A disgruntled former student of Trump University sued for deceptive business practices and got sued in return by the school on a claim of defamation. The 9th U.S. Circuit Court of Appeals refused to toss out the defamation case Wednesday. It ruled that the school is a limited public figure based solely on its advertising campaign, rather than the fame of its real estate magnate namesake, Donald Trump.
But the court did say, in order to prevail on the defamation allegation, the school must show that the student, Tarla Makaeff, acted with actual malice.
Real estate investor, TV personality and sometime presidential candidate, Trump, created an online Trump University to teach his “insider success secrets” to students with aspirations to be real estate moguls. While Trump is a public figure, his school is a limited public figure based on its massive advertising.
“To be clear: Trump University is not a public figure because Donald Trump is famous and controversial. Nor is Trump University a public figure because it utilized Donald Trump as a celebrity pitchman,” wrote Judge Kim Wardlaw. “Trump University is a limited public figure because a public debate existed regarding its aggressively advertised educational practices.”
Makaeff paid nearly $35,000 to enroll in the university’s “Gold Elite Program” of advanced training workshops. She quickly became disappointed and asked for a refund for services she says she did not get. She also accused the school of fraudulent and deceptive business practices.
When she was counter sued for defamation by the school she argued the suit was an attempt to silence her, something known as a SLAPP suit, Strategic Lawsuits Against Public Participation. They are considered attempts to prevent ordinary people from pressing their rights in court by threatening expensive counter litigation.
Makaeff wanted the defamation case dismissed under California’s anti-SLAPP law. The 9th Circuit panel refused. But to Makaeff’s benefit, the ruling did set a high bar for Trump University to succeed by requiring proof of actual malice.
Two of the three judges, in separate concurring opinions, wanted to take on the anti-SLAPP litigation, going beyond the Makaeff case.
Chief Judge Alex Kozinski and Judge Richard Paez suggested it was time to overturn a 1999 federal precedent that allowed for application of California’s anti-SLAPP law to federal procedure. (A case known as Newsham v. Lockheed Missiles & Space Co.) Kozinski said, the state law gives one side a cheap way to get out from under a lawsuit without following federal rules.
“The California anti-SLAPP statute cuts an ugly gash through this orderly process” of orderly motions, discovery or summary adjudication.
“Newsham was a big mistake,” Kozinski wrote. And the appeals court should consider throwing it out.
Unfortunately, two other circuits “have foolishly followed it,” he said.
“It’s time we led the way back out of the wilderness. Federal courts have no business applying exotic state procedural rules, which, of necessity, disrupt the comprehensive scheme embodied in the Federal Rules…,” he said.
Although Paez signed on to Kozinski’s idea, two judge’s can’t overturn a precedent. The entire 9th Circuit would have to take action and Kozinski called from them to consider it in this case or another.
The next step would be a call for a vote for full en banc review of the case.
[It should be noted that Trump University changed its name after the New York State Dept. of Education objected to the company's use of the term “university.” It is currently called The Trump Entrepreneur Initiative, according to a footnote in Wardlaw's opinion.]
Case: Makaeff v. Trump University, No. 11-55016