In an order this week, Judge Schofield denied the motion by Donald Trump, the Trump Corporation, and other Trump family members to compel arbitration of claims related to the multi-level marketing scheme ACN (see our previous coverage here). Defendants argued that, because the plaintiffs had agreed to arbitrate any claims they might have against ACN, the same arbitration clause should force arbitration of any claims against the Trump defendants related to their endorsement of ACN.
Judge Schofield found that the defendants had failed to show the required relatedness from the plaintiffs’ perspective between ACN and the Trump defendants in order to apply equitable estoppel:
The relatedness prong is not met in this case. Plaintiffs claim that Defendants wrongfully held themselves out as offering an independent endorsement of ACN. Plaintiffs were not aware that ACN was paying Defendants to promote and endorse the company, and, consistent with that understanding, Plaintiffs did not treat ACN and Defendants as at least somewhat interchangeable with respect the plaintiffs’ rights and responsibilities under the relevant contract. Plaintiffs had no reason to know that Defendants were affiliated with ACN in a such a way that it would be unfair to allow Plaintiffs to avoid arbitration with Defendants, given their commitment to ACN to arbitrate. Moreover, Plaintiffs allege that Defendants made untrue, misleading and unfair statements to induce Plaintiffs to enter the Agreements. This allegation is consistent with precedent where the Second Circuit found “no unfairness” in denying estoppel to a defendant aligned with the signatories to allegedly accomplish wrongful business practices.