A Court Filing Friday Night
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Case 3:13-cv-02519-GPC-WVG Document 248 Filed 06/17/16 Page 1 of 12 1 DANIEL M. PETROCELLI (S.B. #97802) [email protected] 2 DAVID L. KIRMAN (S.B. #235175) [email protected] 3 O’MELVENY & MYERS LLP 1999 Avenue of the Stars 4 Los Angeles, California 90067-6035 Telephone: (310) 553-6700 5 Facsimile: (310) 246-6779 6 JILL A. MARTIN (S.B. #245626) [email protected] 7 TRUMP NATIONAL GOLF CLUB One Trump National Drive 8 Rancho Palos Verdes, CA 90275 Telephone: (310) 202-3225 9 Facsimile: (310) 265-5522 10 Attorneys for Defendant 11 DONALD J. TRUMP 12 UNITED STATES DISTRICT COURT 13 SOUTHERN DISTRICT OF CALIFORNIA 14 15 ART COHEN, Individually and Case No. 13-CV-2519-GPC(WVG) on Behalf of All Others Similarly 16 Situated, CLASS ACTION 17 Plaintiffs, DEFENDANT DONALD J. TRUMP’S REPLY IN SUPPORT 18 v. OF MOTION FOR SUMMARY JUDGMENT OR, IN THE 19 DONALD J. TRUMP, ALTERNATIVE, PARTIAL SUMMARY JUDGMENT 20 Defendant. 21 22 Hearing: July 22, 2016 Time: 1:30 p.m. 23 Courtroom: 2d 24 Judge: Hon. Gonzalo P. Curiel 25 26 27 28 DEF.’S REPLY ISO MOT. FOR SUMMARY JUDGMENT 13-CV-2519-GPC (WVG) Case 3:13-cv-02519-GPC-WVG Document 248 Filed 06/17/16 Page 2 of 12 1 I. INTRODUCTION 2 This case was an overreach from inception. It stretches civil RICO beyond 3 the breaking point and would effectively federalize consumer advertising fraud 4 claims, and subject officers, directors, and employees of every Fortune 500 1 5 company to unwarranted personal liability. Plaintiff cites no case that has 6 endorsed the use of civil RICO in remotely similar circumstances. The 7 Opposition’s derisive rhetoric and personal attacks do not mask or compensate for 8 the glaring absence of support for imposing RICO liability in this case, nor do the 9 embellishments of the record and mischaracterizations of law that are replete in the 2 10 Opposition. Summary judgment is warranted because there are no genuine issues 11 of fact on any of the following material issues: 12 • Defendant did not “conduct” the RICO enterprise. Plaintiff conflates defendant’s involvement with Trump University (“TU”) the corporation with 13 defendant’s role in the purported illegality of the RICO enterprise. The 14 evidence he cites does not establish that defendant managed, controlled, or directed any part of the alleged “fraudulent marketing scheme.” 15 • 16 The certified issues are puffery. Tellingly, Plaintiff’s only response to this claim is the erroneous assertion that the law-of-the-case doctrine bars 17 consideration of this issue. To the contrary, the Court’s previous order 18 provided that defendant could prove puffery as a factual matter. And the evidence in this case establishes that the representations at issue were 19 puffery—highly subjective claims as opposed to detailed factual representations. 20 • 21 Defendant did not make false statements. There are no genuine issues of fact that TU shared with students what defendant called his secrets—focus, 22 1 23 RICO has been called “the litigation equivalent of a thermonuclear device.” Miranda v. Ponce Fed. Bank, 948 F.2d 41, 44 (1st Cir. 1991). 24 2 Plaintiff’s opposition undermines the judicial process. See Cruz v. Comm’r of 25 Soc. Sec., 244 F. App’x 475, 483 (3d Cir. 2007) (“Heated rhetoric . like this does 26 nothing to advance a client’s cause. It serves only to distract attention from the merits and to call counsel’s judgment into question.”); DRFP, LLC v. The 27 Republica Bolivariana de Venezuela, 2015 WL 4941193, at *1 (S.D. Ohio Aug. 20, 28 2015). DEF.’S REPLY ISO MOT. FOR SUMMARY JUDGMENT 13-CV-2519-GPC (WVG) Case 3:13-cv-02519-GPC-WVG Document 248 Filed 06/17/16 Page 3 of 12 1 hard work, tenacity, and some business knowledge. Defendant provided input 2 into the TU curriculum and selecting instructors—first personally and then through detailed guidance provided to TU’s president. Even plaintiff has not 3 been able to define the alleged “university” misrepresentation with precision. 4 • Defendant did not knowingly participate in anything fraudulent. 5 Defendant believed students were receiving the high-quality education in real estate he wanted them to have and were satisfied with TU’s instruction, as 6 evidenced by its approval rating. 7 Defendant’s superficial review of TU’s advertising for branding purposes is 8 the only fact that connects defendant in any way to plaintiff’s allegations of fraud. 9 The fact is wholly insufficient to establish a RICO violation by defendant. There is 10 no evidence in the record that defendant told TU what to put in the advertising or 11 had any input related to substance. The uncontroverted evidence—defendant’s 12 ownership of hundreds of companies, hiring of qualified people to run TU, the use 13 of outside counsel who reviewed all advertising for compliance—shows he did not 14 know about, participate in, or intend to be part of any fraudulent scheme. 15 II. LIBERALLY CONSTRUING RICO DOES NOT SAVE 16 PLAINTIFF’S CLAIM 17 Courts across the country have “overwhelmingly rejected [plaintiff’s] 18 attempts to characterize routine commercial relationships as RICO enterprises.” 19 Gomez v. Guthy-Renker, LLC, 2015 WL 4270042, at *8–11 (C.D. Cal. July 13, 20 2015); Chaset v. Fleer/Skybox Int’l, 300 F.3d 1083, 1087 (9th Cir. 2002) 21 (“Congress enacted RICO ‘to combat organized crime, not to provide a federal 22 cause of action and treble damages’ for personal injuries.”); see Dkt. 280 at 8–10.3 23 3 Curiously, plaintiff argues that defendant “fail[ed] to cite a single Ninth Circuit 24 case” in support of this argument, yet on the next page asserts that one of 25 defendant’s Ninth Circuit cases has “been overruled.” Compare Dkt. 220 at 9, with id. at 10 n.4. On both fronts, plaintiff is wrong. The Ninth Circuit has uniformly 26 cited with approval the legal principle allegedly “overruled”: “RICO is concerned 27 with the repetition of criminal acts, not ‘provid[ing] a federal cause of action and treble damages to every tort plaintiff.’” Nw. Osteoscreening, Inc. v. Mtn. View 28 Hosp., LLC, 2014 WL 4955673, at *6 (D. Idaho Oct. 2, 2014) (quoting Oscar v. DEF.’S REPLY ISO MOT. FOR - 2 - SUMMARY JUDGMENT 13-CV-2519-GPC (WVG) Case 3:13-cv-02519-GPC-WVG Document 248 Filed 06/17/16 Page 4 of 12 1 Plaintiff contends this sensible policy “flatly contradicts” a block quote taken from 2 Odom v. Microsoft Corp., which advises that RICO is to be “read broadly” and 3 “liberally construed.” 486 F.3d 541, 546 (9th Cir. 2007). Plaintiff is wrong. The 4 Ninth Circuit fully embraces a policy of judicial restraint to prevent federalizing 5 state claims that should not, and do not, fall within RICO—“the litigation 6 equivalent of a thermonuclear device,” see supra note 3; Miranda, 948 F.2d at 44. 7 The best evidence of plaintiff’s misinterpretation of civil RICO is the very 8 cases he cites. Not a single case plaintiff cites comes close to approving of civil 9 RICO claims on the garden-variety consumer claims here. See In re Neurontin 10 Mktg. & Sales Practices Litig., 712 F.3d 21, 25 (1st Cir. 2013) (civil RICO case 11 brought against drug manufacturer following federal criminal prosecution for off- 12 label marketing of a drug); United States v. Philip Morris USA, Inc., 566 F.3d 1095, 13 1105–06 (D.C. Cir. 2009) (criminal RICO case against cigarette manufacturers 14 regarding failure to disclose health effects and addictiveness); In re Testosterone 15 Replacement Therapy Prods. Liab. Litig., 2016 WL 427553, at *9 (N.D. Ill. 2016) 16 (civil RICO case against drug manufacturer for off-label marketing scheme). 17 III. DEFENDANT DID NOT CONDUCT THE ALLEGED FRAUDULENT SCHEME 18 To establish that defendant “conducted” the affairs of the alleged RICO 19 enterprise, plaintiff must demonstrate that defendant directed, controlled, or 20 participated in the management of the “alleged fraudulent marketing scheme.” The 21 “operation or management” test articulated in Reves v. Ernst & Young, 507 U.S. 22 170, 183 (1993), governs the Court’s analysis. As Reves explained, 23 The narrow question in this case is the meaning of the phrase “to 24 conduct or participate, directly or indirectly, in the conduct of such 25 enterprise’s affairs.” The word “conduct” is used twice, and it seems reasonable to give each use a similar construction. As a verb, 26 27 Univ. Students Coop. Ass’n., 965 F.2d 783, 786 (9th Cir. 1992) (en banc), noting it was abrogated “on other grounds”); see also Boar, Inc. v. Cnty. of Nye, 499 F. 28 App’x 713, 715 (9th Cir. 2012) (same); Chaset, 300 F.3d at 1087 (same). DEF.’S REPLY ISO MOT. FOR - 3 - SUMMARY JUDGMENT 13-CV-2519-GPC (WVG) Case 3:13-cv-02519-GPC-WVG Document 248 Filed 06/17/16 Page 5 of 12 1 “conduct” means to lead, run, manage, or direct. Petitioners urge us 2 to read “conduct” as “carry on,” so that almost any involvement in the affairs of an enterprise would satisfy the “conduct or participate” 3 requirement. But context is important, and in the context of the phrase 4 “to conduct . [an] enterprise’s affairs,” the word indicates some degree of direction. 5 Id. at 177–78 (emphasis added and internal citations omitted);4 accord United 6 States Fire Ins. Co. v. United Limousine Serv., Inc., 303 F.