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Frosh, Trump spar over ruling’s effect on emoluments case

A federal appeals court decision reviving hoteliers’ and restaurateurs’ claims of unconstitutional competition from President Donald Trump’s New York City properties has sparked controversy between attorneys for Maryland and the president over what the ruling means for the state’s similar but stalled claim against Trump.

To Maryland’s counsel, last week’s ruling supports their argument that a three-judge panel was wrong to rule that the state and the District of Columbia lack standing to sue the president based on their claim that Maryland and D.C. hotels are at a constitutionally barred competitive disadvantage to Trump’s hotel property in Washington.

In support of the president, a U.S. Justice Department lawyer says the 2nd U.S. Circuit Court of Appeals’ 2-1 decision was wrong because Trump’s competitive advantage is speculative at best in New York and even more so in Maryland and D.C., where the governments — and not the allegedly affected industries – are directly bringing suit.

The Justice Department and Maryland Attorney General Brian E. Frosh — with his district counterpart, Karl A. Racine — presented their contrasting arguments in papers filed in recent days with the full 4th U.S. Circuit Court of Appeals.

The full circuit is considering a request from Maryland and the District that it review a three-judge panel’s unanimous decision dismissing — due to lack of standing — the jurisdictions’ claim that Trump has violated the Constitution’s prohibition on the president’s accepting “emoluments,” or profits, from state or foreign governments or diplomats who visited or stayed in his Trump International Hotel in Washington.

In their filing Friday, Maryland and the District stated that the 2nd Circuit correctly recognized the potential “competitive injury” to New York’s hotels and restaurants due to foreign diplomats’ and federal and state officials’ choosing to stay at the president’s properties to curry favor with him — a form of presidential profiteering in violation of the Constitution’s foreign and domestic Emoluments Clauses.

“The (2nd Circuit) court determined that the complaint’s allegations concerning the statements of foreign diplomats regarding their likely behavior and those of President Trump indicating that he favors governments that spend money at his establishments, were sufficient to establish causation,” Assistant Maryland Attorney General Leah J. Tulin and Loren L. AliKhan, the District’s solicitor general, wrote in papers addressed to the 4th Circuit’s clerk, Patricia S. Connor.

But Justice Department attorney Martin Totaro stated the 2nd Circuit’s decision was “erroneous” in allowing competitors to have standing when they can show it is “almost sure” they will lose business due to the president’s alleged violation of the Emoluments Clauses. The legal standing of the Maryland and District petitioners is even more tenuous, added Totaro, an appellate attorney with the Justice Department’s civil division.

“Unlike an ordinary competitor-standing case, petitioners’ unusual theory of injury is factually idiosyncratic and rests on multiple levels of speculation; namely, they hypothesize injury merely because a handful of plaintiffs’ businesses compete to some extent with the defendant’s single hotel in a market with myriad other competitors, and where the allegedly unlawful activity concerns a tiny subset of customers (government patrons for whom the president’s financial interest in their hotel is a material consideration),” Totaro wrote in the president’s filing to Connor, the clerk, on Monday. “Whereas the 2nd Circuit panel majority failed to grapple with that fundamental point, the panel here properly recognized it, and this (full 4th Circuit) court should not disturb its cogent decision.”

The full 4th Circuit court has not set a date for ruling on the request to review the three-judge panel’s July 10 decision.

The side that loses in the 4th Circuit – either Trump or the attorneys general – is expected to seek review by the U.S. Supreme Court.

The three-judge panel’s decision was written by Judge Paul V. Niemeyer. He was joined by Judge A. Marvin Quattlebaum Jr. and Senior Judge Dennis W. Shedd.

The panel’s decision overturned a ruling last year by U.S. District Judge Peter J. Messitte in Greenbelt that the president can be sued for alleged corruption under the Constitution’s Emoluments Clauses and that the attorneys general are entitled to pretrial discovery of documents and testimony related to their allegation.

The cases are docketed at the 4th Circuit as In Re Donald J. Trump, President of the United States of America, in his official capacity and District of Columbia and State of Maryland v. Donald J. Trump, in his individual capacity, Nos. 18-2486 and 18-2488.

The 2nd Circuit panel rendered its decision Friday in Citizens for Responsibility and Ethics in Washington et al. v. Donald J. Trump, in his official capacity as President of the United States of America, No. 18-474.


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