going to
rule yet, even though it's sort of everybody knows about
this case, but they haven't written any decisions and they
have the full panel that they have to confer with,
(28:44):
so they probably you know, to be on the more
cautious side. They said, we're going to keep these terrors
in place. We're going to preserve the status quo until
we you know, render a final ruling with a written decision.
And so that's why I think they kept it in
place and not not because they plan to. So I
don't read anything into it. I don't think that that
(29:04):
means that they're going to reverse.
Speaker 1 (29:08):
Right, And and in some ways it might be easier
to keep the teriffs in place, and if the government
then loses, right, it's easier for the government to sort
of pay a refund to the companies that have paid
terriffs than if the government then if you like remove
the tariffs for now and then the government wins, the
(29:29):
government can't then go back and like collect terriffs from importers, right, So.
Speaker 5 (29:34):
They can't the government can't go back and collect, but
they can issue refunds. But I'm hearing that it's not
as easy as you think, you know, so the people
are people are going to have to file lawsuits to
probably get the refa oh really.
Speaker 1 (29:46):
Oh yeah, well full time ter Litigation Employment Act.
Speaker 5 (29:50):
Right, right, But but it you know, you would if
if the Trade Court is wrong, then you're right, the
government would not be able to collect all those terraffs
and in the meantime that they lost. So that's you know,
probably one of the factors that the court considered.
Speaker 1 (30:07):
Yeah, so what's your sort of base case as to
you know, the ultimate outcome of these cases.
Speaker 5 (30:13):
So I think it's close because I don't think that
you know, any this is an emergency statute, and the
President has declared emergencies, and I don't the courts have
been very reluctant to you know, second guests the president
when he's declaring an emergency. But I don't think that
the trade deficit constitutes an emergency under APA. I don't
(30:38):
know that the Supreme Court would rule on that specific issue.
But because of that, I think that they're going to
reverse and so they may use other doctrines to try
to get to the result that reciprocal tariffs are you know, unlawful,
like people have been saying, they may use major questions
and that was you know, something that the International Trade
(30:59):
Court raised and it's it's decision, although it wasn't you know,
they didn't really explain this in a lot of detail.
But commentators, I'm saying that the Supreme Court may use
the major questions doctrine or the non delegation doctrine to
get to the result the reciprocal terrifts are not lawful,
(31:19):
but the sentinal trafficing tariffs are closer call because they're
you know, the the sentinel emergency is emergency, and so
no one's going to say that that's not an emergency.
And in fact, the challenger has never even said that
that's not an emergency. But I think that the Supreme
Court is going to be very reluctant to allow lower
(31:39):
courts and even itself to say that the president is
not addressing an emergency properly as a as an international
Trade court did when it said that the tariffs weren't
related to the emergency and that pressure on countries to
address the crisis is not dealing with the emergency. I
(32:01):
think that they're going to have a hard time with
that reasoning. So I think that those may be affirmed.
I'm sorry, I think those they may be kept in place,
and I think that they the court may say that
the president has parachu impose those terriffts, but not with
respect to reciprocal terrats. But again, the issue is very
close on the reciprocal terrats as well.
Speaker 1 (32:22):
Okay, great, so you so we so in the Federal
circuit we have an argument. So I thirty first and
you expect a decision what in August?
Speaker 5 (32:30):
Yeah, I mean, I think that are well, obviously the
earliest would be August, but yeah, I think because of
the import of this, they're probably not going to wait
too long. Remember that the International Trade Court rendered this
decision within a week of its last rural argument, So
that's how important this is.
Speaker 1 (32:45):
Oh, there's more more judges here that we'll have to
that is true, come to an agreement or right opinions.
But that's true, and then from there, presumably whoever loses
or if it's a split opinion, both sides may gout
of the Supreme Court.
Speaker 5 (32:59):
Yeah, I think this will go to the Supreme Court.
Speaker 1 (33:01):
Yeah, yeah, And I mean they could take it up
probably as soon as October yep, I think, yeah, yep,
and then maybe maybe a decision by your end. I think,
so it would have to be pretty quickly, but.
Speaker 5 (33:15):
Yeah, I think I think that's possible. And you know,
that's what I think is the likely out come. Then
it will be four.
Speaker 3 (33:22):
Q got it?
Speaker 1 (33:24):
And what about the case in GDC the Federal District
Court in Washington, So that one.
Speaker 5 (33:30):
Was interesting because the judge stayed his own ruling pending appeal,
So that one is sort of following what the Fed
Circuit decides to do, so, they don't have a briefing
schedule yet the court asked yesterday the court or the
parties to within fourteen days, you know, tell them about
the status of the case and how they should move forward.
(33:51):
So I think that the party and and the parties
had previously said that they would, you know, follow the
briefing schedule that set fourth that the Fed Circuit uses.
So I think that those two are going to be
on like, very similar tracks in terms of timing.
Speaker 1 (34:05):
Got it. And I mean so in addition to sort
of the substance of the case, we have this issue
of like, which is the proper court for these cases
to even.
Speaker 3 (34:14):
These cases.
Speaker 5 (34:15):
Yeah, and that's an issue that's making its way around
various circuits. So it's an issue that's going to be
presented on appeal at the DC Circuit. And it's also
an issue that's being presented on appeal in the Ninth
Circuit because the case is brought there that was dismissed
because the court there said, the lower court said there
was no jurisdiction, that only the Trade Court has exclusive jurisdiction.
(34:39):
So so that's on appeal now.
Speaker 1 (34:42):
Yeah, and it's an issue in the Federal Circuit case too.
Speaker 5 (34:46):
That's right, right, Well, no, actually the Federal Circuit case, no,
I mean, it's not an issue because no one can
tested it there. But but they're going to decide whether
i EVA authorize this tariffs at all, So it's a law. Well,
there are various grounds on which the International Trade Court
said they had jurisdiction. But one of the grounds is
(35:07):
that they said AIPA must authorize some TIFFs. And if
the if AIPA authorizes tariffs at all, then it would
go to the International Trade Court. They would have exclusive jurisdiction.
But if the Fed Circuit says there's no that AIPA
does not authorized tariffs at all, then then the the
(35:29):
International Trade Court court did not have jurisdiction and and
but that's a ruling, So the Fed Circuit will say
there's no jurisdiction before the Trade Court, and then I
guess you'd have a bunch of other courts saying, you know,
in different circuits, saying whatever they determine, right, and because
now they have jurisdiction. But then ultimately LEA will go
(35:53):
up to the Supreme Court. So I don't think you
need a whole bunch of these decisions from the circuit
courts in order for the Supreme Court to decide death.
Speaker 1 (36:00):
Yeah, they're gonna take it regardless, and they're gonna have
both the jurisdictional and substantive issue presumably to decide. All right, well,
it should be a fun second half of the year.
All right, I think we're gonna leave it there. Thanks, Holly,
I think we'll wrap up this episode of Votes and Verdicts.
As always, thank you to the listener for listening. If
(36:21):
you have any questions about anything we've talked about today,
please don't hesitate to reach out to us at your
convenience with questions. As a reminder, again, you can find
all of our research on the Bloomberg terminal at BI
go or on our litigation and policy dashboard at BI
laws go. Thank you again for listening, and have a
great day.
Hello, and welcome to the Votes and Verdicts podcast, hosted
by the Litigation and Policy team at Bloomberg Intelligence, the
investment research platform of Bloomberg LP on the Bloomberg Terminal.
Bloomberg Intelligence has five hundred analysts and strategists working across
the globe and focused on all major markets. Our coverage
includes over two thousand equities and credits, and we have
(00:36):
outlooks on more than ninety industries and one hundred market industries,
currencies and commodities. This podcast series examines the intersection of
business policy and law, and today's our weekly check in
on the litigation and policy catalysts that we're watching and
that we think will impact companies and markets and sectors
(00:57):
and industries. My name is Elliot Stein. I'm in analysts
with Bloomberg Intelligence covering litigation in the financial sector. I'm
delighted as always to be joined by a handful of
my colleagues from the Litigation and policy team here at BI.
As a reminder, you can find all of our research
on the Bloomberg terminal at BI go, and you can
find all of our litigation and policy research on our
(01:20):
dashboard which is available at BI laws Go. Today is
June twelfth. It's about one pm. And we always timestamp
things because inevitably things happen quickly, and sometimes they happen
as we're talking on this podcast. All right, So Nathan Dean,
let's bring you in. Nathan is our chief policy analyst
(01:43):
down in Washington, DC. He's been following the stable coin
bill that seems like it's about to pass the Senate
and eventually get to the President's desk. I guess pretty soon.
Why don't you tell us what the latest is and
what happens next.
Speaker 2 (02:03):
Yeah, So last night, so Thursday night, Senator John Thune
filed cloture, which means that's the first vote of several
votes that ultimately ends up with this bill passing the Senate.
And that vote went sixty eight to thirty. And just
as a reminder, you need sixty to get past the filibuster.
There were significant number of Democrats who came on board
(02:25):
to vote for this, and so when the bill does
come up for vote on Monday, we do think this
bill is going to pass. And just as a reminder,
this is called the Genius Act. This bill would require
stable coin issuers like Circle that have a greater ten
billion dollar the market capitalization to register with either the
Federal Reserve or the Office of the Control or the Currency.
(02:46):
If you're under ten billion, you have to register with
a state regulator, and you're required to have one hundred
percent high quality liquid assets backing up your stable coin,
and you're not allowed to pay yield. And so you know,
there was a lot of discussion in the stable coin
community about whether or not they could pay interest. Under
this bill, you were prohibited from paying yield. Now, I
do think this is going to pass the Senate on
Monday night. Then it goes to the House, and while
(03:08):
the House could tinker with it, I don't think they will.
I think they more likely than not just want to
get this over the line, and the question on whether
or not passes the House.
Speaker 3 (03:16):
It should pass the House fairly easily.
Speaker 2 (03:18):
The biggest issue has always been to pass the Senate,
and that's something that I think you know now that
it's the culture votes, and this is the second culture
vote for what it's worth that has attracted enough Democrats
to get above that sixty vote threshold.
Speaker 3 (03:31):
So I think this passes probably.
Speaker 2 (03:32):
Late June, but more likely early July, and then it
goes to the regulators to implement their proposals. That would then,
you know, for those of you with Bloomberg terminals come back.
You know, we'll be writing about how that rulemaking process
plays out. But if you're a stable cooid issue or
you should be feeling pretty good right now. But the
regulatory clarity that's coming down the line.
Speaker 1 (03:52):
Did the House pass its own version before the Senate
worked on theirs?
Speaker 2 (03:56):
Yeah, so the House has their own version and that
had a lit a little bit more technical differences between
that and the Senate version, and I think for the
sake of speed, and one of the bigger questions is
this idea to pay yield. You know, there are some
folks in Congress that think stable coin issuers can pay yield.
But the problem is is that you'll then if stable
cooin issuers are paying yield, the banks aren't gonna like that,
(04:19):
and then the banks all of a sudden start to
get upset. And you know, that's the other major hiccup
that I should have said earlier is there is an
amendment process that was playing out behind the scenes that
potentially could.
Speaker 3 (04:29):
Have derailed this bill.
Speaker 2 (04:31):
And that comes to the form of this bill called
the credit card Competition Act. So if you've flown through
LaGuardia or Rayan or hair, keep your eyes out and
I think over in the Guardia, it's over in the
new Delta or not Delta. It's probably what's the new
terminal the New Yorkers or Guardia.
Speaker 1 (04:47):
I'd never find I title avoid LaGuardia. There's so many
Jersey guy. I just got into work.
Speaker 2 (04:52):
There's this new terminal, and I the New Yorkers listening
to this podcast and to be like, yep, I know
exactly what you're talking about. It's not the Delta terminal.
Last time I was in the ne La Guardia, keep
your eyes out, because I did see the advert there.
And this advertisement is because Senator Marshall of Kansas, Roger
Marshall is teamed up with Senator Dick Durban of Illinois,
a Republican and a Democrat, to come together and they
(05:15):
want to put forth this bill that increases competition for
Visa MasterCard. Now, without getting into the great details, what
you need to know is is that the airlines think
that's going to kill the credit card rewards programs for
these airlines. So you've got an issue that has banks
versus retailers versus airlines. And when you have that, all
the senators are just like, I can't vote for this.
(05:36):
This is too dangerous. And had Senator Marshall gotten amendment's
vote on this bill, it could have derailed the stablequin invote.
Speaker 1 (05:44):
So why did he even try to put it in there?
I mean, it seems sort of like so random.
Speaker 2 (05:48):
It Well, it's the easiest way to get passage, and
you avoid committee, and you avoid the ability of having
tough votes, and you put it through at the final hour,
and so you only need one vote to get it
over across the line. And when you have something that
has like luke warm bipartisan support but has a lot
of detractors and not it's a way of jamming up
(06:11):
the final bill.
Speaker 3 (06:12):
And trying to force passage.
Speaker 2 (06:14):
There's been other instances of where this has worked over
the last fifteen twenty years that I've covered Washington. But
the problem with this one is that everybody knows it's coming,
and also Senator Thune had so the funny thing that
happened here is that Senator Marshall put this amendment on.
The next thing that happened Senator Holly Republican from Missouri
said no, no, no, no, no, I'm gonna put my amendments
(06:36):
that caps all credit card interest rates at ten percent.
That he's teamed up with Senator Bernie Sanders. He's like, no, no, no,
I'm putting my amendment on there. And next thing, you know,
everybody had amendments. So Senator John Thune on Monday night
of earlier this week came said, no, we're done.
Speaker 3 (06:52):
We tried it. I'm actually devoiding all the amendments. Called
an amendment tree, he invoided all the amendments.
Speaker 2 (06:57):
He brought forth a new amendment tree that only was
really related to the stable coin bill and.
Speaker 3 (07:02):
Said that's what we're going forward with.
Speaker 2 (07:04):
So that process does it and could potentially play out
in the House, but I don't think it will.
Speaker 3 (07:11):
I think the House will just pass it and be
done with it.
Speaker 1 (07:13):
And so what happens to those credit card amendments. I mean,
it's two different bills. I assume they're going to try
to raise them later this time.
Speaker 2 (07:20):
So I think watch out for the September Continuing Resolution
period just because I think that's where they'll try and
attach it next. Senator Durbin tried this with the NDAA
last year, the National Defense Authorization Act. So between now
and the end of the congressional term, if there's any
must pass piece of legislation, watch out probably about three
(07:42):
to four weeks in advance. Senator Marshall and Senator Durbin
will try and attach it. I still think it's not
going to happen. I still think a forty percent chance.
Speaker 1 (07:50):
Both of that, both bills. I mean, it sounds like
the credit card competition maybe might be able to get
more bipartisan support than capping credit card f viesa ten percent.
Speaker 2 (07:59):
Yeah, our Holly's build the cap credit card fees that
that we're at a twenty percent chance of that. But this,
this Credit Card Competition Act, it's one of those things.
Speaker 3 (08:08):
Where I think it's like, you know, I call it
bipartisan warmth.
Speaker 2 (08:11):
Because there was a hearing in the Senate Judiciary Committee
hearing last December, it was like novembery December, and they
had it was about Visa MasterCard, and I was surprised
at the amount of Republicans who came out against Visa MasterCard.
And what this bill does is it requires banks to
issue their retailers so their merchants. Requires these banks to say, Okay,
(08:33):
we're going to offer you Visa and somebody else or
MasterCard and somebody else. And the way the bills written,
it can't be Visa and MasterCard. It either has to
be Visa, an American Express or MasterCard. And Discover still Discover,
even though it Discovers taken over by Capital One, it's
still the Discovered network according to our greater according to
our great equity animals, Benelliot, they're keeping the Discovered network
(08:56):
as is right now, but until they change it, it's
the Discover Net.
Speaker 3 (09:00):
Okay, interesting and so, but you know this bill.
Speaker 2 (09:05):
The reason why the banks hate it is because it
lowers the fees that they get from the retailers.
Speaker 3 (09:10):
The retailers love it.
Speaker 2 (09:11):
So now you have Walmart and Target and Home Depot
lobbying their folks saying we want this. And you've got
Bank of America and JP Morgan in the United Airlines
and American Airlines telling their folks, we hate this.
Speaker 3 (09:23):
And from a senatorial perspective.
Speaker 2 (09:25):
They're like, I got two of my kids fighting here, right,
go and get out of the room.
Speaker 1 (09:29):
So wow, yeah, that's like battle of a heavyweight lobbyists exactly.
That's gonna be fascinating.
Speaker 3 (09:35):
But that's why we can definitely do another podcast on
this one. But yeah, that's what we will.
Speaker 2 (09:40):
Yeah, that's why it didn't you know, that's why the
Senators were like, no, no, no, you can't attach into
the Genius Act.
Speaker 3 (09:45):
Let's get the stable Coin Bill without the other.
Speaker 1 (09:48):
So here's a stupid question. Why are they calling the
stable Coin Bill the Genius Act and not the Stable Act?
Or what there was a Stable Act? What did that
refer to?
Speaker 2 (09:57):
So the Stable Act was from the last Congressional I'm sorry,
the Stable Act was taken by the House.
Speaker 1 (10:05):
Oh, so you have this Stable Act and the Genius Act,
the Stable Genius Acts.
Speaker 2 (10:08):
So the Genius Acting, if you give me about two
seconds to look up what the Genius stands for, it's
the Guiding and Establishing National Innovation for US stable Coins
of twenty twenty five or the Genius Act of twenty
twenty five.
Speaker 1 (10:22):
All right, good stuff, Nathan. Let's move over to antitrust
and bring in one of our anti trust analysts, Justin Tesi. So, Justin,
let's talk about this case brought by the State of
Texas and a dozen other Red states against Black Rock,
(10:43):
Vanguard and State Street accusing these companies of colluding to
reduce coal output. You've been following this case since it
was filed, and even before that when it was threatened
and discussed. I guess you know, why don't you come
in tell us about the case, give us your thoughts
on the strengths and the weaknesses of it.
Speaker 4 (11:02):
Yeah, yeah, definitely, But really important before I jump into this, Nathan,
the name of the new terminal quaritia is Terminal B.
They really went for the stars, the stars in the
moon on that one. That is it, Big Fountain, great
food Cork, food court, terminal be that that's what they
got there for you.
Speaker 3 (11:18):
I was really impressed with the food court, Like, yeah,
I mean I loved it.
Speaker 4 (11:22):
Yeah, yeah, No, It's definitely a step in the right direction,
I think. But all right, back back to business as
usual here. But yeah, this case that we saw file
last year right around Thanksgiving in Texas was brought by
Attorney General Ken pax And representing Texas and a whole
host of Red states, and it really was the first
of I think what we're probably about to see a
(11:44):
wave of new anti trust litigation kind of directing the
anti trust laws at things like ESG initiatives or other
corners of anti trust worty. Maybe haven't seen these kinds
of cases brought before, but in a nutshell, what's been
a last year is that these really large asset managers,
so think black Rock, Vanguard and State Street in this
case many of times, who are holding index funds right
(12:07):
and by virtue of holding funds in these kind of
index you know, mutual funds have really large shareholder ownership
in a wide array of companies, including in this case
coal companies, coal mining and core production companies. So what's
the issue. The issue is that you know, these banks
and several others have joined on to these climate change initiatives,
(12:29):
in this case net zero and Climate Action one hundred plus.
Those the two kinds of climate initiatives that are that
are issue in this case, these ESG initiatives and further
participation in these initiatives. You know, what's alleged here is
that those agreements that participate in these these kinds of
accords basically are an anti trust violation and that these
(12:50):
these managers have come together and agreed to kind of
act in a way that limits coal production and turn
raises coal prices for consumers and turned electricity process or whatever,
and all these different things were coals coming into play.
That's the kind of novel theory behind this case, that
the participation in those climate accords just.
Speaker 1 (13:10):
A participation, not even like some yeah, agreement to morrow.
Speaker 4 (13:14):
Right right, you know. And that's the interesting thing that
was kind of a hanging chat, if you will, as
as to whether or not they were they were hanging
their hat on those kinds of agreements being the subject matter,
you know, that forms the anti trust violation itself. But
if there was any question, really in Attorney General Paxton's case,
there was a statement of interest file by the Department
of Justice and the Federal Trade Commission that really said
(13:36):
or it took the position that that participation in and
of itself can be the foundation for an anti trust violation.
So whether or not, you know, the complaint itself actually
made that allegation, the federal agencies that filed that statement
of interest in the case and support really took it
a step further and said, yes, that participation in and
of itself can can really lay the found word for
(13:56):
liability from an anti trust perspective. So that's interesting, you know,
I think our view is that look there's still really
is that this whole aspect of an agreement here, a
specific agreement to really step in and somehow limit coal
production that at the end of the day, probably hampers
this case from getting too much further than the motion
to dismiss where it's at now. But there's that issue
(14:18):
and also just one of causation.
Speaker 3 (14:20):
Right.
Speaker 4 (14:20):
Did these companies, you know, these independent companies like Peabody
Coal and our Tree Sources, did they limit coal production
because these asset managers were exerting their pressure, you know,
via other participation in these accords? Were there real external
factors involved in lowering coal production? Perhaps there was a
decline in demand for coal, Perhaps there were countervailing kind
(14:41):
of political realities, good decline and coal you know, coming
from Ukraine? Did that somehow affect the price of coal worldwide?
Speaker 2 (14:47):
Right?
Speaker 4 (14:48):
So those kinds of things seem to be missing from
the complaint, and I think for that reason it runs
into semantic trust issues, you know, in terms of liability
down the road.
Speaker 1 (14:56):
Here, although some of those things could be factual questions. Right,
the judge sort of uses to let the case get
pass this initial motion to dismiss.
Speaker 4 (15:05):
I think that's right. And I think I think between
the fact questions and the if quite frankly, the political
the political players involved here. You know, the case is
filed in federal just recording Tyler, Texas. We're talking about
a conservative forum in the Fifth Circuit, you know, and
I think, you know, with with the fact questions being
what they are and with the political actors involved, I
would imagine it's really hard press to shut this thing
(15:27):
down at a motion to the Smiths phase.
Speaker 1 (15:28):
Speaking of the Fifth Circuit, it was interesting that I
think it was black Rocks. The lawyer representing black Rock,
I think in this case was Greg Costa, who's a
former Fifth Circuit judge the point of my democrat, I believe,
so not not not the traditional conservative Fifth Circuit judge,
but still you know, obviously know it's the Circuit.
Speaker 4 (15:49):
I would imagine quite intentional on the part of black Rock.
Speaker 3 (15:52):
Yes, exactly.
Speaker 1 (15:53):
Also interesting to see Gibson Done you know, representing the
companies in this case, because in so many cases that
we follow, Gibson Gun represents you know, the trade groups
challenging uh, you know, a government policy. So just going
back to the statement of interest by DOJ and the FTC,
(16:14):
you know, how how common is that and have you
seen that in other cases?
Speaker 4 (16:17):
Yeah, you know, we have. You know, the one that
comes to mind, you know, most recently is that DJ
stepped in in terms of these real page algorithm cases
that where we're kind of saying, hey, you know, this
kind of sharing through an independent AI algorithm by by landlords,
you know, about what the rental prices or vacancy rates
might be. You know, there was a big question whether
or not that itself could be this kind of anti
(16:38):
trust you know, violation in terms that it's this hub
and spoke agreement between the software provider and the landlords
all working together to kind of you know, uh collude
to price fixed rental prices and for apartments nationwide. Right,
DOJ stepped into that case of file the statement of
interest there, so that you know, these things are fairly common.
What wasn't you know, really common about this is that
typically it's DOJ that steps in and does that on
(17:01):
its own, to have the FDC and do o J
kind of jointly filing this statement of interest here, especially
at a time where the FDC is anti trust authority,
you know, and of itself has been under attack by
some Congressional Republicans. Well, that was a really interesting, uh
you know wrinkle on all of this too, to see
kind of a joint statement that both of those those
agencies here.
Speaker 1 (17:18):
What do you think that means?
Speaker 4 (17:19):
Yeah, I think there's a probably a real effort here,
no surprise by by FDC share Ferguson, to really cement
the anti trust authority at the FTC that you know,
that goes part and parcel with its actual consert protection authority.
You know, it's interesting from from that angle, I think
we're we're we're seeing a very strong FTC in terms
of anti trust enforcement here, and I think probably you know,
(17:42):
a push to really maintain that authority, uh, you know,
in the face of some questioning, you know, for folks
on the hill whether or not there should be this
dual enforcement regime between the two agencies.
Speaker 1 (17:52):
And you know, I mean what another interesting rinkle in
that case is that a lot of these companies have
left these climate accords right sort of to avoid the
anti trust issues. You know, does that matter in this
case and does it matter for potential future cases?
Speaker 4 (18:11):
Yeah? You know, I think in this case, you know,
so you've seen folks like State Street and JP Morgan
completely leave clevi At Action one hundred plus for example.
As you know, I would say likely as a result
of wanting to avoid litigation like this in the future,
if not just you know, this case in and of itself,
but Black Rocks still you know, it's cons curtailed, it's involvement.
You know, there's still this tangential kind of involvement in
(18:33):
ESG agreements or coords like this. So I don't think
it means the end of this case, you know, I think,
by by and large, I think the goal of the case,
if it was to get folks to leave these initiatives,
that's been successful. But I think there's also this desire
probably to scare of folks from joining them again in
the future. You know, I think the creation of precedent
around that is probably something that Paxson and the plaintiffs
(18:55):
here are are interested in doing. And we're kind of
seeing the same thing in relation to this advertising book
co question right with the the X case. And you
know what, you know, can you this whole idea of
a group of boycott by advertisers, you know, not placing
adds on X. Yeah, the trust liability there is really
dubious in my mind, that's a tough case.
Speaker 3 (19:13):
To really prove.
Speaker 4 (19:14):
I don't know that the facts line up with the
with the with the assertions of the complaint in terms
of what the counts that have been alleged. But you know,
it's it's seemed to be getting folks to buy advertising
on X right. So I think the goal of these cases,
the goals of these cases, you know, they're kind of
coming to fruition whell or not the case that kicks
gritting across the finicial line.
Speaker 1 (19:31):
Got it? All? Right, let's pivot slightly. We'll stick with
anti trust, but we'll pivot to Visa and the Justice
Environments monopolization case against Visa leging a series of anti
competitive contracts with merchants and would be rivals that you know,
allegedly would exclude competition from from the debit transaction processing market.
(19:52):
I know you've been following this case. You went to
the motion to dismiss hearing I think on May twenty nine.
Speaker 4 (19:57):
Yes, that's right, right right after the royal It was
a great time right after.
Speaker 1 (20:02):
Yeah, so what's the latest in that case?
Speaker 4 (20:06):
Yeah, So, you know, this case really zeros in on
you know, Visa's behavior following the implementation of Dodd Frank
and rolls around debit transactions that came out of that
that bill when it was past twenty ten, right, And
really what Don Frank did was create the situation where
debit cards had to be able to be processed over
more than one network.
Speaker 1 (20:27):
Right.
Speaker 4 (20:27):
So let's say you've got Visa on the front of
the card. Sometimes you'll see a secondary network like Pulse
or Plus on the back of your card, which is
another network that those debit transactions can be processed over,
typically at a lower fee than whatever Visa would charge
for that transaction to go over its network. Now, I
think seeing the thread of competition here, what DOJ's alleging
Visa did in response to this is they created all
(20:49):
these kind of new fees, if you will, following Dodd
Frank and then Visa said, hey, will either reduce or
eliminate the fee that we charge you if you promise
to send a certain percentage of your debit transactions over
in our network instead of the cheaper networks that might
appear on the back of a cart. Who loses in
that are the merchants, right? Do end up paying these fees,
so that that's the central allegation of the case. There's that,
(21:12):
and then there's also some other allegations, you know, claiming
that Visa basically paid off Apple and others from developing
their own kind of debit networks, you know, and by
kind of you know, giving them fee concessions and things
of that of that sort too, right, are saying, hey,
we don't have to work with you in the future
if you develop your own network. Right, So, those are
the two central themes of this this case. You know,
(21:34):
I think the second the second set of allegations against
Apple and you know, regarding Visa's behavior with Apple, PayPal, others,
you know, to stop them from building a competitor's network,
those seem a little bit more questionable. There's you know,
there there have been heavily redacted but versions of contracts
between Visa and those entities that were submitted to the court.
The argument seems to be that those contracts are what
(21:56):
they are, and they don't really spell out the kind
of antitrust violation in those documents that DJ is saying,
you know, actually happened, so that one seems a little
bit more shaky. But regardless of that, the judge certainly
is saying these are all facts questions, and there's certainly
not issues that I'm willing to set aside right now
in a motion to dismiss hearing. So I think we
probably see that denied, you know, relatively soon, and then
(22:18):
you know what rolls up through discovery does.
Speaker 1 (22:20):
But yeah, right, right, yeah, so that's still pretty early stages.
So is this similar to the interchange feed litigation that's
been going on for twenty years now?
Speaker 4 (22:30):
You know, it's not related to it, but in an
interesting wrinkle, I think, you know, Visa is trying to
say that the fees that are covered that were covered
as part of its class settlement with merchants and the
interser change fee litigation, that it also covers the debit
fees that are at issue here in private suits that
are brought kind of as a copycats the DJ case.
You know, whether or not that's going to be successful,
(22:52):
I really question that because there's been of a different
factual nexus here in terms of, you know, the case
that is being brought here versus what was brought you know,
twenty years ago now, right, things are a bit different,
and the thing the behavior being alleged, the bad behavior
being alleged on the part of VISA here wasn't even
occurring right at the time that the interchange fee case
was brought originally in two thousand and five, allegedly, So
(23:13):
I think that's a bit of a stretch, but certainly
a different case, same kind of you know, network fees
we're talking about in some ways, but different kind of
set of allegations and facts altogether, and.
Speaker 1 (23:23):
Trying to fold it into I guess the settlement with
the merchants case that would have affected this DOJ case anyways.
Speaker 4 (23:31):
No, No, I think absolutely not. You know, a DOJ. You know,
the previous deals made between VISA and DUJ and merchants
all really, you know, I think are kind of especially DJ.
Speaker 3 (23:42):
It's just it's.
Speaker 4 (23:42):
Separate factual predicates altogether. So I think we're separate apart
from that, definitely don't affect the DOJ litigation, got it.
Speaker 1 (23:49):
All right, So you're waiting for some emotion decisions. Emotions
are dismissing this case and in the cultivation they come after.
Speaker 4 (23:54):
Summer Relli'll absolutely that's the rule.
Speaker 1 (24:00):
So all right, good stuff, justin thanks, all right, let's
bring in Holly from Holly has been doing a ton
of work on tariffs, both in terms of the lawsuits
challenging them. She also spearheads our deep dive reports here
at Bloomberg Intelligence related to tariffs, which are like huge
(24:21):
collaborative efforts where she has to heard like fifty different
analysts into one report. But it's really great content, which
I highly recommend. If you have a terminal, you can
find it all at BI space. Tariffs Go. All right, Holly,
let's bring you in for an update on where these
lawsuits are. When we had you on last a couple
(24:42):
of weeks ago, it was I think the day after
the Court of International Trade ruled. Then the following morning
we got a decision from a judge in Federal Court
in Washington, d C. Both those courts essentially found the terriffs,
the AIPA tariffs to be unlawful. And then while we
(25:05):
were recording the podcast two weeks ago, the Federal Circuit
put an administrative stay on the Court of International Trades decision.
Why don't you come in and tell us, you know
what's happened since then and sort of what the latest is.
Speaker 5 (25:20):
Yeah, So the ucit the Court of International Trade issue
it's ruling. On May twenty eighth, the District Court's decision
was me twenty ninth, and the District Court on its
own stated decision pending appeal. The May twenty decision by
the International Trade Court was immediately stayed by the Federal well,
not immediately, but the next day, on May twenty ninth,
(25:41):
was stayed pending the appellate court's consideration of whether it
would stay the the ruling pending appeal, so whether the
terriffs would be kept in place while it considers the appeal,
and so. On June tenth, the Federal Circuit decided that
(26:04):
it would keep the tariffs in place, it would grant
the government a stay of that ruling until it issues
a decision on the appeal. So I don't expect a
decision from the Federal Circuit until three Q because they
they said that be put in it at an order
saying you know, we intend to hold or a argument
(26:27):
on July thirty first, So I don't expect a decision
until you know, earliest to August.
Speaker 1 (26:35):
So in that same decision where they put the Court
of International Trade decision on hold, that effectively let the
tariffs stay in place while the appeal plays out. But
at the same time they said they would expedite the
proceedings on appeal, right, so, like you said, or an
argument will be July thirty first out. That'll be fun.
Speaker 5 (26:55):
Yeah, And it's also going to be bank caring. So
the entire panel is going to be deciding this appeal.
Speaker 1 (27:02):
Which is pretty unusual. Right, Usually in the initial instance
it's three judges and then you know, whichever party loses
can ask for the full and bank hearing. So obviously
the Federal Circuit I guess has taken this very seriously.
Speaker 5 (27:14):
Yeah, I mean they said in the order that due
to like the importance of this decision, that the entire
panel is going to be on it, and also truncates
the process so they don't take to wait for, you know,
a ruling from the three member panel and then on
bank they could just go straight to on bank.
Speaker 1 (27:31):
And so what do you make of them? I mean,
how much would we read into them put in the
lower courts decision on hold and allowing the tariffs to
play out, because you know, I mean, one of the
factors is likelihood of success on the merits, but then
you know it's also a reparable harm and the equities
(27:51):
and like public interest, you know, and I mean, their
decision like did not give any details, right, it was like, oh,
we just considered the factors, but what do you make
of it?
Speaker 2 (28:02):
Right?
Speaker 5 (28:02):
Well, I mean they did say that, you know, we're
considering the equities. This is not a ruling on the merits.
So I think they're implying that they're you know, that
that this is not based on the you know, the merits,
not that factor of you know, because when when you
do try to get a stay, you have to show
these four different factors in one of them is, as
(28:23):
you said, likelihood of success on the merits, and I
don't think that was the you know, determining factor in
this case. I think they probably didn't want to be
you know, they probably don't know how they're going to
rule yet, even though it's sort of everybody knows about
this case, but they haven't written any decisions and they
have the full panel that they have to confer with,
(28:44):
so they probably you know, to be on the more
cautious side. They said, we're going to keep these terrors
in place. We're going to preserve the status quo until
we you know, render a final ruling with a written decision.
And so that's why I think they kept it in
place and not not because they plan to. So I
don't read anything into it. I don't think that that
(29:04):
means that they're going to reverse.
Speaker 1 (29:08):
Right, And and in some ways it might be easier
to keep the teriffs in place, and if the government
then loses, right, it's easier for the government to sort
of pay a refund to the companies that have paid
terriffs than if the government then if you like remove
the tariffs for now and then the government wins, the
(29:29):
government can't then go back and like collect terriffs from importers, right, So.
Speaker 5 (29:34):
They can't the government can't go back and collect, but
they can issue refunds. But I'm hearing that it's not
as easy as you think, you know, so the people
are people are going to have to file lawsuits to
probably get the refa oh really.
Speaker 1 (29:46):
Oh yeah, well full time ter Litigation Employment Act.
Speaker 5 (29:50):
Right, right, But but it you know, you would if
if the Trade Court is wrong, then you're right, the
government would not be able to collect all those terraffs
and in the meantime that they lost. So that's you know,
probably one of the factors that the court considered.
Speaker 1 (30:07):
Yeah, so what's your sort of base case as to
you know, the ultimate outcome of these cases.
Speaker 5 (30:13):
So I think it's close because I don't think that
you know, any this is an emergency statute, and the
President has declared emergencies, and I don't the courts have
been very reluctant to you know, second guests the president
when he's declaring an emergency. But I don't think that
the trade deficit constitutes an emergency under APA. I don't
(30:38):
know that the Supreme Court would rule on that specific issue.
But because of that, I think that they're going to
reverse and so they may use other doctrines to try
to get to the result that reciprocal tariffs are you know, unlawful,
like people have been saying, they may use major questions
and that was you know, something that the International Trade
(30:59):
Court raised and it's it's decision, although it wasn't you know,
they didn't really explain this in a lot of detail.
But commentators, I'm saying that the Supreme Court may use
the major questions doctrine or the non delegation doctrine to
get to the result the reciprocal terrifts are not lawful,
(31:19):
but the sentinal trafficing tariffs are closer call because they're
you know, the the sentinel emergency is emergency, and so
no one's going to say that that's not an emergency.
And in fact, the challenger has never even said that
that's not an emergency. But I think that the Supreme
Court is going to be very reluctant to allow lower
(31:39):
courts and even itself to say that the president is
not addressing an emergency properly as a as an international
Trade court did when it said that the tariffs weren't
related to the emergency and that pressure on countries to
address the crisis is not dealing with the emergency. I
(32:01):
think that they're going to have a hard time with
that reasoning. So I think that those may be affirmed.
I'm sorry, I think those they may be kept in place,
and I think that they the court may say that
the president has parachu impose those terriffts, but not with
respect to reciprocal terrats. But again, the issue is very
close on the reciprocal terrats as well.
Speaker 1 (32:22):
Okay, great, so you so we so in the Federal
circuit we have an argument. So I thirty first and
you expect a decision what in August?
Speaker 5 (32:30):
Yeah, I mean, I think that are well, obviously the
earliest would be August, but yeah, I think because of
the import of this, they're probably not going to wait
too long. Remember that the International Trade Court rendered this
decision within a week of its last rural argument, So
that's how important this is.
Speaker 1 (32:45):
Oh, there's more more judges here that we'll have to
that is true, come to an agreement or right opinions.
But that's true, and then from there, presumably whoever loses
or if it's a split opinion, both sides may gout
of the Supreme Court.
Speaker 5 (32:59):
Yeah, I think this will go to the Supreme Court.
Speaker 1 (33:01):
Yeah, yeah, And I mean they could take it up
probably as soon as October yep, I think, yeah, yep,
and then maybe maybe a decision by your end. I think,
so it would have to be pretty quickly, but.
Speaker 5 (33:15):
Yeah, I think I think that's possible. And you know,
that's what I think is the likely out come. Then
it will be four.
Speaker 3 (33:22):
Q got it?
Speaker 1 (33:24):
And what about the case in GDC the Federal District
Court in Washington, So that one.
Speaker 5 (33:30):
Was interesting because the judge stayed his own ruling pending appeal,
So that one is sort of following what the Fed
Circuit decides to do, so, they don't have a briefing
schedule yet the court asked yesterday the court or the
parties to within fourteen days, you know, tell them about
the status of the case and how they should move forward.
(33:51):
So I think that the party and and the parties
had previously said that they would, you know, follow the
briefing schedule that set fourth that the Fed Circuit uses.
So I think that those two are going to be
on like, very similar tracks in terms of timing.
Speaker 1 (34:05):
Got it. And I mean so in addition to sort
of the substance of the case, we have this issue
of like, which is the proper court for these cases
to even.
Speaker 3 (34:14):
These cases.
Speaker 5 (34:15):
Yeah, and that's an issue that's making its way around
various circuits. So it's an issue that's going to be
presented on appeal at the DC Circuit. And it's also
an issue that's being presented on appeal in the Ninth
Circuit because the case is brought there that was dismissed
because the court there said, the lower court said there
was no jurisdiction, that only the Trade Court has exclusive jurisdiction.
(34:39):
So so that's on appeal now.
Speaker 1 (34:42):
Yeah, and it's an issue in the Federal Circuit case too.
Speaker 5 (34:46):
That's right, right, Well, no, actually the Federal Circuit case, no,
I mean, it's not an issue because no one can
tested it there. But but they're going to decide whether
i EVA authorize this tariffs at all, So it's a law. Well,
there are various grounds on which the International Trade Court
said they had jurisdiction. But one of the grounds is
(35:07):
that they said AIPA must authorize some TIFFs. And if
the if AIPA authorizes tariffs at all, then it would
go to the International Trade Court. They would have exclusive jurisdiction.
But if the Fed Circuit says there's no that AIPA
does not authorized tariffs at all, then then the the
(35:29):
International Trade Court court did not have jurisdiction and and
but that's a ruling, So the Fed Circuit will say
there's no jurisdiction before the Trade Court, and then I
guess you'd have a bunch of other courts saying, you know,
in different circuits, saying whatever they determine, right, and because
now they have jurisdiction. But then ultimately LEA will go
(35:53):
up to the Supreme Court. So I don't think you
need a whole bunch of these decisions from the circuit
courts in order for the Supreme Court to decide death.
Speaker 1 (36:00):
Yeah, they're gonna take it regardless, and they're gonna have
both the jurisdictional and substantive issue presumably to decide. All right, well,
it should be a fun second half of the year.
All right, I think we're gonna leave it there. Thanks, Holly,
I think we'll wrap up this episode of Votes and Verdicts.
As always, thank you to the listener for listening. If
(36:21):
you have any questions about anything we've talked about today,
please don't hesitate to reach out to us at your
convenience with questions. As a reminder, again, you can find
all of our research on the Bloomberg terminal at BI
go or on our litigation and policy dashboard at BI
laws go. Thank you again for listening, and have a
great day.
Host
Elliott Stein
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