Posted by Eugene Volokh:
Demanding Settlement for Clearly Baseless Lawsuit = Criminal Extortion:
http://volokh.com/archives/archive_2009_08_02-2009_08_08.shtml#1249603043
That's what [1]State v. Hynes, decided by the New Hampshire Supreme
Court yesterday, basically holds. [2]N.H. Rev. Stat. Ann. � 637.5
provides, in relevant part, that "A person is guilty of theft" if he
gets money by threatening to do any "act which would not in itself
substantially benefit him but which would harm substantially any other
person with respect to that person's health, safety, business,
calling, career, financial condition, reputation, or personal
relationships." Of course, threatening to file a well-founded lawsuit
unless one is paid a settlement is quite legal, and generally properly
so. Under the statute, that would be a threat to do an act which would
in itself substantially benefit the threatener. But, the court held, a
baseless lawsuit would not in itself provide a substantial benefit to
the plaintiff, so threatening such a lawsuit in order to get a
settlement is extortion.
The court did not discuss what mental state the plaintiff would have
to have to be punished, since the defendant didn't preserve the issue
for appeal. But I take it that under general criminal law principles,
the plaintiff would have to know that the lawsuit was baseless, or at
least to know that there was a substantial and unjustifiable risk that
the lawsuit was baseless.
Here, by the way, is the court's summary of the facts that the jury
could have found in convicting the defendant:
The defendant is an attorney who was admitted to the New Hampshire
and Massachusetts Bars in 2006. In December of that year, he sent a
�Cease and Desist/Demand Letter� to Claudia Lambert, the owner of
Claudia�s Signature Salon in Concord (the salon). The letter,
written on �Daniel P. Hynes Esq.� letterhead and noting his
admission to the New Hampshire Bar, stated:
I am writing in regards to your company�s policy of pricing for
different types of haircuts. It has been brought to my attention
that your business charges $25 for haircuts but $18 for a Men�s cut
and $12 for a children [sic] haircut. Such a distinction in price
based on gender and age is discrimination in violation of the law.
Accordingly, I demand you immediately cease this unfair pricing and
charge customers in a more appropriate manner, such as by the
length of their hair or the amount of time it would take.
The letter claimed that the salon�s practice was both unlawfully
discriminatory in violation of RSA 354-A:17 (2009), and constituted
an unfair trade practice in violation of RSA chapter 358-A (2009).
The letter went on to state:
I demand that you immediately cease your unlawful practice of
charging for haircuts based upon age and gender. Should you not
comply I will be forced to file a complaint with the State
Commission for Human Rights while reserving all rights to remove
and file in Superior Court. In addition, I demand payment in the
amount of $1000 in order to avoid litigation .... I believe $1000
is a fair amount as it is the minimum that would be awarded for an
unfair trade practice alone. You have ten (10) days to comply ....
Should you fail to comply additional steps will be taken including
filing with the State Commission for Human Rights and potential
removal to Superior Court. If such action is necessary I will seek
all remedies available including but not limited to an injunction,
damages for discrimination, damages for the unfair trade practice,
ill-gotten gains, punitive damages, attorney fees and costs. If you
object or otherwise wish to discuss the above matter you may have
your attorney contact me.
The court concluded that the threatened lawsuit would have been
baseless, chiefly because the relevant statutes would not have
provided Hynes with a cause of action, since defendant "lacked a
client and did not personally patronize the salon" and therefore
didn't have standing to challenge the discrimination. A dissenting
judge disagreed, concluding that "the defendant could have
realistically believed that he had standing," because
[T]here is at least some suggestion in our jurisprudence, albeit in
the context of employment discrimination, that to bring this type
of claim, a person need not actually sustain an injury as a result
of a discriminatory practice. While I agree with the majority that
our employment discrimination cases can be distinguished from the
instant case, the fact remains that, until today, we have not
distinguished them.
References
1. http://www.courts.state.nh.us/supreme/opinions/2009/hynes101.pdf
2. http://www.gencourt.state.nh.us/RSA/html/LXII/637/637-5.htm
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