Bad Boys and Tough Talk: When Do Demand Letters Become Criminal Extortion?

Plaintiff lawyers can't be sued for extortion over typical demand letters due to California's litigation privilege—unless they cross the Flatley line by threatening to expose unrelated crimes or information beyond their client's claims. A new lawsuit against attorney Tony Buzbee tests these boundaries in the context of celebrity sexual assault cases.

Litigation can be an ugly business. Some of the darkest corners often involve the opening stages of a dispute, when the plaintiffs or their counsel first make their accusations and warn the defendant of the potential consequences if satisfactory accommodations cannot be made. The conversations sometimes carry the faint whiff of the underworld, as if the plaintiff’s demand letter were scented with cigar smoke and opened with the phrase “It’d be a real shame if . . .”

Sometimes the whiff is not so faint.

The latest celebrity sexual assault scandal, this time a federal criminal case against Sean Combs, has brought on a cottage industry of follow-on civil litigation, much of it led by a single plaintiff’s lawyer with a taste for publicity and an aggressive approach to negotiation.

It has also inspired one putative defendant to preemptively strike back with a lawsuit for extortion, which provides another opportunity to explore the outer boundaries of what is permitted in a litigation demand letter.

Diddy, Buzbee, and Doe

As anyone with a passing awareness of pop culture since the mid-1990s knows, Combs (aka Diddy, née Puffy, née Puff Daddy, née P. Diddy) is a rapper / producer / executive / menswear designer with an impressive record of hits and a rotating collection of names. He is also an inmate at the Metropolitan Detention Center in New York, detained without bail on federal RICO and human-trafficking charges, based on allegations involving sex trafficking, forced labor, kidnapping, arson, bribery, obstruction of justice, and something called "freak offs" (if you don't know, don't ask).

Tony Buzbee is a Texan plaintiff's lawyer who has specialized in suing celebrities for sexual assault, and has filed more than a dozen such cases against Combs, to much media fanfare. He has also publicly promised to sue an array of other unnamed, high-profile figures who allegedly participated in Combs's criminal exploits.

According to the new lawsuit, filed in Los Angeles state court, plaintiff John Doe is a self-described “celebrity and public figure,” and the recipient of a demand letter from Buzbee, which Doe alleges crossed the line into illegal extortion. Specifically, Doe claims that after making various public pronouncements about his intentions to sue a long list of Diddy's alleged accomplices and to refer them to the FBI for criminal investigation, Buzbee contacted Doe and demanded a settlement payment—or else . . .

We thus enter the murky and nefarious realm of California extortion law, as applied to plaintiff demand letters.

What Makes a Demand Letter Extortionate Under California Law?

Under California Penal Code §§ 518(a) and 519, extortion is "obtaining of property . . . from another by a wrongful use of force or fear." Wrongful use of force or fear includes a threat to accuse someone of a crime, to "expose, or to impute . . . a deformity, disgrace or crime," or to "expose a secret affecting" the victim. It is a felony punishable by up to four years in prison, and can be the basis of a private lawsuit for damages.

This would seem to present an obstacle to plaintiff lawyers, whose business largely consists of accusing others of, if not crime, then at least "disgrace," often exposing secrets in the process. Before filing the lawsuits that contain these allegations, the lawyers typically send letters demanding that the prospective defendant enter into a confidential monetary settlement in order to avoid the litigation and the ignominy it may bring.

How Does the Litigation Privilege Protect Plaintiff Lawyers?

So why are plaintiff lawyers not all behind bars? (Yes, yes, hilarious.) And why are they not getting sued into oblivion? Largely because of the litigation privilege.

Under Civil Code § 47, statements made in or directly connected to a judicial proceeding are privileged, and a person generally cannot be sued or prosecuted for making them. The privilege extends to plaintiffs’ demand letters.

When Does the Flatley Exception Apply?

But there is a limited exception to the privilege, named after the famous case—Flatley v. Mauro—in which it was established. In a nutshell, Flatley was a famous dancer, and Mauro was a lawyer who sent Flatley a letter accusing Flatley of raping Mauro’s client. Mauro warned that if Flatley did not pay a seven-figure settlement, then Mauro would publicize the allegations in the media and “expose” information about Flatley’s supposed, unrelated tax and immigration issues. Flatley sued Mauro for extortion, and Mauro invoked the litigation privilege.

The California Supreme Court held that the litigation privilege did not apply because Mauro’s conduct amounted to extortion under California law. The first part of the court’s analysis focused on Mauro’s threats to disclose “criminal activity entirely unrelated to any alleged injury suffered by Mauro’s client”—the tax and immigration issues—which “exceeded the limitations of [Mauro’s] representation of his client.”

In later cases, courts have distinguished the Flatley demand letter from others that threatened only to publicize allegations that were part of legal claims to be filed by the plaintiff. For example, in Malin v. Singer, the court held that an aggressive demand letter threatening to publicly sue the recipient for embezzlement was not extortion, and thus was protected by the litigation privilege, because the allegation was “inextricably tied to” the plaintiff’s proposed legal complaint.

Can Buzbee's Demand Letters Qualify as Extortion?

Mr. Doe’s complaint against Buzbee attaches several exhibits, but Buzbee’s demand letters are not among them. Thus, we are left to rely on the complaint’s partial description of the letters (at paragraphs 51-63), at least unless Buzbee attaches the letters to his response.

 The complaint does not assert that the demand letters threaten to refer Doe to law enforcement authorities. Nor does it say that the letters threaten to publicize any misconduct other than what would be the basis for the complaint itself—that is, Doe’s alleged sexual assault. Per the complaint, the letters specifically threaten to “immediately file” a “public lawsuit” alleging sexual assault, and to seek other victims to bring similar lawsuits against Doe.

Under Malin and other cases applying the Flatley test, Buzbee’s demand letters don’t appear to qualify as extortionate. Their only clear threats involve taking actions that are “inextricably tied” to the potential legal case Buzbee would bring, alleging claims for sexual assault, similar to others he has filed. While the complaint discusses at length the elaborate media campaign Buzbee has launched to publicize his various Diddy-based lawsuits, that conduct does not support an extortion claim under existing authority.  

At one point, the complaint states that the demand letters threatened to “take a different course” if Doe did not agree to discuss settlement. The complaint alleges “on information and belief” that this was “a reference to the threats [Buzbee] made in statements to the media, including that he would report [Doe] to the FBI,” among other things. Perhaps a court extend the Flatley doctrine to consider plaintiff counsel’s outside conduct and statements as part of the implied threats in the demand letter. But I’m not aware of any precedent for that. 

If Not the Battle, then the War?

Expect Buzbee to file an anti-SLAPP motion to strike the complaint, arguing that the demand letters are “protected conduct” under California Code of Civil Procedure § 425.16, and Doe cannot prevail because of the litigation privilege. If that motion succeeds, Doe would have to pay Buzbee’s attorney fees incurred in filing the motion.

But Doe and his counsel may have a broader strategy in mind with their complaint. Buzbee’s leverage over high-profile targets like Doe depends largely on the court of public opinion—the negative publicity the allegations themselves would bring, even if the lawsuits never succeed. One responsive tactic is to strike first, immunizing the media landscape against the reputational harm of the assault claims by preemptively casting them as illegitimate and abusive, and posing Doe as the true victim. Separately, Doe may want to signal that if Buzbee does file such a suit without a proper investigation or good-faith basis, he and his client could face sanctions, or even a retaliatory lawsuit for malicious prosecution. The benefit to Doe may be worth the risk of an anti-SLPP motion.

Doe may also be seeking to undermine Buzbee’s own reputation and ability to target other prominent figures in the future. Most of the complaint focuses on Buzbee’s own background of allegedly extortionate conduct, as well as his purportedly dubious relationship with disgraced former federal judge Samuel Kent. On their face, many of those allegations have nothing to do with Doe’s own case, but they may well be fodder the same audiences that are currently gawking at Diddy’s predicament.

I Knew This Case Was Trouble: Can Concert Fans Bring RICO Claims Against Ticketmaster?

Nearly 400 Taylor Swift fans sued Ticketmaster under RICO for allegedly defrauding them through presale code manipulation. While the antitrust claims may have merit, the RICO count faces fatal flaws: Live Nation and its subsidiary Ticketmaster likely can't form a distinct "enterprise," and the alleged fraud appears limited to isolated incidents rather than a pattern of racketeering.

In any legal analysis piece—really, any non-fiction writing in any genre— involving Taylor Swift more than tangentially, one is statutorily obligated to include a pun using the title of one of her roughly 2,000 hits. As I am no more familiar with her catalogue than 21st century sentience requires, the above title will have to do.

Swift is at the center of the latest celebrity-inspired RICO lawsuit, this time brought against Live Nation Entertainment, its subsidiary Ticketmaster, and an unspecified assortment of Does. To call it a RICO suit is a bit misleading, as the heart of the case involves antitrust claims under California’s Cartwright Act, part of a series of actions against Live Nation that have followed its 2010 merger with Ticketmaster and its gaining supremacy in the world of top-tier concert promotion.

What Are the Swifties Alleging Under RICO?

Cendajas v. Live Nation, filed in Los Angeles state court by a group of nearly 400 Swift fans, generally alleges that the defendants used illegal means to obtain and exploit a monopoly in sales of tickets to major concerts and sporting events. But at the tail end of the 55-page complaint is a federal RICO claim, based on a theory that the defendants were part of an enterprise that engaged in a pattern of federal wire fraud targeting thousands of Swifties.

More precisely, the complaint alleges that Ticketmaster issued special codes to certain fans, including those who had been “verified” by buying a certain amount of Swift merchandise, and promised that only those who received the codes would be able to buy Swift concert tickets at a “presale,” but then arbitrarily denied codes to qualified fans, provided more codes to others than there were tickets available, and allowed millions of buyers (including scalpers) without codes to join the presale. As a result, the complaint says, those who had spent money to obtain codes in reliance on the Ticketmaster representations were unable to buy tickets. The complaint alleges that similar misrepresentations were made through a promotion to Capitol One account-holders.

Can a Company and Its Subsidiary Form a RICO Enterprise?

Whatever the merits of the antitrust theory, there are several potentially serious problems with the RICO claim. First, a RICO plaintiff must allege that the defendants were part of an adequately-defined “enterprise,” which can be identified separately from the defendants themselves. Many federal circuit courts have held that company and its subsidiaries or other corporate affiliates cannot together make up an “enterprise,” as they are essentially part of the same corporate unit. See, e.g., U1it4less, Inc. v. Fedex Corp., 871 F.3d 199, 208 (2d Cir. 2017). While the Ninth Circuit has not addressed that issue specifically, it has held that an enterprise cannot consist merely of a company and its employees (Living Designs, Inc. v. E.I. Dupot de Nemours and Co., 431 F.3d 353, 361 (9th Cir. 2005)). Here, Ticketmaster is a wholly-owned subsidiary of Live Nation Entertainment (the complaint even refers to them collectively as “Ticketmaster”), and thus it does not appear that they can combine to form a distinct enterprise for RICO purposes.

Does Presale Code Manipulation Constitute a Pattern of Racketeering?

Second, a RICO plaintiff must also allege a “pattern” of racketeering, which includes two or more relevant criminal acts that are related and continuous over an adequate period of time (typically more than a year), or else are ongoing. Here, the alleged acts are wire fraud, and the only fraudulent acts specified—the misrepresentations regarding the issuance and value of the presale codes—took place on specific days in November 2022 and August 2023, about nine months apart. That may well not be enough to establish a pattern.

Third, when the alleged racketeering activity is wire fraud, and the case is brought in federal court, the complaint must satisfy Federal Rule of Civil Procedure 9(b), by specifying the details of the fraud, including who did what, and how the scheme was designed to obtain the victims’ property through deception. While this case was filed in state court, it is likely to be removed to federal (as discussed above). And the Cendajas complaint does not say which of the named defendants—Live Nation and Ticketmaster—did what with respect to the alleged presale fraud.

Fourth, by the same token, it is not clear that the plaintiffs—or at least some of them—suffered harm to their “business or property,” another requirement for bringing a RICO claim. Those who bought Swift merchandise in reliance on defendants’ promises that it would help them get presale access might satisfy this hurdle. But the complaint does not say which plaintiffs fall into that category.

Why the RICO Claim Will Likely Fail

I would expect the defendants to remove the case to federal court based on the RICO claim, and then move to dismiss that claim, with a fair chance of prevailing. If the plaintiffs want to remain in state court, one option would be to replace the RICO count with one under California Penal Code § 496(c), which effectively allows a private lawsuit for treble damages against a defendant who obtains property through fraud. The remedy is the same as under RICO, but the pleading requirements are easier, and the state court venue would avoid the stricter standards applied under the Federal Rule of Civil Procedure.

As the RICO claim is currently drafted, I suspect that the defendants will be able to Shake It Off, and whether they want to or not, the plaintiffs will have to Begin Again if they don’t want that section of the complaint left with a Blank Space. Oh, hell. Look what you made me do.

Seeking a Bulwark Against Vengeance. Or at Least a Speedbump.

“Revenge is a kind of wild justice; which the more man’s nature runs to, the more ought law to weed it out.” Francis Bacon, On Revenge, 1625

As we look ahead to Trump 2.0, with the pungent scent of revenge in the air—recall that Trump said he would not just seek retribution, he would be retribution—many have contemplated what politically-driven investigations and prosecutions may come, and what can possibly stop them. Trump has made clear his disdain for the Justice Department’s tradition of independence from White House influence, and his desire for an Attorney General more loyal and pliant than those from his first regnum.

He has been more than transparent about his targets: his predecessor (Obama), his successor (Biden), his latest opponent (Harris), the prosecutors who pursued him (Smith, Bragg, James, and Willis), and the judges presiding over his recent trials (Merchan and Engoron). At other times, he has demanded or threatened criminal cases against companies or executives who offended him, from Amazon, to Google, to Mark Zuckerberg.

Perhaps it is simply campaign bluster, rather than operational policy. Otherwise, it is not hard to imagine the hounds of law being unleashed upon others who speak ill of the once and future king, or who promote social values—diversity, environmental protection, and the like—that are now out of favor.

So what are the guardrails?

Federal Agency Policy

Sure, DOJ policy is pretty explicit when it comes to politically-driven law enforcement. Per the Justice Manual:

The legal judgments of the Department of Justice must be impartial and insulated from political influence.  It is imperative that the Department’s investigatory and prosecutorial powers be exercised free from partisan consideration.  It is a fundamental duty of every employee of the Department to ensure that these principles are upheld in all of the Department’s legal endeavors.

In fact, the Manual has an entire chapter setting out the rules and limits on interactions DOJ has with the White House and Congress, although I expect that section may be due for some editing.

But the Justice Manual, like similar internal policies of other federal enforcement agencies like the SEC, grants no rights to defendants, and is not enforceable in court. It is up to government attorneys to adhere to those restrictions, and Inspector Generals or agency ethics watchdogs to enforce them. And ultimately, all of them answer to the Attorney General or other agency head, who answers to . . .

So not much hope in agency policy.

Selective Prosecution

What about the doctrine of selective prosecution, an outgrowth of the 14th Amendment’s Equal Protection Clause, which the Supreme Court has recognized since 1886’s Yick Wo v. Hopkins, and which prohibits the government from taking enforcement action against someone merely because they exercise a constitutionally-protected right such as free speech?

Don’t count on that one, either.

Since the Supreme Court’s 1996 decision in U.S. v. Armstrong, selective prosecution motions have been nearly impossible to win. A defendant making the claim must show that (1) the defendant was “singled out for prosecution among others similarly situated”; and (2) the prosecution was motivated by a discriminatory purpose. As to the first element, even when the defendant points to similar persons who were not charged, it is almost always possible to distinguish the details of their conduct, the strength of the evidence against them, and a number of other factors. As to the second, the defendant has to provide “meaningful independent evidence” of improper motive, generally without the benefit of discovery into the issue.

In recent years, a string of high-profile defendants have alleged selective prosecution without success. Trump himself raised the defense in the January 6 criminal case, and was rebuffed. Not long before, Hunter Biden struck out with the same argument, as did Roger Stone and Paul Manafort before him. In 2017, AT&T argued that DOJ had sued to block its merger with Time Warner because Trump was angry about negative coverage by CNN, a Time Warner company. It went nowhere.

Of course, hard cases make bad law, and egregious ones sometimes make new law. Given Trump’s predilection for announcing his retaliatory motives in vivid (and capitalized) prose, it is possible that a judge might find even the Armstrong standard met. But history provides no real guide.

Judges and Juries

There is, of course, the judicial process itself. Even Elon Musk, Trump’s new extraordinary consigliere, would struggle to find a way around the Fifth, Sixth, and Seventh Amendments’ guarantees of jury trials and other basic procedural rights. Under last year’s Jarkesy v. SEC, agencies can no longer use in-house administrative tribunals to pursue penalties for civil violations, and the federal rules of both civil and criminal procedure, as well as the rules of evidence, are likely not going anywhere soon.

Depending on your perspective (Trump would disagree), this has worked at least some of the time to screen out entirely meritless, ginned-up cases. While grand juries will famously indict a ham sandwich, one of them in Washington apparently decided that a case Trump sought against former FBI Deputy Director Andrew McCabe was less than kosher, and refused to indict him. A trial jury acquitted Democratic lawyer Michael Sussmann in a case brought be Special Counsel John Durham, who Trump had appointed and urged to pursue those involved in the investigation of Russia’s involvement in the first Trump campaign.

But the incoming crew likely has a game plan for that as well. Conservative organizations challenging Biden policies have found a warm welcome in certain jurisdictions—such as the Amarillo outpost of the Northern District of Texas, as well as the Fifth Circuit more generally—and have learned to steer cases in that direction. A Trump DOJ could well seek reasons to file criminal charges or civil enforcement cases in those courts, rather than in D.C. or New York, with their less hospitable benches and jury pools.

Lawyers to the Rescue?

Or perhaps the legal profession itself could provide a firewall? Political appointees can give the orders, but ultimately, it is an Assistant U.S. Attorney or an SEC enforcement counsel with his or her name on pleadings and bar license on the line. State bar rules prohibit attorneys from bringing baseless claims, and in many cases specifically bar prosecutors from pursuing charges without probable cause. As Rudy Giuliani and other champions of the “Stop the Steal” litigation campaign came to learn, Trump’s pardon power does not extend to disbarment or suspension proceedings. Could line attorneys, fearing more for their long-term livelihood than their current jobs, push back against directions to pursue meritless cases?

We may find out. There is a reason Henry VI’s Dick the Butcher proposed to “kill all the lawyers” as a means to promote revolutionary chaos. Perhaps the bar will rise to its finest hour and take a stand for the rule of law.

I’m crossing my fingers, but not holding my breath.