On Super Tuesday, the news regarding Republican Presidential Candidate Donald J. Trump was not limited to the campaign trail.  On March 1, 2016, the New York Supreme Court’s Appellate Division reinstated claims in a 2013 suit filed by Attorney General Eric T. Schneiderman alleging that Trump University (“TU”) “through various fraudulent practices,[] intentionally misled more than 5,000 students nationwide . . . into paying as much as $35,000 each to participate” in programs offered by TU.  Trump started TU in 2004 to instruct entrepreneurs on real estate investing.  The suit accuses TU of violating New York laws related to fraudulent and deceptive practices, false advertising (General Business Law §§349-350) and fraud.  People ex rel. Schneiderman v. Trump Entrepreneur Initiative LLC, No. 16093, 2016 WL 783216 (N.Y. App. Div. Mar. 1, 2016).  In 2013, Schneiderman initiated a special proceeding under New York Executive Law § 63(12), seeking damages, civil penalties and a variety of equitable relief. 

Schneiderman alleged, among other things, that “instructors played a video featuring Donald Trump telling prospective students the ‘professors . . are absolutely terrific – terrific people, terrific brains, successful, the best’ and ‘are handpicked by [Trump].’”  Id. at *2.  According to the allegations, “Trump did not handpick the instructors; indeed, only one of the live event speakers for Trump University had even ever met Donald Trump” and the instructors “had little to no experience in real estate investing, instead having prior work experience such as food service management and graphic design.”  Id.  Schneiderman also alleged that TU’s instructors “engaged in a bait-and-switch by urging students to sign up for . . . packages [] rang[ing] from $10,0000 to $35,000 that supposedly provided the only way to succeed in real estate investment.”  Id. at *3. 

In 2014, a lower court partially dismissed Schneiderman’s petition on statute of limitations grounds.  Last week, the Appellate Division reinstated the dismissed claims, finding that the three year statute of limitations did not apply.  Also on appeal was the 2014 denial of TU’s request to depose the Assistant Attorney General, in support of a malicious prosecution claim that the true purpose of the special proceeding is to harass TU rather than to protect the public.  The lower court rejected the request, calling the practice of forcing attorneys to testify “offensive to our conception of the adversarial process.” The People of the State of New York v. The Trump Entrepreneur Initiative LLC, 2014 WL 5241483 at *20 (N.Y.Sup. Oct. 8, 2014).  The appeals court affirmed the lower court’s denial of TU’s request. 

This suit is neither the first legal challenge facing TU, nor the first time TU has responded with accusations about the claimant.  In 2010, Tarla Makaeff sued TU in a California federal court on behalf of classes in California, New York and Florida.  TU responded with a million-dollar counterclaim that Makaeff’s public complaints denouncing the program were defamatory.  Makaeff moved to strike, arguing that TU’s claim was designed to overwhelm her by making it more burdensome and expensive for her to pursue her claims against TU.  The court granted the motion and ordered TU to pay almost $800,000 in attorneys fees and costs.  Last month, after almost six years litigating the case, Makaeff moved to withdraw as named plaintiff.  Makaeff argued that TU’s attorneys subjected her to “aggressive tactics,” including over 15 hours of deposition questioning, and that financial, personal and health problems made her continued role as named plaintiff unfeasible.  TU opposed the motion, arguing that they should be entitled to cross-examine her at trial, notwithstanding the issues she is confronting.  The court has not yet ruled on the motion. This week, Trump posted a video called “Trump University Truth”  -- during which he calls out former TU participants who have lodged complaints about the program by name.   

People ex rel. Schneiderman v. Trump Entrepreneur Initiative LLC, No. 16093, (N.Y. App. Div.)

The People of the State of New York v. The Trump Entrepreneur Initiative LLC, No. 11-55016 (N.Y.Sup.)

Makaeff v. Trump University, LLC, No. 10-cv-00940 (S.D. Cal.)