President Trump prevailed Wednesday morning in a lawsuit claiming that profits from his businesses violate the Emoluments Clauses of the Constitution.
The case was brought by the attorneys general of Maryland and Washington D.C., who said that Trump properties, notably the Trump International Hotel in D.C., were siphoning business away from state-owned convention centers.
The Foreign Emoluments Clause, directly relevant in this case, 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.
The Domestic Emoluments Clause, less relevant in this case, provides:
The President shall, at stated Times, receive for his Services, a Compensation, which shall neither be increased 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.
What these clauses mean is the subject of debate, but before reaching the merits, a court needs to decide whether the plaintiffs are entitled (i.e., have “standing”) to sue to enforce the Emoluments Clauses. The U.S. Court of Appeals for the Fourth Circuit found that State of Maryland and the District of Columbia had no standing. The Opinions are here and here. (One addresses claims against President Trump in his official capacity, the other addresses claims against him individually.)
Maryland and D.C.’s argument was that foreign dignitaries were likely patronizing the Trump International Hotel in the hopes of currying favor with the President, giving the hotel a competitive advantage over similar venues—which was tantamount to profiting off the the presidency.
The panel concluded that this theory of harm was too speculative and attenuated to confer standing on Maryland and D.C. The panel wrote:
To begin, the District and Maryland’s theory of proprietary harm hinges on the conclusion that government customers are patronizing the Hotel because the Hotel distributes profits or dividends to the President, rather than due to any of the Hotel’s other characteristics. Such a conclusion, however, requires speculation into the subjective motives of independent actors who are not before the court, undermining a finding of causation….Even if government officials were patronizing the Hotel to curry the President’s favor, there is no reason to conclude that they would cease doing so were the President enjoined from receiving income from the Hotel. After all, the Hotel would still be publicly associated with the President, would still bear his name, and would still financially benefit members of his family. In short, the link between government officials’ patronage of the Hotel and the Hotel’s payment of profits or dividends to the President himself is simply too attenuated.
No one thinks it is desirable for government officials to profit from their positions, but the theory of standing in this case deserved to be rejected. Indeed, the theory was so novel and weak as to make one think that the true purpose of the lawsuit was, in fact, discovery into the president’s finances.
As Legal Insurrection reported in December when this same panel halted proceedings in the case:
The delay is actually a big deal. It means that imminent, intrusive discovery into the President’s finances will be stalled for months, and perhaps never allowed to proceed.Dozens of outstanding subpoenas authorized by the trial judge—several of which were served on the Trump International Hotel and Trump Organization just two weeks ago—are now frozen. Importantly, the stay has also spared the Solicitor General from having to spend his precious (and perhaps diminishing) capital seeking yet another emergency intervention from the Supreme Court.
The decision is certainly a victory for President Trump, who is tweeting about it:
Trump’s attorney declares it a complete victory:
But the President shouldn’t feel too relieved yet. He drew an unusually favorable panel: Paul Niemeyer, Dennis Shedd and A. Marvin Quattlebaum, three of the Fourth Circuit’s most conservative judges.
Because the Fourth Circuit has a 9 Democratic and 6 Republican appointees, the plaintiffs will probably seek en banc rehearing, and there is at very least a reasonable chance they will get it.
But for now, the Fourth Circuit has closed one avenue to discovery into the President’s finances. Of course, other avenues exist.
A similar case, brought by individual members of Congress, is currently pending before the D.C. Circuit. Yet another case, brought by a private watchdog group, is currently on appeal to the Second Circuit.
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