On January 23, 2017, the Citizens for Responsibility and Ethics in Washington (CREW) filed a complaint against President Donald J. Trump, arguing that he had violated the Emoluments Clauses of the U.S. Constitution. The suit was filed in the U.S. District Court for the Southern District of New York, and assigned to Judge George B. Daniels.

The complaint alleged that because President Trump had refused to step away from his businesses while he was in office, he was receiving benefits from the U.S. government and foreign countries through valuable real estate deals at home and abroad, leases of his buildings, and guests and events at his properties. The plaintiff alleged that his acceptance of these benefits violated the Constitution and created doubt about whose interests he was actually representing while negotiating with foreign countries. The plaintiff sought a judgment declaring that this conduct violated the Emoluments Clauses, and injunctive relief to prevent further violations.

The complaint was later amended to include as plaintiffs:

• a nonprofit organization engaged in the protection of workers in the restaurant market and in managing its own restaurant;
• an individual who worked in the hotel market and whose compensation was tied to a percentage of the revenue of the events she booked for foreign governments in hotels; and
• the owner of several hotels, restaurants, bars and event spaces in New York, which attract foreign government clients and U.S. government officials.

On June 9, 2017, the President moved to dismiss, arguing that the plaintiffs had failed to establish a sufficiently concrete injury, and that their alleged injury did not fall within the “zone of interests” of the Emoluments Clauses (which were intended to protect against corruption and foreign influence, not to protect business competitors). In other words, the clauses should only apply to personal compensation, not to transactions involving companies in which the President had financial interest in. Finally, the President claimed that an injunction against him in his official capacity would be unconstitutional.

The district court granted the President’s motion to dismiss on December 21, 2017. 276 F.Supp.3d 174. It found that the plaintiffs had failed to allege a sufficient injury stemming from the President’s actions. Regarding the injury alleged by the plaintiffs with ties to the hotel and restaurant industry, the court found that Donald Trump had already been wealthy and famous before becoming president, and that it was natural that interest in his properties would generally increase after he was elected. The court also held that the plaintiffs’ alleged injury did not fall within the zone of interests of the Emoluments Clauses. The court also concluded that the question of whether the President could continue to receive income from foreign governments through his private businesses without the consent of Congress was a non-justiciable political question.

On February 16, 2018, the plaintiffs filed a notice of appeal (Second Circuit, Docket 18-474). In their brief, filed on April 24, 2018, they argued that the President’s acceptance of emoluments had tilted the marketplace and skewed the incentives of its participants, disadvantaging (and thus injuring) the plaintiffs, who competed with Trump hotels and restaurants for governmental business. The plaintiffs reasoned that the Emoluments Clauses sought to achieve goals of preventing corruption, tempering foreign influence, and respecting federalism, and thereby to protect individuals from the personal harms that result from a violation of these constitutional principles. Therefore, they argued that the complaint fell within the Emoluments Clauses’ zone of interests. The plaintiffs also addressed the argument that the issue was barred by the political question doctrine. First, the Domestic Emoluments Clause did not include any provision about a possible congressional consent. Second, the Foreign Emoluments Clause made it clear that without congressional consent, it was illegal for certain federal officers to accept any foreign emoluments. Additionally, the plaintiffs argued, if the Foreign Emoluments Clause could be enforced only by Congress, as the district court had concluded, it would make little sense—Congress would not need to give “consent” to foreign emoluments in order to validate them. Hence, the plaintiffs asserted that so long as Congress remained silent, the President was breaking the law by accepting emoluments, and injured parties must be able to seek redress in federal court.

The Second Circuit heard oral argument on October 30, 2018, and issued its opinion nearly a year later on September 13, 2019. It vacated the district court’s ruling and sent the case back for further proceedings, finding that the district court had erred in several ways. First, the case was not barred by the political question doctrine. “In the undisputed absence of Congressional consent, the President has violated this provision of the Constitution, if…he has accepted what the Constitution describes as ‘emoluments.’” The definition of emoluments was not something for the political branches to decide, but rather it was the responsibility of the federal courts to find the facts and interpret the Constitution. “The mere possibility that Congress might grant consent does not render the dispute non-justiciable.” Second, the plaintiffs had standing. Third, the Supreme Court’s recent decision in Bank of America Corp. v. City of Miami had made it clear that the zone of interests question did not affect plaintiffs’ standing or courts’ jurisdiction. The district court had therefore erred in dismissing for lack of jurisdiction. The Second Circuit went on to conclude that the plaintiffs’ claims were actually within the zone of interests of the Emoluments Clauses; however, it amended its opinion on March 30, 2020, deleting the zone of interests merits analysis. 953 F.3d 178.

The President petitioned the Second Circuit for rehearing en banc. That petition, submitted October 28, 2019, is still pending as of July 24, 2020.

Daniele de Oliveira Nunes - 10/05/2018


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