The Volokh Conspiracy - Demanding Settlement for Clearly Baseless Lawsuit = Criminal Extortion:

That's what State v. Hynes, decided by the New Hampshire Supreme Court yesterday, basically holds.

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.

	[Eugene Volokh, August 6, 2009 at 7:57pm] Trackbacks Demanding Settlement for Clearly Baseless Lawsuit = Criminal Extortion: That's what State v. Hynes, decided by the New Hampshire Supreme Court yesterday, basically holds. 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.