A client with information that a debtor has cheated or run afoul of the government cannot resist plotting to threaten the debtor that, if he doesn’t pay up, the client will leak the information to the government. The client rationalizes that, at the very least, he would be doing a good deed for the government by turning the debtor in for his wrongdoing. The question is whether such a threat can be made and whether a client who follows through with such a leak can be held liable to the debtor.
If “John” has secret information about “Bill” and knows that releasing that information can cause Bill economic harm, for instance, by costing Bill his job, and John wants to impart that information for the sole purpose of causing Bill harm, John will be held liable for doing so. The legal theory is called prima facie tort. However, there is an exception. If the secret information concerns the public, or is needed to protect public welfare, or will expose a serious crime, John is immunized from liability, regardless of whether the motive to release the information was solely to harm Bill. However, there is an exception to the exception. If before releasing the information, John threatens Bill with it in order to get Bill to do something, such as payment of a debt, John will be liable for having used the information to perpetrate a blackmail scheme. On this, the law is now clear.
The real inquiry, though, is whether the mere making of the threat to release the information, to try to coerce payment, can render a person liable, even if he does not follow through by imparting it to anyone. On this, the law is not so clear. Liability does exist for the intentional infliction of severe emotional distress upon another, which generally requires outrageous conduct beyond all sense of decency. However, it was held by the courts that there is no right to recover for either “attempted extortion” or “attempted duress”. It was also held that intentional infliction of emotional distress would not exist where the threat did not go “beyond simply making the alleged statements”, which seems to mean that the making of the threat is okay, as long as it is not carried out. Threats have been made to publicize a potentially embarrassing law suit unless money was paid to drop it. One court held that liability for such conduct would only be imposed with “the consummation of such threat,” again, carrying it out. A later court cited that opinion for the rule that “scandalous allegations in a complaint cannot in themselves give rise” to liability, since the offended party could move to strike them. So, all in all, it appears that, as far as civil liability goes, John can threaten Bill with releasing whatever information John knows, as long as he doesn’t follow through on the threat.