San Diego Employers: Act Now to Avoid Class Action Arbitration As we have discussed, there are many good reasons why San Diego employers want to use arbitration provisions in their employee agreements and want to have their employees agree to waive their right to bring class action lawsuits as [...]

Tips for Handling the Legal Dangers of Workplace Romance Dating and romances between coworkers is common. Aside from lost productivity and lost efficiencies created by both successful and unsuccessful romantic entanglements, the behavior generates many legal dangers and challenges to the employer, including the following: Perceptions by others of [...]

Goonewardene v. ADP, Inc.: Workers Not Covered by Third-Party Beneficiary Doctrine A unanimous California Supreme Court recently issued an opinion providing further guidance on California's third-party beneficiary doctrine. The third-party beneficiary rule relates to contract law and is important for San Diego businesses. In general, parties can agree to [...]

Mixed Signals from Federal Courts on How Employers May Implement Mandatory Arbitration for Employees Of late, mandatory arbitration for employees has been a hot legal topic. As we have discussed on this blog, employers have good reasons for seeking to implement arbitration. Arbitration helps reduce the litigation costs and [...]

San Diego Trademark Use: Use Caution When "Blanding-Down" There has been a recent trend in marketing called "blanding-down" with respect to trademarks and trade dress. Blanding-down is when someone in the marketing department redesigns the company logo or trademark or trade dress by removing complicating elements like a background [...]

San Diego Mergers and Acquisitions: "Arbitration" Versus "Expert Determination" Contract law truly has infinite flexibility and complexity. Indeed, these are two of the greatest attributes of contract law. Since contracts are creatures of intent, the only limits are the creativity and desires of the parties. One example is the [...]

“Fiji Water Girl” and Contract Formation If you watched the recent Golden Globe Awards (or saw photos after the fact), you probably saw the "Fiji Water Girl." As an advertising promotion, Fiji Water Company, LLC, the company that bottles and sells Fiji Water, hired a model named Kelly Steinbach [...]

Free Speech and Commercial Speech: Ninth Circuit Strikes Down San Fran Billboard Warnings Labels With respect to warning labels and similar types of business regulations, there is an ongoing tension in the law between free speech and the interests of consumers and the public. Free speech is implicated because [...]

San Diego Commercial Leases: To Assign or Sublease? If you have commercial space in San Diego, you more than likely have a lease with the property owner. For various reasons — many quite legitimate business reasons — your company may need to be out from under the obligations of [...]

Mergers and Acquisitions: Three Strategies for Dealing With #MeToo or "Weinstein" Situations If your San Diego business is contemplating a merger or making an acquisition, it is increasingly important to include sexual harassment and good behavior representations and warranties in the early part of the process and to provide [...]

How California Courts Determine the Severability of Contracts Often, people think of a "contract" as some unified whole; a singular "thing." But, in truth, contracts are generally complex and involve a collection of obligations that are agreed to by both parties. Even a simple contract to deliver product contains [...]

To Initial or Not? Thoughts on Requiring Initials for Contract Provisions Among business executives and corporate lawyers, there is an ongoing and long-running debate about the value of requiring a party to a contract to initial various provisions and clauses in addition to signing the agreement. It is common, [...]

Employee BYOD: Compliance with California Reimbursement Laws BYOD is an acronym for "bring your own device." It is increasingly common for employers and businesses to allow or require that their employees use their own devices for business purposes. The most common device is, of course, employee-owned cellphones. But BYOD [...]

Five Reasons for Using In-Writing-Only Contract Amendment Clauses At their core, contracts are merely agreements between persons. There is nothing too mysterious about a contract. Contracts can be written out, can be made orally ("with a handshake"), or can be made via actions like "course of dealings." This is [...]

California Franchise Law: No Franchise if No Franchise Fee In California, franchise relationships are governed by statute. See Cal. Bus. & Prof. Code § 20001 et seq. Under the law, for a franchise relationship to exist, there must be an agreement — either in writing or an oral agreement [...]

Establishing Your Business Credit Rating: What is A DUNS Number? Many successful businesses at some point have incorporated and operate via some corporate entity like a C corporation, an S corporation, a limited liability company, or some other limited liability business entity. Using a corporate entity protects your personal [...]

Franchising News: National Labor Relations Board Reinstates "Entrepreneurial Opportunity" Factor One of the more vexing problems facing San Diego employers is a myriad of overlapping laws, regulations, and jurisdictions. This is readily apparent when considering how to classify a worker as an "employee" or as an "independent contractor." Among [...]

Ignore the Looming Fad of the So-Called "Smart Contract" With the rise of bitcoin and other blockchain currencies, there has been a smaller boom of "news" about so-called "smart contracts." San Diego Corporate Law suggests that you ignore this looming fad. The only thing "smart" about these so-called "contracts" [...]

San Diego Businesses: Prepare to Protect Biometric Data For several years now, Illinois has been on the forefront of protecting biometric data. Biometric data encompasses any sort of personally identifying biological information like a fingerprint or a retinal print or biometric information like the manner in which you walk. [...]

California Consumer Privacy Act Will Apply to Employees and Job Candidates As many know, California recently enacted the California Consumer Privacy Act. On its face and by its name, this Act is intended to protect the privacy of consumers with respect to various personal information. The California Consumer Privacy [...]

San Diego Small Businesses: Take Caution When Using Credit Reports in Hiring Walmart suffered a major defeat recently involving claims that it improperly used credit reports with respect to applications for employment. Access and use of credit reports for hiring purposes have long been subject to federal and California [...]

Regulation D: "Accredited Investor" Determination Must be Made Before the Sale In a recent decision from the Securities and Exchange Commission ("SEC"), the SEC has held that the determination of whether investors are "accredited" must be done before the sale, not after. The administrative proceeding was captioned In The [...]

Study: Merger and Acquisition Activity Strong in 2018 and Promising for 2019 Mergermarket.com recently released its 2018 study of merger and acquisition trends for 2018. Merger and acquisition activity was strong in 2018 despite political uncertainties, market volatility, and international trade tensions. Merger and acquisition globally activity exceeded $3.5 [...]

Avoiding Three Common Gray Rhino Events in Running Your Business Many of us have heard of "black swan" events in the business world. The hallmark of a black swan event is that it is surprising and shocking at the moment that it occurs, but in hindsight, everyone begins to [...]

Using the Trademark Registry as an "Idea Generator" for Expanding Your Business A solid business is one that has a "core business" that is done well and done profitably. That being said, every San Diego business should be on the constant lookout for ways to expand into new markets [...]

Three Essential Components of a Good San Diego Arbitration Agreement Resolution of legal disputes through arbitration is becoming more and more common. This trend is actually increasing and is driven, partly, by recent strengthening of arbitration law to allow businesses a means of legally barring class action lawsuits. There [...]

The Well-Drafted Business Contract Without question, San Diego businesses run on contracts and every business needs an experienced corporate lawyer to review and draft its contracts. To non-lawyers, contract drafting might seem a mystery. But in truth, there is a path to well-drafted business contracts. Choosing the Right Contract [...]

San Diego Business Contracts: No Other Agreements Clauses A thriving San Diego business will have many and various commercial contracts that govern various aspect of the business. One common problem that must be avoided is that, with so many contracts, sometimes one contract might conceivably govern what is covered [...]

Tips for Creating Trademarks that Grow with Your Business Without question, legally protected trademarks and service marks can help your San Diego business grow. That being said, creating, registering, and establishing commercial marks is a matter that requires advanced planning and good business and legal strategies. While you want [...]

Why Business Valuation Provisions are Important for Your Partnership or Owners Agreement It is important for small, closely-held businesses to have partnership or ownership agreements. An experienced San Diego corporate attorney can provide advice and counsel on what should be contained in these types of agreements. Some of the [...]

US Supreme Court: “Wholly Groundless” Doctrine Abolished Arbitration and how to interpret arbitration agreements continues to be breaking legal news. The US Supreme Court just handed down a unanimous 9-0 decision in Henry Schein Inc. v. Archer & White Sales, Inc., Case No. No. 17-1272 , 586 U.S. __ [...]

Does Dynamex Apply Retroactively? Grubhub Magistrate Says “No, for Now” At the end of April 2018, the California Supreme Court issued its decision in Dynamex Operations West, Inc. v. Superior Court, 4 Cal.5th 903 (Cal. Supreme Court 2018). The decision made a significant change in California law with respect [...]

San Diego Business Contracts: What is Ambiguity in Contract Language? When California courts are faced with the task of interpreting contracts because a suit has been brought for breach of contract, the goal is to give the contract the effect mutually intended by the parties. To do that, the [...]

California Federal Court: Paypal Data Breach Press Release Not Securities Fraud As we have discussed on this blog, the federal Security and Exchange Commission ("SEC") has advised that data breaches and cybersecurity are issues that must be disclosed in required corporate filings. This is logical, of course, since data [...]

Data Security and M&A Due Diligence: Lessons From Marriott/Starwood In September 2016, Marriott International, Inc. bought Starwood Hotels & Resorts Worldwide, Inc. The acquisition was approved by the shareholders of each company respectively. Starwood shareholders received 0.8 shares of Marriott including $21 per Starwood common stock. In the last [...]

San Diego Ice Cream Franchising: There Must be Strict Compliance with Disclosure Laws Around the country, there are differing legal frameworks and schemes for business franchising. California law is one of the most protective for the franchisees and requires registration of the franchise with the California Department of Business [...]

San Diego Franchises, Territories, and Non-Traditional Venues Many franchise agreements provide and specify an exclusive geographic territory for the franchisee's operation. This protects the franchisee from competition from another franchisee in the "system" and prevents abusive tactics and/or retaliation by the franchisor. It would be easy enough, for example, [...]

California Business Contracts: What is the Frustration of Purpose Defense? If your San Diego business finds itself defending a lawsuit claiming breach of contract, one possible defense to the case is the legal doctrine of Frustration of Purpose. This is one of several legal doctrines that will excuse performance [...]

New California Law: Time to Revise Your San Diego Nondisparagement Clauses Given the importance of business reputation, many employers have been insisting on nondisparagement clauses in their employment contracts. Many others have promulgated nondisparagement policies and have included them in their Employee Handbooks. Without such clauses, there are many [...]

Anti-Secrecy: National Labor Relations Board Says "No" to Litigation Gag Order We recently wrote about new laws taking effect here in San Diego and California that are attempting to prevent secrecy with respect to settlements and testimony in sexual harassment, discrimination, and retaliation cases. See California Senate Bill 820 [...]

California's New Sexual Harassment Anti-Secrecy Statutes Effective with the new year, San Diego and California companies and businesses dealing with sexual harassment cases should be aware of new anti-secret-settlement and anti-confidentiality laws. This article will discuss two new laws - Senate Bill 820 ("SB 820") and Assembly Bill 3109 [...]

The Palm Restaurant Case: Family Businesses Must Treat Family Shareholders Fairly A recent case decided in New York involving The Palm steakhouse restaurant chain is a good reminder that, even in family-owned and run businesses, minority shareholders must be treated fairly. See news report here. Family-run businesses sometimes forget [...]

Workers’ Compensation and San Diego Small Businesses Any San Diego business with employees must obtain and keep current workers compensation insurance. This is required by California law and there are substantial financial and potential criminal penalties for willfully failing to have workers compensation coverage. Even if you only have [...]

Effect of Statutory Conversion of California Corporate Forms For various good business reasons, it is not uncommon for businesses to seek to shift their corporate forms. As an example, a business owner might start out as a limited liability company ("LLC") but want to convert the LLC into a [...]

Corporation Not "Doing Business" in California for Owning Only A 25% Passive Non-Managing Member Interest in an LLC Doing Business in California The California Office of Tax Appeals recently issued a decision that might spur corporate investments by non-California corporate entities. See In the Matter of the Appeal of [...]

California Supreme Court on Employee Meal Breaks and Waivers In California, laws and regulations with respect to employees are governed by various statutes enacted by the California State Assembly and what are called Wage Orders issued by the California Industrial Welfare Commission ("IWC"). Occasionally, California courts are required to [...]

Practical Guide for Using and Protecting Your San Diego Trademark Trademarks and service marks are common throughout the business and commercial marketplace. A trade/service mark is any symbol or mark that identifies a product or service as having a unique commercial source. The symbol or mark can be words, [...]

Asset Purchases and Successor Liability: California’s "Merely a Continuation" Doctrine As a general rule, if your San Diego business buys the assets of another company in an asset purchase/acquisition, your business does not automatically assume the liabilities of the seller. In fact, that is one of the reasons to [...]

Not Much is Needed to Prove Trade Secret Misappropriation in California Trade secrets are valuable business assets, and trade secrets are not the dramatic stuff of Hollywood action movies locked up in high-tech vaults. Under the California Uniform Trade Secrets Act ("CUTSA"), Cal. Civ. Code § 3426.1(d), trade secrets [...]

Helping Your Family Business Survive: Family Business Charters and Family Councils A recent trend with family-run businesses is the use of Family Business Charters and Family Councils to help smooth ongoing business functioning and to help increase the chances of a successful transition from one generation to the next. [...]

San Diego Business Contracts: When Mistake in Fact Will Allow Rescission With respect to San Diego business contracts, there are some circumstances in which a party can rescind a contract if there has been a mistake about material facts related to the contract. Avoiding mistakes of fact is one [...]

Franchise Agreements: Tips on Negotiating the Marketing Fund Contribution Requirement Almost every franchise agreement contains provisions with respect to marketing or advertising funds. Sometimes the provisions are called "brand building funds" or "brand awareness funds." In general, the provisions require that the franchisee to contribute monies into a fund [...]

Revisiting "Impossibility" as a Contract Defense: It is Not Impossible if There is a Suitable Replacement or Alternative In general, under California law, "impossibility" is a defense to a breach of contract claim. There are two types of impossibility - legal and factual. A legal impossibility might exist or [...]

San Diego Business Contracts: Tips for Ensuring Enforceability of Arbitration Provision A stand-alone arbitration agreement or an arbitration provision contained within a larger agreement is a useful technique for managing downside risk associated with litigation. Lawsuits are expensive and time-consuming. Admittedly, arbitration is not exactly cheap, but arbitration is [...]

California’s Slack Fill Law is Amended Here in San Diego, if you manufacture or package consumer products, your business must be aware of federal and California's slack fill laws. A good corporate attorney can help you stay current with ever- changing legal requirements. Slack fill is empty space in [...]

Does a California Social Purpose Corporation Have to do Charity Work? Social purpose corporations formed here in San Diego and elsewhere in California have to engage in some socially beneficial activity, but that activity does not have be "charity work" in the traditional sense; or even giving money to [...]

What Constitutes “Doing Business” in California Under the Tax Code? For years, the California Franchise Tax Board has imposed tax liability on any out-of-state corporation or LLC that was "doing business" in California. See Cal. Rev. & Tax Code, § 23151. Section 23151 allows the taxation of foreign LLCs [...]

California Corporations and the Third-Party Beneficiary Rule Mostly, contracts are between two persons or businesses. Even with something as complicated as a building construction project, the contracts are bilateral -- owner with architect, owner with general contractor, general contractor with subcontractors, etc. In general, only the parties to a [...]

Lately, there has been quite a bit of law enacted and cases decided with respect to class action lawsuits and waivers. Some have been mystified at all the effort and attention. But limiting class action lawsuits can be significant for San Diego and California businesses. Class action lawsuits are very expensive to defend and they can result in millions of dollars of liability.

Recently, the California Supreme Court held that employees must be paid for off-the-clock work even if the work only takes a few minutes. The case involved a worker at a Starbuck's coffee shop in Los Angeles.

What is not so often recited is that the acceptance must include the idea that the person intends to be bound by the agreement and that he or she or the business entity understands that legal consequences are intended. It is this intent to be bound that often distinguishes legally enforceable contracts from social obligations.

In California, even though the "main" contract/loan might be with the corporation or limited liability company, a personal guaranty allows the creditor to sue the guarantor if the contract is breached or the loan becomes past due. Under California law, the creditor can sue the guarantor immediately without having to pursue a lawsuit first against the principal party to the contract.

A loan out company is a corporate entity that is created to handle the details of contracting for performances by an artist, musician, or other performer. The loan out company hires the artist, musician, or performer as an employee and then "loans out" the employee for performance tours or for roles in movies or plays or whatever the particulars.

If you sign a commercial lease for your San Diego business, the lease will state that it is in force for a certain amount of time -- three years, five years, or whatever has been negotiated. Very likely there is also what is called a "holdover clause" that will vary in terms of the words used and the intent of the parties.

The costs of hacking, malicious data breaches, and accidental data leaks can be extensive and potentially fatal to a business enterprise. For example, Equifax had a massive data breach in 2017. Since then, Equifax has spent -- or is projected to spend -- $439 million through the end of 2018. Only $125 million of that cost is covered by insurance.

If you are running a successful business, you need to have solid and enforceable contracts. Some business owners think that a handshake deal or an oral agreement is all that is needed. And, sometimes that can be true. If the transaction is a "one-off" or in the nature of pay-as-you-go, maybe nothing formal is needed. But, mostly it is important to have written contracts.

In general, California courts will enforce contracts as written and based on the intent of the contracting parties as expressed in the contract. Rarely, a contracting party tries to make the argument that the contract is void for abusive sales practices or what is legally called "undue influence." California courts will only entertain the defense in the most abusive and aggressive circumstances.

One of the abuses that commonly occurred in the past was the use of different franchise agreements for different franchisees. As an example, a franchisor could negotiate a 10% royalty fee with one franchisor and then negotiate a 15% royalty fee with a different franchisee. Through the use of confidentiality and nondisclosure provisions, the franchisees would be prohibited from discussing the material terms of their respective agreements and, thus, the franchisor's unequal treatment would remain secret.

In general, San Diego businesses are permitted under California law to monitor employee workplace communications such as business phone calls and internet usage. More particularly, employers have the right to access employee business-use voicemail, email, texts, and other social media activity.

San Diego Contract Defenses: Doctrine of Economic Duress If you are sued in California for breach of contract, there are some defenses that your San Diego business can raise that might win the case. The doctrine of duress is a general defense when the claim is made and evidence [...]

Contractual Notice Provisions: What is the Notice Prejudice Rule? Many San Diego business contracts contain provisions or clauses requiring various types of notice. For example, in a commercial lease -- a type of contract -- the tenant might be required to give 60 days’ notice to the landlord of [...]

Strategies for Terminating a Business Contract That has "Gone Bad" It happens sometimes: You are doing your part, but your contracting partner is doing a bad job. Problems might include: Delivery is behind schedule Service is no longer top-notch Product quality is less-than-desired And more These unfortunate situations present [...]

Avoiding Unexpected Business Closure: Five Quick and Easy Steps for Business Succession Planning With small-to-medium sized San Diego businesses, an unexpected tragedy or personal accident can put the business in danger. The key person is often busy running the business and is not always careful to neatly file and [...]

Can San Diego Consumers be Bound by "Shrink-Wrap" Contracts? As a consumer, you have probably purchased a product -- often software or small electronic devices -- where a contract or licensing agreement is located inside the box. These types of agreements go by the name “shrink-wrap” agreements. As a [...]

False Advertising in California: "One-A-Day" is False if the Dosage is Two-A-Day Occasionally, the way a product is branded -- its name and trademark -- can cause problems with respect to claims of false advertising. For example, we recently wrote about a US Ninth Circuit Court of Appeals case [...]

San Diego Employers: Does Your Employee Handbook Address Age Discrimination? Age discrimination is not allowed by employers in California under both federal and California laws. If your business does not already have policies and procedures in place to prevent discrimination based on age, you should move quickly to rectify [...]

The Importance of Contract Language: An Insurance Case In California, courts will enforce contracts as they are written. Thus, the language used in the contracts is crucial if you want the contract to reflect your expectations. This is among the many reasons to hire a good San Diego corporate [...]

Invalidity of "No Poach" and Non-Solicitation-of-Employee Agreements California is strict when it comes to protecting the rights of individuals to seek employment and conduct their trade or business. In many states, employers can obtain agreements from their employees whereby the employee agrees not to work for a competitor in [...]