Trump Can't Duck Financial Abuse Claims
Friday, November 20, 2015
SAN DIEGO (CN) - Donald Trump cannot escape class action claims that his profit-seeking real estate school used misleading advertising to commit financial elder abuse and deceptive trade, a federal judge ruled.
Lead plaintiff Tarla Makaeff sued Trump and Trump University in 2010, claiming she spent $60,000 for a real estate program that consisted of seminars that were little better than infomercials.
The class was certified in 2014 to include all people who purchased a Trump University three-day live workshop or program in California, New York and Florida, and have not received a full refund.
The main class was divided into five subclasses based on their age and where they purchased the programs.
U.S. District Judge Gonzalo Curiel on Wednesday denied most of Trump's requests for summary judgment.
Trump University claimed the former students are not entitled to an injunction because it stopped enrolling students after July 2010 and changed its name to the Trump Entrepreneur Initiative that year.
However, the students provided evidence that Donald Trump testified during his deposition in 2012 that he would likely start the university again after the lawsuit is over. He told reporters in 2011 that Trump University was on hiatus.
Curiel partially granted some of Trump's motions.
He found that though the students showed there is a reasonable probability that Trump University's past acts will recur, they lack standing to seek injunctive relief because named plaintiffs Makaeff and Sonny Low both testified they do not intend to purchase any more Trump University seminars or mentorships.
The Ninth Circuit has ruled that for standing to pursue injunctive relief, there must be a real and immediate threat of repeated injury. Makaeff and Low do not face such a threat since they are not planning to buy anymore seminars, Curiel said.
He granted summary judgment to Trump University and Donald Trump on the students' claims for injunctive relief under California's Unfair Competition Law, False Advertising Law and Consumer Legal Remedies Act.
But Trump University is not entitled to summary judgment on the rest of the students' claims - including restitution for unfair competition and false advertising.
Donald Trump argued separately that he cannot be held liable for unfair competition and false advertising because he himself did not make any misrepresentations to Makaeff and Low, and their decisions to pay the money were caused by statements from Trump University.
However, Makaeff testified that she paid for the program after seeing slides with statements from Trump such as, "You'll learn inside secrets from me," and, "This is the next best thing to being my apprentice."
She said she relied on a promise by Trump that he would "hand-pick" the instructors.
Low testified that he received a letter, signed by Trump, that included the statement: "My hand-picked instructors and mentors will show you how to use real estate strategies."
Low said that letter was the main reason he ponied up the tuition.
Curiel found that the students provided sufficient evidence that they were exposed to and relied on core misrepresentations from by Trump. He found that Trump also can be held personally liable for the students' claims for restitution for unfair competition and false advertising, even though they paid Trump University and not Trump.
Such liability can be imposed against people who aid and abet in the violation, and there is evidence that Trump personally participated in the misrepresentations and misconduct alleged by the students, Curiel said.
He also allowed the students to press their claims against Trump and Trump University for financial elder abuse, violations of the New York General Business law, and violations of Florida's Misleading Advertising Law.
Donald Trump faces a related federal class action from lead plaintiff Art Cohen, who claims Trump misrepresented Trump University "to make tens of millions of dollars" but delivered "neither Donald Trump nor a university."
That class is certified for anyone who purchased live events from Trump University throughout the United States since Jan. 1, 2007.
Jill Martin, assistant general counsel for the Trump Organization, pointed out that the ruling follows Curiel's decision in September decertifying the class for purposes of proving damages.
"This means that every person will ultimately have to prove he or she received nothing of value from Trump University. We look forward to finally bringing this case to a jury, where we will show that 98 percent of Trump University students admitted to having a positive experience and everyone received a valuable real estate education," she said.
With that "overwhelming evidence, we are confident we will win and finally put this attorney-driven lawsuit to rest," Martin said.
Attorneys for the students did not immediately respond to an email request for comment late Thursday.