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Archive for for April, 2016

Employee or Independent Contractor? That Is the Question (Part I)

April 28, 2016

As part of our previous blog series titled Uber and Lyft Drivers Might Be Employees, Not Independent Contractors, Under California Law, we wrote about Cotter v. Lyft, a California case involving claims of misclassified drivers.[1]  At the heart of this case was the question of whether Lyft drivers were independent contractors or employees under California law.  Why should this matter to a business?  Because the determination has its consequences– under California law, for instance, employees are entitled to certain benefits and protections, whereas independent contracts are not.… Read the rest

New York Law Update: When Is a Corporate Officer Liable for the Acts of the Corporation? (Part I)

April 26, 2016

As you know, we often focus on issues related to personal liability on this blog.  In our multi-post blog series on personal liability of business owners, for example, we discussed types of business entities designed to protect business owners from business debts and liabilities.  In our multi-post blog series on corporate veil piercing, we looked at situations where courts “pierce the corporate veil” to hold LLC members liable for business debts, and in another multi-post blog series on single-member LLCs and creditors’ rights, we looked at situations where single-member LLCs had no charging order protection in the context of bankruptcy.… Read the rest

Delaware Law Update: The Meaning of “Control” in “Controlling Stockholder” (Part II)

April 21, 2016

In Calesa Associates, L.P. v. American Capital, Ltd., a group of minority stockholders of Halt Medical, Inc. (the “company”) filed a lawsuit for breaches of fiduciary duty in connection with a corporate transaction against current and former directors of the company and a stockholder that allegedly controlled them, American Capital, Ltd. and its affiliates (collectively, “American”).[1]  According to the minority stockholders, American owned 26% of the company prior to the transaction at issue and exercised sufficient control over the company’s board of directors. … Read the rest

Delaware Law Update: When Is a Stockholder’s Pre-Suit Demand Excused? (Part II)

April 19, 2016

Delaware County Employees Retirement Fund v. Sanchez involved a complicated business transaction between a private company wholly owned by the family of A.R. Sanchez and a public company in which the Sanchez family formed the largest stockholder bloc.[1]  The plaintiff stockholders alleged that the transaction between the two companies resulted in a gross overpayment by the public company and unfairly benefited the private company (that is, the Sanchez family).  The Court of Chancery dismissed the complaint, finding that the plaintiffs failed to show that a pre-suit demand on the public company’s board of directors was excused. … Read the rest

Delaware Law Update: The Meaning of “Control” in “Controlling Stockholder” (Part I)

April 14, 2016

We write frequently about minority shareholder rights here.  We started with Ritchie v. Rupe, a Texas Supreme Court case that completely changed the lay of the land by making it harder for minority shareholders to bring lawsuits based on oppressive conduct by majority shareholders (see here).  We discussed Bontempo v. Lare (available here), a Maryland case on remedies for shareholder oppression, which, in addition to dissolution, recognized equitable remedies such as accounting for allegedly misappropriated funds, appointment of a receiver for the purposes of continued operation of the corporation, issuance of an injunction to prohibit oppressive conduct, and damages to minority shareholders as compensation for oppressive conduct, to name just a few. … Read the rest

Delaware Law Update: When Is a Stockholder’s Pre-Suit Demand Excused? (Part I)

April 12, 2016

In our recent blog post on Wandel v. Dimon, we discussed stockholder’s pre-suit demand.[1]  For those who are not familiar with pre-suit demand, Delaware law requires stockholders to serve a pre-suit demand on the corporation’s board of directors before they can bring a derivative lawsuit on behalf of the corporation, unless doing so would be futile.  In Wandel, the stockholders failed to serve a pre-suit demand and claimed that it would have been futile because at least a majority of the board was not independent. … Read the rest

When Can I Reasonably Anticipate Being Haled into Court in Another State? (Part II)

April 7, 2016

On appeal, the court explained what constitutes “minimum contacts” so as to justify a court’s exercise of personal jurisdiction.[1]  Because BRF did not have continuous and systemic contacts with Maryland, Perdue had to show that BRF “purposefully established minimum contacts in the forum state” such “that [it] should reasonably anticipate being haled into court there.”  How could Perdue show that?  The court laid out a test, which considers: “(1) the extent to which [BRF] purposefully availed itself of the privilege of conducting activities in [Maryland]; (2) whether [Perdue’s] claims arise out of those activities directed at [Maryland]; and (3) whether the exercise of personal jurisdiction would be constitutionally reasonable.”  These factors can be shown in many different ways, such as the existence of offices or agents or ownership of property in the state, deliberately conducting significant or long-term business activities in the state, or making in-person contact with the resident of the state regarding the business relationship. … Read the rest

New York Law Update: Shareholders’ Inspection Rights

April 5, 2016

In our previous blog series on Shareholders’ Right To Inspect Corporate Books and Records, we discussed under what circumstances shareholders may inspect corporate books and records and what constitutes proper purposes reasonably related to shareholder interests.  For New York law, we looked at Tatko v. Tatko Bros. Slate Co.,[1] which held that a shareholder’s quest to determine the value of his shares was a proper purpose for inspecting the corporation’s financial records, and Ret. Plan for Gen. Employees of the City of North Miami Beach v.Read the rest

All postings are intended to be planning tools to familiarize readers with some of the high-level issues discussed therein. No posting is intended to be a comprehensive discussion and additional details should be discussed with your transaction planners including attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. This article should not be treated as legal advice to any person or entity.