Following the Supreme Court’s recent decision striking down President Trump’s IEEPA tariffs, many companies will now have to consider whether and how they might seek a refund. Indeed, the first of what undoubtedy will be many refund actions has already been filed. In the following guest post, Sarah Abrams examines the refund-related questions corporate executives now face, and considers the D&O risks involved. My thanks to Sarah for allowing me to publish her article as a guest post on this site. Here is Sarah’s article.

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In the wake of the U.S. Supreme Court’s February 20, 2026 decision in Learning Resources v. Trump, which held that the International Emergency Economic Powers Act (IEEPA) did not authorize the sweeping tariffs imposed during the second Trump administration, the D&O Diary queried what the court’s decision might mean for D&O exposure. An immediate consideration for executive teams, as reported on by The Wall Street Journal (WSJ), is what action (if any) should be taken by companies impacted by Liberation Day tariffs to seek refunds.

The following discusses three areas of potential D&O risk stemming from the tariff refund question created by the Learning Resources decision: whether to disclose that tariff refunds are being sought; whether to monetize tariff refund claims; and the potential impact of pricing modifications implemented to blunt the impact of IEEPA tariffs.

Seeking a Tariff Refund?

The Supreme Court’s majority decision in Learning Resources is silent on the subject of refunds. Importantly, the published opinion does not:

• Directly explain whether the United States must refund tariffs collected under an unconstitutional tariff regime.
• Describe a specific mechanism for how refunds should be processed or who is entitled to them.
• Provide guidance on administrative or judicial procedures for refund claims.

Instead, the opinion’s legal analysis addresses only the statutory issue of whether IEEPA authorizes tariffs. Having concluded that it does not, the Court remanded without addressing remedies such as restitution or refunds. Thus, tariff refund questions are left to lower courts, the executive branch, or Congress.

As a result, for executives and public companies, the refund question may quickly become a disclosure question. Like certain organizations with leadership interviewed by the WSJ, if management believes a substantial tariff recovery is warranted, investors may view that recovery as a material asset. If management believes recovery is unlikely or limited, that too may affect market valuation. Given that the probability of recovery remains uncertain, particularly because tariff refund fights may have to be litigated, along with the potential for a political response from the administration, public messaging by corporate executives on tariff refunds may, in and of itself, create D&O exposure.

Statements about refund prospects may later appear overly optimistic or pessimistic.  Earnings calls, SEC filings, and investor presentations that characterize refunds as “expected,” “possible,” or “unlikely” may become focal points if share prices move materially on subsequent developments.  Thus, securities litigation risk does not seem theoretical. If stock prices increase based on perceived refund upside and later fall when recovery proves elusive, plaintiff shareholders may allege that the company overstated its likelihood of success. Conversely, if corporate management fails to discuss refund potential at all and competitors recover significant sums, investors may question whether the company failed to pursue or disclose a material opportunity.

Monetization of Refund Claims

One such tariff refund strategy reported on by the WSJ included the sale or monetization of refund claims to hedge funds or litigation finance vehicles. Rather than waiting years for uncertain administrative or judicial outcomes, a company could convert the contingent asset into immediate liquidity. Following the Learning Resources decision, such a strategy may appeal to boards and executive teams seeking certainty in at least some return of capital.

But from a D&O risk perspective, such monetization may create its own hazards.  Particularly with respect to the valuation of an anticipated refund. If a company sells a refund claim at a significant discount and subsequent rulings validate full recovery, shareholders may allege that directors failed to maximize corporate value. Securities plaintiffs could then frame the decision as corporate waste or breach of fiduciary duty, particularly if the sale occurred without independent valuation, fairness review, or robust documentation of deliberation.

The timing of tariff refund monetization may also draw scrutiny. A transaction executed under perceived urgency, like immediately after the Learning Resources decision, and in the absence of clear regulatory guidance, may appear improvident if the legal landscape later stabilizes in favor of refund claimants. Thus, corporate disclosure may again become a central issue.

If management characterizes monetization as risk-reducing or value-enhancing, and later developments suggest otherwise, securities plaintiffs may argue that the company misrepresented the transaction’s rationale or potential upside foregone. However, independent advisors, fairness opinions, and documented board engagement in considering whether to monetize refund claims may be levered as defensive tools in future litigation.

Pricing Decisions and the Consumer Refund Overlay

The refund issue does not necessarily stop at the importer-of-record level. Many companies increased prices or imposed surcharges during the tariff period, publicly attributing those increases to tariff-driven cost pressures. Earnings calls may have referenced tariffs as a primary margin headwind. Thus, now that the IEEPA tariffs have been declared unlawful, and duties may be refunded, customers, distributors, retailers, and end users are likely to ask whether those price increases should now be reversed.

State unfair and deceptive trade practice statutes are often broadly framed and require only that a representation be misleading or unfair, not intentionally fraudulent. If a company prior to the Learning Resources decision tied price increases explicitly to IEEPA tariffs and then retains refunded amounts without adjustment, potential plaintiffs may allege that the initial pricing justification was incomplete or misleading. 

While consumer protection claims may not fall squarely within traditional D&O coverage, they can generate derivative suits alleging that boards failed to anticipate or mitigate reputational and regulatory risk. In addition, the impact of anticipated consumer actions seeking refunds for pricing increases may influence corporate budgets and reported revenue, causing scrutiny from shareholders.

Conclusion

Ultimately, what began as a trade law ruling may evolve into a governance stress test. The Learning Resources decision removed the statutory foundation for the tariffs, but it did not resolve the financial, political, or procedural uncertainty surrounding refunds. In that vacuum, executive judgment, board process, and public disclosure may impact whether companies affected by tariffs will face shareholder litigation.

Whether corporate leadership chooses to pursue refunds, monetize them, retain pricing adjustments, or recalibrate messaging, each path carries potential hindsight scrutiny. As the WSJ reporting makes clear, executive teams are actively weighing these choices now. From a D&O exposure perspective, the relevant questions may extend beyond whether refunds will be paid, to whether the strategy surrounding those refunds is deliberated appropriately, documented thoroughly, and publicly communicated.