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Focus on America: new lawsuits allege President accepted foreign benefits through business empire

Michael D Goldhaber, IBA US Correspondent

The word most frequently looked up on merriam-webster.com the week of Donald Trump’s swearing-in was 'emoluments'. It will surely have spiked again from, mid-June, as two new lawsuits alleged the President has routinely accepted foreign benefits through his business empire in violation of the murky constitutional directive that he must not 'without the Consent of the Congress, accept any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State'.

Exactly what this means is a mystery. And so is who has standing to clarify what it means.

Above: Audio: Joshua Matz, constitutional litigator and scholar, discusses emoluments

The legal watchdog Citizens for Ethics and Responsibility in Washington filed the first emoluments suit soon after the inauguration. CREW v Trump was joined earlier this spring by two hospitality businesses and an association that represents 25,000 service workers and 200 restaurants competing with the President’s properties. Earlier in June, Maryland and the District of Columbia, which operate convention centres in rivalry with Trump’s, filed the second emoluments action together. Nearly 200 members of Congress filed the third, on the theory that the President, by declaring his own integrity beyond question, has robbed them of their power to enforce the emoluments clause.

‘It is strategically wise to bring a diverse set of plaintiffs with diverse injuries,’ says the constitutional litigator and scholar Joshua Matz, who works closely with the CREW legal team, ‘and the fact is that Trump’s emoluments violations injure many different people in many different ways.’

Spread bets also raise the chance of discovering the President’s secrets. ‘By investigating emoluments, we may get some transparency around corruption that sheds light on Russia,’ says Fordham Law School professor Jed Shugerman, who is writing a brief in support of CREW. ‘The tax returns are relevant for emoluments. It also may just so happen that the tax returns are relevant for other legal questions.’

But Matz stresses that the emoluments suits are really about emoluments. ‘The bottom line,’ he says, ‘is we have a guy running the country who has deliberately and self-servingly chosen to open himself to influence that the framers were so worried about that they preemptively banned it in the Constitution over 200 years ago, because they saw so clearly how dangerous it could be.’

  By investigating emoluments, we may get some transparency around corruption that sheds light on Russia

Professor Jed Shugerman
Fordham Law School

For starters, the Trump International Hotel, a half-mile from the White House, routinely hosts state visits or functions, with some diplomats openly admitting that they aim to curry favour with the President. In New York, China’s ICBC is Trump Tower’s largest office tenant, and the Saudi mission to the UN occupies a condo in Trump World Tower. The Trump Organisation has countless real estate and hospitality projects licensed or in development worldwide in nations like Turkey, India, Indonesia, and the Philippines. After Trump’s election, the price of a Mar-a-Lago membership doubled, and the price of a high-end cocktail at Trump International Hotel quintupled.

In January, the President promised through his lawyers at Morgan Lewis to place his holdings in a revocable trust with his sons and a Trump executive as trustees, to refrain from monitoring his business, to halt all new or pending foreign deals, and to donate all foreign hotel profits into the US Treasury. Ethics watchdogs doubt these pledges. More importantly, they say these steps fall woefully short of the President’s duties under the emoluments clause. (A Morgan Lewis spokesperson declined to comment.)

The Morgan Lewis memo suggested that emolument should be defined narrowly as a benefit that goes beyond fair market value, and is paid as a quid pro quo for the President discharging a duty of office. Legal historian Andy Grewal of University of Minnesota agrees that ‘emoluments’ should be defined as ‘office-related’ payments, in keeping with the primary dictionary definition of America’s founding period.

CREW and its allies retort that the constitutional phrase ‘of any kind whatever’ makes clear that the secondary meaning of ‘any benefit’ applies. While Trump does take payments as a ‘quid pro quo’ for policy, they say, this would be extremely hard to prove under Supreme Court precedent. Meanwhile, they argue, Americans should not have to wonder whether their children are being sent in harm’s way in order to pad the presidential bank account.

The litigation is likely to turn on these semantics – but only if the judges can get past standing. Whatever emoluments are, whom do they hurt? The scarcity of precedent accounts for the profusion of plaintiffs.

To be extra safe, lawyers are looking beyond the Constitution to assail the President’s business conflicts. The Cork Wine Bar, near Trump International Hotel, has sued under DC unfair competition law. A class action in New York would impose a constructive trust for the benefit of 'the People', and create a court mechanism for funnelling the foreign profits of Trump’s hospitality businesses into the US Treasury.

Most intriguingly, the New York attorney general is reportedly considering suing the Trump Organisation (incorporated in New York and Delaware) under a ‘quo warranto’ theory. A relic of 1189 England, the writ of ‘quo warranto’ survives only in US state law. Its literal Latin meaning: ‘Under what authority?’

The idea, developed by Fordham’s Shugerman, is that the state could revoke Trump’s corporate charter for exceeding its power by acting as a conduit for emoluments antithetical to the public interest. Quo warranto fans see it as an elegant end run on constitutional standing problems and slow federal courts.

With all these strategies in motion, who gets to clarify ‘emoluments’ is anyone’s guess. But there’s always Merriam Webster.