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 [...]

Buying or Selling a Business: Options for Handling the Inventory If you are buying or selling a business here in San Diego or elsewhere in California, often one of the more challenging aspects of the transaction is how to deal with the inventory. This is particularly true when the [...]

Top Three Legal Issues for Continuing the Family Business After a Death If tragedy strikes a small-family run business, a host of legal questions arise about how to continue the business. When something like this happens, after the funeral, grieving is important and due time must be given for [...]

Uber Gets a Win: Drivers' Claims Must Go to Arbitration The Federal Court of Appeals for the Ninth Circuit recently gave Uber Technologies, Inc. a victory. Following the US Supreme Court's decision in Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018), the court held that arbitration agreements [...]

More Lessons For San Diego Businesses On Protecting Trade Secrets Many times, trade secrets are a key piece of intellectual property that can "make or break" a small business and it is crucial for San Diego businesses to protect them. An experienced San Diego corporate attorney can help. Under [...]

Will California Adopt the "Entire Fairness Doctrine" for Corporate Mergers and Acquisition? It is often instructive to keep apprised of case decisions and laws from our sister states. Of particular interest for San Diego corporate lawyers is to watch developments in Delaware law with respect to corporations and entity [...]

San Diego Hospitality Industry: New Law Requires Mandatory Training Regarding Human Trafficking In late September 2018, Governor Brown signed into law Senate Bill 970 ("SB 970") which mandates training on what are the signs and indications of slavery and human trafficking for workers in the hospitality industry. See report [...]

Key Lease Terms When Your Commercial Landlord is Doing a Build-Out With respect to San Diego commercial leases, it is not unusual for the landlord to do some build-out for the new tenant. A "build-out" is an agreed upon remodeling or retrofitting of the tenant lease space for the [...]

Owner Buy-Sell Agreements, Charges of Fraudulent Inducement, and Parol Evidence A recent California case provides some lessons with respect to owner buy-sell agreements and claims of fraud in the inducement. See IIG Wireless, Inc. v. Yi, 22 Cal. App. 5th 630 (Cal App. 4th Dist. 2018). In general, California [...]

Another Reason for M&A Due Diligence: Ignorance of Contract Provision is No Excuse for Non-Performance There is a well-established principle of California law that "ignorance of the contents of a contract" does not excuse performance. The idea that one might not know what is in a contract might seem [...]

Ownership Valuation (Part II): Discounts for Minority Interests and Lack of Marketability In part I of this series on ownership valuation, we discussed the premium that an appraiser might add for a controlling ownership interest. In this article, we discuss two of the main discounts - minority ownership interests [...]

Valuing Ownership Interests in a San Diego Business: What is a Control Premium? Valuation of a person's ownership interest in a San Diego business is important in several contexts including: Personal net worth statements Lending and other financial transactions Personal divorce proceedings Probate proceedings Individual and business bankruptcies Voluntary [...]

Good Corporate Legal Services are Essential to San Diego Small Businesses If you are running a San Diego business, you need an experienced corporate attorney to help. Legal services are not only necessary, but are essential and can actually help your business succeed. Here are a few of the [...]

Law Firm Engagement Agreement Void as Against California Public Policy: Sheppard Mullin (Part II) Generally, contracts entered into by San Diego businesses will be enforced by the California courts. However, a few exceptions exist to this general rule. One exception includes situations in which the contract is contrary to [...]

Truckers, Arbitration, and Independent Contractors: SCOTUS Hears Oral Arguments in New Prime Inc. v. Oliveira The legal battles continue over arbitration and over how to define "employee" versus "independent contractor" -- this time at the federal level and with respect to commercial truck drivers. In early October 2018, the [...]

Ninth Circuit Affirms a General Partnership Interest is a "Security" A recent decision from the US Ninth Circuit Court of Appeals provides yet another window into how a "security" will be defined by the courts here in California. See Securities & Exchange Comm'n v. Schooler, Case No. 16-55167 (US [...]

Protecting Trade Secrets Via Federal Law Almost every business -- even small businesses -- have trade secrets that should be legally protected. California law protects a business' trade secrets, such as a client list, under the California Uniform Trade Secrets Act ("CUTSA"). See Cal. Civ. Code §§ 3426, et. [...]

Web Accessibility Case Dismissed Title III of the federal Americans With Disabilities Act ("ADA") requires that businesses be accessible to those with disabilities. Of late, one of the thorny legal questions is whether the ADA requires that websites be accessible to those who are sight impaired and hearing impaired. [...]

Can Mandatory Arbitration be Avoided if the Underlying Contract is Illegal? If a contract calls for arbitration but the contract itself is void (or large important parts of the contract are void) then the arbitration provision is also void. The general rule in California is that arbitration provisions and [...]

Sexual Harassment Claims: Can I Make My Employees Take Polygraph Tests? Polygraph tests have been in the news lately. We were recently asked whether an employer -- a private company in the case we discussed -- could require its employees to take a polygraph test. Under current California law, [...]

M&A Transactions: What is a Material Adverse Change Clause? When contemplating a merger and/or acquisition, one important consideration to be negotiated up front is what happens if there is a significant deterioration in the target company's business between signing and closing. The purchase/sales agreement might be signed in, say, [...]

Just Because There is a Force Majeure Does Not Mean There is No Breach of Contract Many business contracts contain force majeure clauses. For clarity, these might be better called "disaster clauses" or "big-things-beyond-our-control clauses." The general idea is that performance under the contract is suspended or excused in [...]

The Four Stages of Buying a San Diego Business There are many methods of finding a business - brokers, word-of-mouth, various advertising/listings in industry journals/magazines, Craig's List. If you find a business that interests you, as with any purchase, do your research. Once you have located the business that [...]

Gov. Brown Vetoes Ban on Mandatory Arbitration in Employment Contracts, Kentucky Supreme Court Goes Other Way The California General Assembly sent AB 3080 to Governor Brown for his signature, which would have prohibited employers from requiring mandatory arbitration agreements with respect to their employees. However, Governor Brown vetoed the [...]

Uber Moves to Comply with Dynamex, but Wants California to Pay Uber’s Chief Executive Officer, Dara Khosrowshahi, recently gave a talk that offered some interesting hints that Uber is moving to comply with the new rules established by Dynamex Operations West, Inc. v. Superior Court, 4 Cal.5th 903 (Cal. [...]

Post-Closing Escrows (Part Two): What Happens if There is a Disagreement? We recently wrote about post-closing escrows for mergers and acquisitions and other complex transactions. See here. In this follow-up article, we discuss legal issues with respect to what happens if there is a dispute about the money or [...]

Employee Handbooks: Advanced Legal Lessons Many San Diego businesses have simple employee handbooks. Often, they are a simple compilation of various company policies and various notices that must be given to employees along with a few tax and immigration forms. However, beyond a certain size, often five or more [...]

M&A News: Use of "Weinstein Clauses" Becoming Routine If you are contemplating a San Diego business merger and/or acquisition, be prepared to discuss, review, and possibly include "Weinstein clauses" in the purchase and sale agreements. These clauses are intended to protect the purchasing company from the reputational and financial [...]

No-Poach Agreements Revisited: Jimmy John's Antitrust Class Action Case Proceeds In late July 2018, a US federal judge in Illinois refused to dismiss a class action antitrust lawsuit against sandwich maker Jimmy John's. See Butler v. Jimmy John’s Franchise LLC, Case No. 18-cv-0133-MJR-RJD (US Dist. Court, SD Illinois 2018). [...]

What is a Power of Attorney? A power of attorney is a legal document that allows one person to appoint another to officially and legally act on the first person's behalf. Attorneys, for example, often are granted a power of attorney by a client to sign contracts and legal [...]

Buy-Sell Agreements Should Contain a Right of First Refusal A buy-sell agreement governs the terms and conditions under which a business owner can sell -- or be forced to sell -- his or her ownership shares/units in the business. In general, a buy-sell agreement is an attempt to plan [...]

Five Keys to Using Negotiations to Resolve a Breach of Contract As we have said many times on this site, businesses run on their contracts. Hopefully, all of those contracts run smoothly, and all contracting parties end up getting the benefit of their respective bargains. Unfortunately - and inevitably [...]

Police Chases and the Company Vehicle There is nothing like logging onto your news app or turning on the television to see video of your company's delivery truck prominently featured in a police chase. Your first thought might be "oh no." Your second thought might be to accept the [...]

San Diego Business Contracts: "Materiality" Needed for Breach of Contract Claim Not every breach of contract will result in liability for the breaching party; the breach must be "material" for the breach to be compensable in a San Diego court. "Materiality" goes to the question of importance. Is the [...]

Own a Business and Getting Married? Some Business Thoughts Planning a wedding is an exciting and busy time in anyone’s life, as there is much to consider. For small business owners, there are some practical concerns and worries as well. Here are some thoughts on some business planning to [...]

San Diego Business Contracts: Thoughts on Subcontractor-Limitation Clauses Many standard business contracts, particularly service-related contracts, contain provisions limiting the ability of the parties to subcontract their obligations under the contract. These subcontractor-limitation clauses make business sense and common sense because trust, experience, and reputation are often the basis for [...]

Business Contracts: Importance of Using Both Warranties and Indemnifications In complex business contracts, to protect your business, it is important that the contract(s) contain both warranty and indemnification provisions. A good San Diego corporate attorney can help review your contracts and ensure that your business is protected. In general, [...]

Should Your San Diego Business be Using Clawback Provisions? Clawback provisions are commonly used in various types of contracts. Typically, these are seen in investment and financial-related transactions where payments/salary are incentive-based. Sometimes these are called "Recoupment of Incentive Compensation" provisions. Indeed, some clawback provisions are mandated by federal [...]

California Federal Court: Calling a Soda "Diet" is Not False or Deceptive Advertising In August 2018, a California federal court sitting in San Francisco rejected consumer claims that labeling a soda as "diet" was false and/or misleading. The case was Becerra v. Dr Pepper/Seven Up, Inc., No. 17-CV-05921 (US. [...]

M&A: What is a Post-Closing Escrow? In business mergers and/or acquisitions, it is common for the parties to negotiate at least one post-closing money escrow. These are funded from the seller's purchase price. In general, an escrow is an agreement in which an agreed-upon neutral third party holds something [...]

General Assembly Defies US Supreme Court on Employee Arbitration/Class Action Waivers Recently, the US Supreme Court ruled that employers can require their employees to agree to binding arbitration with respect to employment disputes, and can require that their employees waive the right to file a class action lawsuit. See [...]

You Need Overlapping Protections for Your Company's Intellectual Property Every San Diego business has valuable intellectual property ("IP") including: Copyrightable materials such as slogans, advertisements, website copy, etc. Trademarks such as logos Potentially patentable inventions, designs, and/or methods -- not every business has these, but it is surprising what [...]

More "Happy Cows" False Advertising Lawsuits "Happy cows" and claims of false advertising are back in the news. Back in the early 2000s, here in California, the animal-rights advocacy group, People for the Ethical Treatment of Animals ("PETA") accused the California Milk Advisory Board of false advertising with respect [...]

Update: 2018 California Consumer Privacy Act is Amended To great fanfare, earlier this summer, the California General Assembly passed the California Consumer Privacy Act of 2018 (the “CCPA” or the "Act"). See here. The CCPA has caused quite a stir among San Diego and California businesses and there have [...]

Contract Interpretation: The Language of Lists In this article, we take a brief look at two judicial concepts with respect to how California courts interpret complex business contracts. Both concepts, ejusdem generis and expressio unius est exclusion alterus, relate to how courts interpret the use of lists in a [...]

What Does a Business Lawyer do? An experienced San Diego business lawyer is essential to the success of your business. Many people think that a lawyer is a luxury or only needed if there is a lawsuit. Both are common misconceptions. Lawyers are as basic as plumbing and electricity [...]

Five Hallmarks of a Well-Drafted Company Harassment Complaint Form San Diego businesses that have employees are prohibited from engaging in sexual harassment and other types of discrimination. Moreover, businesses are required to prevent agents, employees, volunteers, and others from engaging in such behavior. Part of the activity that must [...]

San Diego Class Action Lawsuits: Arbitration and Enforceable Contractual Waivers This article provides some basic information on class action lawsuits, their purpose, and some recent trends with respect to contractual waivers. California courts are generally hostile to contractual waivers of class actions, but at the same time, the US [...]

Can Specific Performance of a San Diego Personal Service Contract be Ordered? As a general rule, San Diego personal service contracts are enforceable under California law. An example might be a personal service contract for in-home nursing care for a certain number of months or years. If the nurse [...]

Employee Social Media Account as Stolen Property? In some recent articles, we have written about a dispute between sports reporter Andy Bitter and the owners of the Roanoke Times media outlet. As we have discussed, Mr. Bitter was, until recently, a reporter covering the Virginia Tech Hokies sports teams [...]

Contract Protections For San Diego Subscription Plans: Four Must-Have Provisions San Diego businesses are increasingly looking at subscription agreements as a way to boost revenues and even drive sales (as a form of marketing and promotion). "Subscription agreement" is the new marketing term for the old idea of time [...]

Forming Contracts in San Diego: Browsewrap vs. Clickwrap Everyone who spends any time on the internet has encountered terms of service/user agreements that go by the names of "browsewrap" and "clickwrap" agreements. A classic "browsewrap" agreement is a statement located on a website that says something like: "By visiting [...]

Tezos Litigation: Claims Against Swiss Foundation can be Maintained in California Many have heard of Bitcoin and Ether blockchain cryptocurrencies. Since those currencies were introduced, there have been a succession of blockchain coin or token offerings. As we discussed earlier on this blog, more often than not, such coin/token [...]

Ensuring Your Letter of Intent is Non-Binding Letters of intent ("LOI") are useful tools when San Diego businesses are in the process of negotiating a complex transaction. The letters of intent are often used to summarize points that have been agreed to and are revised many times during the [...]

Dynamex, Senate Bill 1343 and Sexual Harassment Prevention Training As the San Diego business community continues to absorb the many implications and impacts of the Dynamex decision, one new question raised is whether "gig workers" should be receiving sexual harassment prevention training. As we have discussed, under the Dynamex [...]

"Made in the USA" Product Labeling: 2016 Statutory Changes are Deemed Retroactive Back in 2015, the California legislature amended the "Made in the USA" labeling law to provide a more liberal definition of how much content is allowable for a product to still be labeled as "Made in the [...]

No Slave-Labor Product Labeling Required Under California Law if No Active Misrepresentation Made In 2010, the State of California enacted the California Transparency in Supply Chains Act. See Cal. Civ. Code, § 1714.43. The General Assembly took note of the fact that de facto slave labor is common in [...]

Anti-Harassment Policy Basics for San Diego Businesses Every San Diego business with employees must have a company anti-harassment policy approved by the President/CEO of the business. It is actually preferable that the anti-harassment policy be approved by the Board of Directors or Managing Committee and it is important that [...]

Strategies for Making a Handshake Deal More Legally Enforceable For many, "handshake deals" are the best kind of deals. They are based on the good people involved, the right kind of people who honor their promises without the need for writing, and such deals are quick and easy in [...]

Transferring Ownership of Small Businesses: Contract Considerations Most often, small businesses are transferred through a sale/purchase, but there other circumstances in which ownership is transferred that do not involve a sale/purchase. Such include: Transferring partial or full ownership of a family-run business to a spouse or new members of [...]

Reasons for Caution When Demanding Separated Employees Turn Over Control of Employee-Operated Social Media Accounts We wrote recently about whether a Twitter account could be considered the property of and a trade secret of the company that may have created it. That is the current dispute between the owners [...]

What is Quantum Meruit as a Quasi-Contract Measure of Damages? Quantum meruit is a legal doctrine that allows a person to sue and recover for the value of goods or services even though there might not be a specific business contract. As a simple example, your delivery truck has [...]

California Business Law: Retroactivity of Court Decisions and Dynamex As we have written, in April 2018, the California Supreme Court changed the test for determining whether a worker is an "employee" or an "independent contractor." The new rule essentially makes all workers "employees" unless strictly defined conditions are met. [...]

Revisiting "Unconscionable Contracts": California Usury Law In general, usury laws forbid lenders from charging interest in excess of the rate listed in the applicable statute. California has a usury law that caps interest rates, but the law only applies to non-bank consumer loans that do not exceed $2,500. See [...]

New Study: Trademark Registration Helps Your Business Grow The US Patent and Trademark Office ("USPTO") just published a new study that found a higher growth and success rate for businesses that register trademarks. See study here. Highlights of the study include: Trademark registrants statistically tend to have higher revenue [...]

M&A: No-Reliance Contract Clauses and Avoiding Post-Closing Claims of Fraud A post-closing claim of fraud is one of the most common litigation risks associated with buying/selling a San Diego business or with a merger and acquisition. In general, this is a claim made by a buyer who has "buyer's [...]

Pay Special Attention to Provider Numbers When Purchasing a Medical Practice In general, one of the most valuable assets of a medical practice is its government-issued provider number(s). For those not in the industry, a provider number is a business identification number that is used to process payments from [...]

Cost Factors to Consider When Buying a Franchise One of the quickest methods of starting your own business here in San Diego -- becoming your own boss -- is to buy a franchise. There are many advantages of buying a franchise including knowing that you are selling products or [...]

How are "Qualified Purchaser" Investors Different From "Accredited Investors?" Both the US and California governments regulate the offering and sale of securities under various statutes such as the federal Securities Act of 1933 and the California Securities Act of 1968. In addition to those two statutes, there are many [...]

Outlining the Parameters of a Contractual Restraint on Trade: Golden v. CEP (9th Cir.) As we have written previously on this blog, California law does not allow noncompete or other types of agreements that prohibit or unduly interfere with a person's ability to work in his or her trade [...]

San Diego Commercial Leases: Nonconforming Use Clauses When your business enters into a commercial lease, there will likely be a clause related to "nonconforming use" of the property. These clauses often are limited to use of the leased premises that conform or fail to conform to governmental zoning, permit, [...]

Is a Company-Associated Twitter Account a Trade Secret? In the news recently is a fight between a local sports reporter -- Andy Bitter -- and his former employer, the owner of The Roanoke Times. Mr. Bitter was a sports writer for the media outlet covering sports events at Virginia [...]

Selling a Medical Practice? Transitioning is Often Better Than Abrupt Termination Selling a San Diego medical practice is different and more complex than selling another type of business. With a medical or other healing arts practice, two somewhat competing goals are in tension - the desire to maximize the [...]