The Fourth Circuit Emoluments Case Proceeds En Banc: A Non-Partisan Guide for Lawyers

By Derek Stikeleather

On December 12, the en banc Fourth Circuit will re-hear oral argument in the “emoluments” case brought against President Trump by the State of Maryland and the District of Columbia. They allege that his ongoing business interests in the Trump International Hotel in Washington D.C. violate the Constitution’s Foreign and Domestic Emoluments Clauses. In July, a three-judge panel of the court unanimously held that the plaintiffs lacked standing to bring a lawsuit to enforce the Emoluments Clauses, and it remanded the case to be dismissed with prejudice. In re Trump, 928 F.3d 360 (4th Cir. 2019). Despite the unanimous panel ruling, a majority of the court’s active (i.e., non-senior status) judges voted to allow rehearing en banc. 780 F. App’x 36 (4th Cir. 2019).

The case is genuinely newsworthy for many reasons. One of them is that President Trump generates intense feelings among many of his supporters and detractors. Yet, this intensity sometimes overshadows other elements of a case involving President Trump, making it more difficult to understand the narrow questions that the courts are actually deciding. With so much media coverage of the Trump presidency colored by these partisan feelings, this article tries to give lawyers a basic understanding of this remarkable case: its allegations, the district court’s rulings, the appellate panel’s reasoning, and the pending en banc review.

The Allegations:

The case, filed in the United States District Court of Maryland, alleges violations of the Foreign and Domestic Emoluments Clauses of the U.S. Constitution. See 928 F.3d at 362-63. The Foreign Emoluments Clause provides that no officer of the United States shall “accept” any “present, Emolument, Office, or Title . . . from any King, Prince, or foreign State.” U.S. Const. art. I, § 9, cl. 8. And the Domestic Emoluments Clause provides that the President shall receive “Compensation” “for his Services” but not “any other Emolument” from the United States or any State. U.S. Const. art. II, § 1, cl. 7.

The crux of the complaint is that the President receives prohibited emoluments because his “continued ownership interest in a global business empire” gives him “millions of dollars in payments, benefits, and other valuable consideration from foreign governments and persons acting on their behalf, as well as federal agencies and state governments.” 928 F.3d at 363. The parties allege harm to many sovereign, quasi-sovereign, and proprietary interests. They include:

  1. Maryland’s interest as a separate sovereign State in securing adherence to the terms on which it agreed to enter the Union;
  2. the District and Maryland’s interests in not being pressured to grant, or being perceived as granting, “special treatment to the [President] and his extensive affiliated enterprises”;
  3. the District and Maryland’s interests in protecting the economic well-being of their residents, who, as competitors of the President, are injured by “decreased business, wages, and tips resulting from economic and commercial activity diverted” to the President’s businesses;
  4. Maryland’s interest in avoiding a “reduction in tax revenue that flows from [the alleged] violations”; and
  5. the District and Maryland’s interests as proprietors of businesses that compete with the President’s businesses.

For relief, the District and Maryland seek (1) a declaratory judgment that the President has violated the Emoluments Clauses and (2) injunctive relief prohibiting future violations. Id.

The District Court Rulings:

President Trump moved to dismiss the complaint on multiple grounds. The District Court pared the claims to those contesting Trump’s business interests within the District of Columbia, focusing the case on the Trump International Hotel near the White House and dismissing claims related to other Trump businesses outside of Washington D.C., such as the Mar-a-Lago club in Florida. The court held that the plaintiffs had standing to challenge the President’s involvement with the Trump International Hotel and its appurtenances. It never ruled on Trump’s defense, brought in his individual capacity, that he enjoyed absolute immunity from suit. See id. at 363-64.

With discovery set to begin, President Trump asked the District Court to certify an immediate appeal to the Fourth Circuit under 28 U.S.C. § 1292(b). The District Court denied the request. The President then sought mandamus relief directly from the Fourth Circuit, while also seeking a stay of proceedings and appealing the question of absolute immunity on the grounds that opening discovery had denied him immunity from suit. Id. at 364.

The Panel Decision:

After granting an initial stay of proceedings in December 2018, the three-judge panel, in March 2019, unanimously granted the President’s requests for mandamus relief and then reversed the District Court’s orders, holding that both plaintiffs “lack standing under Article III.” It then remanded the case with instructions to dismiss the complaint with prejudice. Id.

The decision is noteworthy in several respects. First, as even the panel recognized, the President’s request for appellate court intervention was “an extraordinary one, as petitions for writs of mandamus are rarely given, and the district court’s refusal to certify was an exercise of broad discretion.” Id. at 368. Indeed, “the Court of Appeals may exercise its power to issue the writ only upon a finding of exceptional circumstances amounting to a judicial usurpation of power, or a clear abuse of discretion.” Id. at 368-69. The panel added that “disturbing an exercise of the broad discretion conferred on district courts to determine whether to certify orders for interlocutory appeal should be rare and occur only when a clear abuse of discretion is demonstrated.” Id. at 372.

But, the panel explained, the “suit is also an extraordinary one.” Id. at 368. Describing the case as one of “national significance” and “of special consequence,” the panel emphasized that enjoining a sitting President as part of a lawsuit brought directly under the Emoluments Clauses would be unprecedented in the nation’s long history. No precedent would guide the district court as it navigated the “novel and difficult constitutional questions” presented by the case. The panel questioned the district court’s decision to proceed without appellate-court guidance, given what it considered questionable harm to the plaintiffs and difficulty in fashioning any relief that would redress the harm without an undue intrusion into the executive branch. Id.

Section 1292(b) mandates certification of an order for interlocutory appeal when the challenged order “involves a controlling question of law as to which there is substantial ground for difference of opinion” and the court finds “that an immediate appeal from the order may materially advance the ultimate termination of the litigation.” 28 U.S.C. § 1292(b).

The Fourth Circuit panel seemed incredulous that the district court did not find that a case to enjoin a sitting president under the Emoluments Clauses satisfied Section 1292(b). It faulted the district court for failing to recognize that:

  • no previous court had enforced the Emoluments Clauses;
  • no decision had defined what “emoluments” are;
  • no prior decision had determined that a party can sue directly under the Emoluments Clauses when the constitutional provisions provide no rights and specify no remedies; and
  • no case had held that a State has standing to sue the President for alleged injury to its proprietary or sovereign interests from a violation of the Emoluments

It reasoned that one “can hardly question that these are ‘new legal question[s]’ of ‘special consequence.’” See 928 F.3d at 369. The panel also found the criterion of substantial ground for difference of opinion undeniably satisfied because (among other reasons) the Southern District of New York had rejected, on standing grounds, a similar emoluments lawsuit against President Trump by the group Citizens for Responsibility & Ethics in Washington. Id. at 370-71 (citing Citizens for Responsibility & Ethics in Washington v. Trump, 276 F. Supp. 3d 174 (S.D.N.Y. 2017)).

Finding that Section 1292(b) required its guidance, the panel moved directly to the plaintiffs’ Article III standing. It framed its inquiry as “whether the District and Maryland have demonstrated that President Trump’s allegedly illegal conduct—i.e., his receipt of funds from foreign and state governments patronizing the Hotel—has caused harm to their proprietary interests and that enjoining that conduct would redress such harm.” The panel held that plaintiffs’ showing was insufficient. Id. at 375.

First, the panel rejected the plaintiffs’ premise that “government customers are patronizing the Hotel because the Hotel distributes profits or dividends to the President, rather than due to any of the Hotel’s other characteristics.” Id. Instead, it found that “the link between government officials’ patronage of the Hotel and the Hotel’s payment of profits or dividends to the President himself is simply too attenuated.” Id. at 376. Explaining that it had “never accepted such a boundless theory of standing,” the panel rejected the “theory that so long as a plaintiff competes in the same market as a defendant and the defendant enjoys an unlawful advantage, the requirements for Article III standing are met.” Id. at 377.

The panel also criticized the plaintiffs’ inability to propose the specific terms of an injunction that would redress the alleged harm. It pointedly complained that when “plaintiffs before a court are unable to specify the relief they seek, one must wonder why they came to the court for relief in the first place.” Id. at 377-78.

The panel further rejected the argument that plaintiffs enjoy standing through their quasi-sovereign interests in being free from having to compete for the President’s favoritism through patronage of his businesses. It emphasized that, to seek injunctive and declaratory relief, “a plaintiff must show that he is under threat of suffering ‘injury in fact’ that is concrete and particularized” and that “the threat [is] actual and imminent, not conjectural or hypothetical.” Id. at 378. The panel found nothing in the plaintiffs’ quasi-sovereign interests that came close to this.

The panel concluded its opinion with sharp criticism of the plaintiffs’ entire lawsuit, suggesting it was a waste of time and resources:

The District and Maryland’s interest in enforcing the Emoluments Clauses is so attenuated and abstract that their prosecution of this case readily provokes the question of whether this action against the President is an appropriate use of the courts, which were created to resolve real cases and controversies between the parties.

Id. at 379. Of course, such criticism did not prevent the plaintiffs from petitioning for en banc review, which the full Fourth Circuit granted.

What Comes Next:

Last year, right before Thanksgiving, Chief Justice Roberts issued a statement addressing the perceived partisanship of federal judges: “We do not have Obama judges or Trump judges, Bush judges or Clinton judges,” Roberts wrote. “What we have is an extraordinary group of dedicated judges doing their level best to do equal right to those appearing before them.” He added that the “independent judiciary is something we should all be thankful for.”

But what already seems inevitable is that the public will view much of these proceedings as political and partisan. The suit was filed by a Democratic-leaning state and district, and the District Court judge who denied the motion to dismiss and opened discovery was appointed by President Clinton. The three-judge panel that unanimously ordered dismissal was comprised entirely of Republican appointees. And a narrow majority of the active judges on the en banc Fourth Circuit are Democrat appointees. If the results of the en banc hearing track the political position of the party of each respective judge’s nominating President, the public will see the case as not merely having political implications but as being decided by political judges. And, if the Supreme Court takes the case after the Fourth Circuit has spoken en banc, the perception of partisan influence will likely grow even stronger.

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