Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—S.D. Cal.: Consumers proceed with misrepresentation claims against Donald Trump, Trump University, (Nov 20, 2015)

By Greg Hammond, J.D.

Donald Trump and Trump University, LLC were partially denied summary judgment on claims they misled consumers that Trump University was accredited, the students would be taught by experts personally selected by Trump, and that students would receive expert support and mentoring. The federal district court in San Diego determined that the named plaintiffs lacked standing to bring claims for injunctive relief under California law, but there were genuine issues of material fact about whether the defendants made the alleged misrepresentations (Makaeff v. Trump University, LLC, November 18, 2015, Curiel, G.).

Several individuals who were interested in real estate investments purportedly learned about Trump University from news advertisements. After attending free preview events, the individuals paid $1,495 to Trump University to attend a three-day real estate workshop and purchased “Trump Gold Elite” programs for up to $35,000. The individuals—residents of California, New York or Florida—filed a class action suit against Trump University, LLC and its chairman and founder, Donald J. Trump, alleging misleading advertisements and unfair and deceptive business practices regarding Trump’s involvement in Trump University, in violation of California’s Unfair Competition Law (UCL), False Advertising Law (FAL), and Consumers Legal Remedies Act (CLRA), among other state claims.

Specifically, the plaintiffs alleged that the defendants made the following misrepresentations in advertisements, mailings, promotions, and the free preview events: (1) Trump University was an accredited university; (2) the students would be taught by real estate experts, professors, and mentors personally selected by Trump; and (3) students would receive one year of expert support and mentoring. Trump and Trump University filed separate motions for summary judgment.

Injunctive relief. Both motions sought to dispose of the plaintiffs’ claim for injunctive relief under the UCL, FAL, and CLRA. The court concluded that there must be a real and immediate threat of repeated injury in order for a plaintiff to have standing to pursue injunctive relief. However, the named plaintiffs in this case failed to raise a genuine dispute of material fact that they intend to purchase Trump University’s seminars or mentorships again in the future. Both motions were therefore partially granted with regard to the injunctive relief claims.

Trump University’s remaining arguments. Trump University’s motion for summary judgment was denied with regard to: (1) plaintiffs’ claims for restitution under the UCL, FAL, and CLRA; (2) plaintiffs’ claim for monetary damages under the CLRA; (3) plaintiffs’ financial elder abuse claim; (4) the Florida subclass; and (5) the New York subclass. The court reasoned that arguments regarding these claims and subclasses were already decided on the defendants’ motion to decertify, in which the court granted decertification on damages issues as to all causes of action and further bifurcated the damages issues.

“Hand-picked” instructors representations. Trump individually moved for summary judgment on the “hand-picked” instructors misrepresentation claim, arguing that the representation he “hand-picked” or “hand-selected” the Trump University instructors was true and not a misrepresentation.However, allegations that various instructors testified they never met with Trump, and that certain instructors Trump testified he “hand-picked” were not involved with the live events at issue, were sufficient to raise 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 Trump was true.

UCL, FAL claims. Allegations that plaintiffs were exposed to Trump’s misrepresentations through Trump University’s highly orchestrated advertising campaign, which featured Trump and which Trump reviewed and approved, raised a genuine dispute of material fact as to whether the named plaintiffs were exposed to and relied on core misrepresentations made by Trump. Even though they did not rely solely on misrepresentations Trump made himself, the named plaintiffs provided evidence that they saw misrepresentations by Trump, which influenced their purchase decisions. Trump’s motion for summary judgment was therefore denied with regard to the UCL and FAL claims.

CLRA claim. Trump additionally alleged that the CLRA claim fails because he was not personally involved in a transaction with the named plaintiffs and there is no evidence that the named plaintiffs relied on the alleged core misrepresentations made. The court rejected these arguments, however, finding: (1) it previously rejected Trump’s “transaction” argument at the motion to dismiss stage and Trump has shown no grounds for the court to reconsider its earlier conclusion; (2) plaintiffs have raised a genuine dispute of material fact as to whether there was an actionable “transaction” between themselves and Trump under the CLRA; and (3) there is a triable dispute as to causation/reliance.

Florida, New York subclasses. Finally, the court rejected Trump’s motion for summary judgment with regard to the Florida and New York subclasses because: (1) the Florida named plaintiff testified she received a letter signed by Trump stating that “my hand-picked instructors will share my techniques” and evidence existed that the core misrepresentations occurred in Trump University ads featuring and approved by Trump ; (2) the New York named plaintiff testified he watched a promotional video in which Trump said he “handpicked” the mentors and instructors, that they were “professors,” that Trump University was akin to “the Wharton School of Business”; (3) and there was evidence that the core misrepresentations occurred in Trump University advertisements featuring and approved by Trump.

The case number is 10cv0940 GPC (WVG).

Attorneys: Aaron M. Olsen (Zeldes Haeggquist & Eck, LLP) for Tarla Makaeff. Benjamin James Morris (Foley & Lardner LLP) and Jeffrey L. Goldman (Belkin Burden Wenig & Goldman, LLP) for Trump University, LLC.

Companies: Trump University, LLC

Cases: Advertising StateUnfairTradePractices CaliforniaNews