The lawsuit, if sent into arbitration, would have kept proceedings related to an alleged pyramid scheme and the family’s alleged links to it away from the public eye.
The lack of a “close relationship” between American Communications Network (ACN) – a multilevel marketing company – and the Trump family meant the plaintiffs had no reason to believe they agreed to arbitrate with the Trumps, wrote circuit judge Robert Sack, according to news agency Reuters.
He also said “there is no unfairness” in requiring the Trumps to litigate over alleged wrongful business practices, given the plaintiffs’ claim they were defrauded into thinking Mr Trump told the truth by endorsing ACN.
Mr Trump, his children Donald Jr, Eric and Ivanka and an affiliate of the Trump organisation have been accused of promoting ACN in exchange for millions of dollars in secret payments from 2005 to 2015.
The lawsuit, filed by four plaintiffs in 2018, has accused the Trumps of leveraging their family name to promote a marketing scam that has targeted the poor and working class.
The Trumps have been accused of fraud and false advertising by promoting ACN’s “get-rich-quick scheme” that conned victims. The plaintiffs said Mr Trump’s endorsement, including on episodes of his TV show “The Celebrity Apprentice”, conned them into thinking their investments would pay off.
The lawsuit alleges that the former president and his children claimed investing in the venture, known as ACN Opportunity, LLC “offered a reasonable probability of commercial success”.
It also says while the Trumps allegedly collected millions of dollars for the promotion of the venture, they “failed to conduct due diligence about the likelihood of economic losses and the slim probability of commercial success from such schemes.”
The Trump family claim they had no control over ACN and that the former president’s endorsement was his opinion. They have dubbed the lawsuit to be politically motivated.
“The truth or falsity of the plaintiffs’ allegations is not before us,” Judge Sack wrote in his opinion. “We neither express nor imply any views with respect to them. The only question before us is whether this case should be resolved before the district court or an arbitrator,” he added.
This is one of several lawsuits Mr Trump faces.
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