On Tuesday, March 1, 2016, a panel of judges in the New York Appellate Division, First Department, held that New York Attorney General (AG) Eric Schneiderman’s suit against Donald Trump and the Trump Entrepreneur Initiative LLC (TEI) can move forward. The court’s decision marks a turning point in the case and resolves ambiguity regarding the contours of the AG’s authority and the statute of limitations for certain causes of action brought by the AG. The decision is important, one could even say huge.

In August 2013, the AG brought a special proceeding against Trump individually and TEI, formerly known as Trump University LLC. The action stemmed from a letter sent by the New York State Department of Education in 2005, informing Trump University that it was violating the state’s education law by using the word “University” without a proper charter. Trump University allegedly did not formally change its name to TEI until May 2010, and ceased operations later that year.

In addition to the allegation it operated as an unlicensed, illegal education institution, the AG alleged that Trump University engaged in a variety of fraudulent practices. Specifically, the AG argued that Trump University intentionally misled more than 5,000 consumers, including more than 600 New Yorkers, into spending as much as $35,000 to participate in seminars and mentorship programs to become successful real estate investors. The AG claimed that consumers lost approximately $40 million collectively and alleged six causes of action, including fraud under Executive Law § 63(12), fraudulent and deceptive practices under General Business Law § 349, and false advertising under General Business Law § 350.

According to the AG, Trump University’s ads misrepresented that Trump himself handpicked the real estate experts (or “professors”), that Trump developed the curriculum, and that Trump would make personal appearances. The AG alleged that Trump did not make any appearances, develop the curriculum, or handpick the experts; rather, the instructors allegedly were “inadequately vetted and in fact had little or no experience in real estate investing” and only one speaker had actually met Trump. The AG further alleged that the free workshops mentioned in Trump University’s advertisements were simply a way to induce students to enroll in a three-day seminar for $1,495, and instructors at these seminars engaged in a “bait and switch” by telling students they had to enroll in another $5,000 seminar to learn more about certain lenders.

In 2014, a New York Supreme Court dismissed some of the AG’s claims as barred by a three-year statute of limitations. However, the Appellate Division overturned the lower court’s decision finding that New York’s six year statute of limitations for common law fraud applied, not the three year limitation for statutory claims. The court found that, because the cause of action for fraud brought under Section 63(12) involves misconduct recognized under common law well before the section of the statute existed, the three year statute applied to statutorily created claims did not apply.

The Appellate Division, however, also held that the scienter and reliance required for a common law fraud claim need not be proven by the AG in an action under Section 63(12). Thus, the AG gets the benefit of the longer statute of limitations without the burden of proving scienter and reliance. That seems like a good deal for the AG.

Outside of the courtroom, the case also has generated buzz perhaps due in part to certain other activities engaged in by Mr. Trump. According to Trump, the lawsuit is frivolous and a “minor case” he has “not settled out of principle.” A website exists, www.98percentapproval.com, which defends Trump and the program based on its 98% approval rating from an evaluation of 11,000 students who, according to Trump, were “extremely satisfied” with the program. As the case heads to court, it will be interesting to watch the case unfold.