Legal Experts: Lawsuit Over Trump’s DC Hotel Conflicts Is Uphill Climb

Republican presidential nominee Donald Trump looks on at the grand opening of the Trump International Hotel in Washington, DC on October 26, 2016.. Photo by Olivier Douliery/Abaca
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A lawsuit filed Wednesday by a Washington D.C. restaurant and bar alleging that the Trump International Hotel on Pennsylvania Avenue has an unfair advantage given its ties to the sitting president is likely to face an uphill battle in courts, legal experts told TPM.

It is the second case this year taking aim at President Donald Trump’s conflicts of interest. The first was a complaint filed by liberal watchdog group Citizens for Responsibility and Ethics accusing Trump of violating the Emoluments Clause, which bars the president from receiving payment from foreign governments.

In the complaint filed in D.C. Superior Court on Wednesday, lawyers for Cork Wine Bar argue that Trump’s link to the hotel amounts to unfair competition. They alleged that his hotel has pulled customers from Cork and other restaurants in the city who think that patronizing the hotel will curry favor with the President.

A court will likely allow the case to proceed based on the injury spelled out in the complaint, but beyond that, it’s unclear whether the D.C. restaurant has a chance to succeed in this unprecedented case, experts told TPM.

“It’s going to be an uphill climb,” Rebecca Tushnet, a law professor at Georgetown University, told TPM.

Tushnet said that it’s “possible” that a court will let the case proceed, but that it’s an open question as to whether a court would interpret this situation as unfair competition.

“This is something of a novel question because this is such an unusual and unprecedented situation,” she told TPM.

“The allegations in the complaint are decent. Whether they can ultimately prove that they have been specifically harmed is another question. But I would be tempted to say that they’ve alleged enough specific harm to themselves to go forward and see if they can prove it,” Tushnet later added.

Tushnet noted that the lawsuit alleges that before Trump’s election the ambassador of Azerbaijan had patronized Cork, but that after Trump’s victory, the ambassador held an event at the Trump International Hotel.

“That’s the kind of thing that might be enough,” Tushnet said, but she added that the complaint did not make it clear whether the ambassador of Azerbaijan was a regular client at Cork.

Tushnet said that unfair competition law is “flexible,” but that it’s unclear if this case is close enough to past cases about unfair competition. She told TPM that she could imagine “well-reasoned opinions being written both ways.”

Mark McKenna, a law professor at the University of Notre Dame, agreed that Cork likely has a standing to sue. Beyond that it’s less clear, he said.

“I’ve not seen a claim in that form before, and so I think it’s a bit of an uphill battle to persuade a court that an unfair competition claim in a form that’s not familiar is a legitimate one,” he said, adding later that the case would “require a little more persuasion” than a more straightforward one.

Mark Zaid, one of the lawyers representing Cork, acknowledged that this is an “unprecedented case” in a phone interview with TPM, but he was optimistic.

“I think we have an incredibly legitimate and valid claim, and I fully expect that we prevail on a motion to dismiss and get to the merits of the case,” he told TPM.

The Trump Organization, for its part, has brushed off the lawsuit.

“The lawsuit is a publicity stunt completely lacking in merit,” Alan Garten, the Trump Organization’s general counsel, said in a statement on Wednesday.

The Trump hotel is housed in the Old Post Office building, which is owned by the federal government. Cork’s complaint cites the lease between a Trump corporate entity and the General Services Administration, which prohibits an elected official from benefitting from the lease.

McKenna told TPM that a court may have some “reticence” about the lease agreement. He said that while Cork is not calling for a remedy because the lease was breached, the court may still have “on its mind” the “possibility that there’s some government remedy for violation of the lease.” The court could possibly just suggest the GSA terminate the lease, McKenna said.

Andy Grewal, a law professor at the University of Iowa, said that he is skeptical that the claim could rely on that provision in the lease. He noted that in the complaint, lawyers for Cork wrote that the provision in the lease barring Trump from benefitting from the lease also “protects competitors of the hotel and its restaurants from unfair competition.”

“I’m skeptical that a contract provision between the GSA and Trump Hotel LLC was intended to protect Cork … or anybody else,” Grewal told TPM.

Zaid told TPM that Cork was not suing over the lease and that he believes Cork would have a case even without that provision in the lease.

“The claim itself is not based on the lease. But the lease provision is evidence of the unfair competition. So even if the lease didn’t exist — if that provision did not exist, there would still be a claim for unfair competition,” Zaid said.

Experts said that Cork will likely be able to proceed with the lawsuit even though Trump is a sitting president, but the case would be entering unchartered waters in that the complaint pushes for the court to order an action from the President.

In the complaint, the lawyers for Cork offered three possible remedies: Trump resigning, Trump divesting completely from his interests in the hotel, or the hotel in D.C. suspending operations for the rest of Trump’s presidency.

McKenna said he had a hard time seeing the court ordering the President to do something.

“If they get an injunction, it’s not going to be directed at him, it’s going to be directed at operations of the restaurants or these businesses,” he told TPM.

Josh Blackman, an associate law professor at the South Texas College of Law Houston specializing in constitutional law, told TPM that it would be unprecedented for a court to order a president how to handle his financial dealings.

“The remedy they’re seeking, which is divestment, would be a serious deal for separation of powers,” he told TPM.

Blackman said that the restaurant has standing to sue Trump, but that suing the president could become an issue when it comes to the court’s remedy.

“That’s a big deal for the court to order the president to sell something,” he added. “I can’t think of any precedent where a court goes to the president and tells him how to structure his financial transactions.”

McKenna also said that a court might be uneasy weighing in, given the political implications of the decision, citing the other complaint filed by CREW.

“You could just imagine a court sort of being a little reluctant to put its foot in the political water here given these other things that are going on,” McKenna told TPM.

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