Antitrust Law Daily Wrap Up, RICO—S.D. Cal.: Class certified in consumer suit over Trump University advertising, (Oct 29, 2014)

By Linda O’Brien, J.D., LL.M.

In an action against businessman Donald Trump for mail and wire fraud in violation of the RICO Act, in connection with the advertising of Trump University, the federal district court in San Diego has certified a class of consumers who purchased live seminars from the university beginning in 2007. The plaintiff’s proposed class sufficiently satisfied the prerequisites of Federal Rule of Civil Procedure 23(a) and (b) (Cohen v. Trump, October 24, 2014, Curiel, G.).

Art Cohen, a businessman interested in real estate investments, filed a class action suit against Donald Trump, founder of Trump University, alleging mail and wire fraud in violation of the RICO Act. Specifically, Cohen challenged the following representations: (1) Trump University’s programs would give access to Trump’s real estate investing secrets; (2) Trump would have a meaningful role in selecting program instructors; and (3) Trump University was an accredited university. In February 2014, Trump’s motion to dismiss was denied. Subsequently, Cohen moved for class certification and appointment of class representative and class counsel.

Rule 23(a). According to the court, the plaintiff established that the class was sufficiently numerous and common issues of law or fact were common to the class. The plaintiff stated that the members of the proposed class “number in the thousands” and his RICO claim raised common questions as to Trump’s alleged scheme and course of conduct which “ensnared the plaintiff and other class members alike.” Thus, the court determined that common questions existed as to all class members regarding whether Trump made the representations and whether the representations were false and materially misleading.

Further, the plaintiff showed that the claims of the class representative were typical of the class because his descriptions of his experience with Trump University matched allegations that the same fraudulent scheme affected every member of the class. The court also determined that Cohen, as the class representative, will adequately protect the interests of the class, and there was no evidence that plaintiff’s counsel had any conflict of interest by serving as class counsel in a related case regarding Trump University advertising.

Rule 23(b). The court found that the plaintiff demonstrated that common questions predominated over issues affecting individual class members. Cohen asserted: (1) the RICO claim can be established by common proof and the causal relationship between Trump’s alleged scheme and the class members was the same; (2) Trump’s statute of limitations affirmative defense did not defeat the predominance of common issues; and (3) Trump University records could be used to calculate each class member’s damages and individual inquiries did not preclude predominance. Finally, the court concluded that class resolution was the superior method for the fair and efficient adjudication of the controversy since a class-wide litigation would reduce litigation costs and promote greater efficiency in a single nationwide class alleging one cause of action.

The case is No. 13-cv-2519.

Attorneys: Aaron M. Olsen (Zeldes Haeggquist & Eck, LLP) for Art Cohen. Benjamin James Morris (Foley & Lardner LLP) for Donald J. Trump.

Companies: Trump University, LLC

Cases: RICO CaliforniaNews