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Tarla Makaeff, Brandon Keller, Oberkrom, and Patricia Murphy, On Behalf of Themselves and All v. Trump University

May 16, 2011

TARLA MAKAEFF, BRANDON KELLER, OBERKROM, AND PATRICIA MURPHY, ON BEHALF OF THEMSELVES AND ALL
OTHERS SIMILARLY SITUATED, DONALD TRUMP'S PLAINTIFFS,
v.
TRUMP UNIVERSITY, LLC, (AKA TRUMP ENTREPRENEUR INITIATIVE), A NEW YORK LIMITED LIABILITY COMPANY; DONALD J. TRUMP; AND DOES 1 THROUGH 50, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT MOTION TO DISMISS [Doc. No. 59]

Plaintiffs paid up to $35,000 apiece to enroll in Trump University seminars, hoping to "Learn from the Master," Donald Trump. When they learned a different lesson than they bargained for, they filed suit, alleging fraud and violations of various state consumer protection and business code provisions on behalf of themselves and a putative class. The matter comes before the Court on Defendant Donald Trump's motion to dismiss. For the reasons stated herein, the Court GRANTS IN PART and DENIES IN PART Defendant's motion to dismiss.

BACKGROUND

The following background is taken from Plaintiffs' second amended complaint ("SAC") unless otherwise noted. For reasons discussed below, the Court summarizes only the conduct of Donald Trump himself.

As the face of Trump University, Donald Trump appeared on the Trump University website and in advertisements. The website contained headings such as "Learn from the Master," and "Are YOU My Next Apprentice? Prove it to me!" In certain instances, the advertisements took the form of personal letters from Trump himself. In one exemplary letter, Trump stated:

I only work with people who are committed to succeed. I founded Trump University back in 2005 to teach go-getters how to succeed in real estate. My team at Trump University is filled with real estate experts . . . proven winners. We're the best of the best and we know what works. If you think you have what it takes to be my next apprentice, prove it to me.

In another letter, Trump stated, "My hand-picked instructors and mentors will show you how to use real estate strategies . . . ." And so on.

Plaintiffs first added Donald Trump as a Defendant in their SAC. (Doc. No. 41.) On February 15, 2011, Trump filed the present motion to dismiss. (Doc. No. 59.) The motion is fully briefed and suitable for disposition without oral argument pursuant to Local Civil Rule 7.1(d).

DISCUSSION

I. Legal Standard for a Rule 12(b)(6) Motion to Dismiss

A complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a). A motion to dismiss pursuant to Rule 12(b)(6) tests the legal sufficiency of the claims asserted in the complaint. Navarro v. Block, 250 F.3d 729, 731 (9th Cir. 2001). The court must accept all factual allegations pleaded in the complaint as true, and must construe them and draw all reasonable inferences from them in favor of the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). To avoid a Rule 12(b)(6) dismissal, a complaint need not contain detailed factual allegations; rather, it must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim has "facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal,129 S. Ct. 1937, 1949 (2009) (citing Twombly, 550 U.S. at 556).

However, "a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (citation omitted). A court need not accept "legal conclusions" as true. Iqbal, 129 S. Ct. at 1949. In spite of the deference the court is bound to pay to the plaintiff's allegations, it is not proper for the court to assume that "the [plaintiff] can prove facts that [he or she] has not alleged or that defendants have violated the . . . laws in ways that have not been alleged." Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983).

Regardless of the title given to a particular claim, allegations grounded in fraud are subject to Rule 9(b)'s pleading requirements. Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009). Where a plaintiff alleges a "unified course of fraudulent conduct" and relies entirely on that conduct as the basis for a claim, the claim is "grounded in fraud," and the pleading as a whole must satisfy Rule 9(b). Id. (citing Vess, 317 F.3d at 1103-04).

Rule 9(b) requires the circumstances constituting fraud to be stated with particularity; they must "state the time, place and specific content of the false representations as well as the identities of the parties to the misrepresentation." Misc. Serv. Workers, Drivers & Helpers v. Philco-Ford Corp., 661 F.2d 776, 782 (9th Cir. 1981) (citations omitted); Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) ("Averments of fraud must be accompanied by the who, what, when, where, and how of the misconduct charged.") (internal quotation marks omitted). The plaintiff must also plead facts explaining why the statement was false when it was made. See In re GlenFed, Inc. Sec. Litig., 42 ...


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