case 3:13-cv-02519-gpc-wvg document 9-1 filed 11/14/13 ......email: [email protected]...

SHUMENER, ODSON & OH LLP Betty M. Shumener (SBN 137220) John D. Spurling (SBN 252324) Staci M. Tomita (SBN 266309) 550 South Hope Street, Suite 1050 Los Angeles, CA 90071-2678 Telephone: 213-344-4200 Facsimile: 213-344-4190 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected]

Jill A. Martin (SBN 245626) c/o Trump National Golf Club Los Angeles One Trump National Dr. Rancho Palos Verdes, California 90275 Telephone: 310-303-3225 Facsimile: 310-265-5522 Email: [email protected]

Attorneys for Defendant DONALD J. TRUMP

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

Case No. 13-cv-2519 GPC WVG

MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS

CLASS ACTION

Hon. Gonzalo P. Cu el, presiding

Date: April 18, 2013 Time: 1:30 p.m. Place: Courtroom 2D

ART COHEN, Individually and on Behalf of All Others Similarly Situated,

Plaintiff,

VS.

DONALD J. TRUMP

MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS

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Case 3:13-cv-02519-GPC-WVG Document 9-1 Filed 11/14/13 of 20

TABLE OF CONTENTS

PAGE

INTRODUCTION

II. PLAINTIFF'S ALLEGATIONS 3

A. Procedual History 3

B. SMA Declares A Maturity Default 4

III. ARGUMENT 7

A. Plaintiff's Complaint Constitues Impermissible Claim Splitting 5

B. Plaintiff's Complaint Must Be Dismissed Under Rule 12(b)(6) 9

1. Plaintiff's RICO Claim Is Barred By The Statute Of Limitations 10

2. Plaintiff Failed to Allege Any Actionalbe Racketeering Activity By Trump 11

3. Plaintiff Has Failed to Plead Fraud With The Required Particularity 14

IV. CONCLUSION 15

MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS 13cv2519

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TABLE OF AUTHORITIES

PAGE

Cases Adams v. California Dep't of Health Services, 487 F.3d 684 (9th Cir. 2007) 5

Agency Holding Corp. v. Malley-Duff & Associates, Inc., 483 U.S. 143 (1987).... 10

Associated Gen. Contractors of Cal. v. Cal. State Council of Carpenters, 459 U.S. 519 (1983) 10

Balistreri v. Pacifica Police Dep't, 901 F.2d 696 (9th Cir. 1988) 9

Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) 10

Bender v. Suburban Hosp., Inc., 159 F.3d 186 (4th Cir. 1998) 9

Biogenex Laboratories, Inc. v. Ventana Medical Systems, Inc., 2005 WL 1869342 (N.D. Cal. August 5, 2005) 5

Clegg v. Cult Awareness Network, 18 F.3d 752 (9th Cir. 1994) 9

Cnty. of Marin v. Deloitte Consulting LLP, 836 F. Supp. 2d 1030 (N.D. Cal. 2011) 11, 12, 14

Corley v. Rosewood Care Center, Inc. of Peoria, 388 F. 3d 990 (7th Cir. 2004)... 12

Edgenet, Inc. v. GSI , AISBL, 742 F.Supp.2d 997 (E.D.Wis. 2010) 12

Edmunson v. Procter & Gamble Co., 2011 WL 4041495 (S.D. Cal. Sept. 8, 2011) 12

Flowers v. Continental Grain Co., 775 F.2d 1051 (8th Cir. 1985) 14

Grimmett v. Brown, 75 F.3d 506 (9th Cir. 1996) 11

Hooker v. Simon, 2010 WL 3516662 (E.D. Cal. Sept. 7, 2010) 7

In re All Terrain Vehicle Litig., 771 F. Supp. 1057 (C.D. Cal. 1991) 12, 14

L.A. Unified School District v. L.A. Branch NAACP, 714 F.2d 935 (9th Cir. 1983) 7

McGlinchy v. Shell Chem. Co., 845 F.2d 802 (9th Cir. 1988) 9

McKinniss v. Sunny Delight Beverages Co., 2007 WL 4766525 (C.D. Cal. Sept. 4, 2007) 14

Rotella v. Wood, 528 U.S. 549 (2000) 10, 11

Russ v. Standard Ins. Co., 120 F. 3d 988 (9th Cir. 1997) 9

Single Chip Sys. Corp. v. Intermec IP Corp., 495 F. Supp. 2d 1052 (S.D. Cal. 2007) 5

ii MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS 13cv2519

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Waterfall Homeowners Association v. Viega, Inc., 283 F.R.D. 571 (2012).... ........ 7

Weisbuch v. County of Los Angeles, 119 F.3d 778 (9th Cir. 1997) 9

Williams v. Aztar Indiana Gaming Corp., 351 F.3d 294 (7th Cir. 2003) 12

Statutes 18 U.S.C. § 1961(1) 11

18 U.S.C. §§ 1341 11

18 U.S.C. § 1962(c) ("RICO") 1

Fed. R. Civ. P. 12(b)(6) 9

iii



MEMORANDUM OF POINTS AND AUTHORITIES

I. INTRODUCTION

The Complaint filed in this action is nothing more than the latest in a series

of unfounded attacks by Plaintiff's counsel on Donald J. Trump ("Trump"). This

latest attack was prompted by the Court's denial of the motion for leave to amend

the scheduling order to file an amended complaint in another class action that

Plaintiff's counsel filed against Trump, styled as Tarla Makaeff, et. al. v. Trump

University, LLC, et. al., which is currently proceeding as Case No. 3:10-cv-00940

(hereinafter, "Initial Case"). The current Complaint consists of just one claim -

Violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §

1962(c) ("RICO") — a statute established to punish those involved in organized

crime, not legitimate businessmen such as Trump. The Complaint seeks to make an

end-run around the Court's order in the Initial Case, constitutes improper claims

splitting, is barred by the statute of limitations, and does not state a single RICO

violation.

After filing three amended complaints, and one year past the deadline for

filing amended pleadings, the class representatives in the Initial Case sought to

amend their complaint a fourth time to add the very RICO claim alleged in this

action for the same class of plaintiffs. The Court denied leave to file the fourth

amended complaint, holding that no good cause supported the amendment and that

plaintiffs had not been diligent in seeking leave to amend. Undetered by the

Court's order denying leave to amend, Plaintiff's counsel simply substituted a

different class representative on the pleading and filed this Complaint as a new

action.

The RICO claim at issue here is identical to that contained in the fourth

amended complaint that Plaintiff's counsel attempted to file in the Initial Case.

Plaintiff's counsel admit in their Notice of Related Cases that this action and the

Initial Case involve the same transactions and events, the same facts, and the same

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parties. Plaintiff is already a member of the proposed class in the Initial Case and is

represented by the same counsel. Accordingly, the filing of this action constitutes

impermissible claim splitting and must be dismissed with prejudice.

In addition to being in direct contravention of this Court's order denying

leave to amend, Plaintiff has not stated (and cannot state) a RICO claim. All civil

RICO claims are governed by the four-year statute of limitations set forth in the

Clayton Act. Plaintiff alleges that the purported representations were made in

spring of 2009, that he attended the Foreclosure Real Estate Retreat in May, 2009,

and that he purchased the Gold Elite program on May 10, 2009. (Complaint 1- 13.)

Thus, all of the predicate acts underlying Plaintiff's RICO claim occurred over four

years ago. Nevertheless, Plaintiff waited until October 18, 2013 to file his

complaint, months after the statute of limitations had run. As a result, Plaintiff's

RICO claim is barred by the statute of limitations, and the Complaint should be

dismissed with prejudice.

Even if the Complaint was not barred by the statute of limitations (and it is),

Plaintiff's general allegation that Trump has engaged in acts of mail fraud fails to

meet the threshold RICO requirement of a "racketeering activity." It is black letter

law that mere "seller's talk," "sales puffery" or "puffing" cannot support claims for

wire and mail fraud. Nevertheless, Plaintiff attempts to base his claims on

advertisements containing vague, generalized and subjective statements concerning

Trump University. For instance, Plaintiff alleges that Trump or Trump University

circulated marketing materials stating:

• With the support from "our Team of Trump Experts — you'll have

what you need to succeed!"

"Learn from the Master"

"I can turn anyone into a successful real estate investor, including you"

• "Do YOU have What It Takes to Be My Next Apprentice?"

• "We'll give you the best training"

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• Trump University is of "Ivy League quality rivaling Wharton Business

School."

These statements are mere puffery; they are not acts of mail and wire fraud as a

matter of law.

As set forth herein, this action should be dismissed, with prejudice, because it

constitutes impermissible claim splitting; it is time barred; and sales puffing does

not rise to the mail and wire fraud required for a RICO claim.

II. PLAINTIFF'S ALLEGATIONS

A. Procedural History

Three years and seven months ago, on April 30, 2010, a class action was

filed by Plaintiff's counsel involving the same parties, the same transaction and

events, and the same facts, which is currently proceeding as Makaeff, et al. v.

Trump University, LLC, et al. Case No. 3:10-cv-00940 (hereinafter, the "Initial

Case"). (Dkt No. 3.) After filing the Initial Case, the class plaintiffs amended their

complaint three more times. The Initial Case asserts fourteen causes of action

against Trump and others, including unfair business practices and misleading

advertisement, deceptive practices in violation of the Consumers Legal Remedies

Act, fraud, misrepresentation, and breach of contract, among other claims. (Initial

Case Dkt. No. 128.)1

On September 24, 2012, Plaintiffs filed a Motion for Class Certification,

which has been fully briefed by the parties. (Initial Case Dkt. Nos. 122, 138, 195.)

However, days before the hearing on the Motion for Class Certification and one

year after the deadline for filing amended pleadings, on August 2, 2013, the class

plaintiffs sought a fifth bite at the apple, and moved to amend the final Court-

ordered deadline to seek leave to amend their complaint again. (Initial Case Dkt.

Although Trump disputes the statements alleged in those filings, Trump requests that the Court take judicial notice of the filings made by the class plaintiffs in Makaeff, et al. v. Trump University, LLC, et al. Case No. 3:10-cv-00940. Hereinafter, citations to entries in the Initial Case Docket will be identified as "Initial Case Dkt."


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No. 248.) The proposed Fourth Amended Complaint sought to add the civil RICO

claim that is the subject of this action, and contained virtually identical allegations

to those found in this Complaint. Indeed, the same communications/transactions on

which plaintiffs purported to base their mail and wire fraud claims in the Fourth

Amended Complaint are alleged in this Complaint. (Compare Complaint, p. 27

with Initial Case Dkt. No. 271, pp. 5-6).

After substantial briefing and oral argument, the Court issued an Order

Denying Plaintiffs' Motion to Amend the Scheduling Order, which denied

plaintiffs' request to file a Fourth Amended Complaint. (Initial Case Dkt. No. 271.)

The Court held that plaintiffs had not shown that they were diligent in seeking leave

to amend, and that it was "clear to the Court that Plaintiffs have failed to make any

adequate showing of 'good cause' why the Amended Scheduling Order" should be

amended to allow plaintiffs to assert a RICO claim. (Initial Case Dkt. No. 271.)

Undetered by the Court's order denying leave to amend, counsel for plaintiffs

in the Initial Case ignored the Court's Order, changed the named plaintiff to Art

Cohen, split the claims, and filed this action asserting a single cause of action for

Civil RICO based on the same facts and circumstance alleged in the Initial Case.

B. Plaintiff's Allegations Fail To State A RICO Claim

Like the Initial Case, this class action arises from Plaintiff's alleged

participation in real estate investing seminars or workshops offered by an entity

named "Trump University." (Complaint T 2.) Plaintiff alleges that he attended a

Preview Live Event on April 29, 2009. (Complaint ¶ 13.) Based on unidentified

"misrepresentations" and/or "omissions" that he would receive Trump's "real estate

secrets," Plaintiff alleges that he then purchased the Foreclosure Real Estate

Retreat, which he attended from May 8-10, 2009. Id. Thereafter, he purchased the

Gold Elite program on May 10, 2009. Id. Over four years later, Plaintiff filed this

complaint containing a single RICO claim based on mail and wire fraud.

Although Plaintiff acknowledges that Plaintiff attended real estate siminars

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and mentorships (Complaint ill 1 & 13), Plaintiff claims that he was allegedly

duped by the title "Trump University" and believed it was a traditional

"University." (Complaint ¶ 14.) Plaintiff also alleges that he would not have

attended the seminars if he had known that he was not going to have access to

Trump's real estate investing "secrets." (Complaint ¶ 14.) However, Plaintiff does

not allege exactly what statements he relied upon, the content of such statements,

when the alleged statements were made, or in what format the alleged statements

were made.

As demonstrated below, Plaintiff's RICO claim is timed barred, and the

above-referenced marketing materials cannot be used to state a RICO claim as a

matter of law.

III. ARGUMENT

A. Plaintiff's Complaint Constitutes Impermissible Claim Splitting.

"The doctrine of claim splitting bars a party from subsequent litigation where

the 'same controversy' exists. The 'main purpose behind the rule preventing claim

splitting is to protect the defendant from being harassed by repetitive actions based

on the same claim.'" Single Chip Sys. Corp. v. Intermec IP Corp., 495 F. Supp. 2d

1052, 1058 (S.D. Cal. 2007) (Internal citations omitted). Although the doctrine of

claim splitting is an aspect of res judicator, unlike res judicata, it does not require a

final judgment on the merits of the first filed suit. Id.

Moreoever, the doctrine of claim splitting is especially applicable where the

plaintiff seeks to ignore an order denying leave to amend and files a separate suit

based on the same transaction. Adams v. California Dep't of Health Services, 487

F.3d 684 (9th Cir. 2007) (affirming the district court's dismissal of a second filed

duplicative suit after leave to amend had been denied in previously filed action);

Biogenex Laboratories, Inc. v. Ventana Medical Systems, Inc., 2005 WL 1869342

(N.D. Cal. August 5, 2005) (dismissing action filed after plaintiff failed to show

good cause and diligence in seeking an amendment in the previously filed action).


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In Adams v. California Dep't of Health Services, 487 F.3d 684, the plaintiff sought

leave to amend the complaint in the first suit, which the district court rejected as

untimely and lacking good cause. Id. at 687. The plaintiff then filed a second suit

(while the first suit was pending) which the district court dismissed with prejudice.

The Ninth Circuit affirmed the district court's dismissal, holding that the second

suit was duplicative and constituted impermissible claim splitting.

Here, it cannot be denied that this case meets the applicable res judicata

factors for claim splitting. In the Ninth Circuit, courts consider the following

factors for determining whether successive suits involve claim splitting: "(1)

whether rights or interests established in the prior judgment would be destroyed or

impaired by prosecution of the second action; (2) whether substantially the same

evidence is presented in the two actions; (3) whether the two suits involve

infringement of the same right; and (4) whether the two suits arise out of the same

transactional nucleus of facts." Single Chip Sys. Corp. v. Intermec IP Corp., 495 F.

Supp. 2d 1052, 1060-61 (S.D. Cal. 2007). "Although not one single factor is

determinative of whether a successive suit would be barred under res judicata

principles, whether the 'same transactional nucleus of facts' exists is the most

important factor in the analysis." Id. at 1061.

Here, Plaintiff's own Notice of Related Cases demonstrates that this action

and the Initial Case involve the same transaction, the same parties, the same nucleus

of facts, and the same rights. Indeed, the very acts alleged as the predicate acts for

Plaintiff's RICO claim are the acts alleged as the basis for plaintiffs' fraud and

misrepresentation claims in the Initial Case. Plaintiff's Notice of Related Cases

confirms that this is so, as it states:

The action identified below [the Initial Case] involves the same parties, is based on similar claims, involves the same transactions and events, and involves substantially the same facts, and many similar questions of law. (Dkt. No. 3.)

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A review of the Complaint in this action and the Third Amended Complaint in the

Initial Case, reveals that the exact same evidence will be required to litigate both

disputes as both actions are based on the same alleged "scheme" concerning the

marketing of Trump University. Although the Complaint involves claims of mail

and wire fraud, the fraud claims at issue in both actions are identical and are based

upon the same alleged representations. Thus, the applicable res judicata factors for

claim splitting are met, and this action must be dismissed with prejudice.

It is of no consequence that the named Plaintiff in this action is different than

the named plaintiffs in the Initial Case because the parties are in privity. Parties are

in privity for claim preclusion when the non-party is adequately represented by a

party with the same interests. Taylor v. Sturgell, 553 U.S. 880, 894 (2008)

("Representative suits with preclusive effect on nonparties include properly

conducted class actions...."); Hooker v. Simon, 2010 WL 3516662 (E.D. Cal.

Sept. 7, 2010) ("A class member of a previous class action is bound by the

judgment in the class action. Judgments in a class action are binding on all the

members of a class and those who may become members of a class.") (citing L.A.

Unified School District v. L.A. Branch NAACP, 714 F.2d 935, 942 (9th Cir. 1983).

In Waterfall Homeowners Association v. Viega, Inc., 283 F.R.D. 571, 574

(2012), attorneys who had brought a class action with one named plaintiff filed

another class action on behalf of the same class against the same defendants with

different named plaintiffs. In dismissing the second filed case because it violated

the prohibition against claim splitting, the Court stated:

The Court rules that the Adams anti-claim-splitting rationale applies in the present context, at least as against the Uponor Defendants. In such cases, a defendant is forced to defend duplicative class actions simultaneously. Plaintiffs may pursue their claims here individually (though they may not then join a class in a case with duplicative claims), but they may not make Defendants defend a duplicative class action, at least not in the

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way they have done so here. Although two groups of attorneys may bring duplicative class actions with different named plaintiffs in a race towards certification, here, the same group of attorneys has brought the duplicative actions, obviating the concerns in the contrary example where different named plaintiffs and their attorneys are competing for bonuses and attorney's fees, respectively, via the race to certification. Plaintiffs' attorneys are of course not adverse to themselves, and insofar as they might argue that their different sets of named plaintiffs have adverse interests in separately prosecuting the duplicative actions because they are competing for class representative bonuses, it is the attorneys themselves who have (potentially unethically) created this direct conflict of interests between their own clients in the present matter.

Id. at 582. (Emphasis added.)

Here, both cases are class actions, and the named Plaintiff in this action is a

member of the class alleged in the Initial Case. Moreoever, the Plaintiff in this

action and the plaintiffs in the Initial Case seek to form the same class, are

represented by the exact same counsel and seek to base their claims on the same

alleged facts. Thus, Plaintiff is adequately represented in the Initial Case and his

interest is being adequately addressed by the named plaintiffs in the Initial Case.

Because the Plaintiff's interests and those of the class are being represented by the

plaintiffs in the Initial Case by the same counsel, and the Initial Case involves the

same facts and fraud claims, this action constitutes impermissible claim splitting

and must be dismissed with prejudice.

Additionally, the Court should reject any attempt by Plaintiff to consolidate

this action with the Initial Case. The Court has already determined that there was

no good cause for the amendment and that, having waited over three years to do so,

the plaintiffs in the Initial Case were not diligent in seeking leave to amend.

Allowing this action to proceed or allowing this action to be consolidated with the

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Initial Case would render the Court's order a nullity and reward Plaintiffs attempt

to circumvent the rules relating to the amendment of pleadings. Russ v. Standard

Ins. Co., 120 F. 3d 988, 990 (9th Cir. 1997) (consolidation should be denied if

plaintiff is using "the tactic of filing two substantially identical complaints to

expand the procedural rights he would have otherwise enjoyed").

In addition, allowing consolidation would be highly prejudicial and unfair to

Trump because, among other things, plaintiffs will likely argue that claims, which

are currently time barred as a matter of law, should to relate back to filing of the

Initial. Case. Plaintiffs should not be rewarded for their lack of diligence and

dilatory conduct. Accordingly, the Complaint should be dismissed with prejudice.

B. Plaintiffs Complaint Must Be Dismissed Under Rule 12(b)(6).

A motion to dismiss is proper under Rule 12(b)(6) when the pleadings fail to

state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). Pleadings

fail to state a claim upon which relief can be granted when there is a "lack of a

cognizable legal theory" or when there is an "absence of sufficient facts alleged

under a cognizable legal theory." See Balistreri v. Pacifica Police Dep't, 901 F.2d

696, 699 (9th Cir. 1988) (citation omitted). A 12(b)(6) motion to dismiss can be

used when the plaintiff has included allegations in the complaint which, on their

face, disclose some absolute defense or bar to recovery. Weisbuch v. County of

Los Angeles, 119 F.3d 778, 783 n.1 (9th Cir. 1997). Indeed, a plaintiff can plead

itself out of court by pleading details that show it has no legal claim. Id.; Bender v.

Suburban Hosp., Inc., 159 F.3d 186, 192 (4th Cir. 1998) ("while notice pleading

does not demand that a complaint expound the facts, a plaintiff who does so is

bound by such exposition.").

The Court is not required to "assume the truth of legal conclusions merely

because they are cast in the form of factual allegations." Id.; see Clegg v. Cult

Awareness Network, 18 F.3d 752, 754-55 (9th Cir. 1994); McGlinchy v. Shell

Chem. Co ., 845 F.2d 802, 810 (9th Cir. 1988) (conclusory allegations without

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more are insufficient to defeat a motion to dismiss for failure to state a claim). As

the Supreme Court reiterated, "a plaintiffs obligation to provide the 'grounds' of

his `entitle[ment] to relief requires more than labels and conclusions, and a

formulaic recitation of the elements of a cause of action will not do." Bell Atlantic

Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted); see also Ashcroft

v. Iqbal, 129 S.Ct. 1937, 1953 (2009) ("Our decision in Twombly expounded the

pleading standard for 'all civil actions'..."). Not only must a plaintiff allege

specific facts, but it must allege facts sufficient to "state a claim to relief that is

plausible on its face." Twombly, 550 U.S. at 570 (emphasis added). The Court

need not assume that a plaintiff can prove facts different from those alleged.

Associated Gen. Contractors of Cal. v. Cal. State Council of Carpenters, 459 U.S.

519, 526 (1983).

As discussed below, Plaintiffs RICO claim is barred by the statute of

limitations, and Plaintiff has failed to state a claim against Trump that is plausible

on its face.

1. Plaintiff's RICO Claim Is Barred By The Statute Of Limitations.

All civil RICO claims are governed by the four-year statute of limitations set

forth in the Clayton Act. Agency Holding Corp. v. Malley-Duff & Associates, Inc.,

483 U.S. 143 (1987) ("Appropriate statute of limitations to be applied in RICO civil

enforcement actions was four-year statute of limitations applicable to Clayton Act

civil enforcement actions...."); Rotella v. Wood, 528 U.S. 549, 556 (2000)

(Holding that the clock begins to tick on a RICO claim when the plaintiff knew or

should have known of his injury.).

Here, Plaintiff's allegations demonstrate that his RICO claim is time barred.

Plaintiff alleges that the purported representations were made in spring of 2009, that

he attended the Foreclosure Real Estate Retreat in May, 2009, and that he

purchased the Gold Elite program on May 10, 2009. (Complaint T 13.) As an

attendee of the seminars in May 2009, Plaintiff would have known whether or not

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he had obtained access to Trump's real estate investing "secrets" and would have

known that Trump University was not a traditional four-year "University." Thus,

all of the predicate acts underlying Plaintiffs RICO claim occurred over four years

ago, in May 2009. Rotella v. Wood, 528 U.S. at 556; Grimmett v. Brown, 75 F.3d

506, 510 (9th Cir. 1996) ("[T]he civil RICO limitations period begins to run when a

plaintiff knows or should know of the injury that underlies his cause of action. The

plaintiff need not discover that the injury is part of a 'pattern of racketeering' for

the period to begin to run.") (Internal citations omitted.). Nevertheless, Plaintiff

waited until October 2013 to file his complaint, long after the statute of limitations

had run. As a result, Plaintiffs RICO claim is barred by the statute of limitations,

and the Complaint should be dismissed with prejudice.

In addition, Plaintiffs class allegations also reveal that the claims of the

proposed class are barred by the statute of limitations. In paragraph 75, Plaintiff

alleges that "[t]he proposed Class consists of all persons who purchased Live

Events from Trump University throughout the United States from January 1, 2007

to the present." As the four year statute of limitations applies to RICO claims, any

claims predating October 18, 2009 are barred as a matter of law.

2. Plaintiff Failed To Allege Any Actionable Racketeering Activity

By Trump.

"Racketeering activity" is defined as any predicate act indictable under

various criminal statutes. See 18 U.S.C. § 1961(1). Although Plaintiff makes

vague and conclusory allegations that Trump has committed alleged offenses of 18

U.S.C. §§ 1341 (mail fraud) and 1343 (wire fraud), when one examines the

purported advertisments identified in the Complaint, such statements cannot be

used to state claims for mail and wire fraud as a matter of law.

It is black letter law that mere "seller's talk," "sales puffery" or "puffing"

cannot support claims for wire and mail fraud. Cnty. of Marin v. Deloitte

Consulting LLP, 836 F. Supp. 2d 1030, 1039 (N.D. Cal. 2011) ("The Court finds


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that the representations are highly subjective, generalized statements of the

superiority of Deloitte's qualifications made in a sales context. As such, they are

"puffery" and not quantifiable, actionable misstatements that can form the basis of a

mail fraud claim."); In re All Terrain Vehicle Litig., 771 F. Supp. 1057, 1061 (C.D.

Cal. 1991) ("To the extent that the slogans do make affirmative representations, the

representations are mere sales puffing and, therefore, are not actionable RICO mail

or wire fraud."); Williams v. Aztar Indiana Gaming Corp., 351 F.3d 294, 299 (7th

Cir. 2003) (holding that "sales puffery" cannot constitute mail fraud to support

RICO claim); Edgenet, Inc. v. GS1, AISBL, 742 F.Supp.2d 997, 1018 (E.D.Wis.

2010) ("Statements regarding the ability of a business to meet clients' needs are

completely subjective" and cannot support a RICO fraud claim.); Corley v.

Rosewood Care Center, Inc. of Peoria, 388 F. 3d 990, 1008-1009 (7th Cir. 2004)

(affirming summary dismissal of RICO claim predicated on mail fraud partly on

grounds that statement of providing "high quality" service "comes under the

category of sales puffery upon which no reasonable person could rely"); Edmunson

v. Procter & Gamble Co., 2011 WL 4041495, at *3 (S.D. Cal. Sept. 8, 2011) (where

"the alleged superiority representation is [not] quantifiable," "such subjective

representations of product superiority are mere puffery.") .

In County of Marin, 836 F. Supp. 2d 1030, the plaintiff asserted RICO claims

based on mail fraud. Like Plaintiff in this case, the plaintiff in County of Marin

alleged that he had been induced to enter into a license agreement by fraudulent

representations that defendant:

• was "uniquely qualified"

• had "deep experience"

• "assembled a highly skilled and experienced" team

• had "experienced consultants"

• had a "seasoned team"

• had a "[c]ommitment to dedicate [his] best resources"

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• had "deep bench strength"

• had an "experienced team that has worked together before"

• had "solid" references

• was "absolutely committed to the success of this project," and

• had a "winning solution, a proven implementation approach, and the

strong project team needed to meet" the plaintiff's requirements. Id.

at 1038.

The Court held that such allegations were insufficient to allege the predicate act of

fraud for a RICO claim because the alleged representations were nothing more than

sales puffery.

The advertisements that Plaintiff complains of here are similarly vague,

generalized and subjective statements concerning Trump University that amount to

nothing more than sales puffery. Plaintiff alleges that Trump University circulated

marketing materials stating:

• With "our Team of Trump Experts — you'll have what you need to

succeed!";

• "Learn from the Master"

• "I can turn anyone into a successful real estate investor, including you"

• "Learn from my handpicked experts how you can profit from the

largest real estate liquidation in history"

• "Are you My Next Apprentice"

• "Do YOU have What It Takes to Be My Next Apprentice?"

• "We'll give you the best training" and

• Trump University was of "Ivy League quality rivaling Wharton

Business School."

The above-referenced statements are vague, subjective seller's talk that every

person hears daily from companies attempting to market their products. From

products like "SHAM-WOW" to "KA-BOOM" to "P90-X," consumers are

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repeatedly told that this or that product is the "best." Such statements cannot be

used to support RICO claims based on fraud as a matter of law. County of Marin,

836 F. Supp. 2d at 1040; In re All Terrain Vehicle Litig., 771 F. Supp. at 1061 ("To

the extent that the slogans do make affirmative representations, the representations

are mere sales puffing and, therefore, are not actionable RICO mail or wire fraud.").

Because the purported statements contained in the materials received by Plaintiff

constitute puffery, Plaintiff has not stated a predicate claim for mail or wire fraud

and its RICO claim must be dismissed.2

3. Plaintiff Has Failed To Plead Fraud With The Required

Particularity

"Claims for mail and wire fraud are subject to Rule 9(b)'s heightened

pleading requirements." County of Marin, 836 F. Supp. 2d at1038. Allegations

that a defendant has violated a criminal statute are to be strictly construed, and "a

defendant faced with allegations of criminal conduct is entitled to more clarity and

specificity" than is required in an ordinary civil complaint. Flowers v. Continental

Grain Co., 775 F.2d 1051, 1054 (8th Cir. 1985) (affirming dismissal of RICO

action for failure to plead act of mail fraud with clarity and specificity.). A

complaint alleging wire or mail fraud must state "the time, place, and specific

content of the false representations as well as the identities of the parties to the

misrepresentation." County of Marin, 836 F. Supp. 2d at 1038.

Plaintiffs Complaint fails to allege its mail and wire fraud claims with the

required specificity. The only allegation relating to Plaintiff is a single sentence

that "[biased on Defendant's misrepresentations and material omissions that he

would receive Donald Trump's real estate secrets from his handpicked 'professors'

and mentors at his 'University,'" Plaintiff purchased the Foreclosure Real Estate

2 Indeed, statements such as "I can turn anyone into a successful real estate investor, including you", "We'll give you the best training", or "Are You My Next Apprentice?" are not statements a reasonable consumer would rely upon. McKinniss v. Sunny Delight Beverages Co., 2007 WL 4766525 (C.D. Cal. Sept. 4, 2007) ("Statements that amount to puffery are not actionable because no reasonable consumer relies on puffery.") (Internal citations omitted.).



Retreat. (Complaint 41- 13). Plaintiff does not allege exactly what statements he

relied upon, who made them, the content of such statements, when the alleged

statements were made, or in what format they were made. In sum, such allegations

are insufficient to state a claim as a matter of law, and Plaintiff's Complaint should

be dismissed.

IV. CONCLUSION

For the foregoing reasons Defendant Donald J. Trump respectfully requests

that Plaintiffs Complaint be dismissed with prejudice.

Dated: November 14, 2013 SHUMENER, ODSON & OH LLP

By: /s/ Betty M Shumener BETTY M. SHUMENER JOHN D. SPURLING STACI M. TOMITA Attorneys for Defendant Donald J. Trump


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CERTIFICATE OF SERVICE

I hereby certify that on November 14, 2013, I electronically filed the

foregoing with the Clerk of the Court using the CM/ECF system which will send

notification of such filing to the e-mail addresses denoted on the Notice of

Electronic Filing.

I certify under penalty of perjury under the laws of the United States of

America that the foregoing is true and correct. Executed on November 14, 2013.

__/s/ Betty M. Shumener___

Betty M. Shumener

Shumener, Odson & Oh LLP

Attorneys for Defendant Donald J.

Trump


case 3:13-cv-02519-gpc-wvg document 9-1 filed 11/14/13 ......email: [email protected]...

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