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Court revives lawsuit targeting Trump’s business dealings at D.C. hotel

Cyclists pass the Trump International Hotel in the District last month. (Erin Scott/Reuters)

A federal appeals court on Thursday revived a lawsuit seeking to block President Trump’s hotel in downtown Washington from accepting payments from foreign and state governments.

In a divided decision tinged with allegations of partisanship, the court refused to dismiss the novel lawsuit, which accuses the president of illegally profiting from foreign and state government patrons at his D.C. hotel. The case, brought by the top lawyers for Maryland and the District of Columbia, is one of a set of lawsuits alleging that the president’s private business transactions violate the Constitution’s anti-corruption emoluments ban.

“We recognize that the President is no ordinary petitioner, and we accord him great deference as the head of the Executive branch,” Judge Diana Motz wrote for a majority of nine judges on the U.S. Court of Appeals for the 4th Circuit.

But, she said, Trump has not met the high bar for the court to intervene midstream and “grant the extraordinary relief the President seeks.”

The Justice Department said it plans to ask the Supreme Court to intervene.

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The majority found a genuine dispute over the definition of an “emolument,” writing that “we can hardly conclude that the President’s preferred definition of this obscure word is clearly and indisputably the correct one.” The court also said subpoenas aimed at the president’s business would not interfere with Trump’s official White House duties.

“The President has not explained, nor do we see, how requests pertaining to spending at a private restaurant and hotel threaten any Executive Branch prerogative,” Motz wrote in the 21-page opinion.

The 9-to-6 ruling revealed deep divisions on the Richmond-based court, which reviews appeals from Maryland. The dissenting judges, whose opinions ran more than three times as long as the majority’s, portrayed their colleagues on the other side as “partisan warriors.” That prompted a separate response from some in the majority who characterized the dissenting opinions as a “disappointing display of judicial immodesty.”

Writing for the dissent, Judge J. Harvie Wilkinson III said the majority had overstepped the judiciary’s role and warned the court against becoming “part of the political scrum.”

“The majority is using a wholly novel and nakedly political cause of action to pave the path for a litigative assault upon this and future Presidents and for an ascendant judicial supervisory role over Presidential action,” Wilkinson wrote.

“It opens the door to litigation as a tool of harassment of a coordinate branch,” he wrote, and will mean that “litigants can virtually haul the Presidency into court at their pleasure.”

The six dissenting judges were nominated by Republican presidents, including three picked by Trump. The judges in the majority were all nominated by Democratic presidents.

The ruling from the full 4th Circuit is at odds with a March decision in a separate, similar case that barred individual members of Congress from suing the president over his private business.

The split rulings suggest that the Supreme Court will have the final word in the cases involving the rarely tested emoluments provisions intended to prevent foreign and state officials from exerting undue influence on U.S. leaders, including the president.

“As the six dissenting judges noted, this unprecedented suit seeking to enforce the Emoluments Clauses against the President of the United States should have been dismissed, and the court of appeals erred by not even considering the merits of the President’s defenses,” Department of Justice spokeswoman Brianna Herlihy said in a statement.

The Trump Organization did not immediately respond Thursday to a request for comment.

A full complement of 15 judges at the 4th Circuit took a second look in December at the lawsuit from Maryland Attorney General Brian E. Frosh (D) and D.C. Attorney General Karl A. Racine (D). An initial three-judge panel of the same court had tossed the lawsuit and said the attorneys general did not have legal grounds, or standing, to sue. But the full court agreed to rehear the case and to decide whether to take the unusual step of dismissing it midstream as the president’s attorneys requested.

Trump’s D.C. hotel is at the center of anti-corruption, emoluments lawsuit

In an interview Thursday, Frosh said the court’s decision was “a strong ruling against the president.”

“It clearly held that he is not above the law, that like every other citizen he is subject to the Constitution and the laws of the United States,” he said.

Unlike past presidents, Trump has retained ownership of his private business and can benefit from it financially. His sons Donald Trump Jr. and Eric Trump run the company.

The emoluments case centers on the president’s hotel on Pennsylvania Avenue in Northwest Washington. Foreign governments, including Saudi Arabia, Kuwait and Bahrain, have booked rooms and events there since Trump entered the White House.

Trump’s Justice Department lawyers say the president is not violating the emoluments clauses, because the language bars only payments in exchange for official action or as part of an employment relationship.

Frosh said the case against the president has only gotten stronger with examples of Trump allegedly using the federal government to enrich himself. Executives at Trump’s company have discussed with federal officials the possibility of reduced or delayed rent payments, and more information has also emerged about Secret Service expenditures at the property.

Individual members of Congress barred from suing president over business dealings

The appeals court was reviewing a decision from a District Court judge in Maryland who interpreted the emoluments provisions as banning U.S. officials from accepting any profit, gain or advantage from foreign officials. The judge signed off on more than a dozen subpoenas for Trump’s closely held financial records to determine which foreign and state governments have paid the Trump Organization and how much.

The subpoenas have been on hold pending the outcome of the president’s appeal.

Racine told reporters Thursday that the 38 subpoenas they had issued — to the Trump Organization, the General Services Administration, hotel competitors and other third parties — could soon become active as long as the Supreme Court did not issue a stay. He said the case was not meant to harass the president or obtain his tax returns but to force him to abide by the law.

“This is not about President Trump’s tax records,” Racine said.

The coronavirus pandemic has forced the hotel to nearly close down completely and has also put the property back in the news for potential conflicts of interest.

The hotel continues to operate, but at a small fraction of the occupancy it drew before the pandemic forced economic shutdowns.The drop in business prompted the Trump Organization to inquire with its government landlord, the GSA, and its lender, Deutsche Bank, about how to proceed, given the hotel’s lack of revenue. Eric Trump, who is running the company while his father is in the White House, said that the discussions were only preliminary and that he was not seeking any special treatment. But the discussions prompted a number of congressional Democrats to ask the GSA whether the company was being considered for relief from its rent payments. GSA spokespeople have not responded to requests for comment. Deutsche Bank declined to comment.

Read the opinion: Ruling on Trump’s D.C. hotel

In late March, the Trump Organization put on hold the proposed sale of its D.C. hotel lease, because coronavirus shutdowns have impacted the real estate industry.

Frosh and Racine have said a sale to an entity other than a state or foreign government would be the end of their case.

In the separate case at the U.S. Court of Appeals for the D.C. Circuit, Democratic members of Congress led by Sen. Richard Blumenthal (D-Conn.) and Rep. Jerrold Nadler (D-N.Y.) have decided not to seek a rehearing by a full complement of judges. The lawmakers have until July to decide whether to ask the Supreme Court to review the three-judge panel’s decision, which blocked individual members of Congress from trying to enforce the foreign emoluments clause.

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