New Questions about Standing for the Plaintiffs in CREW v. Trump

November 10th, 2017

During our guest stint at the Volokh Conspiracy, Seth Barrett Tillman and I discussed whether two of the hospitality plaintiffs in CREW v. Trump were in fact the true parties in interest. First, was Ryan Goode–who represented he “owned” several hotels and restaurants in New York–in direct competition with Trump properties? Second, did Restaurant Opportunities Centers United (ROC)–which asserted ownership of a gluten-free restaurant in the East Village–solely own the restaurant? In both instances, Seth and I discovered publicly available records which suggested that Goode and ROC were not the sole owners of the properties. Standing cannot be supported by a mere diminution in shareholder value. There was no evidence in the record these plaintiffs were ever so authorized to bring suit on behalf of the firms.

We did not discuss in that post the most enigmatic of the three hospitality plaintiffs, Jill Phaneuf, who asserted in her affidavit that “I aim to book embassy functions, political functions involving foreign governments, and functions for organizations that are associated with foreign governments at the Carlyle Hotel and the Glover Park Hotel.” She offered no evidence that she has ever booked such events, as she only “started [her] position booking and curating events for the Carlyle Hotel and the Glover Park Hotel in April 2017.”

In a new article on National Review Online, Theodore Kupfer reports on his communications with both Goode and Phaneuf about their business arrangements.

First, Kupfer confirmed our initial research about Goode–he is not the sole owner of the Bowery Hotel in New York:

But does Goode own them? No stranger to the press, he is frequently mentioned alongside a “business partner” named Sean MacPherson. Time and again, Goode is said to co-own these venues. The New York State Liquor Authority lists Ira Drukier, Richard Born, John Peter Ruha, and MacPherson, along with Goode, as principals for “The Bowery Hotel LLC.” In an email, Goode tells National Review that “the Bowery Hotel has 6 partners altogether and 4 managing partners which I am one of.” 

Counsel for CREW, Kupfer notes, did not specify that Goode was only a co-owner in its pleadings, or during oral arguments:

“Eric Goode owns several celebrated hotels in New York” as well as “numerous restaurants” that “are frequented by diplomats, other foreign officials, and state and federal officials,” CREW wrote in the Oct. 4 filing. Gupta said at oral arguments that the Bowery Hotel, one of these venues, is “owned” by Goode.

I made a similar observation in my recap of the oral arguments:

The Court asked no specific questions about the status of the other hospitality plaintiffs, although I would note that in court, Deepak Gupta asserted that Eric Goode “owned” the Bowery Hotel, and he later referred to “Eric Goode’s hotels.”

Second, Kupfer also spoke with Phaneuf:

It’s a compelling story: a woman whose only source of income is commissions from booking diplomatic events in D.C., and who, “as a result of the defendant’s illegal conduct, now faces intensified competition from Trump International Hotel D.C.” But it’s not true. Phaneuf tells National Review that she works full-time for hedge fund Friedman Capital, and attends law school at night. “Event planning is a very large aspect of what I do and who I am,” Phaneuf says. “[But] I’m not going to say that it’s a full- or part-time job because I don’t rely on anyone but myself.”

If you google Jill Phaneuf, you’ll find that she is an executive assistant at Friedman Capital, and a law student at George Washington. There is no mention of her ambassadorial event-planning business.

Kupfer also confirms the answer to a question posted by Judge Daniels–did Phaneuf ever actually book an ambassadorial event?

Asked for the name of the hospitality company she works with, which the filings curiously omit, Phaneuf identifies it as . . . Friedman Capital. She maintains that the newly opened Trump International D.C. has made life harder for her. Yet asked what her event-planning experience has amounted to, Phaneuf lists career fairs at Georgetown and Johns Hopkins, “black-tie events,” and, most recently, a panel of D.C. hotel developers. “As far as diplomatic events go, I construe that very broadly,” Phaneuf tells NR. “I have a personal friendship with a Mexican senator, and I’m trying to put together his holiday party.”

During oral arguments, Judge Daniels questioned whether the plaintiffs had proven that Phaneuf has suffered a real-world injury. “She can’t say that she sought customer A, and the president also sought customer A, and customer A went to the president,” Daniels said. He was on the right track. Phaneuf did not cite a single diplomatic event that she has booked, and she has exactly one future event in mind — a holiday party for a foreign senator. The claim that her “only job” is to book diplomatic events is false, and appears to have been contrived for the purposes of securing standing.

As Kupfer points out, counsel for the Plaintiffs insisted it was irrelevant for purpose of standing whether Phaneuf ever actually booked such an event, though it is unclear how this is her “only job.”

At oral arguments, attorney Deepak Gupta, arguing on behalf of the plaintiffs, said that Phaneuf’s “only job is booking events at hotels in Embassy Row in Washington, D.C., that are with governments.” Gupta further argued that Phaneuf was “the most obvious competition” with Trump, because “the only thing that she does is these kind of high-end embassy events at an Embassy Row hotel.”

At face value, the fact that CREW was unable to find plaintiffs with bullet-proof affidavits should be shocking–will no member of the resistance stand up!?–but on closer inspection, it is completely rational. Generally, businesses are loathe to get involved in litigation, let alone ideologically-driven litigation that creates uncertainty for their profitability. To make this dynamic more concrete, consider insurance law, as insurance adjustors can increase premiums, or even drop coverage, if a business reaches outside its core competency to pursue litigation that could hurt profitability. Members of a board of directors may not approve of litigation if it takes away from the firm’s core business. Etc.

In this sense, CREW v. Trump reminds me of King v. Burwell: ideologically motivated groups sought out plaintiffs with strained standing claims in order to challenge perceived legal violations. As King was appealed to the Supreme Court, journalists at the Wall Street Journal began to investigate the claims of the four plaintiffs, and raised serious doubts about their injuries. I discussed these reports in Unraveled:

First, the Journal wrote that because David King was a veteran, he qualified for “medical coverage with no premiums through the Department of Veterans Affairs.” 4 As a result, he would not be subject to the individual mandate’s penalty, and thus was not injured. The journalists managed to snag an interview with King at his home. He told them that “he had been to a VA medical center and had a VA identification card, which typically serves as proof of VA-care enrollment.” . . . .

Second, the Journal reported that David Hurst’s wife described him “on social media as being a Vietnam veteran.” . . . .

Third was Brenda Levy. She was sixty-four at the time the case was argued, but would turn sixty-five, and become Medicare eligible, in June – right around the time when the Supreme Court would issue its decision. As a result, she would no longer be subject to future penalties under the individual mandate. . . . .

The biggest riddle was the final plaintiff, Rose Luck. The Journal reported that Rose Luck’s declared address in the original complaint was the Americas Best Value Inn in Richmond. The receptionist at the motel told the enterprising reporters that Luck did not live there. Her residency was relevant, because insurance premiums are priced based on a person’s zip code. If the calculations were wrong because of an incorrect address, the unsubsidized price of insurance may be lower than 8%, and thus she would otherwise be eligible for an exemption from the individual mandate. Nicholas Bagley, the Michigan law professor, observed, “We don’t know where Luck now lives and what the price of a bronze plan is in her area. It’s thus hard to know whether, absent tax credits, she could reasonably expect to be exempt from the mandate penalty.” Scoffing at the case, Washington & Lee law professor Timothy S. Jost told the Journal, “All of these plaintiffs are people they picked off the street for this litigation.”

During oral arguments, Justice Ginsburg referred to the case as little more than an “ideological question.”

Justice Ginsburg thought otherwise. She asked sixteen consecutive questions to begin the hearing, all about standing. Ginsburg explained that the plaintiffs have to actually be injured. With a not-too-subtle jab at the political nature of the suit, she said, “They can’t put [the case] as ideological questions.” After Carvin explained that each of the four plaintiffs has standing, Justice Ginsburg  finished her questioning: “I don’t want to detain you on this any more but I will ask the government what their position is on standing.”

These sorts of questions may not be getting much attention now, but they will garner far more attention as the case goes up on appeal.