Trump International Hotel in Washington, D.C. (Photo: Diego M. Radzinschi/ALM)
Long before Election Day, most lawyers recognized that Donald Trump’s massive business holdings would generate enormous conflicts if he became president. Unfortunately, neither Trump nor the media devoted sufficient attention to the problem, and now the public must figure out what can be done.
The president’s businesses derive significant income from foreign governments, which raise troubling issues under the Constitution’s Emoluments Clause.
The lawsuit CREW v. Trump, pending in New York, demonstrates how the president’s foreign policy decisions may be skewed by his global business interests. However, the case’s uncertain standing and legal complexity may permit the court to duck the merits.
Closer to home, the historic Old Post Office Pavilion in Washington houses one of the most blatant conflicts of interest imaginable, the Trump International Hotel and restaurants.
Trump’s company leases the building from the U.S. General Services Administration, whose administrator Trump will appoint and can fire at will (which is doubly problematic given the president’s reality television persona).
The GSA assumed the lease foreclosed most conflicts because of its inclusion of Section 37.19, which forbids any president from deriving benefits from the lease. Prior to the inauguration, most expected the GSA to enforce the lease’s terms, but to date, the GSA has failed to do so. Any private effort to enforce a term in the GSA’s contract likely presents an insuperable standing obstacle.
Cork Wine Bar’s recent lawsuit against Trump and his LLC, K&D v. Trump Old Post Office filed by us and our co-counsel, avoids standing problems and offers a strong, intuitive legal claim on the merits.
The D.C. restaurant and hotel business is intensely competitive. Any new hotel, convenient to the White House and Congress, would attract business. But the Trump Hotel boasts a unique advantage: its owner is the president. Patrons flock there to curry favor with — or avoid the displeasure of — the hotel’s and restaurants’ beneficial owner, Trump.
As one diplomat told The Washington Post: “Why wouldn’t I stay at his hotel … [and] tell the new president, ‘I love your new hotel!’ Isn’t it rude to ,,, say, ‘I am staying at your competitor?’” This special and unfair advantage that Trump’s hotel lords over its competitors forms the basis for our lawsuit.
The allegations are simple. Cork is losing business to the Trump Hotel restaurants and its catering business because of the unfair advantage inherent in the owner being the president.
Under D.C. law, that is unfair competition, because the president’s ownership tilts the playing field in Trump’s favor.
Widespread, no-cost media coverage enhances the Trump hotel’s name-and-presidential-brand recognition and leaves little doubt that the hotel and restaurants offer something that isn’t for sale at competing establishments: access to, and goodwill with, the president.
Many have asked why we didn’t raise the emoluments issue. It’s all about simplicity. That’s not this case, involving this client, based on these specific facts, brought by this team of attorneys, at this time, in this court. This suit is quite discrete.
The case is novel because, previously, no elected official has so brazenly flouted such a diverse array of conflicts of interest. But our lawsuit does not rely merely on intuitive notions of unfair competition. Rather, there’s an objective standard, to which Trump agreed.
The hotel lease specifically precludes Trump from holding any beneficial interest from that arrangement. At first reading, that might appear to exclusively protect the United States. But a closer study reveals a broader reach.
The ban on benefits received is not limited to the president, but includes other elected officials — members of Congress, the mayor of Washington D.C., city council members, the attorney general, even nonvoting delegates to Congress — who exercise no control over GSA, but whose beneficial interest in the lease might unfairly draw customers away from Cork and other D.C. restaurants.
Our clients acknowledge that competition is the American way, and they welcome it — so long as it is fair. Competing against this president, especially in this town, is another thing altogether.
Cork’s owners don’t want Trump’s money, they just want to stop Trump’s unfair competition.
Cork doesn’t need to prove damages, nor must it show a measurable decrease in existing customers. We think Cork prevails if it can show that potential new business prefers the Trump hotel and restaurant because of its connection to the president. We are confident that, given the opportunity to do so, we can demonstrate that dining, drinking and event business has migrated to Trump’s hotel after the election, and that it wasn’t because the food, wine, service or prices improved starting Nov. 9.
We are asking the court to order the defendants to stop the unfair competition. They can do that by shuttering the Trump hotel until January 2021 or selling it outside the family. Of course, if those reasonable alternatives represent too great a sacrifice for Trump to serve as the leader of the free world, he can simply resign as president. That’s his choice.