Monday, November 23, 2015

If only the last Trump would sound: Trump University case continues

Makaeff v. Trump University, LLC, 2015 WL 7302728, No. 10cv0940 (S.D. Cal. Nov. 18, 2015)
Charlatan and budding fascist Donald Trump failed to get rid of many consumer protection claims against him and his “Trump University” (now renamed).  Can’t wait to see how he’ll explain why this means he’s great.
In 2004, Trump helped found Trump University, a private, for profit entity offering real estate seminars and purporting to teach Mr. Trump’s “[i]nsider success secrets.” TU shifted to live events in 2007. Consumers were first invited to a ninety-minute Free Preview, preceded by an orchestrated marketing campaign:
For example, consumers were sent “Special Invitation[s] from Donald J. Trump” which included a letter signed by Mr. Trump that stated “[m]y handpicked instructors and mentors will show you how to use real estate strategies.” Newspaper advertisements displayed a large photograph of Mr. Trump, stating “[l]earn from Donald Trump’s handpicked expert,” and quoted Mr. Trump as saying: “I can turn anyone into a successful real estate investor, including you.” Similarly, TU’s website displayed large photographs of Mr. Trump and included statements such as “Learn from the Master,” “It’s the next best thing to being his Apprentice,” and “Insider success secrets from Donald Trump.” Further, TU advertisements “utilized various forms of recognizable signs to appear to be an accredited academic institution” such as a “school crest that was ubiquitous and used on TU letterhead, power point presentations, promotional materials and advertisements.” Plaintiffs have provided evidence that Mr. Trump reviewed and approved all advertisements.
The free previews began with a promotional video of Trump saying the things you’d expect Trump to say, minus the racism.  E.g., “We’re going to have professors and adjunct professors that are absolutely terrific. Terrific people, terrific brains, successful. ... The best. ... we’re going to teach you better than the business schools are going to teach you and I went to the best business school.”  The cost of the next step was $1,495.  At that “seminar,” consumers were invited to sign up for the Trump Elite Program for up to $34,995, which allegedly promised unlimited mentoring for an entire year.
Named plaintiffs—California, Florida, and New York residents—purchased and were dissatisfied with TU programs.  After Makaeff initially sued, TU countersued Makaeff for defamation.  Claims at issue here: the usual California claims; financial elder abuse in violation of Cal. Welf. & Inst. Code § 15600 et seq.; deceptive acts and practices in violation of § 349 of New York’s General Business Law; violation of the Florida Deceptive and Unfair Trade Practices Act (FDUTPA); and misleading advertisement in violation of Florida’s Misleading Advertising Law (MAL)/elder abuse.
The court partially certified a class of buyers from the three relevant states based on certain “core” misrepresentations: “(1) Trump University was an accredited university; (2) students would be taught by real estate experts, professors and mentors hand-selected by Mr. Trump; and (3) students would receive one year of expert support and mentoring.” Subclasses were divided by state and by age for the elder abuse claims.  The class was certified for liability only, but decertified for damages.  The opt-out period has expired.
The court first found that plaintiffs, who were now aware of TU’s misrepresentations, lacked Article III standing to seek injunctive relief.  Fair warning: Trump testified at his 2012 deposition: “Do we plan to start [TU] again after this lawsuit is won and after we bring the lawsuit against your firm. I would say probably yeah.” He also told reporters that TU was “on hiatus.”
Trump argued that he was entitled to summary judgment because he did not personally make the alleged “core” misrepresentations to the class representatives, nor did the class representatives rely on misrepresentations made by him. He also argued that the representation that he “hand-picked” TU instructors was true.
Trump stated in interrogatory responses and deposition testimony that he “attended periodic meetings with various experts responsible for drafting and developing Trump University course materials” and that he saw resumes of instructors.  However, though he said he was personally involved in the selection of four people who developed TU course materials, he also stated that “most if not all speakers, instructors and mentors were selected by Trump University representatives ....” Several instructors testified that they never met with Trump. There was a genuine dispute of material fact as to whether the representation that students would be taught by real estate experts, professors and mentors “hand-picked” by Mr. Trump was true.
Trump also argued that he wasn’t liable for restitution because the plaintiffs paid money to TU, not to him directly. However liability under the UCL and FAL “ ‘may be imposed against those who aid and abet the violation,’ ” there was a genuine issue of fact about Trump’s personal participation: (1) Trump was the founder and Chairman of TU, and authorized TU to use his name, photos, and quotes for all TU seminars and presentations; (2) TU’s materials all prominently feature Mr. Trump’s quotes, image, logo, and signature; (3) Trump reviewed and authorized advertisements; (4) Trump personally financed TU and reviewed financials; and (5) Trump represented that he hand-picked the TU instructors and mentors. Trump’s weak response that he didn’t control the day-to-day operations of TU was insufficient to win summary judgment, given his involvement in the alleged core misrepresentations.
Similar challenges to Trump’s direct responsibility for the named plaintiffs’ enrollment also failed.  True, they didn’t talk to Trump directly.  But, for example, Makaeff saw slides with statements by Trump, including that “[t]his is the next best thing to being my apprentice,” “[y]ou’ll learn inside secrets from me,” and “he was going to provide his hand-picked instructors.”  Makaeff testified that it was important to her that Mr. Trump would hand-pick the instructors because “that’s a promise he made, and I would think that he would have the ability to pick the best people since that’s his expertise.”  Likewise, plaintiff Low testified that he received a letter signed by Trump which included the statement that “[m]y handpicked instructors and mentors will show you how to use real estate strategies,” that the signed letter was the “[n]umber one” reason why Low decided he wanted to buy a TU program, and that Low “took it as being very significant that [Mr. Trump] signed it” because “I got that from him.” Low further testified that he considered all TU communications as coming from Mr. Trump.  Under California law, a material misrepresentation can be actionable even if it wasn’t the sole cause of the plaintiff’s injury.
Florida plaintiff Everett similarly testified that the “Trump name, the Trump reputation, the Trump-backed program” played a “huge role” in and was the “only ... reason” for her decision to purchase TU programs, and it was important to her that she would be working with Mr. Trump’s “handpicked” instructors and mentors. She further testified that the name “University” implies an “educational program” with a “full staff of ... handpicked experts that understand real estate investing” and she thought it was “like a real estate school or a special school that has certification and follows certain guidelines for the state.”  Florida and NY claims survived, the NY claims based on similar testimony.
As for the elder abuse claim, California law defines elder abuse as occurring when a defendant “[t]akes, secretes, appropriates, obtains, or retains real or personal property of an elder [65 or over] ... for a wrongful use or with intent to defraud, or both” or “assists” in doing so. The statute defines “wrongful use” as if the defendant “knew or should have known that this conduct is likely to be harmful to the elder ....”  Trump argued that he didn’t know how many TU students were senior citizens and there was no “target market” for TU.  But plaintiffs offered evidence that TU ads could be interpreted, and were interpreted by Low, as targeting seniors, and that Trump approved all ads. That raised a triable dispute as to whether Trump “should have known” the conduct was likely to harm elders. The same result occurred for the Florida elder abuse claims.

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