Emoluments: An Update

By Herbert Teitelbaum

Article I, Section 9, Clause 8 of the Constitution of the United States, now commonly referred to as the “Foreign Emoluments Clause,” is the subject of three federal lawsuits which challenge President Trump’s alleged receipt of financial benefits from foreign governments and their representatives. The clause states that “no person holding any office of profit or trust under them, shall, without the consent of Congress, accept of any present, emolument, office, or title of any kind whatever, from any king, prince or foreign state.” In a nutshell, Congressional approval is required when a federal officeholder is offered something of value. There is little controversy that the clause applies to the president.

Only scant reference to the foreign Emoluments Clause is contained in the recorded debates at the Constitutional Convention, and there are no judicial precedents as yet that interpret the clause. The recent debates concerning the clause in the academic literature have focused on at least three questions: what types of transactions are covered by the clause; what is the role of the federal courts in enforcing the clause’s requirements; and who, if anyone, has standing to bring a lawsuit for violations of the clause?

The three pending federal court cases are likely to address these questions. The first case filed, Citizens for Responsibility and Ethics in Washington v. Donald J, Trump, in his official capacity as President of the United States of America, is pending in the federal court in New York City. While the original plaintiff, a not- for-profit organization, alleged that it had standing to bring a suit to enforce the Emoluments Clause, three additional plaintiffs subsequently have been added, two individuals in the hotel business and a restaurant workers trade group made up of restaurant staff, diners, and restaurants themselves. They claim they compete with president Trump’s businesses and are at risk of losing customers to Trump Organization hotels and restaurants. Among the violations alleged by the plaintiffs are claims involving leases held by foreign-government owned entities in New York’s Trump Tower and other establishments in which the Trump Organization has a financial interest; hotel room reservations and the use of venues and other services by foreign governments and diplomats at Trump’s Washington D.C. hotel located across from the White House; payments by foreign government-owned broadcasters related to the rebroadcasts and foreign versions of the television program, “The Apprentice” and its spinoffs; and, more generally, Trump’s real estate and other business dealings tied to various foreign governments. The Department of Justice is seeking to have the case dismissed at the outset. A motion to dismiss generally assumes the truth of the factual allegations in the complaint, but argues that as a matter of law the case cannot proceed further.

The President’s motion to dismiss makes four main arguments. First, he argues that plaintiffs’ reading of the Emoluments Clause is overly expansive so as to preclude any president or other federal official from having an ownership interest in commercial businesses while serving in office. As examples, the motion to dismiss points to President George Washington and Vice President Nelson Rockefeller, both of whom, the president argues, held such interests while serving. Second, the president argues that plaintiffs lack standing to bring the lawsuit because the injuries they allege — in the case of the individuals and trade group, loss of revenues and, in the case of the not-for-profit organization, diversion of resources — are abstract and speculative, and not concrete as insisted upon by the Supreme Court. Third, according to President Trump, plaintiffs misinterpret the original understanding of the Foreign Emoluments Clause which, he argues, was meant to cover foreign benefits conferred on federal officials in their official capacities, or services rendered by the official to the foreign state. Fourth, the President argues that the remedy sought, issuing an injunction against the President in his official capacity, is unconstitutional, presumably as offensive to the required separation of powers among the three branches of government. Under the Constitution, according to the motion to dismiss, only political means can be used to insure a president’s compliance with the Constitution.

A second lawsuit, The District of Columbia and The State of Maryland v. Donald J. Trump, in his official capacity as President of the United States of America, filed in the federal district court in Maryland by the Attorneys General of the District of Columbia and Maryland, and others lawyers, alleges that, in their capacities as sovereigns, their governments will be competitively disadvantaged and harmed by Trump’s business interests in such areas as the governments’ economies, including their tax revenues, and the financial interests of their residents which the two plaintiff governments have a duty to protect. They also argue there is a “perceived or actual pressure” to treat Trump’s businesses better than competing businesses. In addition to the Trump business interests set forth in the case pending in the federal court in New York, the Maryland federal court case alleges that the continuation of the General Services Administration lease for Trump’s Washington D.C. hotel constitutes an emolument in light of the lease having been breached by Trump, who, as a federal official, holds an interest in the hotel which, it is argued, is forbidden by the lease’s terms.

The case, which is based on the Foreign Emoluments Clause, also claims that Trump has violated the Constitution’s so-called “Domestic Emoluments Clause” in Article II, Section 1, Clause 7 which states: “The President shall, at stated times, receive for his services, a compensation, which shall neither be increased nor diminished during the period for which he shall have been elected, and he shall not receive within that period any other emolument from the United States, or any of them.” Unlike the Foreign Emoluments Clause, the Domestic Emoluments Clause specifically is addressed to the president. It is also absolute in its prohibition and does not allow the acceptance of a domestic emolument, even were Congress to give its consent. By prohibiting domestic emoluments, the clause largely was designed to prevent a president from compromising his independence and failing to act in the best interest of the Nation. The District of Columbia and Maryland argue that this clause protects them from undue pressure to provide the President with emoluments or from reprisals for their refusal to do so.

The third and most recent case, filed in the federal court in the District of Columbia, is brought by 196 Democratic members of Congress claiming that Trump has violated the Foreign Emoluments Clause. The claim rests on the clause’s requirement that Congress’ consent must be sought and obtained for the president to accept an emolument. The plaintiffs contend that they have standing because they have been injured in the performance of their duty as members of Congress to vote on whether to allow the president to receive specific emoluments. The case demands that the court find that Trump violated the Constitution when he accepted emoluments without the consent of Congress, and asks to court to issue an injunction to stop Trump from accepting a foreign emolument without the consent of Congress.

To date, no motion to dismiss has been filed in the cases pending in Maryland and the District of Columbia federal courts, but, given the status of the earlier filed New York federal case, a motion is likely to be filed in these cases as well.

Herbert Teitelbaum is a practicing attorney in New York who has been involved in numerous constitutional cases. 

Mr. Teitelbaum expresses his appreciation to Matthew Propper for his assistance in the preparation of this Emoluments update.