Stenehjem v. Sareen
173 Cal. Rptr. 3d 173
Cal. Ct. App.2014Background
- Plaintiff Stenehjem sued his former employer Akon and CEO Surya Sareen for defamation and related employment claims; Sareen filed a cross-complaint for civil extortion based on a prelitigation August 5, 2011 e-mail from Stenehjem.
- The August e-mail referenced allegedly fraudulent accounting documents, suggested possible involvement of federal authorities (DOJ, U.S. Attorney General, DOD) and a qui tam option, and urged defense counsel to forward the message to Sareen and negotiate.
- Prior history: counsel-to-counsel settlement overtures (prelitigation demand of $675,000), defense counsel repeatedly rejected settlement and called the claims meritless; Stenehjem later communicated directly.
- Stenehjem moved to strike Sareen’s cross-complaint under California’s anti‑SLAPP statute (§ 425.16), arguing the e-mail was prelitigation litigation-related speech protected by § 425.16(e)(2) and privileged by Civil Code § 47(b).
- The trial court granted the anti‑SLAPP motion and dismissed the extortion cross-complaint; Sareen appealed.
- The Court of Appeal reversed, holding the e-mail was extortion as a matter of law and therefore not protected activity under the anti‑SLAPP statute.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the August 5 e-mail constituted protected prelitigation litigation-related activity under § 425.16(e)(2) | Stenehjem: the e-mail was prelitigation settlement/mediation communication and thus protected petitioning/speech. | Sareen: the e-mail threatened exposure to federal authorities (qui tam / criminal allegations) to extract a settlement, constituting extortion and not protected. | Held: Not protected. The e-mail, read in context, was extortion as a matter of law and therefore outside § 425.16 protection. |
| Whether the litigation privilege (Civ. Code § 47(b)) bars Sareen’s extortion claim and defeats probability of success | Stenehjem: the communication is privileged prelitigation litigation activity, so Sareen cannot show probability of success. | Sareen: the extortion threat lacked a logical relation to plaintiff’s civil claims and was not made to further civil litigation objectives, so privilege does not apply to defeat the claim. | Held: Court did not reach second‑prong fully because first prong failed—illegal conduct (extortion) is unprotected; privilege does not permit using anti‑SLAPP to shield extortionate threats. |
| Whether vagueness / lack of explicit money demand or explicit conditional language defeats finding of extortion | Stenehjem: no explicit demand for money or explicit threat to file a false criminal complaint; therefore not extortion. | Sareen: threats need not be explicit; veiled threats, innuendo, and context can establish extortion. | Held: Lack of explicit monetary demand or explicit phrasing is immaterial; the implied threat in context suffices to find extortion as a matter of law. |
| Whether anti‑SLAPP can be invoked where the assertedly protected activity is illegal as a matter of law | Stenehjem: anti‑SLAPP applies broadly to prelitigation communications. | Sareen: Flatley and progeny hold illegal conduct (extortion) is not sheltered by anti‑SLAPP. | Held: Anti‑SLAPP cannot be used to strike claims when the underlying activity is illegal as a matter of law (extortion). |
Key Cases Cited
- Flatley v. Mauro, 39 Cal.4th 299 (2006) (demand letters that are extortionate are not protected by the anti‑SLAPP statute)
- Paul for Council v. Hanyecz, 85 Cal.App.4th 1356 (2001) (illegal campaign conduct cannot be shielded by anti‑SLAPP)
- Cohen v. Brown, 173 Cal.App.4th 302 (2009) (attorney demand letter threatening State Bar complaint coupled with demand constituted extortion; anti‑SLAPP not available)
- Mendoza v. Hamzeh, 215 Cal.App.4th 799 (2013) (threat to report criminal conduct coupled with demand for payment held extortionate and outside anti‑SLAPP protection)
- Blanchard v. DIRECTV, Inc., 123 Cal.App.4th 903 (2004) (distinguishes litigation privilege analysis at second prong from the threshold anti‑SLAPP question; privileged prelitigation letters do not resolve whether conduct was illegal and thus unprotected)