In 2004, the State legislature enacted the Labor Code Private Attorneys General Act of 2004 (“PAGA”), which authorizes California employees to sue their employers for Labor Code violations and collect civil penalties that would otherwise be collectible only by California’s Labor and Workforce Development Agency. PAGA suits are known as “representative actions,” in which an employee sues “on behalf of himself or herself and other current or former employees.” Civil penalties recovered in a...
Previously on our blog, we described what information members of a corporation’s Board of Directors can rely on in discharging their duties and explained how they can use the Business Judgment Rule ("BJR") as a defense to liability imposed in the event of an alleged breach of their duty of care. The use of the BJR as a defense by directors creates an obstacle to shareholders attempting to hold directors personally liable for a...
On July 13, 2017, the California Supreme Court issued a decision that California employment law attorneys have been anticipating for over two years. Williams v. Superior Court (Marshalls of California, LLC) (S227228 7/13/17). The Williams decision significantly impacts the nature and extent of the information employers may be forced to give employees who sue their employers on what are commonly called “PAGA” claims. But before explaining that decision, a bit of background information is...
California Supreme Court Says Arbitrator Decides Whether Parties Agreed To Arbitrate Class Action Claims
In a highly anticipated decision, the California Supreme Court ruled that the question of whether parties to an arbitration agreement agreed to arbitrate class action claims is a question to be decided by the parties’ arbitrator and not by a court. Sandquist v. Lebo Automotive, Inc., ____ Cal.4th ____, 2016 Daily Journal Daily Appellate Report 7663 (California Supreme Court July 28, 2016)...
An integration clause (also known as a merger clause or an entire agreement clause) is found in most contracts and simply provides that the agreement or contract between the parties is the final and complete understanding between the parties, and supersedes all prior negotiations, agreements, or understandings on the subject.
The typical integration clause will say something like this: This Agreement is the entire agreement between the parties in connection with the subject matter of...
In certain types of litigation, including litigation involving real property and corporate assets, a party (typically the Plaintiff) will request that the Court appoint a receiver, or the Court may decide to appoint a receiver without being asked.
A receiver is neutral person who is not a party to the litigation who takes possession of and manages property or assets belonging to one or more of the litigants. California Rules of Court Rule 3.1179.
A receiver is an...
As we discussed in our blog last week, a foreign corporation or other business entity transacting business within California must comply with the certification requirements of Corporations Code § 2105 and obtain a Certificate of Qualification. As set forth in the following list, the consequences for failing to comply with the California Corporations Code (the “Code”) can be harsh.
A foreign entity is not permitted to maintain an action or proceeding within California regarding...
We have previously written about doing business in California, and how the California Corporations Code uses a “transacting intrastate business” test. Importantly, if a corporation or other entity is deemed to be doing business in California under the “transacting intrastate business” test, that entity must obtain a “Certificate of Qualification” under Corporations Code § 2105. This post will look at what will and will not constitute “transacting intrastate business.”
Transacting Intrastate Business
Transacting intrastate business means that...
Section 16600 of the California Business and Professions Code prohibits contracts from restraining individuals “from engaging in a lawful profession, trade, or business of any kind.” While the reach of Section 16600 is broad (recently reaching as far as the Delaware Court of Chancery), it has traditionally been applied only to employment contracts or agreements that contain non-competition or non-compete clauses where the former employee is prevented from working with a competitor.
But what about...
Previously on the blog, we provided some general information about the formation requirements for various business entities. One of the most commonly utilized entities in California is the limited liability company (LLC). Generally speaking, the steps for forming an LLC in California include the following:
Pick a Name for the LLC. Selection of the name is limited by the California Revised Uniform Limited Liability Company Act (RULLCA). See California Corporations Code Section 17701.08. The...
