By Jon Schlotterback
On October 15, 2019, the Fourth Circuit Court of Appeals issued an Order for rehearing one of the lawsuits filed against President Trump for alleged violations of the Emoluments Clauses.[1] This Order came after the Fourth Circuit had previously reversed a district court decision that held the District of Columbia and State of Maryland had standing to pursue such a claim against the President.[2] Despite President Trump’s reference to the “phony Emoluments Clause”[3] in response to the reversal of the decision to host the G-7 Summit at his Miami Doral resort,[4] the Clauses are real, and the rehearing presents interesting questions of Constitutional authority over the President.
Most modern Presidents, upon taking office, have put their business interests in a blind trust for the duration of their service.[5] This was done to address the underlying need for the Emoluments Clauses: to prevent even an appearance of a conflict of interest between the office of the Presidency and personal wealth.[6] President Trump decided to break with that tradition and transfer the management of his business interests to his sons, Donald Jr. and Eric Trump, while retaining an interest from which he could take disbursements at any time.[7] In addition to this change from past administrations, the President’s business interests are more visible because of his high-profile eponymous real estate properties.[8] Emoluments Clause litigation centers around whether the President has impermissibly profited from the office through his business interests.[9]
The U.S. Constitution has three Emoluments Clauses. First, the Foreign Emoluments Clause entails that “no Person holding any Office of Profit or Trust under them, shall, without the Consent of Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.”[10] This Clause is “concerned with preventing U.S. officials from being corrupted or unduly influenced by gifts or titles from foreign governments.”[11] Second, the Domestic Emoluments Clause pertains more directly to the actions of the President, stating “The President shall . . . receive for his Services, a Compensation, which shall neither be encreased nor diminished during the Period for which he shall have been elected, and he shall not receive within that Period any other Emolument from the United States, or any of them.”[12] This Clause is “concerned with ensuring presidential independence and preventing the President from being improperly swayed by the States.”[13] Third is the Ineligibility Clause, [14] not at issue in this situation.
After President Trump’s election in 2016, three lawsuits were filed to challenge his alleged violations of the Emoluments Clauses. First, Citizens for Responsibility & Ethics in Washington v. Trump[15] was filed in the Second Circuit alleging violations of the Domestic and Foreign Emoluments Clauses based upon both the General Services Administration’s lease with Trump International Hotel (the “Hotel”) and payments from foreign government agents to the Hotel.[16] Second, District of Columbia v. Trump,[17] discussed below, alleged violations of the Domestic and Foreign Emoluments Clauses.[18] Third, Blumenthal v. Trump[19] was filed by members of Congress alleging violations of the Foreign Emoluments Clause as a result of foreign government payments both at properties owned by the President and in the form of licensing deals for the President’s business entities.[20] These lawsuits represent some of the first Emoluments Clauses challenges and are testing the waters to see how courts will deal with issues of standing, the limits of the prohibitions, and enforcement of the Clauses.[21]
On February 23, 2018, the District of Columbia and State of Maryland filed their suit against the President in both his individual and official capacity.[22] The complaint detailed several instances of alleged violations of the Foreign Emoluments Clause, including over $270,000 received from an agent of Saudi Arabia for lodging and meals at the Hotel.[23] Furthermore, the compliant alleged violations of the Domestic Emoluments Clause through a lease with the General Services Administration, $32 million in tax credits for the Hotel, and advertisements of Trump’s Mar-a-Lago resort on a State Department-managed website.[24] The arguments are focused on issues of standing and the meaning of the term “emolument.”[25]
On March 28, 2018, the district court filed an opinion addressing one of the primary obstacles to an Emoluments Clause challenge: standing.[26] Primarily discussing whether the plaintiffs had suffered an injury in fact, the court found that Plaintiffs had suffered injuries based on quasi-sovereign, proprietary, and parens patriae[27] interests with respect to “Trump International Hotel and its appurtenances in Washington, D.C. as well as the operations of the Trump Organization with respect to the same,” but found no standing for any of the other Trump Organization businesses challenged.[28]
Reasoning that states will feel coerced into a dilemma of either giving the Trump Organization sought-after tax breaks (and thus losing revenue) or denying the requests and losing the favor of the President to other states, the court found the Plaintiffs had established injury to quasi-sovereign interests.[29] Injury to proprietary interests was found to have been successfully pleaded by unfair competition in the form of the District of Columbia’s Washington Convention Center and Maryland’s Bethesda Marriott Conference Center, both highly similar venues to the Hotel.[30] The Plaintiffs argued their venues lost business to the Hotel as a result of the President’s alleged violations of the Emoluments Clauses.[31] Finally, the court found the Plaintiffs had sufficiently pled injury to parens patriae interests of the Plaintiffs’ residents through the effect of unfair competition on each Plaintiffs’ hospitality market.[32] The court deferred ruling on the President’s motion to dismiss based on absolute immunity in his individual capacity.[33]
On July 25, 2018, the district court then issued another opinion upholding the Plaintiffs’ suit and adopting a broad definition of “emolument” to extend “to any profit, gain, or advantage, of more than de minimis value, received by him, directly or indirectly, from foreign, the federal, or domestic governments.”[34] This definition also included “profits from private transactions, even those involving services given at fair market values,”[35] thereby rejecting one of the President’s arguments that “private transactions unrelated to compensation in exchange for the performance of official duties or personal services” are not emoluments.[36] After the ruling, the President asked the district court to certify an interlocutory appeal to the Fourth Circuit, but the motion was denied.[37] The court once more deferred to rule on the issue of absolute immunity but issued an order to begin discovery. Arguing the discovery order effectively denied him an absolute immunity defense, the President filed a request for a writ of mandamus.[38]
In opposing the President’s request for mandamus, the Plaintiffs argued the district court’s definition of emolument was correct and asserted that dictionaries from the late-eighteenth century frequently gave the term a broad meaning.[39] Additionally, they emphasized earlier contentions that the President’s violations of the Emoluments Clauses harmed quasi-sovereign, parens patriae, and proprietary interests.[40] In reply, the President argued that any “fear of retaliation” and subsequent harm to these interests was “self-inflicted” and that other Founding-era dictionaries contained definitions of “emolument” that significantly narrowed the scope to “compensation accepted from a foreign or domestic government for services rendered by an officer in either an official capacity or an employment-type relationship.”[41] Asserting that the Emoluments Clauses could not have such a broad definition, the President also pointed to the actions of George Washington who, while President and in his private capacity, purchased federal land located in what is now the District of Columbia.[42] Finally, the President asserted that to accept the district court’s definition would also find unconstitutional the actions of President Obama in his retention of treasury bonds and royalties on foreign book sales.[43] After granting a stay on the district court’s proceeding, the Fourth Circuit asserted its authority to hear the case.[44]
In separately filed opinions, the Fourth Circuit reversed the rulings of the district court for claims against the President in both his official and individual capacity.[45] The court noted that the suit was extraordinary by reason that it “is brought directly under the Constitution without a statutory cause of action, seeking to enforce the Emoluments Clauses which . . . give no rights and provide no remedies,” “seeks an injunction directly against a sitting President” and “no court has ever entertained a claim to enforce [the Emoluments Clauses].”[46] Finding that the harm inflicted upon the Plaintiffs’ proprietary and parens patriae interests was too attenuated to provide standing, and that the quasi-sovereign interests were merely a “general grievance, insufficient to amount to a case or controversy in the meaning of Article III,” the court found the Plaintiffs lacked standing on all claims.[47]
Upon petition,
the Fourth Circuit has agreed to rehear the case en banc in December, thus reopening the issue.[48] Because the Second Circuit did find the
plaintiffs had standing in Citizens for
Responsibility & Ethics in Washington v. Trump,[49]
an affirmation of the Fourth Circuit’s original decision could be the circuit
split necessary to prompt review from the Supreme Court. Of course, President Trump could have avoided
all of these suits by placing his business interests in a blind trust, as is the
modern practice for sitting Presidents.[50]
By declining to create the trust,
however, he has provided an opportunity for plaintiffs to wade into the unknown
waters of the Emolument Clauses. Every
American, regardless of their political affiliation, should be concerned about whether
a sitting President is being influenced by his business interests rather than
the interests of the nation. District of Columbia v. Trump provides
an opportunity to ensure the nation’s chief executive officer is acting in the
country’s best interests.
[1] Order at 2, District of Columbia v. Trump, 930 F.3d 209 (4th Cir. 2019) (No. 18-2488).
[2] District of Columbia, 930 F.3d at 215; In re Trump, 928 F.3d 360, 379–80 (4th Cir. 2019).
[3] John Haltiwanger, Trump Said Emoluments Clause in US Constitution Is ‘Phony’, Bus. Insider (Oct. 21, 2019), https://www.businessinsider.com/trump-said-emoluments-clause-in-us-constitution-is-phony-2019-10.
[4] David Smiley, Michael Wilner, & Francesca Chambers, Pulling G-7 Out of Doral the ‘Right Decision,’ Mulvaney Says, Miami Herald (Oct. 20, 2019), https://www.miamiherald.com/news/politics-government/article236461658.html.
[5] See Ciara Torres-Spelliscy, A Federal Appeals Court Asserts Its Authority over Trump’s Unconstitutional Profiteering, Brennan Ctr. for Justice (Sept. 16, 2019), https://www.brennancenter.org/our-work/analysis-opinion/federal-appeals-court-asserts-its-authority-over-trumps-unconstitutional.
[6] See Brief of Appellees at 2, District of Columbia, 930 F.3d 209 (No. 18-2488).
[7] Amended Complaint at 12–13, District of Columbia v. Trump, 291 F. Supp. 3d 725 (D. Md. 2018) (No. PJM 17-1596).
[8] Joy Blenman, The Companies Owned by Donald Trump, Investopedia, https://www.investopedia.com/updates/donald-trump-companies/ (last updated May 21, 2019).
[9] See generally Amended Complaint, supra note 7.
[10] U.S. Const. art. I, § 9, cl. 8.
[11] In re Trump, 928 F.3d 360, 373 (4th Cir. 2019).
[12] U.S. Const. art. II, § 1, cl. 7.
[13] In re Trump, 928 F.3d at 373.
[14] U.S. Const. art. I, § 6, cl. 2.
[15] 276 F. Supp. 3d 174 (S.D.N.Y. 2017), vacated, No. 18-474, 2019 U.S. App. LEXIS 27634 (2d Cir. Sept. 13, 2019) (finding a group of restaurants and restaurant workers had standing to pursue a claim for violations of the Domestic and Foreign Emoluments Clauses).
[16] Citizens for Responsibility & Ethics in Wash., 2019 U.S. App. LEXIS 27634, at *4–8.
[17] 291 F. Supp. 3d 725 (D. Md. 2018), rev’d, 930 F.3d 209 (4th Cir. 2019).
[18] District of Columbia, 291 F. Supp. 3d at 733–34.
[19] 335 F. Supp. 3d 45 (D.D.C.), appeal docketed, No. 19-5237, filed Sept. 4, 2019 (D.C. Cir.). The plaintiffs have argued that, because the Foreign Emoluments Clause permits acceptance of foreign emoluments only by consent of Congress, President Trump has denied them an opportunity to vote on acceptance of such emoluments and therefore caused injury. Blumenthal, 335 F. Supp. 3d at 50.
[20] Id. at 51.
[21] In re Trump, 928 F.3d 360, 368 (4th Cir. 2019).
[22] Amended Complaint at 2, supra note 7.
[23] Id. at 15–16.
[24] Id. at 26–30.
[25] See generally Brief of Appellees, supra note 6.
[26] District of Columbia, 291 F. Supp. 3d at 737. The court noted that standing could be established when a plaintiff sufficiently alleged facts showing “it has (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Id.
[27] Id. at 746 n.14 (“[P]arens patriae refers to the theory of standing by which a State may assert a quasi-sovereign interest, i.e., ‘public or governmental interests that concern the State as a whole,’ on behalf of its citizens.”) (citations omitted).
[28] Id. at 753, 757.
[29] Id. at 740–42.
[30] Id. at 742–43.
[31] Id.
[32] Id. at 746–48.
[33] Id. at 758.
[34] District of Columbia v. Trump, 315 F. Supp. 3d 875, 904 (D. Md. 2018).
[35] Id.
[36] Appellant’s Opening Brief at 37–38, District of Columbia v. Trump, 930 F.3d 209 (4th Cir. 2019) (No. 18-2488).
[37] In re Trump, 928 F.3d 360, 367 (4th Cir. 2019).
[38] Id. at 368. Mandamus is “[a] writ issued by a court to compel performance of a particular act by a lower court or a governmental officer or body, usu[ally] to correct a prior action or failure to act.” Mandamus, Black’s Law Dictionary (11th ed. 2019). “This is a ‘drastic and extraordinary’ remedy ‘reserved for really extraordinary causes,’ therefore it “is one of ‘the most potent weapons in the judicial arsenal.’” Cheney v. U.S. Dist. Court, 542 U.S. 367, 380 (2004) (quoting Ex parte Fahey, 332 U.S. 258, 259–60 (1947); then quoting Will v. United States, 389 U.S. 90, 107 (1967)). Mandamus will only be granted when a party can establish that: “(1) no other adequate means [exist] to attain the relief [desired]; (2) the party’s right to issuance of the writ is clear and indisputable; and (3) the writ is appropriate under the circumstances.” Hollingsworth v. Perry, 558 U.S. 183, 190 (2010) (per curiam) (citations omitted).
[39] Respondents’ Brief in Opposition to Petition for Writ of Mandamus at 40, In re Trump, 928 F.3d 360 (No. 18-2486).
[40] Id. at 56–68.
[41] Reply Brief for Petitioner at 9, 15, In re Trump, 928 F.3d 360 (No. 18-2486) (internal citation omitted).
[42] Appellant’s Opening Brief, supra note 36, at 43–44.
[43] Id. at 45.
[44] District of Columbia v. Trump, 930 F.3d 209, 211 (4th Cir. 2019); In re Trump, 928 F.3d at 364. Although Plaintiffs attempted to voluntarily dismiss the individual capacity suit, this happened only after the Fourth Circuit took the appeal. District of Columbia, 930 F.3d at 214.
[45] District of Columbia, 930 F.3d at 215; In re Trump, 928 F.3d at 379–80.
[46] In re Trump, 928 F.3d at 368.
[47] Id. at 376–77, 379.
[48] Order at 2, supra note 1.
[49] No. 18-474, 2019 U.S. App. LEXIS 27634 (2d Cir. Sept. 13, 2019).
[50] See Torres-Spelliscy, supra note 5.
