K&D LLC v. Trump Old Post Office LLC ( 2020 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 22, 2019 Decided February 28, 2020
No. 18-7185
K&D LLC, TRADING AS CORK,
APPELLANT
v.
TRUMP OLD POST OFFICE LLC AND DONALD J. TRUMP,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:17-cv-00731)
Alan B. Morrison argued the cause for appellant. With him
on the briefs were Mark S. Zaid and Bradley P. Moss.
Michael E. Kenneally argued the cause for appellees. With
him on the brief were Eric W. Sitarchuk, Fred F. Fielding, and
Rebecca Woods. Allyson N. Ho entered an appearance.
Before: GARLAND and GRIFFITH, Circuit Judges, and
WILLIAMS, Senior Circuit Judge.
Opinion for the Court filed by GRIFFITH, Circuit Judge.
2
GRIFFITH, Circuit Judge: Cork Wine Bar, a restaurant on
the edge of the District of Columbia’s U Street corridor,
competes with President Donald Trump’s eponymous
Pennsylvania Avenue hotel. Cork brought suit in the Superior
Court of the District of Columbia alleging violations of the
District’s common law of unfair competition. President Trump
removed the suit to federal court under the federal officer
removal statute, 28 U.S.C. § 1442(a)(1). The district court
denied Cork’s motion to remand the case, then dismissed its
complaint for failure to state a claim. We affirm.
I
At the motion-to-dismiss stage, “we accept as true all of
the complaint’s factual allegations.” Owens v. BNP Paribas,
S.A., 897 F.3d 266, 272 (D.C. Cir. 2018). K&D, LLC, owns
Cork Wine Bar. The Trump International Hotel is a business
held in trust for the sole benefit of President Trump. Trump Old
Post Office, LLC, operates the Hotel and holds the lease to the
historic Pennsylvania Avenue structure. The Hotel, which
opened in September 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.
Cork noticed that the competitive balance shifted toward
the Hotel after the 2016 election, when the Hotel began to
attract more of the lobbyists, advocacy groups, and diplomats
that Cork had relied on to fill its event calendar. Cork alleges
that these customers chose the Hotel because of a “perception”
that patronizing the Hotel “would be to their advantage in their
dealings with” the Trump Administration. Compl. ¶ 18, J.A.
28. President Trump and his associates have encouraged and
advanced this perception by, among other things, using the
President’s surname as the Hotel’s logo and promoting the
3
Hotel during press conferences and meetings with government
officials. As a result, “foreign dignitaries have . . . flocked to
the Hotel,” id. ¶ 21, J.A. 29, including the Ambassador of
Azerbaijan, whom Cork hosted prior to the election, id.
¶¶ 27-28, J.A. 31.
On March 9, 2017, Cork filed suit in the District of
Columbia Superior Court against President Trump and the
Hotel. Cork raised a claim of unfair competition under District
common law for “the unfair advantage that the [Hotel] . . . has
gained from Defendant Donald J. Trump being the President of
the United States,” id. ¶ 2, J.A. 25, and sought declaratory and
injunctive relief. Cork did not raise any claim under the
Constitution or laws of the United States.
Citing the federal officer removal statute, President Trump
filed a timely notice of removal in federal court. See 28 U.S.C.
§ 1442(a)(1). Cork promptly moved to remand the case, but the
district court denied that motion in a minute order. Once in
federal court, President Trump and the Hotel moved to dismiss
Cork’s complaint for failure to state a claim.
The district court granted their motion to dismiss,
concluding that Cork’s allegations of unfair advantage caused
by the Hotel’s association with President Trump did not
amount to a cognizable unfair-competition claim under District
law. Neither the President nor his Hotel had interfered with
access to Cork’s business, the court held. Instead, Cork’s
complaint boiled down to an assertion that businesses with
famous proprietors cannot compete fairly—a proposition alien
to unfair-competition law. Cork filed a timely appeal.
4
II
Cork first argues that the case was improperly removed
from the District of Columbia court. We must resolve this
jurisdictional issue before turning to the merits.
If removal was proper under the federal officer removal
statute, the federal court had “jurisdiction over all the claims
and parties in the case.” District of Columbia v. Merit Sys. Prot.
Bd., 762 F.2d 129, 132 (D.C. Cir. 1985). That statute 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.” 28 U.S.C. § 1442(a)(1).
We apply a two-step test in officer-removal cases. First,
the officer must “raise a colorable federal defense.” Jefferson
Cty. v. Acker, 527 U.S. 423, 431 (1999). Second, the officer
must show that the suit is one “for or relating to any act under
color of [his] office.” 28 U.S.C. § 1442(a)(1). We must
construe the statute liberally in favor of removal, Watson v.
Philip Morris Cos., 551 U.S. 142, 147 (2007), and “we credit
the [officer’s] theory of the case for purposes of both elements
of” the removal inquiry, Acker, 527 U.S. at 432.
A
Removal under section 1442(a) constitutes an exception to
the well-pleaded-complaint rule. “[F]ederal jurisdiction
generally exists only when a federal question is presented on
the face of the plaintiff’s properly pleaded complaint.” Holmes
Grp., Inc. v. Vornado Air Circulation Sys., Inc., 535 U.S. 826,
831 (2002) (internal quotation marks omitted). But under
section 1442(a), a suit may be removed “despite the nonfederal
cast of the complaint” as long as the defendant presents a
“colorable federal defense.” Acker, 527 U.S. at 431. The
federal defense need only be “colorable,” not “clearly
5
sustainable.” Willingham v. Morgan, 395 U.S. 402, 407 (1969).
We do not “require the officer virtually to win his case before
he can have it removed.” Acker, 527 U.S. at 431 (internal
quotation marks omitted).
President Trump raised two federal defenses in his notice
of removal. First, he argued that the District may not impose
legal conditions on the lawful performance of his presidential
duties. J.A. 59. Second, he claimed absolute presidential
immunity from personal liability. Because we find the first
defense colorable, we need not address the President’s
alternative argument based on presidential immunity.
The Supremacy Clause restricts the power of state and
local governments to regulate federal offices and officeholders.
See, e.g., McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316
(1819). In Johnson v. Maryland, for instance, the Supreme
Court held unconstitutional a licensing regime that barred
federal postal workers from operating vehicles until they
passed a state exam. 254 U.S. 51, 57 (1920). Although a federal
officer “does not secure a general immunity from state law,” a
state cannot “control [the officer’s] conduct” when he or she is
“acting under and in pursuance of [federal] laws.” Id. at 56-57.
Thus, Maryland could not impose a restriction beyond “those
that the [federal] Government ha[d] pronounced sufficient.” Id.
at 57.
This principle is not boundless. In Acker, several federal
judges refused to comply with a county ordinance that imposed
a “license or privilege tax” on any occupation not already
regulated by a licensing regime. 527 U.S. at 428. Citing
Johnson, the judges argued that the ordinance made it
“unlawful” for them “to engage in” their federal office without
paying. Id. at 440. But the Court disagreed, distinguishing the
6
“regulatory” law in Johnson, which is forbidden, from the mere
“revenue-raising” provision in Acker, which is not. Id.Claiming his defense relies upon Johnson, President
Trump contends that Cork’s version of what District law
requires works to regulate the “holding [of] federal office,”
Trump Br. 14, because it would “forbid[] federal officials from
owning interests in a D.C. business,” id. at 16. Any officer with
a stake in such a business would face civil liability because of
his official status, which amounts to conditioning the lawful
exercise of federal power on compliance with “local legal
requirements.” J.A. 59.
We think the President’s theory is colorable. Acker tells
us that the “practical impact” of the relevant restriction “is
critical” in this context. 527 U.S. at 440. And a state court’s
decision to embrace Cork’s argument might impede federal
officers. The Supremacy Clause might bar a state-law tort
claim that applies only to federal officers or holds that
ordinarily acceptable behavior—here, running a business—
triggers liability when undertaken by a federal officer.
To be clear, we take no position on the merits of President
Trump’s defense. We need only conclude that, under his
“theory of the case,” the defense is “colorable.” Id. at 431-32;
see also id. at 431 (holding that, “although we ultimately reject
[the judges’ theory,] it . . . presents a colorable federal
defense”).
B
At the second step of our removal inquiry, President
Trump must show that Cork’s suit was “for or relating to any
act under color of [his] office.” 28 U.S.C. § 1442(a)(1). To
satisfy this requirement, “the officer must show a nexus, a
causal connection between the charged conduct and asserted
7
official authority.” Acker, 527 U.S. at 431 (internal quotation
marks omitted). Put differently, “[t]he circumstances that gave
rise to the . . . liability” must “encompass” the defendant’s
conduct in office. Id. at 433. 1
President Trump characterizes Cork’s suit as an action “for
or relating to” the act of simply holding office. Trump Br. 12.
He argues that his position as President is “a necessary
condition for Cork’s theory of liability,” and that his
“assumption of office is what caused the alleged unfair
competition to begin.” Id. at 30-31.
We agree. The fact that Donald Trump is President is
indispensable to Cork’s claim. Cork’s complaint expressly
targets “the unfair advantage that the Trump International
Hotel . . . has gained from Defendant Donald J. Trump being
the President of the United States.” Compl. ¶ 2, J.A. 25
(emphasis added). Indeed, Cork conceded at oral argument that
its unfair-competition claim is “based entirely” on President
Trump’s status as a federal officeholder. Oral Arg. Tr.
19:22-25. As a result, Cork argues, the ongoing unfair
1
Congress added the words “or relating to” to the statue in 2011. See
Removal Clarification Act of 2011, Pub. L. No. 112-51,
§ 2(b)(1)(A), 125 Stat. 545, 545. Our sister circuits read this
language as relaxing the nexus requirement, such that “a connection
or association between the act in question and the federal office” now
suffices. In re Commonwealth’s Motion to Appoint Counsel Against
or Directed to Def. Ass’n of Phila., 790 F.3d 457, 471 (3d Cir. 2015)
(internal quotation marks omitted); see also Sawyer v. Foster
Wheeler LLC, 860 F.3d 249, 258 (4th Cir. 2017); Caver v. Cent. Ala.
Elec. Coop., 845 F.3d 1135, 1144 (11th Cir. 2017). We need not
decide the effect of the amended language in this case, because
Cork’s suit qualifies even under the pre-amendment Acker standard.
8
competition can be remedied by President Trump’s immediate
resignation from office. Compl. ¶ 42, J.A. 33.
A suit that hinges on President Trump’s status as President
of the United States has a causal connection to his “asserted
official authority.” Acker, 527 U.S. at 431 (internal quotation
marks omitted). If Cork is right about the District’s common
law, the President has a legal duty to either resign from office
or divest from the Hotel. As explained immediately below, an
officer’s failure to comply with a legal duty imposed by his
official status is an “act under color of [his] office,” and a suit
seeking to impose liability “for” that failure surely qualifies for
removal under section 1442(a)(1).
Cork argues that the removal statute applies only when a
plaintiff challenges a specific official act, and that its suit does
no such thing. This argument evokes the dissenting opinion in
Acker. There, Justice Scalia construed the target of the state suit
as the judges’ refusal to pay the occupation tax. Id. at 445(Scalia, J., dissenting). Because that act of resistance was
neither “required by” the judges’ “official duties” nor “taken in
the course of performing” those duties, he concluded that the
suit was ineligible for removal. Id.But the Acker majority rejected that narrow approach. Id.
at 432 (majority opinion). Rather than frame the targeted “act”
as the judges’ unofficial resistance, the Court looked to the
“circumstances that gave rise to the tax liability,” which
included the judges’ continued exercise of official authority in
Jefferson County, Alabama. Id. at 433. Similarly, President
Trump’s continued exercise of official authority is a
prerequisite to liability under Cork’s tort theory.
Because President Trump has raised a colorable federal
defense and demonstrated that Cork’s suit falls within the
scope of section 1442(a)(1), we conclude that this case was
9
properly removed, and the district court possessed subject-
matter jurisdiction.
III
We turn now to the merits. The district court dismissed
Cork’s complaint for failure to state a claim under Federal Rule
of Civil Procedure 12(b)(6). Our review is de novo. Citizens for
Responsibility & Ethics in Wash. v. DOJ, 922 F.3d 480, 486
(D.C. Cir. 2019).
When “considering common law claims, federal courts
must apply existing law—we have no power to alter or expand
the scope of D.C. tort law.” Pitt v. District of Columbia, 491
F.3d 494, 507 (D.C. Cir. 2007). In other words, “[w]e must
apply the law of the forum as we infer it presently to be, not as
it might come to be.” Tidler v. Eli Lilly & Co., 851 F.2d 418,
424 (D.C. Cir. 1988) (quoting Dayton v. Peck, Stow & Wilcox
Co., 739 F.2d 690, 694-95 (1st Cir. 1984)).
The District’s case law does not define unfair competition
“in terms of specific elements,” but rather by way of example,
describing “various acts that would constitute the tort if they
resulted in damage.” Furash & Co. v. McClave, 130 F. Supp.
2d 48, 57 (D.D.C. 2001). We have previously identified three
species of unfair competition under District law: “passing off
one’s goods as those of another, engaging in activities designed
solely to destroy a rival[,] and using methods themselves
independently illegal.” Ray v. Proxmire, 581 F.2d 998, 1002
(D.C. Cir. 1978). Later, in its most recent statement on the
subject, the District of Columbia Court of Appeals listed as
forms of unfair competition “defamation, disparagement of a
competitor’s goods or business methods, intimidation of
customers or employees, interference with access to the
business, threats of groundless suits, commercial bribery,
inducing employees to sabotage, [and] false advertising or
10
deceptive packaging.” B & W Mgmt., Inc. v. Tasea Inv. Co.,
451 A.2d 879, 881 n.3 (D.C. 1982) (citing WILLIAM PROSSER,
HANDBOOK OF THE LAW OF TORTS 956-57 (4th ed. 1971)).
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. Although Cork suggests in passing that
President Trump and the Hotel are “impair[ing]” competition
and “interfer[ing] with access” to its business, Cork Br. 44-45,
its claim bears little resemblance to the examples listed in Ray
and B & W Management, and Cork cites no case showing that
the allegations here fall into those categories of unfair
competition.
President Trump argues that we have expressly rejected
Cork’s theory of unfair competition. In Ray v. Proxmire, the
plaintiff, a tour operator, alleged that Senator William
Proxmire’s wife had leveraged “the prestige and contacts
enjoyed by a senator’s wife” to promote her rival tour
company. 581 F.2d at 1002. The Senator’s wife “secured entry
to the vice-presidential mansion, the west lawn of the Capitol,
State Department entertaining rooms and . . . Senate office
buildings,” and “offer[ed] the opportunity to meet wives of
governmental officials and to see their private homes.” Id. at
1003. We rejected the plaintiff’s unfair-competition claim,
explaining that “financial success does not become unlawful
simply because it is aided by prominence.” Id.Given Cork’s failure to cite any contrary precedent, we see
no reason to conclude that District common law recognizes
11
anything like Cork’s unfair-competition claim. 2 During oral
argument, we asked Cork to cite any case—from any
jurisdiction—in which a plaintiff successfully advanced a
similar theory. Cork conceded that no such case exists. Oral
Arg. Tr. 3:23-4:2, 10:8-22, 11:9-11, 12:3-4 (“There are no
other cases because, your Honor, I believe what the Defendant
did here is unique.”); see also Reply Br. 18 (“[T]here are no
decisions of any court[] . . . in which the facts are remotely
similar to this case.”).
Cork’s case cannot survive that concession. Instead of
citing case law, Cork appeals to the ongoing evolution of
common-law claims like unfair competition and cites generic
passages from the Second and Third Restatements of Torts.
Cork Br. 42-44. Cork’s allegations may one day constitute
actionable unfair competition in the District. But we must “take
the law of the appropriate jurisdiction as we find it,” Tidler,
851 F.2d at 424, and Cork offers no indication that the common
law of the District—or, indeed, of any jurisdiction—has
evolved to encompass its theory of unfair competition. We
therefore affirm the district court’s dismissal of Cork’s
complaint.
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. Now that the suit has been properly
removed to federal court, Cork urges us to certify the core
question of District law—i.e., the validity of its unfair-
2
Cork argues that a provision in the lease agreement between the
General Services Administration and the Hotel evinces a “common
understanding” that “elected officials [may not] benefit from their
financial interests in leases of government property.” Cork Br. 47;
see also Compl. ¶ 10, J.A. 26 (describing section 37.19 of the lease).
But Cork articulates no link between the lease provision and the
District’s common law of unfair competition, and we see none.
12
competition theory—to the District of Columbia Court of
Appeals.
We decline that request. The decision to certify is a
discretionary one, and “[t]he most important consideration
guiding the exercise of [our] discretion” is whether we are
“genuinely uncertain” about the correct answer under existing
state law. Id. at 426. When the law “provide[s] a discernible
path,” we follow it. Id. Here, Ray and B & W Management
provide that path by demonstrating that District law does not
recognize Cork’s claim, and Cork fails to identify any case
suggesting an alternative route. Moreover, Cork did not argue
that this “case is one of extreme public importance,” a
traditional element of our certification analysis. Metz v. BAE
Sys. Tech. Sols. & Servs. Inc., 774 F.3d 18, 24 (D.C. Cir. 2014).
IV
The judgment of the district court is affirmed.
So ordered.