Abuses of the legal system, even at the direction of the president, are unacceptable.
Abuses of the legal system, even at the direction of the president of the United States, are unacceptable and warrant sanctions. Monday’s stunning decision by Florida Federal District court Judge Kathleen M. Williams, a scathing rebuke of President Donald Trump and the lawyers who represented him, should deter Trump — and future presidents — from bringing lawsuits against the federal government with the goal of settling them to their enormous personal benefit. At the very least, it should cause lawyers — who face consequences for filing such actions — to refrain from doing so, even if means saying no to the president.
The context for Williams’s ruling was a lawsuit brought by Trump, Eric Trump, and the Trump organization against the IRS and the Treasury Department for $10 billion for the authorized release of tax information. The lawsuit was seriously flawed from the outset. Federal law requires that such suits be filed within two years of the violation. This suit was filed well beyond that timeline, apparently to wait for when Trump was president and those answerable to him could agree to the terms of a settlement.
The federal statute provides for damages of $1,000 for an unauthorized disclosure; there is no basis for a $10 billion claim. Also, the law allows for liability if an officer or employee makes the authorized disclosure; in this case, a contractor disclosed the Trump tax returns.
But what made the lawsuit most objectionable was that Trump controlled both sides of the litigation. After he filed the lawsuit, Trump said, “I am supposed to work out a settlement with myself.” He also declared, “I have absolute right to do what I want with the Justice Department.”
The most basic principle of federal court jurisdiction is that lawsuits must be adversarial. Trump controls the Justice Department and the Treasury Department. The heads of both agencies are answerable to the president and can be removed by him. In her opinion, Williams described in detail how this arrangement made the lawsuit collusive from the outset.
The goal of the lawsuit, Williams explained, was for Trump to settle with himself. And that was exactly what he did. After the lawsuit was filed, Trump’s lawyers and Justice Department lawyers acting at his direction agreed to dismiss the lawsuit and settled on terms tremendously favorable to Trump. The lawyers said that because the case had been dismissed, the judge had no authority to review the settlement.
The settlement included an almost $1.8 billion fund for those deemed to be “victims” of “politicized” federal prosecutions. As was immediately noted, this would allow Trump, through a board he selected, to have a slush fund to give money to his cronies and supporters. The outcry, including from members of Congress, caused this to be quickly scrapped. At least for now, Acting Attorney General Todd Blanche says that there are no plans to create it.
The other part of the settlement gives Trump and his family immunity from tax liability for any past acts, which likely will be a huge financial windfall for them. Williams explained that this was blatantly illegal. She noted that the “explicit text of the statute prohibits President Trump and his lawyers ... from asking or promoting termination of an audit directed toward him.”
Williams thus concluded: “[T]he Court finds that this matter was brought for an improper purpose — to gain the imprimatur of judicial legitimacy for a ‘settlement’ that had no viable basis in law or fact. As was observed in another matter brought in this District, ‘this case is part of Mr. Trump’s pattern of misusing the courts to serve his political purposes.’”
The law is well established that a lawyer may be sanctioned if a court filing has no “reasonable factual basis,” “is based on a legal theory that has no reasonable chance of success and that cannot be advanced as a reasonable argument to change existing law,” or is “in bad faith for an improper purpose.” The lawyers for Trump engaged in all these types of misconduct. Williams stressed the latter. As she explained in her conclusion, although a lawsuit was filed, the “action was never about a party seeking judicial resolution of a factual or legal dispute” — it always was a sham suit to facilitate a settlement to benefit Trump.
The lawyers who represented Trump potentially face bar discipline and monetary sanctions for their actions. This is at it should and would be for any lawyers who engaged in such misconduct.
It is unclear what Williams’s order means for the provisions of the settlement protecting Trump and his family from tax liability. The court’s order states: “The Parties are prohibited from referring to the purported ‘settlement agreement’ or using, offering, admitting, or citing any of its provisions in any judicial, administrative, regulatory, arbitration, or any other official proceeding as evidence of a ‘settlement’ in this matter.” This includes Donald Trump, Eric Trump, and the Trump Organization. Therefore, if a future IRS attempts to collect what they owe, they would be barred from invoking the settlement as a defense.
Underlying Williams’s opinion is a justified outrage at what Trump tried to do. As she noted, no other president in history ever has engaged in such an abuse of power. Trump filed a lawsuit for a huge amount of money and then directed federal officials who are accountable to him to settle it to his great benefit. It was egregious misconduct for the lawyers — who are officers of the court — to be part of this.
The bottom line from Williams is that the lawyers should have said no and not been part of this fraud on the system. It is a courageous decision, and one that is absolutely right.
Erwin Chemerinsky is dean and Jesse H. Choper Distinguished Professor of Law at the University of California Berkeley School of Law.