Trump and the Business of Lawsuits

As entrepreneur Barry LaBov can tell you, business and lawsuits can go hand in hand. There will be consequences to owners’ business practices, the things they say, and the actions they take. And in the case of Donald Trump, that is doubly true. Presently, the real estate mogul is embroiled in four noteworthy suits, three of which he has brought against individuals and corporations for breach of contract and one that was brought against him for fraud.

The unifying theme of the lawsuits initiated by Trump is that they directly relate to the disparaging remarks that he made against Mexican immigrants. In his presidential announcement, as well as subsequent interviews, Trump claimed that “The Mexican Government is forcing their most unwanted people into the United States. They are, in many cases, criminals, drug dealers, rapists, etc.” While these statements did not seem to do much damage to his approval ratings among republican voters, there has been a notable backlash towards his business holdings – specifically, amongst those of either Mexican or Hispanic heritage or those with ties to them.

U.S. Republican presidential candidate Donald Trump answers questions from reporters at a campaign fundraiser at the home of car dealer Ernie Boch Jr. in Norwood, Massachusetts August 28, 2015. REUTERS/Brian Snyder

(Photo courtesy of REUTERS/BRIAN SNYDER)

Two of these suits are specifically aimed at individual chefs who were planning to open restaurants in hotels owned by Trump. José Andrés (a naturalized American citizen of Spanish origins) and Geoffrey Zacharian (a judge on Chopped) both pulled out of contracts with Trump’s group, claiming that they could no longer conscientiously pursue business dealings with the tycoon after his comments. Trump is claiming that he is owed the rent money for the leases that they signed, to the tune of approximately $10 million each.

In addition, Trump’s comments on Mexican immigration caused Univision, a U.S.-based Spanish language media outlet, to drop its coverage of the Miss Universe Pageant, which Trump owns. This alleged breach of contract has resulted in Trump’s group bringing a $500 million dollar suit against the company. It also has resulted in some heated comments and a Univision news anchor being thrown out of a conference after trying to interrupt Trump to ask a question.

On the defensive end, Trump is fighting a class-action suit filed by New York Attorney General Eric Schneiderman concerning Trump University, a for-profit online school that promised real estate education. The charges against Trump include fraud and are backed by the testimony of over a hundred former students. They claim that they were promised certain levels of education as well as the one-on-one guidance of experts, and were instead provided teachers with no experience in exchange for the money they paid.

While these suits may or may not have an impact on Trump’s political career, they have definitely affected his business holdings and could lead to potential losses down the line if Hispanic groups and companies decide to avoid him. And his Trump University project could be seen as gross mismanagement or, worse, intentional deception. However, the thing these cases have in common is that they’re all bad for business. Barry LaBov stresses that it’s important for business owners to be mindful of what they say and choose their projects carefully to avoid backlash – even if they’re running for president.