Stenehjem v. Sareen: Court Finds that Pre-Litigation Demand Constitutes Extortion as a Matter of Law

In Stenehjem v. Sareen (6/13/14) --- Cal.App.4th ---, the plaintiff, Stenehjem, sued his former employer and its president and CEO, Sareen. Sareen cross-complained against Stenehjem for civil extortion. Sareen alleged that Stenehjem sent a prelitigation demand in which Stenehjem threatened to file false reports with federal authorities unless Sareen paid to settle Stenehjem's case. 

The trial court granted Stenehjem's special motion to strike under the anti-SLAPP statute, Sareen appealed, and the Court of Appeal reversed.

Following Flatley v. Mauro (2006) 39 Cal.4th 299, 305, the Court of Appeal found that Stenehjem's prelitigation demand constituted extortion as a matter of law that was not protected under the anti-SLAPP statute. Slip op. at 15-26. Among the factors that the Court found important were the fact that Stenehjem threatened to report Sareen to federal authorities for violation of the False Claims Act, and the alleged criminal activity that Stenehjem threatened to expose was "entirely unrelated to any alleged injury suffered by" Stenehjem. Slip op. at 20. The Court found it irrelevant that the extortionate demand did not make a specific monetary demand because the demand had to be viewed in the context of other communications between the parties, which did include a demand to pay money. Slip op. at 23.

The opinion is available here.