Why the Million-dollar Sanction Was Imposed Against Trump

In 2022, President Donald Trump filed a lawsuit against dozens of defendants, including Hillary Clinton, making several claims, including two under the Racketeer Influenced and Corrupt Organizations Act (RICO) and three under Florida law. The District Court ultimately found that all of these claims were “frivolous” and that the conduct of Trump and his attorney, Alina Habba, were so egregious that they were ordered by the District Court to pay nearly $1 million to the defendants as sanctions (penalties) for how they brought and pursuing such a meritless case. The 11^th Circuit Court of Appeals affirmed the penalty.

The purpose of this note is not to talk about the actual merits of the case, such as they were, but instead to show how many ways a plaintiff can screw up their own case.

The most difficult, yet extremely important, course your first semester of law school is called “Civil Procedure.” It outlines in great detail all of the rules you must follow in pursuing your case. It is not unusual to not understand how the rules all work together until two-thirds of the way through the course. However, unless you understand these rules, you are simply not qualified to practice law in the courts.

To appreciate why the million-dollar sanction was imposed, we will look as the exceptionally basic ways in which Trump and Babba violated the rules of civil procedure.

First, a case must be brought in a timely manner. The Statute of Limitations outlines how long you have to file a case, which varies depending on the type of case. The complaint against Clinton et al was filed after the Statute of Limitations had expired. That by itself was enough to kill the case.

Second, when a complaint is filed, the allegations must be “clear and concise.” If your complaint simply throws everything against the wall hoping something will stick, this is called a shotgun pleading. There is an easy way to avoid this problem. If you are claiming different reasons to win, you file these reasons in separate counts. Here, there were five theories, hence five counts.

To make things easier for the court, and to keep the complaint from becoming incredibly long, relevant fact paragraphs from the first count are often “incorporated by reference” in subsequent counts. The key here is that you only incorporate relevant facts into later counts. In this case, count three incorporated 633 paragraphs from the previous counts, whether or not they were relevant to the third count. This is classic shotgun pleading.

Third, a complaint is often amended to add additional information or to correct misstatements from the original complaint. The amended complaint failed to correct a number of misstatements in the original complaint, even though these errors had been brought to the plaintiffs’ attention.

 Fourth, once sanctions have been imposed, any objection to those sanctions must be filed according to specific rules. Plaintiffs failed to follow those rules.

Fifth, once you decide to appeal, the appeal must state ALL of the errors you believe were committed by the district court judge. Any arguments not presented in your appeal documents are considered “waived.” Trump and Babba decided to argue a few of the waived arguments on appeal, which is a basic no-no.

Sixth, supporting arguments on appeal generally have the following format. Appellants (Trump and Babba) file their initial brief in support of their appeal. This brief contains all of their arguments. Appellees (Clinton et al) file their brief in opposition. Appellants then may file a Reply Brief to address arguments made by appellees. Here, Trump and Babba raised entirely new arguments in their reply brief, something that appeals courts view with derision.

Committing even one of these errors is enough to cause the ire of a judge. Commit all six of these (including numerous minor errors that I haven’t bother to mention), and the judges can easily determine that your case is frivolous and brought in bad faith.

When all of these procedural errors were considered, along with ludicrous nature of the underlying arguments, The appellate court had little difficulty in concluding that the District Court judge properly exercised his discretion in imposing the sanction on Trump and Babba.

 

Was the $355 million judgment against Trump “fair”?

When Kary Tur on MSNBC asked this question of legal analyst Lisa Rubin, the mere question caused outrage among some who thought the question was inappropriate. It is a legitimate question that deserves an answer.

The difficulty of addressing the question is that the legal issues involved in the case are not ones that we normally encounter. Further, the reason for the amount of the judgment may seem to be counterintuitive.

In a typical civil case that requests money damages, the focus is on the amount of loss suffered by an injured party. So, for example, if someone breached a contract with me, I would be entitled to receive what the wrongdoing cost me. This is not that kind of case. Instead, this case comes from a New York statute that evaluates the improper benefits to an individual who gained that benefit through fraud. Recovering that money is called “disgorgement.’ It is not necessary to show, for example, that a bank suffered due to nonpayment of a debt. It is sufficient to show that the conscious manipulation of valuations gave an individual better contract terms than if he had been honest with values.

Try this analogy. I am applying for a mortgage on my home. My credit score is 500. A bank would charge me 7% interest based on that credit rating. However, I have fraudulently convinced the bank that my credit score is 780, entitling me to an interest rate of 5%. During the course of the loan, I made all the payments on time; never defaulted. The financial result to me is that I saved thousands of dollars in interest and the bank, though making some money, did not get what they would have been entitled to had I been honest in my application. Furthermore, having gotten away with it in my home mortgage, I used the same fraud to get more favorable rates on a series of rental properties. Since there is no question that I saved a lot of money by my fraud, I have received an improper benefit. When the case of disgorgement comes to court, I am liable for my ill-gotten gains. In addition, since I am showing no remorse for doing this, the court imposes punitive damages, recognizing that unless I am penalized, I will continue that same fraudulent conduct.

During the course of a six-week bench trial before Justice Engeron (no jury trial is available under the statute), Engeron listened to and evaluated the credibility of numerous witnesses. He heard notable examples of fraudulently inflated property values. He learned that Trump’s New York apartment of 10,000 square feet was valued as though it was 30,000 square feet. He also found out that the Florida Mar-a-Lago property, though restricted by deed forever as a “social club,” was valued as though it was a personal residence.

Justice Engeron’s 93-page decision is fastidious in recounting the testimony of all the witnesses and his rationale for determining the witnesses’ credibility. His conclusion was that Trump and his family, business associates and companies engaged in pervasive misrepresentation of property values over a number of years. The Judgment amount calculated the benefit they received as a result of their fraud.

So was the damage amount “fair”? According to the rules set forth in the New York statute, it was certainly defensible, though the total amount can always be reduced on appeal.

I have two side comments.

One contrarian argument about the case is that the statute had never been used before where there was no established loss to another party, Hence, it was ”selective enforcement.” This is a garbage argument. Consider that Al Capone’s conviction for tax evasion was the first time the tax laws were used to convict a crime boss. Just because a statute is infrequently used does not mean that it has any less value in a particular case.

Reluctantly, I also need to make brief mention of Trump’s legal representation in this case. Excusing for the moment Aline Habba’s disregard for courtroom decorum, she made some mistakes about admitting evidence that would make a first-year law student cower in embarrassment. Her actions will dramatically harm rather than help any attempted appeal.

FAQs About the New York Judgment Against the Trump Organization and Family

There is a lot to unpack from Judge Engoron’s 39-page opinion and order yesterday finding fraud by the Trump Organization and its principals. Due to the multiplicity of issues, I’m going to use a “frequently asked questions” format. 

What is this case all about?

The New York State Attorney General filed a civil suit against the Trump Organizations, some of its related companies and individuals who were officers in those companies, including Donald Trump, Donald Trump, Jr. and Eric Trump. Ivanka Trump has been excluded as a defendant due to a prior appellate court decision. 

The suit claims that all of the defendants “committed repeated and persistent fraud by preparing, certifying and submitting to lenders and insurers false and misleading Statements of Financial Condition,” all for the benefit of Donald Trump. Although there is a great deal of accounting wiggle room in determining the value of property, the Attorney General claims that the defendants’ overvaluations were “egregious.” 

Did this opinion and order come after a trial?

No, we are still in the pretrial stage of this. There has previously been an injunction issued against the Trump Organization (upheld on appeal twice) to prevent it from transferring or otherwise disposing of property. 

The current matter concerns Motions for Summary Judgment, one filed by the Attorney General and the other by the Trump Organization. A Motion for Summary Judgment usually claims that the facts are clear enough that it is not necessary to go through an entire trial to establish them. Defendants in their motion claimed that “there is nothing here” and that the suit should be dismissed. The Attorney General asked for Summary Judgment on only one of the claims, the one alleging fraud. 

Why is this case going to a bench trial where the judge makes the decisions rather than by a jury?

Since Donald Trump is claiming in the media that this judge is biased against him, you would think he would be demanding a jury trial where 12 people would decide the case. There is a limited time after a case is filed in which to demand a jury trial. For reasons I am at a loss to explain, the defendants’ lawyers did not make a timely demand and the period to demand a jury trial has expired. Therefore, Judge Engeron is hearing the case because of a decision (or lack thereof) by the defendants. 

Who prevailed in the Motions for Summary Judgment?

The Attorney General did. Defendants’ Motion for Summary Judgment was denied. The Court found that the defendants committed fraud, the Trump Organization’s certificate to exist in New York is revoked, defense attorneys were fined, and the only matter remaining on the first count of the lawsuit is how much the State of New York is going to be owed. 

Why were the defendant’s attorneys each fined $7,500?

Judges hate it when lawyers do two things: continue to argue matters that have already been decided (here, TWICE on appeal) and make legal arguments that misquote cases. 

The first analogy that comes to mind is when someone contends that the Bible says: “There is no God.” Though that is an accurate quote, the phrase preceding it says: “The fool has said in his heart.” Defendants did the exact same thing in quoting one of their supporting cases. Really, really bad form. 

Isn’t pulling a corporation’s certificate to operate a truly severe action?

Yes, and it does not happen often. Judge Engoron noted that civil cases do not offer the same remedies as criminal ones, such as jail. When everything else has been tried and nothing else worked, only extreme measures are left. 

Some parts of the judge’s opinion have led to some talking points by the defendants. 

“How can there be fraud if we have never defaulted on a loan resulting from the financial statements?”

This is worth a Lawdromat article of its own. We usually think of money damages as restitution to the person harmed. If I am guilty of fraudulently obtaining $1,000 from you, I owe you that money back. This is restitution. 

The Attorney General here is asking for up to $250 million under a completely different, but well established, legal principle called disgorgement. Disgorgement focuses on the gain to the wrongdoer rather than the loss to the victim. As a previous New York case said: “Disgorgement aims to deter wrongdoing by preventing the wrongdoer from retaining ill-gotten gains from fraudulent conduct. Accordingly, the remedy of disgorgement does not require a showing or allegation of losses to consumers or the public; the source of the ill-gotten gains is ‘immaterial’.” 

It therefore makes no difference whether there was a default or not so long as there was fraudulent activity. 

“Even wrong valuations aren’t fraudulent because there was a disclaimer about the accuracy of the numbers.” 

From the opinion:

In his sworn deposition, Donald Trump said: “Well, they call it a ‘disclaimer.’ They call it a ‘worthless clause’ too because it makes the statement ‘worthless’.” Donald Trump goes on to say that “I have a clause in there that says, don’t believe the statement, go out and do your own work. This statement is ‘worthless;’ it means nothing.”

In finding that the “worthless” claim was indeed worthless (judge’s words, not mine), the judge cited a New York case finding that disclaimers are not effective when the facts are “peculiarly within the defendant’s knowledge.” The judge goes into much greater detail, but you get the point – disclaimers cannot be used to cover up misconduct that you create. 

“Mar-a-Lago is not overvalued. If anything, it is UNDERvalued.”

Mar-a-Lago was one example the judge used to show defendants’ fraudulent use of overvaluation. It is contained in pages 25-27 of the opinion. It makes little sense to go into the weeds about the judge’s analysis here. 

What is curious, however, is that the defendants’ current post-decision comments are not referencing (as far as I have seen) the court’s other detailed overvaluations: Seven Springs Estate in Westchester County, NY; Trump Park Avenue, 40 Wall Street, The Trump Tower Triplex, Aberdeen in Scotland; and U.S. golf clubs. These analyses cover twelve pages of the opinion. 

What is coming next?

The Summary Judgment only dealt with Count I of the complaint. The remaining counts will require additional evidence at a trial that is scheduled to begin next month. You can also expect the defendants to appeal yesterday’s order. It is never wise to predict what an appellate court will decide, but decisions such as this one, exhaustively annotated, are seldom overturned.

What You May Not Know About the Right to a Speedy Trial

Individuals have many familiar Constitutional rights. Freedom of Speech and the Fifth Amendment protection against self-incrimination are notable. Nobody but the individual may claim or waive those rights. So, for example, I cannot appear in court and demand that you testify against yourself.

The right to a speedy trial is an exception to that rule. This right applies to individuals AND to society. The courts have repeatedly held that justice is best served when a defendant’s trial occurs as soon as reasonably practicable. The benefits to society of a speedy trial are many and varied. A delayed trial may affect the availability of witnesses and memories of particular events. In more egregious cases, it limits the amount of time a defendant can use to intimidate witnesses or to attempt to try the case in the media.

Interestingly, the ability (and duty) to schedule a trial as soon as practicable is one of the most valuable arrows in a judge’s quiver. In some cases, it is impractical to hold a defendant in jail pending trial. Assessing fines for improper conduct may not deter wealthy individuals. And, most significantly, issuing a gag order may arguably violate the defendant’s free speech rights.

In cases where the alternatives are ineffective, society is protected by having the trial date accelerated. A judge frequently asks both the prosecutor and defendant for a proposed trial date and, absent a clear abuse of discretion, the judge’s determination will stand.

Sometimes defendants desperately want a trial delayed. Well-disciplined prosecutors can short circuit many delay attempts. Consider what the prosecutors in the DC case against Donald Trump did.

First, they only named one defendant. The more defendants there are in a case, the more individual delay arguments that can be raised.

Second, they limited the charges to those that have a strong history of judicial interpretation, even though there were other potential charges available to them. Many delays are caused by a defendant claiming that the charges they face are “unique.”

Third, they provided trial evidence (often called “discovery”) to the defendant promptly and well outlined, giving them more time to prepare a defense. 

Parenthetically, you will hear that there are millions of pages of discovery that have been turned over. Defendants claim that it will take years to read it all. This is a red herring. The state-of-the-art in reviewing discovery is to use computer-aided, key word searches. The idea that there are paralegals actually sitting down and reading millions of pages harkens back to a bygone era. It is simply unnecessary and no longer happens in the real world. Sounds good, though.

On August 28, the judge is scheduled to hear arguments about when the trial should begin. Prosecutors will argue in favor of a speedy trial, suggesting a highly aggressive date of January 2, 2024. Defendants will counter with a date of April 2026 or the Rapture, whichever occurs first.

The judge will set the trial date based largely on the elements discussed above.

Is there enough to charge?

The most intriguing news last week was that a federal grand jury issued a 37-count indictment against former president Trump. The purpose of this note is not to take a position on the strength of the case. Rather, we will look at how the grand jury process safeguards the rights of a defendant. 

Federal felony charges can have devastating results. A conviction carries more than potential fines and jail time. It can also impact other individual rights such as the right to vote or the opportunity to obtain a security clearance. 

In our legal system, the seriousness of those impacts on individual freedom results in an added layer of protection for people charged with serious federal crimes. To put it simply, a defendant has THREE chances to win. 

A grand jury is a group of individuals, similar to a regular jury, that is selected from the general populace. It is not a politically appointed group. Their role is to examine evidence and testimony presented by the prosecutors and, on that basis, to recommend whether formal charges should be brought against a particular defendant. 

Grand juries are empaneled all the time and most of their work never receives media coverage. The reason is that many grand juries decide that there is simply not enough evidence to recommend an indictment. If the grant jury finds that evidence of a crime is lacking, the defendant wins without ever facing trial. 

The grand jury’s role, then, is to prevent the government from bringing charges to simply aggravate or penalize a defendant. The testimony and evidence that the grand jury receives is concededly one-sided. Its job is simply to look at evidence most favorable to the government and to see if there is enough evidence to warrant filing charges. In other words, the grand jury process prevents a “witch hunt” on a most basic level. 

Once charges are filed, there is a second chance for the defendant to win without going to trial. This is the pre-trial stage where the defense attorneys will argue that the charges should be dismissed from the outset. Dismissal can be granted for a variety of reasons including: the indictment was filed in the wrong court, the charges do not fall within the charged federal statute, or that the facts alleged in the indictment (when viewed most favorably to the government) do not provide enough evidence of a crime. If the judge dismisses the case at this early stage, the defendant once again wins. 

Finally, there is the trial. If the jury does not find that the government has proved its case beyond a reasonable doubt, the defendant wins. 

All of these procedural steps illustrate “due process” at its best. The systematic method of case preparation and presentation also answers the question of selective prosecution, or “why hasn’t so-and-so also been charged?” The straight-forward answer is that the prosecutor looks at the three stages where a defendant can win and decides not to waste time on those cases where success is not extremely likely.

 

Goodbye to the Special Master in the Mar-a-Lago Search Warrant Case

The Department of Justice (DOJ) obtained numerous boxes of materials from Donald Trump’s residence at Mar-a-Lago, pursuant to a validly issued search warrant based on a finding of “probably cause.” Many of the documents collected were marked “classified” and should have been turned over to the National Archives and Records Administration. 

Mr. Trump was not pleased. In response, he filed a new action in the United States District Court for the Southern District of Florida, which he styled as a “Motion For Judicial Oversight And Additional Relief.” This case was assigned to Judge Aileen Cannon—whom Trump had appointed.  Judge Cannon decided that the Justice Department should not have access to the materials for investigative purposes until a Special Master reviewed them and decided what the DOJ should properly have. 

The DOJ appealed the decision to the 11^th Circuit Court of Appeals. The DOJ argued that the appointment of a Special Master was ludicrous and that Judge Cannon should not have entertained the case in the first place. Today, a three- judge panel (one appointed by Bush and two by Trump, for those who are keeping score), issued a scathing opinion in favor of the DOJ. The first paragraph of the decision says it all: 

“This appeal requires us to consider whether the district court had jurisdiction to block the United States from using lawfully seized records in a criminal investigation. The answer is no.” 

This was not a difficult decision for the Court of Appeals to make. It all comes down to a fundamental rule in the Federal court system. Federal courts are called courts of limited jurisdiction. In other words, there are specific rules and classifications that apply before a federal court will even accept your case. If the case that you, as a plaintiff, want to file does not fit into those classifications, you are out of luck. 

There is one exception to that rule, however. If you can show that an extremely rare reason exists, the court may exercise “equitable” jurisdiction. As the Court of Appeals said here, “Only the narrowest of circumstances permit a district court to invoke equitable jurisdiction. Such decisions ‘must be exercised with caution and restraint,’ as equitable jurisdiction is appropriate only in ‘exceptional cases where equity demands intervention.’” 

The judicial test to see if it should exercise equitable jurisdiction has four components—and you need to satisfy all of them. The Court of Appeals found that Judge Cannon was incorrect on all four. Therefore, not only did the judge not have the authority to appoint a Special Master, but she lacked jurisdiction to hear the case at all. 

The result is that the entire case filed by Trump is being dismissed and the DOJ can continue with its investigation, using all of the materials obtained in the search warrant. 

It is, of course, possible that Trump’s attorneys will ask the Supreme Court to overturn this decision. A reversal is exceptionally unlikely.

The How and Why of New York’s fraud case against Donald Trump

The long-expected civil fraud case against Donald Trump and others was finally filed this week. It is 220 pages of allegations against 16 defendants, covering 11 years of alleged misdeeds, 20 different properties, and 16 different varieties of fraud. To say the complaint is comprehensive is an understatement. 

It is not my purpose here to get into whether or not the case has merit, though there is certainly enough to survive a motion to dismiss. Instead, it makes sense to step back and answer some frequently (and not so frequently) asked questions. 

Why file a civil case rather than a criminal one? There are a number of reasons. First, civil cases are easier to prove. You only need to prevail by a preponderance of the evidence rather than showing guilt beyond a reasonable doubt. Second, a defendant has no fifth amendment rights in a civil case. You may recall that when Trump was subpoenaed to testify, he refused to answer more than 400 times. That refusal may be used by a jury to infer culpability. Third, in a civil case you may get a money judgment. Here, we are looking at the possibility of $250 million. Fourth, in a civil case you can get more than just money. One of the results of this case could prohibit Trump from doing business in the State of New York. Fifth, you can sue someone without stating he is a criminal, something that defendants often decry to show that they are being unjustly prosecuted. Sixth, a state civil case cannot be dismissed with a pardon. Seventh, there is still the possibility that Trump and his family may face criminal charges. However, those cases should be filed by a different party, such as the IRS. 

Why file the case now for conduct going back to 2011? The timing seems a bit suspect. Blame Trump for this one. For many years he has used every possible legal maneuver to keep relevant information from the attorney general, including tax and accounting records. It was only last month that the attorney general was finally able to obtain records from Mazars, one of Trump’s accounting firms. This was the missing piece of the puzzle. 

Why are there so many defendants besides Donald Trump? The answer to this is finger pointing. One common defense to fraud is that “somebody else did it” and that the complaint should be dismissed for that reason. The complaint names all of the major parties who could be that “somebody else.” A second reason to name multiple defendants is that they may have different levels of involvement or defenses to the actions. In many cases, defendants within the same lawsuit may throw others under the bus in order to escape personal liability. 

Why does the alleged fraud cover 11 years? Proving that conduct occurred over multiple years eliminates the defense that this was an inadvertent, one-time “mistake.” 

Why does the alleged fraud include 20 different properties owned by Trump or his organizations? Similar to the multi-year rationale, the attorney general can show that fraud was pervasive and took many forms. 

Why didn’t the attorney general sue Trump for other wrongdoing? First, the fraud complaint is complicated enough without adding in other allegations. Second, lawyers try to not add weak allegations when they already have a strong one. Third, confining the allegations to fraud eliminates the defense that the attorney general is “piling on.” Furthermore, there is no reason why a separate lawsuit covering other matters could not be brought later on. 

If this case goes to trial, when will that happen? Years from now. 

Then what will the impact of the lawsuit be between now and trial? The lawsuit provides sunlight. Much of Trump’s traditional answer to prospective charges is that they are politically motivated or a “witch hunt.” Here, the attorney general has provided chapter and verse of wrongdoing. In addition, prospective lenders are now on actual notice that the Trumps may have engaged in questionable business practices. Lenders tend to be reluctant to provide financing to those with a history of fraud.

The complaint, as lengthy as it is, is only required to show that bare bones of the fraudulent conduct. Much greater and potentially damaging detail will come out as the lawsuit progresses. By the same token, any defenses will also come to light.

Search Warrants and Whataboutisms

Criminal investigations can be highly complex matters. The gathering of evidence is critical to making certain that any case that is brought is supported by only the most credible supporting documents. 

Some of the documentation can be obtained from third party sources, such as credible eyewitnesses, confidential informants, video and audio records, and paperwork in the possession of others. However, the frequently most damaging evidence is in the possession of the potential defendant. 

Obtaining materials from a potential defendant can be obtained in number of ways.  The defendant can always provide the materials voluntarily. Obviously, this does not happen often. 

Absent cooperation, information may be obtained by a subpoena, a court-authorized demand for relevant papers. There are a couple of downsides to the subpoena process. 

First, a subpoena may be challenged as to relevancy or scope. Challenges to subpoenas have the effect of dramatically delaying the production of documents, often for years if appeals are pursued. The reason delays are implicit in this process is that subpoenas are often fishing expeditions. Prosecutors will often ask for broad categories of information, some of which may not actually be germane to the charges. The challenges to the subpoena frequently are designed to narrow the scope of what should legitimately be produced. 

Second, and perhaps the more critical limitation of subpoenas, is that once someone knows that records are being demanded, there is ample opportunity to hide or destroy evidence. 

The final way to obtain documents is through the use of a search warrant. This method is most frequently used when there is a fear that evidence will be hidden or destroyed. 

Although subpoenas are relatively easy to obtain, the requirements for obtaining a search warrant are stringent. There are sound constitutional and public policy reasons for this. By their very nature, search warrants involve invading the homes and businesses of individuals without the opportunity for them to object. The general “fishing for information” goal is therefore not enough to obtain a warrant. 

In order to get a search warrant, a judge must approve the request. The judge must find that there is “probable cause” to believe that a SPECIFIC crime has been committed (which is outlined in the warrant request). The judge must also be convinced that material evidence about the crime is located in the premises to be searched. Finally, the judge will specifically circumscribe when and where the search is to be conducted. 

Once the materials are seized, this is not the end of the protections for the defendant. Seized materials are still subject to evidence rules pertaining to what may be used in a court case. 

In a lower level criminal case, the prosecutor may ask for a warrant based on the sworn affidavit of a reliable confidential informant. For example, the informant may say that he is personally aware of drug-making materials at a particular address. That will usually be enough to issue the warrant, because if the defendant knew someone is coming, there would be nothing left to find. 

The standard for obtaining a search warrant for a former president is incredibly and nearly impossibly high. Any judge would be extremely reluctant to issue the warrant unless the rationale for obtaining it was almost unassailable. In the Trump case, the Justice Department imposed an even higher degree of difficulty upon themselves by requesting the warrant from a judge that Trump appointed. Therefore, to say that the DOJ likely had a strong case coming in is a massive understatement. 

Those reacting negatively to this warrant have variously described the process as “corrupt” or as evidence of the “deep state.” That argument is pure garbage. The process to obtain this warrant followed the precise procedural safeguards that forms the basis of our system of government. 

Further, for those who are saying “other people have committed crimes too, why isn’t the DOJ going after them?”, remember the exceptionally high standard for obtaining the warrant. Mere supposition of a crime, even if it fits your preferred narrative, is simply not enough.

The Entrapment by Estoppel Defense – Why Blaming Trump Will Not Work

Defendants in the January 6 storming of the Capitol have relied on a variety of defenses, some serious, others outright silly. A common thread has been the implication that Donald Trump encouraged them to act.

We now have a case where a Trump-specific defense is being offered – entrapment by estoppel.

What is that defense and why are prosecutors are saying it should not be allowed?

First, an analogy: a bank robber claims he should not be found guilty because the Chief of Police told him it was okay. In other words, the prosecutor is precluded (estopped) from charging him because he himself was being victimized (entrapped). In order to win, our pantyhose-masked perpetrator must show five things:

1.    The police chief had the authority to give him that advice.

2.    The police chief was aware of existing law and facts before giving the advice.

3.    The police chief affirmatively told the defendant to go ahead and rob the bank.

4.    The defendant relied on the advice.

5.    It was reasonable to rely on the advice.

Yes, this is a ludicrous case, but it shows how high the standard can be if you expect to win.

The problems for this January 6 defendant are myriad.

First, did Trump have the authority to advise him to create mayhem inside the Capitol, especially considering rules for conduct at that institution? Well, we have already lost here, but we may as well continue.

Second, did Trump affirmatively tell the defendant to commit those acts? There is a fact question here about what Trump really said. However,

Third, defendant claims that he relied on that advice.

So, fourth, was it reasonable to rely on this advice?

Reasonableness is always the key in these cases. Think about when your mother asks: “if everyone else jumped off the bridge, would you too?”

As a defense lawyer, my best witness would be Trump himself. I would have him state under oath that as Commander in Chief, he had the authority to abrogate rules of conduct at the Capitol. Further, that he told people to storm the capital. And finally, that people had every reason to believe him when he said the conduct was permitted.

We all know that this testimony will never happen. The defense cannot win without it. This is why the prosecutor is arguing that the defense argument should not be considered.

Then why is the defense using this argument at all? It is really all they have. If, as so many have claimed, they only acted upon the encouragement from Trump, there was an expectation that he would have their backs. Perhaps that would mean the grant of some sort of amnesty or pardon after the fact. At the very least, it might mean that Trump would cover some of their legal expenses.

Obviously, none of that occurred. As noted above, “reasonableness is always the key in these cases.” These defendants may now be asking themselves whether it was reasonable to believe Trump would have their backs. Then again, maybe not. There’s always the Miracle on 34^th Street.

 

Injunction Junction, What’s Your Function?

As part of the Congressional special committee’s examination of the facts relative to the January 6 attack on the Capitol, they have requested the National Archives to release a tranche of information related to Donald Trump’s potential involvement. As a surprise to nobody, Trump filed suit to stop the production of these materials. 

The term “injunction” is being used in so many contexts here that it might be helpful to outline the different kinds of injunctions that are involved. 

When Trump’s lawsuit asked for an injunction to prevent the National Archives from producing materials, it claimed that, although records are readily available, the Congressional committee simply should not be allowed to have them. Ever. The ultimate goal of the case is to permanently prevent the committee from receiving access to these documents. This is a permanent injunction. 

It takes a lot of time and legal proceedings for a permanent injunction to take effect. The Court must consider a variety of facts and also determine whether there is a legal basis that would allow an injunction to be issued. 

In this case, time is not a luxury that Trump has. According to the timetable for producing documents (which is outlined by statute), the National Archives are required to produce the first tranche of these documents by Friday of this week. 

Because the proceedings necessary to receive a permanent injunction will take so long, Trump asked for the process to stop in its tracks until all of the arguments can be presented. He did this by asking for a preliminary (or temporary) injunction. When confronted with a preliminary injunction request, the court considers a number of factors, including irreparable harm to the requesting party. 

Yesterday, the court denied Trump’s request for a preliminary injunction. The next step for Trump, then, is to appeal this decision, asking a higher court to reverse the denial of the preliminary injunction (which he did). However, there is one step that occurs before the appeal ever takes place. 

Trump was required to ask for a different injunction, one where the lower court, on its own, stops the process until the appellate court can weigh in. This is called an injunction pending an appeal or an administrative injunction. This is what is being argued today. 

If that injunction request is denied, Trump will immediately ask the appellate court to stop the proceedings while it considers whether the preliminary injunction was properly denied. 

Confused yet? Try this. 

Trump requests a permanent injunction (ongoing as part of the complete case)

Trump requests a temporary injunction concerning production of documents (denied)

Trump files an appeal (pending)

Trump requests an injunction pending appeal with the lower court (pending)

If that is denied, which is likely, Trump will ask the appellate court to reverse the denial of the temporary injunction. In other words, the appellate court will be asked to order the lower court to grant a preliminary injunction until the full case is heard. 

Considering the case law on the subject, it is likely that the committee will eventually be given access to some, if not all, of the National Archives records they have requested. This is especially true because the National Archives do not contain confidential (privileged) communications of a former president. 

The question, then, is how long Trump will be able to drag out the process. We will learn that shortly.

You Can Throw Your Friends Under the Bus; Not Your Enemies

You may recall that in 2018, Andrew G. McCabe was the F.B.I’s deputy director and had an active role in the Russia investigation. Then-President Trump excoriated him over that role, referring to him as an agent of the deep state. 

Jeff Sessions, the attorney general at the time, fired Mr. McCabe on March 16, 2018, literally hours before his pension was to vest. Trump cheered the firing, tweeting: “Andrew McCabe FIRED, a great day for the hard working men and women of the FBI - A great day for Democracy.”

McCabe filed suit, claiming that his firing was political retaliation. In other words, this was Trump using his presidential office to punish an enemy. The lawsuit proceeded in typical fashion, but then things got quiet. This is often an indication of action occurring behind the scenes—which was exactly the case.

Last week we found out why it had been so quiet. The Justice Department settled the case, which included reversing McCabe’s firing.

Under the terms of the settlement, McCabe will now officially retire, receive his pension and other retirement benefits AND receive around $200,000 in the pension benefits he should have received since he was improperly fired.

There’s more. Any mention of his firing in the personnel records of the F.B.I. are going to be expunged and he will receive the typical plaudits given a senior executive who retires with honor: cuff links and a plaque with his mounted F.B.I. credentials and badge.

It took three years, but Andrew G. McCabe was vindicated.

We also know how Jeff Sessions was rewarded for doing Trump’s bidding in the McCabe firing. Trump endorsed his opponent, Tommy Tuberville, in the ensuing Alabama Republican Senate primary.

Yep, I’ve Got a Fool For a Client

Abraham Lincoln famously stated “He who represents himself has a fool for a client.” Of course, that was before Google. Now, some people think that they can do a bit of online research and gain enough information to beat the system without the necessity of being represented by a professional. They are still fools.

At this point in the prosecution of the January 6 rioters, there are at least six defendants who believe that can go it alone. Brandon Fellows is one of them. At his bond hearing last week, the judge patiently tried to explain that he would be better served by listening to the advice of his court-appointed counsel.  He decided against that—which was his first mistake. 

Brandon’s second mistake was not recognizing the difference between a bond hearing and an evidentiary hearing. 

Brandon’s third mistake was trying to use a “loophole” he found on line to disqualify the judge. This loophole turned out to be a felony.

Brandon’s fourth mistake was not recognizing that anything he says in court can be used against him in further proceedings. 

So now Brandon is not only still in custody but also faces additional felony counts for things he said under oath in court. 

A fool indeed. 

There is an implied fifth mistake as well. Brandon, as well as many other defendants, are claiming that they should not be held responsible because they were simply trying to promote Donald Trump’s position concerning the election. These valiant political soldiers were under the impression that Trump would protect them or at least pay a portion of their legal fees. After all, it was Trump himself who said "It was a loving crowd, too, by the way. There was a lot of love."

Brandon and his friends are learning that expressions of love don’t pay the bills.

Trump Loses His Valued Secrecy in Arbitration Case

Buried deep in the small print of many contracts is a provision stating that disputes will go into arbitration. That provision is typically inserted by the party having the higher degree of power: landlords, franchisors, etc. The two main reasons why arbitration (rather than lawsuits) are beneficial for the party with greater power are: (1) arbitration is a more streamlined and less costly option that proceeding through the court system and (2) arbitration proceedings are private, not subject to the same kind of public scrutiny as lawsuits.

The applicability of arbitration agreements came into sharp focus in a decision earlier this week by the Second Circuit Court of Appeals (one step below the U.S. Supreme Court).

Here is an oversimplification of the facts.  ACN Opportunity, LLC (ACN) is a "multi-level marketing" company that enlists individuals to work on its behalf as "Independent Business Owners" (IBOs) in exchange for a sign-up fee and annual renewal fees. A large class of people signed up. When most people hear the term “multi-level marketing,” something goes ding, ding, ding in their brains and they slowly walk away. These investors did not. Why?

The answer is Donald Trump and the Trump Organization. Through various forums, including at ACN events, recruiting publications and videos, and on two episodes of "The Celebrity Apprentice" television show, ACN was strongly promoted. This series of messages by the Trump group was critical, the plaintiffs asserted, in convincing consumers – including them – to invest in ACN as IBOs. The court noted that the investors’ chances of success were minimal at best: 

Contrary to the defendants' [Trump] representations that ACN's business opportunity was a low-risk entrepreneurial venture that offered investors a viable source of income, investigations by regulatory agencies allegedly have demonstrated that ACN's business was high-risk and that investors had a minimal likelihood of commercial success. Despite claims that ACN's business opportunity would be highly profitable for investors, it is nearly impossible for IBOs to profit or earn a satisfactory income from such multi-level marketing arrangements.

The problem wasn’t that Trump endorsed ACN. He endorses things all the time. The issue was that Trump claimed that the profitability of ACN was based on an “independent evaluation.” But was it?

[T]he plaintiffs allege that in exchange for millions of dollars in secret payments from ACN to the defendants[Trump] between 2005 and 2015, the defendants fraudulently promoted and endorsed ACN as offering legitimate business opportunities that were likely to afford IBOs success.

The plaintiffs had a choice. They could have pursued ACN for damages. However, under the terms of the IBO agreement, this would have gone to arbitration. So the plaintiffs sued Trump and the Trump Organization in the federal district court.

Trump cried foul, claiming that arbitration was required. Both the district court and court of appeals ruled against Trump, noting that since Trump was not one of the parties who signed the contract, arbitration did not apply.

Because of the court’s ruling (which specifically said it was not addressing the merits of the lawsuit), the case can proceed in the federal district court.

Why would Trump and his organization work so hard to keep this in arbitration? Public access to information.

Arbitration proceedings are conducted in private and the only thing that the public will typically ever hear is who won. Court cases, however, are widely reported, pleadings by the parties are public, and information that comes out during the lawsuit often reveals facts that some people would prefer remain hidden.

For an individual such as Trump who regularly uses arbitration agreements and nondisclosure agreements as a silencing measure, this defeat will be highly disconcerting.

Fundraising Stalled? File High-profile Lawsuits!

When you initially sign up on a social media site, you first provide basic information about yourself. You are then directed to check a box that says something like “I have read the Terms of Service and agree to their terms.”

By checking the box (whether you ACTUALLY read the terms or not), you have entered into a contract with the provider. As with other contracts, the provider normally has full discretion to decide how or when to enforce the contract’s terms. These contract terms are markedly different than the enforcement of a law, which much be applied fairly and equitably to all people.

This is where a lot of people get it wrong, often because they are being sold bad information. They assume that because laws must be enforced uniformly across the board that the same rules apply to contracts. This is simply wrong.

Donald Trump just filed “class action” lawsuits against Twitter, Facebook and Google under great fanfare. His chances of success on any of these suits are minimal at best. We will only discuss the highlights here.

We should eliminate a misnomer first. Just because you have filed a lawsuit, it is not automatically a class action, even though that sounds impressive. When a lawsuit is filed with claims similar to numerous people, one of the first things filed with the court is a REQUEST to certify the case as a class action. The point you are making is that the number of people who are similarly affected is so numerous that it is impractical to name all of those people as plaintiffs.

Assuming that the court agrees (and that is no sure thing), an attempt is made to identify the members of that class. These possible members are then individually notified and given the option to opt out. This process should be familiar. We have all received those notices. Class actions are seldom certified in contract disputes (because everybody checked the box), but that remains a possibility.

Next, the Terms of Service contract often states the location of the court where an aggrieved person may bring a lawsuit. It is usually in a court that is conveniently located to where the service provider operates. The Terms of Service provided that the proper court would be in California. Trump’s lawsuits were filed elsewhere (at least one was filed in Florida). A basic, basic, basic rule is to file suit in the correct court. Otherwise, the judge may very well dismiss the case for having filed it in the wrong place.

If I wanted to be cynical, and perhaps I am, I would suggest that the cases may have been intentionally filed in the wrong court. Then, when the case is dismissed, the plaintiff can do a “poor me,” complaining that the judge did not really want to hear the case and dismissed it on technical grounds. If that sounds familiar, it should. You heard that a lot when election challenge cases were dismissed for having been filed in the wrong place.

Maybe Trump can get past the jurisdictional issues. If so, the crux of these lawsuits appears to be that getting kicked off the social media platforms were attempts at censorship and a violation of Trump’s first amendment rights to freedom of speech. That makes for a great sound bite (and he repeatedly uses it), but it has questionable legal basis.

Try this analogy. I enter into a franchise agreement (contract) with Tupperware that gives me the exclusive right to sell their products in the greater Portland area. Other people have similar exclusive rights in other areas. Being a successful entrepreneur, I decide to sell products in New Hampshire in violation of the contract. Tupperware shuts me down. I complain that Tupperware has violated my first amendment rights. I have no chance of success in this lawsuit for two reasons: First, I was the one who violated the contract, and second, freedom of speech does not apply to private contracts. Even if I can show that other franchisees have dome similar things, it simply does not matter.

This analogy breaks down, of course, as analogies do. However, the central point is this. You can claim censorship and first amendment violations all you want, but the courts have consistently held that these claims do not apply in contract cases. Social media companies are private and not, to use legal jargon, “state actors.”

Finally, if you wanted to file a groundbreaking first amendment case, who would you hire as a lawyer? My guess is that you would enlist a top-notch Constitutional law specialist. None of them would touch this case.

So if these lawsuits are simply longshots (and that is being charitable), why were they filed? In his press conference, Trump said:

"I stand before you this morning to announce a very important and very beautiful, I think, development for our freedom and our freedom of speech — and that goes to all Americans. Today in conjunction with the American First Policy Institute, I am filing, as the lead class representative, a major class-action lawsuit against the Big Tech giants including Facebook, Google, and Twitter as well as their CEOs Mark Zuckerberg, Sundar Pichai, and Jack Dorsey."

Moments later, an email went out to a group of his supporters that read:

Pres Trump: I am SUING Facebook & Twitter for UNCONSTITUTIONAL CENSORSHIP. For a short time 5X-IMPACT on all gifts. Donate NOW: (with a link) 

You may ask yourself whether the timing of this fundraising email was coincidental. If you do, follow the link.

Trump’s Greatest Vulnerability—the Deposition

Vulnerability is not the same as guilt. I need to emphasize that up front.

Today, New York’s highest state court ruled that Summer Zervos may proceed with her lawsuit against Donald Trump. Zervos claims that Trump sexually assaulted her a number of years ago. He responded by calling her a liar. She filed suit against him for defamation. The litigation was placed on hold, due to Trump’s claim of presidential immunity. In essence, the court today said that since Trump is no longer president, the immunity arguments have disappeared.

Now that the case can continue, Zervos will be entitled to take Trump’s deposition. Why is that so immportant?

Depositions are a formal pre-trial process where an individual answers questions under oath. In a criminal case, a defendant has little to fear by being deposed. The defendant has the right to refuse to answer questions (5^th Amendment right to not incriminate yourself). The fact that the defendant has refused to answer questions may not be introduced into evidence at the later trial.

In civil cases (where money damages are the usual goal), you have no 5^th amendment rights. There are only three ways to answer a question, and all of these answers may create later problems.

First, you can answer the question. This answer had better be truthful. If is later shown to be a lie, you can be later charged separately for lying under oath (perjury). Even if you are not charged with perjury, the jury can use the lie to help them decide your credibility.

Second, you can refuse to answer the question. That refusal can be entered into evidence at trial, affecting your credibility to the jury. Separately, the other side may go to the judge after the deposition is over and have the judge require you to answer the question.

Third, you can say you do not know the answer or don’t remember. Again, your lack of knowledge or memory may be considered by the jury to determine your credibility.

This is not where deposition problems end. One of the issues that plaintiffs have is that some of the information they need to prove their case may be only known to or available to the defendant.

Answers to deposition questions often reveal the names of other people with knowledge of the circumstances. They may become witnesses later. Perhaps more importantly, depositions may reveal the existence of documents that may be relevant to the case. The plaintiff may follow the deposition by requesting that these documents be produced.

Defendants such as Trump are extremely guarded about written information that they think will make them vulnerable or the names of people with individual knowledge of what happened. The deposition process has the potential to open the door to that evidence.

If there were only one case pending or threatened against Trump, the opened door might not be a big deal. However, once the evidence comes to light, other cases may find a way to make use of it as well. And that is where the true vulnerability lies.