Comcast, Restitution, and Trump University

As California courts continue to grapple with the Supreme Court’s 2013 Comcast v. Behrend decision and appropriate restitution calculations under California’s consumer protection statutes, a recent decision from Judge Gonzalo P. Curiel of the Central District of California provides helpful analysis. Makaeff v. Trump University, LLC, 309 F.R.D. 631 (C.D. Cal. 2015).

The Trump case arose from real estate seminar students’ claims that, in short, they didn’t get what they were promised.  Plaintiffs brought suit under California’s CLRA and UCL, as well as under Florida’ FDUTPA and New York’s General Business Law sec. 349(h).

The primary issue was whether plaintiffs’ proposed classwide restitution and damages model complies with Comcast and applicable state law: Plaintiffs argued that they received no value (or at best de minimis value) in exchange for their money, and argued they were thus entitled to full refunds. Defendants, for their part, argued that state law doesn’t condone a “full refund” theory, and instead requires an amount-paid minus value-received calculation.

The court sided with plaintiffs. First, under California law, plaintiffs were entitled to offer evidence to substantiate their theory that “only a full-refund will return them to the position that they were in before being ensnared by Defendants’ scam.”  Makaeff, 309 F.R.D. at 637-39. Next, the court reached the same conclusion under Florida and New York law, even though those states’ statutes focus on damages, rather than restitution, as the appropriate remedy. Id. at 641-42.

Finally, faced with defendants’ argument that due process required that they be allowed to raise individual damages defenses, the court followed the Ninth Circuit’s ruling in Jimenez v. Allstate, 765 F.3d 1161, 1168 (9th Cir. 2014), and held that after the classwide liability trial, the damages phase could be bifurcated, allowing defendants to raise their individual damages defenses at that time. Makaeff, 309 F.R.D. at 642-43.