What’s next in the US court battle over Trump’s tariffs? DOJ to open grand jury to investigate Obama officials, and more ➡️

☀️ Good morning from The Legal File! Here is the rundown of today's top legal news:

✍️ What happens next in the US court battle over Trump's tariffs? 

A federal appeals panel on July 31 appeared skeptical of President Trump's argument that a 1977 law historically used for sanctioning enemies or freezing their assets gave him the power to impose tariffs.

Regardless of how the court rules, the litigation is almost certainly headed to the U.S. Supreme Court.

The litigation challenges the tariffs Trump imposed on a broad range of U.S. trading partners in April, as well as tariffs imposed in February against China, Canada and Mexico.

The case centers around Trump's use of the International Emergency Economic Powers Act, which gives the president the power to address "unusual and extraordinary" threats during national emergencies. Trump has said that trade imbalances, declining manufacturing power and the cross-border flow of drugs justified the tariffs under IEEPA.

If the Federal Circuit rules in the coming weeks, there is still time for the U.S. Supreme Court to add the case to its regular docket for the 2025-2026 term, which begins on October 6.

There is no consensus among court-watchers about what the Supreme Court will do.

Critics of Trump's tariffs are optimistic their side will win. They point to the Supreme Court's decision from 2023 that blocked President Joe Biden from forgiving student loan debt. In that ruling, the justices limited the authority of the executive branch to take action on issues of "vast economic and political significance" except where Congress has explicitly authorized the action. But the justices in other cases have endorsed a broad view of presidential power, especially when it comes to foreign affairs.

A loss at the Supreme Court would hamstring Trump in future tariff negotiations, but the White House has other ways of imposing tariffs, like a 1962 law that allows the president to investigate imports that threaten national security. Trump has already used that law to put tariffs on steel and aluminum imports, and those levies are not at issue in the case before the Federal Circuit.

Read more.

📑 DOJ to open grand jury to investigate Obama officials, source says

U.S. Attorney General Pam Bondi has directed federal prosecutors to launch a grand jury investigation into allegations that members of Democratic former President Barack Obama's administration manufactured intelligence on Russia's interference in the 2016 elections, a source familiar with the matter said on Aug 4.

The Justice Department said late last month it was forming a strike force to assess claims made by Director of National Intelligence Tulsi Gabbard about "alleged weaponization of the U.S. intelligence community."

Republican President Donald Trump has leaped on comments from Gabbard in which she threatened to refer Obama administration officials to the Justice Department for prosecution over an intelligence assessment of Russian interference.

Fox News first reported that Bondi personally ordered an unnamed federal prosecutor to initiate legal proceedings and the prosecutor is expected to present department evidence to a grand jury, which could consider an indictment if the Justice Department pursued a criminal case. 

Referring to the probe in a post on Truth Social, Trump said: "The TRUTH always wins out. This is great news."

Last month, Trump accused Obama of treason, alleging, without providing evidence, that the Democrat led an effort to falsely tie him to Russia and undermine his 2016 presidential campaign. Trump won the 2016 election against Democrat Hillary Clinton.

A spokesperson for Obama had denounced Trump's claims, saying "these bizarre allegations are ridiculous and a weak attempt at distraction."

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⚖️ U.S. judge says he won't explain error-ridden ruling in Mississippi civil rights case

A federal judge in Mississippi declined to give an explanation for a ruling he issued last month which the state said contained references to made-up material, incorrect plaintiffs and defendants, and other serious errors.

In an order on Aug 1, U.S. District Judge Henry Wingate in Jackson, Mississippi, said his July 20 decision contained “clerical errors referencing improper parties and factual allegations,” and that he issued a new opinion after correcting the mistakes.

“No further explanation is warranted,” Wingate wrote.

The judge’s decision, issued in a civil rights case brought by the Mississippi Association of Educators, stopped the state for now from enforcing a ban on diversity, equity and inclusion programs in state universities and public schools.

After Wingate replaced the ruling with a corrected version, lawyers for the state asked him to clarify what had happened and to "preserve the record."

Wingate said in the filing that judges have the authority to correct what he called clerical mistakes and errors arising from oversight or omission, and no further action was needed. He also declined to make the original, faulty ruling available on the public docket.

The state's lawyers have not publicly suggested a reason for the errors. They came to light the same week that a federal judge in an unrelated New Jersey case also retracted a decision containing seemingly made-up case citations and other errors.

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💼 US law firm Duane Morris must face lawsuit over alleged partner pay scheme

U.S. law firm Duane Morris must face a proposed class action accusing it of misclassifying some of its employees as partners in a bid to force them to pay part of the firm's taxes and expenses while denying them a share of its profits.

District Judge Cathy Ann Bencivengo in San Diego on Aug. 1 denied Duane Morris' bid to dismiss most of the claims in the lawsuit brought by Meagan Garland, a former partner in the firm's employment law practice.

Bencivengo said she would give Garland the chance to amend her lawsuit to reassert two of the three claims she dismissed.

"We are very pleased with the judge’s thoughtful ruling and look forward to getting into the merits of the case," said Bibianne Fell, whose law firm Fell Law PC is representing Garland.

Many U.S. law firms internally designate some partners as non-equity or "income" partners. Such partners typically earn far less than full equity partners, whose compensation is tied directly to firm profits.

Garland sued Duane Morris in August 2024, accusing the firm of systematically and unlawfully misclassifying its non-equity partners as "partners" even though they can be hired and fired at-will, and do not have an ownership stake in the firm.

After promoting lower-ranked lawyers to its non-equity partner tier, Duane Morris stops paying the employer's share of their federal and state payroll taxes, as well as their benefits such as health care, vision, dental and disability insurance, Garland alleged.

Garland, who is Black, also accused Philadelphia-founded Duane Morris of paying women and minorities less than their white male counterparts.

Duane Morris said in a court filing that Garland's claims lacked any validity, and that she was a "genuine partner whom the firm has always compensated and otherwise treated fairly and well within the bounds of the law."

Read more.

👋 That's all for today, thank you for reading The Legal File, and have a great day!

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