An Encouraging, Albeit Limited, Development in the Emoluments Clause Litigation Against Donald Trump

Sometimes it feels great to have been wrong. Last week, a United States District Judge ruled that a lawsuit brought by the District of Columbia and the State of Maryland against Donald Trump for alleged violations of the Constitution’s Foreign and Domestic Emoluments Clauses could go forward (at least for now). More specifically, the judge rejected President Trump’s argument that the plaintiffs lacked “standing,” as well as various related but distinct challenges to the court’s jurisdiction to hear the case.

When the first Emoluments Clause suits were filed against Trump (three have been brought so far, in different courts by different plaintiffs), I was one of many commentators who predicted that the cases would be dismissed on jurisdictional grounds. That prediction seemed borne out when the first of these cases, brought by the Citizens for Responsibility and Ethics in Washington (CREW) was dismissed on jurisdictional grounds last December. While some of the legal reasoning of that decision was questionable, I’d assumed that other courts would follow suit, on the logic that most judges would want to avoid having to decide these cases on the merits, and the jurisdictional doctrines are sufficiently malleable that a competent judge would be able to write a defensible opinion dismissing the cases for want of jurisdiction. (Initially I also fretted that a jurisdictional dismissal could be exploited by Trump and his allies to imply that the courts had rejected the merits of the argument that Trump’s mixture of his business affairs and his public office crosses a constitutional line, but on further reflection I now tend to think no development in these cases short of a Supreme Court ruling on the merits—and possibly not even that—would have a measurable impact on public opinion.) So it came as a welcome surprise that the ruling last week held that the Emoluments Clause suit can proceed.

There’s already been a fair bit of coverage of the ruling (see, for example, here, here, here, and here), and I’m not sure if I have that much to add, but since I’ve been commenting fairly regularly on developments in the Emoluments Clause cases, I’ll make a few additional observations:

  • First, putting aside the politics and practicalities, and speaking just as a matter of legal doctrine, I’m now pretty firmly convinced—after reading both last December’s opinion in the CREW suit and the last week’s opinion in the DC/Maryland suit—that those entities that compete directly with Trump hotels, restaurants, and resorts do have standing. The claim that the “competitive injury” suffered by those other entities wasn’t enough to establish a concrete, judicially-redressable injury was the least persuasive part of last December’s opinion denying standing in the CREW case, while the contrary finding is the most persuasive section of last week’s opinion. This is not the right forum for delving into the nuances of standing doctrine, but the short and simplified version of the claim is this: The weight of Supreme Court precedent supports the notion that firms or individuals generally have standing to challenge allegedly unlawful acts by a competitors that give the latter a market advantage; the plaintiffs in such cases don’t have to show particular customers or contracts they would have won but for the unlawful activity. Just a showing that they were deprived of an opportunity to compete on a level playing field, unskewed by the allegedly unlawful conduct, is enough.
  • Second, although last week’s ruling is indeed a big and unexpected victory for those hoping that the Emoluments Clause litigation will be an effective weapon to wield against Trump’s obvious corruption, we probably shouldn’t be popping any champagne corks just yet. Both the CREW case and the DC/Maryland case will be appealed (to different intermediate appellate courts). If last December’s decision denying jurisdiction is upheld, and last week’s decision granting jurisdiction is reversed—which I fear is the most likely outcome—then last week’s victory will be short-lived. Moreover, if either of those appellate courts finds that the court does have jurisdiction to hear the plaintiff’s Emoluments Clause challenges, the case will almost certainly head to the Supreme Court. Looking at the current lineup of Justices, it’s hard to see five votes in favor of jurisdiction—even though, as I said before, as a doctrinal matter the case for competitor standing seems to me strong. Though I think that’s the right answer, it wouldn’t be hard to write an opinion going the other way, and there are other doctrines that could be used to avoid hearing the case (such as the claim that the plaintiffs lack a cause of action under the Emoluments Clauses because their injury—a competitive disadvantage—is not within the “zone of interests” that the Emoluments Clause are meant to protect. Last week’s ruling rejected that argument, but in contrast to the standing analysis, the discussion of this point was much less compelling, even though I think it’s probably right.)
  • Third, much of the commentary on last week’s ruling suggested that if the suit is allowed to go forward, then it will be a big win even if the plaintiffs don’t ultimately prevail on the merits, because the plaintiffs will be able to use the discovery process to get all sorts of useful information about Trump’s business operations, potentially including his elusive personal income tax returns (see here, here, and here). I’m sympathetic to the idea, but I confess I’m not entirely clear how this is supposed to work. I’m no expert on the discovery process, so hopefully someone out there in our reading audience might weigh in and explain this to me, but I guess I just don’t see how this suit will trigger the broad disclosures that some commentators seem to have in mind. First of all, I would think that if the jurisdictional ruling is upheld on appeal, Trump’s lawyers’ next move will be to move for a judgment as a matter of law that even if the Trump Organization is receiving income from for state or foreign government, this is not a violation of the Emoluments Clauses. Part of the point of such motions is to allow for the dismissal of cases prior to discovery if the plaintiff wouldn’t prevail even if all the facts alleged are true. Second, let’s suppose that the jurisdictional ruling is upheld and the court rules that if the facts alleged by the plaintiffs are true, there’d be a violation of one or both of the Emoluments Clauses. Now, there’d be discovery—but not, as I understand the rules, discovery of anything related to the Trump Organization or Donald Trump’s personal finances. Discovery would be limited to those subjects necessary to establishing the truth or falsity of the plaintiff’s claims, which in this case would seem to be limited to the claim that Trump’s DC hotel earns income from state or foreign governments. It doesn’t seem that Trump is contesting that point (though he did claim that he would donate all profits from foreign sources to the US Treasury, a claim that would be subject to discovery if advanced by Trump as a defense). And last week’s judgment went out of its way to emphasize that the plaintiffs only have standing with respect to Emoluments Clause violations connected to Trump’s DC hotel and restaurant. So I guess I don’t understand why a court would be likely to issue a broad discovery order allowing investigation into other aspects of Trump’s financial dealings. (As one expert pointed out, the most likely items that Trump might have to turn over in discovery in this case would be “hotel guest lists, itemized receipts[,] and various books and records [related to the hotel]”–possibly of interest, but hardly the bombshell financial documents some seem to be hoping for.) And finally, some of the commentary seems to imply that if, through discovery in this case, the plaintiffs got hold of Trump’s tax returns, that information would then be disclosed to the public. But given the sensitivity of the information, I would expect that it would be covered by a protective order prohibiting disclosure. My impression is that leaks of such documents are not very common in the context of litigation discovery, because the professional consequences for the lawyers involved can be so severe. Again, I could be wrong about all this – civil litigation is not my field – but I just wanted to sound a note of skepticism about this idea that if the case proceeds, the public will finally be able to see Trump’s tax returns.

All in all, then, last week’s decision is definitely be a source of cheer for those of us horrified by Trump’s apparently corrupt blending of his public responsibilities and his private interests—but at the same time, the significance and impact of the ruling shouldn’t be overstated. There’s still one other case working its way through the courts, but the next thing to watch is what happens in the appeals of the cases that have already been decided. That will likely take several more months. Stay tuned.

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