IN DEFAMATION CASE, 9TH CIR. MAY REVISIT ISSUE OF WHETHER SLAPP MOTIONS CAN BE BROUGHT AT ALL IN FEDERAL COURT

In the latest case to send shock waves through the California civil defense bar, Makaeff v. Trump University (filed 4/17/13 9th Cir.) No. 11-55016, a disgruntled former student of Trump University's wealth building through real estate seminars sued Trump U. for unfair business practices, fraud and the like, claiming that Trump University is a "scam" and published her experiences with Trump U.  internet chat rooms and review sites.   She found many other former students had posted comments expressing their dissatisfaction with the seminar and the exorbitant price they paid ($34,000.00) with little or no ROI.    In return, Trump sued Makaeff, the former student for defamation.  Makaeff filed and won her anti-SLAPP motion before the 9th Circuit on that grounds that an (e)(4) issue of public interest was implicated by the post and met prong one.  On prong two, the court found that Trump U was a limited purpose public figure for purposes of the public controversy of whether Trump U.'s private, for-profit, real estate education programs were a scam, which is exactly what Makeaff;s post was about.   All Justices concede that this is clearly proper case in which to grant an anti-SLAPP under California's anti-SLAPP statutory scheme.  

The rub comes from Chief Judge, Alex Kozinski's concurring opinion joined by Judge Paez.  Judge Kozinski expressed his strong opinion that an en banc hearing revisiting the U.S. Newsham v. Lockheed Missile and Space Co., 190 F.3d 963, 973 (9th Cir. 1999) and its progeny on the issue whether exotic state procedural rules, like California's anti-SLAPP statute, should be applied in federal court.  The Newsham case held that the anti-SLAPP statute will apply in federal court to state law claims in diversity cases but without the shortened time periods for filing the motion under subd. (f) and without the automatic stay on discovery under subd. (g) applicable in state court because those two provisions directly collide with the federal rule of civil procedure.   Moreover, while the anti-SLAPP statute is a procedural burden shifting device and pre-trial dismissal motion, its goal is substantive - to swiftly extricate defendants from suit for engaging in prima facie First Amendent speech or petition activity.   It is the lawsuit itself that has the chilling effect at which the anti-SLAPP statute is aimed.   The Court conducted an analysis under the Erie doctrine in arriving at its conclusion that the anti-SLAPP statute serves a substantive goal, it will apply in federal court with some limitations.  Erie Railroad v. Thompkins 304 U.S 64 (1938) [state substantive law will apply to state law claims in federal court but federal procedural law will apply in federal court]. Judge Kozinski believes the anti-SLAPP statute is purely procedural. 

Under the pressure of sequestration and budget cuts, courts are feeling the pinch and this too might be partial motivating factor behind Judge Kozinski's eagerness to revisit Newsham.   It would certainly eliminate a lot of messy SLAPP motions and appeals from the dockets in the 9th Circuit at the both the trial and appellate levels.   Judge Kozinski has invited Trump's counsel to file a petition for en banc hearing on the issue of whether SLAPP motions are properly used at all in federal court.   This case will be watched closely by the bench and bar in the coming months. 

The argument for Makeaff if the court grants en banc hearing on the issue, is to show that the anti-SLAPP statute was intended as an immunity statute at least in protecting a specified class of defendants from the expense and delay of lawsuits generally simply because they have exercised their First Amendment speech or petition rights.  This way the law may be considered substantive rather than procedural under Erie.
Moreover, eliminating the anti-SLAP procedure from federal courts would promote rampant forum shopping by plaintiffs lawyers, a result the California Legislature clearly did not intend - many plaintiffs would continue to get away with silencing defendants just for posting comments on the internet about their dissatisfaction with a business or retaliate for making a complaint to a government agency.  Even with the anti-SLAPP law in place in federal court, it is still far more plaintiff friendly than its state law counterpart as Judge Kozinski points out. 

Finally, the majority opinion contains a great defamation analysis in a consumer rights type of case against a business for unfair business practices etc.