Group That Tried to Sue Trump Over ‘Emoluments’ Clause Just Got Booted Out of Court

A federal judge recently dismissed the first of three lawsuits against President Donald Trump that claim it’s unconstitutional for a president to own and profit from a business while in office.

Judge George Daniels of the Southern District of New York authored the opinion, filed Dec. 21, giving a win to Trump. But more generally, the opinion defends the principle that people cannot sue politicians in order to settle political debates in court, instead of in the legislature or at the ballot box.

The watchdog group Citizens for Responsibility and Ethics in Washington sued Trump last January, claiming that his extensive business interests constitute ongoing violations of the Constitution’s foreign and domestic emoluments clauses.

Those provisions serve to keep certain federal officials from taking compensation from foreign state actors, Congress, or the states, in exchange for favorable official treatment.

The domestic emoluments clause (Art. II, § 1, cl. 7) explicitly refers to the president and his salary. But the foreign emoluments clause (Art. I, § 9, cl. 8) does not, and several legal scholars (particularly National University of Ireland Maynooth Law lecturer Seth Barrett Tillman) have persuasively argued that it does not even apply to the president, or reach fair market value transactions, such as an ambassador paying the going rate for a room at the Trump Hotel.

While the government conceded only “[f]or purposes of this motion” that the foreign emoluments clause binds the president, the court did not ultimately decide whether there was any merit to the plaintiffs’ novel and far-reaching legal theories.

Daniels, an appointee of President Bill Clinton, dismissed the lawsuit because the plaintiffs lacked standing—a constitutional requirement that a plaintiff demonstrate that whoever they are suing has caused them some actual, concrete injury that the court can remedy.

As many legal scholars and journalists have, Daniels rejected plaintiffs’ theory that they had standing to sue the president because their lawyers—ethics experts and law professors—have been “forced” (although their activities have been entirely voluntary) to spend time and resources investigating Trump’s business interests, rather than devoting time to other pursuits.

They sought a declaration by the court that Trump’s business profits are unconstitutional, along with an order for him to divest himself entirely from his business interests.

Had the lawsuit proceeded, the district court would have invited future lawsuits filed merely to recover the costs of litigation that was filed because of political disagreements.

As Daniels wrote, “Under [the plaintiffs’] unbounded definition of standing, for example, a news organization could sue the president by alleging that one or more of his statements forced it to divert resources away from a different story it might have pursued. Surely, something more is required.”

Perhaps recognizing the weakness of its own standing claim, Citizens for Responsibility and Ethics in Washington had teamed up with hospitality and restaurant workers in New York and Washington, D.C., who claimed that they could sue the president because it is unconstitutional for them to have to compete with his various restaurants and hotels, which allegedly were being patronized by people seeking to curry favor with Trump.

Daniels described that claim as “wholly speculative” and unlikely to be resolved by any court order. People may visit Trump’s hotels and restaurants for any number of reasons, the judge wrote, “including service, quality, location, price, and other factors related to individual preference.”

He continued, “[T]here is no remedy this court can fashion to level the playing field for plaintiffs as it relates to overall competition.”

But even if there were, Daniels wrote, it is for Congress, and not the court, to consent or not to the president’s business arrangements.

In Baker v. Carr (1962), the Supreme Court ruled that, although the plaintiff in that case had presented a justiciable issue, courts may be barred from hearing cases that present a political question.

The court’s six-factor analysis asked in part whether the text of the Constitution commits the issue in question to another branch of government, and whether another branch of government must first reach some discrete policy determination before a court can resolve the issue.

The foreign emoluments clause provides that:

… no Person holding any Office of Profit or Trust under [the United States], shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.

Daniels found that because the text gives Congress the power to consent to a federal official’s receipt of “any present” or “emolument” from any “foreign state,” the issue is “committed exclusively to Congress … .”

“If Congress determines that an infringement has occurred,” he continued, “it is up to Congress to decide whether to challenge or acquiesce to [Trump’s] conduct.”

The question now is, will Congress take up the emoluments issue?

It doesn’t have to. After all, by receiving profits from domestic and foreign business interests, Trump is merely following well-established precedent set by previous presidents, from George Washington and Thomas Jefferson selling farm goods abroad to Barack Obama and John F. Kennedy selling their books around the world.

Still, plaintiffs’ lawyers have said that they will appeal the December ruling.

And the two other emoluments lawsuits against Trump present slightly different facts in different courts, so a different outcome is, at least theoretically, possible, although unlikely.

Last June, two state-level attorneys general—Brian E. Frosh, D-Md., and Karl A. Racine, D-D.C.—sued the president in the U.S. District Court for the District of Maryland. Two days later, nearly 200 Democratic representatives and senators sued the president in the U.S. District Court for the District of Columbia.

Andy Grewal, a University of Iowa College of Law professor who has written extensively on the emoluments issues, has described the House and Senate Democrats’ lawsuit as “the absolute weakest,” stating that “disgruntled legislators cannot sue the president in this way.”

The attorneys general, however, raise several novel theories for why they should be able to sue the president, including an argument that, similar to the restaurant workers’ claim, it is unlawful for enterprises owned or funded by the state to have to compete with businesses that the president owns.

Even if a court decides that one or both of these parties has standing and agrees to hear the case, Daniels’ conclusion that Congress must act before a court can rule on the emoluments issues would apply.

Still, some in Congress have consistently attacked Trump’s extensive business interests since Sen. Elizabeth Warren, D-Mass., sought to make them grounds for impeachment after Trump’s election.

With nearly 200 Democratic members of Congress suing Trump and one unsuccessful attempt, initiated by Rep. Al Green, D-Texas, to impeach him, the issue is unlikely to go away anytime soon.

For now, Daniels has provided a well-reasoned opinion that should influence how the two other district courts view this effort to pull the courts and the Constitution into a political fight.

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Government Too Often Gets in the Way of Home Cooking Sales, New Study Finds

When cooking your favorite holiday dishes, remember this friendly advice from the FDA: “The most important ingredient in preparing food for the holidays isn’t love (sorry granola people), salt (sorry New York Times), or cannellini beans (sorry Oprah). It’s food safety.

But if you’re among the growing number of people who sell homemade food, government safety regulations might be getting in the way of your profits.

A new report by the Institute for Justice surveys state regulations on the cottage food industry and finds that some needlessly hinder the success of entrepreneurial home chefs.

Consider the case of Kriss Marion, a Wisconsin chef. As co-founder of a local farmer’s market and a bed-and-breakfast owner, Marion regularly served homemade baked goods to patrons. But state law forbade her from selling them.

So, she would feed her leftovers to animals or give them away for free. That is, until she teamed up with other home bakers and the Institute for Justice to successfully challenge the law in court.

The report shows that while many home chefs like Kriss sell their goods as a source of supplemental income or as a hobby, it can also help people achieve financial independence. That income is typically invested in the cooking business, a nest egg, or used to pay the bills.

Only about 20 percent of the 775 home chefs that the Institute for Justice interviewed reported selling their food sales as their primary occupation. Yet the survey results suggest that this business is particularly attractive to women in rural areas who report below-average income.

Especially in times when the economy slackens and rural communities struggle to attract jobs, selling safe, fresh, and tasty home food items can be exactly the opportunity that a family and their community will look for. It provides self-employment with low overhead, relatively low investment, and a great family life.

Others may see selling homemade food as one of their few available economic opportunities. After an injury left Jane Astramecki unable to work outside her home, she built “Jane Dough Bakery” to sell baked goods from her own kitchen.

By teaming up with the Institute for Justice, Astramecki challenged a state restriction on home food sales and was soon able to help support her family through her own business.

These businesses also empower aspiring chefs to test their products before going all in on a brick and mortar venue.

But as Marion and Astramecki’s stories illustrate, some states put excessive red tape in the way of a would-be Julia Child or Wolfgang Puck.

States can and do impose a broad array of restrictions on who can sell food, where, when, in what quantity, and what types. Those rules most often seek to protect the public from harmful, unsafe foods.

That is undoubtedly an important state interest.

But the Institute of Justice’s report confirms numerous studies on occupational licensing laws, including several by Heritage Foundation senior legal scholar Paul J. Larkin, Jr., that show how “today’s licensing regimes prohibit individuals, sometimes on pain of criminal liability, from engaging in conduct that poses no risk of harm to any person or to the community.”

“Such a regime,” Larkin notes, “causes injury rather than protecting against it.”

And according to the Institute of Justice’s research, there “appears to be no rational link between many restrictions on cottage food sales and any legitimate government concern for public health and safety.”

Meanwhile, home cooking businesses can bring prosperity and well-being to a family and value to their neighbors-turned-customers.

As the report suggests, “[s]tates can, and should, take steps to encourage entrepreneurship by easing restrictions on cottage food producers.”

States that have relaxed cottage food laws or expanded protections for those who are already in the industry deserve kudos. As the number and size of safe home cooking businesses increase in states like Texas, California, and Minnesota, other states should follow their lead and enhance economic liberties for home cooks, too.

And as the industry grows, states with greater regulatory burdens should take the Institute of Justice’s hint: “leave the [lawsuit], take the cannoli.”

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Court Ruling Allows Consumers, Not Bureaucrats, To Regulate ‘Scandalous’ Trademarks

Should federal bureaucrats be able to reject trademarks for brand names that they consider “immoral” or “scandalous”?

On Dec. 15, in In re Erik Brunetti, the U.S. Court of Appeals for the Federal Circuit said “no,” ruling that the First Amendment leaves consumers to decide which brands are too offensive to buy—without help from lawyers in Washington.

A federal law called the Lanham Act prohibits registering trademarks that are immoral or scandalous. Lawyers at the U.S. Patent and Trademark Office handle any such inquiry by asking whether a “substantial composite of the general public” would find a proposed mark “shocking to the sense of truth, decency, or propriety; disgraceful; offensive; disreputable; … or calling out for condemnation.”

Or, more simply, the Patent and Trademark Office may deny a trademark that “contemporary attitudes” deem “vulgar.”

In 2011, Erik Brunetti sought a federal trademark for a clothing brand that he founded in 1990 under a sensational spelling of an expletive, “fuct.” Patent and Trademark lawyers refused to register the mark after they referenced multiple dictionaries and decided that the term is immoral or scandalous.

On appeal, the Federal Circuit agreed, finding Brunetti’s brand to be crass and offensive.

Nonetheless, the court held that the prohibition on immoral or scandalous trademarks violates the First Amendment.

Judge Kimberly Ann Moore, joined by Judge Kara Farnandez Stoll, wrote for the court that “[t]here are words and images that we do not wish to be confronted with, not as art, nor in the marketplace. The First Amendment, however, protects private expression, even private expression which is offensive to a substantial composite of the general public.”

It is a worthwhile policy debate to ask whether or not it is good for our culture to open the marketplace to vulgar trademarks.

That puts a greater onus on store owners to consider what goods and services they wish to sell, and on individuals, particularly parents, to assess what they and their children buy.

But the court’s opinion builds on the Supreme Court’s ruling in June, in Matal v. Tam, that the Lanham Act’s similar “disparagement” provision violated the First Amendment’s free-speech clause.

That provision barred registering trademarks that “may disparage … persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute.” There, the Patent and Trademark Office rejected Simon Tam’s bid for federal trademark registration of the name of his Asian rock group, the Slants, because it thought that the term disparaged Asians — like Tam and his bandmates.

Justice Samuel Alito wrote for a plurality of the court (joined by Chief Justice John Roberts and Justices Clarence Thomas and Stephen Breyer), that “[s]peech may not be banned on the ground that it expresses ideas that offend.”

Alito continued, “The proudest boast of our free-speech jurisprudence is that we protect the freedom to express ‘the thought that we hate.’”

The court rejected the government’s argument that it can restrict trademarks because they are government speech, just like state advertising.

The court was also unpersuaded by the government’s theory that trademark registration is a federal subsidy or program that confers broad authority to restrict trademarks that it finds offensive.

Heritage senior legal fellow Alden Abbott wrote that “by enhancing legal protection for a wider variety of trademarks, the Tam decision has paved the way for the expansion of mutually beneficial marketplace transactions, to the benefit of consumers and producers alike.”

Heritage legal scholar Elizabeth Slattery also wrote that the court’s decision in Tam “continues the trend of cases extending First Amendment protection for offensive speech, such as burning crosses, animal ‘crush’ videos, violent video games, lying about military honors, and the Westboro Baptist Church protesting military funerals.”

In In re Erik Brunetti, the Federal Circuit carried that trend one step further, finding that the Supreme Court’s reasoning in Tam applied with equal force to the Lanham Act’s “immoral or scandalous” provision.

In order to restrict speech based on its content, the government must prove that its restriction is “narrowly tailored” to advance “a compelling interest.”

The court found that the government’s only asserted interest for prohibiting “immoral or scandalous” trademarks was “protecting public order and morality”—and that did not pass muster.

The court also wrote that the provision could not pass the lower standard, established in Central Hudson Gas & Electric Corporation v. Public Services Commission of New York (1980), for restrictions on commercial speech, which must be “narrowly drawn” to further a “substantial interest.”

The court found that the Lanham Act’s “immoral or scandalous” provision failed that test in part because the Act does not prevent parties from branding products with a mark of their choosing and advertising them to the public.

“In this electronic/Internet age,” the court wrote, “to the extent that the government seeks to protect the general population from scandalous material, with all due respect, it has completely failed.”

The “immoral or scandalous” provision was also doomed, at least in the court’s eyes, because it was too subjective and inconsistently enforced.

Even the Patent and Trademark Office once called “the determination of whether a mark is scandalous or disparaging” a “necessarily … highly subjective” inquiry. And “it is largely because governmental officials cannot make principled distinctions in this area,” the court continued, “that the Constitution leaves matters of taste and style so largely to the individual.”

The Patent and Trademark Office’s long history of approving some offensive marks while rejecting similar ones, evidenced by pages of vulgar trademarks included in the Federal Circuit’s opinion, confirms its subjectivity.

In his concurring opinion, Judge Timothy Dyk wrote that he would limit “the immoral-scandalous provision’s scope to obscene marks in order to preserve its constitutionality.”

Judge Dyk’s approach may have comforted those who would rather keep nasty products from coming soon to a store near them. But Judge Moore wrote for the court that “[w]hile the legislature could rewrite the statute to adopt such a standard, we cannot.”

Only Congress can amend a law. That remains true no matter how prudent an amendment might be.

So, the court’s ruling allows businesses to register trademarks that previously may have been prohibited as immoral or scandalous.

That may worsen the unfortunate trend, which economist Walter Williams recently described for The Daily Signal, of the coarsening of American culture.

But as Williams wrote, “Society’s first line of defense is not the law, but customs, traditions, and moral values … behavioral norms—mostly transmitted by example, word of mouth, and religious teachings.”

Now, consumers, rather than a small group of federal agency lawyers, will have greater responsibility to decide what goods and services are too vulgar for them and their families.

 

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