//  12/26/17  //  In-Depth Analysis

Cross-posted from Shugerblog

Just before Christmas, Judge George Daniels of the Southern District of New York dismissed the first Emoluments case, CREW v. Trump. He avoided reaching the merits of the emoluments claims by finding that the plaintiffs do not have standing to bring the suit. While I disagree with Judge Daniels on his application of competitor standing, it is a complicated and close question. The problem is that this decision contains many serious errors, so that it seems that these close questions did not receive adequate attention. Two of Judge Daniels’s procedural holdings, on the “zone of interests” test and on the political question doctrine, are like the proverbial thirteenth and fourteenth strokes of the clock. To paraphrase the fictional case of Rex v. Haddock (and perhaps Mark Twain and George Orwell’s 1984), those strokes are not only incorrect of themselves, but cast grave doubt on the preceding twelve.

First, I note that I am a co-author of a legal historians’ amicus brief supporting the plaintiffs. Our brief does not discuss standing directly, but it does relate to the zone of interests of the Emoluments clauses. One reason I helped write this brief is that I thought some of the plaintiffs had a strong claim for standing (particularly ROC United, the association of restaurants who are disadvantaged competitively by Trump’s use of office to draw foreign and domestic state business). I also note that, within just a few hours of Judge Daniels issuing his decison, Daniel Hemel and Leah Litman impressively produced this post on TakeCare enumerating six critical mistakes in the opinion. I am following up  because I have found additional mistakes that cast “grave doubts” on the decision generally.

I. The “Zone of Interests” Analysis

Judge Daniels found that the plaintiffs’ competitive disadvantage is not within “the zone of interests” of the two Emoluments Clauses, that they are not covered by the purposes of the Framers in drafting them. On the merits, I think Judge Daniels is incorrect. Our brief emphasizes the Framers focused intensely on the problem of corruption, and they explained that the purposes of the Emoluments Clauses were to guard against corruption (see, e.g., Edmund Randolph and Alexander Hamilton). One of the primary and obvious concerns about corruption is that it creates an “unlevel playing field,” “stacking the deck” in favor of some interests — and some businesses — over others. More on this point below. But more glaring is the problem in Judge Daniels’s legal framing of this argument. He gets the precedents backwards.

For the sake of clarity, I am pasting Judge Daniels’s introduction of the “zone of interests” analysis. Please note that it is thin, and it relies almost exclusively on Wyoming v. Oklahoma, a 1992 Supreme Court decision:

2. The Hospitality Plaintiffs’ Competitive Injuries Do Not Fall Within the Zone of Interests of the Emoluments Clauses

The zone of interests doctrine demonstrates that the Hospitality Plaintiffs are not the right parties to bring a claim under the Emoluments Clauses. Beyond the Article III requirements, “the federal judiciary has also adhered to a set of prudential principles that bear on the question of standing.” Valley Forge Christian Coll. v. Ams. United for Separation of Church and State, Inc., 454 U.S. 464, 474 (1982). “One of these is the requirement that the plaintiff establish that the injury he complains of (his aggrievement, or the adverse effect upon him) falls within the zone of interests sought to be protected by the statut[ e] [or constitutional guarantee] whose violation forms the legal basis for his complaint.” Wyoming v. Oklahoma, 502 U.S. 437, 468-69 (1992) (emphases in original) (citation and quotation marks omitted).

While it is true that the “zone of interests” test first appeared in cases brought under the Administrative Procedure Act, 5 U.S.C. § 702, see Data Processing, 397 U.S. at 153, the Supreme Court has “made clear that the same test similarly applies to claims under the Constitution in general[.]” Wyoming, 502 U.S. at 469. In fact, the Supreme Court has “indicated that it is more strictly applied when a plaintiff is proceeding under a constitutional … provision instead of the generous review provisions of the APA.” Id. (emphasis in original) (citation and quotation marks omitted).

Judge Daniels cited Valley Forge Christian College once for the general proposition on prudential standing. That decision mentions a “zone of interests” test once, and only as a matter of overview in dicta, and never returned to explain it or apply it. So Judge Daniels relies entirely on Wyoming v. Oklahoma as the precedent for his analysis, citing it three times.

But here’s the stunner: Judge Daniels is relying only on the dissent by Justice Scalia in Wyoming (pages 468-69). And even more stunning is that Judge Daniels’s opinion never acknowledges that it is citing a dissent, rather than a majority opinion. This is a very basic but very important citation error, because there is an obvious problem whenever one cites a dissent: The majority may have actually rejected that argument. A lawyer, judge, or scholar needs to alert the reader of that potential problem. The DOJ cited Scalia’s Wyoming dissent in its brief, and to its credit, it clearly signaled it was a dissent with the appropriate parenthetical: (Scalia, J., dissenting).

The citation problem leads to a more serious substantive problem. It turns out that six Justices (White, Blackmun, Stevens, O’Connor, Kennedy, and Souter) rejected Justice Scalia’s conclusion, which only persuaded Chief Justice Rehnquist and Justice Thomas. The basic facts of Wyoming, a dormant commerce clause case, are that Oklahoma required its utilities to burn mixtures containing at least 10% Oklahoma-mined coal. The state of Wyoming does not mine coal itself, but alleges that the Oklahoma statute reduced the demand for coal mined from Wyoming, which reduces the amount of taxes paid to the state of Wyoming. This seems like a relatively marginal and attenuated injury, but six Justices ruled that Wyoming had standing anyway.

The majority did not explicitly reject Scalia’s “zone of interest” analysis of Wyoming’s interests and the dormant commerce clause’s purposes. But it implicitly addressed this question with a broad interpretation of the Commerce Clause’s federalism concerns: “As such, Wyoming’s challenge under the Commerce Clause precisely ‘implicates serious and important concerns of federalism fully in accord with the purposes and reach of our original jurisdiction.’” Wyoming, 502 U.S. at 451 (citing Maryland v. Louisiana, 451 U.S., at 744, 101 S.Ct., at 2127). 

So in addition to the significant mistake of relying on a dissent without acknowledging it, an even bigger problem for Judge Daniels’s decision is that Wyoming v. Oklahoma actually rules the opposite way on the fundamental point upon which Judge Daniels was relying.

Moreover, CREW and the amicus briefs raised many good arguments and precedents for private plaintiffs to invoke structural constitutional clauses, when the interest of the plaintiff is not the obvious purpose of the clause. CREW cited Bond, 564 U.S. 211, 223 (10th Amendment federalism interest) and Chadha, 462 U.S. 919 (the famouc legislative veto case, in which a non-citizen facing removal raised bicameralism and presentment concerns). An amicus brief by administrative law scholars (including Litman and Hemel) cited Free Enterprise v. PCAOB, 561 U.S. 477 (2010); Plaut, 514 U.S. 211 (1995), and Northern Pipeline, 458 U.S. 50 (1982). There may be good reasons to distinguish all of these precedents, but this opinion dismissing CREW’s case did not even try.

Most significantly in the long run, all of the plaintiffs in this case raise claims that do fall under the Emoluments clauses’ zone of interests: anti-corruption.  Edmund Randolph, delegate to the Convention and  the first Attorney General, explained the Foreign Emoluments Clause in the Virginia ratifying convention, “This restriction is provided to prevent corruption.” In Federalist No. 73, Hamilton emphasized that the Domestic Emoliuments Clause was to guard against corruption: Congress and the states “can neither weaken [the President’s] fortitude by operating on his necessities, nor corrupt his integrity by appealing to his avarice.” Our legal historians’ amicus brief puts these clauses in a larger context of the Founders’ anti-corruption principles. And historians understand that one of the reasons Americans fought a revolution was because corrupt British policies created an unfair playing field in commerce and business competition. For generations, Americans have understood corruption in terms of unfair competition. It is puzzling that Judge Daniels did not see the link between these historic interests that deeply resonate today.

And then there is this sentence in the opinion, which, I must confess, I find totally confusing:

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.

Is Judge Daniels suggesting that the plaintiffs want to be protected from all competition? Their claim is that the market for foreign government business and domestic government business is unfairly skewed by unconstitutional emoluments, which creates an injury in a particular market. The plaintiffs might be disadvantaged in permissible ways by Trump’s presidency, but that does not eliminate the smaller but still concrete injury from impermissible emoluments. The plaintiffs are not seeking protection against legal non-government business. As for 2), Congress has not consented to these emoluments, perhaps because of their corrupt effect on competition, and moreover, President Trump will not disclose his income from foreign and domestic state sources. Invoking what Congress might or might not do to make foreign payments legal has no bearing on the merits now of the injury. Moreover, Congress can only consent to foreign emoluments. Daniels’s second point does not address the Domestic Clause. Readers leaves the zone of “zone of interests” more confused than when they entered.

I add one more note on the zone of interests: Judge Daniels at least acknowledged a federalism interest in the clauses, which bodes well for the pending case Maryland v. Trump in the district court of Maryland. Our legal historians’ amicus brief emphasizes the states’ federalism interests at the heart of both clauses.

II. The “Political Question” Question

Judge Daniels concludes his decision by holding that the Foreign Emoluments Clause is non-justiciable, because it is solely a political question: “As the explicit language of the Foreign Emoluments Caluse makes clear, this is an issue committed exclusively to Congress.” (p. 26). Be ware of the words “explicit,” “clear,” and “exclusively.” The clause gives Congress a voice on the foreign emoluments issue, but it most certainly does not do so exclusively, explicitly, or clearly.

During oral argument, I, along with many observers, were surprised that Judge Daniels spent so much time on this argument, so I wrote up a post addressing this straining of the Foreign Emoluments clause’s text here, and Joshua Matz touched on this question earlier here. I return to those arguments now.

Judge Daniels emphasizes with the Foreign Emoluments clause’s text: “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.”

At oral argument, Judge Daniels asked, and I’m paraphrasing here, “Why doesn’t the political question doctrine apply? The clause assigns the power to Congress to consent or not. If the President is taking emoluments from foreign governments, let Congress weigh in.”

CREW’s Deepak Gupta gave a clear answer then: “Because that approach would flip the clause on its head. The structure is a clear rule, with exceptions given to Congress. It’s a ban, but Congress can create exceptions to the ban. If you say it is non-justiciable, then you flip the script: you turn it into a broad permission to accept emoluments, unless Congress says no. That’s the opposite of the text and the Framers’ purpose.”

Judge Daniels replied: “Congress has the power to prevent emoluments if it wants to.”

Gupta answered that constitutional clauses are justiciable unless they are exclusively assigned to another branch, and if there are no manageable rules. He emphasized that the DOJ (through the Office of Legal Counsel) has crafted manageable rules over many generations and many cases. (I add a note that the DOJ’s enforcement of foreign emoluments suggests that the issue is not committed exclusively to Congress, contrary to Judge Daniels’s observation).

In his decision, Judge Daniels first acknowledged that the DOJ never explicitly argued that the Foreign Emoluments Clause was a political question. The fact that the DOJ did not make this argument should have been a cautionary yellow flag. Judge Daniels went down this path anyway. He relied on just two Supreme Court cases, both on the particularly nettlesome gerrymandering problem: Baker v. Carr and Vieth v. Jubelirer. Gerrymandering is the classic political question case, for which there is no constitutional text directly on point (and thus the courts turn to the 14th Amendment’s broad equal protection clause). Nevertheless, in Baker v. Carr, the Supreme Court rejected the political question doctrine. If the Supreme Court could tackle the politics of gerrymandering with the 14th Amendment, it surely can adjudicate emoluments with Emoluments clauses. Vieth, on partisan gerrymanders, presented a much thornier problem in the political thicket, and the Supreme Court may be on the verge of clearing through that thicket this term. The Foreign Emoluments Clause isn’t in this political thicket at all.

Judge Daniels emphasizes the first factor under Baker v. Carr‘s justiciability test: “[A] case may be dismissed on the basis of the political question doctrine if there exists: “[l] a textually demonstrable constitutional commitment of the issue [at hand] to a coordinate political department.” After describing the factors, Daniels provides just two paragraphs of analysis that confuse the possibility of Congressional action with exclusive commitment to Congress, as opposed to another branch.

The Foreign Emoluments clause is not the only place in the Constitution that uses a similar structure: a barring of an act, with a grant of a power to Congress to make exceptions. In fact, right after the Foreign Emoluments Clause (Art. I, Sec. 9), the next Section of the Constitution offers two other examples with prohibitions on state power and with the same language, “without the Consent of Congress.”

1.  The first is in Art I, Sec. 10, Clause 2: “No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it’s inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Controul of the Congress.

According to Judge Daniels’s interpretation, this clause should be non-justiciable. Congress can always declare or legislate its non-consent, so this clause would be a political question.  In fact, this clause adds that these state laws are “subject to Revision and Controul of the Congress,” so accordingly, this clause has an even stronger case to be a political question relative to the Foreign Emoluments Clause.  Nevertheless, I can find about two dozen Supreme Court cases ruling on this clause, treating it as clearly justiciable. See, e.g., Chief Justice John Marshall’s decision in Brown v. Maryland, 25. U.S. 419 (1827).

2. The second clause is similar. Clause 3: “No State shall, without the Consent of Congress, lay any Duty of Tonnage, keep Troops, or Ships of War in time of Peace, enter into any Agreement or Compact with another State, or with a foreign Power, or engage in War, unless actually invaded, or in such imminent Danger as will not admit of delay.”

Again, it contains the same textual hook: a blanket prohibition, but an exception for congressional consent. Yet the Supreme Court has treated this clause as justiciabe, ruling on tonnage duties under this clause at least a dozen times. It has ruled on the troops provision, and there are countless cases on interstate compacts.

The same section of the Constitution that includes the Foreign Emoluments Clause provides another broad proscription on the executive branch, but also a recognition of Congress’s powers:

Art I, Sec. 9, cl. 7: “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.”

Here again the Constitution provices a prohibition, unless Congress consents (by passing an appropriations measure). Yet there are a dozen Supreme Court cases that have treated the clause as justiciable.

And there is more: the creation of new states has a similar structure.  Art. IV, Sec. 3:

[N]o new State shall be formed or erected within the Jurisdiction of any other State; nor any State be formed by the Junction of two or more States, or Parts of States, without the Consent of the Legislatures of the States concerned as well as of the Congress.

Imagine if California tried to split into two states. Imagine next that a Democratic Senate decided to seat an extra two Democratic Senators, while a Republican President and a Republican House rejected the creation of a North California and a South California. What if the Senate passed legislation with the help of those two Senators? And what if California sent an extra pair of electors to the Electoral College?  I imagine the courts would rule on these questions (although they would handle the question of standing separately).

For another example, turn to the appointment power in Art II, Sec. 2:

“[The President] shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States.”

What if President Obama decided that Congress’s silence on his nomination of Judge Garland to the Supreme Court or his nomination of Elizabeth Warren to head an agency was tantamount to implicit consent? Could these appointments be challenged in court? Surely if Justice Garland tried to rule on a case or if agency head Warren tried to regulate a bank, a plaintiff would have a day in court to challenge the legitimacy of those appointments. The Senate’s potential power to vote yes or no does not eliminate the judiciary’s role.

I am sure Judge Daniels would not mean to push his interpretation this far, but I am concerned that if one applied  Judge Daniels’s logic to the Thirteenth, Fourteenth, and Fifteenth Amendment, would those transformational amendments be rendered non-justiciable political questions? Each of those amendments contains a clause that permits Congress to legislate the enforcement of these amendments. Section 5 of the Fourteenth Amendment states, “The Congress shall have power to enforce, by appropriate legislation, the provisions of this article.”

Arguably, we have a set of prohibitions protecting individual rights to equal protection, privileges and immunities, and due process of law, but the enforcement of these rights is explicitly granted to Congress. An extension of Judge Daniels’s textual approach would be to say that the 14th Amendment assigns enforcement explicitly to Congress, so the enforcement of the 14th Amendment is a political question and non-justiciable (notwithstanding the Court’s proportionality and congruence jurisprudence). He can’t possibly mean that as a matter of textual interpretation. But two cursory paragraphs of analysis of the Foreign Emoluments Clause seems to open the door to such untenable results.

In a footnote, Judge Daniels wrote, “Congress is not a potted plant. It is a co-equal branch of the federal government with the power to act as a body in response to Defendant’s alleged Foreign Emoluments Clause violations, if it chooses to do so.” But the possibility that Congress might one day legislate would render non-justiciable any case relying on a federal statute and administrative action. That can’t be correct. As Hemel and Litman observe:

[T]he fact that Congress could—hypothetically—consent to an action can’t be enough (or even be a reason) to conclude that a plaintiff lacks standing to challenge that action on the grounds that Congress hasn’t authorized it. Otherwise, there would never be standing when a plaintiff challenges ultra vires executive action—executive action that exceeds the scope of congressionally delegated authority, or executive action that violates a statutory prohibition. In all of those cases, Congress could have authorized the action, but didn’t.  The same would be true in dormant commerce clause cases—no plaintiff would have standing to challenge a dormant commerce clause violation because Congress could always consent to and thus cure the violation.”

The Framers drafted many clauses in the Constitution with a broad prohibition, but with the power of Congress to make exceptions and permissions. Two clauses use the exact same language of “without the consent of Congress.” Nevertheless, the courts have treated those clauses as justiciable over and over again, from Chief Justice Marshall’s Court up through modern cases. The Courts certainly have not treated the language of these clauses as committing issues “exclusively” to Congress, to paraphrase Judge Daniels. The Foreign Emoluments Clause offers a manageable text for courts to interpret, even if Congress remains silent, and even if Congress makes some exceptions.

III. Conclusion

The dismissal of CREW v. Trump contained many major errors and many basic mistakes. In its section on “zone of interests,” the reliance on a dissent was not just a problem of formalistic citation rules and improper signaling. It was a misunderstanding that the majority opinion had rejected the Scalia dissent upon which it was relying. And more importantly, it erred in its interpretation of the anti-corruption purposes of the clause. In its section on the political question, it  relied on a Supreme Court precedent that counseled the opposite result (Baker v. Carr) and it overlooked a series of similar clauses that counseled the opposite textual interpretation. In both sections, the decision did not engage many precedents that either raised significant questions or  reached a different result.

If this decision made so many errors on “zone of interests” analysis and its political question analysis, I would not rely too heavily on its analysis of standing doctrine, either.

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