both sides do it: court in Trump Univ. case resolves some expert squabbles

Cohen v. Trump, No.: 3:13-cv-2519, 2016 WL 4487172 (S.D.
Cal. Aug. 25, 2016)
Colorful personalities can produce colorful cases; first,
Pom Wonderful, now Trump.  The court
certified a class action under RICO for people who bought Trump University real
estate investing seminars, including the three-day fulfillment seminar and the
Trump Elite programs, based on allegedly material misrepresentations in
advertisements, mailings, promotions, and free previews.  TU customers paid anywhere from $1,495 for a
three-day fulfillment seminar up to $35,000 for the “Trump Gold Elite Program.”
Here, the court deals with various objections to expert
testimony.  Plaintiff’s marketing expert,
Michael Kamins, studies how consumers interpret advertising.  His expert report made four main claims: (1)
TU’s advertising and promotional campaign focused almost exclusively on
Defendant and targeted his biggest fans. (2) TU’s marketing and sales
strategies incorporated a variety of strategies to encourage prospective
customers to make decisions using emotions, rather than rational
deliberation.  (3)  TU’s 98% approval rating was not the product
of reliable questions or methodology. 
(4) A survey Kamins conducted showed the importance to consumers of TU’s
representations that they’d learn Trump’s strategies from his “handpicked”
instructors.”
The survey was conducted online.  Kamins found that “overall, 87% reported that
the opportunity to learn Trump’s real-estate strategies positively impacted
their decision to purchase a TU Live Event, and 83% reported that the offer of
being taught by Trump’s hand-picked professors positively impacted their
purchase decision.” Kamins also found a larger impact for those with more intention
to attend live events.
The court found that Trump’s objections to the survey went
to weight rather than admissibility. 
Trump argued that the universe was too broad, because it targeted those
21 and over (with certain exclusions), whereas “potential TU customers must
have some basic interest in entrepreneurship, continuing education, real
estate, or business generally.” TU used direct mail to target people who had
purchased similar programs in the past.  But TU also used print media, online, and
radio advertising in mainstream outlets to achieve the “widest distribution”
possible. TU’s internet advertising was geotargeted, but not targeted by
demographics.  The court also pointed out
that “many of TU’s advertising slogans appear to be designed to appeal to
everyday consumers who do not have a background in real estate,” such as “I can
turn anyone into a successful real-estate investor, including you.”  Where a company uses “broad marketing
techniques … the general adult population may well be a sufficient proxy for
the relevant market.”
Trump also objected to the absence of a control group.  Cohen responded that the survey went to
materiality, not to causation, and thus didn’t need a control group.  I’ve got to cite the precedent, because the
question is amazing: Fahmy v. Jay Z, 2015 U.S. Dist. LEXIS 129446 (C.D. Cal.
Sept. 24, 2015) (the survey asked respondents “whether they would be ‘less
likely’ to attend a Jay-Z concert had they known Big Pimpin’ would not be
performed,” and didn’t require a control because materiality was a distinct
question from causation).  [I wonder what an appropriate control here would look like; arguably the Trump name for a real estate seminar already communicated so much that consumers would make inferences about his expertise/involvement; see also the details of the pitches below.  Could you remove Trump references and leave only nameless bluster?]
The court mostly agreed with Trump, because Kamins drew
causation-based conclusions in his report. 
But many courts have found that the absence of a control group goes to
weight, not admissibility.  Moreover,
Cohen argued that other features of the survey, such as including “don’t know”
or “no opinion” responses to close-ended questions, and comparing the response
rates for the two dependent measures, compensated for the lack of
controls.  However, other courts have
found controls to be essential in the false advertising context.  The court wanted to hear more argument about
the issue.
Trump also argued 
that the survey was distorted from the actual market because it
presented only several pieces of TU advertising, “rather than replicating the
entire TU experience, including the 90-minute free preview and, in the case of
those who purchased TU ‘Elite’ programs, the impact of the three-day
fulfillment seminars.” But no survey can perfectly replicate an actual purchase
decision.  Also, by showing
representative print ads and the 2-minute “Main Promotional Video” played at
the beginning of the 90-minute free preview, the survey showed ads
substantially similar to those which would have been encountered by prospective
TU customers, and which initially encouraged prospective TU customers to attend
the 90-minute free preview.
Trump also argued that the survey had an unwarranted demand
effect by asking if the claims in the ads had an impact on respondents’
interest in TU.  But the survey
specifically asked whether the Trump-based opportunities had “a positive
impact, a negative impact, or no impact on your decision to enroll in the live
class,” which was neutral.
As for other opinions, Trump challenged Kamins’ criticisms
of TU’s purported 98% approval rating; if Trump didn’t put that purported
rating at issue at trial, the court would be inclined to exclude Kamins’
testimony on that issue.
Trump also challenged Kamins’ opinions about TU’s marketing
scheme as “unreliable, irrelevant, and overtly prejudicial.” For example,
Kamins cited academic research that “demonstrates how techniques such as using
the ‘University’ moniker, playing the ‘Money, Money, Money’ song at the
beginning of the 90-minute free preview, and setting the room temperature for
the free preview at 68 degrees, were designed to induce a more emotive decision
making approach on the part of prospective TU customers.”  The court found these opinions relevant to
materiality, and reliable in being supported by Kamins’ experience in marketing
and academic studies.
Cohen’s real estate education expert, Paul Habibi, was a
lecturer at the UCLA Anderson Graduate School of Management and the UCLA School
of Law, as well as a real estate investor. Habibi also taught real estate
investment and development seminar courses at UCLA Extension.  His report contained a detailed comparison of
the content taught at TU live events with that offered by leading schools in
real estate education. Habibi concluded that TU’s live program materials didn’t
“provide students with the analytical tools to systematically make sound real
estate investment decisions; sometimes promoted illegal, unethical, and/or
risky investment strategies; and did not provide any strategies or techniques
unique to Defendant.”  He also reviewed
the resumes of twenty-seven TU instructors, and found that TU’s instructors and
mentors primarily had experience in sales and motivational speaking rather than
real estate investment or education.
Trump argued that the comparison was unfair, and that TU
should have been compared to “other business seminars” such as “Rich Dad Poor
Dad,” given that TU differed dramatically from academic programs in its  price, length of time, focus on practical
instruction, provision of part-time education, accessibility, and the
objectives of TU students.  But, if
Habibi was doing that, TU invited the comparison.  In the main promo video played at the
beginning of each 90-minute free preview, Trump said:
We’re going to have professors and
adjunct professors that are absolutely terrific. Terrific people, terrific
brains, successful….The best. We are going to have the best of the best and
honestly if you don’t learn from them, if you don’t learn from me, if you don’t
learn from the people that we’re going to be putting forward –– and these are
all people that are handpicked by me ––then you’re just not going to make in
terms of the world of success. And that’s ok, but you’re not going to make it
in terms of success. I think the biggest step towards success is going to be:
sign up for Trump University. We’re going to teach you about business, we’re
going to teach you better than the business schools are going to teach you and
I went to the best business school.
Many other components of TU’s marketing scheme and live
events reinforced this comparison.
TU’s “[l]ecturer[s]” were directed to call themselves “a
member of the faculty at Trump University” and to tell customers that
Mr. Trump went to the Wharton
School at the University of Pennsylvania, and he knew that most people couldn’t
afford the time or tuition to do that. So he decided to create an organization
that would provide a world-class education, coupled with a year long
apprenticeship resulting in personal development and wealth building. He saw
the opportunity to give a Wharton School education in 3 days followed by an
Apprenticeship[,]
They were also directed to promise that “Trump University
will be your Wharton!”   Moreover, TU ads
used “various forms of recognizable signs associated with accredited academic
institutions, such as a ‘school crest.’” 
The “Trump University Community,” TU advertised, included “Staff,”
“Faculty,” “Instructors,” and “Program Directors (Trump University’s Admissions
Department.”  Approved marketing “Catch
Phrases/Buzz Words” included “Ivy League Quality,” and marketers were told to
set a “tone”: “Thinking of Trump University as a real University, with a real
Admissions process—i.e., not everyone who applies, is accepted”; and to “[u]se
terminology such as” “Enroll,” “Register,” and “Apply.”  By contrast, there was no evidence that TU
ever compared itself with for-profit entrepreneurship seminars such as “Rich
Dad Poor Dad.”
If that weren’t enough, Habibi also did have experience
teaching shorter, entry-level seminars at UCLA’s Extension school, and also
based his opinions on that.  His opinion
about the illegal/unethical nature of certain TU investment strategies was
based on his extensive experience in real estate investment; he didn’t need to
be a lawyer to  have relevant knowledge
of the legality of different real estate investment strategies.

The court ended by concluding that Trump’s rebuttal experts could
critique Cohen’s expert testimony, though if they became cumulative at trial
the court would exclude the cumulative testimony.

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