()

SAN JOSE — The she said-she said sexual harassment flap at Yahoo Inc. could soon get even more contentious.

According to a lawyer for the company, Yahoo is considering a new attack against a former engineer who accused her boss of sexual harassment. At a San Jose court hearing Tuesday, Eric Amdursky of O’Melveny & Myers said Yahoo may file an extortion suit against Nan Shi, based on a demand letter in which Shi’s attorneys said they would publicly air her allegations unless the company settled for $1 million.

That claim could have some traction with Santa Clara Superior Court Judge Maureen Folan, who wrote in a tentative ruling issued before the hearing that “the demand letter and subsequent communications appear extortionate.”

Meanwhile, Folan seemed inclined Tuesday to allow the targeted executive, Maria Zhang, to proceed with a countersuit against Shi for defamation and intentional infliction of emotional distress.

Shi’s lawyers at Da Vega Fisher Mechtenberg argued the cross-complaint is an attempt to silence an employee’s legitimate allegations, and should be tossed under California’s anti-SLAPP law. But Folan tentatively rejected Shi’s motion to strike the complaint, finding Zhang presented sufficient evidence to proceed.

“Zhang presents evidence that demonstrates that her defamation claim is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by Zhang is credited,” Folan wrote.

Zhang, a Yahoo senior director of engineering, filed the defamation cross-complaint last month in what legal experts say is an unusually aggressive response to the accusations of sexual harassment and wrongful termination. Shi accused Zhang of coercing her into a sexual relationship by threatening her job. When Shi complained, Yahoo fired her, according to her complaint.

Zhang, who is also represented by O’Melveny’s Amdursky, denies she ever had sex with Shi. False allegations Shi spread about Zhang to other Yahoo employees as well as people outside the company caused the executive emotional distress, according to Zhang’s cross-complaint.

The judge agreed with Shi that complaints of sexual harassment made to Yahoo’s human resources department fall under the protection of the state’s anti-SLAPP law. Shi’s complaints are protected as statements relating to litigation, as Shi may use them to strengthen her case against Yahoo, Folan wrote.

But to warrant dismissal under anti-SLAPP, a case must also lack even minimal merit, Folan wrote, and Zhang’s case surpasses that hurdle.

Folan cited emails Shi sent to Yahoo’s human resources department and other staff members detailing the harassment allegations, as well as declarations from Shi’s friends and family in China attesting that Shi told them about the harassment. Taken together with Zhang’s declaration that the accusations are lies, there is basis for a defamation suit, Folan wrote.

Shi’s attorney, Matthew Fisher of Da Vega Fisher, tried to shake Folan from that position at Tuesday’s hearing.

“It doesn’t show malice,” he said, adding that inferring malice from the facts at hand is “a slippery slope that has the potential to chill the rights of employees.”

Amdursky countered that his client has all the facts she needs. “The burden to establish malice,” he said, “is that [Shi] knowingly made these false statements.”

Contact the reporter at mkendall@alm.com.