A federal appeals court has approved the $25 million Trump University settlement, striking down the claims of a high-profile objector who had threatened to unravel the deal.
In an opinion handed down Tuesday the U.S. Court of Appeals for the Ninth Circuit found that objector Sherri Simpson, a personal bankruptcy attorney in Fort Lauderdale, Florida, had standing to appeal the settlement, reached days after President Donald Trump was elected in 2016. But the panel disagreed with her that the language of the notice sent to class members one year earlier implied that she would have a second opportunity to opt out of the case should it settle.
“Here, reading the notice as a whole and in context, we conclude that it promised only one opportunity to opt out,” wrote Judge Jacqueline Nguyen.
“Among over eight thousand class members, Simpson is the only one advancing this understanding of the notice,” she added. “The absence of more voices to corroborate Simpson’s reading supports our conclusion that no reasonable class member would have understood the notice to guarantee a second opt-out opportunity at the settlement stage.”
The panel’s decision ends all challenges over the settlement. Objector attorney Deepak Gupta, of Gupta Wessler in Washington D.C., who has several legal actions against Trump, referred calls to another attorney representing Simpson, Gary B. Friedman, who is New York-based. Friedman said his client was disappointed that the facts surrounding the fraud would not get public attention and that Trump “won’t ever be held fully and truly accountable.” Friedman added however that there was no plan to petition the Ninth Circuit for en banc review.
“If there’s a silver lining, it’s all the victims will receive payments without further delay,” he said. Under the deal, more than 8,000 class members would get up to 90 percent of what they paid in Trump University real estate courses.
“Both classes of plaintiffs would have faced significant hurdles had they proceeded to trial, including the difficulty of prevailing in a jury trial against either the President Elect (if the trial had proceeded as scheduled) or the sitting President (if the trial had been postponed, as Defendants requested),” Nguyen wrote in Tuesday’s opinion. “Weighed against this was the fairness of the settlement as a whole, which the court estimated would provide class members with almost a full recovery. Under these challenging circumstances, the district court acted well within its discretion by approving the settlement.”
Joining her on the panel were fellow Obama appointees Andrew Hurwitz and U.S. District Judge Steven Logan, sitting by designation. They heard oral arguments in November.
Plaintiffs lawyer Patrick Coughlin of San Diego’s Robbins Geller Rudman & Dowd said he was “a little disappointed” in the panel’s finding on standing, which was his firm’s primary argument on appeal, but overall found the Ninth Circuit came out with a “good opinion.”
“We think it’s right, of course, that the notice was clear enough to any reasonable person,” he said. “There was only one out of 8,000 people who interpreted it this way.”
The settlement included $21 million to resolve two nationwide class actions and $4 million to end a separate case that New York Attorney General Eric Schneiderman had brought over Trump University. “Today’s approval of the Trump University class action settlement by the Ninth Circuit means that victims of Donald Trump’s fraudulent university will soon receive the $25 million in relief they deserve,” Schneiderman said in a statement.
Daniel Petrocelli, a partner at O’Melveny & Myers in Los Angeles, who represented Trump and Trump University, did not respond to a call for comment.
The case alleged that Trump University falsely promised Trump personally hand-picked the instructors and that the program was an “accredited university.” The settlement did not provide an opportunity to opt out, but Simpson, insisting that the settlement resolved claims for a “small fraction” of the potential award, had argued that the 2015 notice’s language implied that she would have a second opportunity to do so. In particular, she focused on a portion of the notice that said if class members did not opt out “and the plaintiffs obtain money or benefits, either as a result of the trial or a settlement, you will be notified about how to obtain a share (or how to ask to be excluded from any settlement).” She also argued she had a due process right to opt out of the settlement.
U.S. District Judge Gonzalo Curiel, who Trump criticized on the campaign trail over his handling of the case and his Mexican heritage, despite the judge being born in Indiana, approved the deal in March 2017. He found that Simpson lacked standing because she had not opted out at the time of the 2015 notice, and she had filled out a settlement claim form, under which she waived her right to sue.
In its opinion, the Ninth Circuit disagreed with Curiel on his standing decision. As to the notice, the panel found that Simpson’s “reading is not wholly unreasonable” and that “the language could have been clearer,” but that the “correct inquiry here is what an average class member would have understood the notice to guarantee.”
The panel also found Simpson did not have a due process right to a second opt-out opportunity, citing its 1982 decision in Officers for Justice v. Civil Service Commission. In a footnote, the panel addressed claims by Robbins Geller attorneys that the objection was “attorney-manufactured.”
“The timeline and evolution of her objection support that assertion, but our court would have little work to do without creative arguments ‘manufactured’ by zealous attorney advocates,” Nguyen wrote.
Friedman, whose client had the support of two dozen law professors and several notice experts, agreed. And he had this advice for class action lawyers who write notices to class members: “The drafters of class notice would be well advised to make their intentions known.”