United States District Court, S.D. California
TARLA MAKAEFF, et al., on Behalf of Herself and All Others Similarly Situated, Plaintiffs,
TRUMP UNIVERSITY, LLC, et al., Defendants. AND RELATED COUNTERCLAIM.
ORDER: 1) GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION TO CERTIFY CLASS ACTION, APPOINT CLASS REPRESENTATIVES, AND APPOINT CLASS COUNSEL [Dkt No. 122.]
2) DENYING MOTIONS TO STRIKE [Dkt. Nos. 138-2, 196, 211.]
GONZALO P. CURIEL, District Judge.
Plaintiffs Tarla Makaeff, Brandon Keller, Ed Oberkrom, Sonny Low, J.R. Everett and John Brown have filed a putative class action complaint against Trump University, LLC ("TU") and Donald J. Trump ("Donald Trump"). The gravamen of the action is that Defendants made false representations in advertisements, mailings and programs regarding Donald Trump's involvement in TU and the contents of the programs that students would receive. On September 24, 2012, Plaintiffs filed a motion for class certification, appointment of class representatives, and appointment of class counsel. (Dkt. No. 122, "Pl. Mtn.") The proposed nationwide class is comprised of:
All persons in the United States who purchased a Trump University 3-day live "Fulfillment" workshop and/or a "Elite" program ("LiveEvents") within the applicable statute of limitations and have not received a full refund. Excluded from the class are Defendants, their officers and directors, families and legal representatives, heirs, successors, or assigns and any entity in which Defendants have a controlling interest, any Judge assigned to this case and their immediate families.
(Pl. Mtn. at 13.)
Plaintiffs also propose the certification of 14 subclasses, including three single-state subclasses represented by Plaintiffs who reside in California, New York, and Florida alleging violations of deceptive practices laws in their home states. (Dkt. No. 122-7, "Proposed Trial Plan.")
The motion has been fully briefed. (Dkt. Nos. 138, 195.) In addition to the pending motion for class certification, the parties have filed and fully briefed several related motions to strike and objections to evidence. (Dkt. Nos. 138-4, "Def. Obj. to Evidence, " 195-9, 213; Dkt. Nos. 138-2, "Def. Mtn. to Strike, " 192, 212; Dkt. Nos. 196, "Pl. Mtn. to Strike, " 210, 233; Dkt. Nos. 211, "Def. Obj. to Reply, " 221, 230.)
A hearing was held on November 8, 2013. Following careful consideration of the parties' oral arguments, legal briefings and applicable law, and for the reasons set forth below, the Court hereby GRANTS in part and DENIES in part Plaintiffs' motion.
A. Procedural Background
On April 30, 2010, Plaintiff Tarla Makaeff ("Makaeff") filed a class action complaint against Trump University, LLC, alleging violations of California, New York, and Florida consumer statutes as well as several common law causes of action. (Dkt. No. 1.) On May 26, 2010, Defendant Trump University, LLC, filed a counterclaim against Plaintiff Makaeff for defamation. (Dkt. No. 4.)
The complaint has been amended a number of times, ultimately resulting in the current operative pleading, the third amended complaint (TAC), filed September 26, 2012. (Dkt. No. 128.) The TAC named Plaintiffs include Tarla Makaeff, Brandon Keller, Ed Oberkrom, Sonny Low, J.R. Everett, and John Brown. Defendants include Trump University, LLC, Donald J. Trump, and DOES 2 through 50 ("Defendants"). On January 30, 2013, the case was transferred to the undersigned judge. (Dkt. No. 190.)
B. Complaint's Allegations
The TAC alleges the following causes of action: (1) unlawful, fraudulent and unfair business practices in violation of Cal. Bus. & Prof. Code section 17200; (2) deceptive practices and misrepresentation in violation of the Consumers Legal Remedies Act ("CLRA"), Cal. Civ. Code section 1750 et seq. ; (3) untrue and misleading advertisement in violation of Cal. Bus. & Prof. Code section 17500 et seq.; (4) breach of contract against Trump University; (5) breach of the implied covenant of good faith and fair dealing against Trump University; (6) money had and received; (7) negligent misrepresentation; (8) fraud; (9) false promise; (10) deceptive acts and practices in violation of § 349 of New York's General Business Law; (11) financial elder abuse in violation of Cal. Welf. & Inst. Code § 15600, et seq. ; (12) unfair competition, practices, or acts in violation of the Florida Deceptive and Unfair Trade Practices Act ("FDUTPA"), Fla. Stat. § 501.201, et seq. ; (13) misleading advertisement in violation of the Florida Misleading Advertising Law, Fla. Stat. § 817.41; and (14) unjust enrichment.
Plaintiffs bring this action on behalf of all individuals who purchased Trump University, LLC ("TU") real estate investing seminars. Plaintiffs' allegations involve three tiers of programs: (1) the free preview; (2) a three-day fulfillment seminar; and (3) Trump Elite programs. The TAC alleges that the Defendants made material misrepresentations in advertisements, mailings, promotions and the free preview to lead prospective customers to purchase Defendants' fulfillment and elite programs. The named Plaintiffs paid anywhere from $1, 495 for a three-day fulfillment seminar up to $35, 000 for the "Trump Gold Elite Program."
Plaintiffs allege TU and Donald Trump made the following common misrepresentations in invitations, advertisements, and at the free program and fulfillment seminar: (1) Trump University was an accredited university; (2) students would be taught by real estate experts, professors and mentors hand-selected by Mr. Trump; and (3) students would receive one year of expert support and mentoring.
1. Allegations Against Donald J. Trump
Defendant Donald Trump is a businessman, "real estate tycoon, " author, television personality and former presidential candidate. According to Mr. Trump, estimates of the monetary value of the "Trump" brand have exceeded three billion dollars. (Dkt. No. 122-4 at 49, "Trump Depo.") Plaintiffs contend Defendant Donald Trump is personally liable for the misrepresentations and misconduct at issue because of his representations and involvement in Trump University. Plaintiffs point to the following connections between Donald Trump and Trump University:
Donald Trump is the founder and Chairman of Trump University, and authorized TU to use his name, photos, and quotes for all TU seminar presentations;
Print advertisements, email correspondence, letters, and TU website content prominently feature Donald Trump's quotes, image, logo, and signature;
Donald Trump reviewed and authorized TU advertisement and content;
Donald Trump personally financed Trump University, reviewed all TU financial statements and print and mail advertisements; and
Donald Trump represented that he personally hand-picked the TU instructors and mentors.
2. Advertising, Website and Invitations to Free Preview
Plaintiffs allege TU relied on free introductory previews throughout the United States in order to ensnare prospective customers through the use of deception and misrepresentations. The free previews were preceded by an orchestrated outreach campaign utilizing mailed invitations as well as a TU website, Facebook page, radio, and newspaper advertising. (TAC ¶ 40; Dkt. No. 122-4 at 7, "Timeline for Preview.") While the content of the materials varied, Plaintiffs allege that all of the marketing materials uniformly referred to the business as "Trump University." Further, the materials uniformly claimed that Donald Trump was integrally involved in the teaching of students at Trump University. (TAC ¶¶ 40, 43.)
For example, print advertisements sent by TU included quotes such as "I can turn anyone into a successful real estate investor, including you, " and "I'll show you how." (TAC ¶¶ 19(c), (e).) The home page of the TU website displayed a large photograph of Mr. Trump and the message: "Are YOU My Next Apprentice? Prove it to me!" Emails sent by TU to thousands stated "76% of the world's millionaires made their fortunes in real estate... I'm ready to teach you how to do it too." (TAC ¶ 19(d).) Print advertisements and letters signed by Mr. Trump told prospective customers that they would be shown real estate strategies by Mr. Trump's "hand-picked experts." (TAC ¶¶ 19(c), (f).)
3. The Free Preview
Plaintiffs assert that the purpose of the free preview was to "up-sell" attendees to the $1, 495 Fulfillment Seminar, and that the goal of the $1, 495 Fulfillment Seminar was to up-sell participants to the Elite programs. (TAC ¶ 15.) To advance the "up-sell" scheme, Defendants allegedly promised participants that they would learn Trump's secrets from Trump's hand-picked instructors over the course of a one-year apprenticeship. (TAC ¶ 43.) Plaintiffs cite to numerous excerpts from transcripts of the free preview and three-day programs where instructors repeated the claim that Mr. Trump hand-picked the instructors and mentors. (Dkt. No. 195-3, "Pl. Reply, Ex. 88" at 594-605.)
However, Plaintiffs claim TU instructors and mentors were not hand-picked by Mr. Trump. During discovery, Plaintiffs requested the names of Trump University speakers, instructors and mentors that were hand-picked by Mr. Trump. In interrogatory responses, Mr. Trump stated that he "personally was involved in the selection of Don Sexton, Gary Eldred, Michael Gordon and Jack Kaplan. Additionally, most if not all speakers, instructors and mentors were selected by Trump University representatives...". (Dkt. No. 195-5, "Jensen Decl. Ex. 105" at 5) (Response to Interrogatory No. 13). Don Sexton, Gary Eldred, Michael Gordon, and Jack Kaplan are current or former professors who drafted and developed Trump University course materials. (Id. at 3) (Response to Interrogatory No. 10).
4. Fulfillment Seminar
Individuals who paid for the Fulfillment Seminar were promised a three-day seminar and one full year of expert interactive support. (TAC ¶ 53; Dkt. No. 195-3, "Pl. Reply, Ex. 88" at 606-20.) Plaintiffs allege the seminar and year-long support was actually a three-day infomercial accompanied by a phone number to call a "client advisor." (Id.) The TAC also claims that rather than teach customers concrete real estate information, the Fulfillment Seminars were focused on trying to "up-sell" customers the Trump Gold Elite Program for $34, 995 to get the "full education." (TAC ¶ 48.) At the Fulfillment Seminar, Plaintiffs allege TU representatives pressured customers to raise their credit card limits to purchase Trump Elite Programs. (TAC ¶ 49.)
5. Trump Gold Elite Package
Trump Gold Elite participants were allegedly promised unlimited mentoring for an entire year. (TAC ¶ 53.) Plaintiffs allege that, in fact, Trump University told its mentors that it would not pay them for more than six one-hour mentoring sessions per consumer. (Id.)
C. The Plaintiffs
The TAC was filed on behalf of six named plaintiffs located in California, Missouri, Florida, and New York. The Plaintiffs are:
Tarla Makaeff, a citizen of California, who purchased the three-day fulfillment seminar in August 2008;
Ed Oberkrom, a 65-year old senior citizen of St. Louis, Missouri, who purchased the three-day seminar in February 2009 and the $25, 000 Elite seminar in March 2009. He attended the free preview after reading and relying on Trump University advertisements;
Sonny Low, a 71-year old senior citizen of San Diego, California, who attended the free preview on or about November 18, 2009 after learning about it in advertisements. Based on representations made at the free preview, Low purchased the three-day seminar on or about December 6, 2009 and then paid for the $25, 000 Elite seminar in December 2009;
J.R. Everett, a 68-year old senior citizen of Tampa, Florida, who received an invitation to the free preview from Trump University which he attended on October 7, 2009. He then purchased the three-day seminar on or about October 7, 2009 and the $35, 000 Elite seminar on October 16, 2009; and
John Brown, a 61 year old resident of New York, New York, who learned about the free preview in an advertisement and attended the free preview on September 14, 2009. He purchased the three-day seminar on or about September 14, 2009, and the $25, 000 Elite seminar on or about September 26, 2009. (TAC ¶¶ 26-31, 95-96, 106.)
Although Plaintiffs' specific experiences with TU seminars and programs vary, each Plaintiff allegedly purchased the Fulfillment Seminar and/or a Trump Elite program after exposure to representations made at a free preview. Plaintiffs contend that their experiences are typical of the proposed class, which consists of all persons who purchased TU Fulfillment Seminars or Elite programs throughout the United States from April 30, 2006 to the present. (Dkt. No. 195, "Pl. Reply, " at 1-2.)
D. Proposed Common Evidence
1. Promotion of Trump University
From its inception in 2004 until 2010 when it changed its name to the Trump Initiative, "Trump University" was the chosen name for the real estate education business operated by Mr. Trump. A review of TU advertisements demonstrates that Trump University utilized various forms of recognizable signs to appear to be an accredited academic institution. TU used a school crest that was ubiquitous and used on TU letterhead, power point presentations, promotional materials and advertisements. (TAC ¶¶ 19, 42.)
In fact, Plaintiffs allege TU was never an accredited academic institution of higher learning and that it was pressed by the New York Board of Education to cease any claim to being a "university" in 2010. (TAC ¶ 2 n.1.)
2. The Playbook
Plaintiffs point to TU's Playbook as the "single most important" common evidence that the Live Events (TU seminars and programs) were standardized, tightly controlled schemes with the goal to up-sell students. (Pl. Mtn at 6; Pl. Reply at 11.) The 2010 Playbook is separated into three parts: (1) the "Preview Playbook, " which addresses the free seminar; (2) the "Fulfillment Playbook, " which addresses the three-day Fulfillment Seminar; and (3) the "Sales Playbook, " which offers guidelines to sell TU products. (Dkt. No. 122-3, Ex. 8, "2010 Playbook.")
The Preview Playbook includes timelines for advertising the free seminar in the relevant market as well as detailed instructions for preparation and execution of the free seminar. (Id. at TU 52945-52958.) The Fulfillment Playbook similarly provides an overview and the administrative requirements to run a three-day Fulfillment Seminar. (Id. at TU 52960.)
The Sales Playbook provides several guidelines for TU salespersons to sell TU programs, including tips and scripts to help pitch TU products and services. (Id. at TU 53061-53072.) For example, the Sales Playbook offers two scripts for the salesperson to utilize during the seminars. The "Team Door Introduction Script, " welcomes registrants with the following language: "Good Afternoon/Evening! I would like to congratulate you on making it out today... We have all been hand selected by Trump U and are experts in real estate investing." (Id. at TU 53040.) In a second script, the salesperson introduces the TU instructor with the following language: "It is now my pleasure to introduce one of Donald Trump's top instructors. He has been hand selected because of his expertise and knowledge in the real-estate business." (Id. at TU 53041.) The 2010 Sales Playbook includes a script containing representations that the instructor was ...