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  • 7/26/2019 Trump University Filing

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    DEF.S REPLY ISO DEF.S MOTFOR DECERTIFICATION

    13-CV-2519-GPC (WVG

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    DANIEL M. PETROCELLI (S.B. #97802)[email protected] L. KIRMAN (S.B. #235175)[email protected] & MYERS LLP1999 Avenue of the StarsLos Angeles, California 90067-6035Telephone: (310) 553-6700Facsimile: (310) 246-6779

    JILL A. MARTIN (S.B. #245626)[email protected] NATIONAL GOLF CLUBOne Trump National DriveRancho Palos Verdes, CA 90275Telephone: (310) 202-3225Facsimile: (310) 265-5522

    Attorneys for Defendant

    DONALD J. TRUMP

    UNITED STATES DISTRICT COURT

    SOUTHERN DISTRICT OF CALIFORNIA

    ART COHEN, Individually and

    on Behalf of All Others SimilarlySituated,

    Plaintiffs,

    v.

    DONALD J. TRUMP,

    Defendant.

    Case No. 13-CV-2519-GPC(WVG)

    CLASS ACTION

    DEFENDANT DONALD J.TRUMPS REPLY IN SUPPORTOF MOTION FORDECERTIFICATION

    Hearing: July 22, 2016Time: 1:30 p.m.Courtroom: 2d

    Judge: Hon. Gonzalo P. Curiel

    Case 3:13-cv-02519-GPC-WVG Document 247 Filed 06/17/16 Page 1 of 12

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    1DEF.S REPLY ISO DEF.S MOT

    FOR DECERTIFICATION

    13-CV-2519-GPC (WVG

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    I. INTRODUCTION

    Unable to address the many individualized factual issues that now

    predominate and require decertificationstatute of limitations, reliance, causation,

    and damagesPlaintiffs opposition relies on misstatements of the law and record.

    The frailty of Plaintiffs arguments, however, only highlights the many reasons this

    case should be decertified. Decertification is required because: (1) TU operated

    from 2007 until June 2010, but Plaintiffs inexcusable three-year delay in filing this

    case created statute-of-limitations issues; (2) recent discovery established that

    students reliance on the alleged misrepresentations varied, making any common

    sense inference of reliance improper; and (3) as previously recognized by the

    Court inLow, Defendant has a Constitutional right in this case to litigate damages

    offset for each class member.

    Contrary to Plaintiffs claims:

    binding Ninth Circuit authority states that the burden remains on Plaintiff to

    prove certification;

    a motion to decertify does not depend on new law or facts, and courts have a

    continuing obligation to review the appropriateness of certification;

    the Court should not rewrite the Federal Rules of Evidence to exclude opt-outstudent testimony based on an out-of-context citation to a 20-year-old Florida

    district court case;

    the Court should not toll the statute of limitations based on an interpretation

    of a Supreme Court case that has been rejected by the Ninth Circuit; and

    the civil RICO allegation in this case does not provide a basis for the Court to

    deprive Defendant of his Constitutional right to assert individualized

    damages defenses.

    Plaintiff is also incorrect in contending that Defendantand the Courtare

    foreclosed from revisiting the common sense inference and statute-of-limitations

    issues. Significant new evidence and evidence not previously considered by the

    Court on both of these issues require the Court to revisit these issues and grant

    Defendants motion.

    Case 3:13-cv-02519-GPC-WVG Document 247 Filed 06/17/16 Page 2 of 12

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    2DEF.S REPLY ISO DEF.S MOT

    FOR DECERTIFICATION

    13-CV-2519-GPC (WVG

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    II. LEGAL STANDARD

    As a threshold matter, Plaintiff misstates the legal standard on decertification

    Oppn at 24. The Ninth Circuit has made clear that, on a motion for

    decertification, the burden remains on theplaintiffto demonstrate that the

    requirements of Rules 23(a) and (b) are met. Marlo v. United Parcel Serv., Inc.,

    639 F.3d 942, 947 (9th Cir. 2011). Pre-Marlo, courts had held that a party seeking

    decertification of a class should bear the burden of demonstrating that the elements

    of Rule 23 have notbeen established. Given the Ninth Circuits unequivocal

    holding inMarlo, however, . . . to the extent courts have found that on a motion to

    decertify, it is the defendants burden to demonstrate that the elements of Rule 23

    have not been established, these cases are no longer good law. Parra v. Bashas,

    Inc., 291 F.R.D. 360, 400 n.46 (D. Ariz. 2013); accordLindell v. Synthes U.S.,

    2016 U.S. Dist. LEXIS 1949, at *14 (E.D. Cal. Jan. 6, 2016);Hahn v. Massage

    Envy Franchising, LLC, 2014 U.S. Dist. LEXIS 147899, at *51 (S.D. Cal. Sept. 25,

    2014).1 Further, despite Plaintiffs contention that decertification is only warranted

    following a significant intervening event, Oppn at 3, the law is clear that a

    motion to decertify a class . . . does not depend on a showing of new law, new facts,or procedural developments,NEI Contracting & Engg, Inc. v. Hanson

    Aggregates, Inc., 2016 WL 2610107, at *5 (S.D. Cal. May 6, 2016).

    III.

    TU STUDENT TESTIMONY IS RELEVANT AND ADMISSIBLE

    Only 14 former TU students have been deposed between this case and the

    relatedLow case. In his opposition, Plaintiff seeks to exclude the testimony offive

    of these witnessesPaul Canup, Marla Rains Colic, Michelle Gunn, Meena

    Mohan, and Mette Nielsenbecause their testimony is unfavorable. There is no

    basis for excluding their testimony.

    Plaintiff first argues the testimony of these former TU students is not relevant

    1All citations, quotation marks, and modifications omitted. All references to Ex.

    refer to exhibits to the Declaration of David L. Kirman (Dkt. 192-2).

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    3DEF.S REPLY ISO DEF.S MOT

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    because these students either have opted out of the class, intend to opt out of the

    class, or somehow were never even members of the class. Oppn at 78. Only

    Mohan and Gunn officially opted out of the class. Dkts. 154, 16566. Should

    Colic and Nielsen seek to exercise their opt-out rights after the November 16, 2015

    opt-out deadline, the Court would need to determine both whether their deposition

    testimony suffices to demonstrate manifest intent to be excluded from the class and

    whether their failure to previously opt out was due to excusable neglect.2 And

    Plaintiff does not cite any evidence that Canup has also indicated that he wishes to

    opt out of the Class. Oppn at 8 n.3. Nor does Plaintiff cite any support for his

    curious assertion that Gunn was never a class member. Id.at 8. In fact, Plaintiff

    filed a joint motion specifically requesting that the Court allow absent class

    memberMichelle Gunn to opt-out of the class. Dkt. 165 at 2 (emphasis added).

    More fundamentally, Plaintiff provides no support for his position that the

    testimony of opt-out students is irrelevant. Plaintiff merely asserts such witnesses

    are removed from the litigation entirely. Oppn at 7. But percipient witnesses

    need not be members of the class to testify in a class action, just as witnesses in any

    case need not be parties for their testimony to be relevant and admissible. See Fed.R. Evid. 401, 602. That class members who have opted out of a class lack standing

    to object to a settlementwhich is allthat Plaintiffs authority supportsis

    immaterial to whether they have relevant testimony.3 As with ordinary witnesses,

    2See In re Cathode Ray Tube (CRT) Antitrust Litig., 2014 WL 4181732, at *45

    (N.D. Cal. Aug. 20, 2014);In re Static Random Access Memory (SRAM) AntitrustLitig., 2009 WL 2447802, at *2 (N.D. Cal. Aug. 7, 2009); Newberg 9:46.3The only case Plaintiff cites for the proposition that the Court should preclude opt-out testimony is a 20-year-old Florida district court case discussing admissibility ofopt-out testimony at trial, not on a motion for decertification. SeeWaters v. Intl

    Precious Metals Corp., 172 F.R.D. 479, 489 (S.D. Fla. 1996). The court in Watersfound that defendants were entitled to rebut the presumption of reliance on anindividual basis, but that the action would proceed as a class action on thecommon issues, i.e., all issues except reliance, and subsequent to the jurys verdict,the Court will confer with the parties to develop an appropriate, manageable andlawful procedure to allow the Defendants to present proof of non-reliance on an

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    4DEF.S REPLY ISO DEF.S MOT

    FOR DECERTIFICATION

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    the testimony of former TU students is admissible if it complies with the Federal

    Rules of Evidence.4

    IV.

    NO COMMON SENSE INFERENCE OF RELIANCE APPLIES

    Plaintiff misses the point in arguing that a common sense inference of

    reliance is still appropriate. Quoting from the Courts certification order, Plaintiff

    argues that the Court has already considered and rejected this argument by

    distinguishing the two cases discussed in Defendants motionPoulos v. Caesars

    World, Inc., 379 F.3d 654 (9th Cir. 2004), andIn re Countrywide Fin. Corp. Mortg.

    Mktg. & Sales Practices Litig., 277 F.R.D. 586 (S.D. Cal. 2011)each of which

    held that a common sense inference does not apply where there is more than one

    logical explanation for participation in the conduct at issue. Yet Defendant is not

    arguing that this is new law, but rather that there are newfactsthat render these

    cases indistinguishable and an inference of reliance unworkable.5

    Poulosand Countrywide make clear that the Court cannot apply a common

    sense inference of reliance if Defendant presents evidence that at least some class

    members knew of the alleged misrepresentations yet chose to enroll in TU anyway.

    Countrywide, 277 F.R.D. at 605 (emphasis added). Indeed, in grantingcertification, the Court only found a common sense inference appropriate because

    Defendant had by that point failed to demonstrate that it may be inferred that

    individual basis. Id.at 487 (emphasis added); accord McPhail v. First CommandFin. Planning, Inc., 251 F.R.D. 514, 520 (S.D. Cal. 2008) (distinguishing Waters).4Plaintiffs other arguments as to why the testimony of these witnesses should be

    excluded are similarly meritless. For example, Plaintiffs unwarranted personal

    attacks on these witnessesasserting that Colic was committed to a psych[]ward and implicitly accusing Gunn of lying under oath because she appears to bea professional testimonial-giver, Oppn at 8constitute no basis to exclude theirtestimony. Plaintiffs argument concerning the statistical significance of individualstudents and their aberrant views is equally applicable to Plaintiffs witnesses.5Plaintiffs assertion that the common sense inference of reliance can only be

    rebutted by evidence that can be properly generalized to the class as a whole isimmaterial. Defendant is not rebutting the class-wide inference of reliance butrather demonstrating that Plaintiff is not entitled to the inference at all.

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    putative class members had knowledge of the alleged misrepresentations yet chose,

    for other reasons, to purchase Trump University Live Events. Dkt. 53 at 14.

    From the depositions of eight former TU students that have been conducted

    since the Court granted certification, there is now abundant evidence that many

    and certainly at least someclass members had knowledge of the alleged

    misrepresentations but chose, for other reasons, to enroll in TU anyway:

    Many students testified that they did not believe TU was an accredited

    university when they enrolled. See Ex. 19 at 105:6106:12 (You have to

    be pretty thick-skulled to think it was a university. For goodness sa[k]es.

    I mean, a university is a four-year degree. I knew it was a business

    seminar.); Ex. 10 at 42:323; Ex. 6 at 96:2197:16; Ex. 20 at 62:1214;

    Ex. 21 at 95:2125; Ex. 22 at 141:2025.

    Students also testified that they did not expect Mr. Trump to be

    integrally involved. SeeEx. 19 at 107:8108:14; Ex. 20 at 68:1725,

    110:1118, 162:20163:2; Ex. 6 at 33:1619, 43:212, 99:521, 100:8

    22, 100:25101:10; Ex. 10 at 61:1319;

    These same students and others testified that they chose to enroll in TU for other

    reasons than the alleged misrepresentations, including: (1) students were attracted

    to the Trump Brand;6(2) students wanted to gain real estate knowledge; (3) TU

    offered the opportunity to network with other real estate investors; (4) TU appeared

    to be of a higher quality than similar programs; (5) students wanted to learn subject

    matter referenced at a Preview event; (6) students believed that real estate was a

    dangerous market to enter without sufficient knowledge; and (7) students wanted

    to use real estate investment to generate income. Mot. at 1820. That at least

    6Plaintiffs opposition attempts to conflate references to the Trump Brand with

    references to Defendants personal involvement in the program. Oppn at 1213.

    In doing so, Plaintiff misleadingly (and inaccurately) suggests that the Courtalready considered and rejected this argument. Id.at 12 (citing Dkt. 45 at 18; Dkt.53). But this distinction is meaningfulit is the difference between expecting TUto be a good program because Mr. Trump is involvedin the program (whichPlaintiff argues is an expectation common to all class members) and expecting thatTU will be a good program because the businesses Mr. Trump endorses with his

    brand name are known for being of high quality (which is not at issue in thislitigation). Many class members enrolled in TU for the latter reason, which

    prohibits application of a common sense inference of reliance.

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    some class memberslet alone nearly halfof the students who have been

    deposedenrolled in TU for other reasons despite their knowledge of the alleged

    misrepresentations is sufficient to prevent application of an inference of reliance.

    Countrywide, 277 F.R.D. at 605; Dkt. 53 at 14.

    Plaintiff argues that Defendant has no evidence that any class members

    motivation was antagonistic to the prominent marketing themes at issuethat

    Defendant cannot point to anyone who enrolled despite[Defendants] involvement

    or the university moniker. ButPoulosand Countrywidedo not require that class

    members motivations be antagonistic to the misrepresentations, or that the class

    members purchased the products at issue despite what the representations promised

    these cases hold that the common sense inference of reliance is not appropriate

    when class members chose to purchase the products despite their knowledge of the

    falsity of the representations. As discussed above, there is ample evidence in the

    record now that many students enrolled in TU despitebelieving that TU was not an

    actual university and that Mr. Trump would not be integrally involved.7

    V.

    STATUTE-OF-LIMITATIONS ISSUES REQUIREDECERTIFICATION

    A.

    Individual Issues About the Statute of Limitations Predominate

    Plaintiffs opposition argues that statute-of-limitations issues do not warrant

    decertification on the bases that the Court has already considered this argument at

    the class certification stage, that certification may still be appropriate in spite of

    7Plaintiff misstates the scope of the Courts certification ruling to include an

    omission regarding the legitimacy of TU. Oppn at 14, 18, 20. The Court did

    not certify any omissions, and Plaintiffs attempt to expand the scope of theCourts certification at this stage must be rejected. Also without merit arePlaintiffs attempts to undermine the evidence demonstrating individualized issuesrelated to causation and reliance. For example, although Plaintiff asserts that SonnyLow did not see the Main Promotional Video . . . because he arrived late to thePreview, not because it was not played, the evidence he cites for this assertionJensen Decl. Ex. 11 at 31:518says nothingabout the video or about Low beinglate to the Preview he attended. Further, this type of individualized evidence only

    proves the many individualized issues associated with this case.

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    statute-of-limitations issues, and that the facts here do not present the rare

    scenario when individual SOL issues candefeat certification. Oppn at 20

    (emphasis in original). These contentions are incorrect.

    First, statute-of-limitations issues must be considered in the class certification

    analysis because they suggest[] highly individualized damages questions, which

    would make classwide adjudication problematic. Iorio v. Allianz Life Ins. Co. of

    N. Am., 2008 U.S. Dist. LEXIS 118344, at *97 (S.D. Cal. July 8, 2008); accord In

    re N. Dist. of Cal., Dalkon Shield IUD Prods. Liability Litig., 693 F.2d 847, 853

    (9th Cir. 1982).

    Second, it is proper to decertify a class when case developments or evidence

    collected during discovery demonstrates that individual issues related to the statute

    of limitations predominate over any common questions. SeeOConnor v. Boeing

    N. Am., Inc., 197 F.R.D. 404, 413 (C.D. Cal. 2000).

    Third, there is now ample evidence in the record that many TU students

    believedprior to October 18, 2009 (the statute-of-limitations cutoff date)that

    TU was not an actual university and that Mr. Trump would not be integrally

    involved in TU.8

    Much of this evidence establishes directknowledge about thealleged misrepresentations by former TU students prior to October 18, 2009,

    including declarations, Ex. 29 3, 5, testimony, e.g., Ex. 6 at 96:2197:16; Ex.

    19 at 107:8108:14, and online reviews and complaints, Ex. 28 66. Defendant

    has compiled all this direct evidence of knowledge despite only being able to

    conduct discovery on a small number of former TU students (less than 1%). There

    are undoubtedly many more students who held similar understandings about the

    8Moreover, knowledge of either alleged misrepresentation is sufficient to establish

    notice. See Kaplan v. Kahn, 1995 WL 20571, at *4 (N.D. Cal. Jan. 17, 1995).Plaintiff tries to confuse the Court by arguing that no student knew [that TU] wasan illegal enterprise then, apparently referring to TUs ongoing matter with the

    New York Attorney General (NYAG). Oppn at 1617. The NYAG matter isnot relevant to the two misrepresentations certified by this Court and is thereforeimmaterial to the statute-of-limitations analysis before the Court. See Dkt. 53 at 7.

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    alleged misrepresentations prior to October 18, 2009.

    There is also an abundance of circumstantial evidence indicating that many

    TU students believed, at the time they were attending TU courses (often prior to

    October 2009), that TU was not an actual university and that Mr. Trump was not

    integrally involved in TU. For example, most TU students already had a college

    degree, Ex. 1 at TU 145238; many were familiar with other non-academic business

    seminars like TU, Ex. 38 at 59:1560:18; Ex. 10 at 32:24; students were told

    different things about the alleged misrepresentations, Ex. 26 at TU 97258; students

    were exposed to TU materials making it clear that TU was not an academic

    university, Ex. 18 at TU 175350; and there were endless complaints nationwide

    about the facts underlying Plaintiffs RICO claim, Ex. 27 37, Ex. 28 66.

    As this wealth of evidence makes clear, determining whether any individual

    class member had knowledge of the basis for Plaintiffs RICO claim before October

    18, 2009 requires significant individualized inquiry. As a result, [b]ased on the

    individualized, fact-intensive nature of the necessary inquiry in this case, the statute

    of limitations issues preclude a finding that common issues predominate over

    individual issues. OConnor, 197 F.R.D. at 414.

    B. Amer ican PipeTolling Does Not Apply

    Plaintiff also argues that noclass members claims are barred by the statute

    of limitations because they were all tolled by the filing of theLow action under the

    doctrine ofAmerican Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974). This

    argument is contrary to binding Ninth Circuit law that Plaintiff fails to bring to this

    Courts attention.9 See Williams v. Boeing Co., 517 F.3d 1120, 113536 (9th Cir.

    2008). Plaintiff relies on the Ninth Circuits 1985 case Tosti v. Los Angeles, 754

    F.2d 1485, 1489 (9th Cir. 1985), which held that an individual suit [need not] be

    identical in every respect to the class suit for the statute to be tolled. Tosti is no

    9See also LowDkt. 482-2 at 2223 (LowPlaintiffswho have the same

    attorneysfailed to raise binding Ninth Circuit authority to the Courts attention).

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    longer good law. In 2008, in the Williams case, the Ninth Circuit was again

    confronted with the issue of whetherAmerican Pipetolling could apply to non-

    identical claims. 517 F.3d at 113536. After acknowledging that [t]olling is fair

    [when] defendants have notice of the substantive claims being brought against

    them, the court made clear that the tolling rule does notleave a plaintiff free to

    raise different or peripheral claims following denial of class status. Id.at 1136

    (emphasis added). The court then rejected plaintiffs argument that their

    compensation discrimination claims were tolled underAmerican Pipeby the filing

    of a class action complaint alleging promotion discrimination, hostile work

    environment, and retaliation claims because neither the Original nor the First

    Amended Complaints stated a claim for compensation discrimination. Id.10

    Following Williams, courts in the Ninth Circuit have declined to interpret

    American Pipeas allowing tolling for claims that were not asserted in the class

    action, and any cases suggesting otherwise conflict with the Ninth Circuits view

    on the issue, as explained in Williams. In re TFT-LCD (Flat Panel) Antitrust

    Litig., 2013 WL 254873, at *2 (N.D. Cal. Jan. 23, 2013); accord In re Cathode Ray

    Tube (CRT) Antitrust Litig., 27 F. Supp. 3d 1015, 102021 (N.D. Cal. 2014).11

    Andbecause no class member asserted a civil RICO claimthe sole claim at issue

    herein the pendingLowmatter, the filing of theLow class action cannot serve to

    10The Ninth Circuit also rejected this ruling from Tosti in an unpublished decision

    in 2005. SeeCard v. Duker, 122 F. Appx 347, 349 (9th Cir. 2005) (The SupremeCourt has . . . not extended tolling due to class litigation beyondAmerican Pipesnarrow allowance for identical causes of action brought where the class wasdecertified. This court in Tosti v. City of Los Angeles, 754 F.2d 1485, 1487 (9th

    Cir. 1985), apparently expandedAmerican Pipeto apply where the class was notdecertified but the plaintiff opted out. . . . American Pipes narrow holding doesnot require tolling under these circumstances.);see also Wells v. FedEx Ground

    Package Sys., Inc., 2011 WL 1769665, at *6 (E.D. Mo. May 9, 2011) (noting thatCardseverely limited, if not rejected, Tostis holding).11

    See alsoZarecor v. Morgan Keegan & Co., 801 F.3d 882, 888 (8th Cir. 2015);Scott v. Ill. Bell Tel. Co., 2016 WL 910507, at *56 (N.D. Ill. Mar. 10, 2016);Vertrue Mktg. & Sales Practices Litig., 712 F. Supp. 2d 703, 71819 (N.D. Ohio2010).

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    toll the statute of limitations underAmerican Pipe. See Derry v. Jackson Natl Life

    Ins. Co., 2012 WL 1997234, at *2 (N.D. Cal. June 4, 2012).

    VI.

    DAMAGES MUST BE DECERTIFIED

    Plaintiffs sole argument against decertifying damages is that Cohen, unlike

    Low, involves a civil RICO claim. But the statute under which Plaintiff seeks relief

    is immaterial to Defendants Constitutional due processrights regarding offset,

    which have already been recognized by the Court. LowDkt. 418 at 18.12

    Moreover, in opposing decertification of damages, Plaintiff relies on the

    Courts finding prior to expert witness discovery that Plaintiffs damages model

    matches Plaintiffs theory of liability. Oppn at 22 (quoting Dkt. 53 at 21). Since

    that holding, however, Plaintiff has clarified that his damages theory depends on

    proving that TU live events were valueless because TU fell short of providing

    students with any quality of instruction compared to top-tier real estate higher

    education institutions. Dkt. 188-5 at 42 (Plaintiffs damages expert report). This

    theory is inconsistent with the theory of liability that the Court certifiedthat TU

    events were valueless because Mr. Trump was not integrally involved and

    because TU was not an actual university. Dkt. 53 at 7. Plaintiffs theory ofliability is thus no longer consistent with his theory of damages, in violation of

    Comcast. This provides an additional basis for decertification.

    VII. CONCLUSION

    For the foregoing reasons, Defendant respectfully requests that the Court

    grant his motion for decertification in its entirety.

    12Because of the many individualized inquiries regarding the statute of limitations

    and causation in addition to damages issues, bifurcation is insufficient to protectDefendants Constitutional rights; this case must be decertified in its entirety. SeeGoodman v. Platinum Condo. Dev., 2011 U.S. Dist. LEXIS 99628, at *1821 (D.

    Nev. Sept. 1, 2011); W. States Wholesale v. Synthetic Indus., 206 F.R.D. 271, 280(C.D. Cal. 2002);LaBauve v. Olin Corp., 231 F.R.D. 632, 678 (S.D. Ala. 2005).

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    11DEF.S REPLY ISO DEF.S MOT

    FOR DECERTIFICATION

    13 CV 2519 GPC (WVG

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    Dated: June 17, 2016

    Respectfully submitted,

    OMELVENY & MYERS LLP

    DANIEL M. PETROCELLI

    DAVID L. KIRMAN

    By: /s/ Daniel M. PetrocelliDaniel M. Petrocelli

    Attorneys for DefendantDONALD J. TRUMPE-mail: [email protected]

    Case 3:13-cv-02519-GPC-WVG Document 247 Filed 06/17/16 Page 12 of 12