THE EMOLUMENTS CLAUSES

Ivan Hoffman, B.A., J.D.

     The issue about whether the conduct of the President, whether he is actively running his business or not, in receiving monies or tax incentives from condo owners, tenants, hotel guests, municipalities, states and the like, violates the 2 “emolument” clauses of that Constitution has recently been litigated in 3 different cases  (Citizens for Responsibility and Ethics in Government et. al. vs. Donald Trump et. al. [The New York Case], District of Columbia and State of Maryland vs. Donald Trump et. al. [The DC Case] and Blumenthal and Nadler vs. Donald Trump et. al. [The Blumenthal Case]).  As of this writing, The New York Case has been dismissed, The Blumenthal Case is still pending and in The DC Case, the district court ruled that the plaintiffs do indeed have standing to raise these issues. 

     In none of the cases, however, has any court ruled on whether the complained of acts violate the President’s duty and these clauses of the Constitution.  Instead, in all the cases, the key issue is whether the plaintiffs had “standing” to bring the claims and if so, then the case would be able to proceed to trial.  The posture of all the cases was that these were (or in the instance of the pending case, will be) decided on what are called “motions,” which are pleadings submitted by the parties and in some instances, other “friends of the court.”  For purposes of these motions, the Court makes an assumption that all the facts alleged are true and then must decide if, even assuming they are true, whether the Plaintiffs have the legal right (“standing”) to complain.  These are not rulings on the evidence itself, although the allegations (which are not evidence) go into a determination of the standing issues on the foregoing assumption that the allegations are true. 

The Clauses 

     The first of these clauses is called the “Foreign Emoluments Clause” and reads: 

No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince or foreign State.

     The second is called the “Domestic Emoluments Clause” and reads: 

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.

     Note that the domestic clause does not require, or allow, the consent of Congress.  It is an absolute prohibition. 

     In all the cases, the factual bases behind allegations of claimed violations of these clauses are essentially the same.  The claimed violations are all based on the ownership by the President of the Trump Organization and thus the recipient, directly or indirectly, of revenues from that entity.  The claims can be summarized as follows:

     1.  Trump Trademarks:  The President sought for several years to register his “brand” in China but in each instance, was refused.  After letting it be known that he was considering abandoning the “one China policy” (that the United States not recognize the validity of the government on Taiwan, something that “mainland” China insists on) but then deciding to continue that policy, which latter decision was then met with prompt approval of his said trademarks by the Chinese government) making it appear as though the President was getting benefits from a foreign government simply because of his role as President. 

     2.  Foreign governments renting rooms and other facilities at Trump hotels and in particular, the Trump International Hotel in Washington D.C. 

     3.  Foreign governments buying or paying for properties in the Trump Tower in New York. 

     4.  That the President is violating the domestic clause by the Trump Organization receiving favorable tax and zoning and similar treatment from states related to its businesses. 

     5.  That the Trump International Hotel’s lease with the General Services Administration (“GSA”)-an independent agency of the United States, whose administrator is appointed by the president-violates the Domestic Emoluments Clause. This refers to the 60 year lease that the GSA entered into with the Trump Organization for the hotel.  Section 37.19 of the said lease provides that “[n]o ... elected official of the Government of the United States ... shall be admitted to any share or part of this Lease, or to any benefit that may arise therefrom.”  The allegations state that because the President is the President, the Trump Organization is in breach of the lease since the President is benefitting from the said lease.  The allegations further state that the first federal budget the President released contained a proposed federal budget increase for the GSA while cutting nearly all other non-defense-related spending. 

     6.  In The Blumenthal case, that because Congress is given the right to consent under the Foreign Emoluments Clause, that the President has not sought nor obtained their said consent deprives them of their Constitutionally-mandated powers. 

Standing 

     “Standing” is a legal term that refers to whether a party, generally a plaintiff, is a party who has sustained some form of “injury” so that the civil litigation is properly before the court.  Just because an act of another party may violate some statute or in this instance, the Constitution, does not mean that just anyone can bring a litigation.   There are several kinds of “standing” hurdles a party must overcome. 

Article III Standing 

     Under the Constitution, the federal courts only have the right to hear “cases” and “controversies.”  (Article III, Section 2).  If a party does not have “standing,” then the doctrine says that there is neither a “case” nor a “controversy” and thus the federal court has no jurisdiction to hear the case.  The Court in The New York Case stated: 

As the Supreme Court has explained, "[t]he law of Article III standing, which is built on separation-of-powers principles, serves to prevent the judicial process from being used to usurp the powers of the political branches[,]" Clapper v. Amnesty Int 'l USA, 568 U.S. 398, 408 (2013), and "ensure[s] that federal courts do not exceed their authority as it has been traditionally understood."

 

The "irreducible constitutional minimum of standing" consists of three elements: "(1) 'an injury in fact' to 'a legally protected interest' that is both '(a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical,' (2)'a causal connection between the injury and the conduct complained of,' and (3) that it is 'likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.

     In other words, the party must have a real and imminent injury to a legally protected interest that is likely to be remedied if the party wins. 

     In order to show “injury,” several of the Plaintiff’s in The New York Case alleged that they were being harmed by the Trump business interests because those interests were hurting them as “competitors.”  In other words, the Trump businesses such as hotels, were getting favorable treatment and this was harming the Plaintiffs, some of whom were in the same “hospitality” business as the hotels both in New York and DC. 

     The Court stated: 

The doctrine of competitor standing recognizes that economic actors "suffer [an] injury in fact when agencies lift regulatory restrictions on their competitors or otherwise allow increased competition against them." Sherley, 610 F.3d at 72 (citation and quotation marks omitted).

     The Court however ruled that the Plaintiffs lacked Article III standing because they could not show that the actions of the Defendant caused their injuries (i.e. were “speculative”) and could not show that whatever remedies they might have could be addressed by the Court.   It stated in part: 

Here, the Hospitality Plaintiffs argue that Defendant has adopted "policies and practices that powerfully incentivize government officials to patronize his properties in hopes of winning his affection." (Opp'n at 16 (emphasis added).) Yet, as in Simon, it is wholly speculative whether the Hospitality Plaintiffs' loss of business is fairly traceable to Defendant's "incentives" or instead results from government officials' independent desire to patronize Defendant's businesses.

Even if it were determined that the Defendant personally accepting any income from the Trump Organization's business with foreign and domestic governments was a violation of the Emoluments Clauses, it is entirely "speculative," Bennett, 520 U.S. at 167, what effect, if any, an injunction would have on the competition Plaintiffs claim they face.

 Zone of Interests Standing

     The New York Court stated: 

Beyond the Article III requirements, "the federal judiciary has also adhered to a set of prudential principles that bear on the question of standing." Valley Forge Christian Coll. v. Ams. United for Separation of Church and State, Inc., 454 U.S. 464, 474 (1982). "One of these is the requirement that the plaintiff establish that the injury he complains of (his aggrievement, or the adverse effect upon him) falls within the zone of interests sought to be protected by the statut[e] [or constitutional guarantee] whose violation forms the legal basis for his complaint."

     The Court said that the Constitutional provisions were not intended to protect a party from competition but instead to protect the new government from foreign corruption and influences.  Thus, the claims of the Plaintiffs fall outside the “zone of interests” test.  The Court stated in part: 

To ensure the president's independence from the states and additional financial incentives from the federal government, the Framers included in the Constitution the Domestic Emoluments Clause. That clause was meant to ensure that the president has "no pecuniary inducement to renounce or desert the independence intended for him by the Constitution." 

    Quoting from the Federalist papers, the Court wrote: 

[T]he legislature, with a discretionary power over the salary and emoluments of the [president], could render him as obsequious to their will as they might think proper to make him. They might, in most cases, either reduce him by famine, or tempt him by largesses, to surrender at discretion his judgment to their inclinations.

     The New York Court further decided that from a “prudential” point of view, this question of violation of the clauses is better left to the legislative, Congressional process rather than to the judicial process.  In deference to the separation of powers enshrined within the Constitution, courts are prohibited from interfering with political questions.  The Court defined what constitutes “political questions” and found that the within matters were indeed political questions.

     The Court stated: 

Here, the issue presented under the Foreign Emoluments Clause is whether Defendant can continue to receive income from his business with foreign governments without the consent of Congress. As the explicit language of the Foreign Emoluments Clause makes clear, this is an issue committed exclusively to Congress. 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. As such, this case presents a non-justiciable political question.

 The Washington DC Case

     In District of Columbia and State of Maryland vs. Donald Trump et. al., the 2 plaintiffs were as indicated and it is important to note that these plaintiffs, unlike those in The New York Case, were a state and the District of Columbia.  The Court stated: 

Of particular relevance to this proceeding, States are not "normal litigants for the purposes of invoking federal jurisdiction" and are entitled to "special solicitude" in the standing analysis. Massachusetts v. EPA, 549 U.S. 497, 518, 520 (2007). Indeed, the invasion of three types of unique State interests justifying standing were identified by the Supreme Court in Alfred L. Snapp & Son, Inc. v. Puerto Rico ex rel. Barez, being (a) sovereign interests; (b) nonsovereign interests; and (c) quasi-sovereign interests. 458 U.S. at 601-02 . 

     Furthermore, unlike the New York plaintiffs, these plaintiffs were located in the geographical area of the Trump International Hotel.  There were additional allegations that only a state can assert in terms of “competition” including that the state of Maryland alleged that it was “injured” because the Trump International Hotel in DC was injuring all hotels in Maryland (same geographical marketplace with Washington DC).   Moreover, again because the Plaintiffs were states or the District, they could allege economic losses that individuals might not. 

In particular, the president’s Domestic Emoluments Clause violations allegedly present Maryland and the District of Columbia with an intolerable dilemma: [E]ither (1) grant the [Trump] Organization’s requests for concessions, exemptions, waivers, variances, and the like and suffer the consequences . . . including lost revenue and compromised enforcement of environmental protection, zoning and land use regulations, or (2) deny such requests and be placed at a disadvantage vis-à-vis states and other government entities that have granted or will agree to such concessions.46  

This Hobson’s choice leaves plaintiffs and other states “feeling compelled (or being compelled) to confer private financial benefits on the president in order to compete for influence and favor” —precisely the sort of injury that the Founders sought to prevent when they included the Domestic Emoluments Clause in the Constitution.

     In addition to similar allegations as in The New York case, these Plaintiffs alleged other facts, as summarized by the Court in part as follows:

Plaintiffs also contend that the President has been more than a passive actor with respect to the Hotel. Since his election, the Hotel has specifically sought to market itself to diplomats by hiring a "director of diplomatic sales" and by hosting an event where it pitched the Hotel to approximately 100 foreign diplomats. Id. ¶ 37. The President himself has appeared at the Hotel on several occasions, while a number of members of his administration continue to live there. Id. ¶ 38. As a result, Plaintiffs allege that goods and services at the Hotel have been marketed at a premium level since the election. Id. ¶ 100. A portion of benefits, particularly expenditures by foreign governments, is said to have been passed along to the President through the Trump Organization. Id. ¶ 29. 

In addition, at least one State — the State of Maine — patronized the Hotel when its Governor, Paul LePage, visited Washington to discuss official business with the Federal Government, including discussions with the President. Pls.' Opp'n. at 8, ECF No. 46. Indeed, on one of those trips, the President and Governor LePage appeared together at a news conference at which the President signed an executive order to review orders of the prior administration that established national monuments within the National Park Service, which could apply to a park and national monument in Maine, which President Obama had established over LePage's objections in 2016. Id.

     States also have standing to act under the doctrine of parens patriae.  This doctrine essentially provides that states have standing to act as “parent of the country” where they can step into a case on behalf of parties, in this case citizens of their state, who might otherwise be unable to proceed. 

     The Court held that the State of Maryland had suffered no injury to its sovereign state interests but that both Plaintiffs had sufficiently pleaded injuries to their “quasi-sovereign, proprietary, and parens patriae interests” that gave them standing insofar as operations of the hotel and The Trump Organization within Washington DC were concerned. 

The Blumenthal Case 

    This case was filed by Senator Blumenthal on behalf of approximately 200 members of Congress.   Because of who the Plaintiffs are, they have a unique set of allegations as to their “standing.”  Under the foreign emoluments clause, the Plaintiffs have alleged that since Congress must consent to any receipts before they are received, Congress has been “injured” since the President has by-passed their Constitutionally mandated role.   

     On September 28, 2018, the Court ruled that the plaintiffs do indeed have standing and thus the right to proceed with the litigation.   

The Real Issue 

     Of course the larger issue is whether we should have a government head who is even suspected of violating these clauses, irrespective of the outcome.  Shouldn’t our President take affirmative measures to respect the law, to set an example, rather than rely on sands as slippery as those involved in all this legal parsing?  Read “Respect for the Law.”  

Copyright © 2018 Ivan Hoffman.  All Rights Reserved. 

If you wish to repost portions of this article on social media, kindly credit the author and this web site.  Otherwise, no portion of this article may be copied, retransmitted, reposted, duplicated or otherwise used without the express written approval of the author.

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Ivan Hoffman has been practicing intellectual property law for over 45 years and has written extensively about that topic. (www.ivanhoffman.com).  Additionally, Ivan Hoffman has written numerous books about philosophy including “The Tao of Love” and “The Tao of Money.” 

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This article is not legal advice and is not intended as legal advice.  This article is intended to provide only general, non-specific legal information.  This article is not intended to cover all the issues related to the topic discussed.  You should not rely on this article in any manner whatsoever and you should not draw any conclusions of any sort from this article.  The specific facts that apply to your matter may make the outcome different than would be anticipated by you.  This article is based on United States laws but the laws of other countries may be different.  You should consult with an attorney familiar with the issues and the laws of your country.  This article does not create any attorney client relationship and is not a solicitation.      


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