The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court
Presently before the Court is Defendant/Counterclaimant Trump University's request for a stay of these proceedings pending resolution of Plaintiff/Counterdefendant Tarla Makaeff's anti-SLAPP appeal. For the reasons stated below, the Court GRANTS IN PART and DENIES IN PART Trump University's motion.
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT/ COUNTERCLAIMANT TRUMP[Doc. No. 46]
The factual background of this case is set forth in detail in the Court's August 23, 2010, order. [Doc. No. 24.] The Court recounts herein only those facts necessary to decide Trump University's motion. Plaintiffs filed this putative class action against Trump University, alleging various claims related to consumer fraud, deceptive business practices, and breach of contract. Trump University filed a counterclaim for defamation against one of the named plaintiffs, Ms. Tarla Makaeff.*fn1 [Doc. No. 4.] The alleged defamation includes statements claiming that Trump University engaged in consumer fraud, deceptive business practices, and breaches of contract. [See id.] Plaintiffs' action against Trump University is based on the same claims of fraud, deceptive practices, and breach of contract. [Doc. No. 41.] Trump University further alleges that Makaeff defamed it by stating that it also engaged in "brainwashing," teaching criminal behavior, and various other acts of criminality. [See Doc. No. 4; Doc. No. 24.]
Makaeff moved to strike the counterclaim, alleging Trump University filed its counterclaim to retaliate against her for her exercise of free speech and to intimidate her into dropping her lawsuit in violation of California's anti-SLAPP statute, California Code of Civil Procedure § 425.16. [Doc. No. 14.] The Court denied Makaeff's motion and her subsequent motion to reconsider, [Doc. Nos. 24 & 40], and Makaeff appealed. [Doc. No.43.] Trump University now moves to stay these proceedings pending resolution of Makaeff's appeal. [Doc. No. 46.]
Automatic Stay Pending Anti-SLAPP Appeals Under California Law Trump University argues that because California law imposes an automatic stay on trial proceedings when the denial of an anti-SLAPP motion is appealed, the Court should stay all proceedings in this case. Plaintiffs argue, first, that the automatic stay under California law is a procedural rule and thus does not bind this Court. Second, Plaintiffs argue that, if this Court should stay any proceedings pending Makaeff's appeal, the stay should only affect Trump University's counterclaim against Makaeff.
A Strategic Lawsuit Against Public Participation ("SLAPP") is a civil action "in which the plaintiff's alleged injury results from petitioning or free speech activities by a defendant that are protected by the federal or state constitutions." Vess v. Ciba-Geigy Corp., 317 F.3d 1097, 1109 (9th Cir. 2003). California's anti-SLAPP statute immunizes a party subject to a SLAPP suit from being "dragged through the courts [for] exercising [her] constitutional rights." Varian Med. Sys. v. Delfino, 35 Cal. 4th 180, 186 (2005). The statute therefore allows for "early dismissal of meritless first amendment cases aimed at chilling expression through costly, time-consuming litigation." Vess, 317 F.3d at 1109.
Under California law, an appeal of a denial of an anti-SLAPP motion automatically stays further trial court proceedings on causes of action related to the motion. Varian Med. Sys. v. Delfino, 35 Cal. 4th 180, 186 (2005). California's anti-SLAPP statute provides substantive immunity from suit, which a federal court sitting in diversity must recognize. Moser v. Encore Capital Group, Inc., 2007 WL 1114113, at *2 (S.D. Cal. Mar. 27, 2010) (citing Erie R. Co. v. Tompkins, 304 U.S. 64 (1938)). The Court therefore looks to state law to determine the scope of the automatic stay.
"In determining whether a proceeding is embraced in or affected by the appeal, [the Court] must consider the appeal and its possible outcomes in relation to the proceeding and its possible results." Id. at 189 (citation omitted). An anti-SLAPP appeal "does not stay proceedings on ancillary or collateral matters which do not affect the judgment or order on appeal even though the proceedings may render the appeal moot." Id. at 191, 195 & n.8
B.Trump University's Counterclaim Against Makaeff
To permit proceedings on Trump University's counterclaim against Makaeff to continue would risk mooting her anti-SLAPP appeal by eliminating the need for immunity from suit. Varian, 35 Cal. 4th at 190 ("[A] proceeding affects the effectiveness of the appeal if the very purpose of the appeal is to avoid the need for that proceeding."). Accordingly, the Court GRANTS Trump University's ...