Articles Posted in Business Litigation

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…

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photo-suing-supplier-300x199No business is an island. Without trusted suppliers businesses would close shop. What happens when that trust is breached and you’re left holding the bag? If disagreements can’t be worked out and your company is facing or may face a serious loss as a result you may want to consider legal action against a supplier or former supplier.

Huy Fong Foods Inc., based in Irwindale, makes the Sriracha brand hot sauce from chiles (which are peppers). Without chiles there is no Sriracha but that hasn’t stopped the company from suing its chile supplier, Underwood Ranches, based in Camarillo, according to NBC4. Underwood’s website describes the company’s history and its current business including, “Today the farm grows red jalapeños for Huy Fong Foods…”The two companies have had a relationship for thirty years.

Underwood is being sued for breach of production agreement, breach of contract and civil theft. The complaint alleges,

photo-IP-negotiations-300x200If you’re trying to sell your business it’s always good news to hear that a party is interested in buying. But what’s the next step? What happens if after the party looks you, your business and your books over, they decide not to buy? How do you protect your business?

One way to do that is through a confidentiality agreement. Whatever your business, no matter the service or products you provide, one of the most valuable things you have is information. That can include your financial numbers, sales information, marketing plans, customer lists and strategic plans. A potential buyer will want to know that information before making the decision to buy or not.

Before opening yourself and your business to scrutiny, obtain confidentiality agreements from prospective buyers. Here are some issues to think about when deciding what contract language will be right for you.

• You may want your identity kept confidential. If word has leaked out your business is for sale you risk your customers looking elsewhere and your competitors spreading the news to their advantage. One possible way to reduce the number of people knowing about the fact your selling your business is to make yourself anonymous. You could hire an advisor, investment banker or broker to reach out to possible buyers on your behalf while the identity of your businesses remains unknown. Your identity need not be revealed until the potential purchaser signs a confidentiality agreement. Continue reading

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Paris, France, December 10, 2013. LeWeb Day 1. Image by Dan Taylor/Heisenberg Media

Ride sharing behemoth Uber is keeping plenty of lawyers busy. The latest lawsuit concerns control over its board of directors and whether its founder and former CEO, Travis Kalanick, hid critical, damaging facts when he asked the board to allow three more members who he could name. This lawsuit comes after Kalanick resigned as CEO of the company in June after tales of company misbehavior and sexual harassment emerged but as he left as CEO he returned as a board member.

Earlier this month Benchmark Capital Partners, one of Uber’s first investors, sued Kalanick to try to prevent his return as CEO, reports the Los Angeles Times. The lawsuit was filed in Delaware Chancery Court and claims Kalanick breached his fiduciary duty and contractual obligations and engaged in fraudulent concealment by stacking the company’s board with allies to insulate him from possible repercussions of his actions and enable him to return as CEO. Uber and Kalanick are both named but damages are only sought from Kalanick.

photo-online-defamation-200x300Online reviews can help a business grow or cause it to shrink. They are increasingly powerful, double edged tools. Some businesses work very hard to obtain positive reviews and that effort can hit heavy head winds because of an anonymous, vocal, unhappy customer or two. If a business is harmed by a false, negative review, what can it do?

Americans benefit from free speech but that freedom has limits, including defamation. Generally if a business’ reputation is harmed by a false statement and it can prove damages, it may have a legal action for defamation against the party making the false statement. Defamation in a written form is libel while slander is oral defamation.

The California Court of Appeal, First District, Division Four issued a ruling in July protecting a business’ ability to fight online, anonymous speech that may be libelous (ZL Technologies, Inc. v. Does, Glassdoor) though in the context of employee, not customer, reviews. The plaintiff found that it received very poor reviews on the job posting website Glassdoor. They complained about management, compensation and its work environment, making it that much harder for ZL to find job candidates.

photo-arbitration-record-300x200An arbitration is an alternate dispute method that’s becoming increasingly popular and controversial. Thanks in part to that controversy Governor Brown signed into law in October a bill allowing a party to have a certified shorthand reporter transcribe any related proceedings. This may help in case a party wants to challenge the arbitration decision in court.

An arbitration is essentially a private trial.

  • A single arbitrator or a panel of arbitrators normally sit as judge and jury in the case. They are normally practicing attorneys or retired judges.

photo-LLC-law-change-225x300All good things come to an end and that could include a limited liability company or LLC. California law will change in 2017 and make it easier to dissolve and to wind up its affairs. If you’re involved in an LLC and thinking it’s run its course and time to pull the plug, depending on the circumstances, you may want to wait another couple months.

An LLC is a hybrid business entity. It’s a combination of a partnership and corporation.

  • Its main advantage over a partnership is like the shareholders of a corporation the LLC’s owners’ (members’) liability for its debts and obligations is limited to their financial investment.
  • However LLC members can participate in its management and profits or losses flow through to its members like a partnership.
  • An LLC can’t be formed for businesses that provide professional services that require a state professional license, such as a legal or a medical practice.
  • Forming an LLC is easier to form and maintain than a corporation. LLC’s don’t issue stock, are not required to hold annual meetings or keep written minutes, which a corporation must to preserve the liability protection for its owners.
  • Articles of organization must be filed with the state and LLC members must enter into an operating agreement. An oral one will suffice but a formal, written agreement is a better idea for all those involved.
  • An LLC is normally managed by its members, but they can agree to hire a manager to handle its affairs.
  • For state income tax purposes an LLC will be classified as a partnership if there is more than one owner but members can elect to have it taxed as a corporation.

Earlier this year the California legislature made minor language changes to the Revised Uniform Limited  Liability Company Act (RULLCA) and they will go into effect in January. RULLCA currently states that an LLC could be dissolved and its activities wound up if, among other things, a majority of its members voted to dissolve it. Continue reading

Good Morning.  I still can say it’s good morning even though it’s almost noon time.  I woke up early this morning and went to Torrance courthouse for a hearing. On the way back to my office, I thought about a video that I put out last month where I talked about how your attorney’s character count.

Not only does your attorney’s character count, but also your attorney’s personality, the way that they handle your matter, and how they litigate a case. All of these shape the landscape of your case; Meaning, they can affect whether or not your case is going to find resolution, whether or not your case is going to be litigated efficiently as efficient as possible, and/or whether or not your case is going to be settled within a reasonable time.

I currently have two partnership dispute cases that are in the extreme. They’re both dealing with dispute between partnerships that have a significant amount of real estate holdings.  In one case, I filed on behalf of my client against the other partner and received a call from the other attorney. The first thing that came out of his mouth was, “Hey, what does your client want?”. I told him exactly what I’m expecting and what my client wants in terms of resolving this issue. The other side’s attorney listened and we worked out a resolution plan.

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https://www.orangecountybusinessattorneyblog.com/files/2017/02/photo-Ms.-America-pageant-300x225.jpgThose of us running businesses have a supporting cast, whether they’re contractors, suppliers, funders, banks, attorneys or employees. If a trusted cast member disappears at a critical time what do you do? Susan Jeske found herself in that situation in September. Like most of us she made due with what she had and went forward.

Jeske owns the Ms. America® Pageant. She purchased it in 1999 after winning the competition in 1997. Ms. America contestants are often well into their careers, sometimes are married and often range from 26 to 40 years old. The 2017 event was scheduled for September 3 in Brea. At the last minute Jeske got some bad news.

She learned on August 30 that Costa Mesa based BTB Event Productions, the company hired to produce the pageant, was shutting down and their equipment was being sold off. As a result Jeske was left scrambling to find a stage, runway and proper lighting. “I have 43 contestants flying in from across the country that are coming in tomorrow and I don’t have anything,” Jeske told the Orange County Register on August 31.

photo - yogurt spoliationEvidence is the life blood of a lawsuit. If you think you may have a legal claim against a party it’s important you not alter any evidence and maintain its integrity. If you think you may be sued, or have already been sued, you may be tempted to alter or destroy damaging evidence. That’s not a good idea because it may open you up to possible sanctions by a judge.

This issue came up in purported false advertising class action lawsuits filed last year against Whole Foods Supermarkets, according to the Philadelphia Inquirer. They are based on a Consumer Reports story concerning store brand Greek yogurt. Six samples were found to have on average 11.4 grams of sugar while the labels stated that they only had two grams of sugar.

Attorneys for the store stated yogurt samples had been retained for testing. Plaintiffs’ attorneys weren’t so sure. They filed a motion in court claiming all of the yogurt in question had actually been destroyed after the products were pulled from the shelves when the article was published and a prior lawsuit was filed in Philadelphia in 2014.

The motion states that the store admitted in writing that it “believes the voluntarily withdrawn product was destroyed pursuant to Whole Foods protocol.” Whole Foods responded with a statement not quite denying the allegations. “Whole Foods Market took reasonable steps to preserve relevant evidence for this case and we believe there is more than sufficient evidence supporting that fact.”

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