Court Opinion

ID: 1037159
Source: CourtListenerOpinion
Date Created: 2013-08-12 16:04:46.706327+00
Date Added: 2024-06-11T15:27:55.064793
License: Public Domain

Filed 7/16/13
                          CERTIFIED FOR PUBLICATION

                IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                           SECOND APPELLATE DISTRICT

                                     DIVISION FOUR

MIKE MALIN,                                         B237804

        Plaintiff and Respondent,                   (Los Angeles County
                                                    Super. Ct. No. BC466547)
        v.

MARTIN D. SINGER et al.,

        Defendants and Appellants.

        APPEAL from an order of the Superior Court of Los Angeles County, Mary M.
Strobel, Judge. Affirmed in part, reversed in part, and remanded.
        Horvitz & Levy, Jeremy B. Rosen, Felix Shafir, and Wesley T. Shih for
Defendants and Appellants Martin D. Singer, Lavely & Singer, and Andrew B. Brettler.
        Mark Goldowitz and Paul Clifford for Defendants and Appellants Shereene Arazm
and Oren Koules.
        Law Offices of Barry P. King and Barry P. King for Plaintiff and Respondent.
       Defendants appealed from an order denying their special motion to strike
plaintiff’s complaint under Code of Civil Procedure section 425.16, the anti-SLAPP
statute.1 The trial court denied the motion under the first step of the statutory analysis on
the ground that the claims did not arise from protected speech or petitioning activities.
We affirm in part and reverse in part.

                    FACTS AND PROCEDURAL BACKGROUND

       Plaintiff Michael Malin2 and Lonnie Moore3 own The Dolce Group, a consortium
of restaurants and nightclubs that includes the Geisha House restaurant. Malin, Moore,
and defendant Shereene Arazm are general partners of Geisha House, LLC (company).
       In 2011, Arazm consulted her attorney, defendant Martin Singer, regarding Malin
and Moore’s alleged misappropriation of company assets. On Arazm’s behalf, Singer
sent Malin a demand letter and draft of Arazm’s proposed complaint. The demand letter
contained what Malin contends was an extortionate threat to disclose certain personal
information if he did not pay to settle Arazm’s claims. In the disputed portion of the
letter, Singer stated that Malin had misused company resources to arrange sexual liaisons
with older men, including “Judge [first and last name omitted], a/k/a ‘Dad’ (see enclosed
photo).” (We have omitted the judge’s name because the demand letter was filed under
seal to protect the judge’s privacy.) In order to place the allegedly extortionate threat in
its proper context, we have quoted the letter below and italicized the disputed language:

1      SLAPP is the acronym for Strategic Lawsuit Against Public Participation. All
further undesignated statutory references are to the Code of Civil Procedure.

2    According to Arazm’s complaint, Malin’s aliases include Michael Robert Carri,
Michael Robert Malin, Mike Boogie, and Mike Boogie Malin.

3      Moore is not a party to this action.

                                              2
      “I am litigation counsel to Shereene Arazm. I am writing to
you with respect to your outrageous, malicious, wrongful and
tortious conduct. As a result of your embezzlement, conversion and
breach of fiduciary duty, you have misappropriated more than a
million dollars from my client. As a result thereof, my client intends
to file the enclosed lawsuit against you, Lonnie Moore, and various
business entities that you and Mr. Moore control. As alleged in the
Complaint, you, Mr. Moore and several of your co-conspirators have
been embezzling and stealing money from Ms. Arazm and Geisha
House, LLC for years. As set forth in detail in the Complaint, you
and Mr. Moore have devised various schemes to embezzle money
from the restaurants and clubs which you own and/or manage,
including, but not limited to Geisha House and WonderLand. You
and Mr. Moore have created a special account or ‘ledger,’ which
allows you to keep tabs on how the stolen funds are divided among
you, Mr. Moore and your various co-conspirators.           My client
intends, as part of the lawsuit, to seek a full-fledged forensic
accounting of the books and records for Geisha House, LLC,
2HYPE Productions, Inc., LTM Consulting, Inc., and Malin &
Moore Enterprises, LLC, in addition to your personal accounts.
      “In addition, as set forth in the Complaint, we have
information that you and Mr. Moore have engaged in insurance
scams designed to defraud not only the insurers of your
establishments, but also the insurers of WonderLand. You have also
taken steps to hide your assets from creditors as well as from the
taxing authorities.   We are aware that you have converted my
client’s monies and deposited them in accounts in the Cook Islands.
We have also confirmed that you have planned to illegally transfer

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       your shares in Geisha House Los Angeles to Sylvain Bitton in a
       further attempt to hide from creditors and avoid tax liability.
              “Because Mr. Moore has also received a copy of the enclosed
       lawsuit, I have deliberately left blank spaces in portions of the
       Complaint dealing with your using company resources to arrange
       sexual liaisons with older men such as ‘Uncle Jerry,’ Judge [name
       redacted] a/k/a ‘Dad’ (see enclosed photo), and many others. When
       the Complaint is filed with the Los Angeles Superior Court, there
       will be no blanks in the pleading.
              “My client will file the Complaint against you and your other
       joint conspirators unless this matter is resolved to my client’s
       satisfaction within five (5) business days from your receipt of this
       Complaint. . . .” (Italics added.)

       As indicated above, Singer included with the letter a photograph of the judge and a
copy of the draft complaint. The draft complaint did not identify any alleged sexual
partners, but contained several blank spaces and redactions that, according to the letter,
would be filled in before the complaint was filed. The draft complaint stated in relevant
part: “[O]ver the past several months, _______________ has arranged through email and
through Internet websites such as craigslist.org to have multiple sexual encounters with
[redacted] which include _________________________. Based on information and
belief, _______________ used company resources to facilitate these rendezvous and to
communicate with various [redacted] including _______________, _______________,
and _______________.”
       After he received the demand letter, Malin sued Singer and Arazm4 for civil
extortion, violation of civil rights, and intentional and negligent infliction of emotional

4      Malin also named as defendants Arazm’s husband, Oren Koules, Singer’s law
firm, Lavely & Singer, and Singer’s associate, Andrew Brettler. The special motion to

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distress. (Malin v. Singer (Super. Ct. L.A. County, No. BC466547).) In turn, Arazm
sued Malin5 for conversion, breach of contract, breach of fiduciary duty, accounting, and
civil conspiracy.6 (Arazm v. Carri (Super. Ct. L.A. County, No. BC466696).) Both
actions were assigned to the same trial court as related cases.

I.     Malin’s Complaint Against Arazm and Singer
       In his complaint’s preliminary fact allegations, Malin alleged that at Arazm and
Singer’s behest, unknown individuals had retrieved his private communications and
emails through illegal computer hacking and wiretapping activities. Malin’s complaint
alleged causes of action for: (1) civil extortion based on the demand letter (Pen. Code,
§§ 519, 523) (first cause of action); (2) violation of civil rights based on the illegal

strike was made on behalf of all defendants. Where it is appropriate to do so, all
references in this opinion to Arazm and Singer are to include the other defendants.

5     Arazm also named as defendants Moore, 2Hype Productions, Inc., LTM
Consulting, Inc., Moore & Malin Enterprises, LLC, James McDonald, and Robert Pau.

6       We previously granted Singer’s unopposed motion to take judicial notice of
documents filed in Arazm’s action, including her complaint and the April 10, 2012 order
denying Malin’s motion to strike the sexual misconduct allegations from her complaint.
        In her complaint, Arazm alleged in part that Malin had misappropriated company
assets to arrange and facilitate “multiple sexual encounters.” Arazm alleged that “over
the past several months, Malin has arranged through email and through Internet websites
such as craigslist.org to have multiple sexual encounters with various older men during
which Malin would live out fetish role play fantasies, whi[le] playing out Malin’s
versions of a father/son and uncle/nephew relationship. Based on information and belief,
Malin used company resources and assets embezzled from Plaintiffs to facilitate these
rendezvous and to communicate with various sex partners, including a[n] older man he
referred to as ‘Uncle Jerry,’ one he referred to as ‘Dad,’ and several others.”
        In the April 10, 2012 order denying Malin’s motion to strike the sexual
misconduct allegations from Arazm’s complaint, the trial court stated in relevant part:
“The allegations regarding the embezzlement of monies is one of the main allegations of
[Arazm’s] conversion claim. As regards the allegations of Mr. Malin’s sexual activity,
Plaintiff [Arazm] alleges that Mr. Malin engaged in these activities using company
money and property, tying these allegations into Mr. Malin’s alleged misuse of company
resources. The motion to strike these allegations is DENIED.”

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wiretapping and computer hacking activities (Pen. Code, § 502, subd. (c)(1), (2);
18 U.S.C. § 2510 et seq.) (second cause of action); and (3) intentional and negligent
infliction of emotional distress (third and fourth causes of action).

II.    Arazm and Singer’s Special Motion to Strike Malin’s Complaint
       Arazm and Singer moved to strike Malin’s complaint as a SLAPP suit arising
from the exercise of Arazm’s constitutionally protected rights of speech or petition. The
moving parties argued that because all of Malin’s causes of action were based on
protected statements made in contemplation of litigation, his complaint was subject to
dismissal under the anti-SLAPP statute.
       Arazm and Singer contended that Malin’s claims were based on their protected:
(1) statements made before a judicial proceeding (§ 425.16, subd. (e)(1)); (2) statements
made in connection with an issue under consideration or review in a judicial proceeding
(§ 425.16, subd. (e)(2)); and (3) “conduct in furtherance of the exercise of the
constitutional right of petition or the constitutional right of free speech in connection with
a public issue or an issue of public interest” (§ 425.16, subd. (e)(4)).
       Arazm and Singer denied any involvement in the computer hacking and
wiretapping activities alleged in Malin’s complaint. Alternatively, they argued that even
if the “allegations of computer hacking and wiretapping were true (they are not), it is
evident from the context of Malin’s allegations that he is complaining about pre-litigation
information-gathering . . . , which are clearly protected activities.”
       Finally, Arazm and Singer argued that Malin was incapable of establishing a
probability of success on the merits under the second prong of section 425.16. They
claimed that because all of their alleged activities were covered by the litigation privilege
(Civ. Code, § 47, subd. (b)), it was impossible for Malin to prevail on his claims.
       In opposition, Malin argued that Flatley v. Mauro (2006) 39 Cal. 4th 299 (Flatley)
was “effectively identical” to this case. Malin urged the court to apply the Flatley
exception and deny the motion to strike the extortion claim because Singer’s demand
letter constituted criminal extortion as a matter of law. Malin also urged the court to

                                              6
follow Gerbosi v. Gaims, Weil, West & Epstein, LLP (2011) 193 Cal. App. 4th 435
(Gerbosi), and deny the motion to strike the claims arising from the alleged wiretapping
and computer hacking activities because Arazm and Singer’s liability for those alleged
criminal activities was “a question of fact for the jury subject to discovery.”
       In reply, Singer and Arazm sought to distinguish Flatley. They argued “the
Flatley exception only applies if ‘either the defendant concedes, or the evidence
conclusively establishes, that the assertedly protected speech or petition activity was
illegal as a matter of law.’ ([39 Cal.4th] at p. 320.)” The Flatley exception does not
apply here, they argued, because they “have not conceded, and Malin has not
conclusively shown, that the Letter was illegal as a matter of law.”

III.   Order of Denial
       The trial court denied the anti-SLAPP motion under the first step of the section
425.16 analysis based on Flatley and Gerbosi. It concluded that because the activities
targeted by Malin’s complaint—wiretapping, computer hacking, and extortion—were
illegal as a matter of law, the complaint was not subject to early dismissal under the anti-
SLAPP statute. The court stated in relevant part:
       “1.    Defendants’ Special Motion to Dismiss the Complaint on file herein as an
unmeritorious SLAPP lawsuit is DENIED pursuant to Flatley v. Mauro (2006) 39 Cal. 4th
299 and Gerbosi v. Gaims, Weil, West & Epstein (2011) 193 Cal. App. 4th 435. On the
cause of action alleging wiretapping and computer hacking, under Gerbosi v. Gaims,
allegations of this type of activity that is illegal as a matter of law are not covered by
Code of Civil Procedure § 425.16. Because the other causes of action in Plaintiff’s
Complaint are based on the same activity alleged in [these] two causes of action, the
Court similarly finds that those causes of action are not covered by § 425.16.
       “2.    In so ruling, the Court makes the following findings:
              “(a)    The allegations of sexual misconduct contained in the demand letter
in this case are very tangential to the causes of action in Defendants’ complaint, which
have to do with a business dispute and alleged misuse of company resources.

                                               7
              “(b)    The letter is best read as extortion as a matter of law. It threatens to
reveal the names of sexual partners, including a retired superior court judge, and enclosed
a photo of one of the alleged sexual partners. This is well beyond a typical demand letter
saying that a party is going to file a complaint if some sort of settlement or
accommodation is not reached. Rather, it accuses or imputes to the Plaintiff some
disgrace or crime or threatens to expose some secret affecting him for purposes of
obtaining money. The letter states that the blanks in the draft Complaint will be filled in
when the Complaint is filed.
       “3.    Because the letter and the wiretapping/computer hacking activities alleged
in Plaintiff’s Complaint are illegal as a matter of law, there is no need to reach the second
prong of the analysis under the anti-SLAPP statute. All causes of action arise out of the
extortion or wire tapping/computer hacking allegations.”
       Arazm and Singer timely appealed from the order denying their special motion to
strike. (§§ 425.16, subd. (i), 904.1, subd. (a)(13).)

                                       DISCUSSION

       Section 425.16 provides an expedited procedure for dismissing lawsuits that are
filed primarily to inhibit the valid exercise of the constitutionally protected rights of
speech or petition. (§ 425.16, subd. (a); Digerati Holdings, LLC v. Young Money
Entertainment, LLC (2011) 194 Cal. App. 4th 873, 883 (Digerati).) “The purpose of the
anti-SLAPP statute is to encourage participation in matters of public significance and
prevent meritless litigation designed to chill the exercise of First Amendment rights.
(§ 425.16, subd. (a).) The Legislature has declared that the statute must be ‘construed
broadly’ to that end. (Ibid.)” (Digerati, supra, at p. 883.)
       A special motion to strike a complaint under section 425.16 involves two steps.
First, the moving party has the initial burden of making a threshold showing that the
challenged cause of action is one arising from a protected activity. (§ 425.16, subd.
(b)(1).) In order to meet this burden, the moving party must show that the act underlying

                                               8
the challenged cause of action fits one of the categories described in section 425.16,
subdivision (e). (Cabral v. Martins (2009) 177 Cal. App. 4th 471, 478.) Under section
425.16, subdivision (e)(1), a protected activity includes any written or oral statement or
writing made before a legislative, executive, or judicial proceeding, or any other official
proceeding authorized by law.
       Once the moving party has made the threshold showing, the burden shifts to the
opposing party. Under step two of the statutory analysis, the opposing party must
demonstrate a probability of prevailing on the claim. (§ 425.16, subd. (b)(1).) A cause of
action is subject to dismissal under the statute only if both steps of the anti-SLAPP
analysis are met.

I.     Standard of Review
       In an appeal from an order granting or denying a motion to strike under section
425.16, the standard of review is de novo. (Soukup v. Law Offices of Herbert Hafif
(2006) 39 Cal. 4th 260, 269, fn. 3 (Soukup).) In considering the pleadings and supporting
and opposing declarations, we do not make credibility determinations or compare the
weight of the evidence. Instead, we accept the opposing party’s evidence as true and
evaluate the moving party’s evidence only to determine if it has defeated the opposing
party’s evidence as a matter of law. (Ibid.)
       In the following sections, we conclude in part II that Malin’s first cause of action
for civil extortion is subject to dismissal under the anti-SLAPP statute. We conclude in
part III that Malin’s second cause of action for violation of civil rights and third and
fourth causes of action for intentional and negligent infliction of emotional distress are
not subject to dismissal under the anti-SLAPP statute because they did not arise from
protected activities. Finally, we conclude in part IV that Arazm and Singer’s right to
costs and attorney fees as partially prevailing defendants under section 425.16 must be
determined, in the first instance, by the trial court on remand.

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II.    Malin’s Extortion Claim, Which Is Based on a Demand Letter That Does Not
       Constitute Criminal Extortion as a Matter of Law, Is Subject to Dismissal
       Under the Anti-SLAPP Statute
       Malin’s extortion claim is based on a demand letter that was written by an attorney
on behalf of his client in anticipation of litigation. Ordinarily, a demand letter sent in
anticipation of litigation is a legitimate speech or petitioning activity that is protected
under section 425.16. (See Briggs v. Eden Council for Hope & Opportunity (1999) 19
Cal. 4th 1106, 1115 [“‘communications preparatory to or in anticipation of the bringing of
an action or other official proceeding’” are protected by section 425.16] (Briggs).) But in
Flatley, the Supreme Court articulated an exception for a demand letter that was so
extreme that it was found to constitute criminal extortion as a matter of law. (Flatley,
supra, 39 Cal. 4th 299; Mendoza v. Hamzeh (2013) 215 Cal. App. 4th 799 (Mendoza).) We
refer to the exception to the general rule stated in Briggs—that a demand letter sent in
anticipation of litigation is a legitimate speech or petitioning activity that is protected
under section 425.16—as the Flatley exception.
       Arazm and Singer contend the trial court erroneously denied their special motion
to strike the extortion claim by applying the Flatley exception to Singer’s demand letter,
which, unlike the letter in Flatley, does not constitute criminal extortion as a matter of
law. We agree. Under the first step of the statutory analysis, we conclude that because
Singer’s demand letter does not constitute criminal extortion as a matter of law, the
Flatley exception does not apply and, under the general rule articulated in Briggs,
Singer’s demand letter is a protected speech or petitioning activity under the anti-SLAPP
statute. Under the second step of the statutory analysis, we conclude Singer’s demand
letter is protected by the litigation privilege (Civ. Code, § 47, subd. (b)), which precludes
Malin from prevailing on his claim for extortion.

       A.     The Crime of Extortion Generally
       The crime of extortion is defined as “‘the obtaining of property from another, with
his consent . . . induced by a wrongful use of force or fear . . . .’ (Pen. Code, § 518.)

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Fear, for purposes of extortion ‘may be induced by a threat, either: [¶] . . . [¶] 2. To
accuse the individual threatened . . . of any crime; or, [¶] 3. To expose, or impute to him
. . . any deformity, disgrace or crime.’ (Pen. Code, § 519.) ‘Every person who, with
intent to extort any money or other property from another, sends or delivers to any person
any letter or other writing, whether subscribed or not, expressing or implying, or adapted
to imply, any threat such as is specified in Section 519, is punishable in the same manner
as if such money or property were actually obtained by means of such threat.’ (Pen.
Code, § 523.)” (Flatley, supra, 39 Cal.4th at p. 326.)
       As the Supreme Court recognized in Flatley, extortion “has been characterized as
a paradoxical crime in that it criminalizes the making of threats that, in and of
themselves, may not be illegal. ‘[I]n many blackmail cases the threat is to do something
in itself perfectly legal, but that threat nevertheless becomes illegal when coupled with a
demand for money.’ (Philippine Export & Foreign Loan Guarantee Corp. v. Chuidian
(1990) 218 Cal. App. 3d 1058, 1079.)” (Flatley, supra, 39 Cal.4th at p. 326, fn. omitted.)
Criminal extortion laws prohibit the wrongful use of threats to obtain the property of
another, regardless whether a debt is actually owed. “‘[The] belief that the victim owes a
debt is not a defense to the crime of extortion.’” (Id. at p. 327.)
       When a demand for money is accompanied by a threat to report a crime, the
demand may constitute criminal extortion, even if the threat is vaguely worded. “[T]he
crime with which the extortionist threatens his or her victim need not be a specific crime.
‘The accusations need only be such as to put the intended victim of the extortion in fear
of being accused of some crime. The more vague and general the terms of the accusation
the better it would subserve the purpose of the accuser in magnifying the fears of his
victim, and the better also it would serve to protect him in the event of the failure to
accomplish his extortion and of a prosecution for his attempted crime.’ [Citations.]”
(Flatley, supra, 39 Cal.4th at p. 327.)
       Attorneys are subject to “these principles in their professional conduct. Indeed,
the Rules of Professional Conduct specifically prohibit attorneys from ‘threaten[ing] to
present criminal, administration, or disciplinary charges to obtain an advantage in a civil

                                              11
dispute.’ ([Cal.] Rules of Prof. Conduct, rule 5-100(A).)” (Flatley, supra, 39 Cal.4th at
p. 327, fn. omitted.)

       B.     Flatley
       In Flatley, an attorney, defendant D. Dean Mauro, represented a client, defendant
Tyna Marie Robertson, who allegedly was raped by plaintiff Michael Flatley. Flatley, a
well known “performer and dance impresario,” owned stock in companies that provided
live dance performances throughout the world. (Flatley, supra, 39 Cal.4th at p. 305.)
       Mauro and Robertson made television appearances in which Robertson “described
the alleged rape ‘in extremely lurid detail.’” (Flatley, supra, 39 Cal.4th at p. 306, fn.
omitted.) After sending a demand letter on Robertson’s behalf, Mauro telephoned
Flatley’s attorney to warn that he would “‘go public’” with the rape allegations, which
would be “‘publicized every place he [Mr. Flatley] goes for the rest of his life . . . .’” (Id.
at p. 330.) In subsequent phone calls, Mauro continued to threaten to “‘go public’” with
a story that “‘would follow [Flatley] wherever he or his groups performed and would
“ruin” him.’ In response to Fields’s [Flatley’s attorney] query about how much money
Mauro wanted to avoid this, Mauro said ‘it would take “seven figures.”’ He repeated that
the deadline to respond was January 30.” (Ibid.)
       Flatley sued Robertson and Mauro for “civil extortion, defamation, fraud,
intentional infliction of emotional distress, and wrongful interference with prospective
economic advantage.” (Flatley, supra, 39 Cal.4th at p. 306.) Mauro filed a special
motion to strike Flatley’s complaint under section 425.16, which was denied. The order
of denial was affirmed by the Court of Appeal and the California Supreme Court.
       In concluding that Mauro was not entitled to relief under the anti-SLAPP statute,
the Supreme Court noted that “[e]xtortion is not a constitutionally protected form of
speech. [Citations.]” (Flatley, supra, 39 Cal.4th at p. 328.) The court found that because
Flatley’s complaint was based on illegal activities, it was not subject to dismissal under
the anti-SLAPP statute: “[W]here a defendant brings a motion to strike under section
425.16 based on a claim that the plaintiff’s action arises from activity by the defendant in

                                              12
furtherance of the defendant’s exercise of protected speech or petition rights, but either
the defendant concedes, or the evidence conclusively establishes, that the assertedly
protected speech or petition activity was illegal as a matter of law, the defendant is
precluded from using the anti-SLAPP statute to strike the plaintiff’s action.” (Id. at
p. 320.)
       In analyzing whether Mauro’s demand letter fit the “extortion as a matter of law”
exception, the Supreme Court stated: “At the core of Mauro’s letter are threats to
publicly accuse Flatley 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 followup phone calls, Mauro named the
price of his and Robertson’s silence as ‘seven figures’ or, at a 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: ‘[A]ll 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.’” (Flatley, supra, 39 Cal.4th at p. 329.)
       The Supreme Court further stated that in “[e]valuating Mauro’s conduct, we
conclude that the letter and subsequent phone calls constitute criminal extortion as a
matter of law. These communications threatened to ‘accuse’ Flatley of, or ‘impute to
him,’ ‘crime[s]’ and ‘disgrace’ (Pen. Code, § 519, subds. 2, 3) unless Flatley paid Mauro
a minimum of $1 million of which Mauro was to receive 40 percent. That the threats
were half-couched in legalese does not disguise their essential character as extortion.
[Citations.] [¶] Mauro’s letter accuses Flatley of rape and also imputes to him other,

                                             13
unspecified violations of various criminal offenses involving immigration and tax law as
well as violations of the Social Security Act. With respect to these latter threats, Mauro’s
letter goes on to threaten that ‘[w]e are positive the media worldwide will enjoy what
they find.’ Thus, contrary to Mauro’s claim that he did nothing more than suggest that, if
evidence of other criminal conduct became public knowledge it would receive media
attention, the letter implies that Mauro is already in possession of information regarding
such criminal activity and is prepared to disclose this information to the ‘worldwide’
media. Whether Flatley in fact committed any violations of these various laws is
irrelevant. [Citation.] Moreover, the threat to disclose criminal activity entirely
unrelated to any alleged injury suffered by Mauro’s client ‘exceeded the limits of
respondent’s representation of his client’ and is itself evidence of extortion. [Citation.]”
(Flatley, supra, 39 Cal.4th at pp. 330-331.)
       The Supreme Court concluded that Mauro’s demand letter “constituted criminal
extortion as a matter of law . . . based on the specific and extreme circumstances of this
case.” (Flatley, supra, 39 Cal.4th at p. 332, fn. 16.) In reaching this conclusion, the court
explained it was not implying “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. (Philippine Export & Foreign Loan Guarantee Corp. v. Chuidian,
supra, 218 Cal.App.3d at p. 1079 [‘a person, generally speaking, has a perfect right to
prosecute a lawsuit in good faith, or to provide information to the newspapers’].)”
(Flatley, supra, at p. 332, fn. 16.) The court cautioned that its discussion of what
constitutes “extortion as a matter of law” was “limited to the specific facts of this case.”
(Id. at p. 333, fn. 16.) It further “emphasize[d] that the question of whether the
defendant’s underlying conduct was illegal as a matter of law is preliminary, and
unrelated to the second prong question of whether the plaintiff has demonstrated a
probability of prevailing, and the showing required to establish conduct illegal as a matter
of law—either through defendant’s concession or by uncontroverted and conclusive

                                               14
evidence—is not the same showing as the plaintiff’s second prong showing of probability
of prevailing.” (Flatley, supra, 39 Cal.4th at p. 320.)

       C.     Mendoza
       In Mendoza, supra, 215 Cal. App. 4th 799, Division One of this district applied the
Flatley exception to a demand letter written by an attorney, Reed Hamzeh, on behalf of a
client, Guy Chow, who was involved in an employment dispute with Miguel Mendoza.
Hamzeh’s demand letter stated that Chow’s company had suffered losses in excess of
$75,000 as a result of Mendoza’s fraud, conversion, and breach of contract. The letter
warned that if Mendoza did not reimburse the company’s losses, a lawsuit would be filed
and Mendoza would be reported to state and local prosecutors, the Internal Revenue
Service, the Better Business Bureau, and other customers and vendors.
       After receiving the demand letter, Mendoza sued Hamzeh for civil extortion,
intentional infliction of emotional distress, and unfair business practices. Mendoza
alleged that the threat in Hamzeh’s demand letter to report him to state and local
prosecutors and the Internal Revenue Service constituted criminal extortion.
       Hamzeh moved to strike Mendoza’s complaint under the anti-SLAPP statute. In
opposition, Mendoza argued to deny the motion under the Flatley exception, which he
claimed was controlling authority. The motion was denied.
       In affirming the trial court’s ruling, the appellate court stated: “The anti-SLAPP
statute does not apply to the threats at issue in Hamzeh’s demand letter. Hamzeh
threatened to report Mendoza ‘to the California Attorney General, the Los Angeles
District Attorney, the Internal Revenue Service regarding tax fraud, [and] the Better
Business Bureau,’ and to disclose the alleged wrongdoing to Mendoza’s customers and
vendors if Mendoza did not pay ‘damages exceeding $75,000.’ Regardless of whether
Mendoza committed any crime or wrongdoing or owed Chow money, Hamzeh’s threat to
report criminal conduct to enforcement agencies and to Mendoza’s customers and
vendors, coupled with a demand for money, constitutes ‘criminal extortion as a matter of

                                             15
law,’ as articulated in Flatley. (Flatley, supra, 39 Cal.4th at p. 330.)” (Mendoza, supra,
215 Cal.App.4th at p. 806, fn. omitted.)

       D.     Singer’s Demand Letter Does Not Constitute Extortion as a Matter of Law
       In contrast with the demand letters in Flatley and Mendoza, Singer’s demand letter
did not expressly threaten to disclose Malin’s alleged wrongdoings to a prosecuting
agency or the public at large. Malin argues that Singer’s demand letter nonetheless
constituted actionable extortion because it “contained, at the very least, an extortion
demand that threatened to not only embarrass [Malin] and force him to ‘settle’ with the
Appellants on whatever terms they deemed ‘reasonable,’ but also to expose and
embarrass various innocent third parties who had no connection whatsoever to the
dispute between Ara[zm] and [Malin]. [¶] No matter how the Appellants attempt to
gloss this paragraph and the other threats set forth in the July 25, 2011 letter, they clearly
constituted an overt threat by the Defendants to either: ‘accuse the individual
threatened . . . of any crime; or, . . . [t]o expose, or impute to him . . . any deformity,
disgrace or crime; or . . . [t]o expose any secret affecting him or them’ for purposes
of obtaining money. (Pen. Code § 519(2), (3) and (4).) This is the very definition of
criminal extortion. [Citations.]”
       There are two problems with Malin’s argument. First, the “secret” that would
allegedly expose him and others to disgrace was inextricably tied to Arazm’s pending
complaint. The demand letter accused Malin of embezzling money and simply informed
him that Arazm knew how he had spent those funds. There is no doubt the demand letter
could have appropriately noted that the filing of the complaint would disclose Malin had
spent stolen monies on a car or a villa, if that had been the case. The fact that the funds
were allegedly used for a more provocative purpose does not make the threatened
disclosure of that purpose during litigation extortion. We cannot conclude that the
exposure of Malin’s alleged activities would subject him to any more disgrace than the
claim that he was an embezzler.

                                              16
       Second, to the extent that Malin contends the threatened disclosure of secrets
affecting a third party, his alleged sexual partner, necessarily constitutes extortion, he is
mistaken. Penal Code section 519, subdivision 1 defines extortion as a threat “[t]o do an
unlawful injury to the person or property of the individual threatened or of a third person
. . . .” The third person referred to in subdivision 1 need not have a special relationship to
the individual threatened. In contrast, the remainder of Penal Code section 519
criminalizes the threats: “2. To accuse the individual threatened, or any relative of his,
or member of his family, of any crime; or, [¶] 3. To expose, or to impute to him or them
any deformity, disgrace or crime; or, [¶] 4. To expose[] any secret affecting him or
them.” When read in context, it is clear that the third party referred to in Penal Code
section 519, subdivisions 3 and 4 must be a relative of the individual threatened or a
member of his or her family. Malin’s complaint does not allege that Singer’s demand
letter threatened to expose a secret of a third party with whom he had a special
relationship as defined by the extortion statute. Thus, the threatened disclosure of a
secret affecting a third party, who is neither a relative nor family member, does not
constitute extortion. (See People v. Umana (2006) 138 Cal. App. 4th 625, 639 [only
threats that fall within one of the four categories of § 519 will support a charge of
extortion].)
       We conclude that Singer’s demand letter does not fall under the narrow exception
articulated in Flatley for a letter so extreme in its demands that it constituted criminal
extortion as a matter of law. We see a critical distinction between Singer’s demand letter,
which made no overt threat to report Malin to prosecuting agencies or the Internal
Revenue Service, and the letters in Flatley and Mendoza, which contained those express
threats and others that had no reasonable connection to the underlying dispute.
       Because the demand letter in this case is readily distinguishable from the demand
letters in Flatley and Mendoza, this case falls under the general rule stated in Briggs:
“‘[J]ust as communications preparatory to or in anticipation of the bringing of an action
or other official proceeding are within the protection of the litigation privilege of Civil

                                              17
Code section 47, subdivision (b) . . . [,] such statements are equally entitled to the
benefits of section 425.16.’” (19 Cal.4th at p. 1115.)
       Applying the general rule enunciated in Briggs, we conclude that Malin’s
extortion claim is based on a speech or petitioning activity that falls within the ambit of
the anti-SLAPP statute. The special motion to strike must therefore be decided under the
second step of the statutory analysis. Although the trial court did not conduct a second
step analysis, we nevertheless “can address that question as it is subject to independent
review. [Citation.]” (Roberts v. Los Angeles County Bar Assn. (2003) 105 Cal. App. 4th
604, 615-616.)

       E.     The Litigation Privilege Bars Malin’s Claim for Extortion
       Under the second step of the section 425.16 analysis, Malin must demonstrate a
probability of prevailing on his claim for extortion. For the reasons that follow, we
conclude he has failed to meet this burden because his claim for extortion is barred by the
litigation privilege under Civil Code section 47, subdivision (b). (See Digerati, supra,
194 Cal.App.4th at p. 888 [“A plaintiff cannot establish a probability of prevailing if the
litigation privilege precludes the defendant’s liability on the claim.”].)

              1.     The Litigation Privilege Generally
       The litigation privilege applies “to any communication (1) made in judicial or
quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to
achieve the objects of the litigation; and (4) that have some connection or logical relation
to the action.” (Silberg v. Anderson (1990) 50 Cal. 3d 205, 212.) “‘The privilege “is not
limited to statements made during a trial or other proceedings, but may extend to steps
taken prior thereto, or afterwards.” [Citation.]’ (Action Apartment [Assn., Inc. v. City of
Santa Monica (2007)] 41 Cal.4th [1232,] 1241.) The litigation privilege is interpreted
broadly in order to further its principal purpose of affording litigants and witnesses the
utmost freedom of access to the courts without fear of harassment in derivative tort
actions. (Ibid.) The privilege is absolute and applies regardless of malice. [Fn.] (Action

                                              18
Apartment, at p. 1241.)” (Digerati, supra, 194 Cal.App.4th at p. 889.) However, the
privilege does not apply to malicious prosecution actions. (Id. at p. 889, fn. 8.)
       “A prelitigation communication is privileged only if it ‘relates to litigation that is
contemplated in good faith and under serious consideration’ (Action Apartment, supra,
41 Cal.4th at p. 1251) . . . . The requirement of good faith contemplation and serious
consideration provides some assurance that the communication has some ‘“‘connection
or logical relation’”’ to a contemplated action and is made ‘“‘to achieve the objects’”’ of
the litigation. (Ibid.) ‘Whether a prelitigation communication relates to litigation that is
contemplated in good faith and under serious consideration is an issue of fact.’ (Ibid.;
accord, Feldman v. 1100 Park Lane Associates (2008) 160 Cal. App. 4th 1467, 1487.)”
(Digerati, supra, 194 Cal.App.4th at p. 889.)

              2.     Analysis
       Singer and Arazm contend the April 10, 2012 order in the related action, in which
the same trial court denied Malin’s motion to strike the sexual misconduct allegations
from Arazm’s complaint, demonstrates the relevance of the demand letter’s sexual
misconduct allegations to Arazm’s conversion claim. We agree. In denying Malin’s
motion to strike, the trial court stated in the April 10, 2012 order that embezzlement was
“one of the main allegations of [Arazm’s] conversion claim. As regards the allegations
of Mr. Malin’s sexual activity, [Arazm] alleges that Mr. Malin engaged in these activities
using company money and property, tying these allegations into Mr. Malin’s alleged
misuse of company resources. The motion to strike these allegations is DENIED.”
       Malin argues, however, that the April 10, 2012 order is “irrelevant, because the
standards relating to a determination of issues on a demurrer and motion to strike are
substantively different from that utilized in determining a § 425.16 motion to dismiss.”
We are not persuaded by Malin’s argument. On the contrary, the April 10 order is
relevant to our determination that the litigation privilege applies to Singer’s demand
letter, given the similarity of the sexual misconduct allegations in both the letter and
subsequent complaint. Malin has cited no evidence in support of his position that the

                                              19
demand letter’s sexual misconduct allegations were not related to Arazm’s proposed
lawsuit or that the lawsuit was not contemplated in good faith and under serious
consideration when the letter was sent.
       In order for a prelitigation communication such as Singer’s demand letter to be
privileged under Civil Code section 47, subdivision (b), it must “relate[] to litigation that
is contemplated in good faith and under serious consideration.” (Action Apartment,
supra, 41 Cal.4th at p. 1251.) The April 10 order demonstrates that the sexual
misconduct allegations, which the court refused to strike from Arazm’s complaint, were
related to the demand letter that preceded the complaint.
       We conclude Singer’s demand letter was logically connected to litigation that was
contemplated in good faith and under serious consideration when the letter was sent. The
demand letter is therefore protected by the litigation privilege. Because a plaintiff cannot
establish a probability of prevailing where the litigation privilege precludes liability
(Digerati, supra, 194 Cal.App.4th at p. 888), the requirements for striking the extortion
claim under section 425.16 have been met.

III.   The Wiretapping and Computer Hacking Allegations Are Not Subject to
       Dismissal Under the Anti-SLAPP Statute
       The trial court refused to dismiss Malin’s claims arising from illegal wiretapping
activities based on Gerbosi, supra, 193 Cal. App. 4th 435, which held that such claims are
not subject to dismissal under the anti-SLAPP statute. We conclude the trial court’s
ruling was correct as to the claims for violation of civil rights and intentional and
negligent infliction of emotional distress, which are based on the illegal wiretapping and
computer hacking allegations.
       Arazm and Singer contend the trial court erred by relying on Gerbosi, supra, 193
Cal. App. 4th 435, to conclude that the alleged computer hacking and wiretapping were
not protected by the anti-SLAPP statute because they constitute illegal activities. They
argue that because they do not concede they engaged in such activities, “the plaintiff has

                                             20
the burden to establish that the conduct was illegal as a matter of law.” As we will
explain, Arazm and Singer misperceive their burden in an anti-SLAPP case.
       Our Supreme Court stated in Soukup, supra, 39 Cal. 4th 260, 286-287: “[O]nce the
defendant has made the required threshold showing that the challenged action arises from
assertedly protected activity, the plaintiff may counter by demonstrating that the
underlying action was illegal as a matter of law because either the defendant concedes the
illegality of the assertedly protected activity or the illegality is conclusively established
by the evidence presented in connection with the motion to strike.” Here, as in Gerbosi,
Arazm and Singer have not demonstrated that the challenged action arises from protected
activity.
       In Gerbosi, an attorney (Gaims) allegedly hired an investigator to conduct illegal
wiretapping activities and was sued by Finn for claims arising from those and other
activities. Gaims moved to strike all of the claims under the anti-SLAPP statute. In
affirming the denial of the motion as to the wiretapping claims, the court stated that
Gaims’s “status as a member of the bar does not automatically confer the protections of
the anti-SLAPP statute as to all of Finn’s claims. To the extent Finn alleges criminal
conduct, there is no protected activity as defined by the anti-SLAPP statute. [Citation.]
As a result, Finn’s first cause of action for invasion of privacy, third cause of action for
eavesdropping, and fourth cause of action for violation of the [unfair competition law]
(which is predicated on violations of the Pen. Code) are outside the protective umbrella
of an anti-SLAPP special motion to strike procedure. Each is based on alleged criminal
activity.” (Gerbosi, supra, 193 Cal.App.4th at p. 445.)
       Arazm and Singer seize on Gerbosi’s reference to “alleged criminal activity” and
insist the appellate court’s conclusion that mere allegations of criminal conduct are
enough to apply the narrow exception to the anti-SLAPP statute established by Flatley is
at odds with established case law. They misconstrue the Gerbosi court’s reasoning.
       As noted, Arazm and Singer had the burden to show “the challenged cause of
action arises from protected activity.” (Rusheen v. Cohen (2006) 37 Cal. 4th 1048, 1056.)
“In the anti-SLAPP context, the critical point is whether the plaintiff’s cause of action

                                              21
itself was based on an act in furtherance of the defendant’s right of petition or free
speech. [Citations.] ‘A defendant meets this burden by demonstrating that the act
underlying the plaintiff’s cause [of action] fits one of the categories spelled out in section
425.16, subdivision (e) . . . .’” (City of Cotati v. Cashman (2002) 29 Cal. 4th 69, 78.) “If
the defendant does not demonstrate this initial prong, the court should deny the anti-
SLAPP motion and need not address the second step.” (Hylton v. Frank E. Rogozienski,
Inc. (2009) 177 Cal. App. 4th 1264, 1271.)
       Arazm and Singer fail to meet their threshold burden of showing that Malin’s civil
rights claim is based on an act that constitutes protected activity within the meaning of
the statute. In an attempt to do so, they urge the gravamen of Malin’s cause of action
arises from acts in furtherance of their right to conduct prelitigation investigation. They
are incorrect. The acts underlying Malin’s civil rights and related emotional distress
causes of action are computer hacking and wiretapping. Those acts do not fit one of the
categories of protected conduct defined by the Legislature in section 425.16, subdivision
(e), and Arazm and Singer do not contend otherwise. As a result, they are not entitled to
relief under the anti-SLAPP statute.
       The following illustration in Gerbosi aptly demonstrates this point: “[I]f Finn
filed a personal injury complaint alleging that Gaims physically assaulted her in an
attempt to dissuade her from testifying against Pfeifer in his wrongful termination
lawsuit, could Gaims invoke the anti-SLAPP statute to strike the complaint by denying
Finn’s assault allegations? We are certain that the answer is no. The bottom line is this:
section 425.16 was not enacted to protect an attorney who allegedly hired an
‘investigator’ like Anthony Pellicano to wiretap telephones so as to get an unfair
advantage in a client’s legal matters. [¶] Because Finn’s causes of action alleging that
Gaims engaged in wiretapping activity do not fall within the protective ambit of the anti-
SLAPP statute, we need not determine whether Finn showed a probability of prevailing
on those causes of action. Again, the record suggests that Gaims may well have winning
defenses to Finn’s causes of action alleging criminal activity, but those defenses must be

                                              22
established by a procedural tool other than the anti-SLAPP motion procedure.” (Gerbosi,
supra, 193 Cal.App.4th at pp. 446-447.)
       Even if we were to accept Arazm and Singer’s assertion that they are innocent of
the criminal computer hacking and wiretapping allegations, their claim is “more suited to
the second step of an anti-SLAPP motion. A showing that a defendant did not do an
alleged activity is not a showing that the alleged activity is a protected activity.”
(Gerbosi, supra, 193 Cal.App.4th at p. 446.) For the same reason, the contention in the
reply brief that Singer’s associate, defendant Brettler, is entitled to a dismissal under the
anti-SLAPP statute because Malin presented no evidence showing he was engaged in any
improper conduct is misplaced.

IV.    Attorney Fees and Costs
       Arazm and Singer contend that as partially prevailing defendants in an anti-
SLAPP motion, they are entitled to costs and attorney fees under section 425.16,
subdivision (c). As the issue of fees and costs has not been fully briefed, we remand with
directions to the trial court to consider the issue in light of the following guidelines.
       “The special motion to strike—or so-called anti-SLAPP motion—is subject to
statutory fee shifting as follows. ‘In any action subject to [the special motion to strike], a
prevailing defendant . . . shall be entitled to recover his or her attorney’s fees and costs.
If the court finds that a special motion to strike is frivolous or is solely intended to cause
unnecessary delay, the court shall award costs and reasonable attorney’s fees to a plaintiff
prevailing on the motion, pursuant to [Code of Civil Procedure] [s]ection 128.5.’ (Code
Civ. Proc., § 425.16, subd. (c).)
       “Thus, under Code of Civil Procedure section 425.16, subdivision (c), any SLAPP
defendant who brings a successful motion to strike is entitled to mandatory attorney fees.
The fee-shifting provision was apparently intended to discourage such strategic lawsuits
against public participation by imposing the litigation costs on the party seeking to ‘chill
the valid exercise of the constitutional rights of freedom of speech and petition for the
redress of grievances.’ (Id., subd. (a).) The fee-shifting provision also encourages

                                              23
private representation in SLAPP cases, including situations when a SLAPP defendant is
unable to afford fees or the lack of potential monetary damages precludes a standard
contingency fee arrangement. As will appear, by its terms, Code of Civil Procedure
section 425.16 permits the use of the so-called lodestar adjustment method under our
long-standing precedents, beginning with Serrano v. Priest (1977) 20 Cal. 3d 25.”
(Ketchum v. Moses (2001) 24 Cal. 4th 1122, 1131 (Ketchum.)
       In this case, because Arazm and Singer only partially prevailed on their special
motion to strike under section 425.16, there are numerous factors to be considered in
determining their right to fees and costs. Those factors were discussed at length in Mann
v. Quality Old Time Service, Inc. (2006) 139 Cal. App. 4th 328, 344-345:
       “An award of attorney fees to a partially prevailing defendant under section
425.16, subdivision (c) thus involves competing public policies: (1) the public policy to
discourage meritless SLAPP claims by compelling a SLAPP plaintiff to bear a
defendant’s litigation costs incurred to eliminate the claim from the lawsuit; and (2) the
public policy to provide a plaintiff who has facially valid claims to exercise his or her
constitutional petition rights by filing a complaint and litigating those claims in court.
(§§ 425.16, 425.17; see Ketchum, supra, 24 Cal.4th at p. 1131.) In balancing these
policies, we conclude a defendant should not be entitled to obtain as a matter of right his
or her entire attorney fees incurred on successful and unsuccessful claims merely because
the attorney work on those claims was overlapping. Instead, the court should first
determine the lodestar amount for the hours expended on the successful claims, and, if
the work on the successful and unsuccessful causes of action was overlapping, the court
should then consider the defendant’s relative success on the motion in achieving his or
her objective, and reduce the amount if appropriate.
       “This analysis includes factors such as the extent to which the defendant’s
litigation posture was advanced by the motion, whether the same factual allegations
remain to be litigated, whether discovery and motion practice have been narrowed, and
the extent to which future litigation expenses and strategy were impacted by the motion.
The fees awarded to a defendant who was only partially successful on an anti-SLAPP

                                             24
motion should be commensurate with the extent to which the motion changed the nature
and character of the lawsuit in a practical way. The court should also consider any other
applicable relevant factors, such as the experience and abilities of the attorney and the
novelty and difficulty of the issues, to adjust the lodestar amount as appropriate. (See
Ketchum, supra, 24 Cal.4th at p. 1132.)”

                                       DISPOSITION

       The order denying the special motion to strike Malin’s complaint is reversed in
part as to the first cause of action for extortion, and affirmed in part as to the second
cause of action for invasion of privacy and the third and fourth causes of action for
intentional and negligent infliction of emotional distress. The matter is remanded with
directions to the superior court to grant the special motion to strike the first cause of
action for extortion. In accordance with the views expressed herein, the trial court is to
determine Arazm’s and Singer’s rights, as partially prevailing defendants, to fees and
costs incurred in the motion below. If the trial court awards Arazm and Singer the fees
and costs incurred in the motion below, their right to attorney fees incurred on appeal is
to be determined by the trial court. Costs on appeal, with the exception of attorney fees
to be determined by the trial court, are to be borne by the parties.

       CERTIFIED FOR PUBLICATION

                                                   SUZUKAWA, J.

We concur:

       WILLHITE, Acting P. J.                      MANELLA, J.

                                              25