K&D LLC v. Trump Old Post Office LLC

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

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“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.

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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

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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.