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Judge raises doubts over suit against Trump on foreign payments

By Andrew Chung
U.S. President Donald Trump speaks to the Heritage Foundation’s President’s Club Meeting in Washington, U.S., October 17, 2017. REUTERS/Joshua Roberts

By Andrew Chung

NEW YORK (Reuters) - A federal judge in New York voiced skepticism on Wednesday over whether groups and individuals should be able to proceed with a lawsuit against President Donald Trump alleging that he violated the U.S. Constitution by accepting foreign payments through his hotels and other businesses.

U.S. District Judge George Daniels also questioned government lawyers seeking to have him throw out the suit accusing Trump of running afoul of the Constitution's "emoluments" clause by maintaining ownership of his business empire while in office.

Daniels said he would rule within a month or two on whether he will continue to hear the suit. The emoluments clause, designed to prevent corruption and foreign influence, bars U.S. officials from accepting gifts from foreign governments without congressional approval.

Trump has ceded day-to-day control of his businesses to his sons. Critics have said that is not a sufficient safeguard.

During a hearing on the bid to dismiss the case, Daniels suggested the U.S. Congress might be better suited than the courts to resolve the dispute.

"They can make this an issue, but they have not done so," Daniels said. "Why is it appropriate for the judiciary to have the president fight this out in a street brawl?"

The plaintiffs in the lawsuit, filed in January after Trump took office, are the nonprofit watchdog group Citizens for Responsibility and Ethics in Washington, a hotel owner, a hotel events booker and a restaurant trade group.

Daniels, appointed to the bench by Democratic former president Bill Clinton, acknowledged that the case was navigating "uncharted waters."

If he allows the case to go ahead, a lawyer for the plaintiffs, Joseph Sellers, said they intend to seek further evidence of Trump's alleged violations of the emoluments clause. In court papers, they said the "full extent of his violations" are not yet known because he has not released his tax returns.

But Daniels raised doubts about whether the plaintiffs are legally entitled to sue. Federal courts usually require plaintiffs to demonstrate they have actually been harmed.

The plaintiffs allege they are injured when foreign governments try to "curry favor" with Trump by favoring his businesses, such as the Trump International Hotel in Washington, or a high-end restaurant at a Trump hotel in New York City, leading to lost patronage, wages and commissions.

The emoluments clause was not meant to provide a right to protect individuals from competition, Daniels told another plaintiffs' lawyer, Deepak Gupta.

Gupta urged the judge to reject "the government's view that the president is above the law."

In June, the Trump administration asked the court to throw out the case, saying the constitution prohibits gifts and emoluments given to U.S. officials acting in their official capacities only and does not constrain the president's businesses.

Daniels did not buy that argument. If a foreign government expects favorable action, it might also "buy a million dollars worth of your hot dogs," he told Brett Shumate, a lawyer for the U.S. Department of Justice.

"Just because it's a business transaction doesn't necessarily mean it's not an emolument," Daniels said.

Shumate replied, "The president is engaging in ordinary business transactions, not in exchange for anything."

(Reporting by Andrew Chung; Editing by Will Dunham and David Gregorio)