Trump Has Unfair Advantage in Hospitality Game, Lawsuit Claims

By Jon Steingart, Bloomberg BNA

President Donald Trump’s hospitality businesses hurt workers in Washington, D.C., New York City and elsewhere by illegally benefiting from his presidency to siphon revenue from competitors’ operations, a federal lawsuit alleges.

“It’s hard enough to be a restaurant worker in America,” said Saru Jayaraman, co-director of Restaurant Opportunities Center United, which joined the lawsuit April 18. “So now on top of that, to be competing with the president for business, income and tips? Foreign officials will feel compelled, urged and pressured to curry favor with the president by staying at Trump hotels and eating at restaurants in Trump hotels.”

Norm Eisen and Richard Painter, who served as White House ethics lawyers in the Barack Obama and George W. Bush administrations, represent the plaintiffs. They’re joined by constitutional law scholars Erwin Chemerinsky of UC Irvine, Laurence Tribe of Harvard and Zephyr Teachout of Fordham. Deepak Gupta of Gupta Wessler PLLC and Joseph Sellers of Cohen Milstein Sellers & Toll PLLC also represent the challengers.

Restaurant Opportunities Center United became a party in the lawsuit to advocate on behalf of its member restaurants and restaurant workers who allegedly lose income when customers take their business to Trump operations. ROC United also sued on its own behalf because it runs COLORS NY restaurant in Manhattan, which competes with Trump establishments.

The relationship between Trump enterprises and others isn’t an ordinary business paradigm, Jayaraman told Bloomberg BNA April 18. “The problem here is that he is both the president and the owner of these hotels and restaurants where these ambassadors and dignitaries feel compelled to stay and eat,” she said. “It isn’t free competition.”

Jill Phaneuf, a Washington, D.C., event booker, also joined the lawsuit April 18, saying in the complaint that she has lost business to the city’s new Trump International Hotel.

The Trump Organization, which is the parent company for Trump’s business interests, didn’t immediately respond to a request for comment.

The Constitution prohibits the U.S. president from receiving gifts or “emoluments” from foreign states without congressional authorization. Trump violates this clause by receiving income when foreign dignitaries patronize his businesses, according to the lawsuit, which Citizens for Responsibility and Ethics in Washington originally filed Jan. 23.

The case is: Citizens for Responsibility and Ethics in Washington v. Trump, S.D.N.Y., No. 1:17-cv-00458, complaint amended 4/18/17

To contact the reporter on this story: Jon Steingart in Washington at jsteingart@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com; Christopher Opfer at copfer@bna.com


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