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Stenehjem v. Sareen

California Court of Appeals, Sixth District

June 13, 2014

JEROME STENEHJEM, Plaintiff, Cross-defendant and Respondent,
SURYA SAREEN, Defendant, Cross-complainant and Appellant.

Santa Clara County Superior Court Superior Court No.: 111CV209402, The Honorable Mark H. Pierce, Trial Judge:

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Attorneys for Plaintiff, Cross-defendant and Respondent Jerome Stenehjem: Law Office of Mark W. Hostetter, Mark W. Hostetter Law Office of Mark W. Hostetter and Mark W. Hostetter for Plaintiff, Cross-defendant and Respondent.

Myers, Hawley, Morley, Myers & McDonnell and John P. McDonnell for Defendant, Cross-complainant and Appellant.


Márquez, J.

A SLAPP suit is one in which the plaintiff “seeks to chill or punish a party’s exercise of constitutional rights to free speech and to petition the government for redress of grievances. [Citation.]” (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1055 [39 Cal.Rptr.3d 516, 128 P.3d 713].)[1] The California Legislature in 1992 enacted Code of Civil Procedure section 425.16—the anti-SLAPP statute—under which SLAPP suits may be disposed of summarily by a special motion to strike.[2] But if the “assertedly protected speech or petitioning activity [is] illegal as a matter of law, ... [defendant] cannot use the anti-SLAPP statute to strike the plaintiff’s complaint.” (Flatley v. Mauro (2006) 39 Cal.4th 299, 305 [46 Cal.Rptr.3d 606, 139 P.3d 2] (Flatley).) In Flatley, our high court held that a defendant’s (attorney Mauro’s) prelitigation demand—which he characterized in his appeal from an order denying his special motion to strike as “permissible settlement negotiations” (id. at p. 328)—was extortion as a matter of law and therefore not protected activity under the anti-SLAPP law. In this case, we must determine whether a cross-defendant’s prelitigation demand (like Mauro’s in Flatley) was extortion. If so, the special motion to strike that was based upon that demand should have been denied.

Jerome Stenehjem sued his former employer, Akon, Inc., and Surya Sareen, Akon’s president and chief executive officer, for defamation, among other causes of action. Sareen countersued for civil extortion. Sareen alleged in an amended cross-complaint (Cross-Complaint) that Stenehjem (1) had asserted, through his counsel, a prelitigation claim for defamation; and (2) had later, while representing himself, made a written threat by e-mail to file a false criminal complaint against Sareen unless he paid Stenehjem monies to settle his defamation claim. Stenehjem’s e-mail demand mentioned a potential qui tam suit; alluded to accounting documents created by Stenehjem at Sareen’s

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specific direction, and referred to potential involvement of the United States Attorney General, Department of Justice, and Department of Defense. Sareen alleged that Stenehjem’s demand constituted extortion in violation of criminal laws.

Stenehjem moved to strike the Cross-Complaint. He contended that (1) the Cross-Complaint was based upon prelitigation communications that were protected statements under the anti-SLAPP statute (§ 425.16, subd. (e)(2)); and (2) Sareen could not establish a probability of prevailing because Stenehjem’s communications were subject to the litigation privilege of Civil Code section 47, subdivision (b). The court granted Stenehjem’s motion, dismissing the Cross-Complaint.

Sareen appeals the order of dismissal. He contends the special motion to strike should have been denied because Stenehjem’s threat constituted extortion that was not protected speech under the anti-SLAPP statute. Sareen argues further that even if Stenehjem had made an initial showing that his activity was protected, Sareen met his burden of demonstrating a probability of success on his claim.

We conclude after a de novo review of the record that the conduct underlying the Cross-Complaint––Stenehjem’s prelitigation e-mail demand, when considered in the context in which the demand was made—constituted extortion as a matter of law that was not protected under the anti-SLAPP statute. Accordingly, we will reverse the order granting the motion to strike the Cross-Complaint.


I. The Complaint

Stenehjem filed suit on or about September 19, 2011. He filed the unverified first amended complaint (Complaint) on October 28, 2011, against Akon and Sareen (collectively, Defendants). Stenehjem alleged six causes of action against Defendants: defamation; unlawful prevention of employment by misrepresentation (Lab. Code, § 1050); employment discrimination under the California Fair Employment and Housing Act (FEHA; Gov. Code, § 12900 et seq.); wrongful termination in violation of public policy; intentional infliction of emotional distress; and breach of the implied covenant of good faith and fair dealing.[3]

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With respect to the Complaint’s defamation claim, Stenehjem alleged that beginning on or about January 20, 2011, “Defendants began to publicly, falsely and maliciously state [to Akon employees and others] that [Stenehjem] had physically assaulted and battered a petite female coworker during a discussion about her violations of company policies.” The second claim under Labor Code section 1050 was based upon the allegation that Defendants “blacklisted [Stenehjem]” by uttering the defamatory statements. Stenehjem alleged as a FEHA discrimination claim that he had been “terminated on false pretenses because of his sex/gender and race/national origin after being falsely accused of assault and battery, ” and that “Defendants gave preferential treatment to workers of South Asian and East Asian descent and origin.” The fourth cause of action for wrongful termination was based upon the assertions that (1) Defendants had “engaged in illegal tax and duty evasion, fraud, and submitting of false records to the government”; (2) Stenehjem had protested the conduct; and (3) his termination “was motivated by his opposition to [Defendants’] illegal practices.” The fifth cause of action for intentional infliction of emotional distress was based upon alleged defamation and wrongful termination. Finally, Stenehjem alleged that Defendants terminated his employment without good cause and in violation of the covenant of good faith and fair dealing implied in his employment contract.

II. The Cross-Complaint

On January 25, 2012, Sareen filed the Cross-Complaint against Stenehjem.[4] Sareen alleged that after Stenehjem’s at-will employment with Akon was terminated in January 2011, Stenehjem had claimed that Akon had defamed him in that Sareen had “stated to other AKON employees that Stenehjem had been terminated because he had physically assaulted and battered a female co-employee.” Stenehjem hired an attorney who sought to engage in settlement negotiations with counsel for Akon and Sareen, but counsel for Akon and Sareen “refused to engage in any settlement discussions or to offer or pay any settlement.” Sareen alleged further that Stenehjem then terminated his counsel, and on August 5, 2011––while representing himself––wrote to Sareen’s counsel, John McDonnell, “and threatened to file a false criminal complaint against [Sareen] if [Sareen] did not pay monies to Stenehjem. Stenehjem stated he would claim that [Sareen] had engaged in false billing practices with the federal government and had defrauded the federal government in violation of federal criminal statutes.” Sareen alleged that Stenehjem’s communication constituted extortion and abuse of process.

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III. The Special Motion to Strike

On February 24, 2012, Stenehjem filed a special motion to strike the Cross-Complaint under the anti-SLAPP statute. Sareen opposed the motion, and Stenehjem submitted a reply. The motion was heard on March 22, 2012, and was granted by the court on March 28, 2012.[5] The court found that (1) Stenehjem had met his threshold burden of showing that the Cross-Complaint arose from activities that were protected under section 425.16, subdivision (e)(2), in that they were communications in ...

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