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Tam Hoang 8:30 a.m., Aug. 25
In a lawsuit whose outcome might be critical to the ability of individuals and journalists to smoke out bad business practices, the Ninth Circuit Court of Appeals on Wednesday (April 17) told U.S. District Court Judge Irma Gonzalez to think again about her decision permitting Donald Trump's Trump University to sue for defamation a former customer who said she was defrauded out of thousands of dollars. Suing Trump University in the class action suit was Tarla Makaeff and others who had paid heavily to take a real estate course "purporting to teach Trump's 'insider success secrets,'" according to the appellate decision. "Trump University has not been shy about touting its connection to its eponymous creator," noted the decision, pointing out that the so-called university claimed in advertising that it was "the next best thing to being [Trump's] Apprentice," urging potential enrollees to "learn from the Master." The appeals court said Trump U was encouraging inexperienced investors to take imprudent risks.
Makaeff complained about the alleged university to the Better Business Bureau (which at one point gave it an extremely low grade), made derogatory web postings, and charged the organization with "fraudulent business practices," "predatory high pressure closing tactics," and other transgressions. After Makaeff sued, Trump U countersued for defamation. Makaeff then moved to strike the defamation suit with a so-called anti-SLAPP suit. (SLAPP stands for strategic lawsuit against public participation, or a suit that is intended to intimidate or silence a critic by threatening a lawsuit.)
But Gonzalez ruled that Trump University was not a public figure, and denied the motion to strike the suit under the anti-SLAPP provision. The appeals court, however, ruled that Gonzalez was wrong. Because of Trump U's widely-circulated advertising claims, among other things, Trump U was a limited public figure. To prevail in its defamation claim, Trump U must demonstrate that Makaeff acted with actual malice, said the appeals court.
In my non-legal opinion, if Gonzalez's ruling were to stand and eventually become a precedent, the ability of consumers to complain about shoddy or fraudulent products and services -- and journalists' ability to expose business fraud -- could become severely compromised. Anti-SLAPP suits are very important in protecting consumers' rights, free speech, and journalists' duty to expose fraud.
Arguing for Makaeff were San Diego law firms Robbins Geller Rudman & Dowd and Zeldes & Haeggquist.