Source: https://www.scribd.com/document/74221342/2010-Ba-Outline-Final
Timestamp: 2019-04-21 18:34:49+00:00

Document:
Schmid & Oberly, Inc., Petitioner, Vs. Rjl Martinez Fishing Corporation, Respondent.
I. Who is an Agent?
Did the master control the servant? Did the master have the right to control the servant? If yes, the actor becomes the servant and whatever he did will become binding on the master o Outside Employment: you cannot impute liability if the servant is outside the scope of his employment o Actions of Independent Contractors are not imputed to anyone else Factors: Extent of Control: o Day to day control of details: hours/policies/uniform, preparation of food, promotional program, consequence of non-compliance Details of work Distinction occupation or business (specialized work?) Skill required Who is supplying equipment Length of time occupied Humble Oil & Refining Co. v. Martin: (car rolled off lot and struck Martin) Court looking for signs of control. Methods and details are control. Court found sufficient evidence of control and allowed for the doctrine of respondeat superior to apply. A party may be liable for a contractors torts if he exercises substantial control over the contractors operations. Hoover v. Sun Oil Company: (car on fire when being services) The day to day operations were left up to Barone, an independent contractor. A franchisee is considered an independent contractor if the franchisee retains control of inventory and its operation, and this demonstrated that the agency relationship did not exist Murphy v. Holiday Inn: (trips and falls on water dropping from a/c unit): In the franchise agreement, it needs to show that Holiday Inn had right control over its franchise. The franchiser needs to control the method and detail of day to day operations. Since there has been sufficient evidence produced to show that the franchisee exercised control over the details of the operation, this demonstrated that an agency didnt exist.
DETERMINING WHETHER IN SCOPE OF EMPLOYMENT Conduct must be of the same general nature as that authorized or incidental to the conduct authorized. Facts to be considered: o Whether or no the act is one done by such servants; o The time, place, and purpose of the act; o The previous relations between the master and servant; o Whether or not the master had reason to expect that such an act will be done; o Whether or not the instrumentality by which the harm is done has been furnished by the master to the servant Ira S. Bushey v. U.S.: Question is not whether he is subject to control of the Coast Guard because he is in the Navy so that is clear. Issue is whether what he did was within the scope of his employment in the Navy. This particular incident was foreseeable because he was authorized to walk along the dock to the shop. If he had burned down a bar instead of sunk a ship, it would be less foreseeable.
*WAYS TO PROTECT YOURSELF FROM VICARIOUS LIABILITY 1. Indemnity Clause 2. Bond/insurance 3. Use contract to get rid of imputed liability this is a good clause to have in the contract but it is not absolute. Actions may still reveal control, even if there is language against imputed liability.
I. Is the relationship a partnership?
L.A.F. Determining if an Entity is a Partnership 1. Two or more parties 2. Co-owners (Key element) 3. Operating a business for profit PARTNERSHIP ELEMENTS/INDICATORS Fact intensive analysis Look to the totality of the circumstances The intention of the parties o Is the agreement called a partnership agreement? (though this isnt determinative, it still matters) The right to share in profits o Also not a conclusive point, but still important The obligation to share in losses The ownership and control of the partnership property and business o Money, sweat, capital contribution Community of the power in administration o Who has control of the business? The conduct of the parties towards third persons The rights of the parties on dissolution/termination o Is it the same for one partner as if just a regular employee? Fenwick v. Unemployment - Beauty Parlor Situation: labels are not determinative. Even though receptionist was called a partner, she was really an employee. She did not share in the profits, had no power in administration, and didnt have any control of the beauty shop.
III. What do partnerships do?
Defined/Overview: A little big like a partnership and a little bit like a corporation. An LLC is an alternative form of business that combines certain features of the corporate form with others more closely resembling general partnerships In an LLC, investors are called members and the LLC provides a liability shield for its members LLC may be managed by all of its members (as in a partnership) or by managers, who may or may not be members (as in a corporation) Investors in an LLC are taxed, like partners, only once on its profits as those profits are earned o Investors can also take account, on their individual tax returns, of any losses of the LLC are incurred; the losses are said to pass through The LLC offers greater freedom than a corporation in allocating profit and loss for tax purposes Formation: o Requires paperwork and filing with a state agency o Some states impose fees and taxes on LLCs that are not imposed on partnership LIMITED LIABILITY COMPANY Trying to take the very best of everything. LLC gets pass through tax treatment and avoids the corporate double tax. The LCC also avoids unlimited personal liability: Agency: There is, to a certain extent, an attribution of vicarious liability between and among the members of the LLC. If it is imputed, it is still imputed to the amount of their investment and beyond. Management: Like a partnership, 404 of the Uniform Limited Liability Company Act, absent an agreement to the contrary, each member of the LCC has a voice in management. Operating Agreement: Can make it anything you want without losing taxes and liability. Some things provided for are: name of entity, purpose of the entity, duration of the LLC, your registered agent, spelling out of the contributions made by the members. FIDUCIARY DUTIES: As a general proposition members of an LLC owe fiduciary duties to one another. Like a partnership in that respect. 409: Duty of loyalty and duty of care.
PERSONAL LIABILITY No limited personal liability; injured party can take everything. In partnership, you also have unlimited personality liability; no shield to your assets. The corporation on the other hand is separate and distinct entity; only at risk to the extent of your investment. THE OPERATING AGREEMENT Elf v. Jaffari 2 entities formed an LLC. They put together an operating agreement. Elf sues Jaffari individually and Malek, LLC. Freedom on contract: You can make the terms you want and the court is going to enforce them. PROCESS of Jaffaris Lawyer: o Gather Facts: Who is Elf ? What did they offer? What kind of control do you want? o Vet the Deal: examine the transaction (do their due diligence). o Money: how should Jaffari take the money? o Control o Personal Liability o Taxes o Protecting his ideas o Inter se fiduciary relationship o Dispute resolution o Exit/Break-up 3 Types: 1) Employment Agreement (as an employee) 2) Operating Agreement (LLC); 3)Distribution Agreement (as a distributor) PIERCING THE LLC VEIL Kaycee Land and Livestock v. Flahive: Flahive, through Flahive Oil and Gas, LLC, leased undeveloped property from Kaycee Land and contaminated the property. Kaycee did not allege that Flahive acted fraudulently, but wanted to pierce Flahice Oils LLC veil to reach Roger Flahives personal assets to satisfy the LLCs debt for cleaning up the property. The common law doctrine of piercing the corporate veil is not abrogated by the limited liability company act and may be used against LLC members in appropriate cases.
PROXY FIGHTS Shareholders typically do not attend the annual shareholder meetings. A proxy is an absentee ballot if a shareholder cannot attend the meeting. The corporation will ask them for a proxy, which will allow them to vote. The ballot contains a proxy statement from the corporation that has relevant information; they cannot expect you to vote without letting you know what is going on Proxy forms are important because most shareholder meetings involve different votes; such as elections, mergers, proposals and compensation for directors o Incumbents: Sometimes, incumbents will create a proxy fight by contacting the undecided shareholders and trying to win them over. The incumbents wont tell you who the shareholders are, but they will instead mail your proxy statements for you expensively.
BUSINESS ASSOCIATIONS: PROFESSOR RICCIO FALL 2010 3 7 PROXY FRAUD Defined: Section 14(a) of the 1934 Exchange Act and Rule 14a-9 are designed to protect investors Rule 14a-9 o Prohibits solicitation of a proxy by a statement containing either (1) a false or misleading declaration of material fact, or (2) an omission of material fact that makes any portion of the statement false or misleading *Not the same as Section 11 because the elements are different and this is not a security L.A.F. Proxy Fraud/False or Misleading Proxy Statements 1. Jurisdiction a. Interstate commerce involvement if you are dealing with a proxy statement there is likely interstate commerce 2. Proxy Statement (Tab 11) a. Detailed document containing information about the corporation matters to be voted on, etc. b. It is similar in disclosure to a registration statement but it is not the same thing 3. Standing a. Any shareholder who can vote b. Anyone who gets the statement or should have gotten the statement 4. Materiality a. Substantial likelihood a reasonable investor would consider it important in deciding how to vote i. Affirmative Omission must have a materially false, affirmative statement or omission in proxy statement ii. No intent (scienter) is required iii. Definition of Material something is material if it is important; if it is going to make a difference to someone 5. Causation a. Minority votes needed to pass measure essential link b. Minority voted not needed to pass the measure i. There are some lower court cases that in certain extraordinary circumstances even if the minority shareholders votes were not needed to pass the measure, they would still be able to bring a 14a-9 claim c. Defense it wouldnt have changed the outcome d. Mills Look to the process; if corrupted, then there is a remedy under 14a-9 e. If the owns enough shares to produce the outcome anyway, then it doesnt really matter if the minority shareholders would have voted differently 6. Remedy (Depends on when you go to court) a. Pre-vote correct the mistakes; ask for a TRO to postpone the meeting and allow the mistakes to be corrected b. Post-vote discretionary money damages, counsel fees, corporate therapeutics (replacing board members etc seems like you are doing something but you really arent) Seinfeld v. Bartz o Materially misleading?

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