Back in May, the Weekly Constitutional featured the extraordinary “settlement” between President Donald Trump and his own government. This supposed compromise purported not only to end the suit brought by him and his allies against the Treasury and the Inland Revenue Service, which are of course controlled by Trump. It also sought to create a massive “slush fund” and to confer wide-ranging tax immunities on Trump and others.
Never had a settlement agreement been put to such a purpose. One can do many things with such agreements, but surely one could not do that? Usually, these litigation compromises do nothing more than resolve the differences between the parties. This one, however, was doing the job of primary legislation. Never had there been a more super-powered private contract.
And Trump almost got away with it. The judge in this case was unconvinced that there was a genuine dispute, and without a genuine dispute a court cannot have jurisdiction to hear any case. Judge Kathleen M Williams directed the parties to make submissions on this crucial jurisdiction point. But just before the deadline, the wily parties agreed to have the case dismissed.
By pulling this procedural trick, the parties could then pretend to enter a settlement agreement. The agreement could not be approved by the court, as the case had been dismissed. The supposed agreement was in two parts: an arrangement to set up a $1.776bn fund for effectively Trump’s political allies, and an order from the acting attorney general Todd Blanche giving Trump and others immunities in respect of their tax affairs.
It must have seemed so clever. But the court was having none of this. Following an application by a group of former federal judges, the judge reopened the case. Technically, the court could not decide the merits of the lawsuit, because of the earlier dismissal, but it could still look at ancillary related matters, such as if there had been a fraud on the court.
In a resounding court order—which you can read in full here—Judge Williams agreed with the applicants that Trump and his allies “acted in bad faith and for an improper purpose by ‘collusively filing a lawsuit with claims subject to multiple dispositive defenses solely to provide cover for a collusive settlement.’” Indeed, Trump and his co-plaintiffs “pursued this lawsuit in bad faith for the improper purpose of dishonestly advancing a political narrative”.
The court then imposed as a sanction that 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’ reached in this matter”. The judge also referred the lawyers involved, including Blanche, to their regulators.
This does not mean that the fund and the immunities cannot be resurrected in some other form and on some other pretext. There is obviously a demand from Trump that this sort of thing is to be done, and he has now nominated Blanche to be the permanent US attorney general. Further imaginative and breathtaking ploys can be expected if Blanche is approved by the Senate. But for now Trump and Blanche cannot dress up their wheeze in the clothes of a supposed settlement agreement.
What Trump attempted here should have led to his impeachment. It was a shameless attempt to abuse litigation so as to confer considerable benefits on him and his supporters. But, of course, the current nature of US politics means that even without this tax immunity he is pretty much politically immune from the consequences of his abuses of power.
He may appeal (using either side of the case), but the particular nature of this case means that he needs it not to be live (and thereby settled), and a successful appeal would make the case live again. This may thereby be one case he does not take further.
He did not get away with it, this time. And we now have a judgment of the ages to record and bear witness to what he sought to do. Perhaps one day, when there is a shift in the political culture in the US, people will look back at this and see it as unthinkable as it should have been seen as at the time.
