Donald Trump (Wikimedia Commons)
President Donald Trump, in court papers, has accused a lawyer and nearly two dozen law professors of lodging “inflammatory, gratuitous and untested facts and assertions” in their objections to the $25 million Trump University settlement.
The lawyer, Sherri Simpson, a personal bankruptcy attorney in Fort Lauderdale, Florida, has appealed court approval of the settlement. She claimed the settlement failed to give class members, who were given the opportunity to opt out of the case in a 2015 notice, a second chance to back out once the deal was struck. The law professors, joined by a handful of notice experts, have backed Simpson’s appeal in amicus briefs, calling the settlement “fundamentally unfair.”
Yet not allowing class members the opportunity to opt out of the settlement was an essential part of the agreement, reached right after the presidential election, according to Trump’s July 12 brief filed before the U.S. Court of Appeals for the Ninth Circuit.
“While TU believes it would have prevailed if the case went to trial, its objective in settling was to avoid the expense of multiple jury trials, avoid protracted post-trial proceedings and put the case behind it,” wrote Daniel Petrocelli, a partner at O’Melveny & Myers in Los Angeles who represents Trump and Trump University. “Permitting even a single class member to opt out of the class would have frustrated these objectives and would have foreclosed the entire settlement.”
Plaintiffs’ attorneys who negotiated with Trump on the deal said Simpson and her amicus supporters “effectively ask this court to declare Rule 23 unconstitutional,” referring to the Federal Rule of Civil Procedure 23, which governs class actions, according to their July 12 brief filed in the Ninth Circuit. Under Rule 23, judges have the discretion to require opt-out notices once class actions settle, but they’re not required to do so. Patrick Coughlin, of counsel at San Diego’s Robbins Geller Rudman & Dowd, called the amicus arguments a “wish list for academia.”
“And of course, they don’t work in the real world. They’ve never had a real lawyer job—the experts or the professors,” he said. He said some people would have opted out of the deal and pushed for trial, if given the chance, simply because they don’t like Trump. “I’m one of the biggest Democratic donors in the country, I don’t like him. I had to do what was best for the class.”
Simpson’s appeal threatens to unravel the settlement, which resolved two class actions and a case brought by New York Attorney General Eric Schneiderman that alleged Trump University falsely promised Trump personally handpicked the instructors and that the program was an “accredited university.” The appeal also could hold up payouts to class members who stand to get 90 percent reimbursement for the costs of the real estate seminars, according to plaintiffs’ attorneys.
Simpson’s attorney, Gary Friedman, a solo practitioner in New York, has brought in noted appellate attorney Deepak Gupta of Washington, D.C.’s Gupta Wessler, to her team and has set up a crowdfunding page on Indiegogo.
In her appeal, Simpson insists she has standing to object even though she filled out a claim form under which she waived her right to sue. She had to submit her claim by the March 6 deadline in order to preserve her right to get compensated as a class member should her objection fail, her brief said.
But Coughlin continued to assert Simpson lacked standing because she failed to prove that she relied on a part of the 2015 notice, which he referred to as a “parenthetical.” The notice gave class members two options: Stay in the class, which could mean she’d get paid but required her to forfeit her right to sue on their own, or opt out of the class, which would allow her to pursue their own case but exclude her from any potential payouts. The “parenthetical” came in a sentence that further elaborated what would happen if she did nothing: If she remained in the class, the notice read, “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).”
“Nothing in the mailed notice suggested anything other than a binary choice that had to be made ‘now’—opting out later pursuant to a then-nonexistent settlement was not on the menu.”
He also challenged her constitutional claims, noting that granting a second opt-out opportunity wasn’t required under Rule 23, which states that judges may “refuse to approve a settlement unless it affords a new opportunity to request exclusion to individual class members who had an earlier opportunity to request exclusion but did not do so.”
The Ninth Circuit recognized that discretion in its 1982 case called Officers for Justice v. Civil Service Commission, he wrote. In that case, the Ninth Circuit rejected an objector’s claim that he should have been given a second chance to opt out of a class action over discriminatory hiring practices at the San Francisco Police Department once a settlement had been reached. To hold that due process required that “would impede the settlement process so favored by law,” the Ninth Circuit held.