Antitrust Law Daily Restaurant’s ‘unfair competition’ claim against Trump D.C. hotel rejected
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Friday, February 28, 2020

Restaurant’s ‘unfair competition’ claim against Trump D.C. hotel rejected

By Thomas G. Wolfe, J.D.

The complaint failed to show how President Trump or the Trump Hotel interfered with access to the Cork Wine Bar’s restaurant’s business.

The Cork Wine Bar’s allegations of an unfair advantage caused by the Trump International Hotel’s association with President Trump did not amount to a cognizable unfair competition claim under District of Columbia law, the U.S. Court of Appeals in Washington, D.C. ruled. Neither the president nor the Trump Hotel had interfered with access to Cork’s business in the "District of Columbia’s U Street corridor." Depicting the complaint of K&D, LLC—the owner of the Cork Wine Bar—as "an assertion that businesses with famous proprietors cannot compete fairly," the court viewed that proposition as "alien to unfair-competition law." Further, because President Trump raised a colorable federal defense and demonstrated that the restaurant’s lawsuit fell within the scope of the "federal officer removal" statute, the case had been properly removed to the federal district court (K&D LLC v. Trump Old Post Office LLC, February 28, 2020, Griffith, T.).

K&D, LLC owns the Cork Wine Bar (collectively Cork), a restaurant "on the edge of the District of Columbia’s U Street corridor." Meanwhile, Trump Old Post Office, LLC operates (and holds the lease for) the nearby Trump International Hotel on Pennsylvania Avenue, a business held in trust for the sole benefit of President Donald Trump. The Trump Hotel, which opened in 2016, "features event spaces, a restaurant, and a lounge, and competes with Cork to host private events for international delegations and domestic public-interest groups."

After the 2016 election of President Trump, Cork observed that the competitive balance shifted toward the Trump Hotel, as the hotel attracted "more of the lobbyists, advocacy groups, and diplomats that Cork had relied on to fill its event calendar." Cork maintained that these customers chose the Trump Hotel because of the perception that patronizing the hotel "would be to their advantage" in their dealings with the Trump Administration.

Complaint; procedural context. In March 2017, Cork filed a lawsuit in the District of Columbia Superior Court against President Trump and the Trump Hotel, raising a claim of unfair competition under the District’s common law for the "unfair advantage" that the hotel gained from Donald Trump being President of the United States. While Cork sought declaratory and injunctive relief for the common-law claim, the lawsuit did not raise any claims under the U.S. Constitution or federal law.

Citing the "federal officer removal statute" (28 U.S.C. § 1442(a)(1)), President Trump successfully removed the action to the federal district court in Washington, D.C. The trial court then granted President Trump and the Trump Hotel’s request to dismiss Cork’s unfair competition claim, and Cork appealed.

Federal officer removal. Cork argued that the case was improperly removed from the District of Columbia court to the federal trial court. The "federal officer removal statute" (28 U.S.C. § 1442(a)(1)) allows "any officer ... of the United States" to remove to federal court a state suit that is "for or relating to any act under color of such office." Along these lines, President Trump raised two federal defenses for the removal: (1) the District of Columbia may not impose legal conditions on the lawful performance of his presidential duties; and (2) as the U.S. President, he was entitled to absolute immunity from personal liability.

Noting that the "federal officer removal statute" constitutes an exception to the well-pleaded-complaint rule, the D.C. Circuit stated, "[W]e take no position on the merits of President Trump’s defense." Rather, the court concluded that, under President Trump’s theory of the case, his first defense was "colorable." Moreover, the federal appellate underscored that Donald Trump’s position as President constituted a "necessary condition for Cork’s theory of liability" because Trump’s "assumption of office is what caused the alleged unfair competition to begin." Since the court found the President’s first argument to be persuasive to support the removal of the case to the federal trial court and that court’s jurisdiction, it did not need to address the President’s alternative argument based on presidential immunity.

Unfair competition claim. Turning to the merits of Cork’s unfair competition claim under the District’s common law, the D.C. Circuit observed that the District’s case law "does not define unfair competition in terms of specific elements," but rather, by way of example, describes "various acts that would constitute the tort if they resulted in damage."

With this legal paradigm in mind, the court stated, "Cork makes no meaningful attempt to square its unfair competition claim with District law. The gravamen of Cork’s complaint is that so long as the President retains a stake in the Hotel, Cork cannot fairly compete, because of the ‘perception’ that Hotel patrons will receive favorable treatment from the Trump Administration." According to the court, Cork only "suggests in passing" that President Trump and the Trump Hotel are "impairing competition" and "interfering with access" to Cork’s business. However, that type of abstract characterization "bears little resemblance to the examples listed" in the case law, and Cork cites no case showing that the allegations here fall into those categories of unfair competition," the court determined.

In upholding the lower court’s dismissal of the unfair competition claim, the D.C. Circuit remarked, "In fairness, Cork did not plan on having its common-law claim adjudicated in a court incapable of adapting the common law to fit these allegations." In addition, the court exercised its discretion to decline Cork’s request to "certify the core question of District law" to the District of Columbia Court of Appeals.

The case is No. 18-7185.

Attorneys: Alan B. Morrison (GW Law) and Mark S. Zaid and Bradley P. Moss (Mark S. Zaid, P.C.) for K&D LLC. Michael E. Kenneally, Eric W. Sitarchuk, Fred F. Fielding, and Rebecca Woods (Morgan, Lewis & Bockius LLP) for Trump Old Post Office LLC and Donald J. Trump.

Companies: K&D LLC; Trump Old Post Office LLC

MainStory: TopStory DistrictofColumbiaNews StateUnfairTradePractices

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