IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ... · February 10, 2017 letter to OPO...

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

K&D, LLC t/a CORK, Plaintiff, v. TRUMP OLD POST OFFICE LLC; and DONALD J. TRUMP, Defendants.

Case No. 1:17-cv-00731-RJL Hon. Richard J. Leon ORAL ARGUMENT REQUESTED

DEFENDANT TRUMP OLD POST OFFICE LLC’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO PLAINTIFF’S MOTION TO REMAND

Case 1:17-cv-00731-RJL Document 16 Filed 06/01/17 of 26

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TABLE OF CONTENTS

Page

INTRODUCTION AND SUMMARY OF ARGUMENT ............................................................1

FACTUAL BACKGROUND ......................................................................................................2

A. Redevelopment of the Old Post Office Building .......................................2

B. OPO’s Lease with the GSA ......................................................................3

C. The GSA Determined that OPO Is in Full Compliance with the Lease ........................................................................................................4

D. The Complaint’s Allegations ....................................................................6

E. Defendants’ Removal and Cork’s Motion to Remand ...............................6

LEGAL STANDARD .................................................................................................................7

ARGUMENT ..............................................................................................................................7

I. THE COMPLAINT PRESENTS SUBSTANTIAL FEDERAL ISSUES THAT ARE NECESSARY TO THE RESOLUTION OF CORK’S STATE LAW CLAIM .........................................................................................7

A. Cork’s Unfair Competition Claim Against Defendants Necessarily Raises Disputed, Substantial Federal Issues. .............................................8

B. The Federal Issues in This Case Are Actually Disputed. ......................... 13

C. The Federal Issues in This Case Are Substantial. .................................... 13

D. Applying Federal Question Jurisdiction in This Case Would Not Disrupt the Federal-State Balance. .......................................................... 16

II. CORK’S ARGUMENTS FOR REMAND HAVE NO MERIT. ......................... 17

III. FEDERAL OFFICER JURISDICTION EXISTS BECAUSE CORK SUED THE PRESIDENT WHO HAS COLORABLE FEDERAL DEFENSES ....................................................................................................... 19

CONCLUSION ......................................................................................................................... 20


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TABLE OF AUTHORITIES

Page(s)

Cases

Al-Aulaqi v. Panetta, 35 F. Supp. 3d 56 (D.D.C. 2014) ........................................................................................... 3

Arizona v. Manypenny, 451 U.S. 232 (1981) ............................................................................................................ 19

Bender v. Jordan, 623 F.3d 1128 (D.C. Cir. 2010) ..................................................................................... 12, 13

Boyle v. United Tech. Corp., 487 U.S. 500 (1988) .............................................................................................................. 9

Caterpillar, Inc. v. Williams, 482 U.S. 386 (1987) .............................................................................................................. 7

Dist. of Columbia v. Group Hospitalization & Med. Services, Inc., 576 F. Supp. 2d 51 (D.D.C. 2008) ........................................................................... 13, 15, 17

Edwards v. Aurora Loan Servs., LLC, 791 F. Supp. 2d 144 (D.D.C. 2011) ..................................................................................... 11

* Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308 (2005) ..................................................................................................... passim

Gunn v. Minton, 133 S. Ct. 1059 (2013) ................................................................................................. passim

McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178 (1936) .............................................................................................................. 7

Merrill Lynch, Pierce, Fenner & Smith Inc. v. Manning, 136 S. Ct. 1562 (2016) .................................................................................................. 17, 18

Pension Benefit Guaranty Corp. v. White Consolidated Indus., Inc., 998 F.2d 1192 (3rd Cir. 1993) ............................................................................................... 3

Rivet v. Regions Bank of Louisiana, 522 U.S. 470 (1998) ............................................................................................................ 12

Shay v. RWC Consulting Grp., No. CIV 13-0140-JB, 2014 WL 3421068 (D.N.M. June 30, 2014)....................................... 11


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Watson v. Phillip Morris Co., Inc., 551 U.S. 142 (2007) ............................................................................................................ 19

Wright v. Foreign Serv. Grievance Bd., 503 F. Supp. 2d 163 (D.D.C. 2007) ..................................................................................... 10

Yee v. Jewell, No. CV 16-490 (RDM), 2017 WL 78473 (D.D.C. Jan. 9, 2017) ............................................ 9

Statutes

28 U.S.C. § 1331 ................................................................................................................ passim

28 U.S.C. § 1346(a)(2) .............................................................................................................. 17

28 U.S.C. § 1441(a) .................................................................................................................... 7

28 U.S.C. § 1442 ............................................................................................................... 2, 6, 19

28 U.S.C. § 1442(a)(1) .............................................................................................................. 19

Old Post Office Building Redevelopment Act of 2008, Pub. L. No. 110–359, 122 Stat. 4005 .................................................................................................................... 2, 3, 15

Securities Exchange Act of 1934 § 27 ....................................................................................... 17

Other Authorities

U.S. Constitution ................................................................................................................... 1, 12

U.S. Constitution Art. II, §§ 1, 4................................................................................................ 12

* Authorities chiefly relied upon are marked with an asterisk.


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INTRODUCTION AND SUMMARY OF ARGUMENT

Plaintiff K&D, LLC t/a Cork (“Cork” or “Plaintiff”) originally filed this action in the

Superior Court of the District of Columbia, alleging a single claim for unfair competition against

Defendants Trump Old Post Office LLC (“OPO”) and President Donald J. Trump (collectively,

“Defendants”), based on OPO’s alleged breach of a ground lease with the U.S. General Services

Administration (“GSA”) for the federal government’s historic Old Post Office building (the

“GSA Lease”).

OPO properly removed the case to this Court based on “federal question” subject matter

jurisdiction pursuant to 28 U.S.C. § 1331 and Supreme Court precedent holding that “federal-

question jurisdiction will lie over state-law claims that implicate significant federal issues.”

Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 312 (2005).

Although alleged as a state law tort claim, on its face Cork’s complaint invokes the

“federal question” doctrine because it necessarily raises several disputed, substantial federal

issues. First, the Lease is a government contract between OPO and a federal government agency,

the GSA, and is indisputably governed by the federal common law of contracts for purposes of

federal jurisdiction. Second, any right to relief necessarily depends on federal issues, including

(a) whether Defendants have, in fact, breached the GSA lease, and (b) whether OPO or the GSA

can be compelled under the lease to rescind and/or reform their mutual obligations thereunder, as

Cork’s complaint requests. Further, Cork’s request for an order forcing President Trump to

resign his office likewise raises a substantial federal issue arising under the U.S. Constitution, as

removing a president from office is surely a remedy available, if ever, exclusively under federal

law.


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Under these circumstances, when a claim under state law nonetheless turns on substantial

federal issues, the U.S. Supreme Court has expressly held that federal jurisdiction exists. Grable,

545 U.S. at 312-14.

Finally, in any event, this Court need not reach the Grable test for federal question

jurisdiction because the Court has a clear, alternative basis for jurisdiction. Specifically, Cork

has sued a federal officer, the President of the United States, who has asserted proper grounds for

removal under the federal officer removal statute, 28 U.S.C. § 1442. OPO expressly incorporates

such grounds for removal and joins in the President’s opposition to Cork’s motion to remand on

this basis.

In sum, this Court has proper subject matter jurisdiction over this action. Accordingly,

OPO respectfully requests that the Court deny Cork’s motion to remand.

FACTUAL BACKGROUND

A. Redevelopment of the Old Post Office Building

This lawsuit concerns OPO’s lease of the federal government’s historic property located

at 1100 Pennsylvania Avenue NW, Washington, D.C., more commonly known as the Old Post

Office Building. See Compl., ¶ 7.

In 2008, Congress passed the Old Post Office Building Redevelopment Act of 2008,

which President George W. Bush signed into law. Pub. L. No. 110–359, 122 Stat. 4005. In

passing this legislation, Congress found that “[f]or almost a decade [a House of Representatives

subcommittee] expressed considerable concern about the waste and neglect of the valuable,

historic Old Post Office Building … and has pressed the General Services Administration to

develop and fully use this building.” Id. at § 3. Congress further found that “[r]edevelopment of

the Old Post Office Building [would] preserve the historic integrity of this unique and important

asset, put it to its highest and best use, and provide a lucrative financial return to the


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Government.” Accordingly, Congress directed the General Services Administration “to proceed

with redevelopment of the Old Post Office Building … consistent with the redevelopment plan

previously approved” by various congressional committees. Id. at § 4.

In March 2011, pursuant to this act of Congress, the GSA issued a “Request for

Proposals,” seeking a developer to restore, rehabilitate, preserve, manage, and operate the Old

Post Office building.1 See Declaration of Rebecca Woods (“Woods Decl.”), Exh. A, Request for

Proposals, p. 4. OPO submitted a bid to redevelop the property as a luxury hotel, and in

February 2012, the GSA selected OPO as the preferred developer for the project.2 Compl., ¶ 7.

B. OPO’s Lease with the GSA

On August 5, 2013, OPO entered into a 60-year ground lease with the GSA for the Old

Post Office building.3 See Woods Decl., Exh. B, p. 1, , p. 3, GSA lease at § 4.1; see Compl., ¶ 9.

On July 23, 2014, OPO broke ground on redevelopment of the Old Post Office building and in

September 2016, it opened Trump International Hotel Washington, D.C. to the public. 4 See

Woods Decl., Exh. C, p. 2; Compl., ¶ 12.

1 Request for Proposals, Redevelopment of Old Post Office, Washington, D.C., General

Services Administration, (March 24, 2011), https://www.fbo.gov/spg/GSA/PBS/WPZ/NR-73002105/listing.html.

2 GSA Selects the Trump Organization as Preferred Developer for DC’s Old Post Office, General Services Administration (Feb. 7, 2012), https://www.gsa.gov/portal/content/123671.

3 Relevant excerpts of the August 5, 2013 lease agreement (“GSA lease”) are attached as Exhibit “B” to the Declaration of Rebecca Woods. The entire GSA lease is available on the GSA’s website at https://www.gsa.gov/portal/content/305477.

4 Relevant facts regarding the history of redevelopment of the Old Post Office building and regarding the GSA lease are contained in a March 23, 2017 determination letter (“March 23 Letter”), attached as Exhibit “C” to the Declaration of Rebecca Woods. “[J]udicial notice may be taken of public records and government documents available from reliable sources.” Al-Aulaqi v. Panetta, 35 F. Supp. 3d 56, 67-68 (D.D.C. 2014). The March 23 Letter—an official document of a government agency—was provided to OPO by the GSA, a reliable source, and is available on the GSA’s FOIA website at https://www.gsa.gov/portal/content/305477. Thus, the Court may appropriately take judicial notice of the March 23 Letter. See Pension Benefit


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The GSA Lease requires OPO to continuously and uninterruptedly occupy and operate

the Old Post Office building premises as a first-class hotel, to operate on the property at least one

“signature restaurant,” and provides that the property may also include “restaurants, specialty

retail, various food service, beverage service and retail venues.” Woods Decl., Exh. B, p. 2,

definition of “Hotel,” p. 7, GSA lease at § 5.4.

There are also various restrictions on assignment of the GSA Lease by OPO that would

prohibit a transfer of the business. For example, the GSA Lease prohibits assignment to a non-

Trump affiliate within the first three years of operation, prohibits assignment at any time without

the GSA’s consent, and allows assignment after the three-year hold period but only to a qualified

trustee, which determination resides with the GSA alone. Woods Decl., Exh. B, pp. 7-9, GSA

lease at §§ 6.4, 6.5, 15.2, and 15.3.

C. The GSA Determined that OPO Is in Full Compliance with the Lease

On January 20, 2017, Donald J. Trump was inaugurated as President of the United States

and officially became the 45th U.S. President. Compl., ¶ 31.

Following President Trump’s assumption of office, and prompted by questions raised by

outside groups, the GSA contacted OPO by letter and requested its position on the potential

application of a provision in the GSA Lease, Section 37.19. Woods Decl., Exh. C, GSA’s

February 10, 2017 letter to OPO attached as exhibit 1.A. Section 37.19 of the lease provides:

No member or delegate to Congress, or elected official of the Government of the United States or the Government of the District of Columbia, shall be admitted to any share or part of this Lease, or to any benefit that may arise therefrom; provided, however, that this provision shall not be construed as extending to any Person who may be a shareholder or other

Guaranty Corp. v. White Consolidated Indus., Inc., 998 F.2d 1192, 1197 (3rd Cir. 1993) (courts may properly take judicial notice of letter decisions of government agencies). OPO has attached the redacted FOIA version of the March 23 Letter, available to the public on the GSA’s website.


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beneficial owner of any publicly held corporation or other entity, if this Lease is for the general benefit of such corporation or other entity.

Woods Decl., Exh. B, p. 10.

In response, OPO outlined for the GSA the compelling reasons, based upon well-settled

legal principles, why it is in full compliance with Section 37.19. See generally Woods Decl.,

Exh. C, OPO’s February 17, 2017 letter to GSA attached as exhibit 1.B and OPO’s March 20,

2017 letter to GSA attached as exhibit 1.C.5

On March 23, 2017, after conducting a detailed review, the GSA informed OPO by letter

of its conclusion that OPO has not breached the GSA Lease and is in “full compliance.” Woods

Decl., Exh. C, pp. 1, 8. The GSA’s Contracting Officer stated: “Based on my review of the

Lease, discussions with Tenant, and documents submitted by Tenant, I have determined that

Tenant is in full compliance with Section 37.19 and, accordingly, the Lease is valid and in full

force and effect.” Id., p. 1 (emphases added). The GSA also issued to OPO a Landlord’s

Estoppel Certificate, which states the following: “With respect to Section 37.19 of the Lease,

Landlord hereby finds that Tenant is in full compliance with Section 37.19 and, accordingly, the

Lease is valid and in full force and effect as of the date hereof. … Landlord acknowledges that

this Estoppel Certificate and the statements therein may be conclusively relied upon by Tenant.”

Id., Estoppel Certificate attached as exhibit 1 (emphases added). Thus, the GSA and OPO have

mutually and conclusively determined that Donald J. Trump’s assumption of the Office of the

President does not constitute a breach of lease Section 37.19. Id. at pp. 1, 8.

5 The restriction in Section 37.19 does not apply because its plain terms refer to a future

event—the “admitting” of an elected official to the lease. Woods Decl., Exh. C, OPO’s February 17, 2017 and March 20, 2017 letters to GSA. Donald J. Trump was a private citizen when “admitted” to the lease and was never “admitted” as President; he was already a beneficial owner of the tenant OPO. See id. In addition, the restriction contains an exception for any person who is a beneficial owner of an entity where the lease is for the general benefit of such entity. This exception clearly applies to President Trump who, at most, is a beneficial owner of OPO. See id.


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D. The Complaint’s Allegations

Plaintiff Cork operates a restaurant and bar in Washington, D.C. called Cork Wine Bar.

Compl., ¶ 3. Cork filed this action on March 8, 2017 in the Superior Court for the District of

Columbia, naming as defendants both OPO and President Donald J. Trump. The complaint

alleges a single claim for unfair competition, purportedly under District of Columbia common

law. See Compl., ¶¶ 1, 30-42.

The complaint principally alleges that, by Donald J. Trump becoming U.S. President,

OPO breached Section 37.19 of the GSA lease, thereby gaining unfair commercial advantage

over the Hotel’s competitors and engaging in “unfair competition.” See Compl., ¶¶ 2, 31-35.

The complaint further alleges that OPO’s operation of the Hotel pursuant to the GSA Lease,

including operation of food and beverage venues, constitutes “unfair competition.” See Compl.,

¶¶ 33-35.

Cork’s complaint requests relief from the alleged “unfair competition … resulting from

the violation of [GSA Lease] Section 37.19.” Compl., ¶ 42. Specifically, the complaint requests

an order from the Court effectuating the following relief: “(a) Defendant Trump Old Post Office,

LLC, ceasing or suspending all operations (i.e., closing the Hotel and restaurants) for the

duration of Defendant Donald J. Trump’s service as President of the United States;

(b) Defendants, as well as the family of Defendant Donald J. Trump, promptly and fully

divesting themselves of any interest in the Hotel and under the Lease, in a manner to be approved

by the Court; or (c) Defendant Donald Trump resigning as President of the United States.” Id.

E. Defendants’ Removal and Cork’s Motion to Remand

On April 20, 2017, President Trump timely removed this action to U.S. District Court

pursuant to the federal officer removal statute, 28 U.S.C. § 1442. Dkt. No. 1. OPO joined in the

removal and set forth an additional basis for federal jurisdiction pursuant to 28 U.S.C. §§ 1331


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and 1441(a) on the grounds that Cork’s complaint, though captioned under state law, necessarily

requires resolution of disputed, substantial federal issues giving rise to federal question

jurisdiction. Dkt. No. 4.

On May 18, 2017, Cork filed a motion to remand this action to the Superior Court of the

District of Columbia. Dkt. No. 12 (hereinafter “Mot.”). Although Cork’s motion attempts to

frame Cork’s unfair competition claim purely as a matter of District of Columbia law, the face of

the complaint demonstrates that the claim requires resolution of substantial federal issues,

including those relating to OPO’s lease with a federal government agency, the GSA.

LEGAL STANDARD

A defendant may remove to federal court “any civil action brought in state court of which

the district courts of the United States have original jurisdiction.” 28 U.S.C. § 1441(a).

Removal jurisdiction exists if the plaintiff could have originally filed the action in federal court.

See Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987). The removing defendant bears the

burden of demonstrating removal was proper and that the federal court has original jurisdiction.

See McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936).

ARGUMENT

I. THE COMPLAINT PRESENTS SUBSTANTIAL FEDERAL ISSUES T HAT ARE NECESSARY TO THE RESOLUTION OF CORK’S STATE LAW CLA IM

Federal district courts have “federal question” subject matter jurisdiction over “all civil

actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331.

An action can “arise under” federal law in two ways. First, “a case arises under federal law

when federal law creates the cause of action asserted.” Gunn v. Minton, 133 S. Ct. 1059, 1064

(2013). Second, the U.S. Supreme Court has long recognized that federal question jurisdiction

also “lies[s] over state-law claims that implicate significant federal issues.” Grable & Sons


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Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 312 (2005). In the latter such cases,

the question of whether federal question jurisdiction exists depends on “whether the state law

claim necessarily raises a stated federal issue, actually disputed and substantial, which a federal

forum may entertain without disturbing any congressionally approved balance of federal and

state judicial responsibilities.” Id. at 308.

Accordingly, to assess the propriety of a removal based on “significant federal issues,”

the Supreme Court has articulated a four-part test (the “Grable test”), whereby federal

jurisdiction over a state law claim will lie if a federal issue is “(1) necessarily raised, (2) actually

disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the

federal-state balance approved by Congress.” Gunn, 133 S. Ct. at 1065 (citing Grable, 545 U.S.

at 313-14). If each of these elements is met, as in this case, then federal question jurisdiction

applies and removal is proper under 28 U.S.C. § 1331. Jurisdiction is proper because there is a

“‘serious federal interest in claiming the advantages thought to be inherent in a federal forum,’

which can be vindicated without disrupting Congress’s intended division of labor between state

and federal courts.” Id. (quoting Grable, 545 U.S. at 313-14). This doctrine “captures the

commonsense notion that a federal court ought to be able to hear claims recognized under state

law that nonetheless turn on substantial questions of federal law.” Grable, U.S. at 312. Each of

these elements is handily satisfied here.

A. Cork’s Unfair Competition Claim Against Defendants Necessarily Raises Disputed, Substantial Federal Issues.

This case satisfies the first Grable requirement because Cork’s allegations and requested

relief necessarily raise disputed federal issues. A federal issue is “necessarily raised” when an

essential element of the plaintiff’s claim will “require the application of [federal] law to the facts

of [plaintiff’s] case.” Gunn, 133 S. Ct. at 1065.


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First, the complaint necessarily raises a federal issue because the alleged breach and the

terms of the GSA Lease, which is a government contract between OPO and a federal agency, are

foundational parts of Cork’s unfair competition claim. Specifically, Cork claims that OPO

breached Section 37.19 of the GSA Lease by virtue of President Trump assuming the Office of

the President, thereby engaging in “unfair competition.” See Compl., ¶¶ 7-11, 35-39, 42. In

addition, the complaint alleges “wrongful” conduct by OPO’s operation of the Hotel and its

restaurants and bars, (Compl., ¶¶ 33, 35), which are specifically required and extensively

governed by the terms of the GSA Lease.6 Thus, necessary elements of Cork’s “right to relief”

under its theory of unfair competition require this Court to interpret and apply the GSA Lease to

determine whether, in fact, OPO has breached the lease, and whether OPO’s compliance with

requirements in a federal contract can support a state law claim.

It is well-established that federal contracts, such as the GSA lease, are governed by

federal law and that the rights and obligations of the parties to a federal contract are determined

under federal common law. Indeed, “federal common law of contracts applies to contracts

with the federal government, and federal common law is part of the ‘laws ... of the United

States’ for the purpose of § 1331 jurisdiction.” Yee v. Jewell, No. CV 16-490 (RDM), 2017 WL

78473, at *3 (D.D.C. Jan. 9, 2017) (quoting N. Side Lumber Co. v. Block, 753 F.2d 1482, 1484

(9th Cir. 1985)); Boyle v. United Tech. Corp., 487 U.S. 500, 504 (1988) (“[O]bligations to and

rights of the United States under its contracts are governed exclusively by federal law.”); see also

Wright v. Foreign Serv. Grievance Bd., 503 F. Supp. 2d 163, 180 (D.D.C. 2007) (claims for

rescission of government contracts “arise under federal law as § 1331 requires, since the federal

6 See, e.g., Woods Decl., Exh. B, p. 2, GSA lease at § 1.1 defining “Hotel” as a hotel that

“shall include … at least one signature restaurant and may include … restaurants, specialty retail, various food service, beverage service and retail venues”; see also id. at p. 7, GSA lease at § 6.4 (requiring OPO to continuously occupy and operate the premises as a first-class hotel).


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common law of contracts applies to contracts with the federal government, and federal common

law is part of the ‘laws of the ... United States’ for the purpose of § 1331 jurisdiction”) (quotation

and citation omitted). Accordingly, Cork’s complaint necessarily raises a federal issue—i.e.,

whether OPO breached Section 37.19 of its government contract with the GSA when President

Trump assumed office.

In an effort to avoid this Court’s jurisdiction, Cork asks the Court to disregard the

necessity of the GSA Lease to Cork’s unfair competition claim, (Mot. at 4), but there is no doubt

that this action is directly premised both on the alleged breach of a federal contract and on the

requirements placed upon OPO within that federal contract. See Compl. ¶ 2 (“That [unfair]

advantage is specifically prohibited by the hotel lease between Trump Old Post Office, LLC, and

the United States”); ¶¶ 7-11 (discussing GSA lease); ¶ 9 (“A final lease [was entered] between

the United States, acting through GSA, and Defendant Trump Old Post Office, LLC, dated

August 5, 2013”); ¶ 10 (discussing GSA lease Section 37.19); ¶ 35 (“The decision of Defendants

to continue to operate the Hotel after Defendant Donald J. Trump was inaugurated as President

on the United States on January 20, 2017, violates Section 37.19 of the Lease”); ¶ 36 (“Section

37.19 also protects competitors of the Hotel and its restaurants from unfair competition.”); ¶ 37-

39 (discussing the GSA lease and Defendants’ alleged breach of the lease); ¶ 42 (“To remedy the

unfair competition from the Hotel resulting from the violation of Section 37.19 [of the GSA

lease] … the Court should order Defendants to discontinue their unfair competition.”). Cork

cannot deny its express reliance on the GSA Lease as the basis for its unfair competition claim in

an attempt to avoid this Court’s jurisdiction.

Cork’s complaint thus requires that this Court roll up its sleeves and address myriad

federal contract issues, including whether there is a breach of the GSA Lease, whether a state


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cause of action can be based on a party’s compliance with requirements of a federal contract, and

whether and how this Court can overturn a specific determination by a federal agency that OPO

is in “full compliance” with the GSA Lease (particularly where the complainant is not a party or

a third-party beneficiary thereto7).

Second, the complaint also necessarily raises a federal issue because Cork’s requested

relief for the termination or suspension of all Hotel operations and the full and prompt divestiture

of any interest in the Hotel and under the GSA Lease by OPO, the President, and his family

would require reformation and/or rescission of the GSA lease. Compl., ¶ 42. Such requested

relief will require that this Court interpret and apply the GSA Lease—a government contract

covered by federal common law—and to determine whether such requested relief violates

numerous express provisions of the lease, such as § 6.4 (requiring OPO to continuously and

uninterruptedly occupy and operate the premises as a first-class hotel), § 6.5 (prohibiting the

OPO from assigning the GSA lease to an entity that is not a Trump affiliate within the first three

years of operation), § 15.2 (prohibiting assignment of the GSA lease without GSA’s consent),

§ 15.3 (allowing assignment after the three-year hold period but only to a qualified trustee, which

determination resides with the GSA alone). See Woods Decl., Exh. B, pp. 7-9.

Third, the complaint necessarily raises a federal issue because the complaint expressly

seeks an order requiring President Trump to resign from the Office of the President, which

7 See Edwards v. Aurora Loan Servs., LLC, 791 F. Supp. 2d 144, 151 (D.D.C. 2011)

(holding that “Government contracts by their nature benefit the public, but only in rare circumstances will courts deem individual members of the public to be intended beneficiaries empowered to enforce those contracts in court” and dismissing complaint because plaintiff could not show precise language in a government contract demonstrating a “clear intent” to allow third parties to sue for breach of the contract); Shay v. RWC Consulting Grp., No. CIV 13-0140-JB, 2014 WL 3421068, at *34 (D.N.M. June 30, 2014) (whether a federal contractor employee could bring a third-party beneficiary claim for breach of a government contract necessarily turned on the federal issue of whether the U.S. government intended to permit such a third-party claim).


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unquestionably arises under federal law. Compl., ¶ 42. This requested relief cannot be

effectuated without the Court interpreting the U.S. Constitution.8 The U.S. Constitution specifies

the exclusive means for removing the President from office. See U.S. Const. art. II, §§ 1, 4.

Because an order disqualifying the President from office is surely a remedy available, if ever,

exclusively under federal law, Cork’s request for such remedy necessarily raises a federal issue

and federal jurisdiction applies here.

There is ample support for federal jurisdiction in this case under the Grable test based on

these federal issues. For example, in Bender v. Jordan, the D.C. Circuit found that federal

question jurisdiction under Grable applied in a breach of contract case. 623 F.3d 1128 (D.C. Cir.

2010). Although the breach of contract claim was “a state law cause of action,” the court held

that the agreements themselves were “creatures of federal law,” because they were executed

pursuant to a federal regulation. Id. at 1131 (citation omitted). The court concluded that

although the plaintiff’s claim “appears on its face to be one created by state law … the federal

courts have jurisdiction when, as here, it is apparent that the federal questions overwhelmingly

predominate.” Id. at 1130. Similarly, while Cork’s unfair competition claim in this case is

facially based on District of Columbia common law, the core premise of Cork’s theory of

liability—that OPO breached its government lease with the GSA—necessarily requires this

Court to make numerous determinations on federal issues regarding the application and

8 To the extent Cork claims the federal issue of removing the President from office is not

explicitly plead in the complaint (and it is explicitly pled), such federal issue fits within the “independent corollary” to the well-pleaded complaint rule that a “a plaintiff may not defeat removal by omitting to plead necessary federal questions.” Rivet v. Regions Bank of Louisiana, 522 U.S. 470, 475 (1998) (quotation omitted). If a plaintiff has “artfully pleaded” claims this way, the court “may uphold removal even though no federal question appears on the face of the plaintiff's complaint.” Id.


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interpretation of the terms in a government contract. Thus, as in Bender, federal question

jurisdiction exists over Cork’s claim.

B. The Federal Issues in This Case Are Actually Disputed.

The federal issues in this case are also disputed, satisfying the second prong of the Grable

test. Cork alleges that Defendants breached GSA Lease Section 37.19 by virtue of President

Trump assuming the Office of the President, and seeks various remedies to cure the alleged

“unfair competition” stemming from the alleged breach of the GSA Lease. Compl., ¶¶ 7-11, 35-

39, 42. OPO, in contrast, squarely contests that it has violated any aspect of the GSA Lease,

denies that it has failed to abide by the requirements imposed by the GSA, disputes that Cork is

an intended third-party beneficiary of the GSA Lease or that Cork can overturn the GSA’s

determination that OPO is in compliance with the lease, and further challenges Cork’s right to

obtain any of the various remedies it seeks. See generally Dkt. No. 10 (OPO’s Motion to

Dismiss).

Accordingly, Cork’s complaint raises federal issues that are actually disputed. See Dist.

of Columbia v. Group Hospitalization & Med. Services, Inc., 576 F. Supp. 2d 51, 54 (D.D.C.

2008) (denying remand based on federal question jurisdiction where plaintiff’s state law claim

turned on a disputed interpretation of the defendant’s federal charter).

C. The Federal Issues in This Case Are Substantial.

Grable’s third element, the substantiality inquiry, focuses on “the importance of the

[disputed federal] issue to the federal system as a whole.” Gunn, 133 S. Ct. at 1066; see also

Grable, 545 U.S. at 313 (“Federal jurisdiction demands not only a contested federal issue, but a

substantial one, indicating a serious federal interest in claiming the advantages thought to be

inherent in a federal forum.”).


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The disputed federal issues in this case are substantial and support a serious federal

interest in affording a federal forum to Defendants.9 First, the federal government’s ability to

negotiate the terms of its contracts without unilateral rescission or reformation through suit by

non-parties is a substantial federal interest. Cf. Gunn v. Minton, 133 S. Ct. 1059, 1066 (2013)

(“Government’s ‘direct interest in the availability of a federal forum to vindicate its own

administrative action’ made the question ‘an important issue of federal law that sensibly

belong[ed] in a federal court.’”) (quotation omitted). Cork’s requested relief in the form of Hotel

closure and/or total divestment by the GSA’s chosen developer, OPO, is not permitted under the

GSA lease and would require wholesale reformation of the government contract with significant

involvement by the GSA and use of government resources. There can be no question that Cork’s

attempt to interfere in the GSA’s contracting process is an important issue for the federal

government and is anything but trivial.

Second, the interpretation of GSA Lease section 37.19 is significant to the federal

government because it is a common provision in GSA contracts. Specifically, the GSA’s

standard lease form at Section L contains substantially similar language to the GSA’s lease with

OPO at section 37.19. See Woods Decl., Exhs. D & E, GSA Form 3486 (Rev. 4-1999) and GSA

Form 3486 (Rev. 10-2013).10 Thus, a decision on the federal question of interpretation of this

provision will potentially control other cases.

Third, the operation and ownership of a major federally-owned historic landmark in the

District of Columbia is facially a substantial federal interest. Redevelopment of the Old Post

9 Although Cork’s unfair competition claim is legally meritless (as outlined in OPO’s

Motion to Dismiss, Dkt. No. 10), it nonetheless raises federal issues that are “substantial” in the jurisdictional sense.

10 The GSA’s standard form for “Lease of Real Property,” Form 3486, is available at https://www.gsa.gov/portal/forms/download/114914.


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Office building involved nearly a decade of Congressional activity, culminating in the Old Post

Office Building Redevelopment Act of 2008, which was aimed at turning a wasting federal asset

into a vehicle for a lucrative financial return to the federal government. See Pub. L. No. 110–359,

122 Stat. 4005, § 3. The GSA then undertook a lengthy request for proposal process, before

ultimately selecting OPO as its preferred developer in 2012. Cork’s unfair competition claim

seeks to upend the federal government’s work for redevelopment of the Old Post Office building

and alter the use of this important historic property by seeking a court order that would shutter

the Hotel and/or force a sale of the Hotel and any interest in the lease. See Compl., ¶ 42.

Fourth, inasmuch as Cork’s complaint facially seeks an order requiring the President of

the United States to resign from office (Compl., ¶ 42), the Constitutional implications and the

federal interest in providing for a federal forum for this action are obvious and overwhelming.

See Gunn, 133 S. Ct. at 1066 (describing the federal issue in Grable as one with “broader

significance … for the Federal Government”).

The substantial nature of the federal interests involved here are supported by this Court’s

decision in District of Columbia v. Group Hospitalization & Medical Services, Inc., 576 F. Supp.

2d 51 (D.D.C. 2008). There, the court concluded that the disputed federal issue was substantial

because it turned on an interpretation of a federal charter, and because Congress had “indicated

its direct interest” in the issue by amending the charter several times. Id. at 56. Likewise, here

Cork’s claim implicates interpretation of a government contract that was entered into at the

direction of Congress through a federal government agency. As in Grable, where the “the

national interest in providing a federal forum … [was] sufficiently substantial,” so too here the

federal interests outlined above are sufficiently substantial “to support the exercise of federal-

question jurisdiction over the disputed issue on removal.” 545 U.S. at 310.


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D. Applying Federal Question Jurisdiction in This Case Would Not Disrupt the Federal-State Balance.

Finally, Grable’s fourth prong, the preservation of the federal-state balance, is also

satisfied. This inquiry seeks to ensure that exercising jurisdiction “would not materially affect,

or threaten to affect, the normal currents of litigation” in the federal system. Grable, 545 U.S. at

319. Given the substantial federal issues at stake, allowing the case to continue in federal court

would not disrupt the balance of state and federal interests. See id. at 312.

The federal issues involved here are unlikely to lead to any significant re-routing of state

claims to federal courts. Grable, 545 U.S. at 313. Cork’s case is not a garden variety tort suit,

where removal might risk moving many cases to federal court. See Grable, 545 U.S. at 318

(explaining that jurisdiction was found absent in prior Supreme Court decision because of

concerns about “attract[ing] a horde of original filings and removal cases”). To the contrary,

Cork’s claim is unique and raises strong federal interests in that it involves the sitting President

of the United States, a historic Washington, D.C. landmark (the Old Post Office building) owned

by the federal government, a federal agency lease agreement with the GSA that was entered into

at the direction of Congress, key terms of a federal contract that are replicated in other federal

government leases, and a contract that the federal government negotiated and recently

specifically reaffirmed is not in breach. In short, no floodgates would be opened by the exercise

of federal jurisdiction in this case. To the contrary, keen and significant federal interests

permeate Cork’s claim and requested relief.

Litigating the central issue in this case—whether OPO breached Section 37.19 of the

GSA Lease by dint of President Trump’s assumption of the office of the Presidency—would not

“drag the federal court into small disputes more properly addressed in state court.” Group

Hospitalization, 576 F. Supp. 2d at 56. On the contrary, federal courts are the primary venues


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for actions involving, interpreting, and applying federal government contracts11 “Given the

absence of threatening structural consequences” and the clear interest in the availability of a

federal forum, “there is no good reason to shirk from federal jurisdiction over the dispositive and

contested federal issue[s] at the heart of [Cork’s] state-law … claim.” Grable, 545 U.S. at 318-

19.

Because this case will not disturb the state-federal balance and it will serve important

federal interests, this Court should exercise federal question jurisdiction over Cork’s unfair

competition claim.

II. CORK’S ARGUMENTS FOR REMAND HAVE NO MERIT.

Cork makes three primary arguments for remand, none of which has merit.

First, Cork contends that the Supreme Court’s decision in Merrill Lynch, Pierce, Fenner

& Smith Inc. v. Manning, 136 S. Ct. 1562 (2016) requires remand of this action. (Mot. at 13.)

This contention has no merit, as the Merrill Lynch decision is inapposite to Defendants’ removal.

In that case, the Supreme Court considered the jurisdictional application of § 27 of the Securities

Exchange Act of 1934 and concluded that the jurisdictional test established by § 27 is the same

as 28 U.S.C. § 1331’s test for deciding if a case “arises under” a federal law. Id. at 1567-75.

Merrill Lynch—unlike OPO here—did not contend on appeal to the Supreme Court that the

plaintiff’s claims necessarily raised a federal issue pursuant to the Grable federal question

11 Cork contends that federal district courts do not have experience in dealing with federal

contracts because such jurisdiction belongs to the Court of Federal Claims. See Plf.’s Memo. in Supp. Mt. to Remand at p. 14. This is false for two reasons. First, district courts routinely handle such cases involving private parties, and even have concurrent jurisdiction over certain contract claims brought directly against the United States. See 28 U.S.C. § 1346(a)(2). Second, the Court of Federal Claims was specifically created to adjudicate claims against the government, which is irrelevant here where the dispute is between private parties. See generally http://www.uscfc.uscourts.gov/faqs. The fact that Cork’s complaint is premised upon issues tied to a federal contract neither deprives this Court of jurisdiction nor grants it to the Court of Federal Claims.


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doctrine, and thus, the Court expressly declined to address that issue. See id. at 1575. Therefore,

the Merrill Lynch decision has no bearing on the propriety OPO’s removal based on the Grable

test. Further still, Merrill Lynch actually embraces Grable’s holding that a state law claim can

give rise to federal jurisdiction when the claim “rises or falls on the plaintiff’s ability to prove the

violation of a federal duty” and where such claim necessarily raises a disputed, substantial

federal issue. Id. at 1569. Merrill Lynch also instructs that there is a difference between an

apparent state law claim that references federal law for “atmospheric reasons” (which is not

subject to federal question jurisdiction), and an apparent state law claim that “rises or falls on the

plaintiff’s ability to prove the violation of a federal duty” (which is subject to federal question

jurisdiction). Id. at 1568-70 (finding that federal jurisdiction was appropriate in the plaintiff’s

apparent state law claim because “the claim’s very success depends on giving effect to a federal

requirement”). Cork relies on the GSA Lease and asks that this Court meddle with its terms.

These are not “atmospheric” federal issues; rather, they are key ingredients of Cork’s complaint.

Merrill Lynch thus compels federal jurisdiction in this case.

Second, Cork misleadingly attempts to disavow its reliance on the GSA Lease and its

requested remedies that would require either (a) rescission and/or reformation of the GSA Lease,

or (b) the removal of President Trump from office. (Mot. at 14.) As addressed above (see

Section I.B., supra), however, Cork’s complaint expressly alleges that the basis for the alleged

“unfair competition” is Defendants’ alleged breach of the GSA Lease. Indeed, the face of Cork’s

complaint indisputably predicates the unfair competition claim on breach of the GSA Lease

(Compl., ¶¶ 7-11, 35-39, 42), and the complaint requests relief by this Court in the form of an

order that Defendants cease operation of the Hotel and divest any interest in the GSA Lease, or

alternatively, an order requiring the President to resign from office (Compl., ¶ 42). Thus, Cork’s


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half-hearted disclaimer of its grounds for this action and its requested relief is refuted by the

clear language of the complaint it filed.

Finally, Cork argues for remand because if the Court determines it has subject matter

jurisdiction over this action, the Court could theoretically be reversed on appeal sometime in the

future on jurisdictional grounds. (Mot. at 15.) This argument is nonsense. The potential for later

reversal based on lack of subject matter jurisdiction exists in any case removed to federal court.

The mere potential for a later reversal on appeal cannot be a basis to deny parties their right to a

federal forum when a district court finds that federal jurisdiction exists.

In sum, Cork’s arguments for remand are meritless and Cork’s motion should be denied.

III. FEDERAL OFFICER JURISDICTION EXISTS BECAUSE CORK SU ED THE PRESIDENT WHO HAS COLORABLE FEDERAL DEFENSES

This Court need not even address the federal question jurisdiction arguments outlined

above because the Court has a clear and independent basis for subject matter jurisdiction under

the federal officer removal statute, 28 U.S.C. § 1442, which authorizes removal of this case.

Pursuant to 28 U.S.C. § 1442(a)(1), a federal court has jurisdiction over a civil action that

is directed at “any officer … of the United States … in an official or individual capacity, for or

relating to any act under color of such office.” 28 U.S.C. § 1442(a)(1). Federal jurisdiction

under the federal officer removal statute is interpreted broadly, and the U.S. Supreme Court has

mandated that “the policy favoring [federal officer] removal should not be frustrated by a narrow,

grudging interpretation of § 1442.” Arizona v. Manypenny, 451 U.S. 232, 242 (1981); Watson v.

Phillip Morris Co., Inc., 551 U.S. 142, 147 (2007) (“The words ‘acting under’ are broad, and this

Court has made clear that the statute must be ‘liberally construed.’”).

In this case, Cork sues an officer of the United States, President Donald J. Trump, who

asserts the federal defenses of presidential immunity and federal preemption to Cork’s claim.


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Therefore, as outlined in detail in the President’s opposition to Cork’s remand motion, this Court

has jurisdiction under the federal officer removal statute. OPO joins in President Trump’s

opposition to Cork’s motion and expressly incorporates by reference herein the bases for federal

officer jurisdiction made by the President.

CONCLUSION

For the reasons set forth above, OPO respectfully requests that the Court deny Cork’s

motion to remand.

Date: June 1, 2017

Respectfully submitted, /s/ Rebecca Woods Rebecca Woods (D.C. Bar No. 468495) [email protected] SEYFARTH SHAW LLP 975 F Street, N.W. Washington, DC 20004 Telephone: (202) 463-2400 Facsimile: (202) 641-9200 Esther Slater McDonald (D.C. Bar No. 495034) [email protected] Stephanie A. Stewart (Georgia Bar No. 483581, pro hac vice application to be submitted) [email protected] SEYFARTH SHAW LLP 1075 Peachtree Street, N.E., Suite 2500 Atlanta, Georgia 30309 Telephone: (404) 885-1500 Facsimile: (404) 892-7056 Counsel for Defendant Trump Old Post Office, LLC


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CERTIFICATE OF SERVICE

I hereby certify that on this 1st day of June, 2017, a copy of the foregoing DEFENDANT TRUMP OLD POST OFFICE LLC’S MEMORANDUM OF POINTS AN D AUTHORITIES IN OPPOSITION TO PLAINTIFF’S MOTION TO REMAND with the Clerk of the Court for the United States District Court for the District of Columbia using the CM/ECF system, which will send notice and accomplish service of such filing to the following registered CM/ECF users:

Scott H. Rome Andrew J. Kline Christopher LaFon THE VERITAS LAW FIRM 1235 19th Street, N.W., Suite 320 Washington, DC 20036 [email protected] Mark S. Zaid Bradley P. Moss MARK S. ZAID, P.C. 1250 Connecticut Avenue, NW Suite 200 Washington, DC 20036 [email protected] Alan B. Morrison Steven L. Schooner GEORGE WASHINGTON UNIVERSITY LAW SCHOOL 2000 H Street, NW Washington, DC 20052 [email protected] [email protected] Counsel for Plaintiff


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Jason R. Scherr Michael E. Kenneally MORGAN, LEWIS & BOCKIUS LLP 1111 Pennsylvania Avenue, NW Washington, DC 20004 Telephone: 202.373.6709 [email protected] [email protected] Eric W. Sitarchuk MORGAN, LEWIS & BOCKIUS LLP 1701 Market Street Philadelphia, PA 19103 [email protected] Allyson N. Ho MORGAN, LEWIS & BOCKIUS LLP 1717 Main Street Suite 3200 Dallas, TX 75201 [email protected] Counsel for Defendant Donald J. Trump

By: /s/ Rebecca Woods Rebecca Woods


IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ... · February 10, 2017 letter to OPO...

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