Massachusetts Appeals Court Rules That Stem Haverhill Lawsuit, Alleging Extortion By Local Neighbors, Can Move Forward.

First published: 5:18PM Eastern Daylight Time, 5/25/2021

Graphic; Grant Smith Ellis

In a 20 page ruling released early on Wednesday, a three judge panel of the Massachusetts Appeals Court ruled that STEM Haverhill, owned by Caroline Pineau, may continue its lawsuit against two local business owners who, the complaint alleges, offered, in 2019, to drop their opposition to Pineau's then-proposed dispensary if she acceded to a payment demand from the duo.

According to the ruling, written by Appeals Court Justice John Englander, after Pineau was unable to come to terms with the neighbors in question, Lloyd Jennings and Brad Brooks, Jennings and Brooks filed suit in the Massachusetts Land Court seeking to invalide Haverhill's adult use cannabis zoning by-law (the by-law that allowed Pineau to open).

In response, Pineau filed her own lawsuit against Jennings and Brooks, including claims for "violation of G.L. c.93A, violation of the Massachusetts Civil Rights Act, and defamation", which Jennings and Brooks sought, and failed, to have dismissed by Superior Court Judge David A. Deakin earlier this year.

Today's decision was, in turn, the result of Jennings and Brooks appealing the rejection of their motion to dismiss Pineau's lawsuit and will go down as a win for Pineau (as her lawsuit may now move forward).

In response to the ruling, Pineau told me Wednesday afternoon, "We’re very pleased that the appeals court agreed with Judge Deakin that the defendants' actions went beyond any acceptable boundaries. Stem has been a strong new source of tax revenue for the city of Haverhill and has been a positive downtown presence. We look forward to the coming trial and we’re confident we will prevail."

Today's ruling arose from a motion made by Jennings and Brooks to dismiss Pineau's lawsuit on two different grounds, both of which were rejected by the Appeals Court Justices; the first was based on something called "anti-SLAPP" law. Anti-Slapp law, as Justice Englander explained in his written opinion, "provides a mechanism for early dismissal of civil claims,where those claims are "based solely on [a defendant's] exercise of the right of petition" to the government." (Ruling page 8)

That argument was brushed aside, with the Justices' ruling explaining;

"[W]e conclude that Pineau's claims are not based solely on the defendants' (Jennings and Brooks) petitioning activity, and thus that the claims survive an anti-SLAPP motion. As discussed, the thrust of Pineau's complaint is that the defendants employed threats in order to coerce Pineau to pay money, in exchange for which the defendants would drop their opposition to the proposed marijuana dispensary.

"The threats and coercive actions by the defendants were directed at Pineau rather than a government entity,and thus, as in Blanchard I, 477 Mass. at 148, the question is whether the defendants' conduct could nevertheless qualify as "petitioning," because the actions were"in connection with" an issue under consideration by a government body.

"Here, some of the defendants' statements to the Pineaus cannot reasonably be viewed as relating to the defendants' petitioning activities. As discussed, the defendants' focus was to obtain money from Pineau that the defendants knew Pineau did not owe to them." (Ruling page 12)

In those paragraphs, the Justices make it clear that an anti-SLAPP motion can not be used to dismiss a lawsuit arising from alleged coercive statements unrelated to petitioning the government for redress.

In the paragraphs that follow, the Justices then go on to explain the lack of a nexus between the alleged coercive statements and petitioning the government;

"It was in that context --seeking the $30,000 --that Jennings made the statements that the Pineaus did not have the money to fight him, that he was preparing to file a RICO claim,and that he "was prepared to take everything from the Pineaus, including their house.

"Those statements were not reasonably related to the defendants' opposition to Pineau's marijuana dispensary. The defendants' opposition to the dispensary through the Land Court litigation could not have led to the defendants obtaining money from the Pineaus through a lawsuit, let alone to causing the Pineaus financial ruin.

"Rather, the statements by Jennings, if proven,were part of an extended pattern of threats,made in an effort to coerce payment. We agree with the judge that to the extent the plaintiff's claims were seeking redress for such behavior, they were not based solely on petitioning activity, and not subject to dismissal." (Ruling page 13)

Secondly, Jennings and Brooks argued, Pineau's suit should be dismissed due to what is called "litigation privilege", which "generally precludes civil liability based on 'statements by a party, counsel or witness in the institution of, or during the course of, a judicial proceeding,' as well as statements 'preliminary to litigation' that relate to the contemplated proceeding." (Ruling page 18)

Here, against, the Appeals Court Justices rejected that argument, explaining;

"...[M]uch of the defendants' conduct alleged here cannot properly be considered as in connection with litigation, and accordingly is not protected by the litigation privilege. The litigation that the defendants contemplated,and eventually brought, were the two Land Court cases that challenged the Haverhill recreational marijuana zoning bylaw and the award of a special permit to Pineau. On the other hand, the alleged statements at issue are that the defendants would use litigation to obtain monetary relief and thereby cause the plaintiff's financial ruin.Such monetary relief, however, could not be obtained as a result of the contemplated Land Court litigation." (Ruling page 19)

While today's ruling is still subject to appeal to the State's Supreme Judicial Court, for the time being the decision means Pineau will be able to move forward with her civil lawsuit against Jennings and Brooks.

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