DC attorney general vows to fight Trump hotel case to Supreme Court

Suit filed in 2017

By CNN'S CRISTINA ALESCI, SARAH MUCHA AND KATELYN POLANTZ CONTRIBUTED TO THIS REPORT.
Pool via CNN

(CNN) - A trio of Republican-appointed federal appeals court judges in Virginia indicated in oral arguments Tuesday that they are skeptical of a lawsuit filed by the District of Columbia and Maryland over President Donald Trump's ongoing interest in his family company, the Trump Organization.

One of the judges asked whether the suit was politically motivated -- a sign of the deep partisan divisions over questions concerning the President's business arrangements.

Both attorneys general are Democrats. They claim Trump is violating the constitutional ban on government officials accepting gifts or favors from foreign or domestic government entities because he maintains a stake in the Trump International Hotel in Washington.

Attorneys for the Justice Department argued in Tuesday's hearing that the President can't be sued while in office.

DC Attorney General Karl Racine told CNN after the hearing that he plans to appeal to a full court panel if Tuesday's smaller panel of three judges rules in favor of the government, and would be willing to take his case to the Supreme Court.

"I think we very much believe very strongly in our case," Racine told CNN. "As far as whether the case will go to the US Supreme Court, it appears as though both parties are firm in their positions in this case, and so that wouldn't surprise me that this case ultimately would end up in the Supreme Court."

If the lawsuit is allowed to move forward, the Trump Organization may be required to turn over an array of internal documents, potentially offering a window into the operation of the business.

The Trump International, on Pennsylvania Avenue within sight of the White House, is the favored destination for Trump and first lady Melania Trump when eating outside the White House, and it has become a gathering point for Trump supporters as well as for groups with business before the administration.

The Trump administration argues that the lawsuit is causing the President harm and would interfere with the separation of powers, according to court documents.

The suit was filed in 2017 by Racine and his Maryland counterpart Brian Frosh, who argue the Trump International Hotel's operations put nearby hotels and entertainment properties at a competitive disadvantage and that the hotel, which won its lease on a federally owned property before Trump's election, got special tax concessions.

A federal district judge allowed the state governments to pursue their lawsuit in July 2018 against Trump in his official capacity as President. The states later dropped the part of the lawsuit that went after him personally.

The judge allowed DC and Maryland to begin issuing subpoenas last year. Information requests were sent to many of Trump's private businesses, various federal agencies and 18 other unnamed entities that compete with the Trump International. While the subpoenas didn't ask for the President's personal tax returns, they do request tax documents from his businesses that could begin to fill out a picture of his own finances.

The Department of Justice claims that the case from the attorneys general is based on "a host of novel and fundamentally flawed constitutional premises" and the evidence-gathering process for the case would include "intrusive discovery into the President's personal financial affairs and the official actions of the administration," according to court documents.

The Justice Department appeal has halted the discovery process and put the case on hold.

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