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If A Tree Falls In The City, Is It Serving A Public Purpose?

Today’s posting has nothing to do with corporate law and everything to do with trees. On November 30 and December 1, 2011, the City of Pasadena experienced an unusually violent windstorm. Wind speeds in excess of 100 miles...more

8/19/2014 - Property Damage Property Insurance Severe Weather

California Finders Bill Trapped In The Weeds As Legislative Deadline Looms

The question of whether finders’ fees can be paid in securities transactions has bedeviled issuers for decades. The Corporations Committee of the Business Law Section of the California has tried to address this recurring...more

8/18/2014 - Deadlines Legislative Agendas

Some Questions About Delaware’s New Law Allowing Parties To Extend The Statute Of Limitations

Delaware recently amended its law to allow parties to a written contracting involving at least $100,000 to provide that any action based on that contract may be brought within a period specified in that contract provided that...more

8/15/2014 - Cause of Action Accrual Statute of Limitations UCC

Insurer Claims Attorney-Client Privilege Of Third Parties Prohibits Disclosure To Its Own Attorneys

At first, this case seems somewhat pedestrian – a lawyer sues her erstwhile law firm for employment discrimination. But then things get complicated. It turns out that the lawyer was employed by a law firm that was employed...more

8/14/2014 - Attorney-Client Privilege Discrimination Third-Party Relationships Third-Party Risk

Has California Lost Its Jurisdictional Anchor For Securities Fraud Actions?

Does California’s securities fraud statute apply to offers and sales of securities that are made in other states, in Europe, or on the moon? Actually, there is no way to know. Formerly, California Corporations Code Section...more

8/13/2014 - Class Action Fraud Jurisdiction Securities Fraud

Supreme Court Blocks Citizens United Advisory Proposition From Ballot

I’ve previously reported on SB 1272 which was rushed through the legislature and allowed to become “law” without Governor Brown’s signature. The bill, authored by Senator Ted Lieu, calls for an advisory vote on whether the...more

8/12/2014

Former Executive Has No Right To Possess A-C Privileged Documents

Suppose that a corporation terminates its president and chief executive officer who then sues for breach of his employment contract. Does the former executive officer have a right to access and use materials subject to the...more

8/8/2014 - Attorney-Client Privilege Breach of Contract C-Suite Executives Employer Liability Issues Former Employee Hiring & Firing

Did Abraham Lincoln Engage In The Unauthorized Practice Of Law?

I recently learned that I’m supposedly related to a certain Joshua Short, late of Sangamon County, Illinois. I don’t know much about Mr. Short other than he was a farmer who couldn’t write his own name and wasn’t feeling...more

8/7/2014 - Unauthorized Practice of Law

This Court’s Ruling Puts The Opinion In Auditor’s Internal Control Opinion

A brief ruling issued this week by U.S. District Court Judge James C. Mahan makes it clear that an auditor isn’t always liable even when a subsequent auditor uncovers fraud. In Oaktree Capital Mgmt., L.P. v. KPMG, 2014 U.S....more

8/6/2014 - Accounting Controls Auditors Fraud GAAP Internal Controls KPMG Professional Liability SEC

Really? Requiring Someone To Use Information “Fairly And Lawfully” Can Be Illegal?

Companies have lots of very good reasons for adopting codes of conduct. These reasons include: - Ensuring compliance with applicable exchange listing rules (e.g., NYSE Rule 303A.10 and NASDAQ Rule 5610); -...more

8/5/2014 - Code of Conduct Collective Bargaining Confidential Information Employer Liability Issues Fresh & Easy Issuers Nasdaq NLRA NLRB NYSE Privacy Laws Regulation FD Rule 10b-5 Securities Trade Secrets Unions

Stockholder Proposal Seeks To Ratification Of All Decisions And Actions

For the last six years, Amerco as included a rather unique stockholder proposal in its proxy statement. It’s there again this year. Basically, it asks the stockholders to ratify and affirm all decisions and actions by...more

8/4/2014 - Annual Meeting Board of Directors Corporate Governance Corporate Minutes Meeting Minutes Officers Shareholders Voting Powers Voting Rights

As Samuel Goldwyn Reportedly Said: “Include Me Out”

A lawyer aims at precision that can never be achieved because of the bluntness of his tool – language. Consider the word “including”. Is it a term of enlargement or limitation? It is a term of enlargment when the intent is...more

8/1/2014 - Contract Drafting Contract Interpretation Legal Writing

Delaware Likes Garner/California Not So Much

In 1970, Richard Nixon was president, the 26th Amendment was still not part of the Constitution, and the Fifth Circuit Court of Appeals issued its opinion in Garner v. Wolfinbarger, 430 F.2d 1093 (5th Cir. 1970). In that...more

7/31/2014 - Attorney-Client Privilege Breach of Duty Fiduciary Duty Garner Shareholders Wal-Mart

I Find More Confusion On Tallying Votes

I recently came across the following vote tally in Item 5.07 of Form 8-K: - 73,197,209 votes for (28.9% of the voted shares) - 177,776,280 votes against (70.2% of the voted shares)... ...more

7/30/2014 - Form 8-K Shareholder Votes Shareholders

The Franchise Tax Board’s Doing Business Legal Ruling – Ex Nihilo, Aliquid Fit

Today’s post will try to put the Franchise Tax Board’s recent Legal Ruling 2014-01 in perspective by imagining the following inquisition by the Franchise Tax Board...more

7/29/2014 - Franchise Agreements Franchise Tax Board Franchises

SB 1272 (NKA Proposition 49) – The Secretary of State

Last week, I wrote that Governor Brown had allowed SB 1272 to become law without his signature. To say that SB 1272 became law is an hyperbole because, as Governor Brown observed, the bill “has no legal effect whatsoever”. ...more

7/28/2014 - Ballot Measures Citizens United Citizens United v Federal Election Commission Constitutional Amendment New Legislation SCOTUS Secretary of State

FTB Issues Legal Ruling Addressing Filing And Franchise Tax Obligations of LLCs And Their Members

I’ve written several posts on discussing the meaning and ramifications of “doing business” for California tax purposes. See, e.g., Why Your LLC May Be Doing More Than You Think In California Even When It’s Doing Nothing, 60...more

7/25/2014 - Administrative Procedure Act Corporate Taxes Doing Business FTB Limited Liability Companies State Taxes

In This Case, Placement Agent Status Was Better Than Underwriter Status

As a general matter, California Corporations Code Section 25401 declares it unlawful to make an untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the...more

7/24/2014 - Agents Privity of Contract Remedies Underwriting

Facebook/Oculus VR Acquisition Raises Pseudo-Foreign Corporation Question

Yesterday, The Guardian reported that Facebook had acquired Oculus VR using a combination of cash and stock. Facebook avoided SEC registration by availing itself of a fairness hearing before the Department of Business...more

7/23/2014 - Department of Business Oversight Facebook Fairness Hearings Foreign Corporations Oculus VR SEC

California Dividend Statutes Found To Preempt Common Law Claims

Chapter 5 of the California Corporations Code imposes specific limitations on “distributions to shareholders”, a term defined in Corporations Code section 166. Directors who approve the making of any distribution to...more

7/22/2014 - Board of Directors Dividends Preemption Professional Liability Shareholder Litigation Shareholders

Californians To Vote On Stripping Common Cause Of Its First Amendment Rights

I recently wrote about SB 1272 (Lieu) which calls a special election for this November 4 at which California voters will be able to cast an advisory vote on whether the U.S. Constitution should be amended to overturn the U.S....more

7/21/2014 - Citizens United Citizens United v Federal Election Commission Constitutional Amendment First Amendment Legislative Agendas New Legislation

Why Doesn’t The SEC Post SubCommittee Recommendations?

Last Thursday, the Investor Advisory Committee held another meeting. The agenda included this rather vague agenda description...more

7/14/2014 - SEC

Legislature Enacts “5 Second Rule” For Electronic Contracts To Sell Real Property

The Statute of Frauds has been a part of Anglo-American jurisprudence for centuries. It made its first appearance in the wake of the English Civil War (yes, they had one too but for very different reasons) when King Charles...more

7/10/2014 - Contract Formation Contract Interpretation Statute of Frauds Text Messages

Does A Director Have A Contractual Right To Compensation?

Yesterday, I wrote about stockholder challenges to director compensation. Today’s post considers what happens when a director joins a board. When someone is invited to join a board, she may ask about compensation. The...more

7/9/2014 - Board of Directors Director Compensation Directors Oral Contracts Proxy Statements Shareholder Resolution

When It Comes To Director Compensation Claims, Nevada And Delaware Are Fundamentally Different

Since 1969, there has no question that directors of a Delaware corporation have the authority to set their own compensation. 8 DGCL § 141(h). Having authority to do something, however, doesn’t mean that the use of that...more

7/8/2014 - Board of Directors Director Compensation Directors

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