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Leading Questions: Inside the Trump University Settlement

For six and a half years, Donald Trump battled fraud allegations against his now-defunct Trump University, claiming it duped students into thinking they’d get personal access to the real estate mogul and the secrets to his success. After both sides vowed to go to trial, the litigation settled for $25 million the week before Thanksgiving, days before a trial was set to begin in San Diego.

As part of the deal, which resolves two class actions and a separate case brought by New York Attorney General Eric Schneiderman, Mr. Trump doesn’t admit any wrongdoing, and the plaintiffs lawyers chose not to take a fee. Jason Forge, a partner at Robbins Geller Rudman & Dowd LLP who has represented the plaintiffs in the San Diego case since 2013, spoke to Law Blog about what finally led to a settlement. The conversation has been edited for length and clarity. A spokeswoman for Mr. Trump’s transition team and his lawyer in the Trump University case, Daniel Petrocelli, didn’t respond to a request for comment.

How did Mr. Trump’s presidential run and his comments about the case change the litigation strategy?

It didn’t change the evidence and what we viewed as the strengths and weaknesses of the case, but clearly it changed what we thought was realistic in terms of when we’d go to trial and the likelihood of getting a truly unbiased jury. Both sides figured it would be difficult to get a unanimous verdict. That’s daunting. You put in time and effort, and in the back of your head, you think, how will either side prevail?

Did that realization prompt settlement talks?

One thing that hasn’t gotten coverage, but is one of most significant aspects, is that the case was de-certified for damages. What that means, this trial was about liability. The jury would decide at the end of this trial, did they violate this consumer protection statute? Then we were going to go into a damages phase just for the three class representatives and explain why they were entitled to all their money back. All the thousands of other people would then have had to make a decision as to whether they would want to file a lawsuit against the president of the United States. The big advantage is that there would already be a liability determination, but they’d still be subject to discovery and questioning by a Trump lawyer. It would have been daunting.

Given that, did you even want it to go to trial, or was it all posturing for a better settlement?

From a personal perspective I definitely wanted it to go to trial. We were never talking about settlement. It wasn’t one of those situations where we were going back and forth for months and posturing. I’d never seen anyone be so bold about taking the case to trial as Trump. We just accepted that he wanted to take it to trial.

[Mr. Trump’s lawyer, Mr. Petrocelli, told the Am Law Litigation Daily that settling was a “difficult decision” for Mr. Trump but that the election was a “game changer.” Mr. Trump said on his Twitter feed that, “I settled the Trump University lawsuit for a small fraction of the potential award because as President I have to focus on our country.”]

So how did settlement talks finally get rolling?

What happened was, [court-appointed mediator] Judge Jeffrey Miller grabbed the bull by the horns and scheduled a get-together on Wednesday, Nov. 16. That was the first day we’d ever had serious settlement discussions. He got everybody together in his chambers for a very short time. Then he split us up for the rest of the day. The strange thing about this one, no numbers were disclosed to either side until we had a deal. We would explain the range we were looking for, they would do the same thing, but then not disclose to us. Then he said, basically, that $25 million was the number.

So you had a deal by Wednesday.

It was arrived at in principle, yes. The New York attorney general was still out there, they did not have a rep there. We had been in contact with them prior to Wednesday, and thought we had a pretty good understanding of what they wanted. Then things changed.

How?

They had a request for injunctive relief [which goes beyond just monetary payments] that took both sides of our case by surprise, and was a fly in the ointment. It was more than what was agreed to and more than what they sought in their case.

How did things finally break through?

They dropped the demand for that injunctive relief.

And then the leaks to the press happened.

Almost immediately after contacting the New York attorney general, they started. We did not appreciate it at all. I was really disappointed, to say the least.

[A spokeswoman for Mr. Schneiderman said in response: “We absolutely held out for a better deal for victims and are glad that we did. We fought for—and won—more restitution for victims and an additional one million dollar penalty.” On the leaks, she added that this is the first time she’s seen a plaintiffs lawyer “complain about media attention.”]

When did you decide not to take a fee?

From the start, [Trump’s side] made it clear the attorneys deserved to be compensated. But once we realized we could get a real number out of this thing, we decided maybe we could do something significant also. Taking a fee when you’ve got people literally still paying off their credit cards is a lot different than when it’s essentially found money for the plaintiffs. We wanted to do our part to demonstrate to the plaintiffs how much we believed in their case.

How many hours did the firm put into it?

I don’t know, and I probably don’t want to know. Ignorance is bliss in this situation.

So now, the plaintiffs will get at least half of the money they spent on the courses?

The lowest they’ll get is over 50%. Depending on how many people want their money back, it could go up to 100%. We’ll hopefully get preliminary approval before the end of this year. Then objections would be due at the end of February, with a final confirmation hearing near the end of March.

So, did you vote in the election?

I can say yes, but I can’t say who I voted for. Most of my career as a federal prosecutor, I stayed away from politics. It proved beneficial in this case.

(via WSJ)