A Big Victory in the Emoluments Clause Litigation Against Trump–But Might It Be Too Big To Last? A Search for Limiting Principles…

As many of our readers may already be aware, there was a significant and encouraging development last week in the litigation challenging President Trump’s ongoing business dealings with foreign and state governments as unconstitutional under the U.S. Constitution’s Foreign and Domestic Emoluments Clauses. For those readers who haven’t already been following this, here’s a quick synopsis. (Readers who have been following this issue can skip to the end of this bullet point list.)

  • Although President Trump claimed he would turn over his business operations to his sons Donald Jr. and Eric, in fact President Trump retains substantial interests in those businesses. Several of those businesses, particularly his hotels (and among those hotels, especially his DC hotel, located at a property leased from the federal government) do substantial amounts of business with representatives of foreign governments, as well as with state governments. Many people have argued that accepting foreign government or state government patronage at Trump hotels violates the Foreign and Domestic Emoluments Clauses, respectively. The Foreign Emoluments Clause states that “no Person holding any Office of Profit or Trust under [the United States] shall, without the consent of Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any … foreign State.” In other words, no officer of the U.S. federal government can accept an “emolument” (whatever that is – more on this question in a moment) from a foreign government. The Domestic Emoluments Clause states that the President “shall not receive [during his term of office] any other Emolument [besides his official salary] from the United States, or any of them.” In other words, the federal government can’t provide any “emolument” to the President other than his official salary, nor can any state government provide any emolument to the President.
  • So, the argument goes, if a foreign government pays for rooms at a Trump hotel, which increases the Trump Organization’s profits and hence President Trump’s personal wealth, President Trump has received an “emolument” from a foreign state. Similarly, if a state government pays for rooms at a Trump hotel (or purchases other goods or services from a Trump business), the President is receiving an emolument from a state government. An additional violation of the Domestic Emoluments Clause may have occurred when the General Services Administration (GSA) (the federal government agency which is, in essence, the landlord for the Trump DC hotel) concluded that the Trump Organization could retain its lease even after Trump’s inauguration, despite the fact that the express terms of the lease appear to preclude this. The argument goes that in allowing the Trump Organization to keep its lease on the property, a federal government agency (in this case the GSA) had granted an “emolument” to the President, in violation of the Domestic Emoluments Clause.
  • Several separate lawsuits alleged these constitutional violations. When they were filed, many people (including me) expected the suits to be dismissed on jurisdictional grounds, in particular though not exclusively the inability of the plaintiffs in these cases to show that they were personally and directly harmed by the alleged constitutional violations. And that was indeed what happened to the first case, filed by a civil society nonprofit in New York. But in a separate lawsuit filed in Washington DC by the DC government and the state of Maryland, the judge last April determined that court had jurisdiction over at least some of the plaintiff’s claims (including the claims described above).
  • The President’s lawyers then filed a motion to dismiss, arguing that even if everything the plaintiffs alleged were true (a stipulation the President reserves the right to deny later), there’s no constitutional violation, because neither the profit from a business transaction nor a favorable regulatory decision would count as an “emolument.” Rather, on the President’s view, an “emolument” is only a payment made as compensation for official services.
  • Last week, the District Court issued an order denying the President’s motion to dismiss, rejecting the President’s narrow interpretation of “emolument” and instead endorsing a sweeping definition in which an emolument, for purposes of the relevant constitutional clauses, includes anything of value.

That ruling, as Joe Biden might say, is a big f’ing deal. It’s not the end of the case—far from it—but it’s a huge win for the plaintiffs. Among other things, it means there will now be more fact-finding, including discovery, and probably in a few months we’ll have motions for summary judgment and another judicial order in response, which will likely both keep the issue in the news and possibly bring to light even more damaging information about the President’s business dealings. (The President’s lawyers may try to get an appeals court to consider the jurisdictional issue before this process moves forward by asking for what’s called an interlocutory appeal, but by friends who are experts in civil procedure tell me that such a motion is extremely unlikely to succeed, or at least it would be in an ordinary case.)  So, speaking as someone who was initially skeptical of this litigation—who not only thought it was unlikely to succeed but who worried that it could backfire—I’m delighted to confess error. (I suppose we could still debate whether this was a smart gamble at the time, but it does seem that the gamble is paying off, and who am I to argue with success?)

That doesn’t mean that these suits will ultimately succeed. Even if the plaintiffs prevail in the District Court, there will be an appeal, and I think the odds of the plaintiffs prevailing in the Court of Appeals are low. And even if they do win, the Supreme Court is almost certain to hear the case, and I predict that the Court would find a way to dismiss the case on jurisdictional grounds. (That said, if for some reason the Senate doesn’t confirm Judge Kavanaugh’s nomination to the Supreme Court, and in the November 2018 elections the Democrats take the Senate and vow to block any Trump nominee to fill the open seat, then it’s possible that the Supreme Court could deadlock 4-4, leaving any lower court decision in place.)

Now, in addition to the jurisdictional question, one of the issues on appeal will concern the breadth of the District Court’s definition of “emolument.” A lot of the arguments on this point concern matters of text and history. (How did 18th– century dictionaries define “emolument”? What do we learn from debates about the Emoluments Clauses at the Constitutional Convention and ratifying debates? What did early practice look like?) Those arguments are important, but I’m not going to explore them here. There is, however, a separate question of what definition of “emolument” would best serve the purposes of the Emoluments Clauses, which is closely related (if not necessarily identical) to the question of which definition would be the most sensible. I’m very sympathetic to the plaintiff and the District Court’s arguments that the main purpose of the Emoluments Clauses is to serve as broad prophylactic anticorruption measure, one that targets not only quid pro quo deals, but more broadly seeks to eliminate the possibility of governments currying favor with US officials by conferring benefits on them. And I agree that such benefits can take a wide variety of forms. Nonetheless, I do think that the breadth of the definition of “emolument”—as literally anything of value, or as any “profit, gain, or advantage”—might create some problems, and it’s important to think about how the potentially sweeping implications of this definition might be cabined.

I say this not because I’m terribly sympathetic to President Trump’s arguments that he’s not in violation of the Emoluments Clauses. Indeed, based on what I know thus far, I’m fairly confident that President Trump is violating the Emoluments Clauses, and should lose this case on the merits (though the jurisdictional arguments are a closer question). Rather, it’s important to think about appropriate limiting principles for two reasons. First, the likelihood of prevailing on appeal is higher if the plaintiffs and their allies can offer plausible rebuttals to the parade-of-horribles the President’s lawyers will argue follows from defining an emolument as “anything of value.” Second, whatever the appeals court (or perhaps the Supreme Court) says on this issue might have consequences for other cases—with other defendants and different sorts of conduct. So, in the remainder of this post I will first sketch out why the broadest version of the “emolument means literally anything of value” argument might create difficulties, and then consider a series of possible responses to those (alleged) problems.

There are two kinds of situation, both of which arise in the Trump case, where the broadest possible definition of “emolument” may create problems–not necessarily in this case, but in others. The first is where the government makes a legal or regulatory determination that favors the interest of a covered federal official (the President, for purposes of the Domestic Emoluments Clause, or any federal officer for purposes of the Foreign Emoluments Clause). The second is where the covered federal official engages in an “ordinary” market transaction with an entity owned or controlled by a foreign government.

Let’s start with whether (or when) a favorable legal or regulatory decision should count as an “emolument” for constitutional purposes. (I’ve posted about this before, so what I’ll say here is mostly recap, but with a bit of additional elaboration.) Several of the allegations against Trump point to this sort of benefit. The claim that Trump received an emolument from the federal government when the GSA approved Trump’s continued ownership interest in the DC hotel is an example. In the New York lawsuit (the one that the court dismissed on jurisdictional grounds), the plaintiffs also alleged that if a US government agency approved a tax rebate for the hotel, this would also count as a (domestic) emolument, and that China’s grant of trademark protection to Trump brands counted as a foreign emolument. These particular cases do seem sleazy—and perhaps should count as constitutional violations in light of the surrounding circumstances (the legally dubious basis for these decisions and whiffs of possible quid pro quo). But a very broad reading of the Emoluments Clauses—one that covered anything of value and did not require any showing that the thing of value was conveyed because of the recipient’s official position—would seem problematic as applied to legal or regulatory decisions. Consider the following examples:

  • The President holds a US or foreign patent (or any US official holds a foreign patent), which is up for renewal. The responsible government entity approves the renewal application. Has the official received an unconstitutional “emolument”? (In this and other examples, I’ll assume no consent-of-Congress for the Foreign Emolument Clause cases.)
  • The President seeks a tax deduction (say, for charitable donations) to which he or she is clearly entitled under the law. The IRS grants the deduction. Has the President received an unconstitutional domestic emolument from the IRS?
  • A US government official travels to a foreign country and needs a visa. She submits her visa application materials to the foreign consulate in the ordinary fashion, those materials are processed in the ordinary fashion, and a visa is issued. Has the official accepted an unconstitutional emolument from a foreign government?
  • A US official posted abroad needs a local driver’s license. She applies for and receives one from the foreign government’s equivalent of the Department of Motor Vehicles. Is this an unconstitutional emolument?
  • A US official is injured (physically or economically) in a foreign country, and brings a lawsuit in that country’s courts. She prevails, and the foreign court awards her damages. Is this an unconstitutional emolument, since the foreign court is indisputably an arm of the foreign government? If a court seems like some sort of special category, suppose the country in question handles these sorts of claims through an administrative process.

Now, maybe all of these examples really should count as Emoluments Clause violations. But my intuition is that, without more, they probably shouldn’t. But a sweeping definition of “emolument” that includes literally “anything of value” would seem to cover all of these examples and plenty more. We can, of course, add qualifiers to the definition to solve the problem. Maybe an unconstitutional emolument is “anything of value to which you’re not entitled by law” or “anything of value you receive because of your identity as a government official” or something like that. I’ll return to this possibility below. All I mean to emphasize for now is that defining an emolument as literally anything of value, including favorable government legal or regulatory decisions, without any further qualifications, would seem to sweep very—implausibly—broadly.

Second, consider the question whether the benefit one realizes in a market transaction (let us say, for now, an arms-length “ordinary” transaction) counts as an “emolument.” The bulk of the Emoluments Clause allegations against President Trump are of this form. Here again, I agree that President Trump is (probably) acting unconstitutionally, but that a broad, unqualified claim that any benefit realized from a commercial transaction is an emolument could create problems in other cases. While most of the attempts to offer such examples have focused on situations in which the government official is the seller and the government entity is the buyer (for example, the suggestion that on the plaintiffs’ theory of the case President Obama was in violation of the Foreign Emoluments Clause because foreign government institutions (such as public universities) may have purchased his books), I think the more troublesome cases are those where the US official is the buyer and the foreign/state government entity is the seller. Consider the following examples:

  • A US official travels abroad and stays at a hotel that is owned (wholly or partially) by the foreign government. The official books the hotel room through a website and doesn’t get any special discount, but she still receives a benefit (accommodations) that are worth more to her than what she paid for them. Has this official received a prohibited emolument from the foreign government?
  • A US diplomat is posted a country where the state-owned oil company owns all the gas stations. She regularly purchases gas for her car, paying market prices. Has she received an emolument?
  • A US official traveling abroad on vacation comes down with a serious illness, and goes to a state-owned walk-in health clinic, where she’s diagnosed with an infection and given antibiotics (which she pays for out of pocket). Was this an unconstitutional emolument?

I’ve again deliberately picked examples were my strong instinct is that these things shouldn’t be considered unconstitutional (even in the absence of congressional consent)—but where it’s hard to see why they wouldn’t be covered if “emolument” literally means anything of value, including the benefits realized through an “ordinary” market transaction. Again, we can address the problem if we add some qualifications to the definition, but if we don’t do so—if we define an emolument, for constitutional purposes, as any profit, gain or advantage—then we run into difficulties.

How could we cabin the sweep of the Emoluments Clauses in a way that still captures those cases where it seems clear that a domestic or foreign government might seek or obtain improper influence over the President (or, in the case of the Foreign Clause, other federal officials)? There are a few possibilities, a couple of which were suggested in last week’s District Court opinion, and a few more that weren’t:

  • First, the District Court emphasized the standard legal principle that laws, even broad ones, don’t cover trivial cases. This is the so-called “de minimis” exception (short for de minimis non curat lex—the law does not concern itself with trifles). That principle, the court explained, is why it’s not unconstitutional for a federal official to hold shares in companies (directly or through mutual funds) that do some amount of business with foreign or domestic governments. The amount that a federal official with a typical investment portfolio might receive from such business dealings is so small, and so indirect, that it’s implausible to treat these cases as ones in which the official is receiving a benefit from a foreign government. This seems clearly correct to me, and certainly rules out many of the absurd consequences that the President’s lawyers argued would flow from a broad definition of “emolument.” But I’m less confident than the District Court that the de minimis exception, without more, supplies a sufficient limit (unless the exception is stretched will beyond its usual bounds). Think about the examples sketched above. It’s hard to characterize most of these cases—involving benefits like substantial tax deductions, compensatory damage awards, travel visas, lodging, and medical care—as trivial.
  • Second, with respect to the Foreign Emoluments Clause, it’s always possible—as the District Court pointed out—for Congress to provide consent. So, perhaps the answer to those of my examples above that involve foreign governments is that Congress could solve the problem (and get rid of the cases where prohibiting receipt of the emolument appears absurd) by enacting a statute that, for example, provides that US officials traveling abroad are authorized to seek and receive treatment from foreign governments on equal terms as all other similarly situated US citizens, even if as a result the US official receives something of value (an “emolument”) from the foreign government. This is an attractive solution, but it has at least two limitations. First, it obviously doesn’t address the Domestic Emolument Clause issues. Second, anyone who has followed the performance of the US Congress over the last couple of decades is entitled to be skeptical about relying overmuch on congressional action as the solution to the problem. More generally, it strains credulity a bit to imagine that those who framed and ratified the Constitution would have thought congressional approval necessary for many of the seemingly ordinary interactions with foreign governments sketched in the above examples.
  • Third, at least with respect to the market transaction examples, one could exclude from the definition of “emolument” those benefits or advantages that the buyer receives from the transaction (typically some good or service), and count as an “emolument” only the benefit realized by the seller (typically money). That would help a bit, since most of the problematic examples in the market context involve a federal official who is selling to a foreign government, not the other way around. But it’s hard to see a principled basis for that distinction. Why should we treat what economists would call “producer surplus” as an emolument, but not treat “consumer surplus” the same way? And of course this limitation, even if adopted, wouldn’t help with the examples involving favorable legal or regulatory decisions.
  • Fourth, and building on my earlier post, there’s a case to be made that the term “emolument” does not mean any benefit whatsoever that a government official receives, but only those benefits that she receives because she is a government official. On this understanding, an “emolument,” for constitutional purposes, would entail some sort of special or preferential treatment for the federal official by the government. This is not the same as what President Trump’s lawyers and their supporters in the academic community were arguing for: The argument is not that in order to count as an emolument, the benefit must have been a payment for official services. Rather, any benefit that was conferred because of the recipient’s status as a federal official would count as an “emolument,” without any requirement to show a connection to (official) “services rendered.”

I’m sympathetic to this fourth approach, but it would require a court to distinguish those cases in which an official received a benefit because of her status as a federal official from those cases in which her official status was irrelevant to the government decision from which she benefited. That could be challenging. How do we know that the Kuwaiti embassy decided to hold its Independence Day celebrations in the Trump Hotel because Trump is the owner, as opposed to simply choosing a hotel based on price, amenities, and availability? How do we know that the GSA ruled that Trump’s ownership of the hotel was permissible because of his status as President, as opposed to a good-faith analysis of the terms of the lease? How do we know if China approved the Trump Organization’s trademark applications because Trump is the President of the United States, as opposed to a determination that under Chinese law (or prevailing Chinese government policy) these trademarks should be granted?

One way to approach the issue would be to acknowledge that it’s inevitably a fact-intensive inquiry, but to allow the discovery process to go forward to allow the plaintiffs an opportunity to prove the benefits were impermissibly linked to the recipient’s official status. That, however, may be very costly, and could be abused by parties interested in bringing suits in order to harass political opponents. And in many cases the evidence is likely to be extremely murky and contested, or simply unavailable. Another option, therefore, would be to adopt some default presumptions to sort out at least the easier cases in both directions, so that only a relatively small number of cases close to the line require a searching, fact-intensive inquiry. For example, a court could adopt the following presumptions:

  • For the Foreign Emoluments Clause, when a US official seeks a legal or regulatory determination from a foreign government, or enters into a transaction with an entity owned or controlled by a foreign government, on the same terms and conditions as apply to any person seeking a similar determination or engaging in a similar transaction, any benefit received by the official from the determination or transaction will be presumed not to have been on account of the official’s status as a US official, and so is presumptively not an “emolument.” This presumption can be overcome by a showing that the official’s status influenced the foreign government’s decision-making process.
  • In the case of the US President (or, possibly, the Vice President or any official of cabinet rank), the opposite presumption applies in the case of commercial transactions with foreign governments: Any such transaction will be presumed to have been because of the US official’s status, and therefore an emolument, unless the official can show that this factor was irrelevant to the foreign government’s decision.
  • In the case of the Domestic Emoluments Clause, different presumptions should apply to those cases in which the President (or an entity the President owns) seeks a regulatory decision that is ordinarily granted as a matter of course, and those in which the President (or President’s entity) applies for a discretionary benefit, exemption, or reconsideration of a prior decision. In the former case, a favorable decision should be presumed not to be an emolument, while in the latter case, the presumption should be that a favorable decision is an emolument, and therefore unconstitutional. This would allow the President to, for example, to claim ordinary tax deductions or license/patent renewals, but bar the President from seeking, during her time in office, favorable exercises of discretionary authority. The latter limitation is over-inclusive, to be sure, because some of those favorable decisions would not have anything to do with the President’s status as President. The presumption is justified by a combination of the very high risk of improper emoluments in this context, and the fact that the burden on the President seems relatively minimal.
  • Favorable judicial decisions should be excluded from the definition of an “emolument,” even though they certainly confer “gains” or “advantages,” unless there’s a clear and convincing showing that the independence and impartiality of the courts was compromised in order to favor the covered official.

There could be, and likely are, some significant problems with these principles, and I hope that others—especially those working directly on this litigation—are working through these issues and developing much better, more refined approaches. But I do think that those of us who would like to see the Emoluments Clause suit against Trump prevail should move past celebrating last week’s District Court decision (though a bit of celebration is certainly in order), to consider what comes next, including how we might articulate plausible limiting principles on the scope of the Emoluments Clauses—limiting principles that preserve the Clauses’ broad scope while avoiding implausible ramifications that might call our overall legal theory into question.

2 thoughts on “A Big Victory in the Emoluments Clause Litigation Against Trump–But Might It Be Too Big To Last? A Search for Limiting Principles…

  1. Thank you for an exceptionally comprehensive article, including the hashing out of many scenarios of “unintended consequences” that might flow from an overbroad definition of “emolument.”

    I’d like to weigh in and point out that Alexander Hamilton discussed this very issue in regards to the emoluments clauses, specifically that in Art. II.

    Citing the fact that the Constitution bars Congress from increasing or diminishing the president’s compensation during his term in office, Hamilton in The Federalist #73 says,

    “They [Congress] can neither weaken his [the president’s] fortitude by operating upon his necessities; nor corrupt his integrity, by appealing to his avarice. Neither the Union nor any of its members will be at liberty to give, nor will he be at liberty to receive any other emolument, than that which may have been determined by the first act [of Congress setting the president’s salary].”

    Hamilton thus sets fair and common-sensical parameters around types of material benefits that might endanger a president’s integrity—and which the sovereign people must be empowered to guard against.

    The integrity-corrupting forms of emoluments are ones that, on their own or in aggregate, would be…

    A. Adequately valuable to make a difference in the making or not making of the type of living felt appropriate for the leader of a republic (“his necessities”), or

    B. Tempt greediness or conspicuous material distinction on the other (“his avarice”).

    Jonathan
    Sierra Madre, CA

  2. Cogent analysis. Thecappeal to the fourth circuit should not prevail. After that it is hard to say because of politicians in robes. I hope you keep writing about this very significant case. I have been writing Larry Tribe, Richard Painter et.al. about this case for 19 months. I applaud CREW for pursuing this. Best wishes, Dr. Ken Klein

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