By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She now spends most of her time in Asia researching a book about textile artisans. She also writes regularly about legal, political economy, and regulatory topics for various consulting clients and publications, as well as scribbles occasional travel pieces for The National.
Citizens for Responsibility and Ethics in Washington (CREW), a nonprofit watchdog group, filed suit yesterday in federal district court in Manhattan, charging that Trump violated the emoluments clause of the US Constitution (and continues to violate same) by allowing his businesses — including hotels– to accept payments from foreign governments. The complaint can be found here. In this action, CREW is represented by leading constitutional and ethics lawyers, including CREW’s board chair and vice-chair Norman Eisen and Richard Painter– the top ethics lawyers for the last two presidents; constitutional law scholars — Erwin Chemerinsky, Laurence Tribe, and Zephyr Teachout; and constitutional litigator Deepak Gupta.
As I’ve written in a previous post, US Constitution’s Emoluments Clause: a Nothingburger for Trump:
Article 1, Section 9 of that document states that “No Title of Nobility shall be granted by the United States: And 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.”
The clause, on its face, appears to pose a real problem for President Trump, whose companies continue to do business with foreign governments or entities controlled by them– although Trump’s private lawyer, Sheri Dillon of the law firm, earlier in January disputed this, as reported by Politico in Trump says lawsuit claiming he violated the Constitution is ‘without merit’, saying:
“The Constitution does not require President-elect Trump to do anything here,” Dillon said. “Paying for a hotel room is not a gift or a present and it has nothing to do with an office. It’s not an emolument.”
Trump had promised to address the problem of conflicts of interest between his business operations and his role as President. In a January 11 press conference, Trump outlined a plan to transfer leadership and management of the Trump Organization over to his sons Eric Trump and Donald Trump Jr., as well as a longtime company executive. This stands in contrast to other Presidents and cabinet officers, who’ve customarily transferred their assets to some form of blind trust.
Trump neither relinquished ownership of his businesses nor did he establish a blind trust. It would be extremely difficult for Trump to set up such a trust, as his holdings are generally not in the form of paper assets that can be passively managed or easily liquidated. In addition, Trump’s properties in part rely heavily on the use of his name– the Trump brand– to which he is no doubt in many cases contractually bound to continue to use.
Further, Trump has pledged to donate to the US Treasury any profits that arise from activities his businesses conduct with foreign countries, but details– how these profits would be calculated, how they would be monitored– as well as how transparent this process would be, have, to say the least, not been worked out.
The emoluments clause has not been much at issue throughout US history, and there’s scant precedent for how it applies or should be interpreted. Yet while it appears as if Trump might be in a pickle here, as I wrote in my previous post, “Just because something’s unconstitutional, doesn’t mean that any such unconstitutional activity will necessarily be prevented, precluded, or punished.” One of the threshold issues that arises in litigation is who can sue to enforce a right– or, to put it in more formal legal terms, who has standing to sue. Again, I turn to my earlier post, where I addressed the issue of whether a third party– such as an aggrieved private citizen, successfully sue the President for violating the emoluments clause?
This often comes as a surprise to non-lawyers, but the reality is that the US legal system strictly limits who can sue. Persons must have standing in order to bring a suit (as compared to some countries, such as India, and US states, such as California (but only for state law violations), where it is possible to bring a public interest litigation to right an obvious wrong). In US federal court, the authority for bringing a suit comes from Article III of the Constitution. To summarize very broadly an extremely complicated area of the law, to have standing to sue, plaintiffs must be involved in an actual case or controversy– meaning that one cannot bring a case just to determine what a court MIGHT decide. Further, a long series of cases has also established that plaintiffs must have suffered a particularized injury in order to prevail in a lawsuit. This provision prevents someone from bringing a suit arguing, hypothetically, that as a taxpayer, s/he has been harmed by a general policy of the US government.
What does this mean? Well, I would suggest that no one should spend hard-earned money and try to find a lawyer to bring a suit alleging that President Trump has violated the emoluments clause– or any other federal anti-corruption or anti-bribery statute, for that matter– anytime soon. That matter would almost certainly be dismissed on the basis that the plaintiff lacked standing to sue.
Standing and Emoluments Clause
I’ve taken a good hard look at the complaint filed by CREW and their the legal dream team, and note that it skates over extremely thin ice on the standing issue. Hence, I see no reason to back off on my earlier conclusion that the clause will turn out to be a bit of a nothingburger as far as Trump is concerned. Despite the attention this case has attracted– including a direct response from Trump himself– who yesterday averred that this action is “without merit”— this lawsuit almost certainly will be dismissed, well before it gets anywhere near the United States Supreme Court.
Let me spell out my reasoning. The general test is that to have standing to sue, a plaintiff must show s/he suffered a “concrete and particularized” injury and that a court can remedy that the injury. What injury has CREW suffered, even if we assume for the sake of argument that Trump’s ongoing business operations do indeed violate the emoluments clause? As a Forbes article explains, Why The Constitutional Lawsuit Against Trump Is Likely To Fail:
The U.S. Supreme Court has repeatedly refused to allow citizens to use the courts to reverse government policies they disagree with unless they can also show some sign of tangible injury. Whether it’s environmentalists suing to reverse a regulation they don’t like or alarmed citizens suing to find out if the government’s been snooping on their phone calls, citizens don’t have a case unless they can claim an “injury in fact.” Hypothetical injuries won’t cut it.
If I know that, and Forbes knows that, you can be sure that Tribe et al are well aware of the difficulties of establishing standing in such an action. The CREW complaint rests its standing claim on Havens Realty v. Colman (1982), under which a a non-profit housing discrimination group (HOME) was allowed to sue a private real estate firm, not on a discrimination claim but on the basis that the real estate firm’s steering practices impaired HOME’s ability to provide counseling and referral services for low- and moderate-income homeseekers. The Court determined that “[s]uch concrete and demonstrable injury to the organization’s activities — with the consequent drain on the organization’s resources — constitutes far more than simply a setback to the organization’s abstract social interests.”
Over to the CREW complaint:
CREW brings this action to stop and prevent the violations of the Foreign Emoluments Clause that Defendant Donald J. Trump has committed and will commit, which have already injured—and, without a remediable order from this Court, will continue to injure—CREW in the form of a significant diversion and depletion of its time, resources, and efforts. CREW has standing under [Havens] , because there has been a “concrete and demonstrable injury to the organization’s activities[,] with the consequent drain on the organization’s resources.” [citation omitted] CREW seeks declaratory relief determining the meaning of the Foreign Emoluments Clause and stating that Defendant’s present and future conduct violates this provision, as well as injunctive relief ordering Defendant to refrain from violating the Foreign Emoluments Clause (complaint, p. 2).
The Forbes piece calls this rationale for establishing standing “a bold attempt, given the Supreme Court’s repeated decisions since Havens Realty rejecting attempts to sue the government without a specific injury.” I’d describe it as a Hail Mary pass. The key question: What’s the injury to CREW if Trump is indeed violating the emoluments clause? Over to Forbes again:
CREW relies on the Havens argument that it was forced to expend resources protecting the public against Trump’s conflicts but that’s unlikely to fly. Other activists will no doubt come up with some claim that attempts to get over the very high hurdle in front of private citizens suing to change government policy. Maybe they will include a rival real-estate firm or hotelier who says foreign tenants skipped over their properties to get in Trump buildings. But judges aren’t stupid: They’ll look at CREW the way the Supreme Court looked at Amnesty International when the human-rights group sued James Clapper, then the Director of National Intelligence, over what activists suspected to be wholesale surveillance of foreign communications.
The group claimed it was spending extra money trying to safeguard its communications and it was unfair to say they didn’t have the evidence of surveillance since it was guarded by the secrecy they were seeking to penetrate with their lawsuit. But the Supreme Court tossed out the case, saying Amnesty didn’t have standing to sue. What if nobody has standing to sue? The court cited an earlier decision: “‘[t]he assumption that if respondents have no standing to sue, no one would have standing, is not a reason to find standing.’”
(As an aside, sometimes, a federal statute creates an explicit private right of action to enforce some constitutional provision. Yet Congress has never bothered to pass a federal statute that expressly creates a private right of action for violating the emoluments clause, as The Wall Street Journal has reported.)
Ulterior Motive: Make Trump Release His Tax Returns
While CREW almost certainly won’t prevail in this lawsuit, one other motive for filing the suit may be to try and get Trump’s tax returns released a part of the “discovery” process, where a defendant is required to turn over documents that are relevant to the plaintiff’s legal claim. CREW will almost certainly argue that it is necessary to get access to extensive Trump financial records– including tax returns– in order to unravel the web of complex financial relationships that would show violations of the emoluments clause. Yet if the suit is dismissed at an early stage in the litigation process, extensive discovery will be avoided, and the tax returns will remain locked away from public scrutiny.
Is This the Best Democrats Can Come Up With?
Given the difficulty of established standing– which I believe to be very remote indeed– I wonder whether this is actually a wise allocation of opposition resources? At one level, this suit can be seen as just the latest example of Democratic party virtue-signalling. The complaint explores the scope of Trump’s business interests, and teases out numerous potential conflicts.
CREW has been working the ethics beat for more than a decade, but over the last couple of years, its reputation has suffered as it has shifted tack to pursue a more partisan, Democratic agenda, as Bloomberg reports :
For more than a decade, Citizens for Responsibility and Ethics in Washington, or CREW, has scrutinized and assailed federal agencies and politicians from both parties to root out unethical behavior in government. Over the past two years, however, some of the group’s most influential work has been quietly dropped.
Annual rankings of the “most corrupt” members of Congress and a bi-annual list of the “worst” governors have stopped. A pipeline of in-depth reports on issues ranging from financial markets to timber-industry lobbying has gone dry. The group walked away from a spat over Hillary Clinton’s treatment of e-mails as secretary of state, even after an Inspector General found that CREW’s public records request had been improperly denied.
The reason? Longstanding Naked Capitalism readers will not be surprised that CREW “until recently was controlled by David Brock, a Democratic Party operative and fervent supporter of Hillary Clinton’s campaign,” as reported by the New York Times, in Foreign Payments to Trump Firms Violate Constitution, Suit Will Claim. And the self-explanatory headline to the Bloomberg article quoted above makes the point crystal clear: CREW’s Watchdog Status Fades After Arrival of Democrat David Brock.
I’m surprised that months after the shock result of losing the presidential election– to a character regarded as a beyond-the-pale buffoon– and seeing solid Republican majorities installed in each house of Congress– the Democrats are still faffing around on designing their responses. All the efforts deployed in subverting the Electoral College, or blaming the Russians for Hillary’s loss, might, I would be suggest, have been better directed to accepting the debacle that their misguided electoral strategy had created, turning the page, and focussing on what to do next.
Why are Democrats not marshalling their resources to shape the way Trump governs– such as by mounting concerted campaigns to block the worst of Trump’s Cabinet picks? And further, why are Democrats not conducting a thoughtful post mortem, with the intention of designing a strategy to make the 2016 electoral outcome a low point, rather than a harbinger of further disasters?