En Banc Second Circuit Won’t Rehear Trump Emoluments Case

President Donald Trump speaks at the White House before signing an executive order on Aug. 3, 2020. (AP Photo/Alex Brandon)

WASHINGTON (CN) — Nearly a year after reviving the case, the full Second Circuit refused Monday to rehear a lawsuit claiming President Donald Trump violated anti-corruption provisions in the U.S. Constitution.

The New York-based appeals court voted 8-4 against an en banc rehearing, keeping in place its September 2019 decision to reinstate the case brought by Citizens for Responsibility and Ethics in Washington, or CREW, days after Trump’s inauguration in January 2017.

The Constitution’s so-called emoluments clauses ban presidents from receiving gifts from foreign or state governments while in office without congressional consent.

Upon taking office, Trump relinquished managerial operations of the Trump Organization to his adult children Eric Trump and Donald Trump Jr. But the real estate mogul turned president still held onto a financial stake in his conglomerate and continues to build on his assets.

This dynamic prompted CREW and co-plaintiffs Restaurant Opportunities Centers United and New York hotelier Eric Goode to sue, asserting corruption by the new president and harm to their own businesses as they competed against Trump’s outsized influence.

Their 2017 complaint was initially tossed by a federal judge in New York after he ruled that the plaintiffs lacked standing and it would be impossible to prove the competition effects they alleged. That alone precluded any consideration of their claims of constitutional abuse by the president, the judge held.

But on appeal at the Second Circuit, a three-judge panel ruled 2-1 that the plaintiffs “need only plausibly allege that the president’s receipt of emoluments generates an unlawful competitive advantage for the Trump establishments.”  

The president pushed back and asked for a rehearing of the case by the full court, but the Second Circuit released a brief order Monday saying most of its judges had voted to deny the request. The decision marks another court loss for Trump as he plows headlong into the November election.

In a statement Monday, CREW spokesman Jordan Libowitz said the plaintiffs were pleased with the decision and look forward to seeing the case unfold.

The president’s lawyers could appeal to the Supreme Court, challenging the Second Circuit’s finding that the judiciary has the power to reduce incentives for government officials “currying favor” with Trump by visiting his restaurants and hotels. But the high court would likely not take up the case until after the election.

In a dissent, U.S. Circuit Judge Jose Cabranes called the decision a “missed opportunity to address en banc a question of exceptional importance regarding the limits of the judicial power under Article III of the Constitution in addressing a constitutional claim against a president.”

The “exceptional importance” of the case is “beyond dispute,” wrote Cabranes, a Bill Clinton appointee.

“It is worth underscoring that only the threshold question of plaintiffs’ constitutional standing at the pleading stage has been resolved by our Court. We are far from the finish line—the resolution of the merits of the plaintiffs’ claims lies before us,” the judge wrote. “On remand, the District Court will need to determine whether the operative complaint in this case states a claim upon which relief can be granted. In conducting this inquiry, the District Court likely will need to address various issues that have yet to be resolved by the Court of Appeals.”

In a separate dissent, U.S. Circuit Judge Steven Menashi, a Trump appointee, called the plaintiffs’ injuries only theoretical.

“No precept of logic or economics holds that foreign and state government officials will necessarily alter their dining preferences at high-end Manhattan restaurants out of a single-minded desires to give the president additional leverage in lease negotiations with restaurants he does not own,” he wrote.

While the New York case awaits a district court hearing or appeal to the Supreme Court, other emoluments cases against the president are still brewing.

The high court is currently weighing a petition filed by Democratic lawmakers in July after the D.C. Circuit found they did not have standing to sue the president. In May, the en banc Fourth Circuit in Richmond, Virginia, also allowed an emoluments lawsuit brought by Maryland and Washington, D.C., to move forward.

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