Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_10-cv-00940/USCOURTS-casd-3_10-cv-00940-5/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 28:1332fr Diversity-Fraud

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

TARLA MAKAEFF, BRANDON KELLER,

ED OBERKROM, and PATRICIA

MURPHY, on Behalf of Themselves and All

Others Similarly Situated,

Plaintiffs,

CASE NO. 10cv0940 - IEG (WVG)

ORDER:

(1) GRANTING IN PART AND

DENYING IN PART TRUMP

UNIVERSITY’S MOTION TO

DISMISS; and

(2) DENYING TRUMP

UNIVERSITY’S MOTION TO

STRIKE

[Doc. Nos. 50, 51]

vs.

TRUMP UNIVERSITY, LLC, (aka Trump

Entrepreneur Initiative), a New York Limited

Liability Company; DONALD J. TRUMP;

and DOES 1 through 50, inclusive,

Defendants.

This is a putative class action brought by individuals who enrolled in Trump University

seminars and now maintain they learned a much different lesson than they bargained for. Plaintiffs

allege Trump University failed to provide the services they paid for, committed fraud, and violated

various state consumer protection and business code provisions. The matter comes before the

Court on Defendant Trump University’s motion to dismiss and motion to strike. For the reasons

stated herein, the Court GRANTS IN PART and DENIES IN PART Defendant’s motion to

dismiss and DENIES Defendant’s motion to strike.

///

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BACKGROUND

Noting the facts underlying this action have been fully briefed in previous motions, the

parties declined to brief the Court on the factual background pertinent to the present motion. (See

Def.’s Mot. at 2; Pls.’ Opp’n at 1 n.1.) Broadly speaking, Plaintiffs allege Defendants duped them

into purchasing expensive Trump University real estate seminars and mentoring services whose

features were grossly misrepresented. (See Pls.’ Opp’n at 1.)

On October 12, 2010, the Court granted in part and denied in part Defendant’s motion to

dismiss Plaintiffs’ first amended complaint (Doc. No. 33.) Subsequent to the Court’s ruling,

Plaintiffs filed a second amended complaint (“SAC”). (Doc. No. 41.) On January 31, 2011,

Defendant filed the present motion to dismiss and motion to strike. (Doc. Nos. 50, 51.) The

motions are fully briefed and suitable for disposition without oral argument pursuant to Local Civil

Rule 7.1(d).

DISCUSSION

I. Trump University’s Motion to Dismiss

A. 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) (2009). A motion to dismiss pursuant to Rule

12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of the claims asserted in

the complaint. Fed. R. Civ. P. 12(b)(6); Navarro v. Block, 250 F.3d 729, 731 (9th Cir. 2001). The

court must accept all factual allegations pled 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

Mutual 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, --- U.S. ---, 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’

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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. Ashcroft v. Iqbal, --- U.S. ---, 129 S.Ct. 1937, 1949 (2009). 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).

B. Analysis

1. Violation of New York’s General Business Law § 349(a)

Defendant maintains Plaintiffs’ causes of action under New York law must fail because

Plaintiff Patricia Murphy did not contract for, or attend, any Trump University classes in New

York. See Def.’s Mot. at 2-3. According to Defendant, Murphy only took classes in Florida and

Pennsylvania. Id. Moreover, Defendant contends the classes Murphy took were not even Trump

University classes, but classes offered by a different company. Id. Plaintiffs respond by noting the

SAC specifically alleges Murphy attended classes offered by Trump University. See Pls.’ Opp’n at

7. However, Plaintiffs acknowledge the classes took place in Florida and Pennsylvania. Id. at 7

n.4. Nonetheless, Plaintiffs suggest that their § 349 claims are viable because they encompass

more than merely attending classes. See id. at 7-8. Plaintiffs point to other allegations in support

of their § 349 claims. See id.

New York General Business Law § 349(a) provides that “[d]eceptive acts or practices in

the conduct of any business, trade or commerce or in the furnishing of any service in this state are

hereby declared unlawful.” In Goshen v. Mutual Life Insurance Company of New York, 98 N.Y.

2d 314, 324 (2002), the Court of Appeals addressed “territorial reach” of § 349. The Court

concluded that “the transaction in which the consumer is deceived must occur in New York.” Id.

Thus, “to qualify as a prohibited act under the statute, the deception of a consumer must occur in

New York.” Id. at 325. The Court of Appeals expressly noted its analysis did not turn on the

residency of the parties. Id.

Here, then, the Court rejects Defendant’s suggestion that § 349 applies only to New York

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residents. The Court also rejects Defendant’s assertion that Plaintiffs took classes from an

institution other than Trump University. Plaintiffs specifically allege that Murphy took courses

from Trump University, SAC ¶¶ 27, 76-77, and the Court must accept such allegations as true at

the motion to dismiss stage. Cahill, 80 F.3d at 337-38. However, the Court agrees with

Defendants that out-of-state transactions cannot form the sole basis of Plaintiffs’ § 349 claims. 

Goshen, 98 N.Y. 2d at 324. Because Plaintiffs acknowledge the courses Murphy took were in

Florida and Pennsylvania, the Court must dismiss Plaintiffs’ § 349 claims unless Plaintiffs can

provide a separate basis for relief under § 349.

Plaintiffs offer two additional grounds for relief, both of which are unavailing. First,

Plaintiffs note that Trump University offered and conducted seminars and coaching sessions in

New York. Pls.’ Opp’n at 8 (citing SAC ¶¶ 28, 29, 32-60). At this stage, however, the Court must

evaluate only the claims of named Plaintiffs. Speyer v. Avis Rent a Car System, Inc., 415 F. Supp.

2d 1090, 1094 (S.D. Cal. 2005) (citing Barth v. Firestone Tire and Rubber Co., 661 F. Supp. 193

(N.D. Cal. 1987). Second, Plaintiffs note that Trump University used its New York address to

send correspondence to Plaintiffs and putative class members nationwide, see Pls.’ Opp’n at 8-9

(citing SAC ¶¶ 18, 27-29, 32-60), conduct the Goshen Court expressly held to be outside the scope

of § 349. In Goshen, defendant conducted business in New York, but sold plaintiff insurance

policies in Florida. 98 N.Y. 2d at 322. Noting that plaintiff had received defendant’s promotional

materials, purchased his policy, and paid his premiums in Florida, the Court held that “any

deception took place in Florida, not New York.” Id. at 326. Likewise, here, although Trump

University conducts business in New York, it did not deceive any of the named Plaintiffs in New

York. Accordingly, the Court DISMISSES WITHOUT PREJUDICE Plaintiffs’ § 349 claims.

2. Fraud, Misrepresentation, and False Promises Claims

Defendant maintains the fraud allegations in the SAC have not been pleaded with

particularity. See Def.’s Mot. at 3-5. In addition, Defendant argues that Plaintiffs could not have

relied on any of the alleged misrepresentations because the statements were made after Plaintiffs

had already purchased the seminars. Id. Plaintiffs respond that they have cured the deficiencies

the Court identified in its October 12, 2010 Order and pleaded fraud with sufficient particularity. 

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See Pls.’ Opp’n at 3-6. Plaintiffs also dispute Defendant’s reliance argument, emphasizing that the

misrepresentations are used to “upsell” customers to the next product level. See id. at 5. In its

reply, Defendant argues every alleged misrepresentation is not actionable, either because the SAC

does not allege why the statement is false, or because the statement is “mere opinion or puffery.” 

See Def.’s Reply at 2-3.

The Court previously held that Plaintiffs’ fraud, misrepresentation, and false promises

claims are governed by Rule 9(b) of the Federal Rules of Civil Procedure, and Plaintiffs do not

argue otherwise in opposing the present motion to dismiss. Under Rule 9(b), fraud allegations

must be specific enough to give defendants notice of the particular misconduct, so that they can

defend against the charge and not just deny that they have done anything wrong. Kearns v. Ford

Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009) (citations omitted). Averments of fraud must be

accompanied by the “who, what, when, where, and how” of the misconduct charged. Id.

The Court turns, then, to whether each Plaintiff has satisfied the heightened pleading

standard of Rule 9(b). Plaintiff Patricia Murphy’s fraud allegations fall short. Although Murphy

alleges she participated in seminars between January 27 and March 12, 2007, see SAC ¶ 76, she

does not identify any specific instances in which she was the target of Defendant’s

misrepresentations. By contrast, the other Plaintiffs allege the “who, what, when, where, and how”

of Defendant’s misrepresentations, and their allegations further reveal that certain

misrepresentations took place at a time before Plaintiffs purchased the seminars:

• Plaintiff Tarla Makaeff alleges that Trump University speaker Tiffany Brinkman

persuaded Makaeff to sign up for the $35,000 seminar by “guaranteeing” Plaintiff

Makaeff that her first real estate deal would earn her enough to pay for the seminar. 

See SAC ¶ 63. Soon after Brinkman’s statements, on or about August 10, 2008,

Makaeff signed up for the $35,000 seminar. See id. ¶ 61. Lest there be any doubt

as to why the statements were false, Plaintiff alleges that, contrary to Brinkman’s

guarantee, she never made any money. Id. ¶ 63.

• Plaintiff Ed Oberkrom alleges that in order to persuade him and the other students

in his class to sign up for the $25,000 seminar, the speaker told them that “the first

students to sign up . . . would be the first to get the best properties on a list, and

access to get the best buyers.” See SAC ¶ 71. The speaker also told them that “the

first students to sign up would get the first access to an exclusive website of

properties hand-picked by Donald Trump.” Id. Soon after the speaker’s statements,

in March 2009, Oberkrom signed up for the seminar. Oberkrom alleges he later

learned the properties were not handpicked by Donald Trump, and the website was

not exclusive; it was accessible to anyone for $39 a month. Id. 

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 There may well be, as Defendant suggests, a question as to whether some of Plaintiff’s 1

allegations constitute “mere opinion or puffery.” However, because Defendant raised the issue for the

first time in its reply brief, Plaintiffs did not have the opportunity to respond, and the Court need not

consider arguments raised for the first time in a reply brief. Zamani v. Carnes, 491 F.3d 990, 997 (9th

Cir. 2007). At any rate, Defendant has not flagged any of the allegations discussed herein as

constituting opinion or puffery. See Def.’s Reply at 3 (citing SAC ¶ 54).

- 6 - 10cv0940

• Plaintiff Brandon Keller attended a free introductory seminar on November 18,

2009 at the Marriott in La Jolla on La Jolla Village Drive. See SAC ¶ 79. At the

free seminar, a speaker told students that if they signed up for the $1,500 seminar,

and if they brought five to ten real estate leads, Trump University trainers would

call the leads. Id. ¶ 82. A speaker also told students if they signed up for the $1,500

seminar, they were guaranteed to make $5,000 to $10,000 within 30 days. See id. ¶

86. Keller alleges each of these statements were false. Keller never made any

money, and at the $1,500 seminar, Trump University trainers called leads for only

two of the thirty students. See id. ¶¶ 79, 87.

The foregoing allegations satisfy the heightened pleading requirement of Rule 9(b) and negate

Defendant’s assertion that the timing of the misrepresentations precludes reliance. The Court 1

declines to address Defendant’s other reliance argument, i.e., that Plaintiffs expressly disclaimed

reliance on any guaranteed outcomes when they signed up for the seminars, as that argument was

addressed previously in the Court’s October 12, 2010 Order. See Doc. No. 33.

Based on the foregoing, the Court DISMISSES WITHOUT PREJUDICE Plaintiff

Patricia Murphy’s fraud, misrepresentation, and false promises claims but DENIES Defendant’s

motion to dismiss those claims as to the other Plaintiffs.

3. Breach of Contract Claims

In its October 12, 2010 Order, the Court held that Plaintiff’s FAC adequately stated a cause

of action for breach of contract (as well as certain causes of action deriving therefrom). See Doc.

No. 3 at 7. Defendant contends that the SAC alleges additional contract terms and must be

dismissed because “the terms of the alleged contract are a moving target.” See Def.’s Mot. at 5-6. 

Plaintiffs respond that the breach of contract allegations in the SAC are “materially the same” as

those in the FAC. See Pls.’ Opp’n at 2. Plaintiffs contend they have merely added detail to their

allegations.

The Court is unpersuaded by Defendant’s argument. Plaintiffs’ allegations are not a

“moving target” because the SAC stands on its own. See Ferdik v. Bonzelet, 963 F.2d 1258, 1262

(9th Cir. 1992) (“an amended pleading supersedes the original pleading”). At any rate, the Court is

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 As with its argument concerning Plaintiffs’ fraud claims, Defendant raises new arguments 2

in its reply brief. Because Plaintiffs did not have the opportunity to respond to such arguments, the

Court declines to address them here. See Zamani v. Carnes, 491 F.3d 990, 997 (9th Cir. 2007).

- 7 - 10cv0940

unpersuaded that Plaintiffs’ contract claims differ materially from the FAC to the SAC. To the 2

extent Defendant seeks to “nail down” Plaintiffs’ contract allegations, it should be able to do so in

discovery. See Fed. R. Civ. P. 33 (“Interrogatories to Parties”); Fed. R. Civ. P. 36 (“Requests for

Admission”). The Court DENIES Defendant’s motion to dismiss Plaintiffs’ contract claims.

4. False Advertising Claim

Defendant requests the Court to confirm that Makaeff is not a party to this cause of action

based on the Court’s previous determination that Makaeff failed to state a false advertising claim. 

See Def.’s Mot. at 6. Plaintiffs respond by restating an argument the Court considered and rejected

in its previous order, and by raising a new one: that the oral misrepresentations Defendant made in

attempting to persuade Makaeff to purchase the $35,000 seminar constitute false advertising. Pl.s’

Opp’n at 6-7.

California Business and Professions Code § 17500 prohibits the use of any untrue or

misleading statement in selling real or personal property or personal services. People v. Dollar

Rent-A-Car Sys., Inc., 211 Cal. App. 3d 119, 128 (1989). The prohibition extends to the use of

false or misleading oral statements. Id. 

The SAC alleges Defendant made misleading statements at the $1,500 seminar for the

purpose of inducing Makaeff to purchase the $35,000 seminar, and that based on such statements,

Makaeff purchased the $35,000 seminar. SAC ¶¶ 61, 63. The SAC states a false advertising claim

as to Plaintiff Makaeff, and therefore the Court DENIES Defendant’s motion to dismiss as it

relates to that claim.

II. Trump University’s Motion to Strike

A. Legal Standard for a Rule 12(f) Motion to Strike

Rule 12(f) provides that a court may strike from a pleading any insufficient defense or any

redundant, immaterial, impertinent, or scandalous matter. Fed. R. Civ. P. 12(f); Whittlestone, Inc.

v. Handi-Craft Co., 618 F.3d 970, 973 (9th Cir. 2010). The function of a motion to strike is to

avoid the unnecessary expenditures that arise throughout litigation by dispensing of any spurious

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issues prior to trial. Chong v. State Farm Mut. Auto. Ins. Co., 428 F. Supp.2d 1136, 1139 (S.D.

Cal. 2006); SidneyVinstein v. A.H. Robins Co., 697 F.2d 880, 885 (9th Cir. 1983). Rule 12(f)

motions “are generally regarded with disfavor because of the limited importance of pleading in

federal practice, and because they are often used as a delaying tactic.” Neilson v. Union Bank of

Cal., N.A., 290 F. Supp.2d 1101, 1152 (C.D. Cal. 2003). Thus, courts generally grant a motion to

strike only where it is clear that the matter to be stricken could have no possible bearing on the

subject matter of the litigation. Walters v. Fidelity Mortg. of Cal., 730 F. Supp.2d 1185, 1196

(E.D. Cal. 2010) (citing Lilley v. Charren, 936 F. Supp. 708, 713 (N.D. Cal.1996)).

B. Analysis

Defendant moves to strike: (1) allegations regarding Trump University’s targeting of senior

citizens, (2) allegations concerning Noah Herrera, and (3) allegations concerning Plaintiff Patricia

Murphy. Plaintiffs oppose the motion, arguing all of the allegations are relevant. 

1. Targeting of Seniors

Defendant contends the allegations regarding Trump University’s attempts to target senior

citizens should be stricken because the Court has already dismissed Plaintiffs’ elder abuse claim. 

The Court disagrees. Where allegations, when read with the complaint as a whole, give a full

understanding thereof, they need not be stricken. LeDuc v. Kentucky Cent. Life Ins. Co., 814 F.

Supp. 820, 830 (N.D. Cal. 1992). In this case, dismissal of the elder abuse claim does not

necessarily deprive Plaintiffs’ allegations of their relevance. The allegations arguably provide a

fuller understanding Defendant’s misconduct and the SAC as a whole. See LeDuc, 814 F. Supp. at

830. At this stage, the Court is unable to conclude the allegations have no possible bearing on the

subject matter of the litigation. See id.

2. Noah Herrera

Defendant contends that because Noah Herrera is not an agent or employee of Trump

University, the allegations regarding Herrera are immaterial and should be stricken. Again, the

Court disagrees. Plaintiffs allege a Trump University instructor facilitated a deal between Herrera

and Tarla Makaeff. See SAC ¶ 66. The deal ended badly for Makaeff, in part because Herrera

allegedly committed fraud. See id. The deal, and the instructor’s failure to disclose a conflict of

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interest, support Plaintiffs’ claim that Defendant misrepresented quality of Trump University’s

seminars in violation of the Consumer Legal Remedies Act, Cal. Civ. Code § 1770(a)(7).

3. Patricia Murphy

Last, although Defendant insists Plaintiff Patricia Murphy never enrolled in a Trump

University seminar, the SAC alleges otherwise. See SAC ¶¶ 27, 76-77. A motion to strike is not

the appropriate vehicle for contesting the veracity of Plaintiffs’ allegations. See Fed. R. Civ. P.

12(f) (permitting the Court to strike from a pleading any “redundant, immaterial, impertinent, or

scandalous” matter).

The Court DENIES Trump University’s motion to strike in its entirety.

CONCLUSION

For the reasons set forth above, the Court GRANTS IN PART and DENIES IN PART

Defendant’s motion to dismiss and DENIES Defendant’s motion to strike. The Court ORDERS

as follows:

- Plaintiffs’ § 349 claims are DISMISSED WITHOUT PREJUDICE.

- Plaintiff Patricia Murphy’s fraud, misrepresentation, and false promises claims are

DISMISSED WITHOUT PREJUDICE.

- Defendant’s motions are DENIED in all other respects.

The Court GRANTS Plaintiffs leave to amend their complaint. If Plaintiffs wish to do so,

they should file their third amended complaint within 14 days of the filing of this Order.

IT IS SO ORDERED.

DATED: May 16, 2011

IRMA E. GONZALEZ, Chief Judge

United States District Court

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