Donald Trump

Federal Court Dismisses First Emoluments Clause Case Against President Trump

A federal district court in New York concludes none of the plaintiffs could demonstrate standing in CREW v. Trump

|The Volokh Conspiracy |

Does President Trump's continued ownership of hotels and other properties that do business with foreign governments violate the Constitution's emoluments clauses. It might, but don't expect a court judgment to that effect anytime soon.

Yesterday, a federal district court in New York dismissed the complaint in CREW v. Trump, finding that none of the plaintiffs had standing to sue over the alleged violation. The court also noted additional prudential concerns that counseled against judicial resolution of the claims. This is a major setback for those seeking to sue over the President's alleged emoluments, as the CREW plaintiffs presented a stronger standing claim (and filed in a more promising jurisdiction) than any of the others who have filed emoluments clause lawsuits thus far.

A little background. The so-called "Foreign Emoluments Clause" (or sometimes, simply, the "Emoluments Clause") provides

No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.

Assuming this clause applies to the President (a premise contested by some), the clause prohibits receipt of emoluments from foreign states without Congressional permission. A second clause (often referred to as the "Domestic Emoluments Clause" or "Compensation Clause") provides that the President may not receive any emolument from the federal government or any state beyond his legislatively approved salary.

Given that foreign dignitaries are among those who frequent various Trump properties, including his hotel near the White House in Washington, D.C., it is reasonable to believe that the President's business arrangements create potential conflicts of interest and may violate the letter or the spirit of the Emoluments Clause. For this reason, a good-government activist group, Citizens for Responsibility and Ethics in Washington (CREW), filed suit against the President on his first day in office alleging the President's business arrangements violate the Constitution. Other suits have been filed since.

From the beginning, some of us have argued that the various emoluments lawsuits have standing problems. This is because courts have interpreted Article III of the Constitution to require plaintiffs to demonstrate "standing" to press their claim in order to proceed in federal court. What this means is that the plaintiffs must be able to show they have suffered a cognizable injury — specifically an injury that is both actual or imminent as well as concrete and particularized to the plaintiffs — and that this injury was caused by the conduct complained of (in this case, the emoluments clause violation), and that the injury is redressable by a favorable court judgment. While standing is not much of an obstacle in many other contexts, it's a significant hurdle for emoluments clause claims, and was dispositive here.

The CREW plaintiffs alleged several bases for standing, none of which the court found convincing. First, CREW itself claimed that it was injured because Trump's alleged Emoluments Clause violation forced CREW to devote resources to combat potential corruption. This claim was always a stretch (even under some permissive precedents applicable in New York, where the case was filed), so CREW sought help. In April, CREW added additional plaintiffs who alleged "competitive injury" from the alleged Emoluments Clause violation. In effect, they argued that they are victims of unfair competition from the Trump-owned properties, as foreign governments may do business with Trump's businesses in order to curry favor with the President. While this helped CREW's standing arguments, it was not enough. (I should also note, however, that subsequent reporting suggests some of the standing claims may have been exaggerated.)

As Judge George Daniels explained in his opinion dismissing CREW v. Trump, a fatal flaw in the competitive injury standing claim is that the plaintiffs could not properly allege that any such injury was caused by the Emoluments Clause violation, or that it could be redressable in court. As Judge Daniels wrote:

Here, the Hospitality Plaintiffs argue that Defendant has adopted "policies and practices that powerfully incentivize government officials to patronize his properties in hopes of winning his affection." (Opp 'n at 16 (emphasis added).) Yet, as in Simon [v. E. Kentucky Welfare Rights Org.], it is wholly speculative whether the Hospitality Plaintiffs' loss of business is fairly traceable to Defendant's "incentives" or instead results from government officials' independent desire to patronize Defendant's businesses. Even before Defendant took office, he had amassed wealth and fame and was competing against the Hospitality Plaintiffs in the restaurant and hotel business. It is only natural that interest in his properties has generally increased since he became President. As such, despite any alleged violation on Defendant's part, the Hospitality Plaintiffs may face a tougher competitive market overall. Aside from Defendant's public profile, there are a number of reasons why patrons may choose to visit Defendant's hotels and restaurants including service, quality, location, price and other factors related to individual preference. Therefore, the connection between the Hospitality Plaintiffs' alleged injury and Defendant's actions is too tenuous to satisfy Article Ill's causation requirement. Bennett v. Spear, 520 U.S. 154, 167 (1997) (to establish standing, "the injury must be fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third party not before the court") (citing Lujan, 504 U.S. at 560-61); Clapper, 568 U.S. at 413 ("[W]e have been reluctant to endorse standing theories that require guesswork as to how independent decisionmakers will exercise their judgment.")

Moreover, the Hospitality Plaintiffs cannot establish "that it [is] likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision." Bennett, 520 U.S. at 167 (citation omitted). Plaintiffs seek an injunction preventing Defendant from violating the Emoluments Clauses. They argue that such injunction would "stop[] the source of intensified competition [and] provide redress." Even if it were determined that the Defendant personally accepting any income from the Trump Organization's business with foreign and domestic governments was a violation of the Emoluments Clauses, it is entirely "speculative," Bennett, 520 U.S. at 167, what effect, if any, an injunction would have on the competition Plaintiffs claim they face.

Plaintiffs are likely facing an increase in competition in their respective markets for business from all types of customers-government and non-government customers alike-and there is no remedy this Court can fashion to level the playing field for Plaintiffs as it relates to overall competition. Were Defendant not to personally accept any income from government business, this Court would have no power to lessen the competition inherent in any patron's choice of hotel or restaurant. As explained more fully below, the Emoluments Clauses prohibit Defendant from receiving gifts and emoluments. They do not prohibit Defendant's businesses from competing directly with the Hospitality Plaintiffs. Furthermore, notwithstanding an injunction from this Court, Congress could still consent and allow Defendant to continue to accept payments from foreign governments in competition with Plaintiffs.

While this conclusion was sufficient to dismiss the case, Judge Daniels further explained why, in his view, he did not think the plaintiffs could show that their injury was within the "zone of interests" the Emoluments Clause is designed to protect.

there can be no doubt that the intended purpose of the Foreign Emoluments Clause was to prevent official corruption and foreign influence, while the Domestic Emoluments Clause was meant to ensure presidential independence. Therefore, the Hospitality Plaintiffs' theory that the Clauses protect them from increased competition in the market for government business must be rejected, especially when (1) the Clauses offer no protection from increased competition in the market for non-government business and (2) with Congressional consent, the Constitution allows federal officials to accept foreign gifts and emoluments, regardless of its effect on competition. With Congress's consent, the Hospitality Plaintiffs could still face increased competition in the market for foreign government business but would have no cognizable claim to redress in court. There is simply no basis to conclude that the Hospitality Plaintiffs' alleged competitive injury falls within the zone of interests that the Emoluments Clauses sought to protect.

Judge Daniels found it even easier to reject the argument CREW itself had standing. The core of CREW's claim here was that Trump's violations of the emoluments clause injured CREW itself because, as an organization dedicated to policing government ethics and misconduct, these violations give it more work to do and divert resources from other issues. As Judge Daniels noted, to accept this standing claim would require accepting the standing claim brought by any activist group litigating in support of its mission. Given that courts—and the Supreme Court—have repeatedly rejected such claims, such as suits brought by wildlife protection organizations seeking to protect endangered species—Article III must be understood to require more.

Were all that not enough, Judge Daniels also noted there were additional prudential reasons to dismiss CREW v. Trump. First, as I noted here, it is not clear that Emoluments Clause claims of the sort here are justiciable at all, and reasons to suspect they could present nonjusticiable "political questions"—that is, the sorts of constitutional claims (such as whether Congress followed constitutional requirements in an impeachment proceeding) that must be resolved politically rather than in federal court. Among other things, Judge Daniels noted that the Emoluments Clause grants to Congress—and not the courts—authority to determine when and under what conditions officials may receive emoluments.

While a district court judgment is only the first cut at resolving the case, Judge Daniels decision is significant. First, it demonstrates that standing in these cases is a far greater hurdle than some of the President's critics wanted to acknowledge. Indeed, when CREW amended its complaint to add plaintiffs who could make plausible competitive injury claims, we were assured their standing claim was "bulletproof." Indeed, even before CREW added alleged competitors to their suit, we were assured CREW "unquestionably" had standing. Not so fast.

Second, this case augurs bad news for the other emoluments clause cases out there. As I noted at the time CREW supplemented its case with the additional plaintiffs, this case presented almost as strong argument for standing in an emoluments clause case as one could imagine—short of a confession that government X shifted business from A to B to enrich the President. So if the President's critics can't demonstrate standing here, it's not clear they will be able to demonstrate standing anywhere. (So it goes in New York, New York.)

Also yesterday, Judge Daniels dismissed a pro se lawsuit alleging that the President had failed to fulfill his pledge to reduce the potential conflicts of interest caused by his continued ownership of hotel properties, such as donating profits from business with foreign governments. While there's no question the President made such pledges, and that such pledges have gone unfulfilled, Judge Daniels recognized Weinstein v. Trump presented no justiciable claim.

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19 responses to “Federal Court Dismisses First Emoluments Clause Case Against President Trump

  1. They were always weak cases to begin with, even if standing could have been established, given that early Presidents such was Washington had extensive business dealings, and actively managed them while President.

    The precedent was clearly that normal commercial interactions weren’t “emoluments”. But, of course, this was in the spirit of throwing everything available at the wall, and hoping some of it stuck; They might have gotten a NeverTrump judge who’d be willing to apply a bit of TrumpLaw.

    1. I don’t think this is/was a bad faith kitchen-sink type case.
      The Presidency in the era of modern finance is a pretty different thing from Washington’s day. And I’m not sure a less popular Washington could have gotten away with a lot of his money-grubbing shenanigans.

      Trump has been extraordinary in both the ties he started with, and his unwillingness to really concede much of them upon attaining the Presidency.

      They made Carter sell his peanut farm, ffs.

      I agree justiciability is a problem, though I become more and more skeptical of the utility of the political question doctrine.

      1. It is almost certain that it is possible to disguise an emolument as a business transaction.

        However, the plaintiffs would actually have to allege that one of their longtime customers decided to switch vendors to Trump’s organization in exchange for political favors. And while that might cross the standing threshold, proving it would be altogether a different matter.

      2. “They made Carter sell his peanut farm, ffs.”

        Fake news.

        He voluntarily put in a trust even though no law required him to do so. Pres and VP are exempt from the law that requires this from lesser officials.

        1. That exemption is far from clear.

  2. I find it hard to believe Larry Tribe and Erwin Chereminsky actually joined this lawsuit.

    1. Why? Tribe in particular was broken by Trump’s win.

      1. The lawsuit had significant standing problems.

        And its interpretation of emoluments was so broad it would mean almost every president vuiolated it, including George Washington and Barack Obama.

        1. None of these things explains why you are surprised about Tribe.

          He is not a “distinguished law professor” anymore, just a member of “The Resistance!!!!”

  3. Another “great win” for Pres. Trump and his half-educated, bigoted, superstitious, disaffected, stale-thinking, backwaters-inhabiting, authoritarian, downscale followers.

    Merry Christmas, everyone!

    1. You clearly are a ” half-educated, bigoted, superstitious, disaffected, stale-thinking, backwaters-inhabiting, authoritarian, downscale ” opponent.

    2. Thank you for that penetrating legal analysis.

      1. Merry Christmas, clingers.

        1. Reverend, it appears you lack a grasp of the fundamental precepts of your vocation.

    3. I sincerely hope that you do have a merry Christmas. Same goes for the other commentators here, whether I agree or not with their views. I hope you are all safe and warm and close to those you love — and kind to those you don’t.

      (Clinger that I am, I don’t actually celebrate Christmas, but I truly would like yours to be wonderful.)

  4. No “But Trump” exception to a district court opinion. Impressive.

    1. And a Clinton-appointed judge who started his career advising Legal Aid to boot. Gives me hope that actual judging can prevail.

      1. “a Clinton-appointed judge” is precisely why he issued this ruling. Bill and Hillary Clinton committed far more egregious violations of the Emoluments Clause than all other Presidents combined. By issuing this ruling, the judge made sure no one but their Deep State allies in DOJ would be able to call them to account.

  5. The opinion appears to say a good deal of dicta about the merits as well. It opines that a payment received as an ordinary market-rate business transaction simply isn’t an emolument and isn’t the sort of payment the emoluments clause covers. If so, then even if there are plaintiffs who could overcome the standing hurdles, and even if justifiability was prudent, plaintiffs would simply lose.

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