9th Circuit considers objection to Trump University settlement

PASADENA — An objector to a settlement of the seven-year-old case against Trump University urged the 9th U.S. Circuit Court of Appeals on Wednesday to allow her to file and prosecute her own lawsuit against President Donald J. Trump.

“She wants to file her own case. She wants to pursue the … common law fraud claim, which was decertified in this case,” the objector’s attorney, Deepak Gupta, told a three-judge panel of the court. “She has her own claim and she has a due process right to move forward with that claim.”

Gupta, a partner at Gupta Wessler PLLC, represents Sherri B. Simpson, a Florida attorney and former student at Trump University who has objected to the $25 million settlement that was reached in the fraud suit days after Trump was elected president. Simpson v. Trump University, 17-55635 (9th Cir., filed Apr. 30, 2010).

Simpson has argued that she was improperly prevented from opting out of the settlement, pointing to language in a 2015 class notice that said she would be notified about how to “ask to be excluded from any settlement.”

She participated in the class action, but objected to the settlement when details of its terms were finalized in 2016. The settlement agreement excluded new opportunities to opt out. U.S. District Judge Gonzalo P. Curiel of the Southern District denied her motion and approved the settlement.

On appeal, Simpson has articulated that she wishes to pursue a RICO case against Trump, claiming treble damages worth $66,310. Under the terms of the settlement, Simpson would receive up to $9,500. She spent $19,000 in classes with Trump University, according to her brief.

Simpson’s lawyers have characterized the prohibition on opt-outs contained in the final settlement as remarkably unusual.

Gupta argued that it constitutes a due process violation and is contrary to Rule 23 of the federal rules of civil procedure, which establishes parameters for class actions.

The appeal has attracted a number of amicus briefs, including one from civil procedure experts at 11 law schools including UC Berkeley School of Law, Columbia Law School and Stanford Law School.

The professors argued that the opt-out prohibition was contrary to class action procedure. In their brief, they said class members must be allowed to remove themselves from a settlement when they learn of its details.

Gupta referred to the brief on numerous occasions during the argument and said that the court needed to reverse Curiel’s approval.

The settlement parties portrayed the $25 million payout as typical. David L. Kirman, a partner at O’Melveny & Myers LLP who represented the president and Trump University, told the court that the case was a “textbook example of a district court properly administering a settlement.”

“So your client’s view of Judge Curiel has changed,” Judge Andrew D. Hurwitz interjected to laughter, referencing Trump’s highly publicized call during the election campaign for the judge to recuse himself from the case because his Mexican heritage might have made him biased against Trump.

“Yes,” Kirman responded, seemingly surprised by the remark.

Both Kirman and Steven F. Hubachek, a partner at Robbins Geller Rudman & Dowd LLP who represents the plaintiff class, said that if Simpson were removed from the settlement, it would fall apart. They also challenged whether she has standing, questioning whether she proved reliance on the class notice.

Hubachek said that there is a “political aspect” to Simpson’s case, agreeing with Hurwitz, who had commented, “They want more really in this case than just a right to sue.”

If Simpson wins the appeal, the 9th Circuit could reverse Curiel’s entire settlement order. Hurwitz seemed particularly troubled by the possibility of upsetting the deal.

“What you’re asking us to do is to unravel a settlement that’s fair for thousands of people because your client thinks she should have opted out,” he told Gupta. “Now maybe we should do that … but I’ve got to tell you, when I think about this case in real world terms, that’s what troubles me.”

Judge Jacqueline Nguyen also expressed skepticism and questioned Gupta as to whether Simpson had shown actual injury, never seeming to get a sufficient response.

Judge Steven Logan also sat on the panel, visiting from the District of Arizona.