Gov. Brown Signs New Ban On Employer Requests For Salary History Information

In October, Governor Jerry Brown signed AB 168, which enacts Labor Code Section 432.3, prohibiting employers from asking job applicants for their salary histories and prohibiting employers from relying on salary history information as a factor in determining what salary to offer an applicant. Labor Code Section 432.3 will affect employers and job applicants alike.

Commencing on January 1, 2018, employers will no longer be able to request salary history information from job applicants. The new law will also require employers to provide to applicants a position’s pay scale upon reasonable request.

Human Resource Managers and other hiring personnel should be instructed to refrain from asking job applicants about their salary history and employers should remove salary history questions from their employment applications. However, job applicants will still be able to voluntarily provide information concerning their previous salaries. If a job applicant discloses salary history information without prompting, the new ban will not prohibit an employer from considering or relying on that information. But, to insulate themselves from potential litigation, employers may want to document the disclosure before using voluntarily disclosed salary information.

Applicants for employment may gain new leverage in salary negotiations once Labor Code Section 432.3 becomes law.

Ezer Williamson Law provides a wide range of employment services to employers and employees. Contact us at (310) 277-7747 to see how we can help you with your employment law concerns.

Attorneys’ Fees Awarded Based on Void Contract

Recently, in California-American Water Company v. Marina Coast Water District, a California court of appeal found prevailing parties could recover attorneys’ fees based on a void contract under Code of Civil Procedure section 1717 (“section 1717”). The non-prevailing party challenged the trial court’s award of attorneys’ fees, posing the question, “How can an attorney fees provision in a contract govern the parties’ fees obligations when the contract itself is deemed to have been void from its inception?”

In Santisas v. Goodin (1998) 17 Cal.4th 599, the California Supreme Court held that “when a party litigant prevails in an action on a contract by establishing that the contract is invalid, inapplicable, unenforceable, or nonexistent, section 1717 permits that party’s recovery of attorney fees whenever the opposing parties would have been entitled to attorney fees under the contract had they prevailed.” (Santisas, supra, 17 Cal.4th at p. 611.)

The appellant in California-American argued that the trial court’s attorney fees award contravened section 1717’s limitation that fees be awarded only in an “action on a contract.” In California-American, no contract-based claims were at issue. The only issue litigated was the effect of a board member’s conflict of interest on the validity of certain contracts. In other words, the action was one to declare certain contracts void. The losing party argued that such a claim is not an “action on a contract.” However, the appellate court in California-American found “a party’s entitlement to attorney fees under section 1717 turns on the fact that the litigation was about the existence and enforceability of the contract, not on the presence of particular contractual claims . . .” The court noted that a California appellate court had previously found a suit brought by litigants seeking to have a contract declared void is an “action on a contract” for the purposes of section 1717. (Eden Township Healthcare Dist. v. Eden Medical Center (2013) 220 Cal.App.4th 418, 426.) Since an action to declare a contract void is an “action on a contract” for purposes of section 1717, attorneys’ fees can be awarded based on an attorney fees provision of a void 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 property claims. Contact us at (310) 277-7747 to see how we can help you with your business law concerns.

What Happens At the End of an LLC’s Term?

In its operating agreement, a Limited Liability Company, or LLC, may specify a termination date or other event that will result in the dissolution of the LLC. On the termination date or occurrence of another specified event, the LLC is “dissolved” (Corporations Code section 17707.01(e)), with only limited powers to “wind up” its affairs (Corporations Code section 17707.04).

Generally, after the dissolution has occurred, a certificate of dissolution must be filed with the California Secretary of State. Corporations Code section 17707.08(a). Upon the completion the winding up of the LLC’s affairs, a certificate of cancellation of the articles of organization must be filed with the California Secretary of State. Corporations Code section 17707.08(b). When the certificate of cancellation is filed, “a limited liability company shall be cancelled and its powers, rights and privileges shall cease.” Corporations Code section 17707.08(c).

Even after the filing of a certificate of cancellation, the LLC continues to exist for the purpose of prosecuting and defending actions by or against it in order to collect and discharge obligations, disposing of and conveying its property, and collecting and dividing its assets. Corporations Code section 17707.06(a). However, “A limited liability company shall not continue business except so far as necessary for its winding up.” Corporations Code section 17707.06(a).

Even after a certificate of dissolution has been filed, the LLC can be revived under limited circumstances enumerated in Corporations Code Section 17707.09, by the filing of a “certificate of continuation,” which has the effect of nullifying the certificate of dissolution.

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.

U.S. Supreme Court Declines To Rule On Large Fees For Homebuilders

Recently, the United States Supreme Court denied certiorari in 616 Croft Ave., LLC v. City of West Hollywood (2016) 3 Cal.App.5th 621, in which the issue for review was whether the City of West Hollywood’s in-lieu housing fee was an exaction. While the Supreme Court did not rule for or against the homebuilder claiming city fees were invalid, the decision not to hear the case affirms precedent. Just five months earlier, the Supreme Court issued a takings decision, authored by Justice Kennedy, in Murr v. Wisconsin (2017) 137 S. Ct. 1933. This most recent Supreme Court ruling is the latest in a line of cases that deprive property owners of power over their properties. The Court in Murr held the two parcels along the St. Croix River, combined under common ownership in 1995, were required to be evaluated as a single parcel in determining whether the regulations constituted a regulatory taking. Ultimately, the Court found the regulations, which did not allow petitioners to sell one parcel as part of an improvement plan for the lots, did not constitute a compensable regulatory taking.

Declining to hear a case like 616 Croft Ave., for now, continues the trend. The California Appellate Court in 616 Croft Ave. found a half a million dollar in-lieu fee imposed by the City of West Hollywood, to permit the homebuilder to build a condominium, was not an exaction or a taking. The Supreme Court declined to hear a similar case last year. For now, the Court is leaving open to interpretation the constitutionality of large fees upon homebuilders. With rumors of Justice Kennedy retiring soon and New Justices entering the Bench, perhaps a changed Supreme Court may tackle the constitutionality of fees upon homebuilders in coming years.

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 property law concerns.

Selling Partnership Shares

Selling partnership shares often involves various considerations.  In most partnerships, partners can choose to sell their share of the partnership to the partnership or a new potential partner as part of the resolution of a partnership dispute or simply because the individual or entity no longer desires to be part of the partnership.

Selling partnership shares will be governed by a partnership agreement, or if there is no partnership agreement, state law will govern sale of a partnership share. It is especially important to check the provisions of a partnership agreement before selling a partnership share, as there might be restrictions on share sales.  For example, a “right of first offer” provision may subject the selling partner to financial penalties or a lawsuit if there is no initial offer to existing partners before offering to sell to outsiders. Also, a partnership agreement might have certain notice requirements that a partner must follow when considering selling his, her or its share.

It is also important to consider what will and will not change as a result of the  sale of a partnership interest.  For example, according to California Corporations Code Section 16201, “partnership is an entity distinct from its partners.” Therefore, if a partner sells their share, that change alone will not dissolve a partnership or create a new one. The original partnership entity will continue to exist despite such changes.  Similarly, section 16502 of California’s Corporation Code provides that a partner’s only transferable interest is “the partner’s share of the profits and losses of the partnership and the partner’s right to receive distributions.” This means that when a partner is selling partnership shares, they are really only transferring their financial interest in the partnership. All other interests are separate, and must be dealt with separately.

If the partner had a managing role in the partnership, the new partners should update the partnership agreement to make sure the new ownership and responsibilities are memorialized in writing.

If you have any questions about selling partnership shares, consult with 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, real estate, construction and property claims. Contact us at (310) 277-7747 to see how we can help you with your business, real estate or construction law needs.

What Constitutes a Trade Secret?

Unlike patents and trademarks, trade secrets are protected without any procedural formalities associated with the benefits of registration with a government agency. The benefit to this is that a trade secret can be protected for an unlimited period of time and requires no public disclosure. The downside is that defining and protecting a trade secret can be trickier.

There are different definitions of what constitutes a “trade secret.” California law has adopted the Uniform Trade Secrets Act definition, qualifying a trade secret as “information, including a formula, pattern, compilation, program, device, method, technique, or process” that meets two qualifications. The first qualification is that the information must derive “independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use.”  The second qualification is that the trade secret owner must take reasonable steps to maintain the secrecy of the information.

The Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement, an international agreement administered by the World Trade Organization, similarly defines a trade secret.  According to the TRIPS Agreement, trade secret information cannot be generally known among, or readily accessible to, circles that normally deal with the kind of information in question.  It must also have commercial value because it is a secret, and it must have been subject to reasonable steps by the rightful holder of the information to keep it secret.

Thus, if a company deals with third parties who are privy to a company’s trade secret, it is important to always have them sign confidentiality agreements to make sure they understand that the information is a secret.  Taking those steps not only gives the company a cause of action for breach, but also evidences reasonable steps to maintain the secrecy of the trade secret.  Information that constitutes a trade secret can include processes that make production more efficient, a formula (like the Coca-Cola soft drink formula), customer lists, and proprietary business plans.

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, contract, and property claims. Contact us at (310) 277-7747 to see how we can help you with your business needs.

California Shareholder Rights

“Economic” Shareholder Rights

Shareholders invest in corporations primarily for economic gain or profit.  The two main ways shareholders can profit from a corporation are by receiving distributions of the company’s profits and by selling all or part of their interest in the corporation. These correspond with the two main “economic” shareholder rights: the right to receive dividends and the right to sell shares. Notably, shareholders only have the right to receive dividends as they are declared by the corporation’s board of directors, and directors are not obligated to declare dividends.  In addition, some investments and receipt of shares may come with limitations on transferability of the shares.

Shareholder Voting Rights

A company’s board of directors has the right to manage the company’s business. However, shareholders have the right to vote on important matters relating to the business, which gives them some control over the corporation as well. Most importantly, shareholders have the right to elect directors.

Shareholder Inspection Rights

Under California Corporations Code Section 1601, shareholders also have right to inspect the corporate documents, such as the incorporation record, accounting books, and meeting minutes.

Derivative Actions and Shareholder Rights

Derivative actions are brought by a shareholder on behalf of a corporation. Officers, directors, and majority shareholders owe a corporation a fiduciary duty. Someone who owes a fiduciary duty and who breaches that duty can be held liable to the corporation for damages.  Thus, in a derivative action a shareholder seeks judicial enforcement of, and redress for breach of, management’s fiduciary duties to the corporation and its shareholders by means of derivative litigation.

Involuntary Dissolution of the Corporation

Under California law, one-half of the directors or one-third of company shareholders can sue for involuntary dissolution of a corporation. A corporate dissolution may consist of a court approved liquidation or sale of corporate assets. However, the involuntary dissolution of a corporation may be avoided if at least 50% of its shareholders elect to purchase, for cash, the shares owned by the shareholders initiating the dissolution proceeding.

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 needs, or visit our Shareholder Rights page for more information.

Ridesharing Hit with More Business Lawsuits

California prohibits unlawful, unfair, and fraudulent business practices, as well as unfair, deceptive, untrue or misleading advertising. Recently, the district attorney offices for Los Angeles and San Francisco claimed that Uber, one of the the most popular ridesharing companies, violated these California business laws in recently filed actions against the company.

Uber (recently valued at $41 Billion and has backers from Wall Street to Silicon Valley), is no stranger to lawsuits, which are coming from all over the world. In California, the district attorneys’ offices are alleging that Uber misleads consumers about the service’s safety and overcharges them with unnecessary tolls in violation of California consumer protection laws.

According to the lawsuit, Uber claims to be an industry-leader in conducting background checks, but fails to fingerprint its drivers. The district attorneys’ offices claim that without fingerprinting, the company’s criminal checks are “completely worthless.”

The San Francisco district attorneys’ offices also accuse Uber of fraud for charging certain tolls. Uber charges a $4 “airport fee toll,” which is automatically added to rides to and from San Francisco International Airport, even when drivers do not pay a toll themselves. Uber also automatically adds a $1 “safe rides fee” to every ride, claiming that this fee goes to funding the company’s background checks.

The district attorneys’ offices have asked the court for an injunction that will force Uber to stop these practices immediately. They also seek restitution and civil penalties for riders who suffered economic harm from the unnecessary fees.

California law allows a $2,500 penalty to be issued for each violation of the business code. The district attorneys’ offices claim that that are “tens of thousands of violations,” meaning that Uber may be facing a very expensive lawsuit.

Lyft, a competing ridesharing company, who recently raised $700 million, chose to settle a similar lawsuit, agreeing to stop picking up passengers at airports until it obtains the necessary permits and approvals. Lyft will also submit its application to a California testing agency to measure its accuracy in calculating fares.

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, contract, and property claims. Contact us at (310) 277-7747 to see how we can help you with your business law needs

 

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.

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.