Trump Must Face Emoluments Lawsuit Over D.C. Hotel Profits

(Bloomberg) -- A judge has ruled for a second time that President Donald Trump must face a lawsuit accusing him of improperly profiting from his posh downtown Washington hotel.

U.S. District Judge Peter Messitte’s decision Wednesday denied the president’s dismissal request and pushes forward a lawsuit by the attorneys general of Maryland and the District of Columbia. It may open the door to a searching examination of just how much money Trump has made from his Washington businesses while in office and the sources of that income.

The judge asked both sides for recommendations on when Trump must file his response to the allegations and when the parties will begin the pretrial exchange of information, which could include demands for Trump’s tax returns.

“We continue to maintain that this case should be dismissed,” Justice Department spokesman Andy Reuss said in a statement. He didn’t say whether the government would appeal.

The attorneys general claim that Trump is violating the U.S. Constitution’s foreign emoluments clause by taking payments from foreign governments at his Washington hotel, as well as the domestic clause that bars payments from federal or state governments.

Case Proceeds

Messitte didn’t rule on the merits but said in a 52-page opinion that there were grounds for the case to proceed. “A number of foreign governments” have “patronized or have expressed a definite intention to patronize the hotel, some of which have indicated that they are doing so precisely because of the president’s association with it," he wrote. Maine Governor Paul LePage "and his entourage” also stayed there, the judge said.

Those stays by foreign and domestic leaders amount to illegal emoluments within the meaning of the Constitution, attorneys general Karl Racine of D.C. and Brian Frosh of Maryland claim.

Justice Department lawyers disagree, saying the emoluments provisions cover only payments made in connection with employment-type relationships. They also said the AGs’ reasoning could lead to "absurd consequences" such as if a president held stock in a global company whose earnings could be traced to foreign governments.

While the president handed over day-to-day control of the Trump Organization to his sons when he took office, he didn’t divest himself of ownership. The 263-room luxury hotel, just blocks from the White House, opened in October 2016.

"Directly or indirectly, the president actually or potentially shares in the revenues that the hotel” and its restaurant, bar and event spaces generate, the judge said.

Whether that amounts to an emolument has yet to be decided.

18th Century

The attorneys general said any profit, gain or advantage can be an emolument. The president’s lawyers, citing its 18th century roots, said an emolument is only a payment made as compensation for official services, a position the judge rejected.

The ruling is “a substantial step forward to ensure President Trump stops violating our nation’s original anti-corruption laws,” Racine said in a statement. “The constitution is clear: the president can’t accept money or other benefits from foreign or domestic governments."

Messitte said the “decisive weight of historical evidence supports the conclusion that the common understanding of the term ‘emolument’ during the founding era was that it covered any profit, gain, or advantage, including profits from private transactions."

In March, Messitte denied the president’s first attempt to dismiss the lawsuit on grounds the attorneys general hadn’t shown they’d been harmed by the president’s actions. He did, however, reject a part of the suit that focused on profits from the Trump Organization that came from outside Washington, including Mar-a-Lago in Florida.

Trump faces a separate emoluments case in Washington, filed by about 200 Congressional Democrats. The administration argued for dismissal of that case last month. A federal judge in New York previously dismissed a third emoluments case. That ruling is being appealed.

The New York lawsuit was filed by Citizens for Responsibility and Ethics in Washington, which is also representing Maryland and Washington. "Mr. Trump: get ready," its chairman, Norm Eisen, said in a tweet. "We are coming for your #emoluments. Including those in rubles.”

Messitte, who was appointed to the bench by President Bill Clinton in 1993, sits in Greenbelt, Maryland.

Seth Barrett Tillman, a law professor at Ireland’s Maynooth University, said he disagreed with the ruling. Tillman submitted a friend-of-the-court brief arguing that the foreign emoluments clause applies only to appointed, not elected, U.S. government positions.

"These are difficult questions," Tillman said Wednesday. George Washington, Thomas Jefferson and James Madison all received diplomatic gifts and never asked Congress for permission, he said. Messitte never addressed those facts in his ruling, he said.

The cases are The District of Columbia v. Trump, 17-cv-1596, U.S. District Court, District of Maryland (Greenbelt) and Blumenthal v. Trump, 17-cv-1154, U.S. District Court, District of Columbia (Washington).

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