Overview
Friday morning, the Second Circuit vacated the district court's dismissal of a suit challenging President Trump's business dealings under the Foreign and Domestic Emoluments Clauses of the U.S. Constitution. (See our prior coverage here.) In December 2017, Judge Daniels found that Plaintiffs had failed the causation and redressability prongs of the Article III standing inquiry, and lacked prudential standing because they fell outside the "zone of interests" that the Emoluments Clauses were intended to protect.
In a 2-1 decision, the Second Circuit held that Plaintiffs had satisfied the requirements for standing:
The district court demanded too much at the pleading stage by requiring allegations that dispel alternative possible explanations for Plaintiffs’ injury. The district court identified various alternative theories that could explain a decline in Plaintiffs’ business . . . [and] found Plaintiffs’ pleadings inadequate because they failed to dispel these alternative explanations. In so doing, the district court effectively required plaintiffs to prove, pre‐discovery, the facts necessary to win at trial. This was error. . . . The Supreme Court has repeatedly upheld the standing of a plaintiff‐competitor who alleges a competitive injury caused by a defendant’s unlawful conduct that skewed the market in another competitor’s favor, notwithstanding other possible, or even likely, causes for the benefit going to the plaintiff’s competition.The court also clarified that "a plaintiff who sues to enforce a law that limits the activity of a competitor satisfies the zone of interests test even though the limiting law was not motivated by an intention to protect entities such as plaintiffs from competition." Earlier this year, the Fourth Circuit reached the opposite conclusion in a similar case, In re Donald J. Trump, 928 F.3d 360 (4th Cir. 2019), and so there is now a circuit split on this issue.