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Low v. Trump University, LLC

United States Court of Appeals, Ninth Circuit

February 6, 2018

Sonny Low; J. R. Everett; John Brown, on Behalf of Themselves and All Others Similarly Situated; Art Cohen, Individually and on Behalf of All Others Similarly Situated, Plaintiffs-Appellees,
v.
Trump University, LLC, AKA Trump Entrepreneur Initiative, a New York limited liability company; Donald J. Trump, Defendants-Appellees. Sherri B. Simpson, Objector-Appellant,

          Argued and Submitted November 15, 2017 Pasadena, California

         Appeal from the United States District Court for the Southern District of California D.C. Nos. 3:10-cv-00940-GPC-WVG, 3:13-cv-02519-GPC-WVG Gonzalo P. Curiel, District Judge, Presiding

          Deepak Gupta (argued) and Jonathan E. Taylor, Gupta Wessler PLLC, Washington, D.C.; Gary B. Friedman, New York, New York; Edward S. Zusman and Kevin K. Eng, Markun Zusman Freniere & Compton LLP, San Francisco, California; for Objector-Appellant.

          Steven Francis Hubacheck (argued), Daniel J. Pfefferbaum, Rachel L. Jensen, Jason A. Forge, and Patrick J. Coughlin, Robbins Geller Rudman & Dowd LLP, San Diego, California; Amber L. Eck, Haeggquist & Eck LLP, San Diego, California; for Plaintiffs-Appellees.

          Daniel M. Petrocelli and David L. Kirman, O'Melveny & Myers LLP, Los Angeles, California, for Defendants-Appellees.

          Gregory A. Beck, Washington, D.C.; Christopher L. Peterson, S.J. Quinney College of Law, University of Utah, Salt Lake City, Utah; for Amici Curiae Plain-Language Notice Experts, The National Association of Consumer Advocates, and Professors of Consumer Law.

          Elizabeth Rogers Brannen and Peter K. Stris, Stris & Maher LLP, Los Angeles, California; Jay Tidmarsh and Judge James J. Clynes Jr., Professor of Law, Notre Dame Law School, Notre Dame, Indiana; for Amici Curiae Civil Procedure Professors.

          Eric T. Schneiderman, Attorney General; Steven C. Wu, Deputy Solicitor General of Counsel; Barbara D. Underwood, Solicitor General; Office of the Attorney General, New York, New York; for Amicus Curiae State of New York.

          John T. Jasnoch, Scott & Scott LLP, San Diego, California; for Amici Curiae Claims Administrators.

          Before: Jacqueline H. Nguyen and Andrew D. Hurwitz, Circuit Judges, and Steven Paul Logan, [*] District Judge.

         SUMMARY [**]

         Objector / Class Settlement

         The panel affirmed the district court's order approving a class settlement between students and Trump University over Sherri Simpson's objections, and rejecting Simpson's request to opt out.

         A lone objector, Sherri Simpson, sought to opt out of the class and bring her claims in a separate lawsuit, which would derail the settlement.

         The panel held that Simpson had Article III standing because she claimed that the settlement's approval improperly denied her a second, settlement-stage opportunity to remove herself from the class, and therefore, Simpson had an interest in the settlement that created a case or controversy.

         The panel rejected Simpson's argument that the class notice language provided a second opt-out right at the settlement stage, in addition to one at the class certification stage. The panel also rejected Simpson's argument that even if the class notice did not give her a second opt-out right at the settlement stage, due process required such an opportunity. The panel held that due process required only that class members be given a single opportunity to opt out of a Fed.R.Civ.P. 23(b)(3) class.

         The panel held that the district court did not abuse its discretion in approving the settlement.

          OPINION

          NGUYEN, CIRCUIT JUDGE

         Trump University, now defunct, was a for-profit entity that purported to teach Donald J. Trump's "secrets of success" in the real estate industry. During the 2016 presidential election, Trump University and Trump were defendants in three lawsuits alleging fraud and violations of various state and federal laws: two class actions in the Southern District of California, and a suit by the New York Attorney General in state court. Each suit alleged that Trump University used false advertising to lure prospective students to free investor workshops at which they were sold expensive three-day educational seminars. At these seminars, instead of receiving the promised training, attendees were aggressively encouraged to invest tens of thousands of dollars more in a so-called mentorship program that included resources, real estate guidance, and a host of other benefits, none of which ever materialized.

         In the California cases, the district court certified two classes of over eight thousand disappointed "students, " and scheduled the cases for trial in late November 2016. On November 8, 2016, Trump was elected President of the United States. Within weeks, the parties reached a global settlement on terms highly favorable to class members. Plaintiffs would receive between 80 to 90 percent of what they paid for Trump University programs, totaling $21 million. The defendants agreed to pay an additional $4 million in the case brought by the Attorney General of New York.

         This appeal involves a lone objector, Sherri Simpson, who seeks to opt out of the class and bring her claims in a separate lawsuit, which would derail the settlement. Simpson does not dispute that she received, at the class certification stage, a court-approved notice of her right to exclude herself from the class and chose not to do so by the deadline. She argues, however, that the class notice promised her a second opportunity to opt out at the settlement stage, or alternatively, that due process requires this second chance. Neither argument is correct. We affirm.

         I. Background

         A. The Lawsuits

         Trump University was "a private, for-profit entity purporting to teach Trump's 'insider success secrets'" in the real estate industry. Makaeff v. Trump Univ., LLC, 715 F.3d 254, 258 (9th Cir. 2013). In 2010, Sherri Simpson was wooed to a free "investor workshop" in Florida, which Trump University advertised as a chance to "[l]earn from Donald Trump's hand-picked instructor a systematic method for investing in real estate that anyone can use effectively." At this event, attendees were ...


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