A federal judge ruled Wednesday that a lawsuit filed by Maryland’s attorney general alleging that President Donald J. Trump violated a constitutional prohibition on accepting foreign gifts may proceed — the first time an “emoluments” case against the president has cleared that hurdle.
The decision by U.S. District Court Judge Peter J. Messitte is a setback for the Justice Department, which argued that Maryland and the District of Columbia did not have standing to sue because they could not clearly demonstrate how their residents had been harmed by the payments.
Central to the lawsuit is the claim that the Trump International Hotel in Washington is drawing customers from similar businesses in Maryland and the District — particularly among foreign diplomats, but also among state government officials who booked the Trump property while on business in the region.
The “decision is a win for the rule of law, and soundly rejects the Trump administration’s argument that nobody can challenge the president’s illegal conduct,” said Maryland Attorney General Brian E. Frosh, who filed the lawsuit with D.C. Attorney General Karl A. Racine in June.
Both men are Democrats.
The decision goes to a central question in the case, and one that was the focus of a lengthy argument at the U.S. District Court in Greenbelt earlier this year: May the state and the District sue the president over the properties he controls because they are in some way harmed by it?
Messitte found that the two heavily Democratic jurisdictions had provided enough evidence to support standing to sue over the impact of the Washington hotel, but not for the president’s other domestic properties, such as his Palm Beach, Fla., resort, Mar-a-Lago.
“Plaintiffs have alleged sufficient facts to show that the president’s ownership interest in the hotel has had and almost certainly will continue to have an unlawful effect on competition,” Messitte wrote.
A similar emoluments case was dismissed late last year by Judge George B. Daniels of the Southern District of New York for lack of standing. That case had been brought by hospitality industry workers.
A Justice Department spokeswoman said that “we believe this case should be dismissed, and we will continue to defend the president in court.” The spokeswoman did not directly address whether the administration will appeal the decision.
White House spokeswoman Sarah Sanders said that the administration would not comment on pending ligation. The administration previously characterized the suit as a political stunt, noting that it was brought by Democrats.
Justice Department lawyers also have noted that Maryland has not pointed to a specific example of a visitor to the region’s choosing to stay at a Trump hotel rather than a property in Maryland.
“It's not enough for the plaintiffs to speculate about possible, future harm,” Deputy Assistant Attorney General Brett Shumate told the court in January. “They can’t identify any specific lost revenue.”
Messitte countered that more concrete examples — such as the Embassy of Bahrain’s decision to move an event from another hotel in Washington to Trump’s property after his election — would likely apply to other hotels “based on fairly straightforward economic logic.”
Both Messitte and Daniels were appointed to the bench by President Bill Clinton, a Democrat.
An immediate concern for the White House is the possibility that the ruling would allow Frosh and Racine to delve into business records from Trump’s company. Frosh has said that, as part of that process, he would seek tax returns that Trump has not released.
“This important decision proves once again that no one — not even the president — is above the law,” Racine said in a statement.
At issue in the lawsuit are two provisions known as the emoluments clauses, which were added to the Constitution to ensure that a president’s decisions are not influenced by gifts or payments from foreign governments or states.
The Democratic attorneys general argue that hotels and restaurants in the Washington region cannot possibly compete with a hotel owned by the president for guests hoping to curry favor with the White House.
As part of their argument, Maryland and the District have noted a visit last year by Maine Gov. Paul LePage. LePage stayed at Trump’s hotel before the administration agreed to a request by LePage to ease logging restrictions at a national monument in his state.
There is no evidence that the decision was related to the hotel stay.
Trump has faced questions since before his election about how he would separate his business holdings from the White House. He announced early last year that he would retain ownership of his real estate company but turn its daily operation over to family.
The foreign emoluments clause prohibits a president from receiving any “present, emolument, office or title” from a foreign state without the consent of Congress. In his decision, Messitte wrote that the responsibility for policing emolument does not fall to Congress alone.
“It is well settled that courts have authority to determine whether the president ‘has acted within the law,’” he wrote. “In absence of congressional approval this court holds that it may review the actions of the president to determine if they comply with the law.”