diff --git a/web/src/components/AssistantChat/HappyComposer.expandSelection.test.tsx b/web/src/components/AssistantChat/HappyComposer.expandSelection.test.tsx
index 17969341..004225a0 100644
--- a/web/src/components/AssistantChat/HappyComposer.expandSelection.test.tsx
+++ b/web/src/components/AssistantChat/HappyComposer.expandSelection.test.tsx
@@ -76,6 +76,13 @@ function TestRuntime(props: { withSettings?: boolean }) {
                 agentFlavor={props.withSettings ? 'claude' : undefined}
                 onPermissionModeChange={props.withSettings ? () => {} : undefined}
             />
+            {props.withSettings ? (
+                <button
+                    type="button"
+                    aria-label="Outside action"
+                    onPointerDown={(event) => event.stopPropagation()}
+                />
+            ) : null}
         </AssistantRuntimeProvider>
     )
 }
@@ -144,5 +151,11 @@ describe('HappyComposer plain-text expansion', () => {
 
         fireEvent.pointerDown(screen.getByRole('textbox'))
         expect(screen.queryByText('misc.permissionMode')).not.toBeInTheDocument()
+
+        fireEvent.click(settingsButton)
+        expect(screen.getByText('misc.permissionMode')).toBeInTheDocument()
+
+        fireEvent.pointerDown(screen.getByRole('button', { name: 'Outside action' }))
+        expect(screen.queryByText('misc.permissionMode')).not.toBeInTheDocument()
     })
 })
diff --git a/web/src/components/AssistantChat/HappyComposer.tsx b/web/src/components/AssistantChat/HappyComposer.tsx
index a7c67ec5..f5fcfcaf 100644
--- a/web/src/components/AssistantChat/HappyComposer.tsx
+++ b/web/src/components/AssistantChat/HappyComposer.tsx
@@ -1393,8 +1393,8 @@ export function HappyComposer(props: {
             dismissSettings()
         }
 
-        document.addEventListener('pointerdown', handlePointerDown)
-        return () => document.removeEventListener('pointerdown', handlePointerDown)
+        document.addEventListener('pointerdown', handlePointerDown, true)
+        return () => document.removeEventListener('pointerdown', handlePointerDown, true)
     }, [dismissSettings, showSettings])
 
     const handleSubmit = useCallback((event?: ReactFormEvent<HTMLFormElement>) => {