Washington Judge Hands Off Trump Lawsuit Over New York State Taxes

(Bloomberg) -- A Washington judge appointed by President Donald Trump said he won’t handle Trump’s lawsuit aimed at keeping his New York State tax records out of the hands of Congressional Democrats even though he’s already hearing a separate suit over the president’s federal returns.

U.S. District Judge Trevor McFadden cited a court rule aimed at preventing judge shopping to ensure the integrity of the judiciary and said the president’s team didn’t make a strong enough case that the two separate lawsuits belong before him because they are “related.”

“I find the relationship has not been established,” McFadden said after an almost hour-long hearing. That means Trump’s lawsuit will be randomly assigned to another judge.

The suit, filed Tuesday against the House Ways and Means Committee and New York State Attorney General Letitia James, is the latest of a series of courtroom battles being waged by Trump and Congressional Democrats over the president’s business records.

So far, the president has had success in slowing Democrat efforts to shine a light on his personal finances, appealing rulings that he lost and fighting subpoenas at every turn.

Breaking with recent decades of tradition, Trump has refused to make public his tax returns, even as he maintains ownership of a global business empire including a luxury hotel frequented by foreign dignitaries just blocks from the White House.

William Consovoy, Trump’s lawyer, declined to comment after the hearing.

By handing off the case, McFadden didn’t need to address what was supposed to be the main point of Thursday’s hearing -- Trump’s request for an emergency order barring House Ways and Means Committee Chairman Richard Neal from requesting the state tax returns.

A newly enacted New York law -- known as the TRUST Act -- requires its tax department to produce the records at the request of the House Ways and Means committee chairman. Trump claims the law is retaliatory and aims to punish him for exercising his constitutional rights of free speech and free political association.

The president’s lawsuit was filed three weeks after the Ways and Means Committee sued the U.S. Treasury Department and the Internal Revenue Service, seeking an order compelling those agencies to turn over the president’s tax returns for the past six years. Treasury Secretary Steven Mnuchin had rejected the committee’s request.

Legislative Purpose

Trump claims lawmakers have no legitimate legislative purpose for seeking his tax returns -- state or federal -- and argued that’s what ties the two cases together.

“While the president insists that both cases will involve the committee’s purpose in seeking the president’s tax returns, I am not so sure,” McFadden said in his written ruling. “The earlier-filed case will not involve any inquiry into the purpose of the New York legislature in passing the TRUST Act.”

Neil, a Massachusetts Democrat, said he hasn’t yet decided whether he’d ask for the records, a factor cited by McFadden when he handed down his decision. Neal has been reluctant to ask for the tax returns, saying such a request might boost Trump’s argument that Congress only wants his federal taxes for political reasons.

From the bench, McFadden cited the differences between the two lawsuits, noting the committee’s case arises from federal law, while the president’s suit concerns a state law and involves New York state, which isn’t involved in the federal case.

While Neal’s committee took no position on whether the two cases are related, James’ office had objected, arguing in court papers that there was nothing to be gained by putting the only-superficially similar cases before the same judge.

In court, Consovoy told McFadden that both cases arose from a legislative purpose he called illegitimate, repeating an argument he made without success in two other lawsuits over the president’s financial records.

“This feels like a very different situation,” McFadden said.

The cases are Trump v. Committee on Ways and Means, 19-cv-2173, and Committee on Ways and Means v. U.S. Department of the Treasury, 19-cv-1974, U.S. District Court, District of Columbia (Washington).

To contact the reporter on this story: Andrew Harris in federal court in Washington at aharris16@bloomberg.net

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Joe Schneider, Peter Blumberg

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