Donald Trump had a decent day in court on Thursday, as his lawyer pressed a panel of New York state appellate judges to upend the massive, nine-figure fraud ruling against the former president and his business empire. If the judges’ pointed questions to the state are any indication, then there’s a chance that New York Attorney General Letitia James’ stunning trial victory earlier this year could be curbed.
Part of the issue boils down to how broadly James used a state law to go after Trump and his civil co-defendants for fraud in financial dealings, given that it wasn’t a case where victims were conned and then complained to the government about it. Put differently, the question is how broadly that law, Executive Law 63(12), can reach.
The hearing got off to a rough start for the state’s lawyer, Judith Vale (starting at about 34:00 in the video posted by the court). Before she could say much at all, one of the judges jumped in to ask whether there had ever been a case where the attorney general sued under the state executive law
to upset a private business transaction that was between equally sophisticated partners, where the supposed victim had the ability and legal obligation to discover the allegedly misrepresented matters by conducting its own due diligence; where the supposed wrongdoer advised the supposed victim, through written disclaimers, to conduct its own due diligence and to draw its own conclusions; where the alleged misrepresentation almost entirely concerned inherently subjective valuations of properties and businesses; and where the victim never complained about any fraud.”
Well, when you put it that way.
It didn’t get a whole lot better for the state from there. A second judge questioned the harm when there was little to no effect on the public marketplace. A third judge said the case sounded like a potential commercial dispute between private actors, suggesting it’s not something the attorney general needed to get involved with. And a fourth judge on the five-judge panel said they were concerned with “mission creep” — that is, whether the state law had been used to do something it wasn’t meant to do.
Vale maintained that there was a public impact, that public interest is at stake, and that in passing the executive law, the state legislature “was concerned with harms to the honest businesspeople” who “don’t do the misconduct.”
It wasn’t all bad for the state. Presiding Judge Dianne Renwick pointed out during Vale’s grilling that the state executive law was passed to protect honesty and integrity in the marketplace, a line of thinking that supports the state’s broad use of the law. And Trump lawyer John Sauer (who argued the immunity case at the Supreme Court for the Republican presidential nominee) was quizzed by the panel as well.
Ultimately, one can never be sure from oral argument what the precise ruling will be. But the outing could have gone better for James and worse for Trump. At the very least, the panel didn’t sound like it is in lockstep with Judge Arthur Engoron, who presided over the case at trial and roundly ruled against the Trump camp. In a scathing February ruling, Engoron wrote that the civil defendants’ lack of contrition and remorse borders on pathological. They are accused only of inflating asset values to make more money. The documents prove this over and over again. This is a venial sin, not a mortal sin. Defendants did not commit murder or arson. They did not rob a bank at gunpoint. Donald Trump is not Bernard Madoff. Yet, defendants are incapable of admitting the error of their ways. Instead, they adopt a ‘See no evil, hear no evil, speak no evil’ posture that the evidence belies.”
Thursday’s argument took place in Manhattan at the Appellate Division, which is the state’s intermediate-level appeals court. Its highest court is the Court of Appeals (the trial-level court is somewhat confusingly called the Supreme Court), to which either side could appeal after the Appellate Division rules (it’s unclear when that will happen). The U.S. Supreme Court could theoretically get involved after the state courts are exhausted, if the appealing party can raise a federal issue as opposed to a state one, the latter being an issue over which the justices wouldn’t have jurisdiction. In any event, it seems unlikely that the matter will be fully settled for some time. Subscribe to the Deadline: Legal Newsletter for updates and expert analysis on the top legal stories. The newsletter will return to its regular weekly schedule when the Supreme Court’s next term kicks off in October.
Jordan Rubin is the Deadline: Legal Blog writer. He was a prosecutor for the New York County District Attorney’s Office in Manhattan and is the author of “Bizarro," a book about the secret war on synthetic drugs. Before he joined MS NOW, he was a legal reporter for Bloomberg Law.
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