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Federal court dismisses Maryland Attorney General Frosh’s lawsuit over President Trump’s hotel profits from foreign officials

President Donald Trump’s lawyers persuaded a federal appeals court to throw out a lawsuit claiming he is profiting from foreign government business at his deluxe Washington hotel in violation of the U.S. Constitution. The ruling by a three-judge panel of the Richmond, Virginia-based appeals court hands a victory to the president, who could now avoid having the Democratic attorneys general in the District of Columbia and Maryland take a deep dive into his financial affairs.
President Donald Trump’s lawyers persuaded a federal appeals court to throw out a lawsuit claiming he is profiting from foreign government business at his deluxe Washington hotel in violation of the U.S. Constitution. The ruling by a three-judge panel of the Richmond, Virginia-based appeals court hands a victory to the president, who could now avoid having the Democratic attorneys general in the District of Columbia and Maryland take a deep dive into his financial affairs. (Alex Brandon / AP)

A federal court on Wednesday delivered the second strike against critics of President Donald Trump who have filed three separate lawsuits accusing the Republican executive of violating the Constitution by profiting from foreign government business at his Washington hotel.

A similar lawsuit filed against Trump in New York by a government ethics watchdog group was dismissed in December 2017, and a third legal action by nearly 200 Democratic congressmen is pending in Washington.

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The decision Wednesday reverses a Greenbelt-based U.S. District Court judge’s November order that had allowed the case against Trump to move forward. The 4th U.S. Circuit Court of Appeals in Richmond, Virginia, ruled Maryland and Washington, D.C., failed to demonstrate that their residents, businesses and tax collections suffered enough from the hotel’s competition to give the state and the District the legal right to sue the president.

In fact, the three-judge panel of the court stated Maryland and Washington might actually benefit from foreign government officials who want to bypass staying at the Trump International Hotel a few blocks from the White House.

“There is a distinct possibility ― which was completely ignored by the District and Maryland, as well as by the district court — that certain government officials might avoid patronizing the hotel because of the president’s association with it," the opinion states. “Even if government officials were patronizing the hotel to curry the president’s favor, there is no reason to conclude that they would cease doing so were the president enjoined from receiving income from the hotel.”

Maryland Attorney General Brian Frosh said the appeals court panel “got it wrong" and that he and Washington Attorney General Karl Racine are considering appealing the decision. The two men are Democrats.

“Essentially, what they’re saying is that Donald Trump is above the law,” Frosh said in an interview. “He can continue to use the White House to profiteer from the presidency. That’s bad for Maryland. It’s bad for Washington, D.C. It’s bad for the country."

In a statement, Frosh also said the appeals court "failed to acknowledge the most extraordinary circumstance of all: President Trump is brazenly profiting from the office of the president in ways that no other president in history ever imagined and that the founders expressly sought — in the Constitution — to prohibit.”

The lawsuit was one of the first Frosh was able to pursue against Trump without approval from Republican Gov. Larry Hogan after the Democrat-controlled General Assembly in 2017 changed state law to allow Maryland attorneys general to file such legal actions without the permission of governors.

Hans von Spakovsky, senior legal fellow for the conservative Heritage Foundation and a former Justice Department lawyer, said Maryland’s lawsuit and the two other similar actions invoking the Constitution’s “emoluments” clause misread a provision that was originally meant to “prevent bribes.”

“It wasn’t meant to cover actual business services that are rendered in a fair market,” von Spakovsky said. “Under the view of the emoluments clause they were pushing, no one elected president could retain ownership in any business of any kind.”

He said the legal theory alleging a constitutional violation would have prevented President Barack Obama from receiving royalties from any copies of his books that foreign officials or governments bought.

“That’s ridiculous,” von Spakovsky said. “These cases were absurd when they were filed.”

“Certain government officials might avoid patronizing the hotel because of the president’s association with it. Even if government officials were patronizing the hotel to curry the president’s favor, there is no reason to conclude that they would cease doing so were the president enjoined from receiving income from the hotel.”


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The Department of Justice agreed.

“We are pleased that the 4th Circuit unanimously decided to dismiss this extraordinarily flawed case,” spokesperson Kelly Laco said in an email. “The court correctly determined that the plaintiffs improperly asked the courts to exceed their constitutional role by reviewing the president’s compliance with the emoluments clauses.”

The 4th Circuit criticized the attorneys for Maryland and Washington for not being able to explain how the court should remedy the alleged constitutional violation.

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“The likelihood that an injunction barring the president from receiving money from the hotel would not cause government officials to cease patronizing the hotel demonstrates a lack of redressability,” the court wrote. "This deficiency was remarkably manifested at oral argument when counsel for the District and Maryland, upon being questioned, was repeatedly unable to articulate the terms of the injunction that the District and Maryland were seeking to redress the alleged violations.

“When plaintiffs before a court are unable to specify the relief they seek, one must wonder why they came to the court for relief in the first place."

Robert Koulish, director of the University of Maryland’s MLaw Programs, said such cases are not easy because plaintiffs have “to prove direct and concrete harm.” By not allowing the case to move forward to an evidence-collection phase, the court prevented Frosh from obtaining the material needed to demonstrate such harm, Koulish said.

“Without getting to the merits, you can’t find out if there’s been a violation,” he added. “The public has a right to know if the president is profiteering.”

Richard Painter, the former top ethics attorney for Republican President George W. Bush, was shocked that the 4th Circuit dismissed the case based on saying the state of Maryland and Washington lacked legal standing.

“These are governmental entities. If a state doesn’t have standing for suing the president for violating the Constitution, I don’t know who does,” Painter said.

Painter helped lead the first emoluments lawsuit against Trump filed in New York by the Citizens for Responsibility and Ethics in Washington. Although the case was dismissed — also for lack of standing — Painter said the nonprofit watchdog group has appealed.

He urged Frosh and Racine to appeal, as well.

“It should be appealed immediately to the Supreme Court,” Painter said of the Maryland and District of Columbia case. “A state ought to be able to complain about a constitution violation by the president and get a court to adjudicate it.”

“We are pleased that the 4th Circuit unanimously decided to dismiss this extraordinarily flawed case. The court correctly determined that the plaintiffs improperly asked the courts to exceed their constitutional role by reviewing the president’s compliance with the emoluments clauses.”


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The decision Wednesday doesn’t mean Trump’s finances are off-limits to investigators. In addition to the pending congressional case, federal judges in Washington and New York have rejected Trump’s attempts to quash congressional subpoenas for financial information from his accounting firm and two banks. Congress has also sued to enforce a demand for Trump’s tax returns.

Trump handed the day-to-day control of his global business empire to his two sons and a chief financial officer before taking office, but refused to divest any of his holdings, including the Trump International Hotel. According to District of Columbia Solicitor General Loren AliKhan, Trump even hired a director of diplomatic sales.

In their June 2017 suit, Frosh and Racine accused the president of benefiting from the business of at least one U.S. state and of violating the second of the Constitution’s two so-called emoluments clauses.

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The president’s businesses reported a profit of $191,538 attributable to foreign governments in 2018, a 26% increase over the prior year. The Trump Organization has said it donated an equivalent sum to the Treasury.

U.S. District Judge Peter Messitte twice declined to dismiss the lawsuit filed by Frosh and Racine, prompting Trump to turn to the regional federal appeals court in Richmond for relief.

The appeals court did not view Messitte’s ruling kindly, saying it was not “guided by sound legal principles.”

Bloomberg News contributed to this article.

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