ACN and Trump denied arbitration in class-action lawsuit
ACN and Trump family defendants have failed to force arbitration in the ongoing case against them.
Both the Trump family and ACN had moved to compel arbitration, with orders denying the request made on April 8th and 9th respectively.
The Trump family are named defendants in the class-action lawsuit, filed back in 2018.
Back in July 2019 the Trump family sought to compel arbitration, to settle claims that survived a partially granted motion to dismiss.
The arbitration motion was based on the arbitration clause in the ACN distributor agreement, despite the Trump family not being a party to the agreement.
To justify relying on the agreement as a non-party, the Trump family (Defendants) argued
that, from an objective perspective, Plaintiffs could foresee that Defendants were affiliated with ACN.
Defendants note that Plaintiffs joined ACN because “they believed the endorsement of Mr. Trump that they saw on ACN videos, read about in ACN magazines and heard discussed at ACN meetings.”
Defendants contend that it was thus “predictable” that a dispute with ACN concerning the ACN business opportunity would likely implicate Mr. Trump.
Defendants suggest that Plaintiffs knew that ACN and Defendants were aligned such that a contractual obligation to one should be construed as a contractual obligation with the other.
The court rejected this argument, finding
Plaintiffs here not only were unaware of the affiliation between Defendants and ACN, but the business relationship was expressly hidden.
Other arguments raised by the Trump family were also rejected.
The court found that even if the Trump family prevailed on forcing Plaintiffs to enter arbitration, they were still entitled to waiver doing so because the Trump family “waived any contractual right to arbitrate”.
This was based on the time after the lawsuit was filed arbitration was brought up (over eight months). The progression of the case (over 250 docket entries as I write this), was also a deciding factor.
Defendants aggressively litigated in this judicial forum for eight months before informing Plaintiffs of their intent to arbitrate the surviving claims.
This amount of litigation is consistent with prior decisions where the court found waiver (was applicable).
ACN aren’t named defendants in the case. Nonetheless as part of of the case, back in January they were subpoenaed for information regarding their business relationship with the Trump family.
ACN refused to hand over the information, and filed a cross-motion demanding arbitration.
The court rejected the motion and any further attempts at arbitration.
The Court will accept no further briefing on the issue of compelling arbitration.
ACN has been directed to produce the requested documents.
In related orders;
- ACN was denied relief in an effort to unmask the anonymous Plaintiffs; and
- MGM studios was ordered to turn over footage requested by the Plaintiffs.
The case continues…