I don't have anything against Rob Lowe. He hasn't filmed himself having sex with an underaged girl in about 20 years, which shows growth. He hasn't made a brat pack movie in a long time. And whenever he asked Martin Sheen to raise taxes on Republicans, his eyes were all twinkly.

So I feel bad to see him in a bit of a nanny-jam. But his does demonstrate how you have to be careful making settlement demands.

See, Rob was smart — he beat his nanny to the courthouse by suing her for, among other things, extortion. His side of the story is that she demanded $1.5 million or she'd go to the press with bogus stories. A few days later the nanny — by then represented, as required by federal law, by Gloria Allred — fired back, claiming sexual abuse and going on a tour of scandal-hungry news programs and giving People magazine interviews. She's enjoying her 15 minutes.

You never know how the preemptive strike claiming extortion is going to work out. Bill O'Reilly tried it, but wound up settling with the object of his looftah-wielding affections, reportedly to the tune of millions. Win or lose, though, an aggressive response to an extortionate demand is worth trying.

Where's the line between a pre-litigation settlement demand and extortion? That's a tricky question. And as with all tricky questions, it can't hurt to ask the Lord of the Dance.

Michael Flatley, the Lord in question, was a somewhat successful dancer when a young lady, through her attorney, threatened to accuse him publicly of rape if he did not pay her $1 million (on which the attorney was careful to announce a 40% lien). Flatley refused, won when she followed through and sued him, and eventually sued her lawyer, D. Dean Mauro, for extortion. The case went to the California Supreme Court on the question of whether Mauro's settlement demands were protected conduct or extortionate. The Supremes sided with the dancing fool, and Flatley settled with Mauro for a cool $11 million.

What has this to do with Rob Lowe or Falafel Bill? Well, the California Supreme Court, in deciding the issue, offered an interesting discussion of the line between legitimate settlement demands and extortion, at least under California law. The case is Flatley v. Mauro, 39 Cal.4th 299 (2006). I can't find it for free online, unfortunately. Here are some highlights:

At the core of Mauro's letter are threats to publicly accuse Flatey 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 follow-up phone calls Mauro named the price of his and Robertson's silence as “seven figures” or, at 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 “BECOME A MATTER OF PUBLIC RECORD, AS IT MUST BE FILED WITH THE COURT…. any and all information, including Immigration, Social Security Issuances and Use, and IRS and various State Tax Levies and information will be exposed. We are positive the media worldwide will enjoy what they find.” This warning is repeated in the fifth paragraph: “All pertinent information and documentation, if in violation of any U.S. Federal, Immigration, I.R.S., S.S. Admin., U.S. State, Local, Commonwealth U.K., or International Laws, shall immediately [be] turned over to any and all appropriate authorities.” Finally, Flatley is warned that once the lawsuit is filed additional causes of action “shall arise” including “Defamatory comments, Civil Conspiracy, Reckless Supervision” which are “just the beginning” and that “ample evidence” exists “to prove each and every element for all these additional causes of action. Again, these actions allow for Punitive Damages.”

Here are the factors the court looked at in determining that the demand was extortionate and not a settlement demand protected either by the First Amendment or by the litigation privilege:

• The communications threatened to go public and accuse Flatley of a crime if Flatley did not pay money;
• The communications threatened to report Flatley for (speculated) violations of tax or immigration law unrelated to the claim asserted;
• During subsequent communications, the attorney did not discuss the particulars of the claim but simply repeated the demand for money and the threat that Flatley would be exposed to widespread media humiliation.

Based on all of the facts before it, the court found that Mauro's conduct was extortion as a matter of law, and thus upheld the lower court's rejection of Mauro's anti-SLAPP motion. The opinion is more of a cautionary tale than a reliable source of a bright-line rule. It's really not susceptible to a multi-factor test that you could apply to other cases. Perhaps recognizing this, the court waffles:

We emphasize that our conclusion that Mauro's communications constituted criminal extortion as a matter of law are based on the specific and extreme circumstances of this case. Extortion is the threat to accuse the victim of a crime or “expose, or impute to him … any deformity, disgrace or crime” (Pen.Code § 519) accompanied by a demand for payment to prevent the accusation, exposure, or imputation from being made. Our opinion should not be read to imply 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.

This leaves even an attorney wondering what the hell the rule of Flatley v. Mauro is and how far people like Rob Lowe's nanny can go in demanding a pre-litigation settlement. The only hard-and-fast rule I can think of is don't act in a way during negotiations that will make you appear to be a bottom-feeder later. Threaten people with negative publicity at your own risk.

Last 5 posts by Ken

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