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A Federal Appeals Court Asserts Its Authority Over Trump’s Unconstitutional Profiteering

The court reinstated a lawsuit challenging Trump’s violation of the Constitution’s bar against receiving improper payments.

September 16, 2019
Adam Bettcher/Getty

A federal appeals court ruled Friday that Pres­id­ent Trump can be sued for uncon­sti­tu­tion­ally bene­fit­ing from his ongo­ing owner­ship of the Trump Organ­iz­a­tion. The ruling by the Second Circuit Court of Appeals in New York reverses a district court decision that dismissed the lawsuit. It also breaks from a decision by the Fourth Circuit Court of Appeals in Virginia, setting up a poten­tial Supreme Court show­down.

Trump has been sued three times in cases alleging that he is viol­at­ing the Emolu­ments Clauses of the Consti­tu­tion, which are anti-corrup­tion provi­sions that prohibit the pres­id­ent from accept­ing payments from foreign or state govern­ments. The Foreign Emolu­ments Clause disal­lows the accept­ance of money from foreign govern­ments without Congres­sional consent, and the Domestic Emolu­ments Clause sets the pres­id­ent’s salary.

All of these emolu­ments lawsuits could have been avoided if Trump had simply divested or placed his assets in a blind trust as every pres­id­ent since Nixon has done. But he hasn’t — even though he said he would — because he appar­ently believes that the rules don’t apply to him.

The New York case was brought by the nonprofit Citizens for Respons­ib­il­ity and Ethics in Wash­ing­ton, as well as plaintiffs in the hotel and restaur­ant industry. They argue that, by allow­ing foreign and state govern­ments — which have an interest in influ­en­cing the Trump admin­is­tra­tion — to spend money at the pres­id­ent’s hotels, he is uncon­sti­tu­tion­ally compet­ing with the plaintiff’s busi­nesses.

The district court threw out the case, ruling that none of the plaintiffs had stand­ing to sue. Only two of the plaintiffs in the hospit­al­ity industry appealed the ruling on stand­ing. The appeals court disagreed with the lower court, saying that the case should proceed.

As I explore in my book Polit­ical Brands, the emolu­ments cases are inter­est­ing because they ask judges to tackle parts of the Consti­tu­tion that have never been litig­ated before the Trump pres­id­ency. Moreover, most litig­a­tion in consti­tu­tional law inquires about the consti­tu­tion­al­ity of stat­utes or regu­la­tions. These cases ask an entirely differ­ent set of ques­tions: essen­tially, is there such a thing as an uncon­sti­tu­tional market trans­ac­tion? The Second Circuit didn’t rule on that ques­tion yet because it was only address­ing a more narrow proced­ural matter.

In a 2–1 opin­ion, the Second Circuit recog­nized that the “The Pres­id­ent’s estab­lish­ments offer govern­ment patrons some­thing that Plaintiffs cannot: the oppor­tun­ity, by enrich­ing the Pres­id­ent, to obtain favor­able govern­mental treat­ment from the Pres­id­ent and the Exec­ut­ive branch.”

The court concluded that the plaintiffs have a strong case because they allege that “the market­place is thus skewed in favor of Trump busi­nesses because of his unlaw­ful receipt of payments from govern­ment patrons.”

In dismiss­ing the case, the lower court said that there was basic­ally noth­ing that it could do if the pres­id­ent were viol­at­ing the Consti­tu­tion’s emolu­ments clauses. But in a refresh­ing asser­tion of author­ity, the appeals court wrote that there were, in fact, vari­ous remed­ies a court could order “that would adequately reduce the incent­ive for govern­ment offi­cials to patron­ize Trump estab­lish­ments in the hope of curry­ing favor with the Pres­id­ent.”

The Second Circuit didn’t cite Marbury v. Madison, which estab­lished the judi­ciary’s author­ity to act as a check on the other two branches of govern­ment, but it sure soun­ded like it when it wrote, “If the chal­lenged conduct falls within what the Consti­tu­tion describes as the receipt of ‘emolu­ments,’ the conduct is prohib­ited by the Consti­tu­tion in the absence of congres­sional consent — and . . . it is likely simply to continue to occur without a court ruling.”

The pres­id­ent could now ask for the full Second Circuit to rehear the case, or it could go back to the district court for further proceed­ings, which would likely force Trump’s busi­nesses to reveal how much money they’ve been paid by foreign offi­cials. Or if the pres­id­ent’s team is feel­ing partic­u­larly confid­ent, they could ask the Supreme Court to review the case.

Either way, Friday’s decision is a posit­ive devel­op­ment. On too many occa­sions, courts have abdic­ated their respons­ib­il­ity to rein in Trump when he breaks the rules, even when those rules are found in the Consti­tu­tion. In the future, judges need to remem­ber that no one is above the law — espe­cially the pres­id­ent.

The views expressed are the author’s own and not neces­sar­ily those of the Bren­nan Center.