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Editor: D. A. Jeremy Telman
Valparaiso Univ. Law School

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Thursday, October 29, 2009

The New Yorker, Blackmail & Contract

David_Letterman The October 19, 2009 issue of The New Yorker had an interesting little “Talk of the Town” item by Lizzie Widdicombe on the whole David Letterman blackmail issue.   Northwestern Law School’s James Lindgren (unfortunately not a ContractsProf) wonders why blackmail is a crime.  I think the Letterman version of Lindgren's hypothetical would run something like this: Suppose Joel Halderman, the alleged Letterman blackmailer, had written a screenplay that would have exposed Letterman’s penchant for sexual liaisons with his employees.  Suppose Letterman had learned of the screenplay, perhaps because Halderman arranged for him to see it, and offered Halderman $2 million to destroy all copies.  Lindgren suggests that, had Halderman accepted such an offer, we would have had an enforceable contract and no crime.  So if the offer runs in the other direction, why is this a crime?

Widdicombe’s piece offers some situations that we might consider akin to blackmail: all commercial transactions, if you are a “Marxist”; divorce proceedings; and consumers who press for settlement by threatening adverse publicity for the corporate defendant.  The offense we take at blackmail is mere evidence of our penchant to wax sanctimonious over other people’s conduct when we engage in similar or worse conduct under color of law and call it virtue, Saul Smilansky seems to suggest.

Epsteinatgmu Richard Epstein rides to the rescue, explaining that we don’t want to live in a world that permits blackmail, because blackmail leads to fraud, “and lying to the world is wrong.”  Of course, I don't know if the world we live in now, in which Letterman voluntarily catalogues his own faults, is any better.  Others acknowledge what Widdicombe calls “the ick factor,” but tie that factor to the fact that Halderman allegedly sought money.  If he had threatened to ruin Letterman’s reputation by going public with the news, there would be no crime.  Libertarian economist Walter Block goes further, arguing that blackmail, even if “yucky” should not be a crime, any more than smoking is a crime. 

I am more interested in the contracts law issue.  I think it is possible that we could use contracts doctrines, such as duress, undue influence and unconscionability to distinguish between enforceable agreements and acts of extortion.  Thoughts?

[Jeremy Telman]

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Comments

Certainly we could use contracts doctrines to render any potential contracts unenforceable. I'm not sure, however, how unconscionability, undue influence, etc. would punish the one seeking to extort/blackmail.

Therefore, to the extent we are seeking methods to dissuade the potential extorter/blackmailer, I'm not sure that simply rendering any potential contract they may enter into, unenforceable, will have any deterring effect.

Posted by: Jason | Nov 1, 2009 4:55:17 PM

I agree with you, Jason, but I wasn't looking to deter blackmailers. Criminal law can take care of that.

I was trying to show that contracts law has ways of distinguishing cases that James Lindgren thinks are indistinguishable. We would enforce the contract if Dave Letterman initiated it, because it would seem to be an exchange that he freely chose to enter into, given the options available to him. But one could argue that blackmail involves an absence of meaningful choice.

Posted by: Jeremy Telman | Nov 2, 2009 5:54:00 AM

Can we delve a bit into this meaningful choice? Riding off of what Jason said, there are several options off the contract in order to deter blackmailing; first, you can pursue criminal law sanctions, and second, potential civil remedies in tort such as defamation and the like.

However, contractually, it presents an interesting example. On one you have a momentary monopoly due to the information that the blackmailer has attained. The blackmailee obviously wants to attain this information and to prevent its dissemination amongst the greater public. Where I start to get...well, confused...is with freedom of contract. The blackmailee should understand that there are remedies to both stop and deter this type of behavior. If the blackmailer wishes to contract with the blackmailee (which is undoubtedly the case 90% of the time), then why should the parties not be able to privately come to an agreement over the potential dissemination of information?

Your example above of Letterman being able to initiate is faulty in that regard. It is not necessarily who initiates the transaction, for while that could lead evidence to counter coercion and the like, but rather the process of the transaction as a whole. IMO, you ignore the potential benefits and incentives that Letterman could be afforded by a private route. He could save money (over the long run) and perhaps even use the information to his advantage. While those two benefits are grossly exaggerated, they do present an interesting dichotomy to the blackmailee: what happens when the two parties contract over information, with the blackmailee knowing that there are remedies outside of contract if he so wishes to exercise them? Do we treat the ability to contract around them simply like a release of liability (at least policy wise-not literally)?

Posted by: D. Marck | Nov 2, 2009 7:27:36 AM

Professor Telman,

I'm not sure initiation is necessarily dispositive. For example, if I hold a gun to your head and say nothing and you say "I'll give you my car if you don't shoot me," haven't you initiated the contract?

Posted by: Jason | Nov 2, 2009 7:32:45 AM

D. Marck: your question simply confuses me. If the dissemination of the information is advantageous to the blackmailee, there is no blackmail. Indeed, I don't see why there would even be an agreement in such a case, since the blackmailee can simply disseminate the information on his own and profit from it without involving the blackmailer.

But if the blackmailee pays money to prevent the dissemination of information, the question, as a matter of contracts doctrine, is whether he did so as a matter of choice or if he was coerced into doing so. And that is my response to Jason as well. You are correct that we cannot reduce the problem to the question of who initiates the exchange. If I initiate an exchange because a gun is pointed at my head, there is obvious coerction and any agreement that I enter into would be void as a matter of contracts law. As blackmail is a matter of economic rather than physical coerction, I think any agreement entered into based on blackmail would be voidable -- at least under the R.2d approach.

My point is a very small one. Defenders of blackmail are trying to argue that it is not distinguishable from other types of contracts because presumably, there is some sort of disparity in bargaining power and therefore some coercion involved in all exchanges. While there might be some interesting cases on the borderline, my response is that for the most part, contracts law has very little difficulty distinguishing between agreements that are freely entered into and agreements that are the product of duress.

Posted by: Jeremy Telman | Nov 2, 2009 7:55:42 AM

Prof. Telman-

My apologies, it was hastily written. Let me try with a point of clarification: what you're dealing with is the ability to contract around certain laws/rules. Blackmailing is merely another form of bargaining over information; the rules of coercion, fraud, etc., do nothing past sorting egregious examples of horrific contracts ("shock the conscience"), thus the use of contract law would probably have no effect on the behaviors of parties in these situations.

The point of confusion that I had is your treatment of the "initial" contractor; why is that dispositive, or, is it merely just a singular example? (your response to Jason helps clarify a bit of this).

With regards to the information, why couldn't there be an agreement in such a case? I think you're ignoring the options available to the blackmailee. When he learns of the information that the blackmailer has, he can report them to the cops, he can sue them within tort, or he can contract; obviously, the information is not advantageous to him if disseminated. I do not believe that situation alone (the prevention of dissemination) creates a rise to fraud, coercion, or the like. The blackmailee knows his options (theoretically). If he presents those options to the blackmailer, stating, "I have this on the table. You can go to jail, you can pay punitive damages, or we can contract," then the coercive powers lessen significantly. But--why would he want to contract? Simple. The publicity afforded to trials alone could be a deterring factor; what if he doesn't want the information out at all? That may, in some instances, create greater evidence of coercion, but it, at least IMO, is not wholly dispositive. Further, trials are expensive. What if the blackmailer is simply an idiot and undercuts the value of the information? There could be advantages in bargaining over the information and its dissemination, and these advantages weaken the argument that these blackmail cases could be handled by contract law due to its "hands off" nature.

And further, I believe it all comes down to costs. How much does the blackmailee value the information. It's not the court's place to decide that for him, but we all know how that works out.

Posted by: D. Marck | Nov 2, 2009 8:11:40 AM

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