The Federal Circuit should have suspended the tariffs while the litigation goes forward.
The Federal Circuit should have suspended the tariffs while the litigation goes forward.
T he U.S. Court of Appeals for the Federal Circuit issued a dismaying order on Tuesday.
Recall that two weeks ago, the U.S. Court of International Trade (CIT) invalidated the sweeping “liberation day” tariffs President Trump unilaterally imposed, in dubious reliance on the 1977 International Emergency Economic Powers Act (IEEPA). For what it’s worth, I believe this ruling was correct, as Rich Lowry and I discussed on our podcast. Also, check out our editorial, as well as posts by Jim Geraghty, James Lynch, the duo of Tim Chapman and Timothy Harper, Andrew Stuttaford (part 1 and part 2), and moi.
The CIT delayed putting its ruling into effect, giving the Trump administration a chance to appeal. The administration immediately sought a stay from the Federal Circuit (the appellate court that reviews CIT decisions), and the circuit issued an administrative stay, which is just a temporary hold so the tribunal can get a handle on the case.
The administration further moved for a stay that would remain in place while the appeal proceeds. In addition to positing arguments on the merits (i.e., the claims it unsuccessfully made in the CIT, plus the contention that the CIT’s decision is wrong), the administration argued that a suspension of the tariffs at this moment would undermine its sensitive negotiations with China and other nations over tariffs and trade relations. (Note that the president says his negotiators have arrived at a deal with Beijing, subject to final approval by Trump and Xi Jinping. I share the skepticism of Dominic Pino and our editorial.) The plaintiffs, to the contrary, argued that (a) the IEEPA-based tariffs are illegal, (b) the CIT’s ruling is sound, and (c) many of them will be irreparably harmed — i.e., an ultimate decision in their favor, which they understandably regard as likely, would be cold comfort if they have gone out of business in the interim because the tariffs were kept in effect.
The circuit has basically split the baby. In the short order issued Tuesday, the tribunal kept the tariffs in effect but it expedited the appeal, with briefs to be submitted rapidly and the case set for oral argument on July 31 — about six weeks from now. There is, however, no timetable for when the circuit might rule on the case.
Here is the dismaying part. To win a stay under the standard legal test, a party is required to demonstrate that it is likely to win on the merits once the case is finally decided. There are other factors, but that is the most important one. Yet, although the circuit kept the stay in place, it did not find that the Trump administration is likely to win. Instead, observing that “both sides have made substantial arguments on the merits,” it reasoned that there was no need make a prediction at this point about who ultimately is going to win.
For this proposition, it relied on the Supreme Court’s May 22 order in Trump v. Wilcox, which I wrote about here. In Wilcox, the 6–3 majority tautologically stated that “the purpose of . . . interim equitable relief is not to conclusively determined the rights of the parties, but to balance the equities as the litigation moves forward” (emphasis added). The “interim” stage of a litigation is preliminary, not final, so of course a court’s purpose at that point cannot be to make a conclusive determination; it is to make a predictive determination — likelihood of success. And under the Court’s own precedents, the equities cannot be balanced properly without determining who is likely to win in the end and is therefore more deserving of protection in the meantime.
Alas, as Justice Elena Kagan correctly pointed out in her Wilcox dissent, the majority deviated from the Court’s long-standing test for granting a stay because it is in a bind.
The Wilcox case poses the question whether the president has unilateral power to remove board members of “independent” administrative agencies that exercise executive power. A majority of the Court is clearly of a mind to rule that presidents have such power. To do so, however, the justices will have to reverse a 90-year-old precedent, Humphrey’s Executor v. United States, which holds that presidents are bound by congressional statutes that limit their authority to remove heads of such agencies to “good cause” — i.e., misfeasance or malfeasance in office.
To reverse Humphrey’s, or at least substantially gut it, at a preliminary stage of a case — which is the stage Wilcox, like the tariff case, is in — would open a Pandora’s box for two reasons. First, even if a long-standing precedent was a bad decision — one that, in the instance of Humphrey’s, is foundational to modern governance by the administrative state — the majority knows that, if it is to be reversed, that should happen only after a full merits briefing and oral argument, not on an interim emergency motion for a stay. Second, the majority is struggling to rationalize how it can reverse Humphrey’s while simultaneously preserving the Federal Reserve’s insulation from presidential control; unlike the array of other independent agencies, the loss of the Fed’s independence could have dire financial consequences. (That is why even the Trump Justice Department, which ardently seeks the reversal of Humphrey’s, has taken pains to distinguish — unconvincingly — the Fed from other agencies the president seeks to control.)
In short, the majority thinks the president should be able to fire most agency heads; ergo, since the executive power at issue belongs to the president, the judiciary should defer to his determination to remove them while the litigation proceeds. Nevertheless, the Court’s majority is not prepared to deal with the implications of stating that the president is likely to win the Wilcox case — the premature reversal of Humphrey’s and panic over the Fed. So it decided to upend its jurisprudence regarding stay motions (interim relief), which — for obvious reasons – makes the likelihood of success on the merits the most important factor.
And now, as invariably happens when the Court tries to navigate the political currents rather than just applying legal principles, we’re beginning to see negative downstream consequences in the lower courts.
In the tariff case, the president should lose: For the reasons compellingly explained by the unanimous CIT panel (made up of judges appointed by Presidents Reagan, Obama, and Trump himself), the IEEPA — which doesn’t even mention tariffs — is not a license for the president to impose a crazy-quilt global tariff regime on the pretext that so-called trade imbalances are a national emergency. As a result of those tariffs, many American businesses are being crushed. That’s why a number of them sued.
Under circumstances in which the plaintiffs have a likelihood of success on the merits and are suffering what may be irreparable harm, the Federal Circuit should suspend the tariffs while the litigation goes forward. Yet the circuit shrank from its duty. It figured: If the Supreme Court doesn’t follow its stay precedents because the justices don’t want to be blamed for unraveling the administrative state or undermining Fed independence, then why should we follow those precedents only to be blamed by the president for blowing up his administration’s trade negotiations?
This is wrong. If the tariffs are legally infirm (and they are), it’s the Trump administration’s fault, not the judiciary’s, if the president’s trade-negotiation strategy hinges on the misperception that he has power that, in fact, he lacks. A judicial tribunal’s job is not to help manage the fallout of the executive branch’s wayward political strategy; it is to protect the Americans who are being profoundly harmed by the government’s illegal actions. Moreover, if the circuit did the right thing here, it would merely be suspending the tariffs during litigation, not nullifying them. The administration would still have a chance to convince the circuit on the merits; and if it fails, as is likely, it can then appeal to the Supreme Court.
Obviously aware that it is in the wrong, the circuit tried to compensate by throwing the plaintiffs a bone: It will expedite the case. That is, instead of having to suffer and potentially collapse under the tariff regime over the course of six months, or a year, or however long the appeals court would ordinarily take to decide a case in which the entire circuit bench will weigh in, the plaintiffs can hope to hang in there while the circuit tries to issue a ruling in three or four months. What a deal!
The Supreme Court has made a mess here. If likelihood of success on the merits is no longer the guiding factor in emergency-stay litigation — if courts are supposed to pretend that both sides have equally good arguments and the best judges can do is “balance the equities” — there are going to be many more specious legal claims, along with incalculable damage done to Americans whose rights are being violated.
Either the justices should have left the Wilcox agency heads in place until the case could be decided on the merits or, if convinced that it is an intolerable constitutional affront to have executive power wielded by officials to whom the president objects, the majority should have overruled Humphrey’s and let the chips fall where they may. After all, this is what’s eventually going to happen anyway. But if the Supreme Court is alarmed about the increasing breadth of its emergency docket — and the justices have repeatedly expressed concerns about that — that burden will become only more onerous if the lower courts shrink from determining who is likely to win these cases.