CrossTalk Productions, Inc. v. Jacobson

CrossTalk Productions, Inc. v. Jacobson (1998) 65 Cal.App.4th 631, involved two individuals and their corporation who filed a lawsuit against a television executive, their former boss, arising out of termination of their contract to supply the television company with promotional video spots, after plaintiffs reported to the company that the defendant, who had approved the contract, had coerced plaintiffs into paying him a monthly sum (presumably to protect their contract). The trial court sustained defendant's demurrer without leave to amend on the theory that the complaint's allegations established as a matter of law that the individual plaintiffs had committed commercial bribery (Pen. Code, 641.3) and that such an offense would necessarily establish a defense of unclean hands. Our colleagues in Division 2 reversed with directions to vacate the order sustaining the demurrer without leave and to allow plaintiffs leave to amend. The court held the allegation that plaintiffs believed they had no reasonable alternative under these circumstances but to accede to defendant's demand in order to safeguard their contract with the company, did not establish as a matter of law that plaintiffs were guilty of commercial bribery. In this case, Morrow alleges respondents wanted repayment of money from sums the firm already had been paid for legal services rendered. That is a far cry from the CrossTalk situation, where the defendant, the plaintiffs' former supervisor, who had approved their contract, allegedly extorted money from them to continue the contract. In CrossTalk, the demurrer was based on an affirmative defense (unclean hands). In contrast, Morrow is not raising a defense of economic duress. Morrow purports to allege a cause of action for economic duress. In CrossTalk, plaintiffs alleged they reasonably feared loss of a legitimately obtained contract which constituted their sole source of support. At first they paid defendant, but when his demands escalated, plaintiffs told CBS what had happened. They then suffered the very injury they sought to avoid by acceding to defendant's demands, loss of CrossTalk's contract with CBS. The court noted, "A fair inference could be drawn that the underlying cause of the damage to plaintiffs was defendant's extortionate demands." ( CrossTalk Productions, Inc. v. Jacobson, supra, 65 Cal.App.4th at p. 643.) "Here, plaintiffs had nothing to gain by paying defendant other than forestalling conduct in which defendant had no right to engage." (Ibid.)