Trump Tax Return Subpoena Update

A little over a month ago, I suggested that Trump’s opposition to the subpoenas issued for his tax returns would shortly become moot. Trump’s opposition was rooted primarily in the distinction between a congressional subpoena for legislative purposes and one pursuant to an impeachment proceeding. I therefore predicted that, because the investigations would shortly ripen into impeachment investigations, the alleged distinction between Congressional legislative power and its impeachment power would no longer be pertinent. At the time, I noted that:

Judge Rao’s dissent is premised solely on what she believes is a limitation on Congress’ legislative power. She makes a distinction between the legislative power of Congress and what she terms its judicial power. Among the areas in which she believes that the judicial power can be exercised is that of impeachment. 

Today, the D.C. Court of appeals, in a per curiam opinion, declined to block the subpoena. Judge Rao, in one of the two dissents, realized that the facts that underlay her original opinion had basically disappeared. However, she fought on:

The Committee’s suggestion that the current impeachment inquiry somehow alters this case depends on whether House Resolution 660 ratifies this subpoena. This Circuit has not determined whether a defective subpoena can be revived by after-the-fact approval. But we need not confront that question here, because even assuming the subpoena could be issued under the impeachment power, the Committee has not reissued the subpoena pursuant to that power and House Resolution 660 does not purport to sweep previously issued subpoenas into the ambit of the impeachment inquiry.

Slip op. at 6-7 (Rao, J. dissent at 2-3). citation and internal quote omitted.

Judge Rao’s dissent would open up nothing more than a path to further delay. As the case stands now, the previous objections to the tax return subpoenas are, as a practical matter, moot. It’s always difficult to make predictions about the actions that the Supreme Court might take, but I don’t think that the Court will take this case up in its present posture.

Trump Foundation Settlement

I have uploaded a copy of the order settling the claims for breach of the fiduciary duties that Donald Trump and his family owned to the The Donald J. Trump Foundation. Much of the relevant information, however, is apparently contained in a stipulation and I have not, as yet, been able to locate a copy.

The stipulation puts shackles on the ability of Trump and his three oldest children to actively participate in charitable organizations. Footnote 2 of the order approving the settlement, for instance, states:

As per the Final Stipulation, if Mr. Trump opts to serve as an officer or director of a pre-existing New York charitable organization, he may only do so if the organization: “(i) engages counsel with expertise in New York not-for-profit law to advise the organization and its officers and directors on compliance with all applicable laws, regulations, and accepted practices; (ii) engages the services of an accounting firm to monitor and audit the charity’s grants and expenses annually; (iii) has a majority of the board members that are independent, i.e., they have no familial or business relationship with Mr. Trump or any entity owned by Mr. Trump or his relatives, as defined in N-PCL section 102(a)(22) (referred to herein as “family members”); and (iv) agrees not to engage in any related party transactions as defined in N-PCL section 102(a)(24) with Mr. Trump, his family members or any entity owned or controlled by Mr. Trump or his family members (a `Trump Entity’) and agrees to otherwise comply with N-PCL section 715.” The same requirements must be met if Mr. Trump decides to form a new charitable organization and serve as its officer or director. Further, the Final Stipulation provides that should Mr. Trump serve as an officer or director of a new charitable organization, he must also meet the following additional requirements: (i) the newly formed organization will provide the Attorney General with annual reports for five years; (ii) the newly formed charitable organization will enact specific corporate governance procedures; and (iii) Mr. Trump will maintain a working familiarity with the applicable New York rules and laws governing charitable organizations and their officers and directors, for as long as he holds either position.

I will post the stipulation if I can get my hands on it.

Update

I’ve obtained a copy of the stipulation and I have posted it here. I suppose that everyone has his or her own “favorite” Trump scam and sleaze. With respect to the numerous scams and sleazes outlined in the stipulation, my favorite is one of the smaller ones. It’s what I call the Trump Portrait Sleaze and is outlined on pages 7-8 of the stipulation.

In March, 2014, the Unicorn Children’s Foundation, a 501(c)(3) charity held a fundraiser at Mar-a-Lago. As part of that fundraiser, there was a charity auction. One of the items to be auctioned was a portrait of Trump. Trump put in the winning bid of $10,000 for the portrait. However, the $10,000 was paid by the Trump Foundation and the portrait was displayed, where else, at Trump’s Doral Hotel.

In November, 2016, the portrait was returned to the Trump Foundation and the hotel paid $185.82 plus interest to the Foundation for the rental of the painting. The painting was then placed in storage and, so far as anyone knows, never again publicly displayed. As part of the settlement with New York, in May, 2019,one of the members of the Trump family, whose precise identity is not disclosed, paid the Trump Foundation $10,000 to reimburse it for the purchase price. So, let’s analyse this.

Trump has a fancy charity gala at Mar-a-Lago, with respect to which he personally profits. Appearing to act magnanimously, he purchases a portrait of himself for $10,000. But instead of using his own funds to pay for the portrait, he uses funds from a charitable foundation. However, the painting is never used by the charitable foundation that purchased it for any charitable purpose. Rather, it is given to Trump to use as sort of an advertisement at his other hotel. Only in November, 2016, either right before or right after the election, does he take it off of display. And, we also know that most of the later contributions to the Trump Foundation were not made by Trump or members of his family, but came from others who sought to curry favor with him.

Simply put, Trump made money on a charitable event giving the Unicorn Children’s Foundation a discount on its costs via the purchase of the painting. But the contribution/discount never came out of Trump’s pocket. Rather, he funded the discount via the Trump Foundation using money contributed by others.

Of course, big time sleaze is not something that will faze Trump. However, it’s his attention to the small things, the little scams, that is the measure of the man. He scams therefore he is.

No Conscience

I’ve uploaded the opinion in New York v. U.S. Dept. of Health and Human Services handed down today by Judge Paul A. Engelmayer of the U.S.D.C. for the Southern District of New York. The case involves challenges to a rule recently promulgated by HHS entitled “Protecting Statutory Conscience Rights in Health Care; Delegations of Authority.” The rule purports to interpret and provide for the implementation of more than 30 statutory provisions that recognize the right of an individual or entity to abstain from participation in medical procedures, programs, services, or research activities on account of a religious or moral objection. Judge Engelmayer vacated the rule in its entirety.

I won’t even begin to pretend that I’ve read all 147 pages of the opinion. But as those who regularly (or even semi-regularly) read my posts here, I find it troublesome when news outlets comment on judicial opinions but fail to provide links to the opinions themselves. This post is my small contribution to making judicial opinions more accessible to the public.

The following passage gives the reader a flavor of what Judge Engelmayer thought of HHS’s arguments:

HHH . . . urges the Court to sever and vacate only the offending provisions of the [] Rule.

The Court has carefully considered HHS’s application to preserve parts of the Rule that are not compromised by legal deficiencies. Had the Court found only narrow parts of the Rule infirm—for example, had the Court held invalid only § 88.7(i)(3)(iv) [of the Rule], the portion of the remedial provision that authorizes termination of the entirety of a recipient’s funding—a remedy tailoring the vacatur to only the problematic provision might well have been viable.

The APA violations that the Court has found, however, are numerous, fundamental, and far-reaching. The Court’s finding that HHS lacked substantive rule-making authority as to three of the five principal Conscience Provisions nullifies the heart of the Rule as to these statutes. The Court’s finding that the agency acted contrary to two major existing laws (Title VII and EMTALA) vitiates substantive definitions in the Rule affecting the health care employment and
emergency contexts. The Court’s finding that HHS failed to give proper notice of the definition it adopted of “discriminate or discrimination” voids that central dimension of the Rule. And the Court’s finding that the Rule was promulgated arbitrarily and capriciously calls into question the validity and integrity of the rulemaking venture itself. Indeed, the Court has found that HHS’s stated justification for undertaking rulemaking in the first place—a purported “significant increase” in civilian complaints relating to the Conscience Provisions—was factually untrue.

In these circumstances, a decision to leave standing isolated shards of the Rule that have not been found specifically infirm would ignore the big picture: that the rulemaking exercise here was sufficiently shot through with glaring legal defects as to not justify a search for survivors. And leaving stray non-substantive provisions intact would not serve a useful purpose. As the D.C. Circuit has observed in the course of invalidating a rule in its entirety, here “it is clear that severing all . . . [of the invalid sections] would severely distort the [Agency’s work] and produce a rule strikingly different from” the one HHS promulgated and has fiercely defended in court,
making severance inappropriate.

Slip op. at 141-142 (citations omitted, emphasis added).

Guilt Shall Not Escape or Innocence Suffer

The Court of Appeals for the Second Circuit has handed down its opinion in Trump v. Vance in which Trump seeks to block a grand jury subpoena directed to his accountants and seeking his tax returns. I have posted a copy of the opinion.

The Court rejected the District Court’s application of the abstention doctrine set forth in Younger v. Harris, 401 U.S. 37 (1971) barring the federal courts from considering Trump’s claims. However, the Court went directly to those claims and found them lacking. Thus, unless the Supreme Court both sustains the Second Circuit’s ruling on Younger abstention and also overrules the Second Circuit’s (and the District Court’s) ruling on the substantive issues, Trump’s accountants will have to deliver his tax returns to the New York state grand jury.

(BTW, the caption of this post is a direct quote from the case of Nixon v. Fitzgerald, 418 U.S. 681, 709 (1974). See the slip opinion in Trump v. Vance at 28.)

The Wheels of Justice Are Speeding Up

“The mills of the gods grind late, but they grind fine,” is a quotation ascribed to the Greek philosopher Sextus Empiricus. It found its way into English via Longfellow’s translation from the German of the work “Retribution” by Friedrich von Logau. Today, the most common formulation of the concept is that “The wheels of justice grind slowly, but exceeding fine.”

Tonight, Chief Judge Beryl A. Howell of the U.S.D.C. for the District of D.C. denied the Justice Department’s request to stay her ruling directing that grand jury material from the Mueller investigation be turned over to the committees of the House of Representatives investigating impeachment.

While the current center of attention of the march to impeachment is Trump’s attempt to shake down the Ukrainian government, we tend to miss the fact that there is parallel impeachment inquiry ongoing, namely the inquiry into Trump’s efforts to obstruct justice. The pace of that inquiry accelerated this evening. As another poet put it: “Don’t speak too soon, for the wheel’s still in spin.”

The March to Impeachment

I’ve uploaded both the opinion of Judge Beryl H. Howell of the U.S.D.C. for the District of Columbia upholding the right of the House of Representatives’ to obtain grand jury material from the Mueller investigation and the complaint filed by Charles Kupperman who has been subpoenaed to testify before the House of Representatives’ impeachment inquiry.

Judge Howell’s long, detailed, and scholarly opinion makes mincemeat of the Trump Administration’s attempt to throw sand into the gears of the impeachment inquiry. The opinion is here.

The Kupperman complaint is in the nature of an interpleader action. (Note: Kupperman’s complain is not a “true” interpleader action which is governed by 28 U.S.C. § 1335 that deals with conflicting claims to money or property held by the plaintiff. Rather, Kupperman is seeking what amounts to a declaratory judgment pursuant to 28 U.S.C. § 2201.)

Kupperman was the former Deputy National Security Advisor and Acting National Security Advisor for Trump. He is requesting that the court tell him which directive he should honor: Trump’s executive branch order that he not appear or the House’s legislative branch subpoena. A copy of the complaint is here.

The Kupperman case has not been assigned to a particular judge. If the judge to whom it is ultimately assigned follows Judge Howell’s holding, Kupperman will then be informed that the Congressional subpoena trumps Trump’s order and the House subpoena to Kupperman will be deemed to be enforceable. I don’t know what would happen next, because it is unclear to me whether Trump could even appeal such a ruling if, once the court rules, Kupperman says that he’s satisfied with the ruling, dismisses his case, and then proceeds to testify before the House.

A Suggestion of Mootness

On Friday, the U.S. Court of Appeals for the D.C. Circuit upheld the enforcement of the subpoena for Trump’s tax returns issues by the House Committee of Oversight and Reform in a case captioned Trump v. Mazars USA, LLP (the “Mazars Case”). The three judge panel split 2-1, with Judge Neomi Rao dissenting. (The link at the D.C. Circuit’s website pulls up both the opinion of the Court and the dissent as a single file. For ease of use, I have broken that file into separate files. The Court’s opinion can be downloaded here. The dissent can be downloaded here.)

Judge Rao’s dissent is premised solely on what she believes is a limitation on Congress’ legislative power. She makes a distinction between the legislative power of Congress and what she terms its judicial power. Among the areas in which she believes that the judicial power can be exercised is that of impeachment. Thus:

[A]llegations of illegal conduct against the President cannot be investigated by Congress except through impeachment. The House may impeach for “Treason, Bribery, or other high Crimes and Misdemeanors,” U.S. CONST. art. II, § 4, and has substantial discretion to define and pursue charges of impeachment. See The Federalist No. 65, at 338 (impeachable offenses “are of a nature which may with peculiar propriety be denominated POLITICAL, as they relate chiefly to injuries done immediately to the society itself”). While it is unnecessary here to determine the scope of impeachable offenses, Congress has frequently treated violations of statutes or the Constitution as meeting this threshold. Impeachment provides the exclusive method for Congress to investigate accusations of illegal conduct by impeachable officials, particularly with the aid of compulsory process. Thus, the key determination is whether this investigation targets allegations Congress might treat as “high Crimes” or “Misdemeanors.” To make this determination requires no search for hidden motives, but simply crediting the Committee’s consistently stated purpose to investigate “illegal conduct” of the President. Cummings Memorandum at 4; cf. Eastland v. United States Servicemen’s Fund, 421 U.S. 491, 508 (1975) (“[I]n determining the legitimacy of a congressional act we do not look to the motives alleged to have prompted it.”).

Dissent slip op. at 6-7 (footnotes omitted).

I do not know whether the distinction that Judge Rao draws is valid. However, why do we even have to address that point now? When the subpoenas at issue in the Mazars Case were first issued, the House had not begun to explicitly investigate the possibility of impeachment. That is no longer the case. In response to Judge Roe’s dissent, the House Oversight Committee should simply issue a new subpoena seeking the same documents that were the subject of the first subpoena. The new subpoena would lack the infirmity that Judge Rao perceived in the subpoena at issue in the Mazars Case and her objections to that original subpoena would therefore be moot. The House could then get on with the pressing task of investigating whether Trump should be impeached. (Yes, I know that the White House Counsel has issued a letter refusing to cooperate with the various constituent parts of the impeachment investigation because, inter alia, there really isn’t a valid impeachment investigation. I suspect that this argument would not be tossed aside lightly by any reviewing court. Rather, it would be thrown aside with great force. Cf. here.)

Unrestricting Employees

While most of us have been distracted by such minor kerfuffles such as whether the president should be impeached, the real world continues to move forward. My friend, Julie Janofsky, relayed to me that Maryland has now, by statute, declared that non-competition covenants entered into by lower paid employees are not enforceable.

The statute, Md. Labor Law Art. § 3-716, makes such provisions unenforceable with respect to employees making $15 or less an hour or $31,200 a year or less. Customer lists and other proprietary information remain protected.

In 2016, the Obama Administration issued a “Call for Action,” urging states to render such provisions unenforceable. Needless to say, the Trump Administration did not join in encouraging such legislative action.

Here, as it is still often the case, Justice Brandeis, dissenting, got it right:

It is one of the happy incidents of the federal system that a single courageous State may, if its citizens choose, serve as a laboratory.

New State Ice Co. v. Liebmann, 285 US 262, 311 (1932).

Latest Immigration Ruling Setback for Trump Administration

I’ve posted the ruling by Judge Dolly Gee of the U.S.D.C. for the Central District of California in Flores v. Barr. That case deals with the Trump Administration’s attempt to overturn the settlement agreement reach in 1997 dealing with the manner in which the INS may detain immigrants who are minors.

The Court enjoined the Trump Administration’s regulations, which would have abrogated the settlement agreement, and granted the plaintiffs’ motion to enforce the agreement. The concluding paragraph of the opinion sets forth the nub of the legal issue:

The blessing or the curse – depending on one’s vantage point – of a binding contract is its certitude. The Flores Agreement is a binding contract and a consent decree. It is a final, binding judgment that was never appealed. It is a creature of the parties’ own contractual agreements and is analyzed as a contract for purposes of enforcement. Defendants cannot simply ignore the dictates of the consent decree merely because they no longer agree with its approach as a matter of policy. The proper procedure for seeking relief from a consent decree is a Rule 60(b) motion by which a party must demonstrate that a change in law or facts renders compliance either illegal, impossible, or inequitable. Relief may also come from a change in law through Congressional action. Having failed to obtain such relief, defendants cannot simply impose their will by promulgating regulations that abrogate the consent decree’s most basic tenets. That violates the rule of law. And that this Court cannot permit.

Slip op. at 24.

An important point to note with respect to all district court opinions blocking Trump Administration actions from this point on. There’s only a little over thirteen months until November, 2020. Many of these cases will not be heard by the Supreme Court by January 20, 2021. Thus, if these district court opinions withstand review by the relevant circuit courts, a new administration can protect the rulings merely by failing to seek Supreme Court review or, if review has been sought by an outgoing Trump (or Pence) Administration, withdrawing the appeal in the Supreme Court.

Finally, I note that while Judge Gee’s ruling has been reported on by the mainstream media, this is the first link to the opinion other than via PACER. Another illustration of the value of the RBC.

Corruption of the Bureaucracy Watch

The Washington Post had a great story which reported that:

Neil Jacobs, the acting head of the National Oceanic and Atmospheric Administration, sent an all-staff email Friday afternoon in an apparent effort to repair damage from an unusual Sept. 6 statement that sided with President Trump rather than agency weather forecasters.

I have obtained a copy of the email and have posted it here. It states that:

Scientific integrity is at the heart of NOAA’s mission and culture, and is essential for maintaining the public’s trust.

Of course, for the government to function properly, all of its component parts must act with integrity. Thus, the NOAA story is but a subpart of the much larger story of a broad-based attempt by the Trump Administration to undermine the integrity of the federal bureaucracy by the Trump Administration.

Going forward, I will attempt to focus on similar examples of this corruption. One question that I would pose to those contributors to the RBC who are from the UK: Is the bureaucracy there under a similar attack? If it either is or were presented with similar pressures, is it institutionally more resistant?