Solving the "Liquidity Problem" is One Key to a Successful Business Divorce When you start your San Diego business with colleagues and friends, everyone hopes that the business will succeed and the friendships will last forever. Sadly, this is not always the case. For various reasons, business partners and [...]
What You Need to Know About California Professional Corporations Here in San Diego and all over the Golden State, professionals such as doctors, lawyers, accountants, court reporters, and others are permitted to form professional corporations pursuant to the Professional Corporation Act. See Cal. Corp. Code, §§ 13400-13410. We here [...]
"Materiality" Not Relevant When Contract Specifies Grounds for Termination As a general rule under California law, a breach of contract must be a "material" breach. That is, the breach must be important and relevant to the core purposes and intents of the contract. As an example, assume there is [...]
What is a Compliance with Law Provision and Why do I Need it in My San Diego Contracts? A "compliance with laws" provision requires that both parties to a contract must comply with the applicable laws with respect to some core aspect of the contract. These types of provisions [...]
What is a Writ of Attachment? A writ of attachment is a mechanism that San Diego business owners can use when a lawsuit has been filed to help collect on debts and ensure that monies are available from the debtor when a judgment is obtained. In this respect, a [...]
Consumer Privacy Act: Could the Courts Expand the Private Right of Action Under the CCPA? It has recently been reported that the California Senate failed to pass Senate Bill 561 which would have allowed a broad private right of action to consumers in the event of violation of the [...]
San Diego Commercial Leases: Who Pays if The HVAC Goes Out? Who pays if the HVAC — heating, ventilation, and air conditioning — stops working depends on what was negotiated in the lease. Repairing or replacing an HVAC system can be very expensive. Consequently, you should have an experienced [...]
Am I Bound by a Contract That I Signed Even if I Did Not Read it? In brief, "yes." A person who signs a contract is bound by the contract even if the person does not read the contract before signing. As discussed below, this applies to any contract [...]
Piercing the Corporate Veil to Reach Assets of Non-Shareholders Generally, forming a San Diego and California corporation will provide a shield against a creditor attempting to reach the personal assets of the shareholders of the corporation. In general, a shareholder of a corporation is not personally liable for the [...]
What is a "Corporate Opportunity"? If you are a major shareholder or owner of a corporation or limited liability company, you owe certain fiduciary duties to your company and to the other owners. One of the fiduciary duties that is owed is the duty to not divert corporate opportunities [...]
Pro-Tips (Part 3) for a Good Company Telecommuting Policy: Data Security If your San Diego business allows or is contemplating allowing work-from-home or other remote employees, your business must establish an official company telecommuting policy. There are a host of legal and labor law issues that must be addressed. [...]
Does Your Letter of Intent Have a Copeland v. Baskins Robbins Problem? Under California law, letters of intent are problematic and should be signed only after careful review and counsel from an experienced San Diego corporate attorney. Businesses often use a letter of intent as a method of listing [...]
Corporate Governance: Breaking Board Deadlocks with a Provisional Director Like any human activity, running a business can be fraught with disagreements and disputes. Sometimes these disagreements are severe enough to result in deadlocks on the corporation's board of directors. This is possible if your corporation has an even number [...]
Pro-Tips (Part 2) for a Good Company Telecommuting Policy: Safety and Workers’ Comp In part one of this series, we discussed how to write a well-considered and effective company telecommuting policy with respect to meal and rest breaks. Even if you have employees who work from home or otherwise [...]
What to do if a Contract is Lost or Destroyed? Sometimes it happens that a contract gets lost or is destroyed. The contract might not be filed properly among your business records, or the contracts might have not been boxed up during the most recent relocation, or the box [...]
Top Solutions for "Fixing" Unfinished Contracts It is not unusual for a business contract to end up being "unfinished" or incomplete in its final form. This is particularly true with longer contracts that might have been subject to extensive negotiation. An example might be when the finished signed contract [...]
San Diego M&As: Assignability of Confidentiality Agreements Under California law, most contracts and contractual rights can be freely assigned. Legally speaking, an assignment is a transfer of the rights (and obligations) of a contract held by one person/entity to another. Assignments are common when there is a business acquisition [...]
Thoughts on Being Your Own Agent for Service of Process Here in San Diego and elsewhere in California, corporations, limited liability companies, and limited partnerships are required by law to designate an "agent for service of process." This is part of the process of setting up your corporate entity [...]
No Breach of Duty of Loyalty to LLC Where LLC Conducted No Business Under California law, a limited liability company ("LLC") is one of the options available for forming a corporate entity through which to operate a business. Other options include a corporation, various professional organizations, and various limited [...]
Top Reasons for Avoiding Unwritten Contracts Here in San Diego and the rest of the Golden State, certain types of unwritten contracts can be enforced in the courts. Certain contracts, like contracts for the sale and purchase of real estate, must be in writing, but a lot of other [...]
Inspection Rights for Members of San Diego Limited Liability Companies One of the long-standing hallmarks of corporate governance in California and in the US generally is the idea that shareholders and other owners of corporate entities are entitled to inspect the "books and records." This has been enshrined in [...]
Pro-Tips for a Good Company Telecommuting Policy: Dealing With Rest/Meal Breaks Many San Diego employers have workers that prefer to work from home and, if the job duties can be effectively accomplished from a remote location, many employers like the concept, too. However, if you have work-from-home employees or [...]
Corporate Governance: Options for Breaking/Avoiding a Shareholder Deadlock When running your San Diego business through a corporation, one of the practical issues that must be addressed is possible corporate deadlock. In general, corporations run on the ideas of voting and majority rules. The shareholders own the company and they [...]
San Diego Business Law: Is Advertising a Unilateral Contract? As discussed below, under most circumstances, advertisements are not considered "unilateral contracts" in California. When most San Diego business owners think about "contracts," what comes to mind is probably the standard bilateral contract. As the name implies, "bilateral" contracts are [...]
What are Implied Contracts? Implied contracts are specifically allowed under the California Civil Code, §1621. That provisions defines an implied contract as "... one, the existence and terms of which are manifested by conduct." In interpreting this provision, California courts have held that the standard rules with respect to [...]
Some Legal Lessons as Uber Reportedly Settling Most Arbitrations: $146-$170 Million It has recently been reported that Uber is in the process of settling most of the arbitration claims that have been filed by its drivers. According to the reports, the settlements will total between $146 million and $170 [...]
Should You Designate Your Employee Handbook as "Confidential?" NLRB Says "No" Employee handbooks are a useful way of bundling together various information and notices that an employer needs and wants to provide to employees. Handbooks are particularly useful for newly-hired employees. Occasionally, the question arises whether an Employee Handbook [...]
Five Top Reasons for Not Using Off-the-Internet Form Contracts Business contracts have important and sometimes expensive legal consequences. Contracts should be taken seriously and be treated as seriously as every other aspect of your business. A good contract can make the difference between a successful business transaction and a [...]
Acceptance of a Contract by Silence, Inaction, and Subsequent Action An interesting case out Texas recently came to our attention showing an intriguing example of how silence and subsequent actions can be deemed by a court sufficient to create a contract. Normally, we deal with California cases, but, occasionally, [...]
Debunking Myths About the Advantages of Being a Sole Proprietorship Running your San Diego business as a sole proprietorship may seem like a good idea, but the so-called advantages of not being a corporation are myths. Here are some of the top myths debunked. No Wasted Time on Legal [...]
Reverse Morality Clauses are Becoming More Common Hollywood celebrities have long been required to sign agreements containing "morality clauses." These generally state that the celebrity will not engage in various activities or make various public statements that "materially damage or injure" the reputation of the film/entertainment studio and/or production [...]
Strategies for Renegotiating Value-of-Contract Limitation of Liability Clauses Limitation of liability clauses have long been upheld as valid by courts in San Diego and elsewhere in California. However, serious caution is in order if your business is being asked to sign an agreement that contains a limitation of liability [...]
U.S. Department of Labor Issues Guidance on "Employee-vs-Independent Contractor" Question Adding more confusion to San Diego and California labor laws, on April 29, 2019, the US Department of Labor ("DOL") issued a Guidance Letter on the question of "employee" versus "independent contractor" with respect to the federal Fair Labor [...]
San Diego Business Contracts: Arbitration Agreement Held to Have Retroactive Effect If a business contract is written correctly and broadly enough, then the contract can have a retroactive effect. This is the holding of a recent California Court of Appeals case with respect to an arbitration agreement. See Salgado [...]
Board Qualifications: Why You Need Clearly Written Corporate Bylaws San Diego and California corporations are created by the filing of Articles of Incorporation with the California Secretary of State's office. Two documents establish and set out the manner in which any given corporation is governed — the Articles and [...]
Corporate Governance: Shareholders Have Nearly Absolute Right to Have Annual Meetings A recent decision by the California Court of Appeals has held that shareholders have a nearly absolute right to have annual shareholders meetings. See Ielmini v. Patterson Frozen Foods, Inc., Case No. F073377, F074088 (Cal. App. 5th Dist. [...]
Dynamex Applies Retroactively Says 9th Circuit: Businesses Now at Risk Back to 2014 The US Court of Appeals for the Ninth Circuit recently held that the Dynamex decision applies retroactively. See news report here. Dynamex was decided in April 2018 and changed the rules on how California businesses are [...]
Protect Your Company's Twitter/Social Media Accounts With "Claim and Delivery" (Replevin) Clauses When an employee separates from a business — voluntarily or involuntarily — one of the thornier problems crops up if the employee exits with a Twitter handle or social media account. Speed is of the essence in [...]
Assemblymember Lorena Gonzalez (D., San Diego) Introduces Bill to Codify Dynamex Decision State Assemblymember Lorena Gonzalez, elected from here in San Diego, has recently introduced a bill -- known as AB 5 -- that would convert the Dynamex decision into statutory law. See news report here. As we have [...]
Derivative Actions: Corporation Cannot Avoid the Lawsuit by Removing the Dissident Director Under California law, a member of a corporation's board of directors can sue, on behalf of the corporation, the other members of the board and the corporation if there has been misconduct or waste of corporate assets. [...]
"No" to Implied Class Action Arbitrations Says SCOTUS In another sure-to-be-controversial decision, the US Supreme Court, by a 5-4 margin, recently held that class action arbitrations cannot be compelled unless explicitly agreed to. The case is Lamps Plus, Inc. v. Varela, Case No. 17-988 (US Supreme Court April 24, [...]
San Diego Mergers & Acquisitions: Are No-Shop Clauses Valid in California? In a merger and/or acquisition agreement, often the parties agree to what is called a "no shop" clause. A typical "no shop" clause prohibits a seller from soliciting or considering new or alternative bids for the business for [...]
San Diego Court Reporters Must Operate Through a California Professional Corporation, Says California Court of Appeals Many San Diego professionals, like doctors, nurses, attorneys and others, are eligible to form professional corporations under California law. See the Moscone-Knox Professional Corporation Act, Cal. Corp. Code, § 13400 et seq. An [...]
The Importance of Incorporating: A Shield Against Potential Liability One of the most important reasons for forming a corporation to run your business is obtaining a shield against potential personal liability. In general, once a corporation is formed, it becomes a separate legal entity. Thereafter, when the corporation signs [...]
Thoughts on Legal Risks Re: Your CCPA Data Collection and Use Notices The California Consumer Protection Act ("CCPA") is going into effect at the beginning of 2020. There are various statutes being proposed right now in the State Assembly intended to make the CCPA even more protective of consumers. [...]
Joint Venture Partners can be Legally Liable for an Obligation of the Joint Venture A recent case from the US District Court in San Francisco held that the partners of a joint venture agreement could be held liable for the debts and obligations of the joint venture and could [...]
Mergers and Acquisitions: Attention to Detail is Essential During Due Diligence A recent California Court of Appeals decision gives a good illustration of the importance of paying close attention to every detail of important contracts during merger and acquisition due diligence. See Triyar Hospitality Management, LLC. v. WSI (II) [...]
What is a Suit for “Trade Contract Price” When your San Diego business delivers goods, but you are not getting paid, you have several options in terms of filing a lawsuit. First, you can sue for breach of contract — hopefully, a lawsuit based on a written contract. Here [...]
False Advertising/Labeling: Ninth Circuit Holds That Standard for "Literally False" is Lenient Two recent opinions handed down by the US Ninth Circuit in San Francisco have clarified that the summary judgment legal standard for "literally false" labeling and advertising is a lenient standard -- preponderance of the evidence. See [...]
Confidentiality and Nondisclosure Agreements: Three San Diego "Must-Use" Circumstances Confidentiality and nondisclosure agreements are essential to any San Diego business. A confidentiality and nondisclosure agreement is an agreement that protects the confidentiality of your company's data and trade secrets. These agreements are not just for inventors or for those [...]
The Importance of Checking Corporate Status Before Contracting If your San Diego business is entering into a contract with another business, it is important to investigate the status of the corporation or other entity form with which you are about to enter a relationship. An experienced San Diego corporate [...]
Lessons From FTC v. UrthBox: Do Not Use Undisclosed Paid Online Reviews If your San Diego business is currently using online endorsers and is offering some sort of free trial, seek counsel and advice from an experienced San Diego corporate attorney to ensure compliance with federal and California statutes. [...]
More on the Doctrine of Standing: Ninth Circuit Says Inaccurate Credit Reporting Not Sufficient for Standing In good news for San Diego businesses, the US Ninth Circuit Court of Appeals up in San Francisco recently held that, without more, a claim that credit information was inaccurately reported was not [...]
Low Cost, Finality, and Speed: The Three Main Advantages of Arbitration For San Diego businesses, there are many advantages to using arbitration as the dispute resolution mechanism in business contracts. The three most prominent advantages are low costs relative to court litigation, finality, and speed. These advantages are connected; [...]
Websites Must be Accessible to the Blind, Says US Ninth Circuit: Robels v. Domino's Pizza The US Ninth Circuit recently issued its opinion in Robels v. Domino's Pizza, Case No. 17-55504 (US 9th Cir. January 15, 2019), holding that websites and mobile phone apps must be accessible to the [...]
San Diego Business Contracts and Unjust Enrichment There is a legal doctrine here in California called "unjust enrichment." This is a cause of action that can be brought in a San Diego court where the plaintiff — the person suing — claims that he or she has incurred some [...]
What if You Receive a Text Message as "Written Notice" Under a Contract? Recently, we discussed some of the legal implications of sending a text message to deliver a notice that is required under a contract. As we discussed in part I of this series, unless notice-via-text-message is listed [...]
San Diego Business Contracts: What is a Mutual Release Agreement? A "mutual release agreement" is an agreement by which two or more parties agree to settle a dispute and to release each other from any future legal liability going forward. An experienced San Diego corporate attorney should be consulted [...]
Due Diligence and Business Divorces Business divorces happen all the time. A business divorce has three things in common with a personal divorce: The divorce can span the spectrum from hostile and acrimonious to cordial and peaceable; The divorce can be caused by simply losing interest or because of [...]
Good News for San Diego Not-For-Profits: Expressive Trademarks Protected by First Amendment A federal court here in the Golden State recently held that expressive trademarks are protected by the First Amendment of the US Constitution. In general, trademarks and service marks are considered commercial — a designation of the [...]
California Court Says Business Cannot Use Sham Lawsuit to Defeat Fraudulent Transfer Action Under California law, a San Diego person or business cannot avoid paying its creditors by transferring property or items of value to someone else. Such transfers are voidable — that is, the creditor can file a [...]
