Comments on: A question about the AutoAdmit litigation

By: Cyrus Sanai

Cyrus Sanai — Sat, 09 Aug 2008 18:29:03 +0000

The problem for the attorney in Flatly was (a) that the plaintiff threatened to make various CRIMINAL rape allegations as part of a civil suit, after dropping her rape complaint with the police, and most important (b) the plaintiff’s attorney threatened numerous other actions that were not related to advancing a civil lawsuit. It was the latter panoply of threats that brought the case over the line.

The result is in CA is that it is always ok, indeed it is absolutely privileged, to threaten to file a lawsuit. This is bright line law, strictly enforced in California; I was awarded $120,000 by the LA Superior Court in defending a defamation action arising from the mailing of a shareholder derivative suit demand letter.

It was threatening the other stuff (issuing press releases, going to the ICE to get someone deported, etc.), none of which advance a civil lawsuit for assault, that crossed the line in the Flatley case.

So to address the query: in general, saying “pay me money or I file a lawsuit” is NEVER extortion. “Pay me money and a file a lawsuit and issue a press release” should be analyzed on whether the threat of issuance of the press release might be wrongful in the absence of the lawsuit, though that’s not the pathway courts necessarily follow.

The way around this, of course, is not to make the threat. File the lawsuit and send a copy to the other side with the privileged settlement letter. That is never prosecutable as extortion. If the suit is nothing more than a shake down job, then the defendants can press a malicious prosecution action.

By: Mike

Mike — Fri, 08 Aug 2008 01:00:31 +0000

I’ve never understood the distinction.

Has anyone written a law review article on this?

By: Benjamin Cooper

Benjamin Cooper — Thu, 07 Aug 2008 16:56:58 +0000

The problem is inherent in the fact that, if I have a meritorious claim, I have a right to sue and bring to light all relevant information, no matter whether or not transaction costs or externalities exceed the potential damages.

So “blackmail” will always be possible from meritorious claims; the “blackmailer” gets a win-win – the judgment or the surplus.

As for colorable but ultimately failing claims, the only solution is yet more litigation as to whether a demand on a claim was “blackmail” – and more litigation is something I thought this blog wanted to avoid.

By: JT

JT — Thu, 07 Aug 2008 14:43:06 +0000

Civil matters that involve emotion get ugly and confusing quite quickly. “Truth” and “facts” get distorted by both sides.

By: Ken

Ken — Thu, 07 Aug 2008 14:16:44 +0000

In California, at least, the line is (poorly) defined in Flatley v. Mauro, 39 Cal.4th 299 (2006) (Yes, that's Flatley as in the Lord of the Dance). It's a touchy-feely multifactor test based on all the circumstances of the threat, that doesn't do anything but warn lawyers that their threats might rise to the level of extortion, maybe, if a court thinks so: We emphasize that our conclusion that Mauro’s communications constituted criminal extortion as a matter of law are based on the specific and extreme circumstances of this case. Extortion is the threat to accuse the victim of a crime or “expose, or impute to him … any deformity, disgrace or crime” (Pen.Code § 519) accompanied by a demand for payment to prevent the accusation, exposure, or imputation from being made. Our opinion should not be read to imply that rude, aggressive, or even belligerent prelitigation negotiations, whether verbal or written, that may include threats to file a lawsuit, report criminal behavior to authorities or publicize allegations of wrongdoing, necessarily constitute extortion.