Carl Nichols Former Wilmer Hale partner Carl Nichols testifies at his confirmation hearing.  Photo: Diego M. Radzinschi/ ALM

In one of his first hearings on the federal bench, U.S. District Judge Carl Nichols of the District of Columbia has found himself in what he called a “conundrum.”

Nichols is wrestling with how to handle President Donald Trump's bid to prevent U.S. House Democrats from seeking his New York state tax returns.

On the one hand, the House Ways and Means Committee has not formally asked New York officials for those tax returns, raising a question of whether the case is even ripe for his consideration. On the other hand, Nichols noted at a hearing Monday in Washington, the House Ways and Means Committee could request the records and New York could provide them without notifying Trump, instantly rendering the case moot.

That state of play, he said, left him in a “very awkward position.” And Nichols, who was confirmed to the bench in May, blamed House Democrats and New York state officials for putting him there.

“No one has committed to me that there won't be a production tomorrow, or Monday, or the Monday after,” Nichols said.

Trump's suit takes aim at the “Trust Act,” a New York law adopted only weeks ago that would allow the U.S. House Ways and Means Committee to obtain Trump's state tax returns from New York state officials. Trump has fought any disclosure of his tax returns, despite telling voters in 2016 that he would “absolutely” provide his returns—as modern presidential candidates all have done.

The case is one of several in Washington and New York that confront the secrecy of Trump's financial records. Two federal appeals courts are weighing judges' orders that would permit House committees to obtain records from Trump's longtime accounting firm Mazars USA and from his longtime lender Deutsche Bank. Separately, the Ways and Means Committee is suing the Treasury Department and IRS to obtain Trump's federal tax returns.

After about 90 minutes of arguments Monday, Nichols effectively ordered a 24-hour detente, telling the sides to negotiate and report back by 6 p.m. Tuesday on whether they could agree on a process to ensure that any request for Trump's state tax returns could be litigated.

Nichols said he trusted that House Democrats would neither seek Trump's state tax returns—nor would New York provide them—during that stretch. But he stopped short of issuing a formal order preventing Democrats from taking that step.

House general counsel Douglas Letter argued Congress enjoys broad immunity that should block the president from being able to preemptively stop lawmakers from pursuing his tax returns.

Trump's personal lawyer, William Consovoy of the Washington litigation boutique Consovoy McCarthy, on Monday pitched Nichols on an order that would prevent New York from obliging any request for Trump's tax returns.

That proposal drew a rebuke from the office of New York Attorney General Letitia James. In a letter to Nichols, New York litigation counsel Andrew Amer said the state had been “blindsided” by Consovoy's request. “There is simply no excuse for plaintiff's eleventh-hour expansion of the relief he is seeking to include the New York [attorney general and state finance department],” Amer wrote.

Letter and Amer further questioned whether Nichols, or any federal judge in Washington, would have jurisdiction over New York.

Trump filed the case in Washington in an effort to attach it to a pending lawsuit in which the House is seeking copies of his federal tax returns. U.S. District Judge Trevor McFadden, appointed in 2017 to the trial court, is assigned to the House's case against the Treasury Department and IRS.

Nichols, confirmed in May by the U.S. Senate, formally joined the Washington federal trial bench last month from Wilmer Cutler Pickering Hale and Dorr, where he had been a partner. He was randomly assigned the Trump state tax returns case July 26 after McFadden said Trump's lawyers could not automatically put the case on his docket.

 

 

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READ: US House Asks Judge to Force Disclosure of Trump's Taxes