Emoluments Clause Litigation Status Report

When we last left the emoluments clauses, Judge Messitte, U.S. district judge for the District of Maryland, had just issued a ruling in District of Columbia v. Trump, holding that the plaintiffs (DC and Maryland) had standing to sue the president for his alleged violations of the foreign and domestic emoluments clauses. As we observed at the time, the standing theory adopted by the court, based on the premise that these violations were advantaging the Trump Hotel in DC at the expense of competitors such as the Four Seasons and Ritz Carlton, seemed strained, to put it mildly. We also noted that although the court thus far had only addressed standing, “[a]t points it appears to have already decided the merits” against President Trump.

Sure enough, in July 2018 Judge Messitte issued an opinion adopting a broad view of the term “emolument” as extending “to any profit, gain, or advantage, of more than de minimis value, received . . . directly or indirectly, from foreign, the federal, or domestic governments [including] profits from private transactions, even those involving services given at a fair market value.” Memorandum Opinion of 7-25-18 at 47. Although ostensibly Judge Messitte merely denied the president’s motion to dismiss, he effectively decided the case in favor of the plaintiffs since there is no dispute that foreign and domestic governments have patronized the Trump Hotel during the Trump administration, which is all that is required to establish an emoluments violation under the court’s theory. Not surprisingly then, the president’s lawyers sought to stay discovery and take an interlocutory appeal and, when Judge Messitte denied these motions, sought a writ of mandamus in the Fourth Circuit (about which more in a moment).

Two other emoluments suits against Trump also remain pending (hat tip: @SethBTillman). In Blumenthal v. Trump, a suit brought by members of Congress in the U.S. district court for the District of Columbia, Judge Sullivan denied the president’s motion to dismiss for lack of standing but deferred decision on other issues, including the president’s contention that the plaintiffs had failed to state a claim upon which relief may be granted. The district court as of yet has apparently not ruled on the remainder of the motion to dismiss (which was argued nearly a year ago), nor upon Trump’s motion to certify the court’s ruling on standing for interlocutory appeal. No discovery is occurring while these legal motions are pending.

The third case is CREW v. Trump, a suit filed in the U.S. district court for the Southern District of New York. The district judge in that case dismissed for lack of standing. The plaintiffs appealed to the Second Circuit, which heard argument in October 2018. No decision has yet been issued.

Meanwhile, back to DC v. Trump. On March 19, 2019, a Fourth Circuit panel heard argument in the case (there were actually two separate arguments before the same panel, one pertaining to the president in his official capacity and one pertaining to him in his individual capacity). I listened to audio of the argument and can confirm, as has been widely reported, that things did not go well for DC and Maryland.

There are a number of technical issues involved in the appeal/mandamus, most of which I find of little interest. The main takeaway from the argument, though, was that the panel was deeply skeptical about several aspects of the plaintiffs’ case and also disturbed by the behavior of the district judge.

The panel questioned the “competitive injury” theory of standing advanced by DC and Maryland, and it pressed their lawyers to explain what remedy would redress the supposed injury, something the lawyers had some difficulty in doing. Reading between the lines, the Fourth Circuit suspects that the injury is entirely pretextual and that the plaintiffs are actually seeking discovery or favorable court rulings that would inflict political damage on the president without doing anything to redress the alleged injury. (One member of the panel asked if the finding of an emoluments clause violation would establish a high crime or misdemeanor, implying that this was the real objective of the lawsuit.).

The panel also was skeptical about the broad definition of “emolument” adopted by Judge Messitte. They wanted to know why, if an emolument meant any financial benefit or advantage, the emoluments clauses would not prohibit owning government bonds, having federally insured bank accounts or holding stock in companies that do business with foreign or domestic governments. The lawyers for DC and Maryland argued that these types of arrangements did not present the same type of opportunities for influence-peddling as Trump’s ownership of hotels, but this distinction does not cohere well with either the language of the emoluments clauses or the definition of “emoluments” endorsed by the plaintiffs and the district judge.

Finally, the Fourth Circuit panel clearly felt that Judge Messitte was not merely dispassionately applying the law to the facts of the case. (Perhaps they had seen this article by the judge’s son). As Josh Gerstein of Politico noted: “two of the [appellate] judges came close to accusing the Maryland-based district court judge handling the suit, Clinton-appointee Peter Messitte, of impropriety for trying to engineer the challenge rather than responding to legal issues presented to him.”

Professor John Mikhail is critical of the Fourth Circuit’s handling of this oral argument, although it seems to me his criticisms in some cases might be better directed at the plaintiffs. For example, Mikhail argues that the best answer to the court’s questions about remedy would have been “a narrowly tailored injunction ordering the Trump Hotel in Washington D.C. to stop accepting payments from foreign governments,” but the failure of the plaintiffs’ lawyers to highlight this remedy may be symptomatic of their interest in achieving political goals rather than redressing the supposed injury. Similarly, Mikhail argues that many of the Fourth Circuit’s concerns about the breadth of the plaintiffs’ definition of “emoluments” could be assuaged by reading the domestic emoluments clause in a substantially narrower fashion that the foreign emoluments clause. Even if this is true, however, it is not the court’s fault that the plaintiffs decided to advance a different theory of the case.

It is unlikely that the emoluments cases are going to resolve the issue of whether President Trump needs to divest himself of any holdings or take other steps with regards to his business interests, at least during his first term. We have previously discussed why Congress, not the courts, is the proper forum for resolving disputes about the foreign emoluments clause, as well as broader questions about the president’s financial conflicts of interest.

Now that the Democrats control the House, there is even less reason for this dispute to be before the judicial branch. Unfortunately, although there have been a number of inquiries that touch on Trump’s businesses, these appear to be limited in scope. According to this cool Brookings oversight tracker, House committees have asked about the GSA lease of the Old Post Office to the Trump Organization (Transportation committee letter of 1-22-19), the FBI’s decision not to move its headquarters, which would have had a negative impact on the Trump Hotel  (letters from multiple committees to DOJ, FBI and GSA on 3-6-19) and allegations that Trump inflated or deflated the value of his assets in the course of his private business dealings (letter from the Oversight and Reform committee to accounting firm on 3-20-19). In addition, the Ways & Means committee requested Trump’s tax returns from the IRS, ostensibly for the purpose of evaluating the audit process for presidential tax returns, on April 3, 2019.

None of these inquiries appear to address the broader questions of what businesses and assets Trump or the Trump Organization owns, what conflicts of interest may arise from these holdings, and what safeguards have been put in place to minimize such conflicts. Presumably GAO could be quite helpful in conducting such a review. (I would also suggest asking the Office of Legal Counsel for its views on the scope of the emoluments clauses if this has not been done already).

As Judge Daniels observed in CREW v. Trump, Congress is not a potted plant. It need not and should not wait for the courts to resolve these questions, which very possibly will never happen.

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