315 F.Supp.3d 875 (D.Md. 2018), Civ. PJM 17-1596, District of Columbia v. Trump

Docket Nº:Civil No. PJM 17-1596
Citation:315 F.Supp.3d 875
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:Natalie O. Ludaway, Loren L. AliKhan, Stephanie E. Litos, Pro Hac Vice, Office of Attorney General for the District of Columbia, Christine Elizabeth Webber, Pro Hac Vice, Daniel A. Small, Joseph M. Sellers, Cohen Milstein Sellers & Toll PLLC, Deepak Gupta, Jonathan Taylor, Pro Hac Vice, Gupta Wes...
Case Date:July 25, 2018
Court:United States District Courts, 4th Circuit, District of Maryland
 
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315 F.Supp.3d 875 (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

July 25, 2018

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[Copyrighted Material Omitted]

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

Jean Lin, Brett Shumate, U.S. Department of Justice, James R. Powers, Washington, DC, William S. Consovoy, Consovoy McCarthy Park PLLC, Arlington, VA, for Defendant.

OPINION

PETER J. MESSITTE, UNITED STATES DISTRICT JUDGE

In a previous Opinion1 the Court held that Plaintiffs, the District of Columbia and the State of Maryland, have standing to challenge actions of President Donald J. Trump, in his official capacity,2 that they believe violate the Foreign and Domestic Emoluments Clauses of the U.S. Constitution.3

Plaintiffs have alleged that the violations consist of the President’s actual or potential receipt, directly or indirectly, of payments by foreign, the federal, and state governments (or any of their instrumentalities) in connection with his and the Trump Organization’s ownership of the Trump International Hotel in Washington, D.C.4 They seek declaratory relief establishing

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their rights vis-à-vis the President’s actions as well as injunctive relief prohibiting him from further violating the Clauses.

The President has moved to dismiss the Amended Complaint for failure to state a claim. Although the President made this argument in his Motion to Dismiss and the parties addressed the issue in their briefs in support of and in opposition to the President’s Motion, the Court deferred deciding the meaning and applicability of the Clauses until the issue of standing was resolved. Having decided that issue in favor of Plaintiffs, the Court turns to the issue of what the Clauses mean and whether Plaintiffs have otherwise stated claims under them.

For the reasons that follow, the Court determines that Plaintiffs have convincingly argued that the term "emolument" in both the Foreign and Domestic Emoluments Clauses, with slight refinements that the Court will address, means any "profit," "gain," or "advantage" and that accordingly they have stated claims to the effect that the President, in certain instances, has violated both the Foreign and Domestic Clauses. The Court DENIES the Motion to Dismiss in that respect.

I. FACTUAL AND PROCEDURAL BACKGROUND

A full account of the facts alleged in this case is set out in the Court’s Standing Opinion.5 For present purposes, the Court briefly recapitulates the facts necessary to consider the issue at hand.

Many facts are undisputed or essentially undisputed. Donald J. Trump is the President of the United States and the sole or a substantial owner of both the Trump Organization LLC and The Trump Organization, Inc. (collectively, the Trump Organization), umbrella organizations under which many, if not all, of the President’s various corporations, limited-liability companies, limited partnerships, and other entities are loosely organized. Am. Compl. ¶¶ 20, 29 (Mar. 12, 2018), ECF No. 95. 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 continues to own 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 actually or potentially shares in the revenues that the Hotel and its appurtenant restaurant, bar, and event spaces generate. Id.

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. However, following his inauguration and, as of the date of the filing of this action, June 12, 2017, the President had made no such "donations" to the U.S. Treasury.6 See Am. Compl. ¶¶ 46,

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138. Despite these pronouncements, Plaintiffs allege that the President continues to own and have intimate knowledge of the activities of the Trump Organization. Id. ¶ 31. Indeed, according to Plaintiffs, at the outset of his Presidency one of his sons stated that he would be providing business updates to the President regarding the Organization on a quarterly basis and, although the President may have formed a trust to hold his business assets, it appears that he remains able to obtain distributions from this trust at anytime and may have actually received such payments from time to time. Id. ¶¶ 29, 31-32.7

Since the President’s election, a number of foreign governments or their instrumentalities have patronized or have 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. Am. Compl. ¶¶ 39-43. The President has at no time sought the consent of Congress for him to accept the revenues the Hotel receives or could potentially receive from these foreign governments, nor has Congress ever approved the receipt of such revenues. Id. ¶ 33.

In addition, at least one State— Maine— patronized the Hotel when its Governor, Paul LePage, and his entourage visited Washington to discuss official business with the Federal Government, including discussions with the President. Pls.’ Opp’n. at 8 (Nov. 7, 2017), ECF No. 46.

Plaintiffs further allege that the Hotel has received a benefit, which they say is an "emolument," from the Federal Government by virtue of the General Services Administration (GSA) Lease which governs the Trump Organization’s use of the Old Post Office Building, the site of the Hotel. Am. Compl. ¶¶ 80-86. Thus Section 37.19 of the Old Post Office Lease states: "No ... elected official of the Government of the United States ... shall be admitted to any share or part of this Lease, or to any benefit that may arise therefrom." Id. ¶ 82. Despite a previous statement from a GSA official that the President would be in violation of the Lease unless he fully divested himself of all financial interest in the Lease, following the President’s inauguration, the GSA reversed its position, determining that the President was in fact in compliance with the Lease. Id. ¶¶ 83-84. Since then, the Trump Organization and

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through it the President have enjoyed the benefits of the Lease.

Plaintiffs allege that these actions of the President, through the Trump Organization, violate both the Foreign and Domestic Emoluments Clauses.

The issue before the Court at this juncture is whether Plaintiffs’ allegations state viable claims for relief with respect to the President’s purported violations of the Foreign and Domestic Emoluments Clauses.

The key dispute the parties have is over the meaning of the term "emolument"8 in the Clauses, although more can and will be said about other terms within the Clauses.

Plaintiffs submit that the Presidents actions clearly offend the Clauses. An "emolument," they say, citing among other things the definition of the term in a considerable number of dictionaries contemporaneous with the Constitutional Convention, as well as the purpose of the Clauses to prevent against possible undue influence upon the federal official, is any "profit," "gain" or "advantage." Am. Compl. ¶¶ 23-28; Pls. Oppn at 29-30. Accordingly, say Plaintiffs, the Clauses were framed so as to flatly bar the receipt by anyone holding office under the authority of the United States, including the President, of any profit, gain, or advantage of any nature or kind whatsoever from any...

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