By Jonathan Stempel
NEW YORK (Reuters) - U.S. lawyers representing President Donald Trump on Friday said the Trump Organization's exit from a luxury hotel in lower Manhattan undermines a lawsuit in which rival hotels and restaurants are challenging his alleged illegal receipt of payments from foreign governments while in office.
The Department of Justice said the Trump Organization's decision on Wednesday to give up management of the Trump SoHo by year end and drop the Trump name bolsters the argument for dismissing the lawsuit, whose plaintiffs also include the nonprofit watchdog Citizens for Responsibility and Ethics in Washington.
"This development undermines the hospitality plaintiffs' reliance on alleged competition with the Trump SoHo to demonstrate standing," or legal authority to sue, the Justice Department said in a letter to U.S. District Judge George Daniels in Manhattan.
Lawyers for the plaintiffs did not immediately respond to requests for comment.
Daniels had expressed skepticism at an Oct. 18 hearing over whether the plaintiffs could sue over Trump's alleged violations of the U.S. Constitution's "emoluments" clause.
That clause bars U.S. officials from accepting various gifts from foreign governments without congressional approval and is designed to thwart corruption and improper influence.
According to the plaintiffs, Trump is violating the clause by keeping ownership of his business empire, including interests in hotels in Washington, D.C. and elsewhere, despite ceding day-to-day control to his sons, Eric and Donald Jr.
The Justice Department has countered that the plaintiffs cannot show they were injured and do not deserve an injunction that would "effectively impose a condition on the President's ability to serve as President, ... implicating core separation of powers concerns."
Daniels said at the Oct. 18 hearing that he may decide by mid-December whether to let the lawsuit continue.
The original complaint was filed three days after Trump entered the White House, in one of the earliest legal challenges to his presidential authority.
The case is Citizens for Responsibility and Ethics in Washington et al v. Trump, U.S. District Court, Southern District of New York, No. 17-00458.
(Reporting by Jonathan Stempel in New York; Editing by Cynthia Osterman)