(Bloomberg) -- A federal appeals court threw out a lawsuit accusing President Donald Trump of illegally profiting from his Washington hotel, finding the attorneys general of Maryland and Washington hadn’t shown their constituents were harmed by Trump’s actions.
The ruling by a Richmond, Virginia-based appeals court hands a victory to the president, who can now avoid having the two Democratic attorneys general delving into his finances to determine if he violated the U.S. Constitution’s emoluments clauses.
“Unanimous decision in my favor from The United States Court of Appeals For The Fourth Circuit on the ridiculous Emoluments Case,” Trump tweeted. “I don’t make money, but lose a fortune for the honor of serving and doing a great job as your President (including accepting Zero salary!).”
The decision by the three judges, all appointed by Republican presidents, leaves one surviving challenge to the president’s receipt of financial benefits from his businesses. In that case in Washington, more than 200 congressional Democrats, led by Connecticut Senator Richard Blumenthal, are seeking an order compelling Trump to come to them for permission before accepting any benefits from foreign governments, as they say the Constitution requires. An appeals court in New York is also weighing whether to reinstate an emoluments case dismissed there.
Still, the decision doesn’t mean Trump’s finances are entirely off limits to lawmakers. In addition to the remaining suit, judges in Washington and New York have rejected the president’s attempts to quash congressional subpoenas for financial information from his accounting firm and two banks. Both rulings are being appealed. Congress has also sued to enforce a demand for Trump’s tax returns.
In their 2017 suit, D.C. Attorney General Karl Racine and Maryland Attorney General Brian Frosh accused Trump of improperly benefiting from the business of at least one state and from foreign governments, in violation of the U.S. Constitution’s two emoluments clauses. His businesses reported a profit of $191,538 from foreign governments in 2018, a 26% increase over the prior year. The Trump Organization has said it donated that amount to the Treasury.
Trump handed day-to-day control of his business empire to his two sons and a chief financial officer before taking office but refused to divest any of his holdings, including the Trump International Hotel just blocks from the White House. He even hired a director of diplomatic sales.
U.S. District Judge Peter Messitte in Maryland twice refused to dismiss the suit by Frosh and Racine. But now the Fourth U.S. Circuit Court of Appeals has tossed it out, saying it "amounts to little more than a general interest in having the law followed."
“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,” the appeals court said.
Racine and Frosh said the appeals court “got it wrong.”
“Although the court described a litany of ways in which this case is unique, it failed to acknowledge the most extraordinary circumstance of all: President Trump is brazenly profiting from the Office of the President in ways that no other president in history ever imagined,” they said in a statement. “We will continue to pursue our legal options to hold him accountable.”
The AGs had started to collect evidence, serving subpoenas on Trump’s businesses and the Donald J. Trump revocable trust. The appeals court put all that on hold while it considered the appeal.
Maryland and D.C. claimed taxpayers they represent were being harmed because the Trump International Hotel has become a magnet for foreign dignitaries, state government officials and lobbyists, drawing business away from Maryland and D.C. competitors. They sought a court order compelling Trump to abide by constitutional restrictions.
The case generated two opinions -- one involving Trump as president and one involving him as a private citizen. The panel included U.S. Circuit Court Judges Dennis Shedd, who was appointed to the court in 2001; Paul Niemeyer, named in 1990; and Trump appointee A. Marvin Quattlebaum. Niemeyer wrote both opinions.
Messitte, the lower court judge, was appointed by a Democrat.
“The court correctly determined that the plaintiffs improperly asked the courts to exceed their constitutional role by reviewing the president’s compliance with the emoluments clauses,” a Justice Department spokeswoman said in a statement.
The cases are In Re Donald J Trump, 18-2486, U.S. Court of Appeals, Fourth Circuit (Richmond) and District of Columbia v. Trump, 18-2488, U.S. Court of Appeals, Fourth Circuit (Richmond).
(Updates with attorneys general statement.)
--With assistance from Erik Larson.
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