Lawyers Try to Nix Class Action Component of Trump University Lawsuit; Judge Says No.
The case against Trump University and Donald Trump was originally filed on April 30, 2010, and has been winding its way through the legal system for years via its numerous motions. (One can view all related legal docs here; some are only available temporarily and will later cost a fee.)
Here is a bit of background on Trump University, according to John Cassidy in the June 02, 2016, New Yorker:
When it began, Trump University offered online classes, but it quickly switched its focus to live classes and seminars, the first of which was free to attend. One of the company’s ads said of Trump, “He’s the most celebrated entrepreneur on earth. . . . And now he’s ready to share—with Americans like you—the Trump process for investing in today’s once-in-a-lifetime real estate market.” The ad said that Trump had “hand-picked” Trump University’s instructors, and it ended with a quote from him: “I can turn anyone into a successful real estate investor, including you.”
In fact, Trump hadn’t handpicked the instructors, and he didn’t attend the three-day seminars. Moreover, the complaint said, “no specific Donald Trump techniques or strategies were taught during the seminars, Donald Trump ‘never’ reviewed any of Trump University’s curricula or programming materials, nor did he review any of the content for the free seminars or the three day seminars.” So what were the attendees taught? According to the complaint, “the contents and material presented by Trump University were developed in large part by a third-party company that creates and develops materials for an array of motivational speakers and Seminar and timeshare rental companies.” The closest that the attendees at the seminars got to Trump was when they were encouraged to have their picture taken with a life-size photo of him.
The alleged scam didn’t stop there. Trump University instructors told people who attended the three-day seminars that this wasn’t enough time to learn how to succeed, and encouraged them to purchase additional “mentorship” programs, which cost up to thirty-five thousand dollars. The complaint explained,
This bait and switch was laid out in the Trump University Playbook (“Playbook”), which provided step-to-step directions to Trump University instructors on what to tell students during the seminars. . . . Trump University instructors and staff were given detailed guidance as to how to build rapport and approach consumers one-on-one to encourage further purchases. Trump University representatives were explicitly instructed to push the highest priced Elite programs. Even when students hesitated to purchase the expensive programs, Trump representatives were provided stock responses to encourage purchases, including encouraging students to go into debt to pay for the Elite programs.
A June 2016 motion filed by the Trump camp was one that tried to kill the class action component of the lawsuit. On August 29, 2016, US District Judge Gonzalo Curiel denied the motion.
Below are some background and details related to that denial.
On September 18, 2015, the United States District Court, Southern District of California (“the Court”) decided that the following class definition in the lawsuit against Trump University would be defined as follows:
All persons who purchased a Trump University three-day live “Fulfillment” workshop and/or a “Elite” program (“Live Events”) in California, New York and Florida, and have not received a full refund, divided into the following five subclasses:
(1) a California UCL/CLRA/Misleading Advertisement subclass of purchasers of the Trump University Fulfillment and Elite Seminars who purchased the program in California within the applicable statute of limitations;
(2) a California Financial Elder Abuse subclass of purchasers of the Trump University Fulfillment and Elite Seminars who were over the age of 65 years of age when they purchased the program in California within the applicable statute of limitations;
(3) a New York General Business Law § 349 subclass of purchasers of the Trump University Fulfillment and Elite Seminars who purchased the program in New York within the applicable statute of limitations;
(4) a Florida Deceptive and Unfair Trade Practices Act (FDUTPA)/Misleading Advertising Law subclass of purchasers of the Trump University Fulfillment and Elite Seminars who purchased the program in Florida within the applicable statute of limitations; and
(5) a Florida Financial Elder Abuse subclass of purchasers of the Trump University Fulfillment and Elite Seminars who were over the age of 60 years of age when they purchased the program in Florida within the applicable statute of limitations.
On April 20, 2016, the Court allowed the Plaintiff for which the original class representative in the lawsuit against Trump and Trump University, Tarla Makaeff, to withdraw from the lawsuit, under the condition that defendants in the lawsuit (i,e., lawyers representing Trump) would be allowed to depose the other California class representative, Sonny Low.
Trump’s lawyers filed a motion on June 03, 2016, for the Court to reconsider decertifying the lawsuit (i.e., declaring that a class does not exist) based on four arguments:
- Class members were not uniformly exposed to alleged “core” misrepresentations;
- Issues about reliance (acting upon another person’s statement of fact, claim or promise), causation, and materiality (whether something is “of substance”) predominate;
- Low’s recent testimony established that he lacks understanding, and
- The Court’s reliance on FTC [Federal Trade Commission] cases “violates binding Ninth Circuit law.”
Here is what the Court found:
On points 1 and 2, “both arguments were extensively considered by the Court in its previous certification orders”; “The Court ‘declines to revisit these previously resolved issues . . . especially where no intervening events have led to changed circumstances.’”
On point 4, the Court argued that it did not violate Ninth Circuit law as such relates to FTC case reliance.
Regarding point 3, the Court found defendant arguments against Low’s supposed lack of understanding to be “unpersuasive.”
Here, the Court includes some interesting references to Low’s deposition. Trump’s lawyers tried to argue that since Low did not appear concerned that Trump University was accredited, then questions of the legitimacy of Trump University should be dismissed. The Court did not agree:
First, Defendants argue that Low was not concerned with whether TU was an accredited university. … Defendants point to deposition testimony where Low stated that he did not recall ever seeing the word “accredited” used in TU materials… and where Low stated that whether TU was an accredited university “was not even a consideration for me. I went there because it was Trump University, that he created.”
However, Low also testified:
Donald J. Trump, besides being a multi-billionaire in real estate, he set up Trump University, which I would presume that he took all the steps necessary to set up a proper institution that he could call a university, with his name next to it. And when he sent out the special invitation, signed by Donald J. Trump himself, “Come to one of my free seminars and learn through my handpicked instructors and mentors the secrets to become rich, be a success in real estate,[”] that was very important to me.
Similarly, when Low was asked,
Q. [For your declaration in support of class certification,] where did you get the words “legitimate academic institution”?
A. I got that – – Donald J. Trump created this institution. He went through the process, just like any university would go through, that – – that’s why he called it a university. And it has certain, you know, standards and qualifications, which I don’t know about, which I – – he knows. . . .
Q. . . . What do you mean by the word “legitimate”?
A. Donald J. Trump went to the Wharton School of the University of Pennsylvania. I went to University of California. These are legitimate institutions. Trump University was created by Donald J. Trump, and, therefore, presumably, he went through all of the same process as those schools did, to be called a legitimate university.
Q. Sir, is it your testimony that you believed that Trump University was like the University of California at Berkley and the University of Washington? . . .
[A.] It better be, because Donald J. Trump is a multi-millionaire, a major success in real estate, and he created this institution, and that which costs all of us a lot of money to attend. So it better be.
Low’s testimony demonstrates that, even if Low was unfamiliar with the technical term “accredited,” Low understood TU to have undergone the same “processes . . . to be called a legitimate university” involving “standards and qualifications” as other accredited universities, such as the University of Pennsylvania and the University of California. Moreover, Low’s testimony demonstrates that this understanding was an important factor to Low in purchasing in TU programs.
Second, Defendants argue that Low’s definition of handpicked to mean “whatever Donald J. Trump used with his determination, that he would pick the people,” …is imprecise, and that Low’s testimony that he believed his TU instructors “had not spoken with Mr. Trump,” …demonstrates that he did not rely on Defendants’ representation that TU instructors would be “handpicked” by Defendant Trump. … However, whether Low believed that his TU instructors had “spoken” with Defendant Trump is quite obviously a separate matter from whether Low believed that Defendant Trump had “handpicked” his TU instructors. Moreover, Low also testified,
Q. At that time, as you walk out of that seminar and you purchased the three-day seminar, did you believe that Donald J. Trump had personally handpicked James Harris?
Q. And then you went to the three-day seminar and then you heard Steven Goff, correct?
Q. And you heard him for three days?
Q. And after hearing him for three days, did you believe that he had been personally selected by Donald J. Trump?. . .
[A.] At that time, I was thinking not just the final day, all three days, that he was handpicked by Donald J. Trump.
In this testimony, Low demonstrates that he understood his TU instructors to have been “handpicked” by Defendant Trump, and implicitly equates the term “handpicked” with “personally selected.” Moreover, as pointed out earlier, Low also testified that “when he sent out the special invitation, signed by Donald J. Trump himself, ‘Come to one of my free seminars and learn through my handpicked instructors and mentors the secrets to become rich, be a success in real estate,[’] that was very important to me.” … Thus, Low both seems to have a commonsense understanding of what the term “handpicked” means, and to have relied upon Defendants’ representation that Defendant Trump “handpicked” TU instructors in deciding to purchase TU programs.
The result was that Trump et al.’s request to avoid class action was summarily denied.
The Trump University fiasco is scheduled to go to trial November 28, 2016.