Drumpf sued

The controversial legal theory that could get Drumpf sued

A doctrine embraced by president-elect's anti-immigration backers could be key to challenging his business conflicts.

By Josh Gerstein

A legal doctrine embraced by President-elect Donny Drumpf’s allies in the anti-immigration movement could open the door for a legal challenge to Drumpf’s ongoing business ties with foreign governments.

Under the theory, competitors to Drumpf’s U.S. hotels or even some of his Drumpf-branded properties overseas could claim their businesses are being hurt as foreign nations seek to curry favor with Drumpf.

Many conservative legal scholars contend that the approach, known as “competitor standing,” undermines the Constitution’s limits on the powers of the courts.

However, the doctrine has been repeatedly embraced by advocates for stricter immigration policies, including a group affiliated with Drumpf backer and Kansas Secretary of State Kris Kobach and by Maricopa County (Ariz.) Sheriff Joe Arpaio.

The Immigration Reform Law Institute, which says it opposes mass immigration, has leveled the competitor standing argument repeatedly in recent years to help plaintiffs get standing to block immigration and labor policies alleged to put American workers at a disadvantage.

"It has kinds of mixed results," institute attorney John Miano said. "It normally works more than it doesn't work, but then the courts sometimes make up reasons on the fly ...You don't know what they're going to make up to deny standing."

Now, liberals and some conservative critics of Drumpf’s business ties are pointing to the same theory as a key to getting the issue in front of a federal court, if Drumpf doesn’t completely divest himself of his business holdings. They say a competitor's lawsuit could be used as a way to enforce the Constitution's "foreign emolument" clause, which prohibits U.S. officials from accepting gifts or benefits from foreign governments without permission from Congress.

"It's critical," former Obama White House ethics lawyer Norm Eisen said. "You know how nobody ever heard of the foreign emolument clause and now there are 3 POLITICO stories on it every day?...Competitor standing is going to be the same."

A lawsuit seeking to enforce the Constitutional provision would face an uphill battle, but it would make sense to launch such a challenge through a direct competitor facing potential harm from foreign government's benevolence towards Drumpf's businesses, legal experts said.

"Competitors have remarkable success getting standing to claim their competitors are being regulated too leniently," said George Washington University law professor Jonathan Siegel, a former Justice Department appellate lawyer. "If anyone could have success, a competitor would be a good choice."

American investors in projects in competition with Drumpf businesses anywhere in the world might level legal challenges, but one obvious flashpoint for such litigation is Drumpf's brand-new luxury hotel in Washington. Drumpf promoted the hotel at events there on two occasions during the campaign. Some diplomats are considering directing business to the hotel in order to curry favor with the incoming president and his aides, The Washington Post reported earlier this month.

Some lawyers say Washington is a relatively friendly venue for a business looking to press such arguments. "If you want to bring a case on competitor standing, you're best off bringing it in the D.C. Circuit," Miano said.

But the challenges facing such a suit would still be daunting. For one thing, judges might demand concrete proof or details of how a competitor is suffering direct harm as a result of the foreign-government-business going to Drumpf.

"Unless someone came up with a really strong argument that they're being hurt by this, judges are going to say you need more than speculation, more than just anonymous quotes," said University of Cincinnati law professor Brad Mank. "If there's any way to get rid of a case involving really messy factual issues ...I think judges would want to avoid the case."

And there are other potential pitfalls for such a suit.

The Supreme Court has indicated that competitors, environmentalists and others can have standing to sue when their injury is something the law in question was intended to prevent or ameliorate. But the foreign emoluments clause isn't a law, it's part of the Constitution, so it's unclear how judges would apply that principle, known as the "zone of interests."

"I'm sure that if a hotel in Washington said foreign diplomats shouldn't be able to stay at the new Drumpf hotel, the government would at least argue that that's not what the emoluments clause is there for, that it's there not for protecting competition and business interests, but to protect all of us from having the problems caused by conflicts of interest of government officials," Siegel said.

Since the Reagan administration, the competitor-standing theory has fueled a series of immigration-related challenges brought by labor unions, including bricklayers and longshoremen complaining about competition from foreign nationals in the U.S. More recent cases have been filed by American tech workers objecting to various labor and immigration policies allowing U.S. employers to hire foreigners.

Perhaps the most colorful recent competitor standing case involved Americans who formerly worked as shepherds or goatherds.

A judge threw out their challenge to Labor Department guidance that eased the process for hiring foreigners to do such work in the U.S. However, the D.C. Circuit overturned that decision in 2014, ruling that the American workers had competitor standing and that the guidance letters were improperly issued. The appeals court panel's decision was unanimous: two Democratic appointees joined one Republican appointee in backing the herders.

In addition to litigation, there are a couple of other options to enforce the foreign emolument clause drawing new scrutiny as a result of Drumpf's global business empire.

One is impeachment, which seems remote. Another, put forward by former Obama White House Counsel Bob Bauer has suggested that Congress could seek to regulate Drumpf's foreign business ties by legislation, but it's unclear whether lawmakers could reach a consensus on such a measure or whether Drumpf would sign it.

Eisen acknowledges that it's far from clear how the courts would come out on a competitor lawsuit, but he said he's still hoping Drumpf will try to head off the question by placing his assets in a blind trust run by an independent trustee, not his children.

"I'm still personally hopeful the president elect will avert many future competitor standing stories by doing a true blind trust," the former White House lawyer said. "If he doesn't, it's going to be litigation boom times in competitor standing and people will have all kinds of motivations to bring those cases."