Supreme Court Rules for Amazon in Employee Searches Case

It is common practice for retailers to search their employees before they leave work. In a recent United States Supreme Court opinion,  Integrity Staffing Solutions v. Busk, the Court ruled that workers do not have a federal right to be paid for the time spent in these post-shift employee searches. This decision will save businesses billions of dollars, including companies like Amazon, who is projected to save over $100 million.

In the opinion  the justices unanimously rejected former Amazon warehouse workers claims that Amazon and the company that staffs several Amazon facilities were not fairly compensated for their time during these employee searches, and that Amazon and the staffing company were therefore violating federal wage laws. Integrity Staffing Solutions v. Busk, 574 U. S. ____ (2014).

The opinion of the Court centered on what constitutes a “principal activity.” Under the 1938 Fair Labor Standards Act, workers must be compensated for their principal activities, which the Supreme Court previously described as activities that are “integral and indispensable” to the job itself.  The Court found that the security screenings at issue did not constitute principal activities, as they were not integral and indispensable parts of the job. Therefore, there is no need for companies to compensate their employees for the time they spend waiting to be searched and the time of the employee search.

Amazon’s position was that employee searches help protect against theft, and is necessary but not part of the employees’ jobs. This ruling may shield several other companies who use employee searches from facing similar claims, including Apple, Ross Stores Inc., CVS Health Corp., and J.C. Penney Co.  If the Supreme Court had decided for the workers, Amazon and the various staffing agencies it uses could have been liable for the back wages of as many as 400,000 workers, amounting to $100 million or more.

Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. We have successfully prosecuted and defended various types of business and property claims. Contact us at (310) 277-7747 to see how we can help you with your business law concerns.

What is an Indemnification Clause?

An indemnification clause is often found in contracts and is designed to protect one party from financial loss, and shift the risks and any potential loss to another party. Usually, the risk of loss is shifted to the party who is in the best position to control and prevent the risk at issue.  While an indemnification clause is a great term to have in a contract to protect parties from certain events, they can also be used by one party to take advantage of another.

The duty to indemnify (that is, the obligation to take on another’s risk or loss), can arise from an express contract term, an implied contract term, or for equity/fairness reasons. When a party provides indemnity it is in effect acting as an insurer for the other party. An example of a typical indemnity situation is where one party is obliged to reimburse the other party if that other party is forced to defend itself for an issue arising out of the agreement containing the indemnification clause.

However, an indemnification clause can be ambiguous and create complications and risk for the parties to the agreement.  California law itself also complicates indemnification issues by differentiating between responsibility for “passive negligence” and “active negligence.” More specifically, if an indemnity clause is general and does not expressly provide for indemnity for negligence, California courts will still consider the indemnification clause to cover indemnity for passive negligence if intent can be shown under the particular circumstances. Passive negligence includes nonfeasance for failure to discover a defect or perform a duty imposed by law.

In short, it is highly recommended that any contract containing an indemnification clause be reviewed by an attorney and modified as appropriate to clarify any ambiguities and clearly define the parties’ respective rights and obligations.

Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. We have successfully prosecuted and defended various types of business and property claims. Contact us at (310) 277-7747 to see how we can help you with your business law concerns.

California Coastal Access and Property Law

A common issue that arises in California property law surrounds public coastal access. In September 2014, a California Superior Court judge ruled in favor of coastal access advocates by holding that a property cannot block the only public access route to Martins Beach (located less than an hour outside of San Francisco, California), without permission from the Coastal Commission, and demanding the property owner to open the gate blocking access to the beach.

The case, Surfrider Foundation v. Martins Beach 1, LLC, et al., was a bitter dispute over private property rights and public access to California’s coast filed in the San Mateo County Superior Court, Case No. CIV520336, before Judge Barbara Mallach.  The court held that blocking access to the road constituted “development” under the California Coastal Act, and the owner, venture capitalist Vinod Khosla, must apply for a permit if he wants to block the public from accessing the road.

Khosla was sued by the nonprofit Surfrider Foundation after his property manager blocked off Martins Beach Road, the only access to Martins Beach.  His property manager previously allowed the public to occasionally visit a stretch of sand off the property where locals went surfing and smelt-fishing for decades, but Khosla had the gate permanently closed after his property manager received a letter from the county in 2010 demanding that the gate stay open every day.

The issue is complicated because, under the public trust doctrine, beaches are widely considered public property and access to them is protected. However, there is no legal requirement that private property owners allow the public to cross their land to get to the beach.

The court sided with the Surfrider Foundation’s position that under the 1976 Coastal Act, which gave a statewide Coastal Commission jurisdiction over beachfront land and coastal access. Khosla needed to apply for a development permit in order to close the gate. The commission usually only grants development permits, typically to build a home or another structure, if the public gets an established right of way in return. However, the Commission cannot ask a property owner to dedicate an easement for public access.

The Judge’s ruling and recent injunctive relief order require public access to be restored to Martins beach. Khosla’s lawyers are considering appealing the verdict and pushing the issue of private property rights. Even if he does, a bill has been proposed that would require the State Lands Commission to consider purchasing the road if negotiations with Khosla for public access fail.

This case is important because the final determination will set a property law precedent that will impact all 840 miles of California’s coastline.

If you have any questions about easements or real estate transactions, contact an experienced attorney. Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. We have successfully prosecuted and defended various types of business and property claims. Contact us at (310) 277-7747 to see how we can help you with your business law or real estate concerns.

Understanding what “Doing Business As” Means in California

The phrase “doing business as” or “DBA” is a legal term used to signify that the trade name, or fictitious business name, under which the business or operation is conducted and presented to the world is not the legal name of the business responsible for it. For example, a company may incorporate under the name “XYZ Inc.”  This is their legal name and where the business’ creditors can seek payment or compensation, that is, any lawsuits against the company would, or should, be brought against this entity. However, XYZ Inc. can file for a fictitious business name that they will do business under, such as “Better Name Company.”  This name is their “DBA” and the full legal designation would be XYZ Inc., DBA Better Name Company.

In California, if you are going to have a DBA, you need to register a fictitious business name statement with the county clerk in the county where your principal place of business is located. A fictitious business name statement needs to be filed if the business is a:

  • Partnership;
  • Sole proprietorship doing business under a name that does not contain the owner’s last name; or
  • Corporation doing business under a name other than its legal name.

As stated above, unlike most corporate filings, when you are doing business as a fictitious business name, you do not file with the Secretary of State’s Office, and instead you will need to contact either your city or county clerk or recorder.  Be sure to ask about their specific filing requirements relating to DBAs, as fees vary and sometimes multiple copies of forms are required.

The fictitious business name statement needs to be filed either within forty days of starting the business or before the current statement on file expires.

After filing a fictitious business name statement, you need to publish a fictitious business name statement with the name you will be doing business as in a newspaper of general circulation in the county where the statement was filed. You have thirty days to do this after filing the statement, and the publication needs to appear once a week for four successive weeks. After the last publication date, you have another thirty days to file an affidavit of publication with the county clerk’s office.

Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. We have successfully prosecuted and defended various types of business and property claims. Contact us at (310) 277-7747 to see how we can help you with your business law concerns.

What is a Clawback Suit?

Ponzi schemes endanger investors and securities professionals, but these victims are not without recourse. Investors who fell victim to such schemes may pursue compensation from the brokers and other entities that perpetrated the fraud. They may also bring a clawback suit.  A Clawback suit allows them to seek compensation from the early investors who either knowingly or unknowingly benefited from their early involvement.

A common type of clawback suit is brought through federal equity receivers or bankruptcy trustees. These cases are based on several sections of the United Stated Bankruptcy Code, allowing investors to recover false profits that were paid to investors in order to redistribute these funds to investors that lost the principal on their investment.  They are not unique to just Ponzi scheme cases, but rather, can be used in instances where large partnerships dissolve and leave large outstanding debts.

An example of a clawback suit is the recent case against former law firm partners at Dewey & LeBoeuf LLP. Last month, a bankruptcy judge did not dismiss lawsuits against former partners of the firm. The defunct firm’s creditors are seeking nearly $16 million, hoping to obtain, or “clawback,” any money the partners were paid while the firm was insolvent

The judge hearing the arguments found that the partners cannot argue that the value of the work they did offsets the money they were paid, a defense that is sometimes successful in such clawback suits. For example, if a partner who brought in $2 million in fees and received $1 million in payment during the same period could argue that he or she would not owe the bankrupt firm anything.

Following the court’s decision that creditors can clawback funds, the next decision will consider when the firm became unable to pay its debts as they came due.

Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. We have successfully prosecuted and defended various types of business and property claims. Contact us at (310) 277-7747 to see how we can help you with your business law concerns.

Limiting Liability and Damages in a Contract

Certain contract terms can limit liability exposure from potential lawsuits and other claims that may arise. These terms are generally found in limited liability clauses. Certain contractual terms can also limit damages, such as a liquidated damages clause. For these terms to protect contracting parties from liability, they have to be properly drafted and in line with California law.

Limited Liability

Limited liability clauses are permitted by California law, but courts will strictly construe such contract terms. There are certain acts that parties cannot limit liability for, such as instances of gross negligence, fraud, willful injury to persons or property, or violations of law whether the violations of law were intentional or not. Cal. Civ. Code § 1668.

Limiting Damages

In addition to limiting liability in a contract, parties may also agree to exclude or limit damages consistent with Cal. Com. Code §2719(3). For example, parties may limit consequential damages of a commercial loss, so long as the limitation is not unconscionable.

However, if a limited remedy clause fails, a plaintiff will be able to pursue all the remedies available for a breach of contract.  To determine the validity of a contract term limiting damages, California courts weigh factors such as the type of goods involved, the parties, the allocation of risk, and the precise nature and purpose of the contract. To help  ensure that a limiting clause will be enforced, the parties should make clear and explicit statements regarding the intent of the contract.

Liquidated Damages

Sometimes, it is difficult to determine the damages that will result from certain breaches of a contract. To help mitigate against the difficulty of ascertaining the scope of the damages suffered, the parties will include a liquidated damages clause.  In this clause, the parties agree to a specified amount of compensation if one of parties to the contract fails to adhere to its terms.  Liquidated damages clauses are frequently found in contracts where a specific dollar amount of damages can be hard to determine because of changing circumstances, such as in real estate transactions.

Liquidated damages clauses are enforceable under California law as long as they are reasonable and consistent with Cal. Civ. Code. § 1671. For such a clause to be “reasonable,” it must be shown that at the time of contracting, damages would have been difficult to calculate, so the parties agreed upon an amount that was a reasonable estimate of any potential damage a breach of contract might cause.  The stated amount has to be reasonable to both parties.  In the event of a breach, liquidated damages will not necessarily be the only remedy unless the parties expressly so state in the contract.

Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. We have successfully prosecuted and defended various types of business and contract claims. Contact us at (310) 277-7747 to see how we can help you with your business law concerns.

Specific Performance in Real Estate Transactions

Specific performance is a type of remedy available in some contract disputes where a plaintiff requests that a court enforce the contract in question and force the defendant to perform the agreed upon terms instead of or in addition to paying the plaintiff money damages. It is most commonly used when there is a dispute over the purchase and sale of real estate.

Specific performance is an important remedy because real estate projects often involve large amounts of capital, builders frequently rely on a specific location, and a particular piece of property could be essential to a project.

To bring a lawsuit for specific performance a plaintiff has to establish the following elements:

  • That an enforceable contract exists between the parties;
  • Adequate consideration (i.e., payment);
  • The plaintiff’ performed his/her/its part under the contract, or has a valid excuse for nonperformance;
  • The defendant breached the contract; and
  • Proof that damages or another remedy at law are insufficient.

The court must be able to make out the essential terms of the contract, which include the identities of the buyer, seller, and property, the price to be paid (consideration), and the time and manner of payment. If certain terms are missing, the court might be able to insert reasonable ones.
The law presumes that real property is unique, Therefore, an action to enforce the sale of a particular piece of property can typically be enforced by specific performance. If the plaintiff is successful the court will order the sale of the property at the price and terms agreed upon.

Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. We have successfully prosecuted and defended various types of business and property claims. Contact us at (310) 277-7747 to see how we can help you with your business law concerns.

What is Dual Agency?

Previously on our blog, we discussed the importance of understanding the relationship between an agent and a principal.  Knowing the law that applies to principal-agent relationships is particularly important for business owners, so that they can prepare for and mitigate against potential legal liabilities that can arise from an agent’s actions. Agency laws also establish what fiduciary duties can arise from an agent-principal relationship.  It is particularly important to be familiar with fiduciary duties in a “dual-agency” situation.

What is a Dual Agency?

Dual agency exists when an agent represents both parties to a transaction. This relationship commonly arises in real estate transactions, where a real estate agent represents both the buyer and the seller, often to reduce each party’s commission. Because a real estate broker owes fiduciary duties to their other clients, there is potential conflict of interest and breach of fiduciary duty when one agent represents both parties to a transaction.  However, in many states, including California, dual representation that would otherwise constitute a conflict of interest is permitted when both principals knowingly consent to the dual representation. Where such transactions involve residential real estate comprising of one to four dwelling units, a written statutory disclosure form is required (California Civil Code § 2079.16).  In other situations, such as commercial or industrial real estate transactions, an agent must also disclose all facts which reasonably affect the judgment of each party in permitting the dual representation.  The information required to be disclosed alerts the parties to the potentially harmful consequences of dual representation, enabling them to make an informed judgment.  A dual agency relationship, can be advantageous, but it is often in the best interest of the real estate brokers and sales agents and may not be suited for the parties to a real estate transaction.

Case Example

A recent California case suggests that courts are looking at the dual agency relationship more closely. In Horiike v. Coldwell Banker, 225 Cal. App. 4th 427 (2014), a real estate broker served as a dual agent for a buyer and a seller. This case did not involve one real estate agent representing the buyer and seller, but rather, different agents from different offices of the same firm representing the two parties.  As with law firms, even though different agents at different offices may be working with different clients as their agent, when a single firm represents multiple parties the firm and all of its employees owe each party a fiduciary duty.  Thus, the court held that even when a different salesperson with the broker represents each party, fiduciary duties are not diminished. The firm owed a fiduciary duty to both the buyer and the seller, and therefore each salesperson owed a fiduciary duty to both the buyer and the seller.

In any business transaction, it is always best to consult with an attorney who is representing and looking to protect your interests. It may turn out that having one agent representing both the buyer and seller in a transaction creates a direct conflict of interest. An attorney can help you spot this concern and resolve it.

Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. We have successfully prosecuted and defended various types of business and property claims. Contact us at (310) 277-7747 to see how we can help you with your business law concerns.

The Difference Between a Merger and an Acquisition

What is the difference between a merger and an acquisition?  The terms “merger” and “acquisition” are common business terms, but they are often inappropriately used interchangeably, when in fact the two transactions are rather different. If you are planning to combine or purchase assets from another company it is imperative that  you understand the benefits and drawbacks of each.

Merger

In a merger, usually two or more businesses wind down as separate entities, and then a new entity is formed – that is, two entities merge into one new entity. The assets and liabilities of both the original businesses are often carried over to the new company.

Recently, mergers have been especially prevalent in the healthcare and airline industries. For example, one of the biggest mergers has been American Airlines and U.S. Airways. Final steps of the 2010 merger, such as a single reservation system and consolidating frequent flyer programs, are still not complete because of the size of this operation.

Acquisition

In an acquisition, usually one business purchases all or part of another business. As in a merger, most acquisitions involve lengthy negotiations, due diligence, and portfolio transfers. In addition, sellers are generally required to provide information about its’ or their finances, personnel, business opportunities, marketing practices, insurance, and legal status.

Acquisitions are unique and fact-specific.  For example, a seller may finance part of the sale in one transaction, or complete an acquisition using a transfer of stock or cash or both.

Examples of major acquisitions just this year include AT&T’s $69.8 billion purchase of DirectTV and Comcast’s $45 billion acquisition of Time Warner Cable.

If you are considering an acquisition or merger it is always best to consult with an attorney who can help find the most advantageous transaction in light of all the factors and issues in your particular case.

Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. We have successfully prosecuted and defended various types of business and property claims. Contact us at (310) 277-7747 to see how we can help you with your business law concerns.

What is a Forum Selection Clause?

Whether you are drafting a contract or reviewing one before signing it, it is important to understand the significance of a Forum Selection Clause. Although you may never need to use it, in the event of a dispute a Forum Selection Clause may become critical.

A forum selection clause is a provision in a contract in which the parties agree that any litigation resulting from that contract will be initiated in a specific forum. In other words, it establishes what court (usually which court in a specific county in a specific state) will have jurisdiction over the dispute. Oftentimes, these clauses are contested. The reasons vary, but most commonly one party does not want to be held to a specific forum because it is either inconvenient or the law of the forum is not in their favor.

If there are multiple causes of action in a lawsuit they might not all be governed by the forum selection clause in the contested contract.  The clause may specifically say which actions will be covered.   For example, derivative suits and claims for breach of fiduciary duty are typically governed by a forum selection clause. Similarly, state statutes may also provide, absent a specific agreement to the contrary, that all violations of a particular statute will be governed by the laws of the state.

These clauses are quite common in commercial contracts. It is therefore crucial to know what you are agreeing to if there is a forum selection clause in your contract, and it is important to know what forum you want in your contracts for your business purposes.

Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. Contact us at (310) 277-7747 to see how we can help you with any business dispute concerns you may have.