939 F.3d 131 (2nd Cir. 2019), 18-474, Citizens for Responsibility and Ethics in Washington v. Trump

Docket Nº:18-474
Citation:939 F.3d 131
Opinion Judge:LEVAL, Circuit Judge.
Party Name:CITIZENS FOR RESPONSIBILITY AND ETHICS IN WASHINGTON, Restaurant Opportunities Centers United, Inc., Jill Phaneuf, and Eric Goode, Plaintiffs-Appellants, v. Donald J. TRUMP, in his official capacity as President of the United States of America, Defendant-Appellee.
Judge Panel:Walker, Judge dissents John M. Walker, Jr., Circuit Judge, dissenting:
Case Date:September 13, 2019
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

Page 131

939 F.3d 131 (2nd Cir. 2019)

CITIZENS FOR RESPONSIBILITY AND ETHICS IN WASHINGTON, Restaurant Opportunities Centers United, Inc., Jill Phaneuf, and Eric Goode, Plaintiffs-Appellants,


Donald J. TRUMP, in his official capacity as President of the United States of America, Defendant-Appellee.

No. 18-474

United States Court of Appeals, Second Circuit

September 13, 2019

Argued: October 30, 2018

Page 132

[Copyrighted Material Omitted]

Page 133

[Copyrighted Material Omitted]

Page 134

[Copyrighted Material Omitted]

Page 135

[Copyrighted Material Omitted]

Page 136

[Copyrighted Material Omitted]

Page 137

Appeal from the United States District Court for the Southern District of New York (George B. Daniels, J. ).

DEEPAK GUPTA, Gupta Wessler PLLC, Washington, D.C. (Jonathan E. Taylor, Joshua Matz, and Daniel Townsend, Gupta Wessler PLLC, Washington, D.C.; Joseph M. Sellers, Daniel A. Small, Cohen Milstein Sellers & Toll PLLC, Washington, D.C.; Norman L. Eisen, Stuart C. McPhail, Adam J. Rappaport, Citizens for Responsibility and Ethics in Washington, Washington, D.C.; Laurence H. Tribe, Harvard Law School, Cambridge, MA, on the brief), for Plaintiffs-Appellants.

HASHIM M. MOOPPAN, Department of Justice, Washington, D.C., (Chad A. Readler, Michael S. Raab, Megan Barbero, Department of Justice, Washington, D.C., on the brief), for Defendant-Appellee.



Walker, Judge dissents in a separate opinion.

LEVAL, Circuit Judge.

Plaintiffs— Eric Goode, a restaurateur and hotelier, and Restaurant Opportunities Center United (" ROC" ), a non-partisan, member-based organization of restaurants and restaurant workers— appeal from the judgment of the United States District Court for the Southern District of New York (Daniels, J.) dismissing their complaint against Defendant Donald J. Trump, the President of the United States, for lack of subject matter jurisdiction. The complaint seeks declaratory and injunctive relief for the President’s alleged violations of the Domestic and Foreign Emoluments Clauses of the United States Constitution. The President moved to dismiss for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1), arguing that Plaintiffs did not have standing to sue. The district court granted the motion, concluding that Plaintiffs lack Article III standing, they fall outside the zone

Page 138

of interests of the Emoluments Clauses, their claims do not present a ripe case or controversy within the meaning of Article III, and their suit is barred by the political question doctrine. For the reasons below, we vacate the judgment and remand for further proceedings.


Plaintiffs are in the hospitality industry.1 Plaintiff Goode owns high-end hotels, restaurants, and event spaces in the New York City area. Plaintiff ROC counts among its members over 200 establishments, including high-end restaurants and event spaces in New York City and Washington, D.C. The Plaintiff establishments cater to foreign and domestic government clientele, and allege that they are direct competitors of hospitality properties owned by the President in Washington D.C. and New York City.

The complaint alleges that President Trump, operating through corporations, limited-liability companies, limited partnerships, and other business structures, is effectively the sole owner of restaurants, hotels, and event spaces, which are patronized by foreign and domestic government clientele. The President has announced that, since assuming office, he has turned over day-to-day management of his business empire to his children and established a trust to hold his business assets.2 However, he maintains sole ownership, receives business updates at least quarterly,[3] and has the ability to obtain distributions from the trust at any time.4 The facts alleged by Plaintiffs, together with those acknowledged by the President, support the inference that the revenues of the Trump establishments are substantially (or are convertible into) personal revenues of the President.

i. Plaintiffs’ Allegations

Stated generally, Plaintiffs allege that they have been and will be injured because foreign and domestic government entities that patronize Washington, D.C. and New York hotels, restaurants, and event spaces patronize Trump establishments (in preference to Plaintiffs’ establishments) in the hope of enriching the President and earning a reward from him through official Presidential action favorable to their governments, and that such enrichment of the President by foreign and domestic government entities violates the Foreign and Domestic Emoluments Clauses. There are three principal categories of allegations.

First, Plaintiffs allege that they directly compete with the President’s establishments for foreign, state, and federal government clientele. Second Amended Complaint (the " Complaint" ) ¶¶ 13-20.

Page 139

Plaintiffs support this allegation with extensive declarations from hospitality industry experts.[5] Rachel Roginsky, a hospitality consultant and professor at the Boston University School of Hospitality Administration, asserts that certain of Goode’s hotels and one ROC member’s hotel-restaurant are " [p]rimary competitors" with Trump SoHo and Trump International New York because they " market to and attract customers from essentially the same pool" given their " similar ... location, facilities, services, amenities, class, image, and price." Roginsky Decl. ¶¶ 14-17. Dr. Christopher Muller, former Dean of the Boston University School of Hospitality Administration, identifies numerous of Plaintiffs’ restaurants in the New York and Washington, D.C. areas that he asserts are " comparable" to various Trump establishments because they are within the same market " segment" and therefore directly compete with one another. Muller Decl. ¶¶ 24-29, 50-56, 67-75. Collectively, the two declarations identify more than a dozen of Plaintiffs’ establishments, which, according to Roginsky and Muller, compete directly with roughly half a dozen Trump establishments over the same customer base, including foreign and domestic government customers. Owners of these establishments also submitted declarations attesting that their restaurants and hotels are frequented by foreign, state, and federal officials and that they compete directly with Trump establishments over this customer base. Goode Decl. ¶¶ 4, 23-24, 34, 36, 47-50; Colicchio Decl. ¶¶ 13-14, 20-21, 28-29. Plaintiffs’ declarations include evidence of loss of government patronage from Plaintiffs’ establishments after the presidential election. ROC alleges that its restaurant and restaurant-employee members have suffered injury due to " lost business, wages, and tips." Complaint ¶ 13. Specifically, James Mallios, managing partner at ROC-member restaurant Amali, testifies that Amali regularly hosts dinners and events for government officials, including foreign leaders, Mallios Decl. ¶¶ 9, 20, 24-27, and that its tax-exempt sales declined after November 2016, reflecting a decline in government business. Id. ¶ 28.

Second, the Complaint cites statements by the President implicitly soliciting the patronage of government officials and apparently acknowledging that, in making governmental decisions, he favors governments that patronize his businesses. See, e.g., Complaint ¶ 96 (" Trump said [of the Saudis, in the context of discussing trade negotiations], ‘... They spend $ 40 million, $ 50 million. Am I supposed to dislike them? I like them very much.’ " ); id. ¶ 52 (responding to a question about the U.S.’s dispute with China over the South China Sea, " I do deals with [China] all the time. [China’s largest bank] is a tenant of mine ..." ). The Complaint alleges that Trump businesses began investing in attracting foreign government business after the election, id. ¶¶ 60-63, and further that these efforts have succeeded in attracting post-election patronage from foreign governments. Id. ¶¶ 64-87.

Third, Plaintiffs allege that foreign governments have taken note of, and been

Page 140

influenced by, the message that enriching the President by giving patronage to his establishments earns his favor. Plaintiffs point to statements by foreign government officials quoted in newspaper articles, including one " Middle Eastern diplomat" who said, " Believe me, all the delegations will go [to Trump establishments]." Id. ¶ 62 (quoting Jonathan O’Connell & Mary Jordan, For foreign diplomats, Trump hotel is place to be, WASH. POST (Nov. 18, 2016), http://wapo.st/2o PYggX ). Another diplomat reportedly stated, " Why wouldn’t I stay at his hotel blocks from the White House[?] ... Isn’t it rude to come to his city and say, ‘I am staying at your competitor?’ " Id. Plaintiffs also allege that foreign government official patronage of Trump establishments has increased since the President was elected. Id. ¶¶ 56, 60, 64, 68, 72, 79, 82. In particular, Plaintiffs point to one instance in which, shortly after the election, a foreign government switched the venue of an event from a competitor to a Trump establishment. Id. ¶ 74.

The Complaint asserts that the President’s receipt of the revenues he derives from the patronage of foreign and domestic government entities violates the Foreign and Domestic Emoluments Clauses. Id. ¶ 1. The Foreign Emoluments Clause provides: " [N]o Person holding any Office of Profit or Trust under [the United States], 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." U.S. Const., Art. I, § 9, Cl. 8. Congress has not consented to Defendants receipt of the...

To continue reading