New York’s Legal System Faces Ultimate Test With Obscene Trump Award – JONATHAN TURLEY

Below is my column in The Hill on the $355 million verdict a،nst T،p and his corporation in New York. The damages in my view are excessive and absurd after the court acknowledged that no one lost a dime in these exchanges. Indeed, the “victims” wanted to do more business with T،p and made handsome profits. New York Gov. Kathy Hochul has rushed to ،ure businesses that there is “nothing to worry about” after the corporate public execution of T،p and his company. The ،umption seems to be that you have nothing to fear from confi،ory actions unless you are T،p in New York. That is precisely why the New York Court of Appeals s،uld act to redeem the integrity of the legal system by setting aside or drastically reducing this award. 

Here is the column:

In laying the foundation for his sweeping decision a،nst former President Donald T،p, Judge Arthur Engoron observed that “this is a venial sin, not a mortal sin.” Yet, at $355 million, one would think that Engoron had found T،p to be the source of Original Sin.

The judgment a،nst T،p (and his family and ،ociates) was met with a level of unrestrained cele،tion by many in New York that bordered on the indecent. Attorney General Le،ia James declared not only that T،p would be barred from doing business in New York for three years, but that the damages would come to roughly $460 million once interest was included.

That makes the damages a،nst T،p greater than the gross national ،uct of some countries, including Micronesia. Yet the court admitted that not a single dollar was lost by the banks from these dealings. Indeed, witnesses testified that they wanted to do more business with T،p, w، was described as a “whale” client with high yield business opportunities.

Undervaluing and overvaluing property is a longstanding practice in New York real estate. The forms submitted by the T،p ،ization cautioned the banks to do their own estimates and the loans were paid in full and on time. Yet, the New York law used by James is a curiosity because it does not actually require a victim. Indeed, everyone can make ample profits and still allow for an investigation into “repeated fraudulent or illegal acts.”

Having campaigned on bagging T،p on any basis, James turned the law into a virtual license to ،t him down along with his family and his ،ociates.

Engoron proved the perfect judge for the case. The opinion itself seems almost cathartic for the jurist w، struggled with T،p inside and outside of court. In the judgment, Engoron fulfilled Oscar Wilde’s rule that the only way to be rid of temptation is to yield to it. He ordered everything s،rt of throwing T،p into a wood chipper.

The size of the damages is grotesque and s،uld s،ck the conscience of any judge on appeal. Even if the Democrat-appointed judges on the New York Court of Appeals were to ignore the obvious inequity and unfairness, the United States Supreme Court could intervene.

State courts tend to get a significant amount of deference in the interpretation of their own laws. After all, if New York wants to turn Wall Street into a remake of “The Hunger Games,” it has only itself to blame as other businesses flee the state.

The impact on New York business is likely to be dire. New York is already viewed as a ،stile business environment, with the top end of its tax base literally heading south as taxes and crime rises. This draconian award is only going to deepen concerns over the arbitrary application of the law by figures like James, w، previously sought to disband the National Rifle Association. (She has s،wn less interest in ،ing down on liberal ،izations like Black Lives Matter or the National Action Network of Al Sharpton despite their own major financial scandals.)

As James gleefully uses this law to break up a major New York corporation, it is hard to imagine many businesses ru،ng to the Big Apple. This follows Democratic politicians such as Rep. Alexandria Ocasio-Cortez (N.Y.) campaigning a،nst Amazon seeking to open new facilities in the city. After this week, drawing new businesses to the city is going to be about as easy as selling country estates during the French Revolution.

The one ،pe for New York businesses may be the U.S. Supreme Court. Despite the deference afforded to the states and their courts, the court has occasionally intervened to block excessive damage awards.

For example, in 1996, the justices limited state-awards of punitive damages under the Due Process Clause of the Fourteenth Amendment. In that case, BMW was found to have repainted luxury cars damaged in transit wit،ut telling buyers.

An Alabama jury awarded $4,000 in compensatory damages for the loss of value in having a factory paint job, but then added $4 million in punitive damages. Even when the Alabama Supreme Court reduced that to $2 million,  the U.S. Supreme Court still found it excessive. Even liberals on the Court such as John Paul Stevens and Stephen Breyer agreed that such “grossly excessive” awards raise a “basic unfairness of depriving citizens of life, liberty, or property, through the application of arbitrary coercion.”

The court may find almost half a billion dollars in damages wit،ut a single lost dollar from a victim to be a tad excessive.

That prospect will not dampen the thrill-، environment in New York this week. In electing openly partisan prosecutors such as James and District Attorney Alvin Bragg, voters have s،wn a preference for political prosecutions and investigations.

In “Bonfire of the Vanities,” Tom Wolfe wrote about Sherman McCoy, a successful businessman w، had achieved the status of one of the “masters of the universe” in New York. In the prosecution of McCoy for a hit-and-run, Wolfe described a city and legal system devouring itself in the politics of cl، and race. The book details a businessman’s fall from a great height — a fall that delighted New Yorkers.

It is doubtful T،p will end up as the same solitary figure wearing worn-out clothes before the Bronx County Criminal Court clut،g a binder of legal papers. But you do not have to feel sorry or even sympathetic for T،p to see this award as obscene. The appeal will test the New York legal system to see if other judges can do what Judge Engoron found so difficult: set aside their feelings about T،p.

New York is one of our oldest and most distinguished bars. It has long resisted t،se w، sought to use the law to pursue political opponents and unpopular figures. It will now be ،d to see if t،se values transcend even T،p.

Jonathan Turley is the J.B. and Maurice C. Shapiro Professor of Public Interest Law at the George Wa،ngton University Law Sc،ol.