The Trump University Lawsuit Continues

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Posted in: Other Commentary

Donald Trump actually won a small skirmish in his Trump University (TU) legal battle in the U.S. District Court in San Diego this week, but he continues to lose the war. The judge whom Trump has maligned for his Mexican heritage—U.S. District Court Judge Gonzalo P. Curiel—cut The Donald some slack vis-à-vis the media but refused to reverse his earlier rulings and dismiss the case against Trump for his role in bilking people who enrolled in TU and received none of the promised instruction on how to succeed in real estate.

You will recall in May, after Trump became the presumptive presidential nominee of the Republicans, he began his unprovoked racist attack on Judge Curiel claiming the lawsuit against him for his role in TU was “in front of a very hostile judge.” Trump noted, “The judge was appointed by Barack Obama,” and added, “Frankly, he should recuse himself because he’s given us ruling after ruling after ruling, negative, negative, negative.” Trump claimed Judge Curiel was ruling against him because the former wanted to build a wall along our southern border with Mexico, and Trump believed the judge was Mexican. Learning that, in fact, Judge Curiel was born in Indiana did not slow Trump down, since the judge’s parents were Mexican, so he ranted on that he was being “railroaded” by a “rigged” legal system. He claimed Judge Curiel was a “hater of Donald Trump,” and the judge was a “disgrace,” who should “be ashamed of himself.” And he called for other federal judges “to look into Judge Curiel.”

It was very ugly and nasty stuff, particularly since federal judges cannot ethically defend themselves, and a judge’s heritage, race or gender is not a basis on which to disqualify him or herself from any given case. But this week, Judge Curiel proved he is certainly more qualified for his job than Trump is for the job he seeks.

I have written, in a prior column, about Trump’s lawyers requesting Judge Curiel reverse his earlier ruling, when he refused to dismiss the TU lawsuit. He rejected the new motion to end the lawsuit because Trump provided no new basis whatsoever for such an action. By turning down a request by media organizations who wanted access to the video depositions of Trump for public release, however, Judge Curiel showed he is anything but the biased judge Trump claims. Let me explain.

Refusal to Dismiss

Understandably, Trump is apparently deeply troubled by the class-action RICO lawsuit he faces in San Diego. It addresses all the people who were lured into signing up for a $35,000 “university” course developed by Trump and taught by his “handpicked experts” as instructors, who would personally mentor students for a year. Turned out the course was off the shelf and repackaged in TU binders, instructors were salesmen with no experience in real estate who were only trying to get the students to buy more, and the mentors disappeared. In short, according to those who signed up and parted with their money, the entire program was a fraud from start to finish.

It is true that many students signed “student reviews” stating how great the course was but many did so because the salesmen implored them to do so early in the program, claiming they would lose their jobs if they did not get top ratings, and before the students knew they were being defrauded. Indeed, the student reviews were part of the scam. In RICO cases, fraud is a core issue. Speaking in non-legalistic terms, this is a civil action based on the federal mail and wire fraud statutes to show criminal behavior (fraud) by Trump perpetrated against those who signed up for the TU course. In addition, to meet the RICO standard, a pattern of racketeering must be shown, scheming behavior, meaning this was not a one-off matter, but an effort that was repeated again and again.

Trump’s newest legal team—headed by the extremely able Daniel Petrocelli, a partner at O’Melveny & Myers—filed a motion for summary judgment in an effort to get the case tossed out of court. Petrocelli claimed that (1) allowing this case to proceed was “an unprecedented expansion of RICO law;” (2) there was no evidence that Trump had conducted the affairs of TU; (3) that there was no scheme to defraud; and (4) that there was no evidence to establish that Trump “knowingly participated” in a scheme to defraud. Judge Curiel found none of Petrocelli’s arguments persuasive, and denied the motion for summary judgment, thereby allowing the case to proceed.

Judge Curiel’s order addresses Petrocelli’s motion point by point. Item (1) was rejected because the RICO law is what it is and it is based on the statute enacted by Congress and approved by the U.S. Supreme Court, which has “ruled in favor of an expansive interpretation of civil RICO in a series of cases.” The high Court has rejected applying civil RICO only to those who have been criminally convicted, and when business unrelated to the mob have been found engaging in mob-like behavior, this law has been found applicable. Item (2) was rejected because the record shows Trump did “participate in the operation or management of the enterprise,” and that Petrocelli was misreading the law in claiming it required Trump to be the “exclusive director of the operations.” The judge cited the case showing it requires only involvement in “some part” of the enterprise, and the record clearly established Trump was involved in the marketing of TU. Item (3) was rejected, as Judge Curiel had in an earlier motion to dismiss the case, because Trump was involved in more that “puffery” he claimed, and calling his actions puffery did not mean his claims had not misled the students. So this was a question for a jury to determine. Item (4) was not persuasive to the judge because “[d]irect proof of knowledge and fraudulent intent—of what a person is thinking—is almost never available,” but the “intent to defraud” can “be proven through reckless indifference to the truth or falsity of statement,” so this will be a question for the jury.

There can be no summary judgment when there are disputed facts for a jury, and each item the judge addressed raises issues for the jury. So these matters will be resolved at trial, currently scheduled for November.

Refusal to Release Trump’s Deposition Videos

Judge Curiel’s ruling on the request of several news organizations – CNN, CBS, NBC, Tribune Publishing, New York Times and Washington Post—to remove the confidentiality designations to portions of Trump’s videotaped deposition was surprising. The law favors the public’s right to know. But in the end the law also leaves such matters to the discretion of the judge handling the case. Judge Curiel could not have been fairer to Trump in denying the motion of the news media for access to his video deposition, for he could have easily (and not incorrectly) ruled otherwise.

The judge balanced the public’s interest in seeing the video depositions against the private interests of Donald Trump in keeping them confidential. Notwithstanding the fact that the print transcripts of these depositions had already been released and Trump’s attorneys have waived the claim of confidentiality, Judge Curiel found that Trump’s argument to withhold access by the press had merit. The judge agreed that given the timing of the case—with the presidential campaign in full force—that “it is nigh-inevitable that ‘cut’ and ‘spliced’ segments of [Trump’s] deposition videos would appear in both media reports and in political advertisements aired nationwide prior to the trial date in November, increasing the likelihood that prospective jurors would be exposed to information about the case, as well as to evidence that could be introduced at trial to impeach [Trump’s] testimony.”

Bottom line: “The core question is whether the public’s interest in viewing the demeanor of [Trump] in the deposition videos outweighs the impairment to judicial efficiency likely to result. The Court concludes that it does not.” Or as the judge more bluntly stated it, he “is loath to increase the difficulty of the challenge of seating an impartial jury in order to achieve a limited public benefit” in releasing the videos.

Clearly, of these two most recent rulings, the more significant is the fact that the case is now going to trial in November, along with two related cases. But the class-action RICO case is the greatest threat to Trump, and a loss that would be unbecoming a president-elect, should he win in November. For if he loses the RICO case not only will he have been found to have committed serious federal felonies, but he is subject to treble damages and attorney fees, which could result in a personal bankruptcy.

  • Frank Willa

    Mr. Dean, thank you for noting the activity of this case. In my view it is important and I did not hear of this ruling reported by the “beltway media”. My take is that the judge’s ruling rebuts the charges made by Trump; it seems even handed and thoughtful.

  • nettguia

    You can, I suppse, fault someone for not writing about someone you dislike, but it does not make any sense. I would say the article is fair, and Judge Curiel has been very fair in this preparation for trial, and that’s all that is being discussed here.

  • Andy

    This is an argument of semantics that seeks to deflect from the pure bigotry in Trump’s comments. It serves to note that the judge was born in Indiana and therefore of US nationality. He is of Mexican ancestry.