trump university filing
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DEF.S REPLY ISO DEF.S MOTFOR DECERTIFICATION
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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
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1DEF.S REPLY ISO DEF.S MOT
FOR DECERTIFICATION
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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.
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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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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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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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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]
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