A class-action lawsuit filed by a former fashion and handbag designer in San Diego, alleging students are ripped off by false advertising at “Trump University,” has been reinstated by a federal appeals court.

Yes, Donald Trump has an  “institution of higher learning” with his name on it.

Now called the Trump Entrepreneur Initiative, the unaccredited for-profit school offers business courses ranging from $1,500 to $35,000 each that focus on real estate.  

Tarla Makaeff’s lawsuit, filed two years ago in U.S. District Court in San Diego, contends that the school uses high-pressure tactics and false representation to convince students to enroll in expensive classes that resemble infomercials more than seminars. More than 11,000 people have reportedly attended the seminars.

Makaeff paid thousands of dollars for classes and was told that her first real estate transactions would recoup all her money and more. So she figured that was money in the bank and paid another $35,000 for the “Gold Program.” Altogether, she spent $60,000.

Makaeff quickly became disillusioned with the school, tried to get her money back and then sued (pdf). The lawsuit claimed, “Defendant Trump University is more like an infomercial, selling non-accredited products, such as sales workshops, luring customers in with the name and reputation of its founder and Chairman, billionaire land mogul Donald J. Trump.”   

The school counter-sued for $100 million, claiming defamation. Makaeff had been quite open in expressing her negative opinions about “Trump University” online and in other venues. She argued that California’s anti-SLAPP law, which prohibits lawsuits that primarily aim to shut people up using costly litigation, invalidated the Trump counterclaim, but U.S. District Judge Irma Gonzalez ruled against her.

Makaeff appealed to the U.S. Ninth Circuit Court and a three-judge panel found in her favor. Although the judges expressed skepticism about California’s one-of-a-kind anti-SLAPP statute, they ruled that the school was a “limited public figure” and, thus, had to prove “actual malice” on Makaeff’s part to prevail. The U.S. Supreme Court has established a higher bar—reckless disregard for the truth or knowledge of falsity—for public figures to sue.       

Although the school uses Donald Trump’s name to promote the school, the appeals court invoked the higher standard because the school itself had been a controversial player in a divisive public debate over its educational and marketing practices.

The school is under investigation by attorneys general in at least six states and adopted its present name after the New York Department of Education complained that it really wasn’t a university.

School lawyers said they would appeal the decision to the full Ninth Circuit Court.

 –Ken Broder

To Learn More:

Trump University Trips with Defamation Claim (by Tim Hull, Courthouse News Service)

Trump's 'University' Accused of Scamming Customers (by Marcus Baram, Huffington Post)

Few Surprised “Trump University” Is Sued for Fraud (by Ujala Sehgal, The Atlantic)

Trump University's Unhappy Students (by Kerry A. Dolan, Forbes)

Makaeff v. Trump University (Complaint filed in U.S. District Court) (pdf)