Pension emoluments: The California and NY pensions are definitely state entities

Yesterday, Reuters reported that seven pensions are paying millions in management fees to a real estate investment firm CIM, which then immediately pays millions in management fees to Trump. I blogged about it yesterday. We are finding more and more evidence that the word “emolument” was used regularly by lawyers to describe private payments and benefits, not just salaries or office-related payments.

There are two legal questions about whether these are emoluments from the state to Trump:

1. Are the public employee pensions extension of the state?

For the two biggest pensions, the answer is clearly yes as a matter of law.  CalPERS is the creation of California law, as codified in the California Public Employees’ Retirement Law, Section 20002, which states: “The Public Employees’ Retirement System created by Chapter 700 of the Statutes of 1931, as amended, is continued in existence under this part. This system is a unit of the Government Operations Agency” (emphasis added).

The New York State Common Retirement Fund, supervised by the State Comptroller, is treated explicitly by the federal courts as a state entity covered by state sovereign immunity. See McGinty v. New York, 251 F.3d 84, 100 (2d Cir. 2001). For more on the structure of NYS CRF:
http://www.osc.state.ny.us/reports/pension/NYSCRF_Fiduciary_and_Conflict_of_Interest_Review_2016.pdf

2. Do the pensions have enough control or accountability over CIM, the real estate firm,  to make CIM’s payments to Trump a legal extension of the state pensions?  My sense is that an emolument does not depend upon the intent or control of the state entity, but merely that state payments are going to the person in the office of the president, in either a personal or official capacity.  But given that the state pensions constitute a majority of CIM’s capital investment, and given how this issue is analogous to corporate law’s 5% or 10% threshold for legal control, I think one can argue confidently that the state pensions are paying Trump and have the power to stop. But this issue needs to be fleshed out by the experts, and I certainly am not an expert in this field.

Author: Jed Shugerman

Jed Handelsman Shugerman is a Professor and Joseph Lipsitt Scholar at Boston University School of Law. He was at Fordham Law School 2013-2022. He received his B.A., J.D., and Ph.D. (History) from Yale. His book, The People’s Courts (Harvard 2012), traces the rise of judicial elections, judicial review, and the influence of money and parties in American courts. It is based on his dissertation that won the 2009 ASLH’s Cromwell Prize. He is co-author of amicus briefs on the history of presidential power, the Emoluments Clauses, the Appointments Clause, the First Amendment rights of elected judges, and the due process problems of elected judges in death penalty cases. He is currently working on two books on the history of executive power and prosecution in America. The first is tentatively titled “A Faithful President: The Founders v. the Unitary Executive,” questioning the textual and historical evidence for the theory of unchecked and unbalanced presidential power. This book draws on his articles “Vesting” (Stanford Law Review forthcoming 2022), “Removal of Context” (Yale Journal of Law & the Humanities 2022), a co-authored “Faithful Execution and Article II” (Harvard Law Review 2019 with Andrew Kent and Ethan Leib), “The Indecisions of 1789” (forthcoming Penn. Law Review), and “The Creation of the Department of Justice,” (Stanford Law Review 2014). The second book project is “The Rise of the Prosecutor Politicians: Race, War, and Mass Incarceration,” focusing on California Governor Earl Warren, his presidential running mate Thomas Dewey, the Kennedys, World War II and the Cold War, the war on crime, the growth of prosecutorial power, and its emergence as a stepping stone to electoral power for ambitious politicians in the mid-twentieth century. View all posts by Jed Shugerman