As we recently discussed here, the California Supreme Court issued its opinion in OTO, LLC v. Kho, Case No. S244630 (Cal. Supreme Court August 29, 2019), which invalidated an arbitration provision in an employment contract. The case is remarkable in many respects and likely will be an important legal precedent going forward.

San Diego business contracts sometimes contain what are generally called "efforts clauses." Often, these clauses are connected to some approval or resource that one party to the contract must obtain and generally refer to some activity or event that is to occur after the contract is signed. For example, a typical "efforts" clause might be something like this: "Party A will use its best efforts to obtain permitting approval from CITY."

Trademarks and service marks are extremely valuable, and many businesses spend substantial sums of money creating and maintaining trademarks. These are the marks that create the "brand" and help generate consumer loyalty. That loyalty can drive market share and prevent a competitor from becoming profitable. Registering a trademark allows the owner to file a lawsuit in federal court to prevent infringement of the trademark.

The California State Assembly recently passed AB 5 which imposed the so-called ABC test on California employers with respect to how "employees" and "independent contractors" are classified. The author of AB 5 was San Diego Assemblywoman Lorena Gonzalez (San Diego, D). Gonzalez touted the law as an effort to bring fairness to workers in California. AB 5 was aimed at giving "gig" workers the benefits and protections that are afforded to more traditional workers under California's labor laws. Companies like Uber, Grubhub, and Lyft were among the targets of the legislation.

On September 17, 2019, Samsung Electronics received a double-helping of bad news with respect to efforts to force arbitration of consumer class actions related to the Galaxy smartphone. In the first case, the plaintiff filed a class action suit stemming from severe burns allegedly caused by his Samsung phone. See Samsung Electronics America, Inc. v. Ramirez, Case No. 18-16094 (US 9th Cir. September 17, 2019). In the second case, the plaintiff filed a class action alleging false advertising with respect to the marketing of Samsung's phones.

Many San Diego businesses want to protect themselves in the event of litigation with respect to business contracts. Often business contracts contain an attorney fees clause whereby the losing party in the litigation is forced to pay the attorney’s fees and litigation costs of the other party. Under most cases, absent a statute or a contractual provision, if there is litigation, each party must pay its own litigation costs including attorney’s fees. But, by contract, you can require the other party to pay. These are often called "fee-shifting provisions."

Some San Diego employers with workers currently classified as "independent contractors" will likely have to re-classify those workers. One solution that is available is to turn to staffing agencies and contract with such companies to achieve the same flexibility that is obtained by having independent contractors. Essentially, the staffing agency is the employer and will be responsible for providing the employees with various benefits that are mandated by the California Labor Code.

AB 1202 requires any business that collects and "sells" consumer personal data and information must register themselves as "data brokers" with the California Attorney General. Filing a form is required along with a registration fee and the information must be updated annually. The new statute defines a “data broker” as “a business that knowingly collects and sells to third parties the personal information of a consumer with whom the business does not have a direct relationship.”

As with most employment-related questions, the answer is not a clear "yes" or "no." According to a recent decision by the US District Court in the Central District of California, an employee of Union Pacific was properly terminated when his fishing trip vacation photos were posted on Facebook and when the employee -- at first -- was less than honest about being on a fishing trip.

In general, the CCPA applies to any sort of data -- including biometric data -- that is collected by a business about its customers. However, the definition of "customer" or "consumer" is very broad and is not limited to those who may be purchasing goods or services. Thus, many have concluded that employee data and the data collected from employees and about job applicants would be covered by the CCPA. California lawmakers seem to agree and, thus, for the next year at least, employee data was removed from coverage of the CCPA.

In a recent decision, the Oregon Supreme Court held that providing an employee with a negative employment reference can be considered unlawful "retaliation" under Oregon law. See McLaughlin v. Wilson, 365 Or 535 (Or. Supreme Court September 12, 2019). Oregon and California lawmakers tend to take notice of new laws made in each respective state. One wonders if this new legal precedent might soon be followed here in the Golden State.

As with its previous version, AB 51 bans employers from requiring that employees agree to arbitration as a condition of employment. Further, the new law criminalizes any effort to make workers or applicants waive rights to bring litigation or suit for alleged violations of the California Fair Employment and Housing Act (“FEHA”). The FEHA is the main California anti-discrimination statute.

AB 5 codifies, with many important exceptions, the California Supreme Court's Dynamex decision from April 2018. See text of AB 5 here. The Dynamex decision imposed on California businesses a new test for when workers can be classified as independent contractors. The new test is called the ABC test. To properly classify a worker as an "independent contractor," all three parts of the test must be satisfied. AB 5 makes the ABC test part of California's statutory law which effectively prevents Dynamex from being overturned.

Under basic and general rules of contract formation, e-signatures are a valid method of consenting or assenting to a contract. Indeed, one is not required to sign electronically. I "click" on a box on a website that says "I agree" is sufficient for courts to find that a contract has been formed. Thus, the use of a signature block or an image of your signature is sufficient for you to be bound to contract terms.

The Thurston v. Midvale Corporation case is the strongest case to date mandating the legal requirement that business websites be accessible. The Thurston case held that a restaurant's website violated the federal Americans With Disabilities Act ("ADA") and also the California Unruh Act. Of note and of legal importance, the restaurant at issue was held to be liable even though the reservation service was actually handled through a third-party webservice.

A recent case decided by the New Jersey appellate court demonstrates some of the parameters of a successful classification of a worker as an "independent contractor." See Law Office of Gerard C. Vince, LLC v. Board of Review, Case No. No. A-5441-17T2 (N.J. App. September 3, 2019) (non-precedential). The worker at issue was retained under a written consulting contract to provide paralegal work as an independent contractor. When the contract was terminated, she filed for unemployment benefits claiming that she was really an "employee." At the trial level, the employer lost.

Over the last few years, some NLRB administrative judges and courts have held that it is an unfair labor practice to misclassify a worker as an independent contractor when the worker should have been classified as an "employee." The decisions did not look to the intent of the employer or to whether the classification was justified under then-current interpretations of the law. Put another way, an employer who misclassified a worker by mistake was still considered to have engaged in an unfair labor practice.

Registering a trademark, or service mark, is an important part of any marketing strategy of any San Diego business. Trademarks identify your business as the unique commercial source for a product or service and the mark helps retain customer loyalty. Registration of your mark is crucial to protect your marks from being taken by competitors. The process is complex and you should retain an experienced San Diego corporate attorney for advice and counsel leading up to your attempted registration. Here is a quick summary of the process.

Under the federal Americans With Disabilities Act ("ADA"), reasonable accommodations are required for any employee “disability." The term "disability" has been interpreted by the courts to cover emotional disabilities. A recent trend in treating mental health disorders is the use of emotional support animals. Increasingly, it seems that allowing an employee to keep an emotional support animal at work is being defined as a "reasonable accommodation" under the ADA.

A recent case called Anabi Oil Corporation v. Highland Park Oil, Inc., Case No. B283511 (Cal. App. 2nd Dist. August 15, 2019) provides a good example of how words matter when courts evaluate and interpret the contract. In that case, the notable words were "terminate" as opposed to "breach."

In general, trade and service marks must be unique and distinctive enough to identify the commercial source of the goods or services. Descriptive words generally do not function in that manner. In the mind of the consumer, the descriptive words are just that — descriptive words. Likewise, generic words do not function in the minds of the consumer as the identity of the maker/provider of the goods or services.

Most mandatory pre-litigation mediation clauses require some sort of negotiation and mediation within a certain number of days before litigation or arbitration can be filed. In this manner, the effort to negotiate and mediate becomes a precondition -- almost jurisdictional -- to a party's ability to file a lawsuit.

In general, the Federal Arbitration Act protects and encourages arbitration and preempts state laws. The California Supreme Court was forced to dial back Sonic-Calabasas and, instead, ruled that mandatory arbitration was not always unconscionable. If the arbitration provided sufficient procedural safeguards and was equivalent to the kind of hearing one might expect in a court of law, then the mandatory arbitration of wage claims would be enforceable.

Supposedly, the reason for using an AI program to evaluate potential job candidates is to eliminate bias that might be held by human evaluators. But privacy and worker advocates have been concerned about the expansive nature of the evaluation that is done. AI can be programmed to analyze facial expressions and/or eye contact, the speed of a person's response, and other non-verbal cues that are not generally considered relevant to most job applicants.

Under this new law, supervisory employees would be required to have two hours of anti-harassment training (up from one hour) every year and non-supervisory employees would be required to undergo a one-hour prevention training class/video.

The FTC is tasked with enforcing several federal laws including the Federal Trade Commission Act ("FTC Act") and the Consumer Review Fairness Act. The FTC Act prohibited unfair and deceptive business practices and unfair and deceptive advertising. The Consumer Review Fairness Act was enacted by Congress to prevent companies from unduly interfering with consumers' rights to post online reviews.

When Congress enacted the Petroleum Marketing Practices Act, the concern was to prevent arbitrary or discriminatory discontinuance of franchise agreements. The Act gives the franchisee various rights and allows the franchisee to maintain civil actions against any franchisor who violates the Act.

There is a federal law called the Americans With Disabilities Act (ADA) that outlaws discrimination on the basis of disability in “places of public accommodation.” See 42 U.S.C. § 12181(7). The general question that the courts have been struggling with is whether a website is a "place" of public accommodation.

If a San Diego employer violates these meal break laws, employees can file suit and recover the statutory penalties, which are one additional hour of pay at the employee's regular rate of compensation for each work day that the meal period is not provided. In general, this is called the "meal break premium." The meal break premium is due whether or not the employee makes a demand for it.

In general, the covenant does not prevent a franchisor from exercising rights that are expressly provided for in the franchise documents. It is essential to have an experienced San Diego corporate attorney review your franchise agreements to provide advice and counsel.

The CCPA provides consumers with various rights with respect to the data and personal information that is collected on them by businesses operating here in the Golden State. Violation of the CCPA could be very costly. The CCPA allows for the imposition of statutory civil penalties of up to $7,500 per violation per consumer. Even a few violations could result in substantial fines and penalties. The CCPA is a complex and confusing statute.

In a recent case involving unpaid wages, a former employee attempted to use the legal theory of conversion to sue the owners for unpaid wages. See Voris v. Lampert, Case No. S241812 (Cal. Supreme Court August 15, 2019). As a matter of law, a conversion claim can be made against the individual owners and also allows for the imposition of punitive damages against the owner.

In June 2019, Tom Brady filed for a trademark registration for the phrase "Tom Terrific." According to news reports, Brady claimed that he did not like the nickname and that he "... wanted to make sure no one used it, because some people wanted to use it." See USA Today report here. Brady filed an application with the US Patent and Trademark Office ("USPTO") for use of the trademark with respect to t-shirts, football-related memorabilia, and sports collectibles.

A "representation" is a legal word meaning "statement of truth," and a "warranty" indicates that the statement can be relied upon and that, if the statement is false, a lawsuit can be filed seeking damages for the falsity of the statement. Among the advice and counsel that can be provided concerns the representations and warranties, read the article for a list of typical examples.

In today's business environment, four years is a long time and represents a substantial financial risk. As many know, litigation is expensive. Best business practices argue in favor of reducing financial risks by eliminating -- as far as is allowed by California law -- potential lawsuits that may be buried in the "contracts completed" drawer of the filing cabinet. Among the best methods to accomplish this risk-reduction is to truncate the statute of limitations through contractual agreement

Your San Diego business needs a toll-free number if the CCPA applies to your business. More businesses will be subject to the CCPA than you might think. Even a small business -- say only $5 million in revenue -- could be subject to the Act.

One excellent way of reducing the risk of litigation is to only use well-drafted and clear business contracts. A well-drafted and clear contract is not merely about the words used in the contract, but also about the negotiations that lead up to the written contract and whether the contract anticipates potential real-world problems that might occur with respect to the unique situation subject to the contract.

Are you thinking of finally starting that business you have been thinking about? Are you finally going to "make the jump" from employee to owner? The first step is to incorporate. You have a few good options for forming a corporate entity here in California including a standard corporation, a limited liability company, a California professional corporation (for various types of licensed professionals) and others.

Another way that trademarks can be lost is through what is called "naked licensing." "Naked licensing" occurs when you allow others to use your San Diego trademark but do not exercise any control over how and when your trademark, logo, slogan, etc., is used.

Cumulative Rights are any specific right or remedy provided in a contract will not be exclusive but will be cumulative of all other rights and remedies. . Under older legal principles, cumulative remedy clauses were essential because often a contract would specify the remedies that a party might have in the event of a default and, then, courts would deem the listed remedies to be exclusive.

California courts will enforce such clauses, particularly when the clause is subject to actual negotiation between sophisticated parties. If a clause like this is located in a consumer contract, courts will be more exacting in evaluating whether the consumer had meaningful notice of the venue choice.

Per the statute, all corporations must comply, and failure to meet the quotas can result in statutory penalties imposed of up to $100,000 for the first violation and $300,000 for subsequent violations. According to figures released by the California Secretary of State, the act applies to over 500 corporations.

Fingerprinting and facial recognition software are probably the most commonly used biometric data. Many smartphones use facial recognition as a method of locking the phone. That data is stored and privacy advocates are concerned about where that data is stored, the security of that storage, and what other used can be made of the data.

So, what happens if someone forgets to date a document or contract? In simple terms, the parties involved will have to provide evidence of the date of the document from other sources.

Standing is a legal requirement that must be met before a plaintiff can bring a lawsuit and the plaintiff must prove that standing exists. Tightening up the requirements for standing means that fewer lawsuits will be filed which, as noted, can be good for San Diego businesses.

In general, the ADA applies to "places" of "public accommodation" and discrimination based on a disability is prohibited in such places. When the ADA was enacted, there was no internet as it exists now and, as such, the statute did not address -- and still does not address -- whether the internet is a "place of public accommodation."

With startup companies, it is not unusual for there to be a person (or persons) designated to sit on the board of directors who is given the status of "board observer." Venture capitalists and other types of investors commonly seek to have a person affiliated with their investment company placed on the board either as an actual voting member or as an observer.

Under California law, mutual agreement or assent is a necessary element of contract formation. That is, without an agreement, there can be no contract. Under case law and under the California Civil Code, assent may be "manifested" by written or spoken words or by conduct. This is one reason that most contracts are signed.

Non-disparagement clauses in business-to-business contracts have become more and more common. Where a contract is subject to back-and-forth negotiation, non-disparagement clauses are enforceable and important. These clauses are typical in business purchase/merger agreements, shareholder agreements, commercial and office leases and, increasingly, in vendor and supplier contracts.

A buy-sell agreement is essential for small San Diego closely-held corporations. Sometimes a buy-sell agreement is a stand-alone document; often the buy-sell provisions are part of a larger Owners Agreement that sets out the various duties, obligations, and restrictions related to ownership and management of the company. However, whether stand-alone or part of a larger agreement, it is important to seek the advice and guidance of an experienced San Diego corporate attorney when considering what needs to be in a buy-sell agreement.

More Problems With Off-the-Internet Form Contracts: Revisions Affect Validity and Proof Using off-the-internet form contacts is dangerous, particularly if you are running a business. It is essential to retain an experienced San Diego corporate attorney who can ensure that your business contracts are validly formed and enforceable by the [...]

In brief, the answer is "yes" assuming that you had the opportunity to review the contract and seek out a translation or a translator. Generally speaking, parties are not required to translate a contract into another language for the other party. Parties are expected to use their own resources to read, translate, and understand a contract before agreeing to and signing it.

Dynamex Retroactive? US Ninth Circuit Says: “Let's Ask the California Supreme Court” We wrote recently about the US federal Ninth Circuit's decision in Vazquez v. Jan-Pro Franchising International, Inc., 923 F.3d 575 (9th Cir. May 2, 2019). In that decision, the federal judges on the Ninth Circuit held that [...]

Even if you are unaware of the fact, your San Diego business has trade secrets that are entitled to legal protection under both California and federal law. However, certain steps must be taken to protect the secrecy of your trade secrets. If you post an online video showing how to make your "special sauce," for example, the secret is out and there is no longer a trade secret to be protected. This is what happened with the special sauce that is on the Big Mac sandwich.

The California Court of Appeals recently affirmed a trial court ruling that a restaurant did not have to reimburse employees for slip-resistant shoes. The court held that the slip-resistant shoes were not a "necessary expenditure" in the sense of being part of a unique uniform mandated by the restaurant employer

For a San Diego business contract to be formed -- to be enforceable in our courts -- the parties must come to an agreement. Most often, "agreement" is indicated by a signature or, with online contracts, by clicking on the "I agree" box. There are other methods of showing "agreement." One can indicate agreement with a contract by signing a different document, one that relates to and refers to the contract in question. That is one of the legal lessons from the recent California Supreme Court decision in Monster Energy Co. v. Schechter, Case No. S251392 (Cal. Supreme Court July 11, 2019).

There are many benefits to allowing assignability in many circumstances. So there is no reason to always say "no" to allowing assignment. However, there are legal and practical issues to consider and you should seek advice and guidance from an experienced San Diego corporate attorney. Here are some of the considerations.

In part one of this series, we discussed pitfalls and problems with respect to backdating a contract among sophisticated parties. With sophisticated business parties and where the contract has been negotiated, backdating can be "okay," but there are pitfalls to avoid.

There are some circumstances in which parties to a contract want to use a date on a business contract that is prior to the date that the contract is actually signed. This is the general meaning of "backdating a contract." As between sophisticated business parties and when the issue of the contract date is fully negotiated, backdating is not illegal.

The Federal Drug Administration ("FDA") joined a growing list of federal and state agencies that are intending to punish companies and businesses that pay social media influencers without fully disclosing the relationship and the payments.

Effective January 1, 2020, San Diego and California employers will have to be careful about their grooming and business professionalism policies and procedures with respect to hair types and styles.

With longer business contracts, there is a potential for conflict between the provisions in the contract. Indeed, the more provisions and the more pages, the more likely there may be a conflict among the provisions in the contract. This is the reason that it is important to retain an experienced San Diego corporate attorney to review and customize your business contracts.

In general, corporations are governed by their bylaws. The bylaws are adopted by a vote of the shareholders when the corporation is formed and, generally speaking, the shareholders can change the bylaws at any time by a vote of the controlling shareholders. However, there are some limitations.

One of the most important reasons to use written contracts for your San Diego business is the ability to use the contract to help eliminate risks in the event of breach. Generally speaking, the measure of damages for breach of contract here in the Golden State is "benefit of the bargain."

Last year, the California Supreme Court decided the case of Troester v. Starbucks Corporation, 5 Cal. 5th 829 (2018). In Troester, the court broadly held that the California Labor Code required that workers must be paid for all time worked, even for required tasks that only take a minute or two each day.

Every San Diego business that has employees should consider having an employee handbook. There are many state- and federally-mandated notices that must be provided and a host of company policies that must be summarized for your existing and new employees.

San Diego Business Contracts: The Difference Between an Indemnity and Damages Cap Without the assistance of an experienced San Diego corporate attorney, it can be difficult to distinguish different parts of a business contract. For example, many confuse the legal meaning and purpose of an "indemnification" clause, particularly if [...]

"Intellectual property" includes assets like trademarks, patents, and copyrights but also includes trade secrets. Indeed, trade secrets are the most common form of intellectual property owned by California businesses. Intellectual property is protected under both California and federal law.

San Diego Earn Out Provisions: Tips on Avoiding Post-Acquisition Litigation When a small-to-medium sized San Diego business is acquired by another business, often the new owners want to retain the previous owners in an employment capacity. This can be beneficial to both sides of the bargain. The new owners [...]

The US Ninth Circuit Court of Appeals recently affirmed that knowingly including inaccurate information in your copyright application will result in your copyright being held invalid. See Gold Value International Textile, Inc. v. Sanctuary Clothing, LLC, Case No. 17-55818 (US 9th Cir. June 4, 2019). The case provides an example where seeking the advice and counsel of an experienced San Diego corporate attorney during the copyright application process would have helped achieve a more desirable result.

Trade and service marks are some of the most powerful tools that a San Diego business can use to protect and expand its market share. The process of establishing a trade/service mark is essentially one of creation and use. Once in use, the mark can be registered with the US Patent and Trademark Office ("USPTO") under the provisions of the federal Lanham Act. An experienced San Diego corporate attorney can help with the legal requirements and the registration process.

Under California law, the simple answer is, “Yes, you can have a perpetual contract.” The more complicated answer is, "Yes, if that is what the parties agree to and they express that intent unambiguously in the contract." An experienced San Diego corporate attorney can help draft your business contracts to reflect what you and your contracting partners want with respect to termination.

The US District Court up in San Francisco recently handed down a decision with respect to an Uber user on the issue of contract formation.

San Diego Business Contracts: Using Insurance Clauses can Help Avoid Litigation and Reduce Costs/Risks The main function of business contracts is to set out the mutually-agreed obligations of the parties. Business contracts can also be used for secondary and tertiary purposes including reducing the likelihood of litigation and the [...]

Buying goods and services off the internet has become commonplace. But extreme caution is in order with respect to using and buying form/template contracts offline. Bluntly, it is just not a good idea and making a mistake will be expensive both in terms of a potential loss of your bargain and litigation costs if there is a lawsuit.

In general, San Diego businesses and consumers can only be bound to a contract if they agree to the contract. This is the essential element of entering into a contract knowingly. With online contracts -- like a website Terms of Service Agreement -- consumers often argue that "I did not know I was agreeing to anything."