Published by The Lawfare Institute
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On Aug. 20, the U.S. District Court for the Southern District of New York dismissed President Trump’s lawsuit to block a subpoena issued by Manhattan District Attorney Cyrus Vance. The subpoena seeks the president’s financial documents from the Mazars accounting firm. Earlier in the summer, the U.S. Supreme Court denied the president’s claim of absolute immunity and sent the case back to the lower courts to allow Trump to raise new arguments.
On July 27, Trump filed an amended complaint arguing that the subpoena was invalid on the grounds that it was both overbroad and issued in bad faith. Vance responded with a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), alleging that Trump failed to state a claim. Now, after the two sides exchanged subsequent briefings, the court has released the first ruling on the merits on remand. District Judge Victor Marrero rejected all of Trump’s claims. The court stated that the president was seeking “a novel application of presidential immunity,” which “amounts to absolute immunity through a backdoor,” for both the president and other public and private people and entities.
Following Marrero’s ruling, Trump immediately sought to prevent Vance from enforcing the subpoena pending an appeal. In an order issued on Aug. 21, Judge Denny Chin of the U.S. Court of Appeals for the Second Circuit ruled that “[t]o the extent Appellant seeks an immediate administrative stay, that request is DENIED.” Chin set argument for Trump’s motion for a stay pending appeal for Sept. 1. Vance has agreed to hold off on enforcing the subpoena until “5:00 pm on the second calendar day after the Second Circuit issues a decision on [Trump’s] application for a stay pending appeal.” If the Second Circuit denies the stay, Trump could appeal the decision to the Supreme Court.
The Legal Standards
Marrero opened his decision by laying out the legal standards governing the case. As the court noted, to survive a Federal Rule of Civil Procedure 12(b)(6) motion to dismiss, a complaint must “contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” It is well established that “[a] complaint should be dismissed if the plaintiff has not offered factual allegations sufficient to render the claims facially plausible.”
While the court acknowledged that “high respect for the President’s office primarily requires sensitivity to the demands imposed by the President’s Article II duties,” the court stated that it “must take particular care to correctly apply the existing legal standards governing grand jury subpoenas and motions to dismiss, rather than substantively alter those standards.” Accordingly, in the court’s view, the Supreme Court’s opinion in Trump v. Vance “does not absolve the President of the need to affirmatively plead or show impropriety, and it does not categorically narrow the scope of materials that may be relevant to a grand jury.”
The Timing and Preparation of the Subpoena
In the amended complaint, Trump alleged that the timing and the circumstances surrounding the preparation of the subpoena showed that it was issued in bad faith.
Trump made two main arguments regarding the subpoena’s timing. First, Trump asserted that the Mazars subpoena was issued in bad faith because it followed an earlier subpoena issued to the Trump Organization that Trump’s lawyers argued could not be read to reach the president’s tax returns. Second, Trump contended that the fact that the Mazars subpoena was issued at a time when congressional Democrats told the press that they desired the president’s tax returns showed bad faith.
Emphasizing the applicable legal standard on a 12(b)(6) motion, the court determined that Trump’s allegations “lack sufficient factual support to render them plausible.” The court noted that there were multiple possible alternative explanations for the district attorney’s decision to issue a second subpoena that did not demonstrate bad faith, such as “a good faith agreement that the President’s interpretation of the Trump Organization Subpoena was valid or a conclusion that issuing a clearer subpoena would simply be preferable to prolonged arguments.” The court also pointed out, relying on a New York state court case, that “it is not uncommon for a grand jury subpoena to request a subject’s documents from third-party custodians.” And with regard to the contemporaneous statements made by Democrats, the court wrote that “the lack of specific facts tying the Mazars Subpoena to those politicians prevents the Court from reasonably inferring that the Mazars Subpoena reflects an effort to advance the Democrats’ goals rather than legitimate ones.” Moreover, the court placed considerable weight on the fact that even if Vance did obtain the tax returns, members of Congress would be unable to view them since New York law makes the unauthorized disclosure of grand jury proceedings a felony.
Next, the court found unpersuasive Trump’s argument that the fact that the district attorney essentially copied subpoenas issued by two House committees constituted bad faith. While the court acknowledged that it would be illegitimate for the district attorney to issue a subpoena for congressional legislative purposes, the court determined that it could “not reasonably infer that documents requested by the Mazars subpoena are irrelevant to legitimate grand jury purposes simply because they may also be relevant to the legislative purposes of the House committees that originally drafted similar requests.” The court also added that “the Supreme Court has clearly stated that particular information may be relevant to both legitimate legislative purposes and legitimate state criminal purposes.”
Lastly, the court rejected Trump’s allegations that the Mazars subpoena was issued in bad faith since it was impermissibly broader than the initial Trump Organization subpoena, which appeared to be part of an investigation related to the hush-money payments made by Trump’s attorney Michael Cohen in 2016. For a number of reasons, the court observed that it was reasonable to believe that “the grand jury’s broader requests might simply indicate a broader investigation.”
The Breadth of the Subpoena
The court then addressed three of Trump’s allegations about the overbreadth of the subpoena: its time frame, its geographic scope and the documents it requested. The court dismissed each in turn. First, Marrero explained that the time frame of documents requested in a subpoena just had to “bear some relation” to the subject matter of the subpoena and be reasonable. To determine if a subpoena’s time frame is reasonable, the court considered a number of factors, including “the type and extent of the investigation; the materiality of the subject matter ot the type of investigation; the particularity with which the documents are described; the good faith of the party” asking for the documents; and “a showing of the need” for the time frame in question.
Reviewing those factors, Marrero held that the time frame was reasonable. Because a grand jury has wide investigative powers, it is not limited to the years in which a crime may have been committed, or to years that are still within the statute of limitations for the potential crime. Trump argued that the records were “so old as to have no bearing on the grand jury’s investigation.” But ascertaining whether there was a financial crime “may require information from years before and after any single transaction of interest,” and the records were described with particularity. Because the president made only “conclusory allegations” that were “insufficient to support an inference,” the subpoena’s time frame was not overbroad or in bad faith.
Next, the court considered and rejected Trump’s claim that the subpoena was overbroad in geographic scope because it demanded documents outside of New York County. As district attorney, Vance can prosecute crimes that occurred within New York; if the effects occurred in New York or were intended to occur in New York; or if there was an attempt to commit a crime in New York. As the court explained, “[t]his authority, coupled with the practical reality that New York is the preeminent commercial and financial nerve center of the Nation and the world”(internal quotations omitted), meant that Vance could prosecute a range of international entities.
Here, the court wrote, Trump did not make enough of a showing that “the records have no bearing on offenses within the District Attorney’s jurisdiction.” He could not prove that the non-New York businesses never transacted in New York, or that they “lack[ed] financial and reporting obligations or corporate familial ties” to New York. Therefore, the records from non-New York entities “may nonetheless be expected to shed light on legitimate objects” of the investigation.
Finally, the court addressed Trump’s claim that the nature of the documents requested was overbroad and that the requests were essentially a “fishing expedition.” Marrero explained that a grand jury is acting as it should when it “runs down every available clue to find if a crime has been committed” (internal alterations and quotation marks omitted). To be improper in the nature of the documents it requests, a subpoena has to “seek material clearly unrelated to its legitimate aim” or “call for an unduly burdensome production,” or the target can show improper motivations. Even so, the burden is on Trump to allege “the irrelevance of particular categories of documents sought by the subpoena”—and here, the court found, he failed to do so. For example, in addition to the tax returns, the subpoena sought papers about how the tax returns were prepared, which could help the grand jury allocate responsibility and understand how misrepresentations happened, if they did. Moreover, Trump failed to show that the records requested had any especially private matters that would have been inappropriate to disclose.
Discovery and Leave to Amend
The court closed by addressing two other issues. First, the court found that Trump was not entitled to discovery about the investigation at the motion to dismiss stage. Typically, in a civil action, discovery occurs between the motion to dismiss and summary judgment phases. Here, Trump sought discovery from Vance about the investigation so that he could better challenge the subpoenas and because of the respect owed to the president and his constitutional office. But the court held that respect for the presidency did not mean that the court had to allow more discovery by the president at this stage of the litigation, especially because the grand jury is meant to be protected from interference.
Second, the court addressed and granted Vance’s request that Trump’s complaint against Vance be dismissed with prejudice. Although Trump had not yet sought leave to amend his complaint, the court found that it would not be warranted under Federal Rule of Civil Procedure 15. In particular, granting Trump leave to amend his complaint would cause undue prejudice to Vance and the grand jury investigation because the litigation had been holding up the subpoena for almost a year already, and Trump had not yet been successful in arguing that he was entitled to relief, even after the Supreme Court ruled on the case.
At this point in the opinion, Marrero expressed a deep skepticism that the president would be able to amend his complaint to address all of its deficiencies. Refiling just a few weeks after the original filing probably would not include any new facts, and if it did, it “might suggest dilatory motive” by the president to delay the case. And the role of the president would not affect the court’s finding here. The court explained how the president had begun “by invoking Article II to raise a sweeping claim of immunity rejected by every court to consider it,” only to receive guidance from the Supreme Court on how to validly challenge the subpoena—but even after the Supreme Court’s ruling, Trump “chose not to raise claims based on identifiable executive policies or specific Article II duties.”
Marrero closed by stating: “Justice does not require leave to replead under these circumstances. Justice requires an end to this controversy.”
The district court’s decision marks an important step forward in the district attorney’s now two-year-long effort to enforce the Mazars subpoena. However, it remains to be seen whether the subpoena will be enforced. In the immediate term, the Second Circuit will decide the matter; on Sept. 1, a three-judge panel will hear Trump’s appeal on an expedited basis. Depending on the outcome there, Trump could later seek relief from the Supreme Court. In the meantime, Vance has agreed not to immediately enforce the subpoena.