Free Speech

Threat of Frivolous but Reputation-Damaging Lawsuit Can Be Criminal Extortion,

if it's used as an attempt to get a settlement, the Ninth Circuit rules .


The case is yesterday's U.S. v. Koziol, written by Judge Bridget Bade and joined by Judge Carlos Bea and District Judge Gershwin Drain (E.D. Mich.):

Benjamin Koziol was convicted of attempted extortion under the Hobbs Act, 18 U.S.C. § 1951(a), for threatening to file suit against a well-known entertainer asserting salacious and scandalous allegations of sexual harassment, sexual assault, and assault and battery if the entertainer did not settle with Koziol for $1,000,000.

On appeal, Koziol argues that … the threat of litigation, even a baseless and bad faith threat, cannot constitute "wrongful" conduct under the Hobbs Act…. We affirm [the] conviction ….

Here, there was ample evidence at trial from which a rational jury could conclude that Koziol knew his allegations were baseless and that he had no right to obtain any money from the entertainer. As an initial matter, the uncontested evidence at trial established that it was the manager, not the entertainer, who was present at Sweet's apartment on the night of the massage. Several months after the manager negotiated a settlement with Koziol's wife, Sweet, Koziol accused the manager of "verbally and physically" assaulting him, even though Koziol was not mentioned in the detailed demand letter that Saadian, Sweet's attorney, previously sent to Wright, the manager's attorney.

When Koziol made these allegations against the manager, Koziol was aware that the manager had settled with Sweet and he claimed that Saadian had also represented him. After Wright refused any attempts to extract additional money from her client, Koziol changed his story to accuse the entertainer. He later falsely claimed that he had "never accused [the manager] of anything!" And in his threats to sue the entertainer, Koziol contradicted his earlier allegations and stated that the manager "was never at my apartment and has nothing to do with this case."

Moreover, the uncontested evidence also established the entertainer had never even met Koziol or Sweet. Nonetheless, despite his earlier claims that the manager was the massage customer who assaulted him, Koziol changed his story and claimed that he confronted the entertainer at the apartment on the night of the massage and spoke to him, asserted that "by the look on [the entertainer's] face" he was "obviously surprised to see" Koziol, and accused the entertainer of punching him in the face and knocking him unconscious. Koziol also claimed that he "immediately recognized" the entertainer when he searched for him on the internet. From this evidence, a rational jury could find that Koziol knew that the manager, not the entertainer, was the massage customer and that Koziol knew he did not have a claim against the entertainer.

Koziol also used falsified evidence (the photograph of his purported injuries) to bolster his threats against the entertainer, he lied about the existence of evidence that supported his claims (the video that purportedly showed the entertainer at Sweet's apartment the night of the massage). And in the demand letter that Koziol's wife sent to the manager through her attorney, she also claimed that she had a video showing the massage customer at the apartment—but stated that the video showed the manager at the apartment. Again, from this evidence, a rational jury could conclude that Koziol knew he had no lawful claim against the entertainer.

Among other things, the court concludes that such threats are unprotected by the Petition Clause (which does prevent many kinds of liability based on non-sham litigation):

Koziol fabricated evidence, lied about the existence of evidence, and knew that his claims were baseless, all of which further demonstrates that his threats to file a lawsuit were made with an improper motive. From this evidence, we conclude that Koziol knew that his threatened lawsuit could never prove fruitful if brought before a jury, which is why he attempted to intimidate the entertainer into a settlement based on admittedly falsified evidence and an implied threat that scandalous allegations in a publicly filed lawsuit would irrevocably damage the entertainer's reputation and livelihood.

Therefore, we reject Koziol's argument that his litigation threats did not rise to the level of a sham as a matter of law and conclude that the NoerrPennington doctrine did not immunize Koziol's threats of sham litigation.

Thanks to Howard Bashman (How Appealing) for the pointer. For a similar case, though one in which the threatened lawsuit wouldn't have damaged the defendant's reputation as much, see this 2009 post. A District Court decision names the target of the extortion scheme (who appears to have been entirely innocent here), and so does a press account about the Ninth Circuit decision. News reports about the target (unrelated to the extortion case) do suggest that he is known in part for traditional sexual morality and religiosity, which might explain why the extortionate threats may have been seen as especially potentially damaging.

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  1. Almost all lawsuits are frivolous. The Disciplinary Counsel absolutely refuses to enforce the Rule against it unless the complaint is from a judge in a case. This profession is a disgrace.

    Had he filed the complaint, he could not have been charged with extortion. The profession is engaged in a huge bunko scheme. Procedures are so expensive, and judges are so biased and bought off, that most lawsuits settle, even though fake.

    Result? Death of manufacturing. You lawyers killed US manufacturing. Every year each of you breathes, you destroy $millions in value from our economy.

    1. You forgot to mention that we’re also responsible for the common cold, post nasal drip, ungrateful children, and recent flooding in Maine. Oh wait — there is no recent flooding in Maine? Obviously a plot by the lawyers to evade responsibility.

      If you’re going to level stupid accusations, do a thorough job of it.

      1. If the loser in a lawsuit had to pay the legal costs of the winner, there would be fewer but more considered suits.

      2. You skunks are responsible for ungrateful children. You have sided with and empowered evil. So much as criticize a child today, “Stop acting like a fool,” you get investigated by feminist lawyers and hauled into court before feminists judges for emotional child abuse.

    2. Notwithstanding the diatribe, he raises a legitimate point.
      Bullying someone for money not due you is extortion. Now as to why no Massachusetts attorney could comprehend that 15 years ago is beyond me, but that’s what it is…

  2. I have some concerns about he said/she said disputes where the accuser isn’t believed leading to stiff penalties for the accuser. Particularly in cases where defendants are rich, powerful people with good lawyers, accusers already have an uphill battle. Putting them in a position where not being believed leads to jail makes accusing somebody powerful all that much riskier.

    Here, there appears to have been much more evidence than just a credibility dispute. The accuser not only switched his story, he fabricated false evidence in a way that could be objectively proved to be false.

    I would limit cases where filing a frivolous lawsuit leads to criminal charges to situations where false physical evidence is fabricated, documents are forged, or similar situations where deliberate falsity can be objectively and reliably proved. I would not apply criminal charges to the generic frivolous lawsuit.

    1. This situation matters to me too, but the other way: if an accusation can force the accused to spend a lot of money, time, and/or effort defending himself, the accuser needs to be on the hook for restitution or it becomes too easy to misuse the system to attack people. And this is especially true for accusations such as sexual harassment in the workplace, where the anti-retaliation clause in the law means that the wrongly accused can’t even sue his accuser.

      We need a precedent like this one that strikes down such clauses.

      1. The feminist should go to prison under same sentencing guidelines as perjury.

    2. Almost all allegations between people who know each other are fake, and extortionist. If you get into Mike Tyson’s limo at 3 AM, go on a long elevator ride to his room, stay a while, you have implied consent. If you do not like what is going on, why not leave? Why not? To extort money with a feminist lawyer.

  3. Page 18 body: The demand for a settlement was extortion because no lawsuit was ever filed. Page 18 footnote: If the lawsuit had been filed it still would have been extortion.

    1. Almost all lawsuits are frivolous, and extortion, seeking a settlement, and getting one.

      Say I slip on spilled oil in a supermarket aisle, break a bone, suffer great pain. The video will show 100 people walked around it, and my injury is 100% my fault. Yet, the defendant has to pay for my irresponsible behavior.

  4. Large Cash munneiz for sex offenses whether to hush up or decreed by the state should be sharply curtailed. It should be in the dictionary under the definition of perverse incentive.

    1. I firmly believe that all civil judgments for sex offenses should be defaulted to the state to fund the collective treatment of victims.

      Why would a legitimate victim have a problem with this???

      1. Yes. If I’m a legitimate victim, I want to fund my treatment, not collectively fund someone else’s treatment.

    2. It is to make the lawyer money. It is to attack family formation to empower big government run by the lawyer instead. It is to further the agenda of ugly, feminist women now running the Democrat Party and the lawyer profession. If you are ugly and nice, you can still get a man. If you are ugly and nasty, as they are, you will remain alone.

  5. So how long is this Koziol guy going to sit in prison? Are they even imprisoning people for attempted extortion on the West Coast?

    1. He was originally sentenced to 70 months (to be served consecutively to an unrelated state sentence) but the panel held that the district court had calculated the sentencing guidelines incorrectly and vacated that for resentencing.

      1. I approve of the sentence….but that was all pre-Covid time, I imagine.

        Thanks for the info!

  6. Does it even matter?

    It’s all who has the better lawyer, not who is right…

  7. Jeez, how did “the entertainer” and “the entertainer’s manager” keep their names out of this? I can’t find a shred of information on who it is.

    1. Did you try reading the post

      1. His name was mentioned in the Short Circuit article today.

  8. Importing an antitrust rule of statutory construction into the 12(b)6 calculus as a sort of “Iqbal Step Zero” would seem to be asking for all kinds of trouble.

    And, if I remember this right, the (travesty of a mockery of a) sham exception was conceived of in relation to the concerted activity, the latter being the actual crime. When the sham petitionitself (as opposed to the combinations, conspiracy, RICO, what you will) is the delict, there’s no scenario in which the statute could ever be too narrow to reach the crime. So the issue isn’t whether the petition (qua demand letter) is equitably a bona fide petition, but whether the state extortion statute is unconstitutional as applied to putatively abusive judicial process.

    Perhaps. Top of the head, not expert, likely wrong.

    Mr. D.

  9. As others said, making the loser pay the winner’s legal costs would quickly get rid of frivolous suits. But it would also wipe out the chance for David versus Goliath suits.

    Choose your poison.

  10. Another consideration is ‘law suit proof’ accusers. I look at things like the 27 mill GF’s family got and have to wonder what would have happened if the case had gone to court and they lost. No way they have any any resources to come close to what the defense would cost. On the other hand someone like Crump has amassed a small fortune in this type of case. While I have no problem with peeps getting paid for what they do I do have a problem with rent seekers taking advantage.

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