On President Trump's first working day in office, he was sued by CREW for violating the Foreign and Domestic Emoluments Clauses. Through the first half of 2017, CREW was joined by a number of private plaintiffs who compete with the President's properties and are therefore injured by his practice of accepting emoluments.
In December 2017, however, Judge Daniels granted the President's motion to dismiss this case. He concluded that the plaintiffs lacked Article III standing; that their claims did not fall within the "zone-of-interests" of the Emoluments Clauses; that the plaintiffs' claims present a political question entrusted to Congress; and that the plaintiffs' claims are not yet ripe. This opinion attracted substantial criticism, including posts by Michael Dorf, Jed Shugerman, and Dan Hemel & Leah Litman.
Last Tuesday, the plaintiffs filed their opening brief on appeal to the Second Circuit. (Disclaimer: I am among counsel to the plaintiffs, along with my colleagues at Gupta Wessler PLLC). Following below, you can read their "summary of argument."
Yesterday, a formidable coalition of amici filed briefs in support of the plaintiffs:
These amicus briefs address many interesting and important issues in the litigation. They are well worth reading. Together, they make an extraordinarily powerful case in favor of reversing the decision below, which rested on multiple, fundamental errors.
The President's brief in the Second Circuit is due on May 29, 2018.
SUMMARY OF ARGUMENT
The competitor-standing doctrine allows plaintiffs to rely on economic logic to establish Article III standing where the defendant’s unlawful conduct subjects them to increased competition. As courts have explained in cases involving antitrust, unfair competition, and regulatory challenges, a competitor plaintiff need only show that she competes in the same arena as the party who benefits from the defendant’s unlawful conduct.
This suit alleges that the President has adopted an unlawful practice of accepting emoluments from foreign and domestic officials through his hotels and restaurants. There can be no doubt that plaintiffs Goode, Phaneuf, and ROC have adequately demonstrated—through detailed allegations, declarations, and expert testimony—that they compete in the same arena with the President’s properties. While courts often find competitor standing in national or international markets, the plaintiffs here compete with the President’s hotels and restaurants in specific and adjoining neighborhoods, offering similar goods, services, quality, and prices. It follows that they have suffered injury-in-fact.
The district court, however, held that the plaintiffs failed to establish causation and redressability. On causation, it speculated that the plaintiffs’ “loss of business” could result from “government officials’ independent desire to patronize Defendant’s businesses.” JA-336. But the plaintiffs don’t argue that their only injury is loss of particular customers. Nor do they deny that government officials might weigh other considerations in deciding where to take their business. Under precedent, the relevant question is whether the plaintiffs have adequately alleged that the President’s receipt of emoluments has injured them by forcing them to compete in an unlawfully skewed market. The plaintiffs’ allegations are more than adequate. First, they have alleged that governments now prefer the President’s properties because they can confer emoluments on him by going there. Foreign officials openly admit as much. Second, the President himself has encouraged such conduct by stating that his regard for foreign nations is linked to how much they patronize his businesses. Third, it is inconsistent with the Emoluments Clauses’ design to assume that the opportunity to enrich the President cannot tempt officials to influence him. The Clauses rest on the Framers’ contrary assumption.
On redressability, the district court nakedly speculated that the plaintiffs could face increased competition for non-governmental business. But that is irrelevant; the relevant market is the one for governmental business at hotels and restaurants in New York and Washington. The plaintiffs allege that the President’s acceptance of emoluments, in that specific market, injures them by placing an illegal thumb on the scales. If the court grants relief, this discrete competitive injury would necessarily be redressed to some degree—which is all that Article III requires.
II. Zone of Interests.
The district court held that the plaintiffs “do not fall within the zone of interests of the Emoluments Clauses.” JA-333. But contrary to the district court’s rigorous view of the test—which it based on a dissenting opinion that it cited as a majority—the zone-of-interests test is undemanding, and forecloses suit only when a plaintiff’s interests are “marginally related to or inconsistent with the purposes” of the relevant provision. Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians v. Patchak, 567 U.S. 209, 225 (2012). Neither the Supreme Court nor this Court has ever dismissed a case on zone-of-interest grounds where plaintiffs with standing sought to prevent the violation of a structural constitutional provision. In such cases, “individuals who suffer otherwise justiciable injury may object,” and courts may “adjudicate [their] claim.” Bond, 564 U.S. at 220, 223.
In any event, the plaintiffs’ interests here are directly tied to the Emoluments Clauses. An “emolument” is a “gain,” and one person’s gain is another’s loss. The plaintiffs allege that the President is using his office to enrich himself by accepting emoluments—often at their expense. Far from being “marginally related” or “inconsistent” with the Clauses’ purposes, this interest strikes at their core.
III. Political Question and Ripeness.
The district court also justified its dismissal based on two “prudential” grounds: the political-question doctrine and ripeness. As to the first, it concluded that “this is an issue committed exclusively to Congress” because Congress may consent. JA-349. But the Domestic Emoluments Clause has no consent exception. And the Foreign Emoluments Clause makes the acceptance of emoluments illegal unless Congress consents—not the other way around. The “Consent of Congress” language makes no sense if the Clause can be enforced solely by Congress. Legislators wouldn’t need to “consent” to an official’s acceptance of emoluments; they could just do nothing. The wrongheadedness of this reading is confirmed by precedent addressing parallel constitutional provisions providing for congressional consent—which have long given rise to justiciable suits and have never been thought to create political questions.
The same reasons largely dispose of the district court’s ripeness analysis, which holds that the claims in this case cannot be ripe until Congress decides to “confront the defendant over a perceived violation of the Foreign Emoluments Clause.” JA-351. The President is violating the Clause now. The plaintiffs are being injured now. Their claims should be adjudicated on the merits.