Articles Posted in Business Litigation

AdobeStock_271469937-300x200In general, shareholders are protected from liability for the debts of the corporation. This is because the corporation is viewed as a separate legal entity with its own assets and liabilities. This “corporate veil” of protection can, however, be pierced in certain situations, and personal liability imposed on the shareholders. Creditors use this legal tactic strategically to be sure they can access funds for what they are owed. The experienced California business attorneys at the Structure Law Group can help advise creditors on how to effectively pierce the corporate veil in order to satisfy the debts they are owed.

Elements of Alter Ego Liability

In order to pierce the corporate veil, the plaintiff must prove “alter ego liability.” Alter ego literally translates to “other self.” In alter ego liability, the corporation has been treated as an extension of shareholders’ personal interests, so the courts find it fair to hold shareholders liable for the corporation’s debts, as well. Plaintiffs in California must establish: (1) that there is a unity of ownership and interest between the owners (or shareholders) and the corporation, and (2) that it would be unfair to only hold the corporation accountable for its debts in order to establish alter ego liability.

AdobeStock_252763744-300x200In November 2020, California voters approved what is arguably the most comprehensive privacy rights law in the nation. The California Privacy Rights Act does not take effect until January 1, 2023. But its requirements are far-reaching, and California business owners have a lot of work to do to prepare their businesses for compliance with the law before that date. Moreover, violations of the new Act prior to 2023 can cause bad public relations and potential liability in other areas. Business owners should meet with a California lawyer now to determine how the new law will affect their business, what steps must be taken, and the most efficient process for implementing these measures as soon as possible. The sooner these changes are integrated into a company’s practices and culture, the less likely it is the business will face liability under the Act.

Corporate Responsibilities Under the California Privacy Rights Act

The CPRA requires businesses to track an entirely new category of user data: “sensitive personal information.” This includes government-issued identifiers, finance information, biometric data, health status, precise geolocation, contents of emails or texts, and race or ethnic origin. Sensitive personal information is a subcategory of personal information that is protected under existing privacy laws. This means that it, too, must be de-identified or subject to an aggregation exception. The CPRA adds an additional requirement for businesses to implement “reasonable security measures” to protect personal information. What measures are “reasonable” will be determined by the type of information that is collected. Detailed financial or medical records will likely require higher levels of security than basic demographic information. Retention periods must also be updated to meet only what is reasonably necessary to perform the purposes for which the data was collected. This means that sensitive personal information might have a shorter retention policy than more general personal information.

AdobeStock_336124038-300x200The coronavirus pandemic has caused drastic changes in almost every facet of life in California. For instance, federal, state, and local courts are all facing a major backlog. Many courts were shut down entirely for months, open to only the most urgent cases (such as restraining orders). Now courts have reopened, but many are operating at reduced capacity, meaning they have been making slow progress through the serious backlog of cases. Litigants should be aware of how this backlog will affect their legal claims.

The Incentive to Settle

Parties have the option of settling their claims out of court before trial. Whether they choose to do so depends on a wide range of factors, including:

AdobeStock_252648156-300x200Drafting contracts that properly protect your legal interests requires training, a unique skillset, and years of experience as a business attorney.  Contracts that are not drafted by experienced counsel often fail to provide adequate protections to the parties involved.  For example, contracts prepared by business people that are not attorneys often contain key terms that are vague or are missing key legal provisions and fail to offer business owners sufficient legal protection. A well drafted contract can provide a business owner predictability and will save significant time and money by avoiding pitfalls that can be a significant burden on a company.

4 Reasons Why You Shouldn’t Draft Your Own Business Contracts

  1. The Agreement May Not Reflect Your Intentions. Although a form contract purchased online might look enticing, it may very well fail to meet your specific needs.  You might not properly understand its provisions, legalese, or legal terms of art. Lengthy terms in a form contract can be confusing to the untrained reader and can contain terms that are dangerous to include in your specific situation. They can address complex legal theories that are best understood by an experienced attorney.  Ultimately, using a form contract without individualized legal advice can lead to your business being bound to legal provisions that you never intended.

AdobeStock_269304451-300x200As your Silicon Valley startup grows, it’s hard to know whom to trust. You’ve likely gone from a close-knit group of founders invested in the confidentiality of your trade secrets to hiring at-will employees who are less concerned with secrecy. Both federal and state laws reflect the value placed on corporate trade secrets and confidential information. Especially in technology-driven industries where startups are valued for their unique innovations, protecting your trade secrets is a key to success.

Defining Trade Secrets & Confidential Information

While you can contractually bind your employees to keep certain confidences, only qualifying trade secrets are protected by state and federal law. Trade secrets are defined as information that derives economic value by not being generally known or readily ascertainable by competitors and are subject to reasonable efforts to maintain confidence. Trade secrets can consist of:

AdobeStock_230581609-1024x683The future is here, and it’s blockchain technology. Originally developed as a means of trading cryptocurrency, such as Bitcoin, blockchain technology is a digital system that allows digital information to be shared without being copied or altered. It does this by acting as a transaction ledger for digital dealings, registering every change, trade, and attempted access for anything secured through the blockchain. One of the many benefits of using blockchain technology as a medium for trading digital currency is the relative ease of 24/7 international trade. However, this comes with its own dangers when personal information, including personal financial information, changes hands over international borders.

Selecting a Blockchain Company

Blockchain technology is a private, not public, development. The technology typically isn’t owned by any one government or corporation, and as such, many digital providers offer their own variations of blockchain technology. Different developers build private (or public) cryptographic ledger (“blockchain”) systems and offer use of the same to digital industry providers. For example, last year Forbes compiled a list of emerging blockchain companies offering their own cryptographic ledger services. Examples of these companies include:

AdobeStock_197945004-300x178California stock corporations are owned by their shareholders who then elect directors.  Directors, in turn, elect officers who handle a corporation’s day-to-day management. Accordingly, shareholders hold influential positions in a corporation through their voting power.

California requires corporations issuing more than one class of shares to designate the classes and/or series of stock in its articles of incorporation. A stock corporation’s capitalization, or “cap,” table is a type of ledger that designates shareholders’ percentage ownership and equity value.

Most early shareholders know the equity value of their ownership, but as companies add investors, assets, and shareholders, the shareholder ownership structure can shift. This may result in a dilution of shares, changing the structure of shareholder ownership. These changes can lead marginalized minority shareholders to file major shareholder litigation disputing changes to the corporate ownership structure.  While dilution may not affect the financial value of shares, it can have a drastic impact on voting rights and ownership structure.

AdobeStock_279078466-300x188You’ve probably heard your grandfather complain that he did not patent the “mobile phone” he invented in 1942. If he had, he’d be a billionaire! Ideas come and go, but those who take the leap and protect those ideas often reap the benefits.

Intellectual property” (“IP”) is defined as a unique “product of human intellect” protected by law. Intellectual property can be both in physical form, an idea, or even a design. Algorithms, programming techniques, song lyrics, and books are all forms of intellectual property. Federal law protects intellectual property from being used by unauthorized parties. Protecting business’s intellectual property will help the business maintain the value and benefit from their intellectual property. IP law is complex, and you’ll need the assistance of a Mountain View IP attorney from Structure Law Group to protect your rights under federal intellectual property law.

Types of Intellectual Property

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Business law  frequently consists of contractual relationships. Contracts between business owners, shareholders, employees, clients, and vendors  are the very bones on which many businesses are formed. A single breach of contract litigation case in California, like a single broken bone, can cripple your entire business. For this reason, California law permits businesses to recover monetary damages for a breach of contract. Some damages are available by statutory law while others are specified in the contract. Strong business contracts can make or break your company. While you can’t prevent a breach of contract, you can often design contracts to maximum your position.

Litigating a Breach of Contract Case with a Los Angeles Litigation Attorney 

California Breach of contract litigation can get complicated, but a plaintiff Los Angeles Litigation Attorney must prove the following basic elements:

Avoiding the Most Common Business Lawsuits 

Defending against any lawsuit has the potential to sink a Silicon Valley start-up. You must defend against even frivolous litigation especially so in today’s fast-paced and ever-expanding startup industry. There is no way to bulletproof a business from all litigation, but there are ways to greatly reduce the likelihood of lawsuits and their financial impact on your business. The experienced business litigation attorneys at Structure Law Group, LLP can help advise and protect start-ups against business litigation before it happens. While you can’t protect against all litigation, you can protect against the most common legal complaints against businesses. Business attorneys commonly defend against the following lawsuits:

  1. Breach of Contract Claims – Sometimes start-ups enter into contracts that aren’t favorable, or they run out of funding to fulfill their obligations. The business lawyers at Structure Law Group can review and draft the terms of any proposed contracts and include certain protective indemnification and liquidated damage clauses to reduce the cost of or prevent litigation.