States And The Emoluments Clause

June 13, 2017
Guest Post

*This piece originally appeared on Take Care.

by Leah Litman, Assistant Professor of Law, University of California, Irvine School of Law

On Monday, the State of Maryland and the District of Columbia filed a lawsuit against Donald Trump. The suit alleges that the president is in violation of the Emoluments Clauses. (The “Emoluments Clauses” include the Foreign Emoluments Clause, which prevents office holders from accepting emoluments from foreign states or foreign officials without Congress’s consent, and the Domestic Emoluments Clause, which prohibits the president from receiving any emolument other than his salary for being president.)

Maryland and D.C.’s suit is an intriguing development for many reasons. I will just focus on one here: Maryland and D.C.’s case introduces a new theory of standing into the emoluments litigation and given DOJ’s less than rousing defense of the legality of the president’s financial arrangements in another emoluments lawsuit, Maryland and D.C.’s suit should concern the president and his lawyers. 

The New Theory of Standing. The emoluments suits filed to date have been brought by private parties—private organizations and private individuals arguing that they have been harmed, in their private capacities, by the president’s violations of the Emoluments Clauses. The private businesses (and individuals) argue that they are losing out on business to the president’s hotels and restaurants because of foreign and state officials’ desire to curry favor with the president by giving money to his hotels and restaurants, in which he continues to hold a financial stake. I have written some about this theory of standing before on this site.

Maryland and D.C.’s lawsuit, however, introduces a new theory of standing. Maryland and D.C. are not private litigants. Maryland is a state, and D.C. is part of the federal government. Maryland and D.C. allege that they have suffered harm to their “sovereign” and “quasi-sovereign” interests—i.e., interests that are enjoyed by governments, rather than by private entities or individuals. They also allege that they have suffered “proprietary and other financial” harms. I will unpack both theories of standing in a bit. 

The new plaintiffs are intriguing because in Massachusetts v. E.P.A., the Supreme Court held that it is easier for states to establish standing than it is for private litigants to do so. Thus, Maryland at least can get into federal court more easily than a private litigant can; it is easier for Maryland to have a federal court address Maryland’s emoluments lawsuit on the merits than it would be for a private litigant to have a federal court the private litigant’s lawsuit on the merits.

One can quibble with whether it is a good idea for states to have easier access to federal court than private litigants. (In the interest of full disclosure, I have argued that they should not, at least with respect to congressionally created rights of action.)  But the Supreme Court has said that they do. In Massachusetts’s words, “States are not normal litigants for the purposes of invoking federal jurisdiction.” Massachusetts reasoned that States have easier access to federal court because “when a State enters the Union,” (i.e., becomes a part of the United States), “it surrenders certain sovereign prerogatives,” which “are now lodged in the Federal Government.” 

By surrendering those interests to the federal government, Massachusetts explained, the States acquired a particular interest in ensuring the federal government would act as a steward for those interests. Thus, the state (Massachusetts is a commonwealth, but the point holds) could sue to vindicate its “sovereign” interests in federal court. In Massachusetts, that meant Massachusetts could sue the federal government for failing to regulate greenhouse cases because the federal government’s failure to do so threatened Massachusetts’ territory. 

Is Maryland alleging a violation to its sovereign interests, such that it should be able to try and vindicate in federal court? Massachusetts was decided in 2007, and it is not entirely clear what the Court meant by “sovereign” or “quasi-sovereign” interests. (My colleague Seth Davis has written an article on states’ standing and states’ ability to enforce federal laws, which helps to clarify the point.) 

Despite that lack of clarity, there is reason to think that Maryland is alleging that kind of interest here. Massachusetts explained that “when a State enters the Union, it surrenders certain sovereign prerogatives.” As an example of a sovereign prerogative that States surrendered when they entered the Union, Massachusetts wrote “it cannot negotiate an emissions treaty with China or India.” Massachusetts used that as an example because the Constitution makes the federal government the primary authority with respect to foreign affairs.

Indeed, the Supreme Court has held that the Constitution precludes States from legislating in certain areas that affect foreign affairs. Under the dormant foreign commerce clause and dormant foreign affairs doctrines, states are prohibited from burdening the federal government’s authority in those areas. Zschernig v. Miller is the classic example of a dormant foreign affairs case; in that case the Court explained that an Oregon law was an impermissible “intrusion by the State into the field of foreign affairs which the Constitution entrusts to the president and Congress.” Since then, the Court has continued to rely on the idea that the federal government has relatively more authority over foreign affairs than do the States, in cases such as Crosby v. National Foreign Trade Council and American Insurance Association v. Garamendi. These cases explain the federal government’s authority over foreign affairs by reasoning from the Constitution’s structure and specifically the idea that the federal government is better equipped to deal with foreign affairs because it can speak with one voice.

So the conduct of foreign affairs is one of the key “sovereign prerogatives” that States surrendered to the federal government when they entered the Union. States entrusted that power to the federal government. Here is where the Emoluments Clause violations come in: The president’s violation of the Foreign Emoluments Clause raises serious questions about whether the federal government is acting as a responsible steward for the federal government’s power over foreign affairs. The president’s violation of the Emoluments Clauses is violating the terms under which Maryland surrendered some of its power over foreign affairs to the federal government. And that is part of how Maryland claims it is being injured—by the president’s failure to manage foreign affairs in conformity with the Constitution, which Maryland entrusted to the federal government under the Constitution. (I have focused on Maryland thus far because Maryland is a state and D.C. is not. But D.C. also depends on the federal government in the ways Maryland does.)

Maryland and D.C. also allege harms to their proprietary interests. The allegations they raise here are troubling, to say the least. Maryland and D.C. allege that the president has represented (here we go, with his big mouth again) that the president’s businesses have succeeded in part because he has used his financial and political clout to extract favorable land deals and tax breaks from the governments that regulate his businesses. Maryland and D.C. thus allege they have potentially lost revenue, and have also experienced compromised enforcement of their own environmental, zoning and land use laws. Maryland and D.C. also allege that they are forced to compete for favor with the president by patronizing or favoring his businesses. And they argue that their residents lose out on potential revenue for several reasons--because of the pressures to favor the president and the president’s businesses. Maryland and D.C. also rely on the "competitor standing" theory I wrote about before, because Maryland and D.C. own businesses (including hotels) that compete with Trump's businesses.

Those are the sovereign, quasi-sovereign, and proprietary interests that Maryland and D.C. are alleging. And Massachusetts indicated that states would be allowed to try and vindicate those interests in federal court under a more relaxed set of requirements for standing.

It is important to emphasize how Massachusetts appeared to give some additional solicitude to Massachusetts with respect to the requirements of standing. Standing generally requires a litigant to establish an injury that is caused by the defendant’s conduct and would be redressed by a favorable judicial decision. In Massachusetts, the defendant’s conduct that Massachusetts complained of was the federal government’s failure to regulate greenhouse gases; Massachusetts’ injury was its loss of land.  

It is easy enough to see why Massachusetts’ injury might not have been caused by the federal government’s conduct, or redressable by a judicial decision: Even if the federal government regulated greenhouse gasses, it is not clear that that would reverse any of the damage to Massachusetts’ coastal territories, or prevent any future damage to its coastal territories. But the Court still held that Massachusetts had standing. Maryland and D.C. could get into federal court under similar reasoning.

Is that to say Maryland and D.C.’s standing is a sure thing? Given the state of standing doctrine, there are few sure things. And in Massachusetts, Congress had allowed entities to sue to challenge the federal government’s administration of the pertinent environmental statutes. Massachusetts relied both on the existence of that statute and Massachusetts’ status as a state to conclude there was standing. Maryland and D.C. do not have a similar statute they can point to in this case.

A Quick Note On The Merits. I have not had a chance to post a full post on the substance of DOJ’s motion to dismiss in CREW’s emoluments lawsuit. The brief struck some (including me) as not particularly persuasive on the merits—that is, in its defense that the president’s financial arrangements do not violate the Emoluments Clauses. That’s part of what makes the Maryland and D.C. case so interesting—DOJ’s somewhat confused position on the merits really opens the door for plaintiffs that are able to clear threshold requirements like standing. And Maryland and D.C. have certainly made some compelling allegations on that score.