photo-coporate-suspension-300x239Under California law a corporation can “die” after it outlives its usefulness. There’s a procedure to wind down and dissolve the entity. A corporation can also be suspended if the corporate owners fail to keep up the formalities or file taxes to keep the entity legally viable.

If that happens the corporation is suspended by the Franchise Tax Board (FTB) and it can’t legally conduct business. The Secretary of State (SOS) may also suspend a corporation for failure to reimburse the Victims of Corporate Fraud Compensation Fund for a paid claim or failure to file the annual Statement of Information.

Suspension means the corporation loses its rights to its name. In California it’s also a crime (a misdemeanor) for someone to transact, or try to transact, business through a suspended corporation. Contracts involving a suspended corporation can be voided and it can’t sue or defend itself against lawsuits. If a suspended corporation loses those rights but if it enters into a contract while it’s suspended, the business cannot enforce that contract unless it gets relief from contract voidability.

What happens if the suspended corporation gets a check? If it’s large enough to be worthwhile in order to cash it you need to reinstate the corporation and breathe legal life back into it. This requires,

  • Payment of unpaid taxes, applicable penalties, fees and interest, and
  • Filing of delinquent returns and an Application for Certificate of Revivor to the FTB.

Continue reading

photo-new-tip-rule-300x225When you give a tip at a restaurant you may do so out of habit or you may want to reward particularly good service by wait staff. Either way you probably don’t have in mind putting money in the pockets of restaurant owners, supervisors or managers. The Trump administration proposed a regulation allowing just that. It was panned by the critics in Congress, who as part of the federal government’s most recent budget compromise made changes to tipping, but nothing that radical.

The original proposal encountered strong opposition from many working in the restaurant industry, reports the New York Times. Labor advocacy groups claimed the proposed regulation would’ve shifted billions of dollars from workers to employers.

The restaurant industry claimed it would’ve allowed the tips given to waiters and waitresses to be shared with those working in “the back of the house” such as cooks and dishwashers. There were no such limitations in the proposal, owners were free to keep or split the tips however they saw fit.

Continue reading

photo-lunch-police-300x187Under California law an employee working a long enough shift is entitled to a meal break but at what point does a temporary employer break the law if an employee isn’t using these breaks? The Court of Appeal for the State of California, First Appellate District, Division One, put the burden on an employee to show her rights were interfered with before there would be liability for unpaid wages due to a missed meal.

The decision concerns Norma Serrano who worked for a temp agency, Aerotek, Inc., at a bakery, Bay Bread, LLC. In a contract between the two companies Bay Bread agreed to be responsible for the daily management of Aerotek employees and comply with applicable state and federal laws. Aerotek’s employee manual largely copies state law when it comes to meal breaks.

After a work period of more than 5 hours, an hourly employee must be provided an uninterrupted 30-minute off-duty meal break. This meal period must begin no later than the end of the employee’s 5th hour of work, and the employee is expected to take this meal break in full. If, however, an employee’s workday is no more than 6 hours, the employee may elect to waive the off-duty meal period in advance by written agreement with the company.

Continue reading

photo-forum-300x200Courts are like private clubs. They can decide whether you and your lawsuit belong there. If not, you have to go elsewhere. Just because you’d like to have a legal dispute resolved in a particular court in a particular jurisdiction doesn’t mean that will actually happen, even if the other party agrees with your choice.
A Taiwanese company (Quanta Computer, Inc.) entered a contract concerning supplying cell phones made in China to a Japanese company (Japan Communications, Inc., or JCI), which sold them in Japan. Japanese law would apply to warranties and defects of the phone. Quanta supplied the phones, 14,246 of which were defective. There was an oral agreement Quanta would fix the phones and that JCI would make payments over time. Quanta accused JCI of not making the payments.

As part of the agreement both parties agreed that if there was a dispute over the contract the courts of the State of California was the “exclusive jurisdiction” for them to be resolved. JCI filed a lawsuit in Japan, Quanta filed one in Los Angeles.

Though the contract spells out that California is the agreed upon place for this dispute, does that mean the court is required to be the place to litigate the issue, given the lack of any contacts or relevance to the state? JCI filed in California court a motion asking the court to dismiss the case because it’s the wrong forum (“forum non conveniens” in legal speak). That means that though the court has the ability to make a decision on the issue (jurisdiction) it shouldn’t do so because it’s not practical, it lacks any contacts with the parties or the disputed transaction and the parties can go elsewhere.

The trial court agreed. The judge stated given the lack of connection to California, the court and taxpayer dollars shouldn’t be used to resolve the dispute. Quanta appealed the decision and the Court of Appeal of the State of California, Second Appellate District, Division Five, agreed with the trial court.

Continue reading

photo-stormy-daniels-agreement-300x103After President Trump was elected there are many things we now consider normal would be scandalous in the past. But as the political and social winds blow contract law is much more steady, though legal decisions may zig zag as the facts require.
In case you haven’t heard Pres. Trump is famous for extramarital affairs. He’s openly admitted them and written about them in his books. Melania Trump is his third wife. They had an affair while he was married to his second wife, Marla Maples. He had an affair with her while he was married to his first wife, Ivana Zelnickova. There’s currently a very public dispute over a non-disclosure agreement involving porn star Stephanie Clifford (aka Stormy Daniels) and what appears to be Donald Trump.

According to Clifford they engaged in a sexual relationship while Trump was married to Melania Trump and pregnant with their son. It appears that this agreement, or attempted agreement, depending on who you believe, was partially signed just days before the 2016 election. Clifford states she was paid $130,000 in exchange for the agreement. Trump’s attorney, Michael Cohen, claims he paid the money, not the President, who denies an affair took place or he’s involved in the agreement.

Clifford recently went on a public relations tour discussing the affair, then denied it took place, then stated there was an affair. Apparently Cohen started an arbitration proceeding to enforce the agreement, prevent Clifford from disclosing details or filing any related lawsuits. He claims the arbitration outcome was in his favor, according to Fox News.

Clifford’s attorney, Michael Avenatti, claimed the arbitration process was a sham and filed a lawsuit in state court in Los Angeles seeking a legal judgement that the non-disclosure agreement is not binding or valid because Pres. Trump, the one who was supposed to pay the money, never signed it (though Clifford did).

Continue reading

photo-generic-trademark-300x188A trademark concerns a product or service. If you register one it may eventually be used by the public in a way that transcends your product or service and applies to a wide range of products or services. Have you ever used a “Xerox machine” that was a copier not made by Xerox? If your mark becomes generic your right to it can be challenged, which happened to Google.

In 2012 Chris Gillespie acquired 763 internet domain names that contained the word “google” in them. In these names were words identifying a brand, person, or product such as “” Google, Inc. objected to these registrations and filed a complaint with the National Arbitration Forum (NAF) which has authority to decide certain domain name disputes.

Google argued the registrations violated the Uniform Domain Name Dispute Resolution Policy and constitutes domain name infringement, or “cybersquatting.” Google argued the domain names are confusingly similar to its GOOGLE trademark and were registered in bad faith. The NAF agreed and the domain names were transferred to Google. In response David Elliott filed, and Gillespie later joined, a federal lawsuit in the Arizona District Court.

Continue reading

photo-fixer-upper-lawsuit-300x200If you are a partner in a business you have a fiduciary relationship with your fellow partners. That relationship means that partners owe each other fiduciary duties which a partner must abide by when acting on behalf of a business. Two former partners of a Texas real estate company claim their former third partner bought them out knowing the business would soon be much more valuable because it would be featured on a cable TV show and didn’t tell them before the purchase was finalized. The plaintiffs accuse Chip Gaines of HGTV’s Fixer Upper defrauded them in the process.

The fiduciary duty between partners includes several different duties, including the duty to act in the utmost good faith and fair dealing, and the duty of loyalty. A violation of a fiduciary duty could be putting the individual’s interests over that of the business. A common type of breach of fiduciary duty occurs when a business partner learns of an opportunity in his work as a partner and takes advantage of that opportunity for his personal benefit without first notifying or receiving the consent of his other partners. Plaintiffs could argue that’s the case here.

The two former partners of Gaines in the creation of the Magnolia Real Estate Company claim he bought them out without telling them in 2013 that HGTV will be broadcasting the show nationally “and that the show would prominently feature the ‘Magnolia’ brand name,” reports KWTX. The show features Gaines and his wife renovating various properties (fixer uppers).

In the lawsuit filed in state district court in Waco, Gaines’s two former partners, lawyers John L. Lewis and Richard L. Clark, seek more than $1 million in damages and non-monetary relief. Gaines’ attorney told KWTX the lawsuit was “meritless” and that it’s “disappointing” to see the plaintiffs were trying to “take advantage of the hard work and success of Chip and Joanna Gaines.” Lewis, Clark and Gaines were equal partners founding the Magnolia Real Estate Company in 2007.

The lawsuit states,
• For their first six years, the company operated in Waco with a single real estate agent.
• Gaines worked out a deal with HGTV for the “Fixer Upper” program without telling his partners and that he planned on featuring the Magnolia brand name.
Continue reading

phot-file-sharing-300x163Traditional offices for many businesses are a thing of the past so information needs to shared more often and more widely. Employees may work from their homes and work that’s outsourced to independent contractors could be done in a business’ home city or on another continent. Businesses may also want to share documents with customers, prospective customers and contractors online for easy access. This method of doing business often involves the use of file sharing sites like DropBox or Google Drive. While this may be very convenient it can also result in the loss of legal protections if not done correctly.

“Privilege” is an exception to the rules of evidence when it comes to what can or cannot be used as evidence in litigation. An example is attorney-client privilege, which covers documents or conversations between a client or potential client and an attorney. Depending on what was said or written by whom, when, to whom, that may not be admissible, but it must be communicated in private. A conversation between a client and an attorney behind closed doors in an office may be privileged while the same conversation in a busy restaurant may not be.

Earlier this year a judge in a Virginia federal court in the case of Harleysville Insurance Co. v. Holding Funeral Home, Inc., ruled that Harleysville waived its right to privilege in a lawsuit when one of its employees uploaded documents to an unprotected file sharing site. The judge wrote that by uploading what otherwise would’ve been confidential documents to a site that was accessible by anyone with access to the hyperlink was like leaving them on a public bench for anyone to come along and take a look.

photo-fiduciary-rule-300x200Despite criticism by the President during his campaign about the fiduciary rule (as it applies to retirement investments) and his claims it would be stopped, the federal Department of Labor largely put it into effect on June 9, according to The Oregonian. Though like any rule or regulation, it may not live forever. If you’re making retirement investment decisions you may want to enjoy it while you can.

The rule was first put together by the Obama administration with the goal of trying to protect retirement investors from high costs and conflicts of interest by financial planners. The rule was delayed earlier this year after President Trump asked the Department of Labor to reevaluate the rule and the review is expected to last through January. Large sections of the rule are now in effect.
Why should you care about this?

Your financial advisor needs to act in your best interest, which is partially the definition of a fiduciary: a party putting your best interest ahead of his or her own, someone who can’t “self deal” (benefit him or herself to the detriment of the client).

Continue reading

photo-employee-leaves-for-competitor-300x169Depending on your business and number of workers, it may be common for employees to leave for opportunities elsewhere. You may be disappointed to see a valued colleague and genuinely good person leave, you may actually be happy if the person is an under performer who’s hard to get along with or the person’s departure may make you upset or uneasy if he or she is a critical part of your team who’s joining (or starting) a competitor.
If that’s the case, after going through your emotions, it’s time to take action. One action you could consider is making a counter-offer. Perhaps you didn’t really appreciate the value of the person’s skill set and experience on the open job market. Given the time and effort that may be needed to find a replacement, the cost if you use a recruiter and the disruption that may be caused by having the position vacant for an unknown period of time, along with the fact you may potentially have to pay a higher salary anyway for a replacement, this might be the way to go.

If that’s not what you want to do, or if your counter-offer is rejected, there are steps you can take to protect your business. Depending on the facts of the situation, if the person had access to trade secrets or intellectual property and whether or not a contract between your firm and the employee was signed (and if so, its language), you may have some options based on state, federal and contract law.
Here are some suggestions on what to do…

Continue reading