Judges seem skeptical Trump’s interest with family hotel violates the Constitution

RICHMOND, Va. -- A trio of Republican-appointed federal appeals court judges in Richmond indicated in oral arguments Tuesday that they are skeptical of a lawsuit filed by the District of Columbia and Maryland over President Donald Trump's ongoing interest in his family company, the Trump Organization.

The appeal, brought by the Justice Department and President Trump's personal lawyer, was heard before the 4th Circuit Court of Appeals in downtown Richmond because a lower court allowed the case to move forward. The Justice Department argues that was an error because the president cannot be sued while in office.

One of the judges asked whether the suit was politically motivated -- a sign of the deep partisan divisions over questions concerning the President's business arrangements.

Both attorneys general are Democrats. They claim Trump is violating the constitutional ban on government officials accepting gifts or favors from foreign or domestic government entities because he maintains a stake in the Trump International Hotel in Washington.

Two of the appeals judges questioned attorneys for Maryland and D.C. over what it would take for their side to be satisfied sort of President Trump selling off his stake in the Trump Hotel.

"I believe it is Kuwait and Bahrain have moved from non-Trump properties to Trump International Hotel by virtue of the fact he is president," said Loren Alikhan, Solicitor General for the District of Columbia.

"Alright, so you don't think they'd still go there with his son running it?" responded Judge Paul Niemeyer.

Maryland and D.C. argue President Trump's involvement with the Trump Hotel, even by just having his name attached to it, encourages foreign and state officials to book there in order to curry favor with the president.   That action, the plaintiffs argue, creates an unfair economic environment for other competing businesses nearby.

Judge Niemeyer pushed back by saying Trump has stepped away from his businesses while in office. Judge Dennis Shedd mentioned the claim could be hard to prove.

"I would think there are a lot of people who come to D.C. to protest this president, and I would guarantee none of them stay in Trump buildings," said Judge Shedd.

Attorneys for the Justice Department argued in Tuesday's hearing that the President can't be sued while in office.

"There is no authority to sue directly the President of the United States in his official capacity," said Hashim Mooppan, a lawyer for the D.O.J.

DC Attorney General Karl Racine told CNN after the hearing that he plans to appeal to a full-court panel if Tuesday's smaller panel of three judges rules in favor of the government, and would be willing to take his case to the Supreme Court.

"I think we very much believe very strongly in our case," Racine told CNN. "As far as whether the case will go to the US Supreme Court, it appears as though both parties are firm in their positions in this case, and so that wouldn't surprise me that this case ultimately would end up in the Supreme Court."

"It is more difficult for Donald Trump to deal with these clauses, but that's what he signed up for," said Maryland Attorney General Brian Frosh.

If the lawsuit is allowed to move forward, the Trump Organization may be required to turn over an array of internal documents, potentially offering a window into the operation of the business.

The Trump International, on Pennsylvania Avenue within sight of the White House, is the favored destination for Trump and first lady Melania Trump when eating outside the White House, and it has become a gathering point for Trump supporters as well as for groups with business before the administration.

The Trump administration argues that the lawsuit is causing the President harm and would interfere with the separation of powers, according to court documents.

The suit was filed in 2017 by Racine and his Maryland counterpart Brian Frosh, who argue the Trump International Hotel's operations put nearby hotels and entertainment properties at a competitive disadvantage and that the hotel, which won its lease on a federally owned property before Trump's election, got special tax concessions.

A federal district judge allowed the state governments to pursue their lawsuit in July 2018 against Trump in his official capacity as President. The states later dropped the part of the lawsuit that went after him personally.

The judge allowed DC and Maryland to begin issuing subpoenas last year. Information requests were sent to many of Trump's private businesses, various federal agencies and 18 other unnamed entities that compete with the Trump International. While the subpoenas didn't ask for the President's personal tax returns, they do request tax documents from his businesses that could begin to fill out a picture of his own finances.

The Department of Justice claims that the case from the attorneys general is based on "a host of novel and fundamentally flawed constitutional premises" and the evidence-gathering process for the case would include "intrusive discovery into the President's personal financial affairs and the official actions of the administration," according to court documents.

The Justice Department appeal has halted the discovery process and put the case on hold.

The CNN Wire contributed to this article. 

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