Whether or not a pre-litigation demand letter is extortionate as a matter of law has been a hot topic in anti-SLAPP litigation over the past ten years.
In 2006, the Supreme Court held that the anti-SLAPP law does not apply when the defendant concedes, or the evidence conclusively establishes that the defendants conquest was illegal as a matter of law. Flatley v. Mauro held that the defendant’s over-the-top pre-litigation demand letter and phone calls were extortionate as a matter of law.
Since then, two published opinions have followed Flatley in concluding that the demand letters in those cases were illegal as a matter of law and therefore the anti-SLAPP law did not apply: Cohen v. Brown and Mendoza v. Hamzeh. A third case, Malin v. Singer (where CASP was counsel for two of the defendants), held that the demand letter in that case was not extortionate as a matter of law, and that Flatley did not apply.
Now, in an opinion issued on June 13, 2014, the Court of Appeal, Sixth Appellate District, ruled that the pre-litigation demand letter in that case was extortionate as a matter of law. In Stenehjem v. Sareen, an employee sued his former employer’s president and chief executive officer (CEO) for defamation. The CEO counter-sued for civil extortion, based on an email sent by the employee. Among other things, the employee allegedly made a pre-litigation claim for defamation and then sent a follow-up email threatening to file a false criminal complaint unless the CEO paid the employee to settle his defamation claim. The employee’s email demand also referred to potential involvement of prosecutors and government agencies. The CEO claimed that the employee’s email constituted criminal extortion.
The employee responded by filing an anti-SLAPP motion to the CEO’s cross-complaint, claiming that the statements were pre-litigation communications that were protected under C.C.P § 425.16(e)(2). The employee also claimed that the CEO could not establish a probability of prevailing because the statements were subject to the litigation privilege of Civil Code 47(b). The trial court granted the employee’s anti-SLAPP motion.
The Court of Appeal disagreed, holding that the pre-litgation demand email, “when considered in the context in which the demand was made,” constituted extortion as a matter of law and was not protected under the anti-SLAPP statute. The court analyzed the email and its context, and concluded that because “it threatened to expose [the CEO] to federal authorities for alleged violations of the False Claims Act unless he negotiated a settlement of [the employee’s] private claims,” that the e-mail constituted extortion as a matter of law. The court stated that, as in Flatley, the alleged criminal activity that the employee threatened to expose was “‘entirely unrelated to any alleged injury suffered by’ [the employee] as alleged in his defamation and wrongful termination claims.”
The Court held that because the employee did not meet his burden of showing that the underlying allegations of the cross-complaint were protected under the anti-SLAPP statute, the anti-SLAPP motion should have been denied.