A lot of people—New York’s attorney general, law professors, Washington restaurant owners—think President Donald Trump is breaking laws by holding onto his businesses. The trouble is, a month and a half into his presidency, they’re still searching for a successful courtroom strategy to force him to divest.
The president isn’t bound by the main federal law against conflicts of interest. But legal experts have argued since Trump won the election that he’s violating the constitutional ban on accepting payments from foreign government—known as the emoluments clause—and is putting federal agencies under his control in the impossible position of having to supervise his businesses.
The most glaring example is the Trump International Hotel on Pennsylvania Avenue near the White House, which is housed in a building that Trump’s company, now overseen by his older sons, leases from the General Services Administration.
But while the legal problems may be obvious, the responses are not. It’s an area of law that’s never before been tested — because there has never before been a billionaire president intent on maintaining his commercial ties while in office.
“It is so far beyond the bounds of anything that anyone has ever attempted that people are having trouble coming up with a clear legal strategy to address it,” New York Attorney General Eric Schneiderman said last week. He sued Trump in 2013 over fraud claims against his for-profit Trump University, reaching a proposed settlement last year.
The latest front in the legal onslaught opened on Thursday from Khalid Pitts and Diane Gross, the husband-and-wife owners of Washington’s Cork Wine Bar, who claim their popular and award-winning restaurant faces unfair competition from Trump’s nearby hotel. They’re asking a D.C. judge to order Trump to stop the unfair competition, which could be achieved by making Trump sell the hotel, shut it down, or resign the presidency.
“The president of the United States owning a hotel, owning restaurants and promoting the restaurants is unfair and detrimental to other businesses in the city,” Pitts said at a press conference. “We simply want to level the playing field so all DC restaurants can compete fairly and equally.”
Their claims of direct harm from Trump’s ongoing business ties distinguishes their suit from other efforts, in which the litigants have struggled to show how Trump’s actions hurt them and qualify them to sue. Most prominently, the watchdog group Citizens for Responsibility and Ethics in Washington accused Trump of violating the Emoluments Clause because foreign countries are already renting space in his buildings and lending money to his real estate ventures.
The group argues it is being harmed because of press inquiries diverting resources from its other watchdog activities. But it will he hard-pressed to convince a federal judge in New York that that makes CREW qualified to sue.
“What everyone says about the CREW case is, ‘Wow, it’s too bad they don’t have a hotel or a restaurant to serve as their plaintiff,” said Mark Zaid, one of the lawyers representing Pitts and Gross. (Zaid and his law partner sometimes work with POLITICO reporters on requests under the Freedom of Information Act.)
Pitts and Gross argue the president’s hotel has an unfair advantage as the preferred destination for lobbyists, foreign officials and others trying to influence the administration — a big source of revenue in the Washington dining scene. They also point to a provision in the Trump hotel’s lease that arguably prohibits elected officials from benefitting.
“We could not draft a better example for a law school examination of a conflict of interest,” said Steve Schooner, another GWU professor who’s helping with the lawsuit. “There is no easier way to funnel money directly to the president of the United States with no transparency whatsoever than by spending money in the president’s hotel or in his restaurants or in an event hosted in that facility.”
The lawyers, who also include business attorney Scott Rome, aren’t charging fees.
But Pitts and Gross’s case faces hurdles of its own. Their lawyers admit a court has never before made an order like the one they’re seeking under DC law. “But never has there been a case like this where the president of the United States has run a business in opposition to local businesses,” said Alan Morrison, a co-founder of watchdog group Public Citizen now at George Washington University who’s helping with the lawsuit.
The White House referred questions to the Trump Organization, where top attorney Alan Garten said, “It’s a publicity stunt completely lacking in legal merit.”
The Cork Wine Bar lawsuit came a day after three public interest groups urged U.S. Attorney Preet Bharara, who oversees New York's southern district, to launch an investigation into whether Trump is violating the Constitution by accepting payments and other benefits from foreign governments through his hotels and other business interests around the world.
A spokesman for Bharara declined to comment on the request, from watchdog groups Democracy 21, Citizens for Responsibility and Ethics in Washington and the Campaign Legal Center.
“We don’t believe that the letter or the lawsuits are legally sustainable,” Garten said.
The lawsuits against Trump’s businesses are still in their early stages, and the president’s attorneys will likely try to have them thrown out—a standard first step in such litigation. But the scattershot bids nevertheless present serious legal questions designed to put Trump and his company under the microscope when it comes to the arrangement that places Donald Trump Jr. and Eric Trump, along with a longtime company executive, in charge of the family business.
In another Trump-related case, refiled on Tuesday, New York attorney William Weinstein through a class-action lawsuit wants the court to establish an official system to make the Trump Organization follow through with its promise to donate all foreign government profits to the U.S. Treasury.
Both that case and the CREW claim are in preliminary phases before the same federal district court judge, Obama appointee Ronnie Abrams.
Justice Department lawyers have an April 21 deadline to file their first motion in the CREW lawsuit, which the president has already dismissed as “without merit, totally without merit.” The president’s attorneys have until May 18 to respond in the class action case, which Garten called “completely without merit.”
“As a threshold matter, he has no standing to bring the claims. And even if he did, the claims are legally erroneous,” he said.
Schneiderman, speaking last week to reporters on the sidelines of a National Association of Attorneys General conference in Washington, predicted more litigation to come challenging Trump’s business arrangement, adding that his staff was “doing our own research” on potential strategies.
His office is watching the CREW case closely. Liberal advocacy groups have asked Schneiderman to dissolve Trump’s business charter under New York law, effectively putting the president’s company out of business.
“A lot of different legal theories are being discussed,” he said. “There’s a lot of lawyers doing a lot of research on this right now.”