SAN DIEGO (CN) – After just 18 months in the business, a four-person San Diego law firm took on Goliath: business mogul – now President-elect – Donald Trump.
Over the course of the next seven years, the attorneys at Zeldes Haeggquist & Eck would litigate two federal class actions on behalf of 7,000 former Trump University students burdened with debt after paying thousands for the real estate school and in the end not getting what they paid for.
The two San Diego cases – along with a third filed in New York by its Attorney General Eric Schneiderman – ended in a $25 million global class action settlement announced Nov. 18, just 10 days before the first Trump University case was scheduled to go to trial. A pot of $21 million will go to the two California classes, while $4 million went to settle the New York case.
In a surprising move, the class attorneys said after the settlement hearing they chose to litigate the case for free, on a pro bono basis. That decision was somewhat unprecedented.
Courthouse News interviewed the legal team at their downtown San Diego office to find out what it was like to work on the highly publicized cases.
Trump’s Name Vital to School Success
In 2010, Zeldes Haeggquist & Eck attorney Aaron Olsen took a call from a woman who’d eventually be a class action representative in one of the most talked about court cases of 2016 – Low v. Trump University.
Tarla Makaeff told Olsen she’d been ripped off after investing in the Trump University “elite” package and one-year mentorship program which was supposed to include hands-on guidance from a real estate expert purportedly handpicked by Trump. But she said she never got the real estate guidance she paid $35,000 for.
Makaeff had been trying to get her money back for about five months, firm partner Amber Eck said, first by requesting a refund from Trump University and then going to the Better Business Bureau and other agencies when she didn’t get her money back. Eventually, the Orange County woman got in touch with the small San Diego law firm, whose attorneys began investigating the school.
Partner Helen Zeldes attended a Trump University presentation in San Marcos to find out about the real estate school. She said she was troubled by the promises Trump University was making.
“I was very concerned about the pitch that was given to people, really preying on their vulnerabilities at the time,” Zeldes said.
“The market had crashed; everybody had lost equity in their homes. They asked people, ‘How many of you have lost the equity in your home that you wanted to leave for your children; how many of you wanted to leave your home as a legacy for your children; how many of you want to make that money back?’ They were really trying to convince people this was the way out of that dire situation that so many Americans found themselves in.”
The first class action was filed April 30, 2010. A second class action, Cohen v. Trump, was filed in 2013. Both cases hinged on essentially the same fraud claims, with students claiming they invested up to $35,000 to learn from real estate experts purportedly handpicked by Trump himself. The students said the education they received was equivalent to that of an infomercial.
Zeldes, a self-described fan of Trump’s TV show “The Apprentice,” said Trump University students spent thousands to learn Trump’s real estate secrets when they could have spent that on tuition at real, accredited universities.
Instead, Eck said, students “bought in” to Trump’s sales pitch largely because they “respected him and looked at him as one of the most successful real estate investors.”
That Trump’s name was attached to his real estate school is what made the operation so lucrative for him and expensive for students, Eck said, with much of its success hinging on its namesake.
Eck said at least 50 declarations she took from some of the class members highlighted how important Trump was to Trump University students and that they wouldn’t have paid for the school if his name wasn’t attached.
“That’s really what separated this from all other real estate seminars,” Eck said, noting Trump University was also priced much higher than similar programs.
“At the end of the day, a lot of students said what they got out of it wasn’t any more than they could have gotten from checking out a book from the library or joining a free real estate investing club.”
Olsen and Eck began gathering stories from about 400 Trump University students. The attorneys found Makaeff’s experience was not isolated and the commonalities in the experiences of other students they talked to is what made the case worth taking on.
Unprecedented in Some Ways, Run-of-the-mill in Others
While the case was filed years ago, it did not truly enter the public consciousness until Sen. Marco Rubio, R-Florida, publicly challenged the success of Trump’s real estate school during a televised Republican debate early this year. Other presidential candidates, including Sen. Ted Cruz, R-Texas, jumped on board, questioning the legitimacy of Trump’s real estate school. And Trump himself called attention to the case during a campaign stump in San Diego in May, where he went on a lengthy tangent about the case and famously called U.S. District Judge Gonzalo Curiel a “hater of Donald Trump” and questioned the judge’s ability to fairly preside over the class actions.
Trump University and the San Diego federal court where the two cases were being litigated were thrust into the media spotlight, with media outlets even getting involved in the case.
This past summer, The Washington Post, The New York Times and other national outlets requested Curiel make Trump’s videotaped depositions publicly available in the interest of public transparency and accountability. The outlets argued the electorate should get to see the temperament of someone who could become the next President when answering questions related to his business. The judge eventually sided with Trump and kept the tapes sealed, saying he did not want the jury pool to be prejudiced.
The plaintiffs in the case did not oppose releasing Trump’s deposition tapes so it was really a fight between Trump and the media, Eck said.
The firm’s third partner, Alreen Haeggquist, said they’d never been in a case like Trump University, which got national media attention.
“We weren’t throwing the case in the media, it was him [Trump] and his actions that were throwing the case in the media,” Haeggquist said.
“Did it affect us, what we were doing? No. But I do think the media was trying to hopefully help the public get a full picture of what was going on.”
As the Low case neared trial, Trump attorney Daniel Petrocelli and the rest of the president-elect’s legal team did everything possible to get the trial postponed. Curiel denied moving the trial to accommodate Petrocelli’s schedule conflict, which the well-known attorney did not alert the judge to until two months before the trial was supposed to start.
In another attempt to postpone the trial, Petrocelli filed requests for documents and information related to the 100-person jury pool the court selected for the Low trial. Those documents suggested the president-elect believed that the selection process could have been unfair or prejudicial to his case.
But Curiel never got to rule on that motion, as the settlement was announced the day the attorneys for both sides were to argue about it.
Haegguist said moving dates is not unusual, even when it’s a tactic to postpone a trial.
“It happens all the time,” Haeggquist said. “I don’t think what Judge Curiel did was improper or too accommodating in any way. But they definitely tried different ways to get the case put off.”
As to why both sides were able to reach a settlement on the eve of trial when they met previously for settlement talks multiple times over the nearly seven-year-long case, Zeldes said the pressure to settle was there whether Trump was a presidential candidate or President-elect.
“The pressure to settle would be there before the election or after the election,” Zeldes said.
“Whether he was the candidate for office or the president-elect, those both are tremendous pressure points. Would he have settled before the election versus after? I think the pressure is there either way. But of course, he said he wouldn’t settle the case.”
Eck said the attorneys were concerned “there would never be a good time” for President-elect Trump to go to trial. While Curiel told Petrocelli during a pretrial hearing he would “at a minimum” accommodate the president-elect’s new schedule by not requiring him to come to San Diego to testify in person, Trump’s attorney said his client wanted to be able to appear in person to defend himself. Two days after Trump was elected president, Petrocelli filed a motion to postpone the trial until after the Jan. 20 inauguration.
At the end of the day, Zeldes said, they stood behind their claims “100 percent” but settled in light of the risks of taking the case to trial.
In federal court, a unanimous jury verdict in the plaintiffs’ favor is required for recovery. And because Curiel decertified the damages phase of what would have been a two-part trial, there could have been 7,000 “mini trials” to determine what each individual Trump University plaintiff could recover.
“Why now?” Eck asked. “Trial was set 10 days out and Donald Trump appeared to be motivated to settle and willing to put out some money. That’s generally enough to get a settlement done. It could have been settled other times, but this was definitely an opportune time to settle.”
When asked to estimate how much it cost their firm in attorney’s fees and costs to litigate the case for free, Eck laughed. “We’d rather not know,” she said.
Haeggquist said the figure was in the millions but the firm had not done the exact math.
“It really is a great result for these class members, many who took out credit lines on their houses and maxed out their credit cards,” Eck said of the class members who will recover at least 55 percent, if not more, of what they paid for Trump University.
“They’re going to be able to pay back this money. Many of the people who took this course believed they would improve their financial situation, and in fact their financial situation became worse.”
The plaintiffs were also represented by Jason Forge, Rachel Jensen and Patrick Coughlin with Robbins Geller Rudman & Dowd in San Diego, who did not return email requests for comment. Trump was represented by Daniel Petrocelli with O’Melveny & Myers in Los Angeles. He also did not return an email request for comment.
A final settlement approval hearing is scheduled for March 30, 2017.