Will Any of the Lawsuits Against Trump's Businesses Succeed?

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Merely because of her proximity to the White House, Ivanka Trump is engaged in unfair business practices.

This, at least, is the accusation Modern Appealing Clothing is lodging against the elder first daughter in a recently filed lawsuit. The San Francisco-based clothing retailer alleges that Ivanka’s company has an unfair advantage over its competition due to the apparent use of her father’s position to engage in “piggy-backing promotion” off of the presidency, such as by using official appearances to display her fashion lines—or, most memorably, receiving a free plug from Kellyanne Conway on national television. These de facto promotions, MAC argues, will unfairly drive competition toward Ivanka’s brand and away from competitors, such as MAC itself. This, MAC continues, gives the company “standing”—that is, a claim to a concrete financial injury, and, therefore, the right to sue.

Modern Appealing Clothing’s lawsuit against Ivanka Trump is the fourth legal challenge so far contesting the relationship between the first family and its business empire. The other three focus on the president, and seek to drive a wedge between the Trump administration and the Trump Organization—whether by forcing Donald Trump to divest or by driving him out of office altogether. But the need to establish standing could significantly limit these plaintiffs in terms of what they’re able to accomplish, raising an important question: If a lawsuit against the president is unlikely to succeed, what, exactly, are the plaintiffs achieving?

After all, suing the president is exceedingly difficult. As Trump himself has remarked on multiple occasions, the president is immune from the laws regarding conflicts of interest for other members of the executive branch. This has led many of his critics to turn their attention to the Emoluments Clause, a previously obscure section of the Constitution that makes it illegal for federal officials to receive emoluments, or gifts, from agents of foreign governments.
But even making that argument might prove difficult: “To establish standing, you have to establish an injury in fact that’s concrete and particular to you,” says Andrew Hessick, a law professor at the University of North Carolina; “Annoyance at the government not obeying the law is not enough of an injury.”

The first, and arguably highest-profile, legal action against Trump came from the ethics watchdog group Citizens for Responsibility and Ethics in Washington, or CREW, just two days after the president took office. Headed by an all-star team of legal experts, including the ethics advisers for the previous two presidential administrations and numerous constitutional-law scholars, CREW’s lawsuit focuses on the Emoluments Clause. By operating so many properties in so many different countries, CREW argues, the Trump Organization is constantly receiving emoluments of all different kinds, especially at the president’s hotel in Washington, D.C., where numerous foreign governments have already booked rooms and events, and on The New Celebrity Apprentice, of which the president remains an executive producer and which is syndicated on government-owned channels in multiple countries, offering easy avenues via which other nations can effectively pay Trump in an attempt to curry favor with him.

The most obvious obstacle CREW’s lawsuit faces is the dearth of jurisprudence surrounding the Emoluments Clause, which has never been tested in court, let alone against the president. But CREW’s legal team may not get a chance to argue the case anyway, as the lawsuit rests on an unusual claim to establish standing: CREW argues that, as a group solely dedicated to investigating ethics violations, the continual pursuit of Trump’s conflicts of interest will be such a “drain on the organization’s resources” as to render it similarly incapable of discharging its other duties.

CREW’s tactic derives from a technique used by the civil-rights group Housing Opportunities Made Equal in the 1982 Supreme Court case Havens Realty Corp. v. Coleman. In the leadup to the case, HOME had paid two “testers,” one black and one white, to inquire about the availability of housing at an apartment complex; the black tester was turned away, while the white one was shown vacant units. HOME argued that it had standing to sue because the expenses they incurred to “test” for housing discrimination so taxed their resources as to impede their ability to pursue their cause elsewhere. The group eventually won its case, not only establishing that landlords could not intentionally misinform clients due to their race but also validating the organization’s claim to standing.

But several legal experts have questioned whether CREW’s invocation of Havensto establish standing will hold up in court, pointing out that CREW’s injury may not be sufficiently “particularized” and that the precedent from Havens doesn’t really apply. Hessick notes that, while the housing discrimination HOME faced materially prevented the organization from doing its job—“They were an organization that helped people get housing, and the discrimination made it so that HOME was having a much harder time getting people into housing”—CREW cannot claim the same. “They’re just a general watchdog organization; they’re not out there trying to repair the wrongs of Emoluments Clause violations,” Hessick argues. Derek Muller, a law professor at Pepperdine University, agrees, noting that, in Havens, the defendants had broken a specific fair-housing law, and one plaintiff was given false information, which the court ruled gave him standing. “The injury in that case much stronger than CREW’s,” says Muller, who called CREW’s case “borderline frivolous in terms of establishing the sort of injury that courts talk about.” Mark Joseph Stern, who covers legal issues for Slate, describes the case as “an audacious gamble”: CREW is using a legally dubious claim to standing in an attempt to force impeachment of the president over an essentially untested part of the Constitution.

Though CREW may not be able to establish standing, other groups are taking to court to challenge Trump, albeit on more limited grounds. Cork Wine Bar, a restaurant about a mile and a half north of the White House, has filed a lawsuit against the president taking aim at the Trump International Hotel in Washington, D.C., although for a different reason: The hotel engaged in unfair competition, Cork alleges, by using its connection to the president to promote the property’s restaurants and catering services. Cork, the restaurant and bar claims, is losing business because of the Trump International’s association with the president. “We have events we do here for elected officials, nonprofits, foreign dignitaries, the World Bank, law firms,” Diane Gross, who co-owns Cork with her husband Khalid Pitts, told The Washington Post, adding that “Those folks are now being courted to come and want to go [to the Trump International] because they see it as advantageous to them to curry favor with the president.” As evidence, Cork cites that it has seen “significantly less income” after this year’s inauguration than it has in previous years.

Unsurprisingly, a lawyer for the Trump Organization quickly contested Cork’s lawsuit, calling it “a wild publicity stunt completely lacking in legal merit.” Khalid Pitts and Diane Gross, the owners of the wine bar, maintain that they “didn’t enter into doing this lightly” and are doing so solely for the good of their business—although it’s hard to argue that the suit has brought the establishment into the spotlight, and the Associated Press notes that both Pitts, who ran for a seat on the D.C. City Council in 2014, and Gross, who once worked in the office of Democratic Senator Barbara Mikulski, have histories in politics.

Hessick and Muller both agreed that Cork’s case is far more likely to see its day in court than CREW’s. “When you first file your complaint, it’s enough to just allege that, ‘I’ve lost business because of Trump,’” says Hessick. And it shouldn’t be hard to demonstrate that Trump is associated with the hotel—his name adorns the building’s facade in gold letters—or that its business is benefiting from his presidency, something members of the Trump family have all but explicitly acknowledged.  

One aspect of Cork’s initial complaint unlikely to result in a favorable outcome is the restaurant’s claim that the Trump International is violating its lease with the General Services Administration, which owns the building the hotel inhabits. The GSA’s contract includes a clause stating that “no ... elected official of the Government of the United States ... shall be admitted to any share or part of this Lease, or to any benefit that may arise therefrom.” Though numerous legal experts, including those involved with CREW, attempted to make similar cases, the GSA has already stated that the arrangement under which the president transferred his businesses to his two adult sons and a Trump Organization executive was sufficient to resolve the conflicts of interest.

Even if they do successfully establish standing, Pitts and Gross’s case still faces an uphill battle in court. First, says Hessick, “they’re going to have to produce some sort of evidence that it’s because of the Trump Organization that they’re losing business,” such as a marked decline since the Trump International opened or direct statements from customers who chose to go there instead of Cork because of the association with the president. And though numerous foreign embassies have scheduled events at the Trump International, so far, none has directly cited Trump’s presidency as their reason for doing so.

Still, Muller believes that this may not be enough to actually win the case: “Usually, unfair competition claims are tethered in some illegal practice, like a tort—defaming the business of a competitor or infringing on their intellectual property.” While Trump having his name on the building “might be unfair in a popular sense, it’s almost surely not unfair in a legal sense,” says Muller. “You could almost drop this complaint in five years ago and say, ‘It’s really unfair that Donald Trump ran The Apprentice on NBC because he gets all this attention and publicity.’”

Though Cork does not mention the Emoluments Clause in its complaint, Hessick and Muller both suggested that a business in its situation could potentially have standing to do so. “If you had something akin to Cork’s lawsuit where you have a business that claims that it’s losing business because foreigners are going to the president’s businesses instead in order to give him money in hopes of developing good will, that’s a direct harm that could result in standing for an Emoluments Clause violation,” Hessick says.

The third effort to forcibly separate the president from his business interests aims not at federal courts but at state officials. According to a theory first advanced by Jed Shugerman, a professor at Fordham University School of Law, state attorneys general can sue the president’s companies to enforce the Emoluments Clause. Shugerman’s argument rests on the idea that “corporations are a creature of state law, and state attorneys general have a special role in making sure that corporations adhere to federal and state law.” In other words, according to Shugerman, since the individual companies comprising the Trump Organization are chartered within specific states, the attorneys general of any of those states have not only the standing but the prerogative to investigate whether the president’s companies are complying with state and federal laws, including the Emoluments Clause.

The advocacy group Free Speech for People (FSFP) soon seized on a possible implementation of Shugerman’s argument, penning a 23-page public letter calling upon New York’s Attorney General Eric Schneiderman to open an investigation into the Trump Organization. Rather than belabor the legal details of Shugerman’s interpretation, the letter instead musters evidence that the president’s New York-based businesses have violated the law—not only the Emoluments Clause but also a state statute authorizing the state attorney general to shut down any corporation that “has exceeded the authority conferred upon it by law, or has violated any provision of law whereby it has forfeited its charter, or carried on, conducted or transacted its business in a persistently fraudulent or illegal manner, or by the abuse of its powers contrary to the public policy of the state has become liable to be dissolved.”

Also integral to, though implicit in, FSFP’s appeal is Schneiderman’s history with the president. On top of being one of several state attorneys general to oppose the president’s executive order banning immigration from several majority-Muslim countries, Schneiderman has in recent years launched an investigation into the president’s namesake foundation (after it was found to be operating without proper certification) and participated in the suit against Trump University (which the president settled in November for $25 million). The latter case is among those that FSFP cites as evidence of Trump-affiliated companies pushing against legal limits of behavior, although they don’t mention Schneiderman’s participation therein. Schneiderman, for his part, has signaled a willingness to go after Trump: According to The Wall Street Journal, Schneiderman has recently hired Howard Master, “one of the top public-corruption prosecutors under former Manhattan U.S. Attorney Preet Bharara,” to head investigations, and potentially litigation, involving the Trump administration.

If Schneiderman does put shutting down Trump’s businesses on his docket, he, too, will be wading into novel legal waters in terms of both standing and argumentation. Calling upon state attorneys general effectively sidesteps the question of standing, Hessick says: “Government standing is different from individual standing because, even though we claim that you still need to show an injury in fact, we don’t actually require it. We say it’s enough for there to be a violation of the generally enforceable laws. That’s why states have standing to enforce criminal laws, for example.” Schneiderman, then, may be able to draw upon the authority of his office to contest the charter of the Trump Organization should he find it to be operating illegally. Still, his case might find itself facing the same fundamental problem as CREW’s: Though ostensibly a part of American jurisprudence since the very beginning, there is no precedent for enforcing the Emoluments Clause in court, and, as Muller says, “it’s not like the attorney general unilaterally decides he’s in violation of the law and revokes the charter.”

Of course, there is one group that wouldn’t need to establish standing to bring a case against the president: Congress. The Constitution gives the House of Representatives the authority to draw up articles of impeachment against the president for “treason, bribery, or other high crimes and misdemeanors.” Though the first two categories of misconduct have established legal meaning, “high crimes and misdemeanors” is relatively less defined. As the University of Texas law professor Stephen Vladeck told Vice in November, the phrase “frankly encompasses whatever conduct two-thirds of the House and Senate agree that it encompasses,” although “historically, Congress has construed that term much more narrowly” as “a special and narrow category of offenses.” Critics of the president, such as CREW and the numerous other groups that have been calling for the president’s impeachment (some since before he even took office), have continually asserted that Trump’s alleged violation of the Emoluments Clause merits just such special consideration.

Congressional Republicans appear not to agree. Numerous Republican representatives, including Speaker of the House Paul Ryan and Jason Chaffetz, who chairs the House Oversight Committee, have signaled that they do not intend to investigate the president’s conflicts of interest. “It’s worth noting for the Emoluments Clause that it has an exception in there that says that Congress can consent to officers receiving emoluments,” says Muller; “there’s almost a sense in which, if Congress doesn’t impeach, then it’s almost an implicit consent.” From a purely political perspective, their inaction on the issue so far is unsurprising; Congress has never initiated impeachment proceedings against a president of the same party.

With Republican majorities in both houses of Congress, the difficulty of establishing standing is likely to shield President Trump from his first emoluments-related legal challenge, which would render it essentially symbolic. Other attempts to sue the president over his businesses may be more likely to get a full hearing, but even they very well may fail in court. If and when they do, there will likely be a scramble to control the narrative: Is the result, as Trump’s supporters will likely claim, evidence that the criticisms are much ado about nothing, spurred by the obsessively oppositional media and sore-loser Democrats? Or will the outrage the cases generate underscore the danger Trump’s conflicts of interest create and the hypocrisy of those who choose not to enforce the law? And, perhaps most importantly, the outcome may prove a referendum about the Emoluments Clause itself: If the first-ever attempts to enforce it can’t even reach the courtroom, the 200-year-old law may prove little more than another toothless norm to be shredded by an administration that has already rewritten so many rules of American governance.

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