The appeals panel examining a challenge to the $25 million Trump University settlement appeared unlikely to dismantle the deal as they peppered questions on an attorney representing an objector to the deal.
The objector, Sherri Simpson, a personal bankruptcy attorney in Fort Lauderdale, Florida, had appealed the settlement’s approval claiming she was deprived of an opportunity to opt out of the deal, even though an earlier 2015 class notice in the case appeared to promise she would get that opportunity. She’s brought in high-profile appellate attorney Deepak Gupta to handle her appeal before the U.S. Court of Appeals for the Ninth Circuit.
In oral arguments on Wednesday, three panel members, all appointees of President Barack Obama, allowed it was an interesting case. They spent most of the time mulling the intersection of constitutional claims and class action law—an academic debate that also drew nearly two dozen law professors to side with Simpson’s arguments. But it was clear the panelists also were aware of the political bent of the case, which President Donald Trump settled just days after his election victory last year.
“Setting aside who the defendant is, this is a typical, ordinary, run-of-the mill class action, and it is also a textbook example of a district court properly administering a settlement,” said Trump’s attorney, David Kirman, a partner at O’Melveny & Myers in Los Angeles.
Judge Andrew Hurwitz immediately remarked: “I see your client’s view of Judge Curiel has changed?” He was referring to U.S. District Judge Gonzalo Curiel of the Southern District of California, who approved the settlement in March but was criticized by candidate Trump, who claimed the Indiana-born judge was biased because of his Mexican heritage.
“Your honor,” Kirman chuckled, “yes.”
And at one point, Hurwitz acknowledged that Simpson likely sought “more in this case than just the right to sue,” to which plaintiffs attorney Steven Hubachek replied: “That’s right. There’s a little political aspect I believe.”
Gupta, of Washington, D.C.’s Gupta Wessler, tried to convince the panel that a phrase in the 2015 class notice outlining the right of class members to be excluded from the case was unusual. In hundreds of class actions across the country, he said, notices to class members have made clear that they wouldn’t get a second chance to opt out should the case settle. But in the Trump University case, the notice allowing class members to opt out as members of the class appeared to indicate that a second opportunity to be excluded from the case would come should it settle. A second notice about the settlement didn’t provide that opportunity.
That “no opt out” provision, Gupta said, is unusual.
“You plug that language into Google or into Westlaw, you will not find any other settlement that has that language,” he said. “If you affirm the settlement here, you will be providing a roadmap for settling parties to run roughshod over the promised opt out right.”
Hubachek, of San Diego’s Robbins Geller Rudman & Dowd, called the objector’s argument “attorney manufactured” and insisted that a reasonable class member wouldn’t have been confused by the notice’s language.
Both Hurwitz and Judge Jacqueline Nguyen questioned Gupta’s claim that his client was denied a procedure that was promised to her.
“That may be a violation of Rule 23,” Hurwitz replied, but “our cases make clear you do not have a constitutional right to a second opt out opportunity,” referring to the Federal Rule of Civil Procedure governing class actions.
They also had standing concerns given that Simpson hadn’t actually opted out of the deal, which made it harder to argue she relied on the notice or was economically injured from its provisions.
Standing was the primary focus of Hubachek’s arguments.
“Simpson seeks to derail a settlement that the district court found to be exceptional based upon a single parenthetical phrase that she didn’t even rely on when she chose not to opt out by the deadline that was provided to every class member,” he told the panel.
The judges also questioned what Simpson ultimately wanted. Did she want the opportunity to opt out, or to bring her own lawsuit? Or did she want to unravel what Hurwitz called “a heckuva good settlement”?
In the end, Hurwitz said, he struggled with what he called a “big world problem.”
“What you’re asking us to do is to unravel a settlement that’s fair for thousands of people because your client thinks she could have opted out of that deal,” he said. “When I think about this case in real-world terms, that’s what troubles me.”