Defendants appealed from an order denying their special motion to strike plaintiff's complaint under Code of Civil Procedure section 425.16, the anti-SLAPP statute.
Plaintiff Michael Malin
In 2011, Arazm consulted her attorney, defendant Martin D. Singer, regarding Malin and Moore's alleged misappropriation of company assets. On Arazm's behalf, Singer sent Malin a demand letter and draft of Arazm's proposed complaint. The demand letter contained what Malin contends was an extortionate threat to disclose certain personal information if he did not pay to settle Arazm's claims. In the disputed portion of the letter, Singer stated that Malin had misused company resources to arrange sexual liaisons with older men, including "Judge [first and last name omitted], a/k/a `Dad' (see enclosed photo)." (We have omitted the judge's name because the demand letter was filed under seal to protect the judge's privacy.) In order to place the allegedly extortionate threat in its proper context, we have quoted the letter below and italicized the disputed language:
As indicated above, Singer included with the letter a photograph of the judge and a copy of the draft complaint. The draft complaint did not identify any alleged sexual partners but contained several blank spaces and redactions that, according to the letter, would be filled in before the complaint was filed. The draft complaint stated in relevant part: "[O]ver the past several months, ___________ has arranged through email and through Internet websites such as craigslist.org to have multiple sexual encounters with [redacted] which include __________. Based on information and belief, _________ used company resources to facilitate these rendezvous and to communicate with various [redacted] including _________, __________, and __________."
After he received the demand letter, Malin sued Singer and Arazm
In his complaint's preliminary fact allegations, Malin alleged that at Arazm and Singer's behest, unknown individuals had retrieved his private communications and e-mails through illegal computer hacking and wiretapping activities. Malin's complaint alleged causes of action for (1) civil extortion based on the demand letter (Pen. Code, §§ 519, 523) (first cause of action); (2) violation of civil rights based on the illegal wiretapping and computer hacking activities (Pen. Code, § 502, subd. (c)(1), (2); 18 U.S.C. § 2510 et seq.) (second cause of action); and (3) intentional and negligent infliction of emotional distress (third and fourth causes of action).
Arazm and Singer moved to strike Malin's complaint as a SLAPP suit arising from the exercise of Arazm's constitutionally protected rights of speech or petition. The moving parties argued that because all of Malin's causes of action were based on protected statements made in contemplation of litigation, his complaint was subject to dismissal under the anti-SLAPP statute.
Arazm and Singer contended that Malin's claims were based on their protected (1) statements made before a judicial proceeding (§ 425.16, subd. (e)(1)); (2) statements made in connection with an issue under consideration or review in a judicial proceeding (§ 425.16, subd. (e)(2)); and (3) "conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest" (§ 425.16, subd. (e)(4)).
Arazm and Singer denied any involvement in the computer hacking and wiretapping activities alleged in Malin's complaint. Alternatively, they argued that even if the "allegations of computer hacking and wiretapping were true (they are not), it is evident from the context of Malin's allegations that he is complaining about pre-litigation information-gathering ..., which are clearly protected activities."
Finally, Arazm and Singer argued that Malin was incapable of establishing a probability of success on the merits under the second prong of section
In opposition, Malin argued that Flatley v. Mauro (2006) 39 Cal.4th 299 [46 Cal.Rptr.3d 606, 139 P.3d 2] (Flatley) was "effectively identical" to this case. Malin urged the court to apply the Flatley exception and deny the motion to strike the extortion claim because Singer's demand letter constituted criminal extortion as a matter of law. Malin also urged the court to follow Gerbosi v. Gaims, Weil, West & Epstein, LLP (2011) 193 Cal.App.4th 435 [122 Cal.Rptr.3d 73] (Gerbosi) and deny the motion to strike the claims arising from the alleged wiretapping and computer hacking activities because Arazm and Singer's liability for those alleged criminal activities was "a question of fact for the jury subject to discovery."
In reply, Singer and Arazm sought to distinguish Flatley. They argued "the Flatley exception only applies if `either the defendant concedes, or the evidence conclusively establishes, that the assertedly protected speech or petition activity was illegal as a matter of law.' ([39 Cal.4th] at p. 320.)" The Flatley exception does not apply here, they argued, because they "have not conceded, and Malin has not conclusively shown, that the Letter was illegal as a matter of law."
The trial court denied the anti-SLAPP motion under the first step of the section 425.16 analysis based on Flatley and Gerbosi. It concluded that because the activities targeted by Malin's complaint — wiretapping, computer hacking, and extortion — were illegal as a matter of law, the complaint was not subject to early dismissal under the anti-SLAPP statute. The court stated in relevant part:
Arazm and Singer timely appealed from the order denying their special motion to strike. (§§ 425.16, subd. (i), 904.1, subd. (a)(13).)
Once the moving party has made the threshold showing, the burden shifts to the opposing party. Under step two of the statutory analysis, the opposing party must demonstrate a probability of prevailing on the claim. (§ 425.16, subd. (b)(1).) A cause of action is subject to dismissal under the statute only if both steps of the anti-SLAPP analysis are met.
In an appeal from an order granting or denying a motion to strike under section 425.16, the standard of review is de novo. (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 269, fn. 3 [46 Cal.Rptr.3d 638, 139 P.3d 30] (Soukup).) In considering the pleadings and supporting and opposing declarations, we do not make credibility determinations or compare the weight of the evidence. Instead, we accept the opposing party's evidence as true and evaluate the moving party's evidence only to determine if it has defeated the opposing party's evidence as a matter of law. (Ibid.)
In the following parts, we conclude in part II. that Malin's first cause of action for civil extortion is subject to dismissal under the anti-SLAPP statute. We conclude in part III. that Malin's second cause of action for violation of civil rights and third and fourth causes of action for intentional and negligent infliction of emotional distress are not subject to dismissal under the anti-SLAPP statute because they did not arise from protected activities. Finally, we conclude in part IV. that Arazm and Singer's right to costs and attorney fees as partially prevailing defendants under section 425.16 must be determined, in the first instance, by the trial court on remand.
Arazm and Singer contend the trial court erroneously denied their special motion to strike the extortion claim by applying the Flatley exception to Singer's demand letter, which, unlike the letter in Flatley, does not constitute criminal extortion as a matter of law. We agree. Under the first step of the statutory analysis, we conclude that because Singer's demand letter does not constitute criminal extortion as a matter of law, the Flatley exception does not apply and, under the general rule articulated in Briggs, Singer's demand letter is a protected speech or petitioning activity under the anti-SLAPP statute. Under the second step of the statutory analysis, we conclude Singer's demand letter is protected by the litigation privilege (Civ. Code, § 47, subd. (b)), which precludes Malin from prevailing on his claim for extortion.
The crime of extortion is defined as "`the obtaining of property from another, with his consent ... induced by a wrongful use of force or fear ....' (Pen. Code, § 518.) Fear, for purposes of extortion `may be induced by a threat, either: [¶] ... [¶] 2. To accuse the individual threatened ... of any crime; or, [¶] 3. To expose, or impute to him ... any deformity, disgrace or crime[.]' (Pen. Code, § 519.) `Every person who, with intent to extort any money or other property from another, sends or delivers to any person any letter or other writing, whether subscribed or not, expressing or implying, or adapted to imply, any threat such as is specified in Section 519, is punishable in the same manner as if such money or property were actually obtained by means of such threat.' (Pen. Code, § 523.)" (Flatley, supra, 39 Cal.4th at p. 326.)
As the Supreme Court recognized in Flatley, extortion "has been characterized as a paradoxical crime in that it criminalizes the making of threats that, in and of themselves, may not be illegal. `[I]n many blackmail cases the threat is to do something in itself perfectly legal, but that threat nevertheless becomes illegal when coupled with a demand for money.' (Philippine Export & Foreign Loan Guarantee Corp. v. Chuidian (1990) 218 Cal.App.3d 1058, 1079 [267 Cal.Rptr. 457].)" (Flatley, supra, 39 Cal.4th at p. 326, fn. omitted.) Criminal extortion laws prohibit the wrongful use of threats to obtain the property of another, regardless whether a debt is actually owed. "`[The] belief that the victim owes a debt is not a defense to the crime of extortion.'" (Id. at p. 327.)
Attorneys are subject to "these principles in their professional conduct. Indeed, the Rules of Professional Conduct specifically prohibit attorneys from `threaten[ing] to present criminal, administration, or disciplinary charges to obtain an advantage in a civil dispute.' ([Cal.] Rules of Prof. Conduct, rule 5-100(A).)" (Flatley, supra, 39 Cal.4th at p. 327, fn. omitted.)
In Flatley, an attorney, defendant D. Dean Mauro, represented a client, defendant Tyna Marie Robertson, who allegedly was raped by plaintiff Michael Flatley. Flatley, a well-known "performer and dance impresario," owned stock in companies that provided live dance performances throughout the world. (Flatley, supra, 39 Cal.4th at p. 305.)
Mauro and Robertson made television appearances in which Robertson "described the alleged rape `in extremely lurid detail.'" (Flatley, supra, 39 Cal.4th at p. 306, fn. omitted.) After sending a demand letter on Robertson's behalf, Mauro telephoned Flatley's attorney to warn that he would "`go public'" with the rape allegations, which would be "`publicized every place he [Mr. Flatley] goes for the rest of his life' ...." (Id. at p. 330.) In subsequent phone calls, Mauro continued to threaten to "`go public'" with a story that "`would follow [Flatley] wherever he or his groups performed and would "ruin" him.' In response to Fields's [(Flatley's attorney)] query about how much money Mauro wanted to avoid this, Mauro said `it would take "seven figures."' He repeated that the deadline to respond was January 30." (Ibid.)
Flatley sued Robertson and Mauro for "civil extortion, defamation, fraud, intentional infliction of emotional distress, and wrongful interference with prospective economic advantage." (Flatley, supra, 39 Cal.4th at p. 306.) Mauro filed a special motion to strike Flatley's complaint under section 425.16, which was denied. The order of denial was affirmed by the Court of Appeal and the California Supreme Court.
In analyzing whether Mauro's demand letter fit the "extortion as a matter of law" exception, the Supreme Court stated: "At the core of Mauro's letter are threats to publicly accuse Flatley of rape and to report and publicly accuse him of other unspecified violations of various laws unless he `settled' by paying a sum of money to Robertson of which Mauro would receive 40 percent. In his followup phone calls, Mauro named the price of his and Robertson's silence as `seven figures' or, at [a] minimum, $1 million. The key passage in Mauro's letter is at page 3 where Flatley is warned that, unless he settles, `an in-depth investigation' will be conducted into his personal assets to determine punitive damages and this information will then `
The Supreme Court further stated that in "[e]valuating Mauro's conduct, we conclude that the letter and subsequent phone calls constitute criminal extortion as a matter of law. These communications threatened to `accuse' Flatley of, or `impute to him,' `crime[s]' and `disgrace' (Pen. Code, § 519, subds. 2, 3) unless Flatley paid Mauro a minimum of $1 million of which Mauro was to receive 40 percent. That the threats were half-couched in legalese does not disguise their essential character as extortion. [Citations.] [¶] Mauro's letter accuses Flatley of rape and also imputes to him other, unspecified violations of various criminal offenses involving immigration and tax law as well as violations of the Social Security Act. With respect to these latter threats, Mauro's letter goes on to threaten that `[w]e are positive the
The Supreme Court concluded that Mauro's demand letter "constituted criminal extortion as a matter of law ... based on the specific and extreme circumstances of this case." (Flatley, supra, 39 Cal.4th at p. 332, fn. 16.) In reaching this conclusion, the court explained it was not implying "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. (Philippine Export & Foreign Loan Guarantee Corp. v. Chuidian, supra, 218 Cal.App.3d at p. 1079 [`a person, generally speaking, has a perfect right to prosecute a lawsuit in good faith, or to provide information to [the] newspapers'].)" (Flatley, supra, at p. 332, fn. 16.) The court cautioned that its discussion of what constitutes "extortion as a matter of law" was "limited to the specific facts of this case." (Id. at p. 333, fn. 16.) It further "emphasize[d] that the question of whether the defendant's underlying conduct was illegal as a matter of law is preliminary, and unrelated to the second prong question of whether the plaintiff has demonstrated a probability of prevailing, and the showing required to establish conduct illegal as a matter of law — either through defendant's concession or by uncontroverted and conclusive evidence — is not the same showing as the plaintiff's second prong showing of probability of prevailing." (Flatley, supra, 39 Cal.4th at p. 320.)
In Mendoza, supra, 215 Cal.App.4th 799, Division One of this district applied the Flatley exception to a demand letter written by an attorney, Reed Hamzeh, on behalf of a client, Guy Chow, who was involved in an employment dispute with Miguel Mendoza. Hamzeh's demand letter stated that Chow's company had suffered losses in excess of $75,000 as a result of Mendoza's fraud, conversion, and breach of contract. The letter warned that if Mendoza did not reimburse the company's losses, a lawsuit would be filed and Mendoza would be reported to state and local prosecutors, the Internal Revenue Service, the Better Business Bureau, and other customers and vendors.
Hamzeh moved to strike Mendoza's complaint under the anti-SLAPP statute. In opposition, Mendoza argued to deny the motion under the Flatley exception, which he claimed was controlling authority. The motion was denied.
In affirming the trial court's ruling, the appellate court stated: "The anti-SLAPP statute does not apply to the threats at issue in Hamzeh's demand letter. Hamzeh threatened to report Mendoza `to the California Attorney General, the Los Angeles District Attorney, the Internal Revenue Service regarding tax fraud, [and] the Better Business Bureau,' and to disclose the alleged wrongdoing to Mendoza's customers and vendors if Mendoza did not pay `damages exceeding $75,000.' Regardless of whether Mendoza committed any crime or wrongdoing or owed Chow money, Hamzeh's threat to report criminal conduct to enforcement agencies and to Mendoza's customers and vendors, coupled with a demand for money, constitutes `criminal extortion as a matter of law,' as articulated in Flatley. (Flatley, supra, 39 Cal.4th at p. 330.)" (Mendoza, supra, 215 Cal.App.4th at p. 806, fn. omitted.)
In contrast with the demand letters in Flatley and Mendoza, Singer's demand letter did not expressly threaten to disclose Malin's alleged wrongdoings to a prosecuting agency or the public at large. Malin argues that Singer's demand letter nonetheless constituted actionable extortion because it "contained, at the very least, an
Applying the general rule enunciated in Briggs, we conclude that Malin's extortion claim is based on a speech or petitioning activity that falls within the ambit of the anti-SLAPP statute. The special motion to strike must therefore be decided under the second step of the statutory analysis. Although the trial court did not conduct a second step analysis, we nevertheless "can address that question as it is subject to independent review. [Citation.]" (Roberts v. Los Angeles County Bar Assn. (2003) 105 Cal.App.4th 604, 615-616 [129 Cal.Rptr.2d 546].)
"A prelitigation communication is privileged only if it `relates to litigation that is contemplated in good faith and under serious consideration' (Action
Singer and Arazm contend the April 10, 2012 order in the related action, in which the same trial court denied Malin's motion to strike the sexual misconduct allegations from Arazm's complaint, demonstrates the relevance of the demand letter's sexual misconduct allegations to Arazm's conversion claim. We agree. In denying Malin's motion to strike, the trial court stated in the April 10, 2012 order that embezzlement was "one of the main allegations of [Arazm's] conversion claim. As regards the allegations of Mr. Malin's sexual activity, [Arazm] alleges that Mr. Malin engaged in these activities using company money and property, tying these allegations into Mr. Malin's alleged misuse of company resources. The motion to strike these allegations is DENIED."
Malin argues, however, that the April 10, 2012 order is "irrelevant, because the standards relating to a determination of issues on a demurrer and motion to strike are substantively different from that utilized in determining a § 425.16 motion to dismiss." We are not persuaded by Malin's argument. On the contrary, the April 10 order is relevant to our determination that the litigation privilege applies to Singer's demand letter, given the similarity of the sexual misconduct allegations in both the letter and subsequent complaint. Malin has cited no evidence in support of his position that the demand letter's sexual misconduct allegations were not related to Arazm's proposed lawsuit or that the lawsuit was not contemplated in good faith and under serious consideration when the letter was sent.
In order for a prelitigation communication such as Singer's demand letter to be privileged under Civil Code section 47, subdivision (b), it must "relate[] to litigation that is contemplated in good faith and under serious consideration." (Action Apartment Assn., Inc. v. City of Santa Monica, supra, 41 Cal.4th at p. 1251.) The April 10 order demonstrates that the sexual misconduct allegations, which the court refused to strike from Arazm's complaint, were related to the demand letter that preceded the complaint.
The trial court refused to dismiss Malin's claims arising from illegal wiretapping activities based on Gerbosi, supra, 193 Cal.App.4th 435, which held that such claims are not subject to dismissal under the anti-SLAPP statute. We conclude the trial court's ruling was correct as to the claims for violation of civil rights and intentional and negligent infliction of emotional distress, which are based on the illegal wiretapping and computer hacking allegations.
Arazm and Singer contend the trial court erred by relying on Gerbosi, supra, 193 Cal.App.4th 435, to conclude that the alleged computer hacking and wiretapping were not protected by the anti-SLAPP statute because they constitute illegal activities. They argue that because they do not concede they engaged in such activities, "the plaintiff has the burden to establish that the conduct was illegal as a matter of law." As we will explain, Arazm and Singer misperceive their burden in an anti-SLAPP case.
In Gerbosi, an attorney (Gaims) allegedly hired an investigator to conduct illegal wiretapping activities and was sued by Finn for claims arising from those and other activities. Gaims moved to strike all of the claims under the anti-SLAPP statute. In affirming the denial of the motion as to the wiretapping claims, the court stated that Gaims's "status as a member of the bar does not automatically confer the protections of the anti-SLAPP statute as to all of Finn's claims. To the extent Finn alleges criminal conduct, there is no
Arazm and Singer seize on Gerbosi's reference to "alleged criminal activity" and insist the appellate court's conclusion that mere allegations of criminal conduct are enough to apply the narrow exception to the anti-SLAPP statute established by Flatley is at odds with established case law. They misconstrue the Gerbosi court's reasoning.
As noted, Arazm and Singer had the burden to show "the challenged cause of action arises from protected activity." (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1056 [39 Cal.Rptr.3d 516, 128 P.3d 713].) "In the anti-SLAPP context, the critical point is whether the plaintiff's cause of action itself was based on an act in furtherance of the defendant's right of petition or free speech. [Citations.] `A defendant meets this burden by demonstrating that the act underlying the plaintiff's cause [of action] fits one of the categories spelled out in section 425.16, subdivision (e)....'" (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 78 [124 Cal.Rptr.2d 519, 52 P.3d 695].) "If the defendant does not demonstrate this initial prong, the court should deny the anti-SLAPP motion and need not address the second step." (Hylton v. Frank E. Rogozienski, Inc. (2009) 177 Cal.App.4th 1264, 1271 [99 Cal.Rptr.3d 805].)
Arazm and Singer fail to meet their threshold burden of showing that Malin's civil rights claim is based on an act that constitutes protected activity within the meaning of the statute. In an attempt to do so, they urge the gravamen of Malin's cause of action arises from acts in furtherance of their right to conduct prelitigation investigation. They are incorrect. The acts underlying Malin's civil rights and related emotional distress causes of action are computer hacking and wiretapping. Those acts do not fit one of the categories of protected conduct defined by the Legislature in section 425.16, subdivision (e), and Arazm and Singer do not contend otherwise. As a result, they are not entitled to relief under the anti-SLAPP statute.
The following illustration in Gerbosi aptly demonstrates this point: "[I]f Finn filed a personal injury complaint alleging that Gaims physically assaulted her in an attempt to dissuade her from testifying against Pfeifer in his wrongful termination lawsuit, could Gaims invoke the anti-SLAPP statute to strike the complaint by denying Finn's assault allegations? We are certain that the answer is no. The bottom line is this: section 425.16 was not enacted to
Arazm and Singer contend that as partially prevailing defendants in an anti-SLAPP motion, they are entitled to costs and attorney fees under section 425.16, subdivision (c). As the issue of fees and costs has not been fully briefed, we remand with directions to the trial court to consider the issue in light of the following guidelines.
"Thus, under Code of Civil Procedure section 425.16, subdivision (c), any SLAPP defendant who brings a successful motion to strike is entitled to mandatory attorney fees. The fee-shifting provision was apparently intended to discourage such strategic lawsuits against public participation by imposing the litigation costs on the party seeking to `chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of
In this case, because Arazm and Singer only partially prevailed on their special motion to strike under section 425.16, there are numerous factors to be considered in determining their right to fees and costs. Those factors were discussed at length in Mann v. Quality Old Time Service, Inc. (2006) 139 Cal.App.4th 328, 344-345 [42 Cal.Rptr.3d 607]:
"This analysis includes factors such as the extent to which the defendant's litigation posture was advanced by the motion, whether the same factual allegations remain to be litigated, whether discovery and motion practice have been narrowed, and the extent to which future litigation expenses and strategy were impacted by the motion. The fees awarded to a defendant who was only partially successful on an anti-SLAPP motion should be commensurate with the extent to which the motion changed the nature and character of the lawsuit in a practical way. The court should also consider any other applicable relevant factors, such as the experience and abilities of the attorney and the novelty and difficulty of the issues, to adjust the lodestar amount as appropriate. (See Ketchum, supra, 24 Cal.4th at p. 1132.)"
The order denying the special motion to strike Malin's complaint is reversed in part as to the first cause of action for extortion and affirmed in part as to the second cause of action for invasion of privacy and the third and fourth causes of action for intentional and negligent infliction of emotional distress. The matter is remanded with directions to the superior court to grant the special motion to strike the first cause of action for extortion. In accordance with the views expressed herein, the trial court is to determine Arazm's and Singer's rights, as partially prevailing defendants, to fees and costs incurred in the motion below. If the trial court awards Arazm and Singer the fees and costs incurred in the motion below, their right to attorney fees incurred on appeal is to be determined by the trial court. Costs on appeal, with the exception of attorney fees to be determined by the trial court, are to be borne by the parties.
Willhite, Acting P. J., and Manella, J., concurred.
In her complaint, Arazm alleged in part that Malin had misappropriated company assets to arrange and facilitate "multiple sexual encounters." Arazm alleged that "over the past several months, Malin has arranged through email and through Internet websites such as craigslist.org to have multiple sexual encounters with various older men during which Malin would live out fetish role play fantasies, whi[le] playing out Malin's versions of a father/son and uncle/nephew relationship. Based on information and belief, Malin used company resources and assets embezzled from Plaintiffs to facilitate these rendezvous and to communicate with various sex partners, including a[n] older man he referred to as `Uncle Jerry,' one he referred to as `Dad,' and several others."
In the April 10, 2012 order denying Malin's motion to strike the sexual misconduct allegations from Arazm's complaint, the trial court stated in relevant part: "The allegations regarding the embezzlement of monies is one of the main allegations of [Arazm's] conversion claim. As regards the allegations of Mr. Malin's sexual activity, Plaintiff [Arazm] alleges that Mr. Malin engaged in these activities using company money and property, tying these allegations into Mr. Malin's alleged misuse of company resources. The motion to strike these allegations is DENIED."