Federal appeals court reinstates lawsuit over Trump’s hotel profits

RICHMOND, Va. — A lawsuit accusing President Donald Trump of illegally profiting off the presidency through his luxury Washington hotel was revived Thursday by a divided federal appeals court.

The lawsuit brought by the state of Maryland and the District of Columbia alleges that Trump has violated the emoluments clause of the Constitution by accepting profits through foreign and domestic officials who stay at the Trump International Hotel.

The ruling from the 4th U.S. Circuit Court of Appeals in Richmond could jumpstart efforts by the two jurisdictions to obtain financial records showing how much state and foreign governments have paid the Trump Organization to stay at the hotel and hold events there. A lower court judge approved more than three dozen subpoenas issued to the General Services Administration — the administrator of the lease on the hotel — and other government agencies, but the subpoenas were put on hold while Trump's appeal was pending.

Maryland Attorney General Brian Frosh and District Attorney General Karl Racine — both Democrats — said they expect the case to return to U.S. District Court in Maryland, where a judge could lift the stay on the subpoenas. But both Frosh and Racine said they think it's likely the Trump administration will ask the U.S. Supreme Court to hear the case. A spokeswoman for the Department of Justice said the DOJ is reviewing the ruling, but did not comment on whether it will seek review by the high court.

The lawsuit was filed almost three years ago. U.S. District Judge Peter Messitte refused to dismiss it, but his ruling was overturned in July by a three-judge panel of the 4th Circuit. The judges found that Maryland and the District of Columbia lacked standing to pursue their claims against the president.

But on Thursday, the panel's ruling was overturned by the full court of 15 judges. In a 9-6 ruling, the court found that the three-judge panel overstepped its authority when it ordered Messitte to dismiss the lawsuit.

“We recognize that the President is no ordinary petitioner, and we accord him great deference as the head of the Executive branch. But Congress and the Supreme Court have severely limited our ability to grant the extraordinary relief the President seeks,” Judge Diana Gribbon Motz wrote for the majority in rejecting Trump's request to dismiss the lawsuit.

The six judges who disagreed wrote a scathing dissenting opinion, saying the lawsuit should be thrown out.

"The majority is using a wholly novel and nakedly political cause of action to pave the path for a litigative assault upon this and future Presidents and for an ascendant judicial supervisory role over Presidential action," Judge J. Harvie Wilkinson III wrote.

The hotel, just blocks from the White House, quickly became a hot spot for lobbyists and foreign officials after it reopened in 2016 shortly before Trump was elected president.

Trump’s lawyers had argued that Frosh and Racine lack authority to sue the president in his official capacity. They also insisted that the emoluments clause only bars compensation made in connection with services provided in his official capacity or in “an employment-type relationship” with a foreign or domestic government.

Frosh and Racine argued that hotels in their jurisdictions suffer “competitive injury” because officials hoping to curry favor with the president are more likely to stay at his hotel.

“This confirms our fundamental assertion in this case — that the emoluments clause is our nation's original anti-corruption law and President Trump is not above the law," Frosh said of Thursday's ruling.

“It is a huge victory for the rule of law,” Racine said.

In October, Trump’s company said it is exploring the sale of the hotel after nearly three years of complaints alleging he is profiting off the presidency. The Trump Organization said it will consider offers to buy out the 60-year lease on the hotel.

The lawsuit brought by Maryland and the District of Columbia was one of several that accuse Trump of illegally profiting off the presidency through his business interests.

In February, a federal appeals court in Washington dismissed a lawsuit filed by Democratic members of Congress who accused the president of violating the emoluments clause by accepting benefits to his businesses from foreign governments without congressional approval.

The court did not rule on whether Trump violated the law. It just found that the 29 senators and 186 members of the House of Representatives involved in the lawsuit “do not constitute a majority of either body" of Congress and therefore didn’t have the power to bring the lawsuit.