Posts by Richard Burt
Ex-CFO Allowed to Sue for Defamatory Innuendo in Press Release
In Hawran v. Hixson (2012), the court allowed a CFO who had resigned from a public company to sue the company and certain directors because the company’s press release implied that he had engaged in misconduct. Sequenom was a publicly traded bio-tech company. Paul Hawran was its chief financial officer from April 2007 to his…
Read MoreCalifornia has a new LLC Act
S.B. 323, the Revised Uniform Limited Liability Act, has been signed by Governor Brown. It will be effective January 1, 2014.
Read MoreInconsistent Use of Entity Name Proves Costly
In Montgomery Sansome v. Rezai (March 28, 2012) 204 Cal. App. 4th 786, the court held that a construction contractor’s designation of an entity as a “general partnership” in a fictitious business name statement when the contractor was licensed as a limited partnership and the contractor’s use of a variant of the name under which…
Read MoreCorporate Spin-Off Does Not Transfer Insurance Coverage
In Fluor Corp. v. Superior Court (2012), the court held that an insurance policy’s clause requiring the insurer’s consent to an assignment of rights under the policy was valid. Fluor Corporation (here called Fluor-1) was formed in 1924 Fluor-2 was formed in the fall of 2000 to take in part in a corporate restructuring referred…
Read MoreSpringing Covenant Not to Compete Not Enforceable
In Fillpoint, LLC v. Maas (2012), a court struck down a covenant not to compete that would take effect only upon termination of employment where the covenant was in addition to a covenant not to compete that was given in connection with a sale of a business. Michael Maas sold his stock in Crave Entertainment…
Read MoreShareholder Loses Standing to Maintain Derivative Action After Merger
In Villari v. Mozilo (2012) 208 Cal. App. 4th 1470, the court held that under Delaware law a shareholder who was a plaintiff in a shareholder derivative action lost standing to maintain that action once a merger resulted in the shareholder ceasing to be a shareholder. A shareholder filed a shareholder derivative complaint in August…
Read MoreRemoval of Officer of Delaware Corporation May Be Partly Governed by California Law
In Lidow v. International Rectifier Corp. (2012) 206 Cal. App. 4th 351, the court held that, notwithstanding the conflict of laws principle known as the internal affairs doctrine, where a foreign corporation is alleged to have removed or constructively discharged a corporate officer in retaliation for that person’s complaints of possible harmful or unethical activity,…
Read More“Good Standing” Certificates
The California Franchise Tax Board (FTB) has recently announced that a report of the tax status of a business entity (limited liability company (LLC) or corporation) can be obtained online from the FTB for free. The report is officially referred to as an “entity status letter” (and is sometimes referred to as a “good standing…
Read MoreNo “Selective Waiver” of Attorney-Client Privilege
To show that they are good citizens, public companies are often encouraged by the government to investigate wrong-doing by their employees and then to take corrective action. Often these internal investigations are conducted by outside legal counsel, who prepare a report to the board of directors, and legal counsel’s report is typically an attorney-client communication…
Read MoreCalifornia Now Licensing LLC’s as Contractors
As a result of legislation passed in 2010 (Statutes of 2010, Chapter 698), the California Contractors State License Board (CSLB) is authorized to issue contractor licenses to limited liability companies (LLCs). The CSLB issued the first contractor’s license to a limited liability company (LLC) on January 19, 2012. Applications for licensing an LLC to be…
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