Court Grants Class Certification of Nationwide Class of Trump University Students in RICO Class Action Lawsuit Against Defendant Donald Trump
San Diego (October 28, 2014) – On October 27, 2014, the Court in a RICO class action against Donald Trump issued an Order granting class certification of a nationwide class of all students who purchased live event seminars from Trump University from January 1, 2007 to the present. In October 2013, Zeldes Haeggquist & Eck, LLP and Robbins Geller Rudman & Dowd, LLP filed a class action lawsuit in the United States District Court for the Southern District of California, alleging mail and wire fraud against Donald Trump, in violation of the Racketeer Influenced and Corrupt Organizations Act (“RICO class action”).
As stated in the Order, Plaintiff’s Complaint alleges that Trump University CEO and founder Donald Trump and President Michael Sexton “‘devised and executed a scheme to make tens of millions of dollars’ by falsely marketing Trump University as an institution with which Donald Trump was integrally involved as well as an actual university with a faculty of professors and adjunct professors.” Order at 3. Plaintiff alleges that the “‘scheme was fueled by a ‘national advertising campaign with an annual budget at one time of $6 million dollars,’ which included YouTube, email, website, and traditional postal mail solicitations.” Id. “Specifically, Plaintiff alleges the following ‘uniform’ misrepresentations were made: that the programs would give access to Donald Trump’s real estate investing secrets; that Donald Trump had a meaningful role in selecting the instructors for Trump University programs; and that Trump University was a “university.” Id.
In the Court’s 23-page Order granting class certification of a nationwide class in the RICO class action, Judge Gonzalo Curiel found that “common questions exist as to all members of the putative class” regarding whether Defendant misrepresented that Donald Trump was integrally involved in Trump University and that Trump University was an “actual University.” Order at 7. The Court also held that Plaintiff’s claims and defenses were “typical” of those of the class, because his experience with Trump University “matches the allegations alleged on behalf of the putative class in his Complaint, regarding a common fraudulent ‘scheme’ to which all class members were allegedly exposed.” Order at 9. The Court noted that although Defendant “may yet raise the statute of limitations and causation as defenses to the claims of the putative class, these defenses are not unique to Plaintiff’s claim and do not defeat a finding that Plaintiff Art Cohen’s claims are typical of the claims of the class.” Id.
The Court concluded that Plaintiff Art Cohen, and his counsel would adequately represent the class, and appointed Art Cohen as a class representative and Zeldes Haeggquist & Eck, LLP and Robbins Geller Rudman & Dowd, LLP as class counsel. Order at 10-11, 23.
The Court also found that, under F.R.C.P. Rule 23(b), common questions of law and fact predominated over individual issues, and that a class action was superior to other available methods for fairly and efficiently adjudicating this controversy. The Court rejected Defendant’s “causation” argument, noting that “Plaintiff’s theory of liability under RICO is that Defendant schemed to misrepresent the Trump University Live Event programs, which caused the putative class members to make Live Event purchases.” Order at 12. The Court held that because Plaintiff introduced evidence that Defendant’s “alleged misrepresentations of a ‘university’ and of Donald Trump participation in the Trump University Live Events were prominently featured in all Trump University marketing materials; and that a ‘Playbook,’ PowerPoint presentations, and scripts encouraged if not required Trump University representatives to continue these representations,” the evidence provides “a method for Plaintiff to establish proximate causation on a classwide basis without resort to individualized inquiries.” Order at 13.
The Court also rejected Defendant’s contention that individual issues of proof predominated in regard to its statute of limitations defense, finding that the facts did “not prove that Cohen uniquely discovered the injury resulting from the concealed fraud as of October 2009.” Order at 17. The Court was thus “satisfied that determination of Defendant’s statute of limitations defense in this case will not defeat the predominance of common issues in this case.” Order at 19.
Finally, the Court rejected Defendant’s argument that “individual inquiries into entitlement and amount of damages precludes predominance.” Order at 19-20. The Court found that Plaintiff’s “full-refund” damages model matched Plaintiff’s theory of liability. Order at 21. The Court also noted that “Plaintiff brings this claim under RICO, which provides for statutory trebled damages, attorney’s fees, and cost of suit .… Damages under RICO do not depend on subjective valuations, but rather on objective losses.” Id. Accordingly, the Court held that although Plaintiff “must still prove its damages case, his theory of damage recovery does not conflict with his theory of liability under Comcast,” and thus “individualized questions as to damages do not defeat predominance in this case.” Id.
Finally, the Court held that the superiority requirement of Rule 23(b) was satisfied because “class-wide litigation of Plaintiff’s claims here will reduce litigation costs and promote greater efficiency in a single nation-wide class alleging one cause of action.” Order at 22.