Makaeff v. Trump Univ., LLC

• Citation: 715 F.3d 254
• Decision Date: 17 April 2013
• Docket Number: No. 11–55016.,11–55016.
• Parties: Tarla MAKAEFF, on behalf of herself and all others similarly situated, Plaintiff–counter–defendant–Appellant, and Brandon Keller; Ed Oberkrom; Patricia Murphy, Plaintiffs, v. TRUMP UNIVERSITY, LLC, a New York limited liability company, AKA Trump Entrepreneur Initiative, Defendant–counter–claimant–Appellee, and Donald J. Trump, Defendant.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

715 F.3d 254

Tarla MAKAEFF, on behalf of herself and all others similarly situated, Plaintiff–counter–defendant–Appellant,andBrandon Keller; Ed Oberkrom; Patricia Murphy, Plaintiffs,

v. TRUMP UNIVERSITY, LLC, a New York limited liability company, AKA Trump Entrepreneur Initiative, Defendant–counter–claimant–Appellee,andDonald J. Trump, Defendant.

No. 11–55016.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Jan. 18, 2012.

Filed April 17, 2013.

Eric Alan Isaacson (argued), Rachel L. Jensen, Amanda M. Frame, and Thomas R. Merrick, Robbins Geller Rudman & Dowd LLP, San Diego, CA; Amber L. Eck, Zeldes & Haeggquist, LLP, San Diego, CA, for Plaintiff–Counter–Defendant–Appellant.

Jill A. Martin (argued), Rancho Palos Verdes, CA; David Keith Schneider, Yunker & Schneider, San Diego, CA, for Defendant–Counter–Claimant–Appellee.

Christopher M. Burke, Scott & Scott LLP, San Diego, CA, for Amicus Curiae Consumer Attorneys of California.

David Blair–Loy, ACLU Foundation of San Diego & Imperial Counties, San Diego, CA, for Amicus Curiae American Civil Liberties Union of San Diego & Imperial Counties.

Appeal from the United States District Court for the Southern District of California, Irma E. Gonzalez, Chief District Judge, Presiding. D.C. No. 3:10–cv–00940–IEG–WVG.

Before: ALEX KOZINSKI, Chief Judge, KIM McLANE WARDLAW and RICHARD A. PAEZ, Circuit Judges.

Opinion by Judge WARDLAW; Concurrence by Chief Judge KOZINSKI; Concurrence by Judge PAEZ.

OPINION

WARDLAW, Circuit Judge:

No one would deny that Donald Trump, the real estate magnate, television personality, author, and erstwhile presidential candidate, cuts a celebrated, if controversial, public figure. We must decide whether Trump University, LLC, a private, for-profit entity purporting to teach Trump's “insider success secrets,” is itself a public or limited public figure so as to implicate the First Amendment. Disgruntled former customer Tarla Makaeff sued Trump University for, among other things, deceptive business practices. In return, Trump University counterclaimed against Makaeff for defamation. Makaeff moved to strike the defamation claim, contending that Trump University is a public figure and therefore must show that she made her allegedly defamatory statements with “actual malice,” a requirement she contends Trump University cannot prove. See New York Times Co. v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964). Denying the motion to strike, the district court held that Trump University is not a public figure. We disagree. Trump University is a limited public figure, and, to prevail here, must demonstrate that Makaeff acted with actual malice. Because the district court erred by failing to recognize Trump University's status as a limited public figure, we reverse and remand for further proceedings.

I.

Donald Trump founded Trump University ¹ because he has “a real passion for learning.” Trump, who describes himself as Trump University's chairman, portrays the venture as the next step in his progression from real estate tycoon to educator. “My books and seminars have always included a strong educational or ‘lessons learned’ slant.... [Trump University] grew out of my desire to impart my business knowledge, accumulated over the years, and my realization that there is a huge demand for practical, convenient education that teaches success.” So born, Trump University took shape as a limited liability company offering real estate seminars and other training programs to would-be real estate investors. Its stated mission is to “train, educate and mentor entrepreneurs on achieving financial independence through real estate investing.”

A.

Trump University has not been shy about touting its connection to its eponymous creator. Evoking Trump's well-known reality television series, Trump University's advertisements promise that enrolling in Trump University is “the next best thing to being [Trump's] Apprentice.” Its advertisements prominently showcase Trump's photo while urging consumers to “[l]earn from the Master,” and promising to teach Trump's “insider success secrets.” The home page of Trump University's website features Trump's photo next to the words: “Are YOU My Next Apprentice? Prove it to me!” Trump University students are shown a slide depicting Trump University as the latest of Donald Trump's achievements, alongside such feats as buying the “Taj Mahal” casino in Atlantic City and completing the “Trump Tower” in Manhattan.

Trump University has collaborated with Donald Trump on several books. ² It holds the copyright in the books Trump 101, written by Donald Trump with Meredith McIver, see Donald J. Trump, Trump 101: The Way to Success (2007) (“ Trump 101 ”), and Wealth Building 101, see Wealth Building 101: Your First 90 Days on the Path to Prosperity (Donald J. Trump, ed. 2007) (“ Wealth Building 101 ”). Both works tout Trump's involvement with Trump University. For instance, in his Foreword to Trump 101, Michael Sexton, the president of Trump University, asserts that Donald Trump “has made the decision to become an educator himself, through his public appearances, The Apprentice, his books, and now, Trump University.” Michael Sexton, Foreword to Trump 101, at xiv. In the Foreword to Wealth Building 101, president Sexton asserts that

[o]ther organizations try to sell help alone, without the proven expertise to back it up, and just when you begin to realize that the advice you paid for is unproven and ineffective—they try to sell you more expensive products. They hook you on promises and never deliver.

Neither I nor our chairman, Donald J. Trump, would stand for that at Trump University.

Michael Sexton, Foreword to Wealth Building 101, at ix.

Almost from its inception, Trump University drew public comment. Donald Trump referenced the attention in 2005, noting in a blog post on the Trump University website that the nationally syndicated comic strip “Doonesbury” spent a week lampooning “the disparity between [Trump University] and a traditional university.” The post was entitled: “We're laughing all the way to the bank.” ³ By 2007, however, disappointed customers had begun posting complaints about Trump University on Internet message boards. Some posts alleged that Trump University programs were “scams” that focused on “upselling” customers to more expensive seminars and workshops. In late 2007, an investigative article by journalist David Lazarus of the Los Angeles Times questioned Trump University's business practices in the larger context of the subprime mortgage crisis. See David Lazarus, Trump Spins in Foreclosure Game, L.A. Times, at C1, December 12, 2007. The column quoted Donald Trump (“I love helping people”) and described a satisfied Trump University customer (“I have control of four properties”), but also cited the skepticism of real estate experts over “push[ing] neophytes to take such risks” in the burgeoning foreclosure market.⁴Id.

B.

In August 2008, Tarla Makaeff attended Trump University's three-day “Fast Track to Foreclosure Workshop” at a cost of approximately $1,495, which Makaeff says she split with a friend. Makaeff describes the seminars as slick productions featuring carefully choreographed presentations, speakers blaring “For the Love of Money,” the theme song from Trump's hit reality television series “The Apprentice,” and Trump University representatives exhorting customers to raise their credit card limits, ostensibly to enable “real estate transactions,” but actually to facilitate the purchase of the $34,995 “Trump Gold Elite Program.”

Apparently persuaded, Makaeff paid $34,995 to enroll in the Gold Elite Program, which entitled her to four three-day “advanced training workshops,” a three-day “mentoring session in the field,” and “training publications, software, and other materials.” Makaeff's satisfaction with the program was short-lived. In April 2009, after completing five more programs and workshops, and after seven months of the Gold Elite Program, she wrote an email to Trump University complaining that she was in a “precarious financial position” and that she “did not receive the value that I thought I would for such a large expenditure.” Makaeff had earlier spoken by phone with a Trump University representative who had told her that she was ineligible for a refund of the cost of the program. In response to Makaeff's email, Trump University offered more free “mentoring services,” which Makaeff accepted.

By Fall 2009, however, the relationship between Makaeff and Trump University had gone irretrievably south. Makaeff wrote to her bank and the Better Business Bureau, contacted government agencies, and posted on Internet message boards about her dispute with Trump University. Makaeff requested a refund of $5,100 from her bank for services charged for Trump University programs. In the letter to the Better Business Bureau, Makaeff requested a refund of her payments for services that she did not receive. In both letters, Makaeff asserted that Trump University engaged in “fraudulent business practices,” “deceptive business practices,” “illegal predatory high pressure closing tactics,” “personal financial information fraud,” “illegal bait and switch,” “brainwashing scheme[s],” “outright fraud,” “grand larceny,” “identity theft,” “unsolicited taking of personal credit and trickery into [sic] opening credit cards,” “fraudulent business practices utilized for illegal material gain,” “felonious teachings,” “neurolinguistic programming and high pressure sales tactics based on the psychology of scarcity,” “unethical tactics,” “a gargantuan amount of misleading, fraudulent, and predatory behavior,” and business practices that are “criminal.” Trump University claims that Makaeff published similar statements to unknown third parties and to the general public on the Internet.

In April 2010, Makaeff filed a class action complaint against Trump University, accusing it of, among other things, deceptive...