The political overtones of the Trump University dispute and the fact that one of the defendants in the litigation is the president of the United States seemed to hang in the air in the courtroom. | Bebeto Matthews/AP Photo Court wrestles with objection to Trump U. settlement

A federal appeals court heard arguments Wednesday about whether to upend a $25 million deal President-elect Donald Trump agreed to last year to settle long-running federal lawsuits over alleged fraud in his Trump University real estate seminar program.

A three-judge panel of the 9th Circuit Court of Appeals mulled a complaint from Florida bankruptcy lawyer Sherri Simpson. She claimed she was denied the chance to opt out of the settlement and file her own lawsuit pressing for a jury trial over the $19,000 she claims she was swindled out of by Trump University.


Most of the roughly 45-minute argument session was devoted to the arcane procedures that apply to class action cases and to the interpretation of the dense, fine-print notices consumers often receive about such suits.

However, the political overtones of the Trump University dispute and the fact that one of the defendants in the litigation is the president of the United States seemed to hang in the air in the courtroom in Pasadena, California.

When Trump lawyer David Kirman rose to defend the settlement, he praised the work of the District Court judge who approved the deal.

"It is … a textbook example of a District Court properly administering a settlement," Kirman insisted.

Judge Andrew Hurwitz jumped in with the biting observation that the judge in question was none other than Gonzalo Curiel, the jurist Trump derided during last year's presidential campaign as intrinsically biased on account of his Latino heritage.

"So, your client’s view of Judge Curiel has changed?" Hurwitz cracked, prompting some laughter in the court.

"Your honor ... yes," Kirman replied with some hesitation. "It’s our position that Judge Curiel administered this settlement in a textbook fashion."

Notwithstanding the jab delivered to Kirman, the Trump attorney and the class action lawyers who settled the suits seemed to have the upper hand Wednesday as at least two of the three judges sounded dubious about Simpson's ability to block the settlement by asserting a right to not take part in it and sue separately.

Simpson's lawyer Deepak Gupta earnestly insisted that a litigation notice sent in 2015 to purchasers of Trump University programs guaranteed Simpson that opportunity because of a phrase saying those who took no action would be advised in the future “about how to obtain a share (or how to ask to be excluded from any settlement).”

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"It says you’ll be able to exclude yourself and that language means something," Gupta said. "Those words have an objective meaning. ... All she's asking is that that promise be enforced."

However, Hurwitz pointed to other portions of the disputed notice that seemed to make clear that class members' only opportunity to opt out was when they got the notice in 2015. He also questioned the practicality of torpedoing a deal that could give about 4,000 people back 80 percent or more of what they paid Trump University — sums that sometimes exceeded $35,000 a person.

"It looks like a heck of a good settlement," Hurwitz said. "What you’re asking us to do is to unravel a settlement that’s fair for thousands of people because your client thinks she could’ve [opted out.] When I think about this case in real-world terms, that’s what troubles me."

Judge Jacqueline Nguyen repeatedly raised the question of whether the appeals court could grant Simpson the right to opt out, while not overturning the entire settlement.

However, all the litigants were in agreement that the court lacks the authority to change the terms in the deal.

Kirman said flatly that Trump would not have agreed to the settlement if it did not effectively shut down the possibility of continued litigation over the Trump University seminar and mentorship program.

"The opt-out provision was a material term of the settlement and the defendant would not have proceeded with the settlement without those terms," Kirman said. "When one opt out such as Ms. Simpson would have precluded the settlement from moving forward."

Trump agreed to personally guarantee payment of the $25 million settlement. The funds were transferred to an escrow account a few days before his inauguration in January,

Despite her question about preserving the settlement, Nguyen sounded largely skeptical about Simpson's claim, saying that the objector had to show she relied on the language in the notice and was harmed as a result.

A District Court judge assigned to the three-judge 9th Circuit panel, Steven Logan, asked fewer questions and was more difficult to read. He asked Gupta how much more than 80 percent of her damages Simpson wanted, prompting Gupta to say that if she prevailed in the case, she should be entitled to recover triple her damages.

Hurwitz and Logan also talked about Simpson looking for vindication in ways that go beyond just money, although neither judge condemned her for that.

"I suppose they want more in this case than really just her right to sue," Hurwitz observed.

"That’s correct your honor," class action lawyer Steve Hubachek of Robbins Geller replied, defending the settlement. "There’s a whole political aspect, I believe."

And under questioning from Logan, Gupta seemed to acknowledge that what Simpson really wants is a public airing of the fraud claims against Trump.

If she'd been allowed to opt out, "she would’ve been able to move forward with the case and have some public accountability," Gupta said. "That’s what she’s seeking."

Curiel and all three members of the appeals panel are appointees of President Barack Obama.