Outside the Beltway

Federal Judge Allows Congressional Emoluments Clause Lawsuit To Proceed

A Federal Judge ruled late last week that a lawsuit under the Foreign Emoluments Clause by more than 200 Congressmen and Senators can proceed forward.

Doug Mataconis · Monday, October 1, 2018 · 10 comments

A Federal District Court Judge in Maryland has ruled that a lawsuit filed against President Trump by more than 200 Democratic Members of Congress and Senators alleging that the President’s business ties constitute violations of the Emoluments clauses of the Constitution can move forward, handing the President’s legal team yet another loss on this issue:

WASHINGTON — Congressional Democrats cleared a key hurdle on Friday in their effort to sue President Trump over whether he is illegally profiting from business dealings with foreign governments, in a case that could give the lawmakers access to the Trump Organization’s finances.

Judge Emmet G. Sullivan of the United States District Court in Washington ruled that the lawmakers have standing to sue Mr. Trump for accepting payments and other benefits from foreign governments without obtaining permission from Congress, which would violate the Constitution’s clause that bars federal officials from accepting gifts, or emoluments, from foreign powers without congressional approval.

Judge Sullivan dismissed the Justice Department’s claim that the legislators did not have standing to sue and denied its request to dismiss the lawsuit.

“The court finds that the plaintiffs have standing to sue the president for allegedly violating the Foreign Emoluments Clause,” Judge Sullivan wrote in his opinion. Mr. Trump “has neither asked for their consent nor provided them with any information about the prohibited foreign emoluments he has already allegedly accepted.”

The case brought by the Democrats is broader than a second lawsuit that accuses Mr. Trump of illegally benefiting from foreign powers and has the potential to reach deeper into the Trump Organization’s finances.

Judge Sullivan said that he would decide later whether Mr. Trump violated the Constitution’s clause.

“As we argued, we believe this case should be dismissed, and we will continue to defend the President in court,” said a Justice Department spokeswoman, Kelly Laco.

The ruling was a step toward empowering Congress “to hold the president accountable,” said Senator Richard Blumenthal of Connecticut, who originally filed the lawsuit along with Representative Jerrold Nadler of New York. Nearly 200 Democrats joined them.

Mr. Blumenthal said that the president has violated the clause by collecting trademarks from China, rent paid by foreign governments at his real estate properties worldwide and government approvals for his business dealings. He also suggested that Mr. Trump’s businesses may have collected payments and benefits that are unknown to Congress.

If Judge Sullivan finds that Mr. Trump has violated the emoluments clause, congressional Democrats can ask for information in the discovery phase of the lawsuit about any foreign benefit related to his global business dealings, including payments, trademarks, intellectual property and regulatory advantages.

More from The Washington Post:

A federal judge on Friday gave the go-ahead to a lawsuit filed by 200 congressional Democrats against President Trump alleging that Trump has violated the Constitution by doing business with foreign governments while in office.

The lawsuit is based on the Constitution’s emoluments clause, which bars presidents from taking payments from foreign states without Congress’s consent. Trump’s business, which he still owns, has hosted foreign embassy events and visiting foreign officials at its downtown D.C. hotel.

Trump has not given Congress any details of these transactions, nor has he asked Congress’s permission for them. Trump says he doesn’t need to — by his reckoning, these transactions don’t fit the Founding Fathers’ definition of “emoluments.” They are business deals, he says, not payoffs.

But the Democratic members of Congress said Trump had effectively nullified their votes by not giving them anything to vote on.

In his ruling, Federal Judge Emmet G. Sullivan agreed with the legislators, writing that they have legal standing to sue and their case can proceed.

“The Clause requires the President to ask Congress before accepting a prohibited foreign emolument,” Sullivan wrote. If the allegations made by Democrats are true, he wrote, then “the President is accepting prohibited foreign emoluments without asking and without receiving a favorable reply from Congress.”

Typically, judges are skeptical when individual legislators seek to sue the president. In this case, Sullivan allowed it, writing that the lawmakers had no where else to turn for a remedy other than the courts.

The Department of Justice, which is representing Trump in this case, said in a statement that it will continue to fight the lawsuit.

“We believe this case should be dismissed,” said Kelly Laco, a spokeswoman for the department, “and we will continue to defend the President in court.”

(…)

Friday’s ruling is just the beginning of the Democrats’ lawsuit.

Sullivan still must rule on questions that include whether the Founding Fathers’ definition of “emolument” was broad enough to include a foreign embassy paying the president to rent a hotel ballroom.

Attorneys for the Democratic legislators called Friday’s ruling a significant victory.

“By recognizing that Members of Congress [have] standing to sue, the court proved to all in America today that no one is above the law, not even the President,” wrote Elizabeth Wydra, of the Constitutional Accountability Center, in a statement.

Although Trump has given up day-to-day management of his businesses, which include residential, office, hotel and golf properties in the United States, Europe and South America, he still owns them and can withdraw money from them at any time.

In addition to this case, there is a separate lawsuit pending in the U.S. District Court in Maryland that was filed by the Attorneys General of Maryland and the District of Columbia that has moved further along than the Congressional lawsuit has. In March, the Judge assigned to the case rejected a motion to dismiss the case that had been filed by the Justice Department that raised essentially the same standing and pleading arguments as Judge Sullivan dealt with in his opinion. More recently in July, the Judge in that same case issued a broader ruling that found that the Plaintiffs had set forth a sufficient case under both the Foreign and Domestic Emoluments Clauses. This was a historic ruling in that this was the first time a Court issued a ruling interpreting either emoluments clause.  Additionally, there was a case that had been filed in New York by a public interest group and a group of businessmen who claimed that they were harmed by the fact that Trump’s properties were continuing to operate under his name even after he became President. In that case, though, the Judge dismissed the case on the ground that the Plaintiff’s had failed to establish that were being harmed by the alleged violations of the Emoluments Clauses in a way that would give them legal standing to sue the President.

All of these claims are based on two provisions of the Constitution that, until recently, have never been litigated before or ruled upon by a Judge at any level of the Federal Judiciary or in any of the states in the 229 years since the Constitution was ratified.The first provision, which has been called the “Foreign Emoluments Clause” is found in Article I, Section Nine, Clause 8 of the Constitution and prohibits any Federal official from receiving without Congressional consent “any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince or foreign State.” The second clause, which has been called the “Domestic Emoluments Clause” can be found in Article II, Section 1, Clause 7 and states that the President “shall not receive within that Period any other Emolument from the United States or any of them.” Generally speaking, an “emolument” is defined as ” the returns arising from office or employment usually in the form of compensation or perquisites.” ‘The Congressional lawsuit is based on the Foreign Emoluments Clause and the fact that Trump is, according to the lawsuit, accepting benefits from foreign sources both at his Trump properties in the United States and those overseas, payments from foreign sources without having obtained permission to do so from Congress.

Prior to the Trump Administration, there is no record that either of these clauses of the Constitution have been raised or litigated with respect to any President since George Washington first took the Oath of Office in 1789 and no record of any legal proceeding in which a court of record has ruled on the application of these clauses in any specific set of facts. It’s also worth noting that there is a long history of Presidents of the United States receiving gifts, including gifts that potentially have significant value, from foreign leaders and foreign nations. Typically, these gifts are given as part of official visits by foreign heads of government or heads of state to the United States, or official visits of the President to foreign nations during his time in office. Under a strict reading of the Foreign Emoluments Clause, these gifts would appear to be barred absent Congressional authorization, but rather than being prosecuted for accepting them previous Presidents have been permitted to receive them as long as they are properly reported by the White House and with the understanding that these are meant to be gifts to the United States rather than personal gifts for the President. As a result, this means that Presidents are generally not permitted to take these gifts with them when they leave office, or to sell them on the open market. At the very least, though, this history raises legitimate questions about what the clauses mean and whether they are being violated in this case. Because of all that, the rulings that have been issued with respect to President Trump’s business interests are groundbreaking and could lead to some serious headaches for the President going forward.

In this particular case, the Judge’s opinion was generally speaking focused solely on the narrow question of whether or not the lawsuit could proceed and whether the Democratic Congresspersons and Senators had sufficient legal standing to proceed with the case. The second question was especially important because the Federal Courts have generally held that individual members of Congress, or large groups of them such as what we have here, lack the standing required under Article III of the Constitution to pursue claims against the President or other parts of the investigation. In this case, though, Judge Sullivan, who was appointed to the U.S. District Court for the District of Columbia by President Clinton in 1994 after ten years as a Judge in the District of Columbia, found that the Plaintiffs had alleged sufficient facts to establish standing to maintain a lawsuit, primarily because of the fact that the Foreign Emoluments Clause requires the President to seek Congressional authorization to accept foreign gifts whereas the Domestic Emoluments Clause simply bars receiving such gifts from state governments and does not allow the President to receive Congressional authorization to accept them. Because of that, Judge Sullivan ruled, the members of the House and Senate bringing the lawsuit had standing because the President’s failure to seek Congressional approval undercut their authority as members of Congress. Additionally, the ruling rejected the argument that the Plaintiffs had not sufficiently pled a case making out a potential violation of the clause.

The most significant thing about this ruling is that it puts the Plaintiffs one step closer toward being able to engage in the kind of discovery about the Presidents finances that he has previously sought to prevent. This discovery could include everything from the documentation regarding the internal operations of The Trump Organization and its properties here in the United States and overseas to the President’s personal tax returns, which until now he has refused to make public. It is also likely to lead to other discovery related to the President’s finances, including attempts to depose people with information regarding his finances and, eventually, the President himself. This is obviously one of the main reasons why the President is fighting these cases so vigorously and why he has been relatively quiet about them on Twitter and in other forums. These are claims that hit very close to home and could expose Trump to liability for a variety of other claims.

Here’s the opinion:

Blumenthal Et Al v Trump Et Al by on Scribd