A federal appeals court made it much tougher for Trump University, named for real estate mogul Donald Trump, to succeed in a defamation claim by a disgruntled former student. And in doing so, the 9th U.S. Circuit Court of Appeals Wednesday made an even more important stand in allowing what’s known as state anti-SLAPP cases to be brought in federal courts.
SLAPP refers to strategic lawsuits against public participation. They are lawsuits brought for the purpose of thwarting the defendant’s exercise of free speech or petition. The most common example is a land developer who sues neighbors who protest a proposed development, accusing them of defamation. It is a lawsuit intended only to impose legal fees and scare protesters away.
In the TrumpUniversity case, the school sued Tarla Makaeff for defamation in response to her lawsuit accusing the school of deceptive business practices and seeking a tuition refund. The Trump suit, she claimed was a SLAPP suit and under a California law allowing special motions, known as anti-SLAPPs, she could ask the court to throw out the defamation case against her and let her get back to the business of seeking her refund.
Back in April, the 9th Circuit held that TrumpUniversity was a limited public figure and had to prove actual malice (a very high standard) to prevail in its defamation claim against Makaeff. Her anti-SLAPP motion is a powerful tool. If Makaeff wins it will not only throw out the defamation case but it also entitles her to recover all her legal costs from TrumpUniversity.
On Wednesday, the 9th Circuit refused to reconsider the ruling by the full court, en banc. This means the 9th Circuit will continue to allow anti-SLAPP suits in federal court and allow immediate appeals if anti-SLAPP claims are denied, something opposed by Chief Judge Alex Kozinski and Judge Richard Paez. They lobbied their colleagues to take the case en banc, arguing that anti-SLAPP motions were merely procedural vehicles in state law and in any case, they conflict with federal rules.
Judge Kim Wardlaw, explaining why the majority rejected rehearing, said the original opinion follows 14 years of precedent, and a contrary result would create a circuit split.
In dissent, Judge Paul Watford wrote the California anti-SLAPP law creates conflicts with federal rules and defendants, such as Makaeff, should be limited to filing motions to dismiss the defamation claim.
“Even if anti-SLAPP motions may be brought in federal court, we should stop entertaining interlocutory appeals from rulings on such motions,” he said. Watford said the 9th Circuit’s anti-SLAPP rulings run afoul of two separate U.S. Supreme Court lines of cases. But he got a scant three signers to his dissenting position, Kozinski, Paez and Judge Carlos Bea.
Joining Wardlaw’s opinion were Judges Connie Callahan, William Fletcher and Ronald Gould. Not all judges who vote on en banc ballots necessarily sign on to public opinions.
It takes 14 or more votes of the 27 active judges to win en banc reconsideration.
Real estate investor, TV personality and sometime presidential candidate, Trump, created an online TrumpUniversity 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.
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, a SLAPP suit.
[It should be noted that TrumpUniversity 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