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K&D LLC v. Trump Old Post Office LLC

United States District Court, District of Columbia

November 26, 2018

K&D, LLC t/a CORK, Plaintiff,
v.
TRUMP OLD POST OFFICE, LLC, and DONALD J. TRUMP, individually, and in his personal capacity, Defendants.

          MEMORANDUM OPINION [DKT. ## 31, 32]

          RICHARD J. LEON UNITED STATES DISTRICT JUDGE.

         Plaintiff K&D, LLC is the owner and operator of Cork Wine Bar (hereinafter, "plaintiff or "Cork"), a restaurant and bar located in the downtown Washington, D.C. area. Am. Compl. 2 [Dkt. #30]. On March 9, 2017, Cork brought this action against defendants Trump Old Post Office, LLC ("OPO") and President Donald J. Trump ("President Trump" or "the President"), alleging that defendants are liable in tort for unfair competition under D.C. common law and seeking injunctive relief. Id. at ¶¶ 30-42; see D.C. Sup. Ct. Compl. 11 [Dkt. #1-1].[1] OPO, which is owned by a revocable trust that acts for the sole benefit of President Trump, operates a hotel and restaurants under the name Trump International Hotel ("Hotel"). Am. Compl. ¶¶ 2, 5, 12-13. The Hotel is located within the historic Old Post Office Pavilion at 1100 Pennsylvania Avenue, N.W., which OPO leases from the General Services Administration ("GSA"). Id. at ¶¶ 7-8.

         Pending before the Court are OPO's and the President's motions to dismiss. See Def. Trump Old Post Office LLC's Mot. to Dismiss and Stmt, of Points and Authorities in Support ("OPO Mot. to Dismiss") [Dkt. ## 31, 31-1]; Def. Donald J. Trump's Mot. to Dismiss ("Pres. Trump Mot. to Dismiss") [Dkt. # 32]. Upon consideration of the pleadings and the relevant law, and for the reasons stated below, defendants' motions to dismiss are GRANTED and this case is DISMISSED.

         BACKGROUND

         The crux of Cork's complaint is that since President Trump took office on January 20, 2017, Cork has been damaged by unfair competition resulting from the President's ownership, through OPO, of the Hotel. Cork alleges that it "competes with the restaurants in the Hotel by providing the same or similar services that are provided by them in the same marketplace." Am. Compl. ¶ 32. Specifically, Cork asserts that a large portion of its business involves hosting and catering "receptions and dinners for large groups of lobbyists, as well as for political fundraisers and conventions" attended by individuals and organizations who have business before and/or seek to influence federal officials and United States policy. Id. at ¶ 4, 19, 24-28.

         Since the President's election, Cork claims, "many organizations and individuals, including citizens of nations other than the United States, [have] substantially increased their use of the Hotel and its various facilities to the detriment of Cork." Id. at ¶ 17. Cork attributes this upswing to an intentional effort by the Hotel, President Trump, and Trump family members and associates "to promote the Hotel to maximize its exposure and income-producing potential." Id. at ¶ 20. The Amended Complaint provides several examples of these so-called "promotional activities," including the use of "Trump" name branding as well as former White House Press Secretary Sean Spicer's televised encouragement to visit the Hotel, which he described as "absolutely stunning." Id. at ¶20(a)-(b). Cork also references press reports documenting the Hotel's patronage by foreign diplomats and lobbyists, purportedly demonstrating the Hotel's unfair advantage. Id. at ¶¶ 21-23.

         In addition, Cork emphasizes Section 37.19 of OPO's lease with the GSA, which prohibits any elected United States or D.C. official from being "admitted to any share or part of this Lease, or to any benefit that may arise therefrom," unless the official is "a shareholder or other beneficial owner of any publicly held corporation or other entity, if this Lease is for the general benefit of such" entity. Id. at ¶ 10. According to Cork, President Trump's beneficial ownership of the Hotel through OPO violates Section 37.19, placing OPO in default. Id. at ¶¶ 35, 38. The parties dispute the importance of this alleged breach; defendants contend that it is fundamental to Cork's unfair competition claim, see OPO Mot. to Dismiss 9-13; Pres. Trump Mot. to Dismiss 12-13, while Cork describes it as an ancillary illustration of D.C.'s "understanding of fair competition norms," see Pl.'s Mem. of Points and Authorities in Opp'n to February 2018 Mots, of Defs. to Dismiss ("Pl.'s Opp'n") 24 [Dkt. # 34]. In either case, after President Trump took office, the GSA determined that his assumption of the Presidency does not constitute a breach of Section 37.19 and that OPO remains in compliance with the lease. See OPO Mot. to Dismiss 4-5.

         On February 26, 2018, defendants moved to dismiss Cork's Amended Complaint under Federal Rule of Civil Procedure 12(b)(6). Defendants contend that Cork has failed to state an unfair competition claim under D.C. common law because: (1) the allegedly tortious conduct does not constitute an "unlawful act" under D.C.'s narrow unfair competition law; (2) our Circuit Court precedent forecloses unfair competition claims predicated on the competitive advantage derived from a public figure's prominence; and (3) Cork cannot sue in tort to enforce a contract (the GSA lease) to which it is not a party. OPO Mot. to Dismiss 7-15; Pres. Trump Mot. to Dismiss 9-14. President Trump's defense rests on the additional federal law grounds that, as President, he is entitled to absolute immunity from Cork's lawsuit, and that Cork's claim is preempted under the Constitution's Supremacy Clause, which precludes D.C. from directly regulating federal officials. Pres. Trump Mot. to Dismiss 4-9. Cork opposed defendants' motions to dismiss on March 12, 2018, see [Dkt. # 34], and OPO and the President filed their reply briefs on March 19, 2018, see [Dkt. ## 35-36]. On September 25, 2018, the parties presented their oral argument on the motions to dismiss.

         LEGAL STANDARD

         To survive a Rule 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.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A complaint "does not need detailed factual allegations," but it does need "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (alteration in original) (citations and internal quotations marks omitted). A facially plausible claim requires "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqball 556 U.S. at 678. "The Court assumes the truth of all well-pleaded factual allegations in the complaint and construes reasonable inferences from those allegations in the plaintiffs favor[.]" Sissel v. U.S. Dep't of Health & Human Servs., 760 F.3d 1, 4 (D.C. Cir. 2014). The Court "need not, however, accept inferences drawn by a plaintiff if such inferences are unsupported by the facts set out in the complaint." Nurriddin v. Bolden, 818 F.3d 751, 756 (D.C. Cir. 2016) (per curiam) (alterations and internal quotation marks omitted). Nor must it "accept legal conclusions couched as factual allegations." Id. (citing Iqbal, 556 U.S. at 678). In deciding a Rule 12(b)(6) motion to dismiss, the Court may consider not only the factual allegations in the complaint, but also any "documents attached to or incorporated in the complaint, matters of which courts may take judicial notice, and documents appended to a motion to dismiss whose authenticity is not disputed, if they are referred to in the complaint and integral to a claim." Harris v. Amalgamated Transit Union Local 689, 825 F.Supp.2d 82, 85 (D.D.C. 2011).

         ANALYSIS

         While appearing at first blush to be just another unfair competition action, there are constitutional questions of profound weight and import lurking within the contours of this case. Fortunately, however, the pending motions can be resolved without opening that Pandora's box of novel issues. Thus, for the reasons set forth below, I have concluded on the merits that Cork has failed to state a claim of unfair competition under D.C. law and that defendants OPO's and President Trump's motions to dismiss must be GRANTED.[2]

         I. Unfair Competition

         Reflecting "our society's encouragement of 'aggressive economic competition, '" the tort of unfair competition is actionable at D.C. common law only in "limited" circumstances. Econ. Research Servs., Inc. v. Resolution Econs., LLC,208 F.Supp.3d 219, 231 (2016) (quoting Ray v. Proxmire,581 F.2d 998, 1002 (D.C. Cir. 1978)); see also Scanwell Labs., Inc. v. Thomas,521 F.2d 941, 949 (D.C. Cir. 1975) (tort of unfair competition must be "limited in scope in a free market economy based on free and open competition for business"). The law does not enumerate "specific elements" which, if established, make out a cause of action for unfair competition. Camarda v. Certified Fin. Planner Bd. of Standards, Inc.,672 Fed.Appx. 28, 30 (Mem) (D.C. Cir. 2016) (quoting Furash & Co., Inc. v. McClave,130 F.Supp.2d 48, 57 (D.D.C. 2001)). Instead, the claim is defined "by the description of various acts that would constitute the tort if they resulted in damage." Id. These acts include "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 ...


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