{"id":4136,"date":"2023-10-23T23:22:05","date_gmt":"2023-10-23T23:22:05","guid":{"rendered":"https:\/\/socal.law\/?p=4136"},"modified":"2023-11-30T23:41:59","modified_gmt":"2023-11-30T23:41:59","slug":"an-offer-you-cant-refuse-part-iii-the-dropped-dime-and-the-underlying-crime","status":"publish","type":"post","link":"https:\/\/socal.law\/an-offer-you-cant-refuse-part-iii-the-dropped-dime-and-the-underlying-crime\/","title":{"rendered":"An Offer You Can\u2019t Refuse, Part III: The Dropped Dime and the Underlying Crime"},"content":{"rendered":"\n
\"\"<\/figure>\n\n\n\n

In my first article<\/a> on this topic, I discussed the blurred line between permissible prelitigation communications and constitutionally unprotected extortionate demands. In a subsequent article<\/a>, I discussed that without payment by the extortionist to the victim, there is no claim for civil extortion.   <\/p>\n\n\n\n

A relatively recent case has shed additional light on the blurry line discussed in Part I of this series. Specifically,  the new precedent clarifies the importance of a key issue in the civil extortion analysis\u2014the relatedness of the information threatened to be revealed and the underlying wrong. It also bridges the gap between the seminal authorities of Flatley v. Mauro, <\/em>39 Cal. 4th 299 (2006)and Malin v. Singer, 217 Cal. App. 4th 1283 (2013) (previously discussed in Part I).<\/em><\/p>\n\n\n\n

Case Analysis:<\/mark><\/u><\/strong><\/p>\n\n\n\n

In Flickinger v. Finwall<\/em>, 85 Cal. App. 5th 822 (2022) (\u201cFlickinger II\u201d),<\/em> decided November 30, 2022, Jason Flickinger (\u201cPlaintiff\u201d), through counsel, made a demand on Robert Pendergrast, a contractor he hired to remodel his home, for presumably the cost of finishing the remodeling work. Id. <\/em>at 828. Pendergrast, through his counsel, Gordon Finwall (\u201cFinwall\u201d), rejected the demand in a December 2016 letter (the \u201cDecember 2016 Letter\u201d), wherein he wrote, “I suggest you discuss with [Plaintiff] how such litigation may result in Apple opening an investigation into [Plaintiff’s] relationships with vendors.” Id. at 829.<\/em> In so doing, Finwall was apparently alluding to Plaintiff\u2019s alleged receipt of kickbacks from Chinese vendors while liaising with them on behalf of Apple, Plaintiff\u2019s employer.<\/p>\n\n\n\n

The first case, Flickinger I, began when Plaintiff sued Pendergrast. While Flickinger I was still pending, Plaintiff filed another case in what is known as Flickinger II.<\/p>\n\n\n\n

In the case that preceded Flickinger II<\/em>, Flickinger I<\/em>, Plaintiff asserted a breach of contract cause of action against Pendergrast. Id.<\/em> While Flickinger I <\/em>was pending, Plaintiff filed Flickinger II, <\/em>naming both Pendergast and Finwall as defendants, based on allegations that Finwall  “used threats, intimidation, and coercion\u201d in the December 2016 Letter \u201cto prevent [p]laintiff from filing [Flickinger I].”. Id. at 831. <\/em>The trial court denied Finwall\u2019s anti-SLAPP motion to strike Plaintiff’s causes of action, holding that it was extortionate and illegal as a matter of law and thus unprotected activity; Finwall appealed. Id.<\/em> <\/p>\n\n\n\n

The Court of Appeal found that the December 2016 letter was protected under Section 425.16 because it was “written in response to a prelitigation demand from Plaintiff\u2019s counsel and previewed Pendergrast’s litigation posture.” Id. at 833.<\/em> “Section 425.16 protects any conduct in furtherance of the exercise of the constitutional right of petition.” Id. <\/em>at 832. The Court also found that the Flatley<\/em> exception did not apply because “Defendant’s letter bears no resemblance to the “extreme” conduct in Flatley which warranted a “narrow” exception to the protections ordinarily accorded petitioning activities under section 425.16.” Id. <\/em>at 836. The Court reasoned that Flatley <\/em>permitted a “finding of extortion as a matter of law only where an attorney’s threats fall wholly outside the bounds of professional norms.” Id<\/em>.  <\/p>\n\n\n\n

Moreover, the Court reconciled that while the Malin <\/em>court found that the “allegations of Malin’s sexual activity Singer threatened to disclose in [that] litigation [were] \u2018inextricably tied\u2019 to the underlying causes of action,” the court<\/em>\u00a0also suggested a standard that only required them to be reasonably connected to be protected under 425.16.\u00a0Malin,\u00a0<\/em>217 Cal. App. 4th at 1299. Therefore, the Court stated that “[a] threat that is \u2018entirely unrelated\u2019 to the merits of the disputed claims is not \u2018reasonably connected\u2019 to the actionable conduct. But a threat does not have to be \u2018inextricably tied\u2019 to the merits to avoid a finding it is “entirely unrelated.”\u00a0Flickinger II, 85 Cal. App. 5th\u00a0<\/em>at 838. Therefore, the Court found that Finwall’s implied threat to publicize that Plaintiff engaged in an illegal kickback scheme was reasonably connected to the dispute.\u00a0Id. <\/em>Specifically, the underlying dispute about the incomplete remodel ultimately arose from Pendergrast\u2019s failure to obtain permits, which, in turn, arose from Plaintiff\u2019s alleged instruction to Pendergrast not to obtain permits to avoid any public record of Plaintiff spending above his means, implicating the alleged cash kickback payments. Id. at 838-39. As a result, the December 2016 Letter was not illegal as a matter of law and was entitled to protected activity status as prelitigation communications in connection with the constitutional right of petition under section 425.16(e)(4). Id. at 832-33.<\/p>\n\n\n\n

Unlike previous cases, the Flickinger <\/em>Court had the occasion to go past the first prong of the anti-SLAPP analysis (the \u201cprotected activity\u201d inquiry). Having determined that the December 2016 Letter was protected activity, the Court moved on to the second step of the anti-SLAPP analysis, wherein the burden shifted to the Plaintiff to show that it had a \u201clikelihood of success\u201d on the merits of his civil extortion claim. The Court held that Plaintiff could not show a likelihood of success on his civil extortion cause of action because the cause of action was barred by the litigation privilege of Civil Code Section 47(b), which rather broadly protects communications made in connection with judicial proceedings, including pre- and post-litigation communications. Id. <\/em>at 840. The Court, applying largely the same logic as in the first step of its analysis, held that the litigation privilege applied to Defendant’s December 2016 Letter because it was related to Plaintiff’s threatened litigation against Defendant’s client. Id. <\/em>In so doing, the Court reversed the trial court\u2019s denial of the anti-SLAPP motion, finding that the trial court should have stricken Plaintiff\u2019s civil extortion claim.<\/p>\n\n\n\n

What about the holdings in Stenehjem<\/em> or Mendoza<\/em>?<\/mark><\/u><\/strong><\/p>\n\n\n\n

Although the Flickinger <\/em>Court largely focuses on the \u201creasonably related\u201d test for extortion that it establishes, that test does not fully explain other courts\u2019 prior decisions regarding whether various prelitigation communications were illegally extortionate as a matter of law.<\/p>\n\n\n\n

Specifically, the court does not directly address the cases of Mendoza v. Hamzeh<\/em>, 215 Cal. App. 4th 799 (2013) or Stenehjem v. Sareen<\/em>, 226 Cal. App. 4th 1405 (2014)–both of which are discussed in greater detail in Part I of this series.<\/p>\n\n\n\n

However, in both of those cases, the crimes\/disgraces threatened to be revealed by the sender of the challenged communication are at least arguably reasonably related to the underlying wrongdoing. Specifically, the threat to report plaintiff in Mendoza<\/em> to various agencies for fraud in its business practices is ostensibly related to the underlying claim for the \u201csame\u201d \u201cfraud, conversion, and breaches of contract\u201d allegedly perpetrated by the plaintiff against the attorney defendant\u2019s client, plaintiff\u2019s former employee. Mendoza, <\/em>226 Cal. App. 4th at 802-03. Similarly, plaintiff in Stenehjem<\/em>\u2019s threat to initiate a qui tam action against his former employer is also ostensibly related to his underlying claim for wrongful termination based on alleged retaliation against him for reporting the same conduct that would form the basis for the qui tam action. Although the court in Stenehjem<\/em> does expressly state that it found the qui tam threat to be unrelated to the underlying wrongful termination claim. However, that analysis seems suspect given that the alleged illegal activity by the former employer is what plaintiff alleges led to his termination. If anything, that conduct is more related to the underlying claim than the money laundering of Flickinger II <\/em>is to the breach of contract. Indeed, the court in Flickinger II <\/em>seems to have taken the non-moving party\u2019s theory of the case at face value in its analysis, while the Stenehjem <\/em>court took a more critical approach.<\/p>\n\n\n\n

Perhaps the way to square the circle in both of these cases is by referring to the explicitness of the threat. Although not spelled out in any of these cases, the unspoken factor of explicitness balances out the relatedness \u201cprong\u201d of the civil extortion test. For example, the threat in Flickinger II <\/em>is in the Malin \u201c<\/em>just stating facts\u201d mode that suggests that unpleasant information might be revealed if the case did not settle. On the other hand, the demand letter in Mendoza <\/em>openly threatens to report the plaintiff to a laundry list of agencies. Although subtler, the plaintiff in Stenehjem <\/em>was also more direct about filing the qui tam claim than the oblique threat of exposure in Flickinger II<\/em>. Indeed, although not expressly \u201cweighed\u201d against the relatedness analysis, the Flickinger <\/em>court does take note of the lack of express threats in the December 2016 Letter:<\/p>\n\n\n\n

[Finwall\u2019s] only express \u2018threat\u2019 was that his client . . . would \u2018aggressively defend himself in litigation. The statement from which plaintiff and the trial court implied a further threat [regarding the potential exposure of the money laundering to Apple] is not a threat that Pendergrast would report plaintiff to prosecuting authorities, and does not lie so far outside the bounds of professional communication to amount to criminal extortion as a matter of law.<\/p>\n\n\n\n

Flickinger, <\/em>85 Cal. App. 5th at 837.<\/p>\n\n\n\n

Takeaways<\/mark><\/u><\/strong><\/p>\n\n\n\n

So what does this mean for litigators and their clients? Although lawyers still must take care not to cross an often blurry line, it behooves them to make sure (1) that whatever \u201cthreat\u201d is issued is related to the underlying claim and (2) to avoid express threats. These best practices are rooted in the reality, illuminated by Flickinger<\/em>, that courts are less inclined to find that a demand is extortionate as a matter of law if your threat (implied or not) to report a violation\/crime or reveal a “disgrace” is related to the underlying claim that you are leveraging the threat to recover money on. Adhering to these general guidelines will minimize the chances that any prelitigation demand will be considered extortionate and thus not entitled to constitutional protection. Of course, attorneys would appreciate the Court of Appeal addressing head-on how the \u201crelatedness\u201d and \u201cexplicit threat\u201d factors relate to each other in making the extortion determination, but until that day comes, practitioners at least have this newly published case that adds a not insubstantial gloss on the established Flatley\/Malin <\/em>analysis.<\/p>\n","protected":false},"excerpt":{"rendered":"

In my first article on this topic, I discussed the blurred line between permissible prelitigation communications and constitutionally unprotected extortionate demands. In a subsequent article, I discussed that without payment by the extortionist to the victim, there is no claim for civil extortion.    A relatively recent case has shed additional light on the blurry line discussed […]<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16],"tags":[],"yoast_head":"\nAn Offer You Can\u2019t Refuse, Part III: The Dropped Dime and the Underlying Crime - Gupta Evans and Ayres<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/socal.law\/an-offer-you-cant-refuse-part-iii-the-dropped-dime-and-the-underlying-crime\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"An Offer You Can\u2019t Refuse, Part III: The Dropped Dime and the Underlying Crime - Gupta Evans and Ayres\" \/>\n<meta property=\"og:description\" content=\"In my first article on this topic, I discussed the blurred line between permissible prelitigation communications and constitutionally unprotected extortionate demands. 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In a subsequent article, I discussed that without payment by the extortionist to the victim, there is no claim for civil extortion.    A relatively recent case has shed additional light on the blurry line discussed […]","category_list":"<a href=\"https:\/\/socal.law\/category\/news\/\" rel=\"category tag\">All Blog Posts<\/a>","comments_num":"0 comments","_links":{"self":[{"href":"https:\/\/socal.law\/wp-json\/wp\/v2\/posts\/4136"}],"collection":[{"href":"https:\/\/socal.law\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/socal.law\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/socal.law\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/socal.law\/wp-json\/wp\/v2\/comments?post=4136"}],"version-history":[{"count":2,"href":"https:\/\/socal.law\/wp-json\/wp\/v2\/posts\/4136\/revisions"}],"predecessor-version":[{"id":4161,"href":"https:\/\/socal.law\/wp-json\/wp\/v2\/posts\/4136\/revisions\/4161"}],"wp:attachment":[{"href":"https:\/\/socal.law\/wp-json\/wp\/v2\/media?parent=4136"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/socal.law\/wp-json\/wp\/v2\/categories?post=4136"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/socal.law\/wp-json\/wp\/v2\/tags?post=4136"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}