Out-Standing News: CREW adds new plaintiffs with solid standing

As I’ve posted before, a challenge to the Emoluments suit against Trump is “standing,” the requirement that a plaintiff show an actual injury to be able to get into court at all.  Tonight’s breaking news is excellent news for the suit’s first procedural steps. CREW has added two new plaintiffs: a non-profit, Restaurant Opportunities Centers United, which represents over 25,000 restaurant workers and over 200 restaurants; and Jill Phaneuf, who books events for two Washington hotels. Both have solid claims that they are injured by President Trump’s emoluments, using his office as an illegal market advantage over his competitors by drawing business from foreign entities and from federal and state spending.

In order for a plaintiff to sue in federal court, they must have a “case or controversy” as required by Article III of the federal Constitution, and thus they must have “standing” through an injury in fact. A plaintiff must have some “concrete and particular” injury, which is “actual or imminent,” not “conjectural or hypothetical.” Federal courts have often differentiated concrete and specific injuries from abstract and general claims of injury. The CREW lawsuit initially faced an uphill battle on standing, because as a non-profit, it had an indirect injury claim that stretched the interpretation of past precedents (see Havens). I argued that voters had standing to challenge emoluments as an injury to the democratic process, but CREW’s new plaintiffs have an even stronger argument: economic harm from unfair competition.

A 1970 Supreme Court case, ADPSO v. Camp (“Data Processing”), is often credited with establishing the “injury in fact” requirement for standing. ADPSO represented data processing companies, and it was challenging a ruling by a part of the executive branch (the Comptroller of the Currency) that banks may make data processing services available. The data processing companies were not directly affected by the ruling, but the banks would be able to compete with the data processing companies, and that competition was enough to establish an injury in fact. The Court did note that ADPSO presented more than just speculation about future competition, that it identified two customers being targeted for competition by banks. In the case of emoluments, it is probably sufficient for these two plaintiffs to show that their hotels directly compete with the Trump hotels for specific business. In antitrust cases, an injury through an unfair general competitive advantage is enough for standing. The same should be true here. They can certainly point to this infamous story of the Kuwaiti Embassy cancelling its huge event at the Four Seasons and suddenly rescheduling it at Trump’s new DC hotel. Two DC restaurants are making a similar claim of unfair competition.

ADPSO also established a “zone of interests” test: “The question [is] whether the interest sought to be protected by the [plaintiff] is arguably within the zone of interests to be protected or regulated by the statute or constitutional guarantee in question.” Later cases clarified that this test “is not meant to be especially demanding; in particular, there need be no indication of congressional purpose to benefit the would-be plaintiff.”  The question is more abstractly about the interests protected. Clarke v. Securities Industry Association, 479 U.S. 388 (1987); NCUA v. First National Bank & Trust Co., 522 U.S. 479 (1998). Here, there is no need to show evidence that the Constitution’s framers and ratifiers meant to benefit hotels, only that they were interested in guarding against corruption, which creates unfair competition and unfair markets.

Two other requirements for standing are causation (the plaintiff’s injury must be “fairly traceable” to defendant’s illegal behavior) and redressability (the court must be able to redress or remedy the injury). Both plaintiffs meet these requirements at this stage: they can argue that the office of the President draws business away (as emoluments) from these hotels, and they can argue that an injunction to stop taking such business would end the harm.

As a side note on standing and state attorneys general, the quo warranto strategy in state court does not have these standing problems, because the state statutes give the state attorneys general “statutory standing,” specifying that they have the power to challenge the Trump LLCs’ participation in emoluments. In some states, citizens are given statutory standing to raise such claims.  I have argued that they may have “voter” standing under Akins v. FEC, as well.

Update: Jonathan Adler asks, “What is the precedent for enjoining third party to cure injury?”  His point is that the suit is against defendant President Trump, but he assumes the injunction is only against the Trump Corporation. 1) The injunction could be directly against Trump to divest and/or sell the assets and put them into a blind trust. 2) The injunction could be against the Trump Corporations, because the corporate entities are the “alter ego” of Trump the actual human, and corporate law allows courts to “pierce the corporate veil” in these kinds of cases. Trump is the sole beneficiary of the “trust,” he can revoke the trust at will at any time to retake direct control, and he can take profits from the trust personally at any time.

There is no immunity, because the Emoluments Clause says “No person holding an office of trust…”, meaning that liability under the emoluments clause is personal, not official.