Emoluments: December Ruling

By Norman Siegel and Matthew Propper

In late December, a federal judge in New York dismissed a lawsuit claiming that President Trump is violating the Emoluments Clauses of the Constitution. The Foreign Emoluments Clause precludes a president from receiving any gifts or compensation from foreign governments without the consent of Congress. The Domestic Emoluments Clause “provides that the president’s compensation for his services as president shall not change during his term in office and prohibits him from drawing any additional compensation or salary from the federal or state governments.” Dec 21, 2017 Memorandum Decision and Order (MDO), p. 5. (For more on the Emoluments Clauses, see our June 22 update.)

In the lawsuit, individuals in the hotel and restaurant business claim that they compete with president Trump’s businesses and are at risk of losing customers to Trump Organization hotels and restaurants. Foreign governments and diplomats, they argue, frequent Trump Organization establishments, including Trump’s Washington D.C. hotel located across from the White House, in an effort to curry favor with the President.

Judge George B. Daniels ruled that the restaurant and hotel owners lacked standing because they did not sufficiently show that they suffered as a result of Trump’s status as president. Thus, it is only speculative to assume that government officials frequent Trump’s hotel as way to curry favor. Judge Daniels explains that the Framers included the Clauses to prevent corruption, not unfair competition with presidentially owned-businesses.

Judge Daniels generally asserted that Congress must determine if a president violates the Foreign Emoluments Clause; the Constitution bestows Congress the power to decide whether a president can receive a gift from a foreign leader, and under what circumstances. The Judge stated “As the only political branch with the power to consent to violations of the Foreign Emoluments Clause, Congress is the appropriate body to determine whether, and to what extent, Defendant’s conduct unlawfully infringes on that power. If Congress determines that an infringement has occurred, it is up to Congress to decide whether to challenge or acquiesce to Defendant’s conduct (MDO at p. 26)…This Court will not tell Congress how it should or should not assert its power in responding to Defendant’s alleged violations of the Foreign Emoluments Clause” (MDO at p. 28-29).

The Judge also held that the watchdog group Citizens for Responsibility and Ethics in Washington (CREW) did not have standing to sue because they could not demonstrate “a concrete or particularized injury” (MDO at p. 23).

Two other lawsuits are still pending in court. The Attorneys General of the District of Columbia and Maryland filed a complaint in the federal district court in Maryland. The lawsuit makes similar arguments as the above suit in regard to the Foreign Emoluments Clause. 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.

We need to see if Judge Daniels’ decision will have any effect on the two other pending cases and whether his decision will be appealed to the United States Court of Appeals for the 2nd Circuit. Stay tuned.