Trump, kids can’t arbitrate marketing scam case – US Court of Appeals

NEW YORK, July 28 (Reuters) – A federal appeals court has ruled that former US President Donald Trump and his adult children cannot arbitrate a fraud lawsuit accusing them of exploiting their last name to promote a scam marketing targeting the poor and the working class.

The Second United States Court of Appeals in Manhattan said the plaintiffs’ agreements to arbitrate claims against multi-level marketing firm American Communications Network did not extend to the Trumps, who had not signed the agreements. .

Lawyers for the Trump family did not immediately respond to requests for comment on Wednesday’s 3-0 decision.

Four plaintiffs in the proposed class action lawsuit accused Trump, his children Donald Jr., Eric and Ivanka, and an affiliate of the Trump Organization of promoting ACN in exchange for millions of dollars in secret payments from 2005 to 2015.

The plaintiffs said Donald Trump’s endorsement, including in episodes of his TV show “The Celebrity Apprentice”, led them to believe their investments would pay off.

ACN would charge customers $ 499 to sell videophones and other goods, according to the plaintiffs.

In Wednesday’s ruling, circuit judge Robert Sack said the lack of a “close relationship” between ACN and the Trumps meant the plaintiffs had no reason to believe they had agreed to officiate with the Trumps .

He also said that “there was no injustice” in requiring Trumps to take legal action against alleged illicit business practices, given the plaintiffs’ claim that they were defrauded into believing that Donald Trump had told the truth by endorsing ACN.

The Trumps claimed they had no control over ACN, that Trump’s endorsement was simply his opinion, and that the civil lawsuit – one of many they face – was politically motivated.

Some defendants prefer arbitration to litigation because arbitration can cost less and remain confidential, and obtaining evidence can be more difficult.

Roberta Kaplan, an attorney for the plaintiffs, said her clients are satisfied and look forward to gathering more evidence and starting depositions.

The ruling upheld an April 2020 ruling by U.S. District Judge Lorna Schofield in Manhattan.

The case is Doe et al v Trump Corp et al, 2nd US Court of Appeals, Nos.20-1228, 20-1278.

Report by Jonathan Stempel in New York; edited by Diane Craft

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