//  6/12/17  //  In-Depth Analysis

Today, Maryland and the District of Columbia filed suit against President Trump for violating the Foreign and Domestic Emoluments Clauses of the U.S. Constitution.  In this post, we offer quick background and context, and then explain why Maryland and DC have standing under Article III to bring these claims against the President.  

It is our considered judgment that the constitutional arguments supporting state standing in this litigation are exceptionally powerful.  Maryland and DC are proper Emoluments Clause plaintiffs as a matter of precedent and constitutional law.  Their case against President Trump should unquestionably be decided on the merits. 

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The Maryland and DC complaint is a landmark development in the struggle to hold Trump accountable for receiving illegal emoluments.  The President has insisted that he cannot have a conflict of interest—a statement flatly at odds with the Constitution.  He and his lawyers have further asserted that nobody can hold him responsible at law for an open, notorious, and continuing violation of the Emoluments Clauses.  Trump has persisted in that view while it has grown clearer that he has no intention of complying even with the inadequate half-measures announced in early January.   

In short, President Trump has taken the view that he can receive (through the Trump Organization) an endless flood of foreign money—and money from states and the federal government—and nobody can challenge him in court.  That’s just wrong.  

The consequences of Trump’s illegal conduct are extraordinary. The man who controls huge swaths of American public policy has deliberately embraced a position overrun at every turn with conflicts of interest. And these are hardly obscure ethics violations: they involve such an obvious, invidious form of corruption that the Framers foresaw and banned it in the Constitution.

On Trump’s first working day in office, Citizens for Responsibility and Ethics in Washington (CREW) filed a suit challenging the President’s unconstitutional conduct.  CREW has since amended its complaint twice.  The operative complaint can be found here.  Last Friday, the Department of Justice filed its motion to dismiss the CREW case.  That filing has already drawn unusually heavy criticism from a wide range of experts—including Leah Litman, Richard Primus, Andy Grewal, and Joshua Zeitz.

Since the CREW case, there have been scattered efforts to hold Trump accountable at law for his conflicts of interest.  Perhaps most notably, these include the unfair competition lawsuit filed by Cork Wine Bar, which relates to the Trump International Hotel and its lease administered by the General Services Agency.  CREW and other government watchdogs have also filed a number of ethics complaints relating to emolument-adjacent ethics issues. 

But there has not yet been additional, large-scale emolument litigation.  Going from zero to sixty on cutting-edge constitutional cases takes time, after all.  So for months, CREW has occupied the Emoluments Clause field all by itself.

Until now.     

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President Trump’s defenders on Emoluments Clause issues have offered a very weak case on the merits, as we have explained in detail elsewhere (e.g., here and here and here).  And they have offered essentially no defense of Trump’s decision as a matter of effective, responsible, or sound policy.

Instead, Trump and his lawyers have hidden behind technicalities designed to prove that nobody can file suit against the President, even if his Emoluments Clause violations are clear as day.  Their main argument is that nobody has yet demonstrated injury as a result of the President’s alleged unlawful conduct.  And it is settled that if a party has not been injured by the defendant’s conduct, then he or she lacks “standing” to bring a case in federal court under Article III of the Constitution.  That provision restricts the jurisdiction of federal courts to “cases or controversies.”

In the CREW case, the plaintiffs have made (and will continue to make) powerful arguments that they have been injured by the President’s unlawful conduct—and that they do have standing.  Check out these posts by Jon Taylor and Mike Dorf, and the short Take Care series by Leah Litman (here and here and here).  This issue is currently being litigated before Judge Ronnie Abrams, a federal judge based in Manhattan.

In the meantime, though, questions have arisen about who else might have standing to challenge the President’s Emoluments Clause violations.  Given the sheer scope of his power, it wouldn’t at all be surprising if many different entities could demonstrate concrete and particularized injuries resulting from the President’s illegal conduct—which has many adverse implications across many fields of commercial, political, and public policy activity.  

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This brings us to Maryland and DC.  In recent years, there has been a rapid expansion in the notion that States must play an important role in protecting their own rights—and, at times, the rights of their citizens.  Conservatives, in particular, latched onto more robust views of state standing under the Obama Administration, rallying around the State of Texas as it become a full time anti-Obama litigation shop.  This expansive vision of state standing was nowhere more pronounced than in United States v. Texas, a challenge to President Obama’s deferred action protection for certain undocumented migrants.

More recently, in litigation over the travel ban, many progressives rallied around Washington, Oregon, and Hawaii as they invoked their interests as states to attack the President’s executive order.  And just as the Fifth Circuit Court of Appeals had accepted Texas’s argument that it had standing to challenge Obama’s deferred action program, so did the Ninth Circuit Court of Appeals agree that Washington State could challenge the travel ban.

The idea that states are not ordinary plaintiffs when it comes to Article III standing is deeply established in our jurisprudence.  As the Supreme Court noted in Massachusetts v. EPA (2007), “well before the creation of the modern administrative state, we recognized that States are not normal litigants for the purposes of invoking federal jurisdiction.”  Rather, as Massachusetts confirmed, states are “entitled to special solicitude in our standing analysis.”

The basic framework for state standing comes from Alfred L. Snapp & Son, Inc. v. Puerto Rico, ex rel., Barez (1982), where the Supreme Court identified three kinds of interests possessed by states, injury to which can support standing:

  1. States possess “sovereign interests,” which include “the power to create and enforce a legal code, both civil and criminal” and “the demand for recognition from other sovereigns.
  2. In addition, States possess “nonsovereign interests,” which include the right to pursue their interests as proprietors of business ventures.
  3. Finally, States possess “quasi-sovereign interests," which “consist of a set of interests that the State has in the well-being of its populace.”  These include a State’s “quasi-sovereign interest in the health and well-being-both physical and economic-of its residents in general,” and a State’s “quasi-sovereign interest in not being discriminatorily denied its rightful status within the federal system.” 

With respect to this last kind of quasi-sovereign interest, the Supreme Court added, “the State has an interest in securing observance of the terms under which it participates in the federal system.” 

Accordingly, while there are many important limits on state standing to challenge the federal government, see, e.g., Massachusetts v. Mellon (1923), it has long been recognized that States can maintain suits against the federal government to protect their interests qua States, see Mass v. EPA (2007); South Carolina v. Katzenbach (1966).  To boil down a complex body of constitutional law, states can sue the federal government, including the President, when they seek to enforce federal statutory or constitutional law with respect to their interests as States (including their sovereign and quasi-sovereign interests). 

This background provides helpful context to the Maryland and DC lawsuit. 

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In their complaint, Maryland and DC invoke two separate theories of standing:

“First, they have suffered (and will continue to suffer) harm to their sovereign and/or quasi-sovereign interests, including Maryland’s interest in preserving its rightful status within our federal system; the plaintiffs’ interest in not being subjected to unfair competition by virtue of ongoing violations of constitutional provisions designed to guard against corruption and to protect interests distinct to the states themselves; the plaintiffs’ interest in protecting their economies and their residents from economic harm; and Maryland’s interest in preserving its tax revenue.”

“Second, the plaintiffs have suffered (and will continue to suffer) proprietary and other financial harms as a result of the defendant’s ongoing constitutional violations.”

Let’s consider each of these theories, in turn. 

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The first theory of standing is based on injury to Maryland’s sovereign and quasi-sovereign interests.  The complaint spells out four basic injuries:

Harm to “Maryland’s sovereign interest in enforcing the terms on which it agreed to enter the Union”

Before adopting the federal Constitution, Maryland and its sister states were truly independent sovereigns.  Many of these states—including Maryland—had incorporated protections against public corruption into their own legal codes and constitutions, with specific prohibitions on public officials accepting payments from federal, state, or foreign governments . . . .

The prohibitions contained in the Domestic and Foreign Emoluments Clauses were thus material inducements to the states entering the union.  As a state sovereign, Maryland retains its power to bring suit to enforce those prohibitions today.”

Harm to “the plaintiffs’ governmental interest in not being compelled to compete improperly for influence or favor”

The Domestic Emoluments Clause aims to prevent “the United States, or any of them,” from feeling compelled (or being compelled) to confer private financial benefits on the President in order to compete for influence and favor.  The District and Maryland each have a governmental interest in the enforcement of their respective laws regarding taxation, environmental protection, zoning, and land use as they relate to real property that the defendant or the “Trump Organization” may own or seek to acquire . . . .

The defendant’s acceptance or receipt of presents and emoluments in violation of the Constitution presents the District and Maryland with an intolerable dilemma: either (1) grant the Organization’s requests for concessions, exemptions, waivers, variances, and the like and suffer the consequences, potentially including lost revenue and compromised enforcement of environmental protection, zoning, and land use regulations, or (2) deny such requests and be placed at a disadvantage vis-à-vis states and other government entities that have granted or will agree to such concessions.  Either way, the result is the very type of injury that the Domestic Emoluments Clause was designed to prevent

Harm to “the plaintiffs’ interest in preventing economic injury to their residents and their economies”

Residents of the District and Maryland are injured by the payment of presents and emoluments to the defendant because it tilts the competitive playing field toward his businesses; causes competing companies and their employees to lose business, wages, and tips; and generates a range of market distortions that restrict and curtail opportunity, diminish revenues and earnings, and hamper competition

The District and Maryland have the authority and right to vindicate their interest in providing and preserving a level playing field in the hospitality industry, and in ensuring that their residents are free from the injuries and competitive disadvantages that flow from defendant’s violations of the Emoluments Clauses.

Harm to “Maryland’s sovereign interests in tax revenues.”

The defendant’s violations of the Emoluments Clauses also injure Maryland’s interest in preserving tax revenue for the benefit of its residents. For example, National Harbor is a resort development with hotels, a casino, restaurants, entertainment, a marina, and shops located on the Potomac River in Prince George’s County, Maryland. Although Maryland does not own National Harbor, the various hotels and other businesses in the complex generate significant tax revenue for state and local governments . . . .

Trump International Hotel, located in the District of Columbia, is a direct competitor of National Harbor’s hotels and other businesses, including MGM National Harbor.  Those hotels and businesses suffer competitive harm by the defendants’ ongoing constitutional violations, and Maryland’s tax coffers, in turn, are diminished as a result

In our view, these theories of injury more than suffice to establish standing under applicable Supreme Court precedents.  While there is a lot to say here, we’ll offer only a few general remarks about the injuries identified by Maryland and DC.

A core purpose of the Emoluments Clauses is to prevent States from feeling compelled (or being compelled) to confer private financial benefits on the President in order to compete for influence and favor against other States—and against the federal government itself and foreign sovereigns.  That purpose is especially apparent in the Domestic Emoluments Clause, which refers to the States explicitly and which does not allow Congress to consent to any emoluments conferred on the President (presumably to prevent sections of states from seeking to buy off the President and then have their representatives approve that sordid deal).  This purpose of the Emoluments Clauses was wholly consistent with Framing-era anxiety about the powers of the new federal government, the threat of “factions,” and regional strife among the states.

Because the Emoluments Clauses exist to protect States themselves from a specific injury, and because that purpose is inextricably intertwined with the design and operation of the federal scheme, there can be no serious question that violations of the Emoluments Clauses implicate core quasi-sovereign interests.  The importance of the state interest here resonates in vital respects with Shelby County v. Holder (2013), where the Supreme Court applied a doctrine of “equal sovereignty among States”—a principle that the Emoluments Clauses play a significant role in enforcing as a matter of constitutional structure.   

This is confirmed by Snapp, which, as we explained above, held that a State has “an interest in securing observance of the terms under which it participates in the federal system.  Surely any State would view “the terms” of participation in a “federal system” as including the necessity, or lack thereof, of constantly feathering the President’s nest in order to win his favor and the many benefits that might flow from it.  States face an imminent risk of being “excluded from the benefits that are to flow from participation in the federal system,” and of witnessing harm to their “general population,” when they are subjected to a system of inter-sovereign conflict over emoluments.  That is particularly true in the modern period of extraordinarily expanded presidential power.

As Snapp observed, One helpful indication in determining whether an alleged injury to the health and welfare of its citizens suffices to give the State standing to sue parens patriae is whether the injury is one that the State, if it could, would likely attempt to address through its sovereign lawmaking powers.” Here, that “helpful indication” cuts sharply in favor of standing.  A state is denied its rightful status in the federal system when forced either to compete with other states and federal actors in essentially bribing the President, or to suffer in the President’s eyes and acts.  (This is all the truer when states must also compete with foreign powers—some of them hostile.)  And the states, having surrendered sovereign prerogatives, and thereby lost their ability to wage war, engage in economic retaliation, or negotiate alternative terms for participation within the Union, should not be relegated to noblesse oblige from a President who has decided to set them at odds with each other to buy his love.

In short, there can be no serious question that Maryland and DC have sustained classic injury to their sovereign and quasi-sovereign interests as a direct result of President Trump’s violations of the Emoluments Clauses.  This view should be attractive to lawyers and judges of all constitutional persuasions.  

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Maryland and DC also allege an independent basis for standing: “proprietary and other financial injuries.”  Simply put, they own businesses, some of which are subject to corrupted, corrupting competition against the President’s own properties, which have been turned by Trump into emolument vortexes (both foreign and domestic).

These claims do not allege competitive injury in vague and non-specific terms.  To the contrary, they are impressively detailed.  Consider DC’s allegations:

The District owns the Walter E. Washington Convention Center. The Washington Convention and Sports Authority (also known as Events DC), is an instrumentality of the government of the District of Columbia. Events DC operates event and conference venues in the District, including the Walter E. Washington Convention Center, D.C. Armory, and Carnegie Library ….

The District, through Events DC, serves the diplomatic community and foreign and state governments by providing services that compete with those owned or controlled by the defendant or the Trump Organization.

In fiscal year 2016, Events DC generated over $30 million in revenue from building rental and ancillary charges. A portion of Events DC’s revenue is based on demand for the Convention Center, D.C. Armory, and Carnegie Library.

[DC then identifies several prior examples of foreign embassy business at the Carnegie Library]

The defendant, his family, and other members of the defendant’s administration have continued to promote his hotel properties, such as by making multiple appearances at those properties, including in connection with official business.

Since the defendant’s inauguration, foreign governments (including the Embassy of Kuwait and the Kingdom of Saudi Arabia) have held events at the hotel, and public officials have stated that, since the defendant was elected president, they are more likely to pay for goods and services at the defendant’s properties in an attempt to curry favor with him.

The defendant’s receipt or acceptance of presents or emoluments through the Trump International Hotel Washington, D.C. and other properties owned or controlled by the defendant or the Trump Organization has resulted in a competitive injury to the Walter E. Washington Convention Center, D.C. Armory, and Carnegie Library 

The District’s interest is further injured by the loss of the economic value of its brands in comparison to defendant’s brand, as foreign and state governments and their agents and instrumentalities favor his businesses for reasons related to the defendant’s receipt or acceptance of presents or emoluments.

This kind of competitor injury is firmly established in Supreme Court jurisprudence as a recognized basis for Article III standing.  It provides a distinct basis for Maryland and DC—as proprietors—to have their claims against Trump heard on the merits.  

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The President is violating the Emoluments Clauses by insistently maintaining his ownership interest in a global business empire.  This selfish conduct—which benefits Trump personally, while conferring no conceivable benefit on the United States or its citizens—has enveloped Trump in an aura of lawlessness.  The Constitution was built to endure in extraordinary times.  These are such times.  And as a result of lawsuits like the one filed by Maryland and DC, the Constitution will win out.  Soon, the President will be held accountable at law for blurring his loyalty to this great nation, and will be forced to cease receiving illegal emoluments.  That day cannot come soon enough.

Disclaimer:  Larry has consulted with Maryland and DC about this litigation, and is counsel in the CREW case.  Joshua, in turn, has worked very closely with lawyers involved in both the CREW and Maryland/DC cases.

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