Category: Business Law

California Consumer Privacy Act of 2018

Consumer-Privacy

By: Lindsay Volle, Attorney

The California Constitution grants a right of privacy. And now, with the passing of AB 375, also known as the California Consumer Privacy Act of 2018, this right to privacy has evolved to meet the needs of consumers in the modern world of data collection.

With every web search, companies collect analytics and gather information about consumers. Last week I searched for plumbers on the internet; this week I saw two advertising banners for plumbers in my area. Somewhere in the “world wide web” it has become known that I am in need of a plumber and that information is being used to create personalized, targeted advertising.

But what if I want to opt out? Beginning January 1, 2020, The California Consumer Privacy Act of 2018 will allow me to do so. The text of AB 375 provides “it is the intent of the Legislature to further Californians’ right to privacy by giving consumers an effective way to control their personal information, by ensuring the following rights:

(1) The right of Californians to know what personal information is being collected about them.

(2) The right of Californians to know whether their personal information is sold or disclosed and to whom.

(3) The right of Californians to say no to the sale of personal information.

(4) The right of Californians to access their personal information.

(5) The right of Californians to equal service and price, even if they exercise their privacy rights.

Great news for consumer protection, but what does this mean for California businesses? That depends. For-profit businesses that collect or receive consumer information and who meet any of the following criteria will be required to comply with the California Consumer Privacy Act of 2018: 

  • Has annual gross revenues in excess of $25 million
  • Annually buys, receives for the business’ commercial purposes, sells or shares for commercial purposes, alone or in combination, the personal information of 50,000 or more consumers, households or devices
  • Derives 50 percent or more of its annual revenues from selling consumers’ personal information.

..

Based on the above criteria, it might seem that this new law only applies to “big” businesses with “big” marketing departments. However, the CCPA has practical implications for even small businesses who are marketing on the internet. For instance, Facebook and Google ads are popular marketing tools. But these ads use consumer’s collected information and data to target an audience. If more than 50,000 people see your ad, suddenly your business is subject to the law.

So if the law applies – what does this mean for my business? If your business activity would trigger the CCPA, your business will be required to:

  • Disclose to a requesting consumer the categories and specific pieces of personal information the business has collected; 
  • Inform consumers, at or before the point of collection, the categories of personal information to be collected and the purposes for which the categories of personal information shall be used;
  • Upon receipt of a verifiable consumer request, disclose and deliver (free of charge) the personal information as requested by consumers.

Additionally, if your business sells personal information to third parties, the consumer will have the right to opt out. A clear and conspicuous link titled “Do Not Sell My Personal Information,” will be required to enable consumers to easily opt out of the sale of the consumer’s personal information.

Businesses are not required to retain any personal information collected for a single, one-time transaction if such information is not sold.

Enforcement of this new law will vary depending on the extent or severity of the infringement. However, the text of the law authorizes broad authority for the Attorney General to prosecute actions against violations.

Michael Cohen Case Highlights Attorney-Client Privilege Issues

Michael-Cohen-legal-team

By Anthony P. Fritz, Esq.

The FBI raid on Michael Cohen’s office, home and hotel room in April 2018, and the seizure of business records, e-mails, audio tape records and other materials brought the issue of attorney-client privilege into national focus. Most people know that Mr. Cohen was one of Donald Trump’s longtime personal attorneys and that Cohen arranged a non-disclosure agreement with Trump and Stephanie Clifford, aka Stormy Daniels, in November 2016. Mr. Cohen also represented Elliott Broidy, former RNC deputy finance chairman, in a similar arrangement with a former Playboy model.  Cohen’s third client, Sean Hannity, stated publicly that Mr. Cohen did little or no legal work for him.

In order to obtain search warrants, the FBI had to show probable cause that a crime was committed and that items connected to the crime are likely to be found in the places specified by the warrants. It remains to be seen whether Cohen might face criminal charges, or whether any of his three clients might be implicated in any of Cohen’s possible criminal activities.

The FBI seized materials that included communications between Mr. Cohen and Mr. Trump, and others. After the records were seized, Cohen’s attorneys appeared before Kimba Wood, Federal Judge in the Southern District of New York, and argued that they should have the right to review the materials and redact or withhold any information they believe is protected by the attorney-client privilege before Federal law enforcement officials could review any of the seized materials.

Instead, Judge Wood appointed a Special Master to review the seized materials and render decisions regarding privilege issues. Judge Wood gave Cohen and his attorneys the right to identify the information that they claim is privileged and therefore protected from disclosure. The Special Master is entitled to confer with the Government on privilege issues without disclosing information that Cohen claims to be privileged. The Special Master is required to issue a report of her privilege determinations to the Court, giving the parties the right to object to the determinations, with the Court making the final decision as to any information that is privileged and therefore cannot be reviewed by Federal prosecutors.  Judge Wood specifically directed the parties to focus on the “crime/fraud” exception to the attorney-client privilege in assessing privilege issues.

The Court’s determination of privilege issues will undoubtedly have a major impact on Mr. Cohen’s future, and could very well affect the Trump presidency, and the future of our nation.

Attorney-client communication and work-product privileges are frequently raised in litigation, and it is important to understand how these privileges operate in practice. Michael Cohen’s privilege claims will be determined under New York law, but we believe that an understanding of the application of attorney-client privileges under California law will help our readers understand how those principles will likely be applied in Mr. Cohen’s case.

Guiding Principles:

Attorney-Client privilege applies to a communication made in confidence in the course of the lawyer-client relationship. Evid. Code section 917. A lawyer-client relationship begins when a person consults an attorney for legal advice. The client is the holder of the privilege and can prevent another from disclosing a confidential communication between the client and lawyer. Evid. Code section 954. The lawyer who received or made a communication subject to the privilege shall claim the privilege whenever he is present when the communication is sought to be disclosed and is authorized to claim the privilege under Evidence Code section 954(c). Evid. Code section 955.

The attorney-client privilege has been a hallmark of Anglo-American jurisprudence for almost 400 years. The privilege authorizes a client to refuse to disclose and to prevent others from disclosing, confidential communications between attorney and client. The fundamental purpose behind the privilege is to safeguard the confidential relationship between clients and their attorneys so as to promote full and open discussion of the facts and tactics surrounding individual legal matters. The public policy fostered by the privilege seeks to ensure “the right of every person to freely and fully confer and confide in one having knowledge of the law, and skilled in its practice, in order that the former may have adequate advice and a proper defense.”

Although exercise of the privilege may result in the suppression of relevant evidence, the Legislature has determined that these concerns are outweighed by the importance of preserving confidentiality in the attorney-client relationship. “The privilege is given on grounds of public policy in the belief that the benefits derived therefrom justify the risk that unjust decisions may sometimes result from the suppression of relevant evidence.” Mitchell v. Superior Court (1984) 37 Cal.3d 591, 601.

Scope of the Privilege

The attorney-client privilege includes oral and written statements, actions, signs and other means of communicating information to the client. The privilege covers the transmission of documents which are available to the public, and not merely information in the sole possession of the attorney or client. The actual fact of the transmission to the client merits protection since discovery of the transmission by an attorney of specific public documents to the client might very well reveal the transmitter-attorney’s intended strategy. Mitchell v. Superior Court (1984) 37 Cal.3d 591, 601.

Attorney Work-Product Privilege

“The work product of an attorney shall not be discoverable unless the court determines that denial of discovery will unfairly prejudice the party seeking discovery in preparing his claim or defense or will result in an injustice, and anything in writing that reflects an attorney’s impressions, conclusions, opinions, or legal research or theories shall not be discoverable under any circumstances.” Civil Procedure section 2018.030.   

The effect of section 2018.030 is to create two privileges: “a qualified privilege against discovery of a general work product and an absolute privilege against disclosure of documents containing the attorney’s `impressions, conclusions, opinions, or legal research or theories.” American Mut. Liab. Ins. Co. v. Superior Court (1974) 38 Cal. App.3d 579, 594.  The attorney is the holder of work-product protection and has the right to assert the privilege.

Prima Facie Privilege Claim

The party claiming the privilege must establish the preliminary facts essential to the claim, namely, that the communication was made in the course of an attorney-client relationship. When that showing has been made, then the communication is presumed to have been made in confidence, and the opponent has the burden of proof to establish that the communication was not confidential, that an exception applies or a waiver occurred. Evid. Code section 917,  Wellpoint Health Networks, Inc. v. Superior Court (1997) 59 Cal.App.4th 110, 123-24.

No Attorney Work-Product Privilege: Attorney acting solely as a client’s business agent/negotiator

Where the attorney acts merely as a business agent for the client in conveying the client’s position to a contracting party, there is no justification for protecting the attorney’s notes concerning the conversation. However, in doubtful cases or those in which the legal work and work performed as an agent are inextricably intertwined, the privilege will be sustained.  Watt Industries, Inc. v. Superior Court (1981) 115 Cal.App.3d 803.  Similarly, there is no attorney work-product privilege where the attorney merely gave business advice to the client.  Estate of Perkins 195 Cal. 699, 710.   The work-product privilege applies to documents related to legal work an attorney performs for a client, not to notes memorializing acts an attorney performs as a mere agent.

No Attorney-Client Privilege: The Crime/Fraud Exception

The attorney-client privilege does not exist if the client sought or obtained the attorney’s services to enable or aid anyone to commit or plan to commit a crime or fraud. Evid. Code section 956; BP Alaska Exploration, Inc. v. Superior Court (1988) 199 Cal.App.3d 1240, 1262–1270.  The issue is whether the services of the firm were used to enable the client to commit a crime or fraud and whether there is a reasonable relationship between the crime or fraud and the attorney-client communication.  State Farm Fire & Cas. Co. v. Superior Court (1997) 54 Cal.App.4th 625, 645.  The lawyer does not have to be aware of the fraud for the crime-fraud exception to apply. Instead, “it is the intent of the client upon which attention must be focused and not that of the lawyers.” Id.  

In State Farm Fire & Cas. Co. v. Superior Court (1997) 54 Cal.App.4th 625, the Court held that that evidence that an insurance company, aided by its attorneys, instructed its employees to forge signatures, lie, and destroy documents related to the handling of certain earthquake insurance claims was sufficient to support a prima facie case establishing the crime/fraud exception to the attorney-client privilege.   

A prima facie case for the crime/fraud exception is made where the proponent of the exception demonstrates sufficient evidence to show that the fraud or crime has some foundation in fact. State Comp. Ins. Fund  v. Superior Court (2001) 91 Cal.App.4th 1080, 1090-1091. However, mere issuance of a search warrant to seize files from an attorney’s office does not, in itself rise to the level of a prima facie showing to establish the crime/fraud exception. Geilim v. Superior Court (1991) 234 Cal. App. 3d 166.     

Work product or communications between Michael Cohen and his clients made in furtherance of a crime or fraud perpetrated by one of Cohen’s clients would not be subject to the attorney-client privilege, and would, therefore, be subject to disclosure to Federal prosecutors.  

Michael Cohen had a long-standing close professional relationship as Donald Trump’s attorney, and Cohen used his access to Trump secure several lucrative “consulting contracts” with companies such as Time/Warner and Novartis.  Cohen had separate business interests outside of his law practice and at this point, we do not know whether the FBI search warrants were based on suspected criminal activity involving Cohen’s law practice and clients, or business activities unrelated to Cohen’s law practice.  The FBI raid made headlines, but at this point, it would be pure speculation to conclude that it had anything to do with possible criminal activity involving the President.

Procedure to Establish Privilege: In Camera Review

California’s discovery statutes enable a party to obtain relevant documents and electronically stored information in an adverse party’s possession, custody or control.  The party responding to a request for production may withhold documents and other information claimed to be privileged but must provide sufficient factual information for other parties to evaluate the merits of the privilege claim. Code of Civ. Proc. Section 2031.240.  A person questioned under oath is entitled to refuse to answer if the question requires the disclosure of information protected by the attorney-client privilege.   

Where a dispute over privilege issues arise during litigation, the parties are required to first meet and confer and attempt to resolve the dispute.   If the dispute cannot be resolved voluntarily through negotiation, the requesting party may file a motion with the Court to compel the other party to disclose or produce the disputed documents or other information.

Where a dispute concerning the attorney-client privilege arises in litigation, the court may conduct in-chambers review of the materials allegedly subject to the privilege and determine whether the privilege applies and whether the documents or other information should be provided to the requesting party.

In United States v. Zolin (1989) 491 U.S. 554, the United States Supreme Court addressed the issue of disclosure of privileged materials under the federal rules of evidence. The IRS sought to obtain two tapes of a church, which were held under seal in the custody of the California state court clerk. The IRS argued that the tapes fell within the crime/fraud exception to the attorney-client privilege claimed by the church.  The Supreme Court held that the material should be provided to the trial court for in-camera review and that disclosure to the court for purposes of determining the merits of a claim of privilege does not have the legal effect of terminating the privilege.

Waiver of the Attorney-Client Privilege

The attorney-client privilege “is waived if any holder of the privilege, without coercion, has disclosed a significant part of the communication or has consented to disclosure made by anyone.” Evid. Code section 912(a).  The attorney-client and work-product privileges can be waived by: 1) failing to assert the protection; 2) tendering certain issues; or 3) by conduct inconsistent with claiming the protection. BP Alaska Exploration, Inc. v. Superior Court (1988) 199 Cal.App.3d 1240, 1254, 1261.  

Work-product protection “is not waived except by a disclosure wholly inconsistent with the purpose of the privilege, which is to safeguard the attorney’s work product and trial preparation.” Raytheon Co. v. Superior Court (1989) 208 Cal.App.3d 683, 689.  Mere disclosure in deposition of the fact that a communication between client and attorney had occurred does not amount to disclosure of the specific content of that communication, and as such does not necessarily constitute a waiver of the privilege. Mitchell v. Superior Court (1984) 37 Cal.3d 591, 601-602. The attorney-client privilege is not waived by sharing documents during contract negotiations where the disclosure of documents was reasonably necessary to further the interests of both parties in finalizing negotiations. STI Outdoor v. Superior Court (2001) 91 Cal.App.4th 334, 341.

Implied Waiver – The “In Issue” Doctrine:  There is an implied waiver of the privilege when the client tenders an issue involving the substance or content of a protected communication. Implied waiver is limited to situations where the client has placed into issue the decisions, conclusions, and mental state of the attorney who will be called as a witness to prove such matters.  A client’s deliberate injection of the advice of counsel into a case waives the attorney-client privilege as to communications and documents relating to the advice. Mitchell v. Superior Court (1984) 37 Cal.3d 591, 606.

Conclusion:  Judge Wood appears to have instituted procedures to enable Federal prosecutors to complete their investigation while protecting the legitimate privilege and privacy interests of Mr. Cohen and his clients.  

The rest of us should keep in mind certain principles concerning the nature and scope of the attorney-client privileges in business dealings and in litigation.  First, merely hiring an attorney to represent you in business negotiations will not necessarily guarantee that your communications with your attorney will be privileged.   Second, communications with an attorney made in furtherance of a fraudulent or criminal scheme will not be protected from disclosure. Third, attorneys and their clients should exercise caution in sharing their communications with third parties.  Unnecessary or gratuitous disclosure of communications between an attorney and his or her client can be deemed a waiver of the privilege under certain circumstances. Finally, where a party in litigation refuses to provide documents or testimony based on the attorney-client privilege, a judge may be the final arbiter of the dispute if the parties are unable to resolve it by agreement.         

Clifford v Trump

Trump VS Clifford

Non-Disclosure, Rescission, Agency, and Third Party Beneficiary Law in the News

By Anthony P. Fritz, Attorney at Law

Background

President Donald J. Trump’s alleged tryst with an adult film star has become sensationalized tabloid media fodder across America. Regardless of its political implications or entertainment value, the Clifford v. Trump litigation raises several interesting legal issues concerning contract interpretation and enforcement.

Media reports state that in 2006 Mr. Trump had an extramarital affair with a woman named Stephanie Clifford, who goes by the stage name “Stormy Daniels”.   It has been reported that shortly before the 2016 presidential election, Mr. Trump learned that Ms. Daniels was about to go public with details of their alleged carnal dalliance, and his attorney took certain steps to prevent that from happening.

On October 28, 2016 Ms. Clifford, under the pseudonym “Peggy Peterson”, signed a document titled “Confidential Settlement Agreement and Mutual Release; Assignment of Copyright and Non-Disparagement Agreement”.  The other parties referenced in the agreement were “Essential Consultants, LLC”, a newly formed Delaware limited liability company, and “David Dennison”, a pseudonym for the soon-to-be-elected President of the United States.

The Confidential Settlement Agreement provides that, in exchange for $130,000, Ms. Clifford/Peterson shall assign and deliver to Trump/Dennison all “physical and intellectual property rights” pertaining to her relationship with Trump, including photographs, negatives, letters, films, tapes, CD-Roms, DVD-Roms, magnetic data  and electronic data.  She further agreed to not disparage Mr. Trump in any way, shape or form, directly or indirectly, and to not disclose to any person any information pertaining to her intimate encounters with Mr. Trump.  The settlement agreement provides that Ms. Clifford will be obligated to pay Trump all money and other consideration she derives from her disclosure of any confidential information, and she will owe Trump $1 million for each separate violation of the agreement.

Michael Cohen, Donald Trump’s longtime personal attorney, negotiated the settlement agreement and he signed it on behalf of Essential Consultants, LLC.  Donald Trump did not sign the settlement agreement, and no signature appears on Mr. Dennison/Trump’s signature line in the agreement.

Ms. Clifford received her $130,000 on October 27, 2016, and Donald Trump was elected President shortly thereafter. That should have been the end of the story, except that in January 2018, rumors about the alleged affair and efforts to keep it secret began to surface in various media reports.  Michael Cohen came forward, publicly stating that he used funds from his home equity line of credit to pay Ms. Clifford the $130,000 and he was never “directly or indirectly” reimbursed for the expenditure, and his payment to Clifford had nothing to do with Trump’s election campaign.

In February 2018 Mr. Cohen obtained an ex parte restraining order to prevent Ms. Clifford from going public with her story.  Clifford responded by scheduling an interview with 60 Minutes.  Her attorney, Michael Avenatti, publicly offered to return the $130,000 Ms. Clifford received when she signed the agreement. There is nothing to suggest that the offer was accepted.

On March 6 Stephanie Clifford and her attorney filed a complaint for declaratory relief with the Los Angeles Superior Court naming Donald Trump and Essential Consultants, LLC as defendants.   Clifford’s complaint in Stephanie Clifford v. Donald J. Trump et al, LA Superior Court Case No. BC696568 alleges that the so-called “Hush Agreement” is “null, void and of no consequence” because it was never signed by Mr. Trump, Trump had no knowledge of the agreement and he did not pay any consideration for it, thus Mr. Trump “never assented to the duties, obligations, and conditions” therein.  Ms. Clifford’s complaint further claims that Mr. Cohen’s public disclosures about the settlement agreement violated its confidentiality provisions thereby nullifying it, and the agreement itself is unconscionable, illegal and violates public policy.

On March 16 Mr. Trump joined Essential Consultants’ petition to remove the Clifford v. Trump lawsuit from L.A. Superior Court to the U.S. District Court, Central District of California.   The removal petition states that Essential Consultants intends to seek private arbitration of the dispute and that Ms. Clifford owes President Trump $20 million based on 20 separate violations of the settlement agreement she allegedly committed as of March 16.

The controversy has spurred much public debate among various legal experts.  We offer our analysis of certain legal issues presented in the Clifford v. Trump lawsuit under California law.

Legal Issues

Non-Disclosure Provisions are often included in settlement agreements, particularly in highly contested litigation.  There is nothing intrinsically nefarious or sinister about a non-disclosure agreement. Disagreements between parties to a business transaction often lead to highly contentious and acrimonious litigation.  Most lawsuits settle before trial, with one party agreeing to pay money to the other in order to resolve the dispute.  A settlement agreement often includes non-disclosure provisions to prevent the recipient of settlement funds from harming the paying party’s reputation by proclaiming their victory to the world through the internet and social media.

Rescission

A party may cancel and rescind a contract where his or her consent to the contract was given by mistake, or obtained through duress, menace, fraud, or undue influence, where the consideration for the contract fails due to the fault of the other party, where the contract is unlawful or if the public interest will be prejudiced by permitting the contract to stand.[1]  Rescission extinguishes the contract, terminates further liability on the agreement, and restores the parties to their former positions. To effect a rescission, a party must restore or offer to restore everything of value he or she received under the contract.[2]  Ms. Clifford’s attorney offered to return the $130,000 she received under the settlement agreement to support her claim for rescission of the agreement.

There does not appear to be a basis for Ms. Clifford to rescind the settlement agreement based on mistake, duress, menace, fraud, or undue influence based on the information that is presently publicly available.  It is questionable whether the settlement agreement can be rescinded based on Mr. Cohen’s public communications about the agreement.   Clifford’s best argument may be that the settlement agreement, and its confidentiality provisions, should be rescinded because disclosure of the details of her alleged intimate relationship with the President is in the public interest.

Agency

Ms. Clifford’s complaint alleges that Donald Trump is not entitled to enforce the settlement agreement because he never signed it and he did not know about the agreement when it was negotiated and signed by his attorney in October 2016.   However, Trump may be considered a party to the settlement agreement according to agency principles under California law.

Michael Cohen was Donald Trump’s attorney representing Trump as his agent in negotiating and signing the settlement agreement.  An agent represents a principal in dealings with third persons. Such representation is called “agency”.[3]  An agent can bind his principal to a contractual agreement when acting within the scope of his or her agency relationship.  An agency is either actual or ostensible.[4] An agency is “actual” when the agent is really employed by the principal.[5] An agency is “ostensible” when the principal intentionally, or by want of ordinary care, causes a third person to believe another to be his agent who is not really employed by him.[6]  An agency may be created, and an authority may be conferred, by a precedent authorization or a subsequent ratification.[7] An attorney is an agent of his client, and the attorney-client relationship is governed by the rules applicable to the relationship of principal and agent in general.[8]

Both principal and agent are deemed to have notice of whatever either have notice of and ought, in good faith and the exercise of ordinary care and diligence, to communicate to the other. [9]   An attorney practicing law in California or New York is ethically required to advise his or her client of a settlement offer or a settlement agreement affecting the client’s rights and duties.[10]  Under agency principles, Michael Cohen’s knowledge of the settlement agreement may be imputed to Trump, regardless of whether Mr. Trump had actual knowledge of the settlement agreement and its terms when it was signed.

Ratification is the voluntary election by a person to adopt in some manner as his own an act which was purportedly done on his behalf by another person, the effect of which, as to some or all persons, is to treat the act as if originally authorized by him.[11]  Ratification may be inferred from a purported principal’s conduct which demonstrates an intent to adopt an act as its own, including acceptance of benefits.[12]  A voluntary acceptance of the benefit of a transaction is equivalent to a consent to all the obligations arising from it, so far as the facts are known, or ought to be known, to the person accepting.[13]  Trump ratified the settlement agreement by accepting its benefits and seeking to enforce it.

Donald Trump is bound by and he benefitted from Michael Cohen acts and agreements while acting within the scope of his authority as Trump’s agent and attorney.  Under California agency principles, Trump would very likely be entitled to enforce the settlement agreement even though he did not sign it, and even if he did not know about the agreement when it was negotiated and signed by Mr. Cohen in October 2016.

Third Party Beneficiary

Donald Trump may also be entitled to enforce the settlement agreement as a third party beneficiary under California law.  The Confidential Settlement Agreement states that it is entered by and between “EC LLC and/or DAVID DENNISON (DD), on the one part, and PEGGY PETERSON (PP), on the other part…”  The “and/or” in the Agreement is significant.  Donald Trump may not actually be a party to the settlement agreement, but he should have the right to enforce its terms as a third party beneficiary of the agreement.

A person who is not a party to a contract may be entitled to damages for breach of contract if he or she can prove that the parties to the contract intended for that person to benefit from the contract.  A third party may qualify as a beneficiary under a contract where the contracting parties intended to benefit that individual and the intent appears from the terms of the agreement.[14] The intent to make Trump a beneficiary of the settlement agreement is apparent from its terms.  Therefore, the absence of Trump’s signature on or knowledge of the settlement agreement would not likely be an impediment to his right to enforce it under California law.

Conclusion

Stephanie Clifford’s arguments for rescission of the Confidential Settlement Agreement appear to be on shaky legal ground if the dispute is decided according to California legal principles. She undoubtedly stands to make a great deal more than $130,000 by sharing her tales of adulterous intimacy with the world, but Ms. Clifford is very much at risk of having to pay all of the proceeds, and possibly much more, to her former inamorato.  Donald Trump is no stranger to legal controversy, and he and his attorneys have good reasons to seek private arbitration of the dispute rather than a high profile legal battle before a potentially hostile Los Angeles jury.

Stay tuned.

1 Civil Code § 1689(b)
Civil Code § 1691
Civil Code § 2295
Civil Code § 2298
Civil Code § 2299
Civil Code § 2300
Civil Code § 2307
Moving Picture, etc., Union v. Glasgow Theaters, Inc., (1970) 6 Cal.App.3d 395, 403.
Civil Code § 2332
10 Clifford’s complaint points out that Mr. Cohen would have violated his ethical duties as Donald Trump’s attorney if he did not tell Trump about the settlement agreement when he negotiated and signed it.

11 Rakestraw v. Rodrigues, (1972) 8 Cal.3d 67, 73
12 Ibid.
13 Civil Code §1589
14 Brinton v. Bankers Pension Services, Inc. (1999) 76 Cal.App.4th 550, 558.

Consider This Before Leaving A General Partnership

Are you thinking about leaving a general partnership, but are wondering what legal steps you have to take in order to preserve your financial interests and protect yourself from future liability? At Herrig & Vogt, LLP, we have experience assisting people with this process, and we can help you move forward with your decision.

In California, a general partnership is the association of two or more persons that hold themselves out as co-owners of a business for profit. The act of leaving a general partnership is called “dissociation,” which can occur in several different ways. Still, a partner can leave a general partnership at will at any time. However, the manner in which a partner leaves determines whether his or her dissociation is rightful or wrongful, which can have an effect on the partner’s return on investment.

In addition, the number of partners in a general partnership also has an effect. A two-partner general partnership automatically enters into dissolution and has to “wind up” if one partner dissociates and leaves the partnership. The winding up period is the process in which the partnership’s assets are located and liquidated in order to pay of its creditors. Then, any profits or losses are credited to each partner. At the end of this process, the partnership is terminated. However, if there are three or more partners in a general partnership, the dissociation of one partner causes the partnership to buy out the dissociating partner’s interest in the business, and the partnership remains intact.

Another important consideration is the liability that the dissociating partner will have after leaving the partnership. By leaving the partnership, the dissociating partner is still liable for any partnership obligations incurred before his or her dissociation. Additionally, a dissociated partner could also be held accountable for partnership liabilities incurred during the two years following the partner’s dissociation unless certain steps are taken.

Each business relationship is unique to the participants involved, so contact our firm today and we can help you figure out what steps needs to be taken in order for your goals to be accomplished.

5 Common Causes Of Business Disputes

The business world is filled with competition along with the need for cooperation. Every company wants to be better than their competitors, which often causes disputes between competing companies. At Herrig & Vogt, LLP, we offer quality legal services to individuals throughout Roseville and Granite Bay, California. Contact our firm today if you are facing any type ofbusiness dispute.

Common causes of business disputes include:

Breach of Contract

If any party within a business contract does not uphold obligations which are described in the agreement, the other party can sue under the claim of a breach of contract. The victimized party may be entitled to collect monetary compensation. The judge can come to a decision based on the financial losses and the extent of the breach of contract.

Employment Litigation

The conduct of an employer toward his or her employees or the environment can result in disputes between any of the following parties:

  • City agencies
  • Workers
  • Business owners

Disputes involving regulations within the business world are often very complicated and costly. You will need a powerful attorney on your side.

Premises Liability

If anyone is injured on a property that is owned by a business, the company may be liable for damages of the injured party. He or she may be liable for both compensatory and punitive damages. Businesses have the ability to dispute its liability for damages and can obtain a legal advocate to support them in court.

Shareholder Disputes

Internal disputes that arise over finances or other matters involving partners and shareholders in a business will require legal representation to make sure that the contract is upheld. Your legal advisor can also make sure that finances are properly distributed.

Fraud

If any party within a business relationship misrepresents information that leads to a loss of money, the victim may be entitled to financial damages. With the help of a legal guide, fair results can be pursued within court.