Hardball Attorney Tactics Considered Extortion

• Pages: 4-5
• Date: 01 July 2022
• Author: Sara E. Costello
• Subject Matter: Civil Law

Hardball Attorney

Tactics Considered

Extortion

n attorney committed extortion

when she escalated her settlement

demands by threatening to reveal

damaging information about the

adverse party, a state appellate

court concluded. Although the attor-

ney in Falcon Brands, Inc. v. Mousavi

& Lee, LLP, argued that her demands

were part of run-of-the-mill settlement

negotiations, the court was not per-

suaded. Because the attorney’s threat-

ening demands were not protected

speech, the attorney and her law rm

must contend with a cross-claim for

extortion, the appellate court ruled.

To avoid a similar fate, ABA

Litigation Section leaders stress that

attorneys must understand that nego-

tiation requires honest dealing, not

just zealous advocacy. They also rec-

ommend that attorneys scrutinize the

relevant criminal law on extortion, as

well as any ethical requirements for

BY SARA E. COSTE LLO,

LITIGATION NEWS

ASSOCIATE EDIT OR

negotiations in one’s jurisdiction, prior

to engaging with opposing counsel.

Attorney Threa tens Client’s

Former Employer

In Falcon Brands, a former employee

of Falcon Brands, a ca nnabis company,

retained an at torney to represent him in a

wrongful termination case in California

state court. I nitially, the employee’s coun-

sel contacted Falcon to reque st employ-

ment records for her client.

After receiv ing no response to her

records request, the at torney threat-

ened to contact a company plan ning

to merge with Falcon. I n an email, she

alleged that Falcon c ommitted numer-

ous violations of California’s cannabis

regulations, including illegally trans-

porting ca nnabis to Las Vegas, deliv-

ering illega l products, and bribing a

deputy distri ct attorney when a Falcon

employee was arrested. T he attor-

ney then offered to set tle her client’s

claims. But she did not l ink any of the

alleged illeg al conduct to her client’s

settlement demands.

Shortly afterwards, the attorney

informed Falcon that she had told the

merger partner about her client’s claims

without disclosing any of the alleged mis-

conduct. But the attorney cautioned that

she would provide additional, damaging

information to the merger partner in four

days. In a follow-up email to Falcon, the

attorney emphasized: “If you want to

resolve this matter, now is the time.”

The parties did not reach a settlement.

The attorney sent the merger partner

copies of the settlement demands that

included the discussion of illegal activities.

As a result, the company sued to rescind

its merger with Falcon.

Attorney Accused of E xtortion

Following disclosure of the crimi-

nal allegations, Falcon led a cross-

complaint against the employee, as

well as the employee’s attorney and

law rm, in the underlying wrongful

termination action, alleging that the

lawyer and rm committed extortion

and intentionally interfered with its

contract with the merger partner. The

attorney and her rm moved to strike

the cross-complaint under California’s

Anti-SLAPP (Strategic Lawsuits Against

Public Participation) law.

The state’s anti-SLAPP law “autho-

rizes courts to strike any cause of action

which falls within the statute’s purview,

if the plaintiff cannot demonstrate a

probability of prevailing on it.” However,

the Supreme Court of California has

established that a defendant whose state-

ments are illegal cannot use the anti-

SLAPP law to strike a complaint.

After reviewing the settlement

demands, the trial court granted the

attorney’s motion to strike. In the trial

court’s view, Falcon failed to prove that

the attorney sent the demands “with

the intent to extort money by fear.”

Link Between Thr eats and

Settlement Demands Is Dispositive

The California Fourth District Court

of Appeal reversed the trial court’s rul-

ing on the extortion claim. Analyzing

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