The argument, previously made in court filings, was presented to a panel of three judges on the U.S. Court of Appeals for the 2nd Circuit more than two years after the case was filed on behalf of four anonymous plaintiffs who say they were duped into paying to join ACN as independent sales representatives because the Trumps presented it as a promising business opportunity.
If Trump is successful, the matter would be forwarded to an arbitrator, a common way for business disputes to be resolved more efficiently and with more privacy than they are through lawsuit proceedings. Arbitration would take place in North Carolina, where ACN is based.
However, the arbitration process is seen as less friendly to plaintiffs like the individuals who said they were deceived by the famous family plugging ACN, which was featured prominently years ago on “Celebrity Apprentice,” Trump’s nationally televised reality show. The registration fee alone was $499, and participants often paid other fees with little or no profit in return, the plaintiffs said.
One plaintiff — listed as Jane Doe in the case — is a California hospice caregiver who joined in 2014 and paid thousands of dollars in costs and expenses to ACN, according to the lawsuit.
Trump’s attorneys argued that the plaintiffs should be held to the arbitration agreements they signed on joining ACN, but lawyers for the plaintiffs say that ACN is not being sued and therefore the arbitration agreements do not apply. U.S. District Judge Lorna G. Schofield sided with the plaintiffs.
It was not clear when the appellate panel would issue its decision.
Roberta Kaplan, who represents the plaintiffs, argued at the hearing that the case was “really a very straightforward commercial dispute.”
The Trump side has engaged in “gamesmanship” by waiting more than eight months even to make the claim that the arbitration agreements are applicable — and only after exhausting other options and failing to get the case dismissed, Kaplan said.
She noted that in a letter to the district court judge, the Trump legal team conceded it “intentionally” held back the arbitration claim to see whether Schofield would first dismiss the case.
Kaplan also said that any arbitration agreement between the plaintiffs and ACN was moot.
“This is about what Donald Trump said, not about what ACN said,” Kaplan argued. “It’s a fraud case, not a contract case.”
Trump, before taking office, was a vocal paid pitchman for what the plaintiffs say was a pyramid scheme that sold telecommunications products and services — offers that were available directly from cable and phone companies without the involvement of a third party such as ACN.
Trump and his children Ivanka, Donald Jr. and Eric are named as defendants in the lawsuit.
Attorney Thomas McCarthy, representing the Trumps, made the case to the appellate court that for the purpose of his appeal request, the Trump family and ACN were the same. Trump and his children promoted the company “through branded ACN media,” he argued. ACN filed a brief with the court arguing for arbitration as well.
This lawsuit is one of several legal matters and investigations that will follow Trump when he leaves the presidency early next year.