291 F.Supp.3d 725 (D.Md. 2018), Civ. PJM 17-1596, District of Columbia v. Trump

Docket Nº:Civil PJM 17-1596
Citation:291 F.Supp.3d 725
Opinion Judge:PETER J. MESSITTE, UNITED STATES DISTRICT JUDGE
Party Name:The DISTRICT OF COLUMBIA and The State of Maryland, Plaintiffs, v. Donald J. TRUMP, individually and in his official capacity as President of the United States, Defendant.
Attorney:Civil No. PJM 17-1596 Natalie O. Ludaway, Loren L. AliKhan, Pro Hac Vice, Stephanie E. Litos, Pro Hac Vice, Office of the Attorney General for the District of Columbia, Christine Elizabeth Webber, Pro Hac Vice, Daniel A. Small, Joseph M. Sellers, Cohen Milstein Sellers and Toll PLLC, Deepak Gupta...
Case Date:March 28, 2018
Court:United States District Courts, 4th Circuit, District of Maryland
 
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291 F.Supp.3d 725 (D.Md. 2018)

The DISTRICT OF COLUMBIA and The State of Maryland, Plaintiffs,

v.

Donald J. TRUMP, individually and in his official capacity as President of the United States, Defendant.

Civil No. PJM 17-1596

United States District Court, D. Maryland

March 28, 2018

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Natalie O. Ludaway, Loren L. AliKhan, Pro Hac Vice, Stephanie E. Litos, Pro Hac Vice, Office of the Attorney General for the District of Columbia, Christine Elizabeth Webber, Pro Hac Vice, Daniel A. Small, Joseph M. Sellers, Cohen Milstein Sellers and Toll PLLC, Deepak Gupta, Pro Hac Vice, Jonathan Taylor, Pro Hac Vice, Gupta Wessler PLLC, Noah D. Bookbinder, Pro Hac Vice, Norman L. Eisen, Stuart C. McPhail, Pro Hac Vice, Citizens for Responsibility and Ethics in Washington, Washington, DC, Steven M. Sullivan, Leah J. Tulin, Office of the Attorney General of Maryland, Patrick Hughes, Baltimore, MD, for Plaintiffs.

Jean Lin, Brett Shumate, U.S. Department of Justice, James R. Powers, Washington, DC, for Defendant.

OPINION

PETER J. MESSITTE, UNITED STATES DISTRICT JUDGE

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This suit alleges that President Donald J. Trump has violated the Foreign and Domestic Emoluments Clauses of the U.S. Constitution.1 Plaintiffs, the District of Columbia and the State of Maryland, submit that the President is violating these Clauses because the Trump Organization, in which he has an ownership interest and from which he derives financial benefits, owns and operates a global business empire, including hotels, restaurants, and event spaces. The President’s receipt of these benefits is said to offend the sovereign, quasi-sovereign, proprietary, and parens patriae interests of the State of Maryland and the District of Columbia. Plaintiffs seek declaratory relief establishing their rights vis-à-vis the President’s actions as well as injunctive relief prohibiting him from further violating the Clauses.

The President has filed a Motion to Dismiss, arguing, inter alia, that Plaintiffs lack standing to pursue the litigation, i.e., that they have shown no injury-in-fact, fairly traceable to his acts, or likely to be redressed by any court order. Plaintiffs reject all these propositions. Although the parties have briefed other arguments pertaining to the viability vel non of Plaintiffs’ suit,2 the Court held oral argument limited to the issue of standing and advised the parties that it would address that issue in a stand-alone Opinion and Order. This is that Opinion and Order.

For the reasons that follow, the Court DENIES-IN-PART the Motion to Dismiss and finds that Plaintiffs do have standing to challenge the actions of the President with respect to the Trump International Hotel and its appurtenances in Washington, D.C., as well as the operations in the Trump Organization with respect to them. It GRANTS-IN-PART WITHOUT PREJUDICE the Motion to Dismiss as to Plaintiffs’ standing with respect to the operations of the Trump Organization and the President’s involvement in the same outside the District of Columbia. The Court DEFERS ruling on other

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arguments in the Motion to Dismiss pending further oral argument.3

I. FACTUAL BACKGROUND

The basic facts are not in dispute.

A. The Parties

Plaintiffs are the District of Columbia and the State of Maryland. The District of Columbia is a municipal corporation and the local government for the territory constituting the seat of the Federal Government. Am. Compl. ¶ 18. The State of Maryland is a sovereign State of the United States. Id. ¶ 19.

Donald J. Trump is the President of the United States, originally sued in his official capacity, subsequently added as a Defendant in his individual capacity.4 Am. Compl. ¶ 20. He is the sole owner of both the Trump Organization LLC and The Trump Organization, Inc. (collectively, the Trump Organization), an umbrella organization under which many, if not all, of his corporations, limited-liability companies, limited partnerships, and other entities are loosely organized. Id. ¶ 29. Through these various business entities, the President owns and receives payments from a number of properties, hotels, restaurants, and event spaces in the United States and abroad. Id. Of particular importance in the present suit is the President’s ownership, through the Trump Organization, of the Trump International Hotel in Washington, D.C. (the Hotel).

The Hotel is a five-star, luxury hotel located on Pennsylvania Avenue, N.W., in Washington, near the White House. Id. ¶ 34. While the President does not actively manage the Hotel, through the Trump Organization, he owns and purportedly controls the Hotel as well as the bar and restaurant, BLT Prime, and the event spaces located within the establishment. Id. ¶¶ 29, 34-36. Directly or indirectly, the President shares in the revenues that the Hotel and its appurtenant restaurant, bar, and event spaces generate. Id.

B. The Alleged Violations

On January 11, 2017, shortly before his inauguration, the President announced that he would be turning over the "leadership and management" of the Trump Organization to his sons, Eric Trump and Donald Trump, Jr. Id. ¶ 30. Prior to taking office, he also announced that all profits earned from foreign governments would be donated to the U.S. Treasury. Id. ¶ 46. The Trump Organization stated that it would not be tracking all payments it might receive from foreign governments and only planned to make an estimate with regard to such payments. Id. As of the date of the filing of this action, the President had made no such "donations" to the U.S. Treasury.5 See Am. Compl. ¶¶ 46, 138. Despite

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these announcements, Plaintiffs allege that the President continues to own and know about the activities of the Trump Organization. Id. ¶ 31. Indeed, according to Plaintiffs, one of the President’s sons has stated that he would be providing business updates to the President regarding the Organization on a quarterly basis and, although the President has formed a trust to hold his business assets, it appears that he remains able to obtain distributions from this trust at anytime. Id. ¶¶ 31-32.

Since the President’s election, a number of foreign governments have patronized or expressed a definite intention to patronize the Hotel, some of which have indicated that they are doing so precisely because of the President’s association with it. Id. ¶¶ 39-43. For example, the Amended Complaint alleges that the Kingdom of Saudi Arabia spent thousands of dollars at the Hotel between October 1, 2016, and March 31, 2017. Id. ¶ 41. Plaintiffs also cite a statement from a Middle Eastern diplomat who told the Washington Post, "Believe me, all the delegations will go there." Id. ¶ 39. An Asian diplomat allegedly agreed, explaining "Isn’t it rude to come to [the President’s] city and say, ‘I’m staying at your competitor?’ "Id.

Plaintiffs further allege that at least some foreign governments have withdrawn their business from other hotels in the area not affiliated with the President and have transferred it to the Hotel. As an example, they assert that the Embassy of Kuwait held its National Day celebration at the Hotel on February 22, 2017, despite having made a prior "save the date reservation with the Four Seasons hotel." Id. ¶ 40.

Plaintiffs also contend that the President has been more than a passive actor with respect to the Hotel. Since his election, the Hotel has specifically sought to market itself to diplomats by hiring a "director of diplomatic sales" and by hosting an event where it pitched the Hotel to approximately 100 foreign diplomats. Id. ¶ 37. The President himself has appeared at the Hotel on several occasions, while a number of members of his administration continue to live there. Id. ¶ 38. As a result, Plaintiffs allege that goods and services at the Hotel have been marketed at a premium level since the election. Id. ¶ 100. A portion of benefits, particularly expenditures by foreign governments, is said to have been passed along to the President through the Trump Organization. Id. ¶ 29.

In addition, at least one State— the State of Maine— patronized the Hotel when its Governor, Paul LePage, visited Washington to discuss official business with the Federal Government, including discussions with the President. Pls. Oppn. at 8, ECF No. 46. Indeed, on one of those trips, the President and Governor LePage appeared together at a news conference at which the President signed an executive order to review orders of the prior administration that established national monuments within the National Park Service, which could apply to a park and...

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