Category: Enjoining third parties from complying

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More Standing Confusion in Mazars/Deutsche Bank

Since my last post on standing in Mazars/Deustche Bank, the Supreme Court ordered the parties to file supplemental briefs on the question whether the political question doctrine or “related justiciability principles” bear on the Court’s consideration of these cases. These letter briefs have now been filed and, not surprisingly, none of the parties have changed their position that the case is justiciable and the Court should decide it on the merits.

It is important to note that the Court’s order was specifically focused on political question-type issues, which presumably means the Court wants to know whether there is a problem in deciding what is in substance, if not form, a dispute between the legislative and executive branches. In my interpretation, the Court was asking the Solicitor General in particular how to explain the Justice Department’s position that Article III does not permit the Court to adjudicate subpoena disputes between the branches, yet somehow allows the Court to decide exactly the same type of separation of powers issue raised by President Trump’s attack on the congressional subpoenas to third parties here.

That is a good question and the Solicitor General’s answer, IMHO, amounted to gobbledygook. Hopefully this question will be pursued in oral argument and we may discuss it further in due course. For today, however, I want to focus on the logically antecedent question of what gives Trump standing to complain about the congressional subpoenas in the first place. Although this was not the focus of the Court’s order, Trump’s lawyers spent the first page and a half of their letter brief attempting to explain why such standing exists. Their argument, however, did nothing to assuage my skepticism.

They begin by asserting that the disclosure of Trump’s “private records” or “private papers” is a “tangible” and “concrete” injury. The nature of the injury is not further explained. Is it based upon the premise that Trump owns the records or information in question? As discussed in my prior post, it is not apparent that the records in question necessarily belong to Trump personally. Indeed, the letter brief refers to “Petitioners’ private records,” but “petitioners” include corporate entities which are legally distinct from Trump. Similarly, to the extent that standing is premised on an alleged legal right to prohibit the third party accountant and banks from disclosing the information in question, such right may belong to various business entities, only some of which are even parties to the lawsuit.

The brief cites no authority for the proposition that an individual generally has standing to object to a subpoena for his private papers or financial information in the hands of a third party. It does cite Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), which holds that Congress’s effort to curb the dissemination of false personal information in the Fair Credit Reporting Act does not establish that such dissemination results in a concrete harm to an individual whose information was so disclosed. How this case supports Trump’s standing is left to the imagination.

The brief also quotes United States v. Nixon, 418 U.S. 683, 696 (1974), for the proposition that “‘resistance to [a] subpoena present[s] an obvious controversy in the ordinary sense.'” Hopefully, however, an enterprising Supreme Court clerk will look up the full quote, which goes like this:

The demands of and the resistance to the subpoena present an obvious controversy in the ordinary sense, but that alone is not sufficient to meet constitutional standards. In the constitutional sense, controversy means more than disagreement and conflict; rather it means the kind of controversy courts traditionally resolve. Here [the matter is justiciable because] at issue is the production or nonproduction of specified evidence deemed by the Special Prosecutor to be relevant and admissible in a pending criminal case. It is sought by one official of the Executive Branch within the scope of his express authority; it is resisted by the Chief Executive on the ground of his duty to preserve the confidentiality of the communications of the President.

Id. at 696-97. In Trump’s case, of course, he is not “resisting” a subpoena at all; instead, he is attempting to enlist the assistance of the courts to prohibit third parties from complying with subpoenas. Moreover, he is not claiming that those subpoenas violate either an official privilege (as President Nixon did) or a personal privilege. Instead, he argues that the subpoenas exceed the authority of the committees that issued them because those committees lack a legitimate legislative need for the information sought. True, he bases this argument in part on the idea that Congress lacks the power to enact certain legislation relating to the presidency, but he does not claim that the production of the information itself violates some legal right or privilege belonging to him.

To see the difference, consider the congressional hearing at which Trump’s former personal lawyer, Michael Cohen, testified about various legal and ethical improprieties in the conduct of Trump’s personal and financial affairs. Trump undoubtedly would have had standing to sue Cohen to prevent him from testifying as to information protected by the attorney-client privilege (why he chose not to do so is something of a mystery). But I don’t see why he would have standing to object to Cohen’s testimony on the ground that the committee’s investigation lacked a legislative purpose, any more than he could complain that the subject of the investigation fell within the jurisdiction of a different committee under the House rules. These are objections that Cohen himself could have raised, but third parties would not, at least ordinarily, be permitted to do so.

Finally, Trump’s brief cites Eastland v. U.S. Servicemen’s Fund, 421 U.S. 491 (1975), which suggests that a third party may be able challenge a congressional subpoena for lack of a legitimate legislative purpose. As we have discussed before, however, the language in Eastland was dicta in the context of a claim that the subpoena violated the third party’s constitutional rights. As explained by another case cited in Trump’s brief, “[t]he plaintiffs have standing to challenge the legality of [congressional] subpoenas on the ground that the forced disclosure of the materials requested would allegedly violate their federal constitutional rights . . .” Bergman v. Senate Special Comm. on Aging, 389 F. Supp. 1127, 1130 (S.D.N.Y. 1975).

There are undoubtedly many cases in which an individual would be injured by a subpoena to a third party seeking private or personal information about that individual. The fact that Trump cannot identify any authority for applying the Eastland dicta outside the context of a claimed violation of constitutional right or privilege is reason to be skeptical that it applies to mere attacks on the validity of a subpoena to a third party.

 

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Could Standing Still be an Issue in Mazars/Deutsche Bank?

When we first discussed the Mazars case (almost one year ago), I suggested that one of the issues would be whether President Trump had standing to object to congressional document subpoenas directed to third parties when he was not claiming constitutional or other privilege in the subpoenaed documents. While Trump and his companies objected to the subpoenas on the grounds that the underlying investigation lacked a legitimate legislative purpose, it was not clear that anyone other than the subpoena recipients should be able to challenge them on that basis.

However, the House did not raise standing as an issue in either the Mazars (involving a subpoena to Trump’s accounting firm) or Deutsche Bank (involving subpoenas to two banks for records relating to Trump’s finances) cases. Nor did any of the judges in those cases question standing. In her Mazars dissent, Judge Rao asserts “[a] subpoena’s force extends beyond its recipient, which the majority has implicitly acknowledged by declining to question President Trump’s standing to challenge the subpoena’s validity.” In Deutsche Bank, the Second Circuit notes “there is no dispute that Plaintiffs had standing in the District Court to challenge the lawfulness of the Committees’ subpoenas by seeking injunctive relief against the Banks as custodians of the documents. See United States Servicemen’s Fund v. Eastland, 488 F.2d 1252, 1260 (D.C. Cir. 1973) (‘[T]he plaintiffs have no alternative means to vindicate their rights.’) (italics omitted), rev’d on other grounds without questioning plaintiffs’ standing, 421 U.S. 491 (1975).” In their Supreme Court brief, Trump’s counsel simply observe that neither the DC Circuit nor Second Circuit  questioned standing and cite a footnote in the Supreme Court’s Eastland decision for the proposition that third parties can challenge legislative purpose. Brief for Petitioners at 59 n.7 (filed Jan. 27, 2020); see Eastland v. United States Servicemen’s Fund, 421 U.S. 491, 501 n. 14 (1975).

Eastland, however, involved a claim that the subpoena to a bank for an organization’s financial records violated its First Amendment rights. Here there is no claim that the subpoena violates any constitutional privilege or right; Trump simply objects to the validity of the investigation in which the subpoena was issued. As I noted in my original post, I would not read the footnote in Eastland as allowing third parties to challenge the legislative purpose of a congressional subpoena when that purpose is not relevant to an asserted constitutional privilege. And the conclusory references to Eastland  suggest that there is no other caselaw supporting the argument for standing.

In any event, Trump’s standing is premised on the idea, suggested by the Second Circuit, that the subpoenaed records belong to him, and the banks (and the accounting firm) are merely “custodians.” But it is not at all clear that this is true for many of the documents in question. As the House points out       “[m]any of the subpoenaed documents are internal bank records that the President may never have seen or even known about.” Brief for Respondents at 65 (filed Feb. 26, 2020). 

Furthermore, an amicus brief filed by two Boston University law professors points out that most of the records at issue are not Trump’s personal financial records but records of various business entities that are legally separate from him. Indeed, in many cases these entities no longer exist, no longer are owned by Trump and/or are not parties to the litigation. They argue that Trump has no rights in these corporate records and cannot assert any of his legal objections with respect to them. See Brief of Boston University School of Law Professors Sean J. Kealy and James J. Wheaton as Amici Curiae in Support of Respondents at 23-26 (filed Mar. 3, 2020). They also argue that even those entities which are parties to the litigation cannot assert claims based on alleged lack of legitimate legislative purpose because those claims are founded in separation of powers concerns which have no possible application to these business organizations. Id. at 27-29; see also Brief for Respondents at 65 (“The fact that the President is the principal owner of the Trump Organization cannot provide it immunity from Congressional investigation.”).

All of which suggests to me it remains possible that the Court could dispose of this case for lack of standing (which, of course, is a non-waivable jurisdictional requirement). The chief justice will undoubtedly want the Court to speak with one voice if at all possible, and standing might be the way to achieve that result. I suspect, moreover, that the justices will have qualms about opening up the federal courts to litigants seeking to delay and disrupt congressional investigations, a point that was well argued by an amicus brief filed on behalf of former House general counsels and congressional staff. See Brief of Former House General Counsels and Former Congressional Staff as Amici Curiae Supporting Respondents (filed Mar. 4, 2020).

We will see if standing comes up in the (telephonic) oral argument now scheduled for May 12.

 

 

 

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What to Look For in the Mazars Oral Argument

Tomorrow the Mazars subpoena case will be argued before the D.C. Circuit (Judges Tatel, Millett and Rao). In this appeal, President Trump (in his private capacity) has advanced a novel and audacious theory in support of his contention that the congressional subpoena at issue lacks a “legitimate legislative purpose.” Trump is asking the D.C. Circuit to reverse the decision of the district court, which denied Trump’s application for an injunction to prevent Mazars, his accounting firm, from producing financial records responsive to the subpoena.

As Judge Mehta pointed out in his decision below, the legal standards employed by the courts to review congressional subpoenas and investigations are generally so deferential that they “do not substantially constrain Congress.” Rather than fighting this proposition head on, Trump’s lawyers focus primarily on seeking a carve-out from Congress’s broad investigatory and oversight authority for those who hold constitutional offices (i.e., the president and Supreme Court justices).

The lynchpin of this argument is the distinction between Congress’s legislative and judicial powers. Although it has long been understood that Congress must have some ability to obtain information needed to consider and craft legislative measures, the scope of this power was once highly controversial. Following the Supreme Court’s decision in Kilbourn v. Thompson, 103 U.S. 168 (1880), which stressed that Congress, unlike the British Parliament, was not a court of general jurisdiction, it was widely believed that Congress’s authority to compel the production of information for legislative purposes was limited at best. This reading of Kilbourn, however, was undermined by later Supreme Court cases beginning with McGrain v. Daugherty, 273 U.S. 135 (1927). These subsequent cases, Judge Mehta noted, render Kilbourn “largely impotent as a guiding constitutional principle.”

Trump attempts to revive Kilbourn for a limited purpose. His theory goes something like this. Congress generally has broad legislative and oversight authority with respect to the departments and agencies of government, including offices created by statute. With respect to constitutional offices, however, Congress’s legislative authority is “severely constrained.” Trump Br. at 4, 38. Thus, Trump claims that Congress cannot rely on its legislative authority to seek his financial records because these records are not relevant to a subject on which legislation may be had.

To be sure, Trump acknowledges that Congress also has powers of a judicial nature. But, following Kilbourn, he stresses that these are not of general scope, but are limited to those areas expressly identified in the Constitution, namely judging elections, disciplining members, and, most importantly, impeachment. For those who hold constitutional offices, therefore, impeachment is the only method (Trump argues) by which Congress can investigate alleged wrongdoing.

Thus, “[w]hile Congress could presumably use subpoenas to advance these non-legislative powers, the Committee has not invoked them.” Trump Br. at 45. In fact, Trump takes pains to demonstrate that Speaker Pelosi has disavowed any intent to go down the path of impeachment. Trump Br. at 47-48.

The novelty of this argument is illustrated by the fact that one of the principal “authorities” cited in Trump’s brief is a three-page law student note that is more than a century old. See Note, Congressional Power to Punish for Contempt, 30 Harv. L. Rev. 384 (1917) (cited in Trump Br. at 17-18). The apparent utility of this note from Trump’s perspective is that it vividly distinguishes congressional contempt in the context of impeachment from that in the context of legislative oversight:

A committee of the House considering an impeachment is like a Grand Jury hearing evidence which may lead to the return of an indictment– it is a judicial body and it is one provided for by the Constitution. It must surely have the power to call witnesses, and the power is of little avail if these witnesses may contemptuously refuse to respond, or may be influenced or intimidated by outside contempts of the body before whom they are testifying. If the House is to sit in a judicial capacity, it must have the protection that a court has.

Note, 30 Harv. L. Rev. at 385. Yet even this note, which predates McGrain, concludes that “[t]he power to legislate . . . by necessary implication include[s] the power to examine witnesses and to compel them to respond by contempt proceedings.” Id. at 386.

Why would the Trump team rely on what seems like a very long shot argument? The short answer is I don’t know, but three possibilities come to mind. First, Trump’s lawyers may simply believe this is the best argument available to them. Second, it may be thought that stressing the lack of impeachment proceedings helps Trump’s cause beyond the confines of this particular case (e.g., with public opinion and/or with courts that will be ruling on more difficult subpoena enforcement issues in the months ahead). Third, Trump’s legal team may believe that advancing a bold legal theory is the best way to get the Supreme Court to grant certiorari, which strings out the proceedings even if it is unlikely to deliver an ultimate victory.

The two things to look for in tomorrow’s argument: (1) how much interest does the panel show in impeachment and why the House has declined to initiate impeachment proceedings to date, and (2) whether Judge Rao (the lone Republican appointee) seems at all open to Trump’s arguments. A unanimous panel opinion will make further review less likely.

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Why the Mazars and New York Bank Cases are Moving So Fast, and Why Others Will Not

On Monday, May 20, 2019, Judge Mehta dismissed Trump v. Committee on Oversight and Reform, No. 19-civ-01136 (D.D.C.). The judge’s ruling came just four weeks after President Trump (in his personal capacity) and several of his businesses filed suit to enjoin enforcement of a congressional subpoena to Mazars, an accounting firm that had worked for the Trump companies.  This quick resolution may have surprised some observers because legal experts have been predicting that legal fights between the administration and Congress are likely to drag on for many months if not years and could well be still in litigation when this congress expires in January 2021.

It is important to understand, however, that the Mazars case (and the case in New York which Trump seeks to block congressional subpoena to banks for his financial records) are in a very different procedural posture from other ongoing information disputes (such as those over the Mueller report and related documents, tax returns, or the testimony of current or former administration officials). Mazars and the New York banks are third parties that have indicated they will comply with the congressional subpoenas unless ordered to do otherwise by a court. Therefore, it is Trump’s legal team which needs judicial intervention to alter the status quo, whereas in the other disputes Congress will likely be in the position of asking for judicial assistance.

In the Mazar and New York bank cases, Trump’s legal team initially asked for emergency judicial relief (i.e., a TRO) in order to prevent the cases from becoming moot by virtue of the third parties complying with the subpoenas. In both cases, however, the House Counsel’s office agreed to postpone the return date for the subpoenas until 7 days after a district court ruling on the motion for a preliminary injunction, thereby rendering it unnecessary to have a TRO. As part of the same agreement, the parties agreed to an expedited schedule for briefing and oral argument (which both courts accepted and entered as orders).

As the result of that agreement, Trump’s team was now in the position of nominally seeking expedited relief (a preliminary injunction), but actually no longer needing it so long as the court did not rule on the preliminary injunction motion. This anomaly presented itself when Judge Mehta proposed consolidating the preliminary injunction hearing with a final trial on the merits. Trump’s lawyers objected, saying that they needed more time to prepare for such a trial, and suggesting that instead the preliminary injunction hearing could be pushed back so the record could be fully developed. The House oversight committee, in contrast, had no objection to the proposed consolidation, but emphasized that the preliminary injunction hearing should go on as scheduled regardless.

Judge Mehta did in fact consolidate the merits trial with the preliminary injunction, but it is not clear this mattered much. If the judge had simply denied the preliminary injunction, Mazars would have been expected to comply with the subpoena after 7 days regardless. Presumably Trump’s lawyers would have asked for the judge to stay his ruling until a final merits decision, but they would have been in no better posture (and arguably somewhat worse) than they were as a result of the consolidation. Following the court’s ruling against them on both the preliminary injunction and the merits, they asked the court for a stay, which was denied. Now the plaintiffs’ only option is to obtain a stay from the D.C. Circuit so as to prevent the case from becoming moot before the appellate court can hear it. Had the case not been consolidated, they probably could have sought such relief from the appellate court, but it might have been even harder to get the court to intervene on a matter that was still before the district court (admittedly I am just guessing about this).

In any event, unless the D.C. Circuit issues a stay of the district court’s ruling, Mazars will be required to comply with the subpoena as early as next week. If Judge Ramos, who is presiding over Trump v. Deutsche Bank, No. 1:19-cv-03826 (SDNY) and is hearing argument today,  similarly denies Trump’s preliminary injunction motion, that case could also end within a week of the ruling unless either the district court or the Second Circuit issue a stay.

None of the other information disputes currently percolating are likely to move anywhere nearly as quickly as this. If cases are brought directly against the administration (eg, for the Mueller report or Trump’s tax returns), the congressional plaintiff will not be able to seek expedited relief (a TRO or preliminary injunction) since it will be seeking to change, not preserve, the status quo. Moreover, the executive branch defendant will have little incentive to agree to an expedited briefing or argument.

Exactly how fast a case may move at the district court level will depend on a number of factors, including the complexity of the legal issues and whether any discovery or document review is necessary to resolve the matter (going through the 1.4 million pages of Mueller documents to determine the applicability of different executive privilege claims, for example, could take a very long time). But even a case that presents a relatively straightforward legal issue is likely to take a few months with a normal briefing and argument schedule. In the Miers case, for example, Judge Bates issued his ruling in favor of the House Judiciary Committee about 4 and a half months after the action was filed.

Of course, the district court has a great deal of discretion with regard to scheduling matters. Judge Mehta clearly believed that it was important to expedite the Mazars case (even going so far as to consolidate the merits trial on his own initiative). Even there, though, the court’s reasons for acting quickly were based in part on the fact that it was being asked to interfere with the functioning of a coordinate branch of government. A district court might be less inclined to act quickly when it is being asked by the legislative branch to order the executive branch to turn over information.

Furthermore, however quickly the district court decides the case, the executive branch still has the right to appeal that decision, to seek rehearing en banc of any appellate decision, and ultimately to petition the Supreme Court for review. Even assuming that neither the en banc court nor the Supreme Court decide to hear the case, it is difficult to imagine the full process being complete in much less than a year.

One category of case that might be resolved more quickly would be enforcement actions by Congress against former executive officials like Don McGahn. These individuals are in a situation somewhat analogous to third parties like Mazars, in that they do not have (or purport not to have) a position or interest in whether or not they comply with the subpoena. On the other hand, they do purport to have an obligation to follow the president’s instructions with regard to asserting executive privilege (though opinions differ on whether such an obligation exists).

At any rate, if a district court orders such a former official to comply with a congressional subpoena, the    former official may not wish to risk possible contempt of court by continuing to defy the subpoena. Even if the Justice Department is able to obtain a stay from the district court or the court of appeals, the former official could decide that the district court’s decision is sufficient to release him from any further obligation not to comply. Thus, these cases could be resolved more quickly than direct suits against the executive branch, though probably not as quickly as the Mazars and New York bank cases.