This is [music] Bloomberg Law with June

Grao from Bloomberg Radio.

President Trump was highly critical of

the Supreme Court's decision last month

striking down the tariffs he imposed

under the International Emergency

Economic Powers Act or IEPA.

>> Wouldn't you think they would have put

one sentence in there saying that keep

the money or don't keep the money?

Right. I guess it has to get litigated

for the next two years.

>> The decision was silent on the question

of refunds. It's up to the US Court of

International Trade to determine what

refunds will be available for the almost

$170 billion in global tariffs

collected, how they'll be doowled out,

and to whom. And even though the

administration says its web-based portal

to handle refund requests is about 70%

complete, more than 2,000 lawsuits have

already been filed by companies seeking

refunds. And a new wrinkle last week as

a Costco member sued the retailer,

saying it should reimburse all customers

who paid higher prices on its products

because of Trump's tariffs. It's one of

at least five proposed class action

cases identified by Bloomberg News where

a customer is suing a company to get

tariff refunds. My guest is Timothy

Breitbill, a partner and co-chair of the

international trade practice at WY Rine.

Tim, the Supreme Court didn't give any

specifics at all about refunds, but

Judge Eaton of the Court of

International Trade has said that every

single scent of tariffs collected under

AIPA has to be returned. Has the Trump

administration agreed with that?

>> So, the Justice Department has agreed

and Customs and Border Protection has

agreed. It's not entirely clear that the

White House has agreed. So, but the way

this is proceeding now in front of Judge

Eaton when he said all importers of

record whose entries were subject to

AIPA duties are entitled to the benefit

of the learning resources decision. That

was very clear in the order that was

issued on March 4th. Since then, Customs

and Border Protection gave a response

asking for 45 days to implement

functionality for its automated uh

service called ACE. So, Judge Eaton, who

originally ordered immediate refunds,

rescended that order. He then asked for

weekly status reports. So, Customs and

Border Protection has been giving him

updates. There was one on March 12th.

There will be another one on March 19th.

So, the process is moving along. Customs

is building the refund system that will

be needed and hopefully if that is

created, it will be less messy than

otherwise could be.

>> So, the whole process will be automated.

>> That's the intent. Yes. So, customs when

it collects duties has an automated

system for that that brokers and others

can access. again, this ACE system. And

so if you can re-engineer that, uh, you

could potentially provide refunds in a

quick and efficient and organized way,

which would be ideal, and that would

potentially make everyone's lives

easier. But again, the system is still

being built. We don't know for sure what

challenges or delays there might be in

that, but so far at least, uh, the

system seems to be under control or in

progress. So then if the system is in

place and things are going forward, why

have thousands of companies still filed

lawsuits at the Court of International

Trade?

>> Well, it's a great point and even after

Judge Eaton's decision, additional

companies have filed at the Court of

International Trade, including some of

our clients. So, as I said, Customs and

the Justice Department seem committed to

this, but there hasn't been a 100%

commitment from the White House and the

administration about willingness to

facilitate tariff refunds. So, there's

some uncertainty

whether the government will in fact pay

everyone that paid AIPA tariffs or if a

lawsuit might be required for some

reason. So I think that's why some

companies are filing. In addition, and

this is very much a company by company

decision, but once the Supreme Court

decision was made, the potential

political risk became much lower and the

costs of filing are not particularly

great. So all of those things lead to

companies continuing to file lawsuits

even while this refund automated process

is being built. So, the judges said that

all importers of record whose entries

were subject to AIPA duties are entitled

to refunds regardless of whether or not

they'd sued the government. But the

government will not pay refunds to the

final commercial customer or the

individual consumer. But there are

already at least five proposed class

actions by customers against retailers.

So, for example, last Wednesday, a

Costco member sued the retailer, saying

it should reimburse all customers who

paid higher prices on its products

because of the tariffs. That looks like

a very messy lawsuit. I'm not even sure

how they would work out the numbers.

>> Yes, as predicted by Justice Barrett, it

could be very messy. The importer of

record of course is the entity that pays

the tariffs and therefore it is the

importer of record who is entitled to

the refunds but that does not address

the question of customers who paid

higher prices. They are not necessarily

entitled to those refunds directly. Now,

over the weekend, the US trade

representative, Jameson Greer, said that

retailers should seek to pay customers

refunds. But this is why you've seen

this new wrinkle of class action suits

being filed against Costco and FedEx and

the maker of Raybans. These were some of

the first companies to file suit at the

Court of International Trade for the

refunds in the first place. Now they are

the first targets for these consumer

class actions.

>> How strong are those consumer class

actions? It seems to open up the

courthouse doors to just about everybody

in the country who paid more because of

the tariffs.

>> Yes, this could be a very messy process

and it doesn't involve just consumers.

Think about uh businesses that arrange

with another entity to have bought

certain goods for manufacturing, paid a

higher price through the importer of

record. Well, now the importer of record

gets the money back. And yet, it's the

manufacturer who paid the importer of

record who should ultimately get the

benefit of that. So it does seem like

this will be a messy process and it is

very difficult to demonstrate what

percent of IPA tariffs were passed on to

customers were passed on to consumers in

a way that would allow for orderly

refunds. So again it may be each company

trying to sort this out in some way or

trying to make consumers whole to the

best extent possible.

>> Is there any precedent for a lawsuit

like that? you know the customers

against Costco etc.

>> This is very unusual in the trade space.

I am not aware of similar sort of

consumer class action suits comparable

to this. But then again when you have

more than $170 billion at stake, you're

going to find lawyers and law firms that

might have clients who feel they are

entitled to some share of that money.

>> Once this website is up, this portal, is

it going to go like one two three?

here's my documentation. Put it through.

Or is it going to be more steps after

that?

>> It could be a relatively straightforward

process. Again, since the importer of

record is the one who paid the duties in

the first place, and they have automated

records through customs, of all of those

entries, the dates that the entries were

made, and the amounts of of money,

including tariffs that were paid. That

piece of it could be relatively

straightforward when it is just reversed

back to refund the tariffs to those

importers of record. Anything beyond

that, it gets much more complicated very

quickly.

>> Now, President Trump has moved to

replace those AIPA tariffs and there are

lawsuits already challenging those 10%

tariffs, including by two dozen US

states. Tell us about those lawsuits.

>> Yes, sure. So this is section 122 of the

trade laws which is a law intended to

address a balance of payments deficit

and it does allow the president to

impose tariffs of up to 15% for up to

150 days which would be July 24th.

President Trump impose 10% tariffs. He

did threaten to go to 15% but so far

that has not happened yet. In response

quickly, you're correct. There were

lawsuits filed by 24 states on March 5th

and those have also were filed at the

Court of International Trade and will be

heard by a three judge panel uh that

includes the chief justice Mark Barnett

and the process will move quickly. There

is a motion for summary judgement that

was filed last Friday. There will be a

hearing on April 10th. So, uh, the lower

courts appear to want to move quickly

just as as they did on the AIPA tariffs.

Now, that being said, the tariffs are

only in place until July 24th, and it's

certainly not clear that you could get

through all of the stages of courts and

appeals before that July 24th when those

tariffs would have to come off.

>> And what is the theory of the states and

others suing?

Well, the basic theory is that the

United States does not have a balance of

payments deficit, that it has a trade

deficit. But balance of payments takes

into account many other factors. And

when you look at those other factors, in

their view, the uh United States does

not have a balance of payments deficit

or emergency that would justify these

types of tariffs.

>> Do you think that's a good argument? By

the way,

>> personally, uh not speaking for my law

firm or my clients, I do think it is a

credible argument and um there is

clearly a difference between trade

deficits and balance of payments

deficits. And so I expect the court is

going to give the government a very hard

time at this hearing on April 10th.

>> Coming up next on the Bloomberg Law

Show, I'll continue this conversation

with trade attorney Tim Breitbel.

President Trump has tried to replace the

AIPA tariffs. We'll talk about some of

the obstacles. I'm Jun Grao and you're

listening to Bloomberg.

President Donald Trump took to Truth

Social on Sunday night, contending that

he has an absolute right to impose

tariffs and criticizing the Supreme

Court's decision striking down the

tariffs he imposed under the

International Emergency Economic Powers

Act or AIPA. Quote, "The decision that

mattered most to me was tariffs. The

court knew where I stood, how badly I

wanted this victory for our country, and

instead decided to potentially give away

trillions of dollars to countries and

companies who have been taking advantage

of the United States for decades. I've

been talking to trade expert Timothy

Breitbill of Wy Rin. Tim, tell us about

the other ways the Trump administration

is trying to impose tariffs. Well, and

again, the goal is to have something in

place by the time that these section 122

tariffs would expire in late July. So,

last week, the US Trade Representative

announced two new sets of investigations

under section 301 of the trade laws.

Section 301 is the same law that the

first Trump administration used to

impose tariffs on hundreds of billions

of dollars of goods coming in from

China. and those tariffs are still in

place. So the two investigations that

were announced related first of all to

structural over capacity and overp

production and these are country

specific. So the US trade representative

is going to investigate structural

excess capacity or production in 27

countries and then followed a day or two

later by another investigation into

forced labor practices and in particular

what other countries are doing to

prevent goods that are made with forced

labor from being imported or sent on to

the United States. That investigation is

going to cover 60 countries. There will

be a very accelerated time frame for

these. So there will be comments that

are due starting almost now and due by

April 15th. And then the US trade

representative will have hearings on the

forced labor issue beginning April 28th

and on the structural overcapacity

beginning May 5th. So again, we have an

accelerated time frame to try and have

some of these investigations concluded

by the late July time frame.

>> Are there other national security

investigations

underway?

>> Those are still underway as well. A

number of section 232 investigations. Uh

this was the tool in the toolbox that

has been used to impose tariffs on steel

and aluminum imports uh from a number of

countries. Those tariffs are still in

place, but there are a variety of

ongoing section 232 investigations

covering everything from critical

minerals to pharmaceuticals to solar

polysilicon and related products like

solar cells and modules. So here the

commerce department has to do a report

on whether imports are a threat to

national security. Then the president

has ultimate discretion as to what

remedy to put in place. When we were

talking about the tariffs under AIPA, it

seemed as if most experts were saying,

"Well, no, the president could use this,

the president could use that." But it

seems like everything that the president

is using is under either investigation

or some long-term, you know, process.

Well, I would say that the courts have

upheld generally the president's ability

to use these national security tariffs

under section 232 as well as the section

301 tariffs depending on the situation.

So there is more discretion for the

president in these in these

circumstances as opposed to the AIPA

tariffs where Chief Justice Roberts

concluded that AIPA does not give the

president this unbounded power to

unilaterally impose tariffs. In fact, he

found that that view would represent a

transformative expansion of the

president's authority over tariff

policy. So I think there are tools in

the toolbox that the courts have upheld.

Doesn't mean they will necessarily

uphold the use of them in these

situations.

>> Was there anything in that Supreme Court

decision that you found very surprising?

>> Well, I think the decision was in line

with our expectations as far as when we

thought it would come out. We thought it

would be a 54 or a 63 decision. I do

think the chief justice uh writing the

main opinion and finding that all

tariffs under AIPA were illegal, not

just some tariffs like maybe the

fentinol tariffs were legal but the

worldwide reciprocal tariffs were not.

And then I also thought it was very

interesting to see the debate on the

major questions doctrine where justice

Gorsuch made a full defense of that

doctrine and and credited that for why

he voted the way he did. Whereas uh

Justice Amy Coney Barrett basically said

this is a textual issue. If you read the

text of AIPA, it does not allow tariffs.

So you don't have to get into the major

questions doctrine.

>> President Trump recently said it's going

to take 5 years before all this refund

stuff gets settled out. I mean what's

your prediction or assessment of how

long this is going to take this process?

I think it will be a relatively orderly

process for getting money back to

importers [clears throat] of record, but

I agree that if the goal is to get money

back to consumers, that will be longer

and messier and could take quite some

time. But the building blocks of this

customs system seem to be moving along.

We're keeping an eye on it. The judge is

keeping an eye on it. That part seems

manageable. It's really how to get the

refunds back to those who may have paid

higher prices that will be a real

challenge.

>> And Jim, what's your take on the big

picture for trade?

>> The only thing I would say is that uh

trade as a whole remains chaotic. It

remains among the top interests of this

president and this administration and it

is balanced against the clear importance

of affordability as a midterm election

year issue and a presidential election

issue. So the balance between tariffs

and affordability will continue to

define this debate this year and running

through to the presidential elections.

>> Always a pleasure to have you on Tim.

Thanks so much. That's Timothy

Breitbill, co-chair of the international

trade practice at WY Rine.

Please welcome the very first winner of

the FIFA Peace Prize, the 45th and 47th

President of the United States of

America, Mr. Donald J. Trump. Please,

[music]

>> thank you very much. This is truly one

of the great honors of my life.

>> You may remember back in December when

FIFA President Giani Infantino awarded

President Donald Trump the newly created

FIFA Peace Prize. Days later, the US

Solicitor General ordered Brooklyn

prosecutors to drop two FIFA bribery

convictions. In 2023, a jury had handed

down guilty verdicts against Lopez and

the sports marketing group Full Playby

for money laundering and wire fraud in

connection with a scheme to bribe

international soccer officials for World

Cup broadcasting rights. The highly

unusual move of prosecutors asking a

judge to overturn guilty verdicts could

lead to the reversal of convictions in

dozens of other international soccer

corruption cases as well as the return

of hundreds of millions of dollars in

recovered penalties. So, a Brooklyn

federal judge is requiring the Justice

Department to provide a legal basis for

dropping the long-unning international

soccer corruption case and explain the

impact on related convictions and

penalties. Joining me is Bloomberg legal

reporter Patricia Herano, who's been

following this legal saga for years.

Patty, tell us how we got to this point

in this longunning investigation and

prosecution. Two federal juries

convicted three sports marketing

executives

and soccer bosses. They had different

titles in a massive bribery scheme for

paying bribes or accepting bribes for uh

sports marketing tied to soccer and

FIFA, international soccer. It was part

of a huge case unveiled by then Attorney

General Loretta Lynch in 2015 to much

fanfare. And people may remember that

all the soccer baronss were collected in

a Barlac five-star hotel in Switzerland

and the FBI and law enforcement raided

it and took them away in handcuffs.

There was a huge trial in 2017

and resulted in the conviction of two of

those soccer officials and then uh they

appealed and then there was a trial in

2023 of former 21st century Fox uh

executive and alleged bribe paying and

receiving and a company called Fool Play

was also convicted. So then goes the

story, the appeal of the first two

executives, they appealed it and their

convictions were upheld. And then we get

to the story where um the 21st century

Fox executive is named Ernan Lopez and

he had hired a squad of good lawyers and

they challenged and challenged the case.

And then out of the blue, the judge

dismisses his conviction, anticipating

how the Supreme Court would rule. And it

took everyone by surprise and the

government by surprise and they

challenged it and they went to the

second circuit and they won. The circuit

reinstated the conviction. He continued

to challenge it and he was taking it to

the Supreme Court and then suddenly

everyone was very shocked. Literally

days before Christmas of last year, the

government and the solicitor general

said they weren't going to appeal this

case. So basically, it put the case back

into the posture of a conviction for

Ernon Lopez and full play will no longer

be challenged. Nothing to see here.

Supreme Court judges, the government is

pulling away from this prosecution.

So, um, reporting from my colleague and

I in law determined that the Trump

administration ordered the Eastern

District to pull the plug on their

prosecution.

>> The order you reported from the

solicitor general to pull the

prosecution. Was that after Donald Trump

was awarded a so-called peace prize by

FIFA?

>> Yes. Surprisingly, you remember that.

So, yes, this is true. It happened days

later. So my sources told me that the

Eastern District did not want to pull

the plug. It was one of their And the

other thing that affects this whole

thing in this equation is that more than

two dozen defendants either pleaded

guilty or were convicted. So imagine you

have at least 24 people or entities that

got convicted in this crackdown of

international soccer and what happens to

them too because they all are running

back to court saying, "Hey, if the judge

voided that guy's conviction, what about

us? What about me?" It was an uproar in

the courts. In January, the Supreme

Court vacated and remanded the Second

Circuit's decision reinstating the

bribery and money laundering convictions

of Lopez and the full play group. So,

where do we stand now? Where we stand

now is the case has been abandoned. So

what does it mean for not only against

Ernon Lopez and Full Play the company

that were convicted? The government's

abandoning that, but then it threw into

question what was the government going

to tell the district court judge about

the remaining defendants. And so what's

happened now is the judge ordered the

government to explain what the heck was

going on. So the same judge that

overturned the conviction of these two

defendants and she had previously upheld

the convictions of the other 24 entities

and people, she basically asked the

government to explain themselves. So

what we saw on filed late Thursday that

showed up on the docket on Friday

morning is the government's explanation.

>> And what is the government's

explanation?

>> The government's explanation is we've

decided it's not worth pursuing these

two cases. So, it's a kind of a

solommonic decision, if you want to call

it, because they want to save the

bathwater rather than the baby, I guess,

if you want to call it that way. I mean,

they're basically agreeing to dismiss

these two cases, the Full Play company

conviction as well as Arnon Lopez's, but

they say there are different elements

involved in the earlier convictions, so

they should stay. They said that the

Department of Justice has determined it

will not commit further resources to

these two defendants conviction. They

said in in the interest of justice just

get rid of these two cases, but let the

other 24 stand. It's quite remarkable.

Absolutely. The federal rules of

criminal procedure do allow the

government to seek dismissal of an

indictment even after there's a

conviction by a jury and a court has

entered judgment. But how unusual is it

for the US attorney to come in and say,

"Well, we got these convictions, your

honor, but forget it. We don't really

want them."

>> It's unusual, too, that the government

when they were winning would pull out. I

mean, that was what was so extraordinary

about what I saw on the docket in

December. I mean, first docket entry was

from the US attorney in Brooklyn telling

the court, "Hey, we're pulling out of

this case." and then literally seconds

later, minutes later, the solicitor

general of the United States pulls out

of the case. Now, my colleague um in law

had his sources saying that basically

DOJ felt and the solicitor general felt

the case was not winnable, but they had

already won at the circuit, which is

kind of incredible. I mean, if you're

winning, do you do you give up?

>> Not usually. I mean, there seems to be a

lot more here than we're being told. So,

the papers are in then or are there more

papers to come?

>> Well, I anticipate that what's going to

happen is these defendants, some of them

pled guilty expecting, you know, some of

them have gone to prison and are out.

So, we have two defendants, the soccer

bosses, uh, Latin American soccer

bosses, they got convicted in 2017 and

did their time and are out. they're

wealthy enough to sort of try to go to

see if they can get a clean slate to

wipe away their conviction and ask for

something. I mean, I don't think this is

the end of it. Obviously, if you have a

smart lawyer and you're mad about, hey,

I did a deal, but that's not fair to let

that other guy get away with it. Why do

I have to have that black mark on my

record? You know, certainly worth hiring

a lawyer and pursue that. And so there

are like about 30 individuals and

corporate defendants who've entered

guilty p who may now want to withdraw

them. Here's the data I have. Four

corporate defendants pled guilty. Two

corporate defendants got deferred

prosecution agreements. One corporation

got a nonprosecution agreement. 26

people defendants got convicted. And one

basically they dropped the co

cooperation agreement. I mean one key

former banker he was a city bank banker

and he became the government's star

witness. I mean the guy cooperated for

like eight years in this investigation

and his whole life got eaten up by this

case and he plead guilty and he got no

jail time you know. I mean, imagine

being that person and you've given up

your life and there were death threats

allegedly uh against him and imagine

you're living under this cloud and then

the US government says, "Hey, it's okay.

Nothing to see here."

>> Are the prosecutions over basically or

there are other cases pending?

>> I mean, there's two defendants who it's

a father and son sports marketing

company executives that are basically in

South America and they're never going to

be showing up in the US. so they could

get arrested. So I mean that case is

pending against them and the government

has vowed that they would pursue them.

And I mean the way the government has

written their letter that they filed on

Friday is it's sort of very discreet

carving out of the defendants these two

defendants Lopez and Full Play and not

the other 26 in that hopper. So if you

can think about it those earlier people

may be according to way the government's

perspective they're still in their

target site. We'll see if if some

executives got a lot of money and wants

to get their lawyer in and make a big

deal about this that hey this ain't fair

you know

>> and hundreds of millions of dollars in

penalties were paid

>> right I mean the government's carving

out and say basically leave those alone

those are fine we're still happy with

those and we're not going to give up

it's just Arnon Lopez and this full play

group that we're giving up on which is

kind of a wild theory and it'll be up to

the judge who basically started this to

have to parse out.

>> And also the second circuit decision was

important as far as you know the

government's ability to prosecute these

corruption cases, right? It sort of gave

the government a leg up.

>> Yeah. And that's one of the the

arguments that the government did say

that when that remember when I said that

the judge exparte without any invitation

decided on her own to say you know what

I just sat through this trial um they

got a conviction and here I am about

five six months later on second thought

I'm going to dismiss it because this is

what I think the Supreme Court would

rule. The circuit was very firm and said

she shouldn't be taking the job of

having to determine how the Supreme

Court is going to rule on something. she

should just have looked at what she was

asked for. So the government fought very

strenuously in their appeal saying to

the second circuit, hey this is

important for us. We have a new way of

attacking international corruption. The

judge had ruled that this was

international corruption that didn't fit

into the actual statutes. The solicitor

general, according to your sources,

didn't want to go forward with this

because he was afraid that the Supreme

Court would reverse because the Supreme

Court has been on a sort of a mission to

limit corruption cases. Yes, solicitor

general was saying this and but my

sources also told me that they were

pretty convinced that they were going to

win at the Supreme Court and that they

were ordered to give up on the case by

DOJ and the Trump DOJ just days after um

Mr. Trump got the FIFA world um peace

prize. And if every time you the

solicitor general thought they were

going to lose it, the Supreme Court just

threw in the towel, I mean, that would

be pretty unusual.

>> Right. Right. And also, you know, I

mean, the second circuit is hardly they

are one of the uh the the venues for

this grist of white collar corruption,

right? I mean, they are a very tough

circuit and they've made a lot of

rulings that have gotten and been upheld

in the Supreme Court. So anticipating I

mean this case so extraordinary. You

have a judge who decided on her own

without being asked. She was repeatedly

asked by the way during the trial by the

defense lawyers, hey this is not right.

And she rejected it and then she guessed

she had the summer to think about it and

to decide it on her own. You know what?

I think this is what the Supreme Court's

going to rule. And she was actually like

chided by the second circuit about this.

So, what does the timeline look like in

the case now?

>> When the solicitor general and the US

attorney told the judge that they were

not going to pursue this case, a couple

of weeks later, the district court judge

asked for an explanation. So, next thing

we have to hear is from the defense

lawyers, who I'm sure are thrilled and

what they're going to say. And then I

expect more defendants maybe flocking to

her and asking her, "Hey, what about

me?" Nobody wants to be left out of of a

good ruling like this.

>> The two defendants, Nan Lopez and the

sports marketing group Full Play. I

mean, is there anything about them that

stands out from the rest of the

defendants? Do they have more ties to

the Trump administration? I mean, do

they stand out for any other reasons?

Ernon Lopez has gotten very wealthy and

doing a podcast company and that's got a

lot of clout and made a lot of money

after he left uh 21st century Fox. You

know, he's got some excellent lawyers

including one who is a former federal

judge in Brooklyn. So whether one has

moral persuasion or has um you know the

creds, the legal creds uh to help you in

your pursuit of what you think was an

injustice. I mean the one thing that all

the defendants have assailed is there

was no nexus for the US to bring this

kind of case. But the government uh

Eastern District especially is very

creative in establishing that there were

actual impacts on the American legal

system or also in the financial system

and they showed thousands of financial

transactions where some of them even had

bribes that went through US financial

institutions through correspondent

banks. So I mean the government yeah I

mean the reach maybe has been

self-imposed. You know think about it if

you put yourself in a straight jacket

rather than having one put on you. So I

mean this kind of decision will maybe

limit further transnational criminal

cases you especially white collar

financial fraud cases. We've talked

about these cases so many times and I

anticipate we'll be talking about them

again. Thanks so much Patty. That's

Bloomberg legal reporter Patricia

Herertado. And that's it for this

edition of the Bloomberg Law Show.

Remember, you can always get the latest

legal news on our Bloomberg Law podcast.

You can find them on Apple Podcast,

Spotify, and at

www.bloomberg.com/mpodcast/law.

And remember to tune in to the Bloomberg

Law Show every week at 1000 p.m. Wall

Street time. [music]

I'm June Graasso and you're listening to

Bloomberg.