Makaeff v. Trump University, LLC
2015 U.S. Dist. LEXIS 156160, 145 F.Supp.3d 962, 2015 WL 7302728 (2015)
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Rule of Law:
A class action plaintiff seeking injunctive relief must demonstrate Article III standing by showing a 'real and immediate threat of repeated injury,' which typically requires a likelihood of purchasing the defendant's product again. However, corporate officers can be held personally liable for deceptive marketing under consumer protection laws if they authorized or participated in misrepresentations that consumers relied upon, even without direct contractual privity.
Facts:
- In 2004, Donald Trump helped found Trump University (TU), a for-profit entity offering real estate seminars that purported to teach Mr. Trump’s “insider success secrets.”
- TU’s marketing campaigns included mailed invitations, website content, radio, and newspaper advertisements that prominently featured Donald Trump’s image and statements.
- Advertisements and promotional videos played at free preview events stated that TU instructors and mentors were “handpicked” by Donald Trump and would teach his “insider success secrets.”
- Consumers were invited to ninety-minute Free Previews, then offered a $1,495 “Fulfillment Seminar,” and subsequently the “Trump Elite Program” for up to $34,995.
- Plaintiffs Tarla Makaeff, Sonny Low, J.R. Everett, and John Brown each purchased TU programs after being exposed to its advertising and promotional materials.
- Tarla Makaeff testified that at a Fulfillment Seminar, she viewed slides with statements by Mr. Trump, including promises of “hand-picked instructors,” which influenced her decision to purchase the Elite Program.
- Sonny Low, a 70-year-old, received a letter signed by Donald Trump stating that “handpicked instructors” would show how to use real estate strategies, which was a primary reason for his purchase, and he considered all TU communications as coming from Mr. Trump.
- J.R. Everett, a 68-year-old, testified that the “Trump name, the Trump reputation, the Trump-backed program” played a “huge role” and was the “only ... reason” for her decision to purchase TU programs, and she received signed letters from Mr. Trump promoting “handpicked” instructors.
- John Brown viewed a promotional video where Donald Trump said instructors were “handpicked” by him and that TU “would be as good as the Wharton School of Business,” which influenced his decision.
Procedural Posture:
- April 30, 2010: Plaintiff Tarla Makaeff filed a class action complaint against Trump University, LLC in the United States District Court for the Southern District of California.
- May 26, 2010: Trump University filed a counterclaim against Tarla Makaeff for defamation.
- September 26, 2012: The Third Amended Complaint (TAC) was filed, naming Tarla Makaeff, Sonny Low, J.R. Everett, and John Brown as plaintiffs, and adding Donald Trump as a defendant, alleging various state consumer protection and common law claims.
- February 21, 2014: The District Court granted in part and denied in part Plaintiffs’ motion for class certification, certifying a class and five subclasses based on alleged “core” misrepresentations.
- March 16, 2015: The District Court granted a joint motion by the parties to dismiss Plaintiffs’ non-certified individual claims.
- February 12, 2015: Defendant Donald Trump filed a Motion for Summary Judgment or, in the Alternative, Partial Summary Judgment.
- February 17, 2015: Defendant Trump University, LLC filed a Motion for Summary Judgment or, in the Alternative, Partial Summary Judgment.
- September 18, 2015: The District Court granted in part and denied in part Defendants’ Motion for Decertification of Class Action, denying decertification on liability issues but granting it on damages and bifurcating damages.
- September 21, 2015: The District Court granted in part and denied in part Plaintiffs’ Motion for Approval of Class Notice and Directing Class Notice Procedures.
- November 15, 2015: The opt-out period for the class expired.
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Issue:
Does the court grant summary judgment for Trump University and Donald Trump on consumer protection claims for injunctive relief, restitution, or damages, where plaintiffs allege reliance on misleading advertisements and representations regarding 'hand-picked' instructors and the nature of the educational programs?
Opinions:
Majority - Hon. Gonzalo P. Curiel
No, the court grants summary judgment as to claims for injunctive relief but denies summary judgment as to all other claims for restitution and damages, finding triable disputes of material fact. The court granted summary judgment on the plaintiffs' claims for injunctive relief under California's Unfair Competition Law (UCL), False Advertising Law (FAL), and Consumers Legal Remedies Act (CLRA) because the named plaintiffs lacked Article III standing. Citing Lujan v. Defenders of Wildlife, Perez v. Nidek Co., and Bates v. United Parcel Service, Inc., the court reasoned that to establish standing for prospective injunctive relief, plaintiffs must demonstrate a “real and immediate threat of repeated injury.” Since named plaintiffs Makaeff and Low did not testify that they intended to purchase TU’s seminars or mentorships again, they failed to show a likelihood of future harm from the challenged conduct, even though the court acknowledged a split among district courts on this issue. Conversely, the court denied summary judgment on Trump University's and Donald Trump's motions concerning claims for restitution and damages. For Trump University, the court found arguments regarding insufficient damages methodology to be moot given its prior order decertifying damages issues and bifurcating them for a separate trial phase. For Donald Trump, the court found genuine disputes of material fact precluded summary judgment on several grounds. First, conflicting evidence existed as to whether Donald Trump “hand-picked” instructors as advertised. Second, the court held that Donald Trump could be personally liable for alleged misrepresentations under UCL/FAL, citing People v. Sarpas and Coastal Abstract Service, Inc., because he approved advertisements containing core misrepresentations and personally participated in the misconduct, despite not controlling day-to-day operations or directly contracting with plaintiffs. Third, the court found triable disputes regarding named plaintiffs' exposure to and reliance on Donald Trump's misrepresentations, noting that plaintiffs are not required to show misrepresentations were the sole or decisive cause of injury, citing In re Tobacco II Cases. Fourth, for CLRA claims, the court reaffirmed its prior holding that a direct contractual “transaction” with Donald Trump was not required, given the CLRA’s liberal construction and evidence that his misrepresentations were “intended to result” in sales. Finally, for California and Florida financial elder abuse claims, a triable dispute existed as to whether Donald Trump “assisted in taking” money from elders through misrepresentations and whether he “should have known” his conduct was likely to harm seniors, as his advertisements could be interpreted as targeting them and he approved them. For New York General Business Law § 349 claims, a triable dispute existed regarding whether Plaintiff Brown was exposed to Donald Trump’s misrepresentations and whether a “reasonable consumer” could have been misled.
Analysis:
This ruling clarifies the stringent Article III standing requirements for injunctive relief in consumer protection class actions, emphasizing the need for plaintiffs to demonstrate a future intent to purchase the allegedly deceptive product. At the same time, it reinforces that individual corporate officers, particularly those whose names and images are central to a marketing campaign, can face personal liability for deceptive practices under various state consumer protection laws, even without direct contractual privity. The decision's denial of summary judgment on liability issues for both Trump University and Donald Trump underscores the difficulty of dismissing claims where orchestrated, widespread advertising campaigns are at issue, and multiple forms of reliance can be demonstrated, setting a precedent for robust consumer protection enforcement against prominent individuals associated with allegedly misleading ventures.
