Source: https://www.jgschwartzlawblog.com/category/business-litigation/page/2/
Timestamp: 2019-01-20 21:05:07
Document Index: 464089854

Matched Legal Cases: ['§ 1798', '§ 1798', '§ 1798', '§ 1798', '§ 1798', '§ 1798', '§ 6250', '§ 6253', '§ 6252', '§ 253', '§ 262', '§ 17200', '§ 17500', '§ 1770', '§ 1770', '§ 17204', '§ 8']

Business Litigation Category Archives — Page 2 of 8 — Pleasanton Business & Commercial Law Blog Published by California Business and Commercial Attorneys — Law Offices of James G. Schwartz, P.C.
Computer technology and the internet have created countless opportunities for both businesses and consumers. As more and more commercial activity moves online, however, the risks to the integrity of a company’s digital records grow greater. Cybersecurity breaches threaten not only the company’s assets but also stored customer information. Consumer information is often the target of hackers because it may enable further fraudulent activities like identity theft. Companies that collect and store personal information have a duty under California law to protect that information and to notify consumers in the event of a breach. Penalties for noncompliance may include civil liability to consumers and state or federal regulatory actions. Northern California business owners that deal with digital consumer information should make cybersecurity a critical part of their business operations.California’s Breach Notification Law (BNL) defines “personal information” as any information that “is capable of being associated with a particular individual,” such as a name, address, date of birth, and social security number or other identification number. Cal. Civ. Code § 1798.80(e). Businesses must “implement and maintain reasonable security procedures and practices” to safeguard customers’ personal information from cybersecurity breaches. Id. at § 1798.81.5(b).
If a breach occurs, the BNL requires businesses to notify individuals who were affected by the breach “in the most expedient time possible and without unreasonable delay.” Id. at § 1798.82(a). If a business intentionally shares customer information, such as for marketing purposes, California’s “Shine the Light” (STL) law requires it to make certain disclosures to customers in advance and to disclose, upon a customer’s request, which information was shared and with whom. Id. at § 1798.83.
Any contractual provision that waives an obligation under the BNL is considered “void and unenforceable.” Id. at § 1798.84(a). Customers may file civil actions for injuries sustained due to violations of any of the provisions of the BNL. Violations of the STL law that are found to be “willful, intentional, or reckless” may result in civil penalties. Id. at § 1798.94(c). Businesses may also be subject to injunctions to prevent further violations.
Updated: September 7, 2018 10:46 am
Businesses must always be aware of how their actions and communications could affect their legal rights. The media rather frequently report on internal company documents that become public, through the discovery process in litigation or by other means, which at best cause embarrassment for a company. A recent decision from the California Supreme Court, while not directly related to business litigation, offers a useful reminder of the importance of communicating with government officials and employees through “official channels.” The decision, City of San Jose v. Superior Court of Santa Clara Cty., 2 Cal.5th 608 (2017), addresses access to government communications under state law. The court held that official communications by government officials are still public record, even when the official uses a personal email account or mobile device. In other words, anything sent by or to a public official, for official reasons, could become public.
California’s Public Records Act (PRA), Cal. Gov’t Code § 6250 et seq., states that “every person has a right to inspect any public record” upon request, with some exceptions. Id. at § 6253(a). The statute defines a “public record” to include “any writing containing information relating to the conduct of the public’s business” that was “prepared, owned, used, or retained” by any government agency. Id. at § 6252(e). This includes communications written and sent by government employees, as well as those written by private parties and sent to government employees, provided that the subject matter relates to official business.
The San Jose case began in 2009 when an individual made a public records request to the city for “32 categories of public records.” San Jose, 2 Cal.5th at 614. The request was directed to the city itself, its redevelopment agency, the agency’s executive director, and various other officials and employees. The records that were responsive to the request included communications sent and received by city officials and employees. The city produced records of “communications made using City telephone numbers and e-mail accounts,” but not those made with personal phones or email accounts. Id. at 615. The individual who made the request filed suit against the city for declaratory relief.
Minority shareholders, meaning those whose shares in a corporation make up only a small percentage of the total outstanding shares, are at a disadvantage if one or more majority shareholders take actions that harm their interests. State business and corporate laws offer protection against certain potentially harmful actions by the majority. In the event of a merger, for example, minority shareholders can challenge the valuation of the corporation and the resulting price per share that they would receive. The Delaware Court of Chancery recently considered a shareholder’s claim that he did not receive sufficient information to evaluate and object to a planned merger. In Re United Capital Corp., Stockholders Litigation, No. C.A. No. 11619-VCMR, mem. op. (Del. Ch., Jan. 4, 2017).
A “merger,” generally speaking, involves two companies combining to form a single company. Delaware allows a procedure known as a “short-form merger,” which typically involves a parent company merging with a subsidiary. Since the parent company, by definition, owns a majority of the subsidiary’s stock, the merger only requires buying the shares of the minority shareholders. A short-form merger can also occur when one shareholder owns an overwhelming percentage of outstanding shares and wants to buy out the minority shareholders. Shareholder approval is not required for this type of merger. See 8 Del. Code § 253. This was the type of merger that led to the dispute in United Capital.
Minority shareholders who believe their shares have been undervalued in a short-form merger have little legal recourse. The Delaware Supreme Court has held that “absent fraud or illegality, the only recourse for a minority stockholder who is dissatisfied with the merger consideration is appraisal.” Glassman v. Unocal Expl. Corp., 777 A.2d 242, 243 (Del. 2001). This involves “an appraisal by the Court of Chancery of the fair value of the stockholder’s shares of stock” under the circumstances of a merger. 8 Del. Code § 262.
Updated: September 7, 2018 10:21 am
California Court Allows False Advertising Lawsuit to Proceed
Three plaintiffs filed a putative class action against a retail clothing company, alleging that it induced them to enter store locations with misleading advertisements of a storewide sale. The defendant sought summary judgment, partly on the ground that the plaintiffs lacked standing to sue because they had not established actionable economic injuries. The trial court ruled in the defendant’s favor. The appellate court reversed this ruling, finding that the plaintiffs had demonstrated a triable issue of fact as to whether they suffered injuries-in-fact. SV v. Banana Republic, LLC, No. B270796, slip op. (Cal. App. 2nd, Dec. 15, 2016).
The lawsuit asserts causes of action under three California statutes. The Unfair Competition Law (UCL) prohibits “unfair, deceptive, untrue or misleading advertising.” Cal. Bus. & Prof. Code § 17200. The False Advertising Law (FAL) broadly prohibits the advertising of goods or services using “any statement…which is untrue or misleading, and which is known, or which…should be known, to be untrue or misleading.” Cal. Bus. & Prof. Code § 17500. The Consumers Legal Remedies Act (CLRA) prohibits “unfair or deceptive acts or practices” connected with the sale of goods or services. Cal. Civ. Code § 1770(a). The plaintiffs in SV alleged three CLRA violations involving false advertising of goods, false or misleading statements regarding “price reductions,” and misrepresenting the nature of a transaction. Id. at §§ 1770(a)(9), (13), (14).
In order to establish standing under any of these statutes, a plaintiff must demonstrate that they have “suffered injury in fact and…lost money or property” because of the defendant’s unlawful act. SV, slip op. at 10, quoting Kwikset Corp. v. Superior Court, 51 Cal.4th 310, 321 (2011), Cal. Bus. & Prof. Code § 17204. With regard to the amount of damages a plaintiff must show, the court notes that an “injury in fact is not a substantial or insurmountable hurdle.” SV at 10, Kwikset at 324. All three statutes allow restitution and injunctive relief. The UCL and the FAL limit any other kind of damages, but the CLRA expressly includes compensatory and punitive damages as available remedies.
Krispy Kreme Sued for Misleading Customers Into Thinking Doughnuts Contain Fruit
by andrewsass
A Los Angeles resident is suing Krispy Kreme Doughnuts, Inc. in federal court in California for false advertising. Specifically, plaintiff Jason Saidian claimed that the doughnut company’s blueberry, raspberry, and maple filled doughnuts don’t actually contain fruit or maple. Saidian bought the doughnuts at issue in 2015.
Krispy Kreme, which is based in North Carolina, has not responded to the complaint. The suit includes 10 allegations and seeks national class-action status. Saidian likely chose to file suit in California because the state sets a low bar for establishing violations of the business and professional code, breach of contract, and false advertising. Saidian is specifically suing under California’s False Advertising law.
Updated: December 1, 2016 7:03 pm
Laws Regulating Certain Types of Interstate Business Transactions May Be Up for Supreme Court Review
The internet has given businesses the ability to reach customers across the country, or even across the world. Doing business across state lines can involve different legal issues from keeping one’s business activities within California, and understanding state and federal regulations of business activities that cross state lines is crucial to operating a successful business. A petition for certiorari to the U.S. Supreme Court is asking for clarification on two constitutional doctrines that appear to conflict with each other. Texas Package Stores Assoc., Inc. v. Fine Wine and Spirits of North Texas, LLC, No. 16-242, pet. for cert. (Sup. Ct., Aug. 19, 2016). A doctrine known as the “dormant Commerce Clause” limits the ability of any one state to enact laws restricting interstate commerce, while the Twenty-First Amendment to the U.S. Constitution gives the states broad authority to regulate commerce involving alcohol.
The Commerce Clause, U.S. Const. art I, § 8, cl. 3, empowers Congress “to regulate Commerce…among the several States.” The Supreme Court has interpreted this authority very broadly. It has also recognized a negative converse to this doctrine, known as the dormant Commerce Clause, which bars state laws that discriminate against out-of-state businesses or otherwise unreasonably interfere with interstate commerce. The dormant Commerce Clause has been used, for example, to invalidate a state law that imposed an assessment on all milk sold within the state but only distributed the assessment to in-state dairy farmers. West Lynn Creamery, Inc. v. Healy, 512 U.S. 186 (1994). The court held that this amounted to a discriminatory tax on out-of-state dairy farmers.
The Twenty-First Amendment is best known for repealing the Eighteenth Amendment and ending the period from 1919 to 1933, known as Prohibition, when alcohol was banned throughout the country. Section 2 of the Twenty-First Amendment gives the states the authority to regulate alcohol, including “the transportation or importation into” a state.