The Real Players in Our Nation Are … – Recent Business, Contract, and Real Property Law Developments

Posted by Mack W. Borgen October 24th, 2022

Blog No 156

October 24, 2022
By Mack W. Borgen
Author (7 Books): The White Binder – Your Personal Data and Information Book (2022); The Writings of a Lifetime (2021); Dead Serious and Lighthearted – The Memorable Words of Modern America (Three Volumes) (2018-2019); and The Relevance of Reason – The Hard Facts and Real Data about the State of Current America (2 Volumes) (2013). As advertised in The New York Review of Books. Recipient of Eight National Book Awards
See my legal articles and other blogs at  https://www.mackwborgen.com/  . Then, just click the “Blogs” tab.

Call Me Anytime – General Business Planning

or Corporate, Business or Real Property Law Matters

805-450-2602

The Real Players in Our Nation

The Need for More Corporate Economic Transparency in America

– Nobody Needs a Rant Right Now – This Is JUST an Idea –

Given accurate information, most Americans can assess and evaluate the import of such information. O.k., not all Americans, but “most.” However, getting that information remains an unnecessary challenge.

Certainly, there is plenty of garbage floating about the media — and especially the social media. And yes, America and some of our leaders have far too readily embraced a pathetic tolerance for “alternative facts,” “untruths,” and “misinformation.” Admittedly, reporting mistakes occur, bias is oftentimes a component of our news, and any data is vulnerable to varying analyses and interpretations. However, even in our not-so-simple world, facts can still be facts. And data can still be meaningful.

Since we are now immersed in the season of election tension, possibly it would be useful – even encouraging – to remember a couple simple observations about our democracy. As brilliant as our Constitution is; as hard as our government may work; and no matter how many elections are held …

Democracy, at its core, is based merely upon the belief that 51% of the people are right 51% of the time.

and

As “clumsy” as our democracy is — it is certainly better than any other alternative yet conceived or designed. 

These are pretty low D-/51% standards, but they are still true. They are still important and sustaining for our democracy. Most of all, they suggest a need for tolerance and humility which is admittedly hard to find in our temporary know-it-all, blustery, conquer-style society.

But one manner by which America might start tempering its anger and regaining its self-confidence would be for there to simply be more transparency about our nation’s major corporations — because these corporations are important, because these corporations are some of the real players in our country. And mere data transparency would be useful on many levels. As we have all said to ourselves, “just give me the facts, and I’ll take it from there.”

Every month our government reports reams of data – from our nation’s inflation rate to the unemployment rate, from wage patterns to labor participation rates, and on and on. Such data is widely reported in the news. But similar or even remotely parallel data about our nation’s largest corporations is not readily available. Why?

The Data IS There! 

A great deal of core economic data is calculated each month by such corporations – especially public corporations. But such data is rarely disclosed to the public or is deeply and intentionally buried in annual reports and filings. Would it not be useful for us, both as Americans and consumers, to have ready access to some of the basic, already-calculated monthly corporate data? Would not Americans have a better understanding of our own economy and some of its corporate participants if data was available — data about changes in corporate profits and profit margins, worker wages and employee turnover rates, the marginal federal corporate tax rates actually paid, gross receipts, and maybe even the amounts these corporations pay to lobbyists, political parties, and PACs?

This is particularly important because these corporations are some of the real players in our country. Their behavior and their successes and failures affect all aspects of our economy from the changes on the stock market to the health and welfare of workers, from the growth or diminishment of wealth disparity to the prospects for the future. Surprisingly, there are less than 7,500 public corporations in America, but they employ more than one-third of all non-farm workers in this country. It is not here suggested that their power be limited – merely that we Americans have a right and need to know – on a regular reporting basis – some basic facts about these massive public corporations.

Consider this in the context of our current inflation economy. Americans need to know the extent to which price increases are “real” — or are they merely a smokescreen and opportunistic pretext for increasing corporate prices and profits. For example, it is both relevant and unnerving, at least to this writer, that the corporate profits of the top six oil companies soared last year. Why is not such information routinely demanded and widely reported? The fact that our nation’s economy is at least 50% more concentrated now than it was just 15 years ago in 2005 (think Albertsons and Kroger), should be a matter of grave concern to all Americans.

Hell, We Know What Kim Kardashian Had for Dinner Last Night!

Think of it this way: We read reviews of every AirBnB we stay at. We track local restaurants and contractors on Yelp. We have access to every piece of minutiae data about the professional athletes in our country. We rate and compare the academics and even the food and dorms at our colleges. Hell, we know what Kim Kardashian had for dinner last night. Is it not time we have ready access to comparative information about America’s largest corporations – the truly Big and Real Players in our nation’s economy, health, and well-being?

More information would allow us to know – rather than speculate — about what is occurring. And, yes, as our thoughts about our economy influence our decisions about our political system. This is just another reason America needs enhanced reporting and more corporate transparency.

As always, this is offered just an idea. Now back to work.

 Recent Business, Contract, and Real Estate Cases and Developments

General Sources: Daily or Periodic Judicial and Legislative Reports from various sources including the California Lawyers Association Daily Reports, the CLA’s Monthly Business Law News, and Announcements and Press Releases from the (California) State Attorney General’s Office. 

  1. Employment Law – Important Pending Legislation. At the end of California’s recent legislative session, several particularly important employment laws were passed (pending action by Governor Newsom). Expanding legislation adopted two years ago which required employers with more than 100 employees, to report specific pay data annually, this legislation would (a) add civil penalties for failing to report such data and (b) require such data to be provided to job applicants. Another adopted bill would allow employees to leave work or refuse to show up it they feel “unsafe,” and it would prohibit employers from taking adverse action against such employees. The bill adopts a “reasonable belief” standard but specific does not include health pandemic within the definition of “emergency condition.” Lastly, legislation was adopted to assure employees the right to five (5) days “bereavement leave” upon the death of a family member and to take family leave for a “designated person” (defined to include a family member or one whose relationship with the employee is the “equivalent of a family relationship.” For the appropriate benefit of the employer, the employer may limit an employee to one designated person leave per 12-month period. 
  1. Corporate Formations – Continued Selection of Delaware as the State of Incorporation. Approximately 68% of Fortune 500 companies are now incorporated in Delaware. This state-selection preference reflects a number of different factors: low franchise taxes, ease of filing, user-friendly online services, well-developed body of corporate law, judicial expertise in corporate law, and business-friendly laws. An example of Delaware’s corporate/management bias is the state’s recent (and rather absurd) statutory enactment whereby both corporate officers and directors are exempt from monetary damages arising even from breaches of fiduciary obligations. This was briefly discussed un my previous Blog No. 155, October 2, 2022. Even with these real or theoretical Delaware incorporation advantages, for small or moderate-sized corporations and especially for such non-public corporations, California, the local jurisdiction, is normally preferable (and more convenient). Note: Some persons still follow the tired, but rarely useful, practice of incorporating in Nevada – but this rarely creates any material advantages to the corporation. 
  1. Real Property Law – Ground Leases – The Too Often Forgotten Use of Ground Leases. Reading the real estate market is nearly impossible. However, one thing is almost certain – the long-term increase in real estate value and the immediate utility of ground lease rents. In the buy/sell world of real estate, the use of ground leases is too often forgotten. A well-drafted ground lease, which is both a conveyance and a contractual agreement between the ground lessor and the ground lessee, can have extraordinary advantages to both parties. While there are many considerations to be considered (e.g., term, rental amount and periodic increases, subject provisions, financeability of improvements, use, and subordination, non-disturbance, and attornment provisions), ground leases should be seriously considered by any party contemplating selling their property – and especially if it is currently unimproved.
  1. Landlord-Tenant – Prohibition of “Self-Help Evictions” – Clarification of Distinctions between “At fault” Evictions and “No-Fault” Evictions. New California AG directives prohibit landlords from conducting unlawful lock outs and other “self-help evictions) (changing locks without court order, shutting off water or electricity). Furthermore, new California legislation generally prohibits a landlord from evicting most tenants without “just cause” except in the context of “no-fault” evictions such as then the owners wish to move into the property, remodeling that requires local permitting and which would take more than thirty (30) days, or, obviously, the intent to demolish toe unit. 
  1. Employment Law – Minimization of “Quiet Quitting” – Steps for Employers to Take. With the growing use and abuse of quiet quitting whereby the employee refuses or delays in doing anything outside the boundaries of one’s job description and to avoid burdensome litigation, corporate employers should take certain steps to minimize the adverse impact of such quiet quitting. The three most commonly-identified steps are (a) to be precise (and arguably expansive) in defining one’s job description, (b) to conduct regular and routine performance reviews, and (c) to prepare and circulate detailed employee handbooks so as to define and articulate the employer’s expectation with respect to the employee’s work. 
  1. Accurate Consumer Credit Reporting – Importance of Providing Accurate Information to Consumer Reporting Agencies. The recent case involving Hyundai (in which it was fined $19.2MM) underscores the importance of providing accurate information to consumer reporting agencies, Hyundai’s penalty imposed by the Bureau of Consumer Financial Protection was due to Hyundai failing to promptly update consumer information, failing to provide the date of first delinquency information, and failing to have reasonable identity theft and related blocking procedures. If such reporting is a component of one’s business, accurate reporting is critical and sometimes it is advantageous to have such reporting administered by retained third-parties with focused expertise. 
  1. Trade Secrets and Noncompete Agreements. Once again, another state (this time Colorado) has narrowed the enforceability of trade secrets, nondisclosure, and non-solicitation agreements. These types of agreements can be critical for the protection of one’s business – especially as they relate to true corporate trade secrets and contain non-(employee-)raiding and customer non-solicitation provisions), they must be evermore carefully drafted in light of more and more jurisdictions, in effect, placing the burden of enforceability upon the corporation rather than the (former) employee. Too often such agreements are executed, placed in an employee file, and forgotten about. It is the recommendation of this author that they be routinely (e.g., once every 2-3 years) be reviewed and if necessary, amended and re-executed.

My Most Recent Publication

The White Binder (2022)

For Your Detailed Personal Asset and Liability Management,

Estate Organization, and (Detailed) Disposition Planning 

–Order Today–

Just email me at mwborgen@live.com (Mailing Address and Number of Copies)

(Binder Format, $49.95 plus $6.95 Shipping, Pay After Delivery)

All rights reserved. No part of this article may be reproduced or transmitted in any form or by any means, electronic or mechanical without the prior written permission of the author.

 

 

Quick Facts – Some Humble Thoughts for America and 8 Major Business/Real Estate Law Cases and Developments

Posted by Mack W. Borgen October 4th, 2022

Blog No 155
October 4, 2022
By Mack W. Borgen
Author (7 Books): The White Binder – Your Personal Data and Information Book (2022); The Writings of a Lifetime (2021); Dead Serious and Lighthearted – The Memorable Words of Modern America (Three Volumes) (2018-2019); and The Relevance of Reason – The Hard Facts and Real Data about the State of Current America (2 Volumes) (2013). As advertised in The New York Review of Books. Recipient of Eight National Book Awards
See my legal articles and other blogs at  https://www.mackwborgen.com/  . Then, just click the “Blogs” tab. 

Three Thoughts for America

 The beautiful thing about learning

Is that nobody can take it away from you.

B.B. King

– 

In the end, it matters less that you can fight.

What you fight for is the real test.

John McCain

 –

And on a lighter note,

When you come to a fork in the road,

Take it.

Yogi Berra

Quick Facts

Important Tax Terms 

“Contemporaneous Records.” To substantiate deductions, the IRS requires that one keep “contemporaneous records.” This key term means that deductions cannot just be estimated and reported at the end of one’s year. Instead, substantiating records must be kept “contemporaneously,” via, for example, by keeping receipts or by keeping a log of all deductible costs and expenses. 

Marginal Tax Rate. The tax rate which would be applied to the next dollar one earns. Since our income tax rates are progressive, the next dollar one earns could be taxed for as little as zero or as high as 37%. 

Effective Tax Rate: The tax rate an individual or corporation actually pays. It is the total income taxes paid divided by a taxpayer’s total taxable income. This phrase (far more than one’s marginal tax rate) is a far more valid basis of comparison in evaluating the reasonableness of tax burden complaints by individuals, corporations, and for that matter, politicians.

 Definitions provided by the excellent Newsletter of Bryars, Tolleson Whitton LLP.

 Recent Business, Contract, and Real Estate

Cases and Developments

General Sources: Daily or Periodic Judicial and Legislative Reports from various sources including the California Lawyers Association Daily Reports, the CLA’s Monthly Business Law News, and Announcements and Press Releases from the (California) State Attorney General’s Office. 

  1. Corporations – Corporate Officers Further Exculpated from Personal Liability Under New Delaware Law. Corporate Directors have considerable immunity from personal liability under existing Delaware laws. Now, by new Delaware legislation, both Directors and certain corporate officers have expanded protections for personal monetary damages even some of those resulting from a breach of fiduciary duty. While this author has serious reservations about cutting off meaningful (i.e., costly) recourse against corporate officers in such circumstances, the Delaware legislature suggested that such expanding immunity was necessary due to changes in the availability of liability insurance for such corporate officers. This is, or soon will be, another reason many businesses incorporate in Delaware regardless of their principal place of business.   
  1. Contracts – Letters of Intent – Exclusivity Provisions. Early in many business transactions, parties will prepare and sign letters of intent (”LOIs”). While such LOIs nearly always state that the terms and provisions of the LOI are not binding until final transactional documentation has been prepared, agreed upon, and signed, such LOIs sometimes include an exclusivity provision. Such provisions normally provide that for a designated period of time (e.g., 2-3-4 months) or until the parties mutually agree, the other party will not negotiate with any third-parties. In a recent New York case (but which may have parallel implications in many other jurisdictions including California), the court imposed significant liability upon one of the parties who breached the exclusivity provision – even though the underlying transaction never closed. While damages can be difficult to calculate, if an LOI contains an exclusivity provision it is highly advisable that they be honored and complied with. 
  1. Structural Integrity Reserve Study for Condominiums. Under a new Florida law, condominiums which are higher than two stories must conduct “structural integrity” and “deferred maintenance” inspections. Certainly, this legislation is in partial response to the horrific June 2021 collapse of the Surfside, Florida condominium in which 98 people were killed. While this legislation only applies to Florida condominiums, it would be prudent for all condominiums and cooperatives (and the HOAs in charge thereof), including those in California and especially high-rise condominiums, — as a matter of due care — to periodically have such structure integrity and deferred maintenance inspections.
  1. Caution Regarding Pricing Gouging under California Law. Regrettably, more and more frequently there have been state or local declarations of emergency due largely this year to fires. During such periods of emergency, local businesses must be cautious about any changes in product pricing. Basically, California law prohibits charging more than 10% higher than the price immediately before any such declaration of emergency. With respect to the sale of new products during emergency periods, prices cannot exceed 50% of the seller’s cost. This anti-price gouging law applies to a wide range of products and services – from food, emergency supplies, building materials and gasoline to repair or reconstruction services and even hotel accommodations and rental housing. As a practical matter, such enforcement is, at best, haphazard, but pricing gouging can lead to both criminal (up to 1-year imprisonment) and civil remedies ($2,500 per violation etc.). 
  1. California Establishment of Unelected Council to Set Minimum Wage/Working Conditions for 500,000 Fast Food Workers. As a result of new September 2022 legislation, the state will now appoint a 10-member Council composed of employees, employers, and “union activists” in order to set minimum wages and working conditions of fast-food workers in California. The legislation applies only to “non-unionized workplaces” and “fast food chains” are defined as those with 100 or more restaurants nationwide. 
  1. SEC Continues More Aggressive Enforcement. After its much-publicized intention to do so, the Securities and Exchange Commission (the “SEC”) over the last several months has continued more aggressive enforcement actions. Examples include its seeming willingness to exercise claw-back compensation from corporate offices, its increasing insistence upon admission of wrongdoing (as opposed to the previously standards “no admission of guilt” settlements), and its stepped enforcement against corporations which fail to present ESG (Environmental, Social and Governance) criteria and information to prospective investors. ESG is basically a set of criteria which comprise a set of standards for socially responsible investors to use in order to evaluate a corporation’s activities or proposals.
  1. The Cessation of the Libor Rate – “The World’s Most Important Number.” Although not commonly known outside the real estate and lending industries, the London Interbank Offered Rate (“Libor Rate”) has been used for decades to establish the interest rates payable in the context of many transactions. Effective as of June 2023, the Libor rate will be discontinued. New loans without fixed interest rates are now being negotiated without Libor terms, and existing Libor agreements (without provisions for replacement interest rate basis) either need to re-negotiated or will be subject to the replacement interest rate provisions as enacted now by many states and Congress.
  1. Residential Development of Commercially-Zoned Land. In order to increase the construction of multi-family, residential housing on commercially zoned land, two recent pieces have been enacted to streamline the approval process for such land use. Such legislation, unless vetoed by Governor Newsom, will take effect as of July 1, 2023. Such legislation obviously was enacted in order to accelerate the construction of residential housing, but it will also encourage owners of commercial land to more closely evaluate the possibly enhanced value and even use of their commercially-zoned properties. It is the observation of this author that the impact of this legislation (in a manner similar to the enhanced authorization for ADUs in California) has not begun to be reflected in the marketplace – or begun to be appreciated, if that is the right word, by landowners, real estate developers, and brokers.

Call Me Anytime

General Business Planning

or Corporate, Business or Real Property Law Matters

805-450-2602

 

My Most Recent Publications

The Writings of a Lifetime (2021)

A Semi-Autobiographical Writing

(Hardback: $19.95 / Paperback: Just $12.95)

The Writings of a Lifetime

and

The White Binder (2022)

For Your Detailed Personal Asset and Liability Management,

Estate Organization, and (Detailed) Disposition Planning

 –Order Today–

Just email me at mwborgen@live.com (Mailing Address and Number of Copies)

(Binder Format, $49.95 plus $6.95 Shipping, Pay After Delivery)

All rights reserved. No part of this article may be reproduced or transmitted in any form or by any means, electronic or mechanical without the prior written permission of the author.

 

A Different Kind of Article – Sometimes We Have to Laugh – The World’s Funniest Word

Posted by Mack W. Borgen September 26th, 2022

Blog No 154

September 27, 2022

By Mack W. Borgen
Author (7 Books): The White Binder – Your Personal Data and Information Book (2022); The Writings of a Lifetime (2021); Dead Serious and Lighthearted – The Memorable Words of Modern America (Three Volumes) (2018-2019); and The Relevance of Reason – The Hard Facts and Real Data about the State of Current America (2 Volumes) (2013). As advertised in The New York Review of Books. Recipient of Eight National Book Awards
See my legal articles and other blogs at  https://www.mackwborgen.com/  . Then, just click the “Blogs” tab.

NORMALLY, my articles present major legal developments or commentary about the social and economic issues facing our country.

 But sometimes, We just need a break.

 We just need to laugh.

Thus, today:

 “The world funniest word”

Compliments of Shawna S. Borgen Who First Showed Me the Word.

So, what is the word?

Technically, it is an under-used adjective meaning “extremely tasty, delicious, or very attractive”

 But also — It is a type of flower — a peony.

It is routinely sold at nurseries. 

 It is a pretty flower — actually, an o.k. flower.

But its glory is in its name:

               The Scrumdiddlyumptious Peony                   

 If you can repeat this word

– “scrumdiddlyumptious” –

Three times without smiling, Then, give me a call.

Both your next therapy session and dinner are on me 

 —

Some Fine Honorable Mentions

Lickety-split (ASAP)

Ramshackle (Something that is about to fall apart)

Pusillanimous (Showing lack of courage)

Doohickey (Small object or gadget for which one has forgotten its name)

Gobbledygook (Meaningless talk or language)

Skedaddle (To run away)

Scalawag (A rascal)

Hullabaloo (Talking about a commotion)

Whippersnapper (Young, overly-confident person)

Lollygag (When a person is messing around)

Cattywampus (Catty-corner from something)

And, of course, the perennial

Fuddy-duddy (Super, old-fashioned person)

 But Pound-for-Pound, Letter-for-Letter, and Syllable-for-Syllable,

 I respectfully suggest,

Scrum-did-dly-ump-tious wins.

 For now, my friends

Enjoy the rest of September,

Next newsletter is back to business

 Call Me Anytime

General Business Planning

or Corporate, Business or Real Property Law Matters

805-450-2602

 My Most Recent Books and Publication

The Writings of a Lifetime (2021)

(A Semi-Autobiographical Work)

The Writings of a Lifetime

and

The White Binder (2022)

For Your Personalized and Detailed Asset and Liability Management,

Estate Organization, and (Detailed) Disposition Planning 

–Order Today–

Just email me at mwborgen@live.com (Mailing Address and Number of Copies)

(Binder Format, $49.95 plus $6.95 Shipping, Pay After Delivery)
 All rights reserved. No part of this article may be reproduced or transmitted in any form or by any means, electronic or mechanical without the prior written permission of the author.

 

Quick Facts (Who Gets Audited) – 8 Major CA Business and Real Estate Law Developments

Posted by Mack W. Borgen September 12th, 2022

Blog No 153

September 13, 2022

By Mack W. Borgen
Author (7 Books): The White Binder – Your Personal Data and Information Book (2022); The Writings of a Lifetime (2021); Dead Serious and Lighthearted – The Memorable Words of Modern America (Three Volumes) (2018-2019); and The Relevance of Reason – The Hard Facts and Real Data about the State of Current America (2 Volumes) (2013). As advertised in The New York Review of Books. Recipient of Eight National Book Awards
See my legal articles and other blogs at  https://www.mackwborgen.com/  . Then, just click the “Blogs” tab.

Quick Facts

80% Drop in IRS Audits – So Who Does Get Audited?                                     

                                                                                               2019                            2010              

All individual tax returns                                            0.2%                           1.0% 

Reporting:

No Income                                                                               1.1%                            20.6%

Under $50,000                                                                       0.6%                              1,6%

$50,000 – $100,000                                                              0.4%                              1.4%

$100,000-$500,000                                                             0.4%                              3.1%

$500,000 – $1,000,000                                                       0.6%                              3.6%

$1,000,000 – $10,000,000                                                 3.3%                            21.7%

Over $10,000,000                                                                8.7%                            21.5%

Source: Newsletter of Bryars Tolleson Spires and Whitman LLP – One of Southern California’s excellent accounting firms.

Conclusion: Our federal tax system depends, largely, upon voluntary reporting and compliance. However, some level of compliance is assured only by the potentiality of being audited. If under-reporting is found, then there is also a risk of monetary penalties and even criminal tax evasion prosecution. Now, for many reasons including the under-staffing of the IRS itself, the percentage of tax returns which in the U.S. are audited has dramatically shrunk in recent years – and especially since 2016.

Overall, there used to be about a one-in-a-hundred chance of being audited. Now, that is one-in- 500! The most dramatic audit diminishment has been among the tax returns of the ultra-wealthy. The percentage of those tax returns audited has dropped by about 75%!

The Proverbial Bottom Line. No one, absolutely no one, wants to be audited. But without at least a risk of audit, a “voluntary compliance system” eventually becomes a “pay-if-you-wish” system – and I guess the rest of us will cover the shortfall. 

Eight Major Business, Contract, and Real Estate

Cases and Developments

General Sources: Daily or Periodic Judicial and Legislative Reports from various sources including the California Lawyers Association Daily Reports, the CLA’s Monthly Business Law News, and Announcements and Press Releases from the (California) State Attorney General’s Office.

1 . Contracts. Another court has held that an email confirmation from a partner CAN be deemed a “written instrument” for purposes of amending a partnership agreement. It is preferable to expressly authorize the use and acceptance of email confirmations in the notice and amendments sections of documents, but here, another US District Court joined the growing consensus that email confirmations will normally suffice.

2 . Employment Law. In California, the right of an employer to mandate that its employees agree to arbitrate their employment-related disputes is still in flux. Without going into detail, this issue (Chamber of Commerce of the U.S.A. v. Bonta) has been flipped, appealed, and reversed between the District Court and the Ninth Circuit. The status in California of such mandated-arbitration provisions remains, regrettably, in a state of confusion.

3 . Contracts – Clarity in Definition of Terms or Standards. The selection of terms and phrasing can lead to very different standards. Litigation is almost always the most challenging (and costly) means of dispute resolution, and contract clarity and comprehensiveness are oftentimes the best way to avoid the necessity of such litigation. I will use just one example. There is a ridiculous amount of litigation about one parties’ obligation to another party based upon the use the phrase “best efforts,” “reasonable efforts, and even “commercially reasonably best efforts.” The courts have rather consistently held “best efforts” to require a party to a high standard of effort than “reasonable efforts,” but the key is contract drafting and clarity.

4 . Real Estate. Short-Term Governmental Rental Regulation (or Even Prohibition) Not Deemed a “Taking” Under the 5th Amendment – California Coastal Act Exception. While this author is troubled by this series of cases, more and more courts are concluding that a governmental body MAY effectively prohibit the use of one’s property for short-term rentals. The courts’ strained logic is that the property still has other beneficial uses, and thus the property has not lost all of its value and usefulness to the impacted homeowners. In California, however, there is an exception. In California, it has recently been held that the California Coastal Act overrides local cities’ plans to implement short-term rental bans (Keen v. City of Manhattan Beach). Basically, coastal California cities are faced with a choice – give up on short-term rental bans or seek the approval of the Coastal Commission.

5 . Misuse of Consumer Data. There are more and more instances of corporations misusing (or misappropriating and selling) consumer information. Last month, U.S. Bank had the dubious distinction of joining Wells Fargo as another bank which “pressured and incentivized” its employees to use consumers credit reports and personal information to open other accounts, credit cards and credit lines without the consumers knowledge or consent. A paltry $37.5MM fined was imposed upon U.S. Bank. However, this case underscores the necessity of taking due diligence steps to assure that customer information data is secure. To that end, in certain cases and to minimize any third-party claims, I have recommended that in some cases — and especially when a substantial volume of customer data is assembled by a client corporation, it is advisable to schedule regular, third-party reviews with respect to all client and corporate data. 

6 . Non-Compete and Non-Disclosure Agreements. Such agreements have become more and more common. However, over the last couple of years more states have banned or severely restricted their use. For example, in the first six months of this year alone, four more states (Hawaii, Maine, Oregon, and Washington) have enacted or amended state laws voiding, prohibiting, or restricting employer/employee nondisclosure agreements. Parallel trends have occurred with respect to non-compete agreements. Very, very summarily, some form of such agreements (including anti-raiding provisions), albeit carefully tailored, are still recommended by this author to protect, for example, an employer’s trade secrets and customer lists. They can still be enforceable and can have an appropriate chilling effect with respect to areas of potential disagreement or confusion.   

7 . Condominium Deconversions. Some developers are creatively turning to condominium “deconversions” as a means of taking advantage of the strong multifamily rental demand. Such deconversions are enabled and regulated by state statutes and local ordinances. Oftentimes these statutes and ordinances permit such deconversions upon the approval of a super majority (e.g., 75% or more) of the condominium ownership. There are limited remedies for condo owners opposing the bulk sale so long as they timely (e.g., within 20 days) object to the proposed deconversion sale.

8 . Protecting Your Personal Assets – Assurance of Entity Capitalization and Steady Maintenance of Entity Documentation and Records. In another NY case, the court rejected a third-parties attempt to “pierce the corporate veil” of a corporation and impose direct personal liability upon, in this case, the corporate defendant’s sole principal. The claimant argued that the “corporation” was inadequately capitalized and routinely did not follow corporate procedures and documentation. In this case the court held that the claimant did not meet the “heavy burden” of so piercing the corporate veil. Salesmark Ventures, LLC v. Jay Singh, JJHM Trading Corp. The protection of one’s personal assets from corporate/business-based claims is critical and should not be ignored. There are many factors which a court will consider such as the following quick list: (1) whether the entity was undercapitalized, (2) whether the entity failed to maintain adequate corporate records, (3) whether the owners used the entity to promote fraud, or illegal activities, (4) whether the owners used the entity to pay for individual, non-corporate-related obligations, (5) whether the owners commingled personal and business assets, and (6) whether the owners and board failed to observe required “corporate formalities. It is certainly easy to forget, but sometimes it is advisable to conduct a formal, but “internal,” audits of one’s own corporation or other business entity to assure the protective shield of the corporation or LLC.

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Competition vs Greed – America Is Going to Have to Decide

Posted by Mack W. Borgen August 15th, 2022

Blog No 152 

August 16, 2022

By Mack W. Borgen

Author (7 Books): The White Binder – Your Personal Data and Information Book (2022); The Writings of a Lifetime (2021); Dead Serious and Lighthearted – The Memorable Words of Modern America (3 Vols) (2018-2019); and The Relevance of Reason (2 Vols) (2013). As advertised in The New York Review of Books. Recipient of Eight National Book Awards
See my legal articles and other blogs at  https://www.mackwborgen.com/  . Then, just click the “Blogs” tab.

 – Competition vs Greed –

America Is Going to Have to Decide

 Introduction 

There are thousands of good and honorable businesses in America. Most of them are small- or mid-sized businesses in the $1.0MM-$30.MM range. Even in highly competitive markets, they survive as a result of their hard work and their fine products, services, and marketing. But increasingly, different descriptions may apply to many of America’s large corporations. Increasingly, competition, the very core of American capitalism, is being evermore replaced by a new ethos — greed.

There certainly are exceptions, but the adjectives of “good” and “honorable” are rarely used to describe the actions of large corporations or the hustle-bustle of Wall Street. Indeed, there has been a shift over especially the last four decades. Once again, there are some exceptions. Some corporations are taking responsive steps to (finally) address climate change. There is a better gender balance on many corporate boards. Other corporations are responding, even if begrudgingly, to the reality that some investors now consider environmental, social and governance factors (“ESGs”) in their investment-making process. A few corporations are even adopting a social mission as a component of their corporate purpose and organize themselves as public benefit corporations (“PBCs”) or since their introduction in 2007 have become certified as a B Corporation through a third-party organization. However, that is not enough, and B Corporations remain relatively rare.

Nothing diminishes the hard reality that too much of our American economy is being driven by greed. Not “good” greed (if there is such a thing) or “bad” greed – just raw greed. This represents as radical shift in the nature of American capitalism.

There are many reasons for this shift in our capitalistic model, and some of those reasons will be discussed below. However, the focus of this article is that the core ethos of our Modern American economy has changed.

Now, protected by teams of lawyers, thick corporate shields, personal name anonymity, and an amazing array of company and product re-branding tools, greed is more and more the basis of our economy; the driving force of our economy.

No exact date can be ascertained as to when America’s corporate ethos officially “changed.” But maybe it was around 35 years ago — around the time of the 1986 release of Oliver Stone’s movie, Wall Street. 

Oliver Stone’s movie Wall Street, released just one year after his award-winning film, Platoon, was filmed in an entirely different kind of jungle. Wall Street featured young Charlie Sheen (long before he departed from all forms of sobriety) and Hal Holbrook, but for many people, the star of the film was Michael Douglas in his portrayal of the character Gordon Gekko.

In the movie, Gekko delivered one of the most famous movie lines of all time as he assured a group of assembled shareholders that “greed is good.” (Note 1) Interestingly, this line was not just a movie script. It was taken from Ivan Boesky’s real-life speech to the 1986 graduating class of UC Berkeley’s School of Business Administration. Almost appropriately after Boesky’s pathetic encouragement of greed to Berkeley’s graduating class, he pled guilty to insider trading. He was fined a pitiful $100,000. He became an FBI informant. He served three-years in prison. Then, – right on schedule – he was divorced by his wife. (Note 2)

According to the movie’s writers, Gordon Gekko was actually a composite of several people. These people include Boesky himself, Dennis Young (a young Goldman, Sachs & Co. executive who was convicted of selling information), and Michael Milken, a former executive at Drexel Burnham Lambert and the king of “junk bonds.” In 1989, Milken also pled guilty to a federal securities charge and served two years of his ten-year sentence. (Note 3).

But, regardless of when the “greed is good” concept really started overtaking our economy, the question is whether greed is good – for oneself, for one’s family, for our communities, for capitalism, and for America. America needs to decide this soon. This author suggests that it is not good.

No Need to Be Burdened

By Windy Talk about the Historical Origins of Greed or the Philosophies of Our Forefathers

Greed (Note 4) in all of its sizes and shapes and with all of its consequences has been around a long time. It is not expressly mentioned in the Bible, but it is one of the Seven Deadly Sins (Note 5). Since the proverbial beginning of time, it has been viewed with disdain rather than as some form of necessary evil — let alone an acceptable evil.

For centuries, greed has been frowned upon by parents. Most parents routinely try to teach their children that greed is a dishonorable personal trait.

But that may have changed. In cruel twists of modern logic, greed is now often and conveniently justified. Sometimes, it is defended as a component of a corporation’s obligations to its shareholders. Sometimes, it is embraced by corporate managements with an “everybody-does-it” shrug of the shoulders. Regardless, more and more, it is too often and too routinely accepted as a core basis of capitalism itself.

Fortunately, to understand the role of greed in the context of economic capitalism, we do not need to go back centuries. We do not need to reread the thick words of David Hume or Adam Smith’s Wealth of Nations. We do not need to go back to the origin of modern capitalism or sit around and debate the 1970 and 1980 writings of Milton Friedman and his “free market” gang from the University of Chicago.

Instead, we can easily and independently conclude that the management of American businesses should not be allowed to wrap themselves in willful blindness or take wrongful actions in response to their supposed obligations to shareholders.

It is neither my place nor my desire to be preachy, but we do not even get to use the everybody-does-it card mentioned above. And it is not enough to blame globalism or complain about the supposed “over-reach” and “intervention” of governmental oversight and regulation.

But clearly, our relatively new, Internet-connected world has played a role. Americans have fewer direct, interpersonal, and face-to-face connections in and to world. Electronic “anonymity” is allowed by our wired society and results from our constant use of social media. Internet-based communications inevitably dehumanizes the recipients of our communications. Just too often, there are no visual observations of the faces of those injured by our words and actions.

Furthermore, few businesses have highly identifiable leaders such as Elon Musk, Jeff Bezos, Mark Cuban, and Jamie Dimon. But most do not. All we get are blank corporate names and Customer Service Numbers. So, there it is — what we already really knew. Few corporations have humanized faces, and few corporations “see” their customers. Online customers are still customers, but their sheer distance and anonymity have played a role in the tolerance of greed.  Once again, businesses no longer have to look over a counter at their disappointed customers or across a conference room table at their outplayed competitors. In a million ways, the consequences of greed can be kept less visual. Distance and hiding can almost be part of the plan. Electronic data can keep human emotions at bay. The numbers start to mean more than actions. Right and wrong are long lost amidst the decisions of the day.

Lastly, wholly apart from the impact of our modern internet world, some suggest that greed is merely logical; merely the only logical response to defend itself against governmental intrusion and regulatory over-reach. And yes, there may be honest and long-overdue debates about the limits which should be imposed on our government’s regulation of our economy.

But regardless of all of these issues and excuses, the same stubborn question still remains before us. All of these what-about-that debates still miss the broader point – was Michael Douglas right that “greed is good?” I suggest not.

Greed Will Eventually Bring Us Down

Wholly apart from the downwind stink of greed, in the long run it is bad for our economy. In the long run, it is bad for our society. In the long run, it is dangerous to our social unity. The phrase “in the long run” is italicized because this author readily admits that greed in the short run can be useful. It certainly can be convenient. Greed can generate higher profits; can bury unwanted competition; can allow companies to more easily raise prices; can allow companies to under-pay its workers and overpay its management. I

In the long run, we will be all be dead — but hopefully America will be alive. THAT is why “in the long run” matters.

Furthermore, the very manner in which greed will bring us down is also dangerous.

The very word is buried by lawyers as they misdirect the focus of litigation. Greed’s consequences can become routinized simply by the use of protracted trials, by the almost standardization of baseless, time-consuming, and costly appeals, and by the imposition of mere monetary fines. The penalty for greed becomes a mere budget line-item; another “cost of doing business.”

Worse yet, even serious wrongdoing can be diminished by the overuse of some enforcement and legal punishment tools. One such tool are deferred prosecution agreements. Under these agreements, a corporation and its management, without uttering a word of remorse or admitting an ounce of wrongdoing (and thus escaping third-party liability), can merely agree not to do something again for a set number of years. Let us not use fancy phrasing here. Let us merely recite the word “Really?” out loud – without admitting anything, the “punishment” is that the corporate defendant agrees not to do it again.

But the bedrock of America’s capitalism should remain competition; not greed.

We can sit around and watch Damian Lewis in all six seasons of Andrew Sorkin’s (Note 6) blockbuster, Billions, but we should not delude ourselves. The my-yacht-is-bigger-than-your-yacht conversations are literally counter-productive to society because greed does exist in isolation. As it becomes more tolerated in our economy, it becomes an enlarged component of our society.

In addition, there are the whole “entitlement” issues. Greed is not the only basis for the entitlement issues which are so pervasive in our society, but greed – or at least a tolerance of greed, is one component. Greed was an unwritten part of the recent college admissions scandal. Greed (and its buddy word, envy) are part of the motivations and subtext of the thousands of Kardashian wanna-bees and look-alikes which dominant our social media. Greed thickens the us-vs-them aspects of our country.

Greed becomes a justification for more and more things in our society; for more and more actions of our people and our companies – both big and small; rich and the poor — even though most of us remain, precariously, in the middle.

But both the reach and dangers of greed can be hard to define with precision. This is because there are many inter-acting forces simultaneously at work. There are many vagaries which blur our analysis. They confuse our discussion.

For example, some would suggest that in our economic life, just as in love and warfare, all is fair. Slightly less aggressively, it can be suggested that “if it’s legal,” it is ethical. However, the use of legality as a basis for ethics is absurd.

First, laws cannot begin to prescribe all of the “rights” and “wrongs” of our daily lives or of our corporate actions. Ask any parent, any teacher, and friend – or any foe.

Second, even in a perfect world – which is far distant from us – would we ever want to allow politicians and regulators to define our ethics; to define what we do, how we behave, who we are.

Third, another common suggestion is that even if one accepts greed as a driving in force at our work, it does not define one’s life. It somehow will not define our communities. It somehow will not define our society. But I suggest that this argument is misguided because greed is never left at the office.

Author’s Digression: This writing is not intended to have any high-and-mighty tone. Counting my flaws and listing my errors in life would take all day – no, all weekend. But it is humbly suggested that confronting the growing acceptance and influence of greed as a driving force in American capitalism has been ignored for too long – dangerously ignored and conveniently ignored.

Greed is not an 8-to-5 disease. Like mud, glue, grime, and slimy substances, greed sticks to us. It creeps into our thinking. It affects our decision-making. It becomes a factor in our choice of friends; a guiding force in our voting; an influence upon what we buy. The concept of “conspicuous consumption” has been around for a long time, but we all know that it has reached new dimensions. Greed even affects our philanthropy and (tax-deductible) charitable giving. Too often, they, too, have become how-much-did-they-give transactional events.

Thus, this writing suggests that the basis of American capitalism must be hard work and aggressive, but honorable, market competition. It cannot be greed for greed will – in the long run – adversely affects us all; diminishes us all.

Closing

So, greed is clawing its way into our society. Fortunately, America still has the power.

America has the power to choose what is wants to do; what it wants to be. In future articles, this author will suggest a series of (pretty simple) changes which can be made in our economy to diminish both the prevalence and power of greed. I have not finally decided on their titles — but I believe they will be referred to as “Greed-Killer Steps.”

In defining our American capitalism, we still can reset the expected balance between the disdainful role of greed and the honorable push of market competition. However, just like with climate change and next year’s taxes, the time to plan is now.

The time to choose is now. We cannot keep putting it off. We must decide whether “greed is good.” This has been hovering around our economy, our politics, and our society for too many decades.

It is obvious that this author believes that there should be little doubt about this. But I also know that it is not for me to decide. It is for America to choose as to whether or not “greed is good.”

In closing, this author humbly suggests that without a more honed societal moral compass, America will stay lost. Merely enforcing our laws is not enough. Narrowly (and defensively) defining our choice of friends is not enough. Building more gated communities is not enough. Hedging our bets and shorting our futures are not enough.

Instead, we must first recognize that we have drifted — from competition to greed. Then we must embrace that the core ethos of our economy matters. Then we must remember that capitalism must rest upon intelligent, even aggressive, competition. But not greed. In the long run, we might all come out better for it.

NOTES

Note 1. The exact line is “greed, for lack of a better word, is good.”
Note 2. Be assured that there is little need to be concerned for Mr. Boesky. After his release from prison, he lived in Montecito, CA. After his divorce, his ex-wife was ordered to deliver millions of dollars to him together with $180,000 a year for the rest of his life. He eventually moved to, and I believe still lives comfortably in, La Jolla. California.
Note 3. Mr. Milken was released from prison early for delivering testimony against his former colleagues and for good behavior. To his fine credit, he re-dedicated his life to many avenues of philanthropy, and as of 2018 he was listed by Forbes magazine as one of the richest men in America with a net worth of $3.7BB. In February 2020, he was pardoned by former President Trump.
Note 4. There are many closely-associated words and dimensions of “greed” – avarice, covetousness, and rapaciousness – but for purposes of this article, this author will just refer to “greed.”
Note 5. Curiously, neither greed nor the other “deadly sins” (pride, wrath, envy, lust, gluttony, and sloth) are mentioned in the Bible. They are, however, alluded to in the Bible, and the Seven Deadly Sins remain a cornerstone of Christian theology.  
Note 6. In addition to Mr. Sorkin, the Netflix series was co-written by Brian Koppelman and David Levien.

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Quick Facts – Quick Law Facts – Best Songs Lyrics of Modern America

Posted by Mack W. Borgen July 25th, 2022

Blog No 151 
July 26, 2022
By Mack W. Borgen
Author (7 Books): The White Binder – Your Personal Data and Information Book (2022); The Writings of a Lifetime (2021); Dead Serious and Lighthearted – The Memorable Words of Modern America (3 Vols) (2018-2019); and The Relevance of Reason (2 Vols) (2013). As advertised in The New York Review of Books. Recipient of Eight National Book Awards
See my legal articles and other blogs at  https://www.mackwborgen.com/  . Then, just click the “Blogs” tab.

 – Quick Facts –

IRS Announces New Mileage Travel Deductions

The IRS’ mileage travel deductions can be substantial for you and your business.

Starting July 1, 2022, the IRS’ business mileage rate was increased to $0.625 cents per mile. Examples: 5,000 miles per year = $3,125 tax deduction; 20,000 miles per year = $12,500 tax deduction.

In addition, both the medical and moving mileage rates were increased to $0.22 per mile.

IMPORTANT:

                1 –           Keep good and contemporaneous records.

                2 –           Keep track of both mileage and actual expenses.

             3 –           Have your tax advisor evaluate the possible use of the vehicle depreciation deduction as well.

Source: Bryars Tolleson Spires and Whitton LLP – One of Southern California’s excellent accounting firms.

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 Quick Law Facts

California’s Complicated Landlord-Tenant Law 

California landlord-tenant law has been become far more complicated over the last several years. In large part, this is due to legislation enacted in response to the covid pandemic. Most of the state law changes (such as the Tenant Protection Act (AB 1482) (the “TPA”) (Note 1)) and the local law changes (i) have enhanced tenant rights and (ii) have complicated both the eviction and past-rent collection practices and even the bases for which a landlord may evict a non-paying residential tenant.

For example, there have been multiple rental increase and eviction moratoriums, and there are now statewide caps on annual rental increases (5% plus the inflation rate with a maximum increase of 10%). Some local laws are even more restrictive.

Nevertheless, in most cases, eviction moratoriums have expired.

They are more complicated, but residential evictions may again proceed. There are basically two kinds of evictions – “at fault” evictions and “no fault” evictions. “At fault” evictions include evictions for (1) nonpayment of rent, (2) breach of material lease term, (3) nuisance, waste, or using the unit for unlawful purposes, (4) refusal to allow lawful entry, or (5) refusal to execute a new lease on materially similar terms. “No fault” evictions, another set of bases allowing for a permissible eviction, include instances such as when an owner (1) wants to move in to the unit or (2) desires to initiate a substantial rehabilitation or remodel of the unit (so long as such rehabilitation would take more than 30 days to complete).

Before initiating an eviction action or a suit for back rent, it is prudent to closely example the lease and review of possible tenant defenses based upon the TPA or other pandemic-based laws. Also, as a business matter, it is sometimes prudent to carefully consider the advisability of using some form of “cash-for-keys” resolution with the tenant.

Note 1 – Applicability of Tenant Protection Act. The TPA applies to all rental units in California except (1) single-family homes (unless they are owned or controlled by a corporation), (2) units covered by a local rent control ordinance which is more protective than the TPA, (3) units constructed in the past 15 years (i.e. “newer units”), (4) mobile homes, (4) duplexes where the owner is living in one of the units, and (6) affordable housing subject to deed restrictions, a regulatory agreement, or some other form of governmental agency agreements).

Best Song Lyrics of Modern America – Part 22

Song lyrics are the real poetry of Modern America. The lyrics of our favorite songs roll around in our heads for decades. Almost unconsciously, every day we honor the words of America’s songwriters who said something in that perfect, poetic, or clever way.

Here is Part 22 of my assembled list — done over the last eleven years in conjunction with my research for my last series of books, Dead Serious and Lighthearted – The Memorable Words of Modern America. To order copies of my books, just go to http://mackwborgen.com/shop/  or, as always, order on Amazon. Thank you.

But now, … The Best Lyrics of Modern America

– From 1957 through 2015 – Enjoy.

 Tennessee River (1980) (Alabama) (Years Active: 1969-2004, 2006-2007, 2010-{Present).            

 “I was born across the river in the mountains where I call home,

 Lord, times were good then, don’t know why I ever roamed?” 

 

On Broadway (1978) (George Benson) (B: 1943, Pittsburgh, PA). 

“They say the neon lights are bright on Broadway

They say there’s always magic in the air

But when you’re walkin’ down the street

And you ain’t had enough to eat

The glitter rubs right off

And you’re nowhere.”

 

We Are the Champions (1978) (Queen) (Years Active: 1970 – Present 9 (Original Lead Singer – Freddie Mercury (B: 1946: Tanzania – D:1991 (U.K.).

I’ve paid my dues

Time after time,

I’ve done my sentence,

But committed no crime,

And bad mistakes              

I’ve made a few

I’ve had my share of sand

Kicked in my face

But I’ve come through.

– 

We are the champions – my friends

And we’ll keep fighting

Till the end.”  

 Best Movie Lines

“Sometimes I don’t know where the bullshit ends, and the truth begins.

But if I die, I’m sorry for all the bad things I did to you.

And if I live, I’m sorry for all the bad things I’m gonna do to you.”

Roy Scheider in his role as Joe Gideon in All That Jazz (1979) (American musical drama film directed by Bob Fosse and starring Roy Scheider, Jessica Lange, and Ben Vereen).

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Quick Facts – Shrinkflation – Major Business/Contract Law Cases – Fancypants Word of Day

Posted by Mack W. Borgen July 11th, 2022

Blog No 150

July 12, 2022

By Mack W. Borgen
Author (7 Books): The White Binder – Your Personal Data and Information Book (2022); The Writings of a Lifetime (2021); Dead Serious and Lighthearted – The Memorable Words of Modern America (3 Vols) (2018-2019); and The Relevance of Reason – The Hard Facts and Real Data about the State of Current America (2 Vols) (2013). New York Review of Books. Recipient of Eight National Book Awards
See my legal articles and other blogs at  https://www.mackwborgen.com/  . Then, just click the “Blogs” tab.

New Word of the Month

“Shrinkflation”

Definition: A technique used by companies to downsize a product or its ingredients in order to lower costs. The retail price may not change, but the amount or quality of the product in the package will be decreased. Examples:

Gatorade – Its “32-ounce bottles” are now 28 ounces.

Cadbury Chocolates: Size of its chocolate bars have been decreased by 10%.

Kimberly-Clark Paper: Toilet paper rolls reduced from 340 sheets to 312 sheets.

Source: Newsletter of Bryars Tolleson Spires and Whitton LLP. (July 2022)

Quick Facts

A Strange Contradiction: Increasing Size of Average U.S. House

But Decreasing Number of People in Average U.S. Household

In 1973, the Census Bureau began tracking the average square footage of American homes.

In the 1970s, the average U.S. house was 1,660 square feet. As of 2021 – about four decades later – the average house size had grown to 2,687 sq.ft. This is approximately a 1,000 sq. ft / 62% increase. As noted by one commentator, despite this increase in house sizes, the “full house’ is rarely used. In fact, “90% of the time, we live in about 30% of our homes – the bedroom, family area, and kitchen.” (Note 1).

It is tempting to conclude that this may say something about Americans’ inflated sense of entitlement, the extent of our self-indulgences, or the perceived importance of displayed wealth. But maybe, it is merely the result of 72” TV screens and our growing need for more computer spaces.

But, assuredly, the increase in house sizes is not the result of larger families. In fact, the average U.S. household has both decreased in size and changed in nature over the course of our nation’s history.

In 1789, the average U.S. household was about 5.79 persons per household. By 2018, that number had been cut in half to 2.63 people per household.

There are many reasons for this, including, for example, the number of elderly members of the household. In 1850, nearly 70% of the elderly (65 and older) lived with their adult children. By 2000, only 15% of parents lived with any of their children. (Note 2).

Author’s Addendum Regarding “Average” vs “Median” Calculations. The above data uses “averages” (average square footage, average household size). Such “average-based” data can be very useful and may be the only data available. However, in many instances, “median” value data is preferable. For example, the “average” square footage of a small community can be materially distorted (i.e., misleading) if within that community all the houses were 2,000 sq. ft. except for three mansions on the edge of town each containing 14,000 square feet. The median value (50% higher / 50% lower) would present a far more accurate description of the community than the average value.

Note 1. My thanks to the wonderful article by Elizabeth Stewart, PhD. (“Talking Stuff with Elizabeth Stewart, Ph.D.”) (July 2022).
Note 2. Sources: Fry, R., Pew Research Center (October 1, 2019); Statista (2022).

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 10 Recent Business and Contract Law Cases and Developments

 It is hard to keep up. As noted in my prior article (Blog 149, June 28, 2022), at the end of California’s 2021-2022 legislative session, about 770 new laws were enacted. These new laws are in addition to the hundreds of new judicial opinions and rulings. (All the cases discussed below are California cases unless otherwise noted)

  1. Arbitration Agreement; No Unconscionability in Failing to Provide Spanish Translation. An arbitration agreement, if properly incorporated into an agreement, can be treated as a part of such agreement between the parties, and no separate signatures are required. Here, the court also held that there was no procedural unconscionability in failing to provide a Spanish translation because the person challenging the agreement understood English sufficiently to understand the contract. Author’s Comment: At least theoretically, this case may suggest that it sometimes may be appropriate for contracts to (now) include an initialed English-comprehension representation. Cisneros v. AltaMed Health Services Corp. (CA)
  1. Trigger Date for Starting Notice Period. The trigger date with respect to any claim under a contract would be when the claimant became “aware” (or should have become aware) of the potential claim. This is a matter of proof in which the court would analyze how much the claimant would have had to “know” before he became “aware” of his claim. Sterling Nat’l Bank v. Block (7th Circ).
  1. Liability of Controlling Affiliate. A controlling affiliate of a party which breaches a contract is not liable for interference with contract unless such affiliate acted in bad faith. Surf’s UP Legacy Partners, LLC v. Virgin Fest, LLC. (Del.). 
  1. Breach of Fiduciary Duty; Arbitration Provisions. In a potentially very significant case, a breach of fiduciary duty claim is not within the scope of a standard arbitration provision which relates to “all legal claims arising out of or relating to employment.” Cooper v. Ruane Cunniff & Goldfarb Inc. (2d Circ).
  1. Adhesion Contracts. Such contracts are deserving of “greater scrutiny” including determinations by the court as to “procedural unconscionability” (e.g., considerations such as the sophistication of a party or the presence of hidden or unduly complex contract terms) and “substantive unconscionability” (e.g., the imposition by the contract of “terms beyond the reasonable expectation of an ordinary person”). May v. DirecTV, LLC. (N.D.W.Va.). 
  1. Reckless vs Deliberate Fraud. A simple reference to “fraud” may or may not include claims based upon a party’s recklessness. However, if an indemnification provision references “deliberate” fraud, then such reference should not be deemed to include reckless conduction because “deliberate” means “intentional.” Express Scripts, Inc. v. Bracket Holdings Corp. (Del). 
  1. U.S. Supreme Court Limits California Labor Law That Allows Private Suits Against Employers. In this heavily pro-employer ruling, the USSC “sharply limited” California’s law which had authorized private lawsuits on behalf of groups of workers even if the parties had agreed to resolves all claims through individual arbitration. The 8-1 decision was based upon the holding that the Federal Arbitration Act preempts state law. Interestingly, at the time of the ruling California was the only state which allowed such private suits as a means of enforcing labor laws. The USSC found that by allowing such private suits the state had de facto allowed employees to bypass binding arbitration agreements. Viking River Cruises, Inc. v. Moriana (2022). Savage, D, Los Angeles Times (June 15, 2022). See also, Press Release of Rob Bonta, CA Attorney General about how this case may impact cases (e.g., overtime pay and unsafe working condition cases) which could otherwise be brought under California’s PAGA (Private Attorney Generals Act).  
  1. Limits upon Breaching Party’s Right to Protection under a Contract’s Exculpation Provision. In a case that seems obvious to this author, the court held that a contract-breaching party could not enforce an exculpation clause (basically a contract provision which relieves one party from liability under the contract) if at the time the party seeking exculpation (i.e., relief of liability) were himself or itself in “material” default under the contract. Horne v. Elec. Eel Mfg. Co. (7th Circ).
  1. Application of Choice of Law Provisions. Under a fundamental choice-of-law policy exception, California securities law would apply to the parties to cover issues which are addressed by such laws – even though there were sufficient contacts with the chosen-law state, which in this instance was Delaware. Author’s Note: This is a good reminder case that despite a choice-of-law provision in a contract, there are times when “local” law will continue to apply. Swipe Acquisition Corp. v. Krauss (Del). 
  1. Covid-Related Contract Cancellations Covered by Contract’s Force Majeure Clause. Unsurprisingly, there are a number of cases which have addressed this issue. Also unsurprisingly, the courts, as in this case, have normally found that if the pandemic “directly and proximately” caused the cancellation, then such cancellation may be appropriately justified since the pandemic was obviously “not reasonably foreseen, anticipated, or predicted.” Rudolph v. United Airlines Holdings, Inc. (N.D.Ill.).
Source: Business Law News (CA Lawyers Association) (Issue 1, 2022), pp. 12-15.

 Fancypants Word of the Day

Edacious (Adj) (Latin):  1) Relating to or given to eating, 2) Having an insatiable appetite.

Serious Example: “Her priority was planning the edacious elements of the party.”

Humorous Example: “It is calorically disappointing, but understandable, why Hometown All-You-Can-Eat Buffets target all of their 3-D, wide-screen, scratch-n-sniff food ads to the edacious members of our society.”

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10 Major New Business/Contract Law Cases – The Company We Keep – Guns in the U.S.

Posted by Mack W. Borgen June 27th, 2022

Blog No 149
 June 28, 2022
By Mack W. Borgen
Author (7 Books): The White Binder (2022); The Writings of a Lifetime (2021); Dead Serious and Lighthearted – The Memorable Words of Modern America (Three Volumes) (2018-2019); and The Relevance of Reason – The Hard Facts and Real Data about the State of Current America (2 Volumes) (2013). As Advertised in The New York Review of Books. Recipient of Eight National Book Awards
See my legal articles and other blogs at  https://www.mackwborgen.com/  . Then, just click the “Blogs” tab.

Quick Facts about Guns

Introductory Comment: You will find below some facts and ideas regarding guns in the Unites States and our Constitution.
There are 35 sides and 144 perspectives relating to the debate about guns in our country. Some of these perspectives relate to politics (Democrat vs Republican). Some relate to where you live (Montecito, California vs Uvalde, Texas). Some relate to race, … and on and on. Thus, I am NOT here seeking to “take sides” on this issue. However, maybe some gun facts would be helpful. Maybe when the entire rest of the world does things differently, there is a chance that maybe we should think again. We should try to think together. But we must try to think again. Almost in passing, maybe it is also time for a wild idea about our Constitution. 

Average Annual U.S. Gun Sales (Years 2000-2009):             8,284,000 guns per year

                                  Years 2010-2015                                                13,342,000 guns per year

                                  Years 2016 – 2019                                             14,402,000 guns per year

                                  Years 2020 – 2021                                            20,227,000 guns per year

Estimated Number of Privately-Owned Guns in US:       393,000,000 guns 

Number of Privately-Owned Guns Per US Adult:          1.52 guns per US adult 

The Company We Keep – Countries with Most Civilian Firearms:

  Country                   Guns Per 100 People

United States                          120.7

Saudi Arabia                             53.7

Yemen                                        52.8

Serbia                                         39.1

Montenegro                              39.1

Summary: The U.S. has more than twice the number of guns as the next nation in the world (i.e., Saudi Arabia), and – for better or worse – we are in the dubiously distinguished company of Saudi Arabia, Yemen, Serbia, Montenegro. 

Compare – Privately-Owned Guns PER 100 CITIZENS:

Country                      Guns Per 100 Citizens

United States                         120.7

Scandinavia (Note 1)             23.6

France                                       19.6

Germany                                   19.6

Mexico                                      12.9

Russia                                        12.3

Israel                                           6.7

United Kingdom                       5.1

China                                           3.6

Japan                                           0.3

 Summary: The U.S. has more than 5-6 times (!) the number of privately-owned guns per 100 citizens as the next closest nations (Scandinavia and France).

Note 1. Average of Denmark (9.9), Finland (32.4), Norway (28.8, and Sweden (23.1)  Source: Small Arms Survey (Internationally recognized data source based in Geneva, Switzerland).

“JUST AN IDEA” ABOUT OUR CONSTITUTION 

The U.S. Constitution is a document of both brilliance and inspiration. It is the core of our nation’s existence. My uncle died in Italy in World War II defending this country. My father was a Vet. I am a Vet. Many of my friends are vets. But despite the Constitution’s brilliance, it has been amended 27 times. It was amended ten times (the Bill of Rights) before the ink of its first printing was dry. It has been amended another 17 times since then. Even ignoring the Bill of Rights Amendments, our U.S. Constitution has been amended about once every 13.7 years.

Some of the amendments have been especially huge in importance – the 13th Amendment (Abolition of Slavery (1865)), the 14th Amendment (due process and equal protection (1868)), the 19th Amendment (Women’s Right to Vote (1920)), the 21st Amendment (Two-Term Limitation on President (1951)), and the 26th Amendment (Right to Vote at Age 18 (1971)). The most recent amendment was in 1992 (27th Amendment relating to Congressional Compensation).

As terribly difficult is to imagine amidst our highly polarized society, it may be time to start (slowly) working towards some new amendments; to start thinking about another constitutional convention. Read on – this may not be as crazy as it sounds.

Background and Personal Note

Larry Sabato is a brilliant American political scientist. He writes extensively, and he teaches at the University of Virginia. In 2007, he wrote a book entitled A More Perfect Constitution. In that book – nearly 15 years ago now – he outlined the need for another constitutional convention. I still recommend this book highly to all who may be interested. In the course of my writing my first books, The Relevance of Reason series, I communicated with Professor Sabato several times. I remember him telling me how difficult it had been for him to write about “a more perfect constitution” because he could not foresee any mechanism of organizing a second Constitutional Convention.

And, today, it remains hard to disagree with his conclusion – especially so in the context of issues relating to the 2nd Amendment, Roe v. Wade, the separation of church and state, and other culture war issues. Nevertheless, it may be time to start down the long road of organizing another constitutional convention. We could start by focusing upon the need to address more unifying themes — such as America’s desperate need for term limits and our need to diminish the power of money as the de facto tool (weapon?) which controls our political elections.

Just an idea.

Anytime

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 10 Major Recent Business and Contract Law Developments

 It is hard to keep up. At the end of California’s 2021-2022 legislative session, about 770 new laws were enacted. These new laws are in addition to the hundreds of new judicial opinions and rulings. 

Sampling of Major New Business and Contract Laws or Judicial Rulings

(All California legislation and cases unless otherwise noted)

1. Corporate Governance. Corporations are now authorized to conduct virtual shareholder meetings or hybrid meetings. (Covid-based new law) (No unanimous shareholder or member consent required).

2. Property Law. Since a trust is not a natural person, only trustees – and not trusts – can hold title to property. Boshernitsan v. Bach.

3. Filing of Financing Statements. The perfection of a security interest is governed by the “location” of the debtor (as determined under UCC Secs. 9-301, et. seq.). Thus, a choice-of-law contract does not bind third-parties. The fact that a security interest was created under the law of another state does not change the result. Deutsche Bank Tr. Co. Ams v. U.S. Energy Dev. Corp.

4. “Real-Time” Viewing May Be Basis for Emotional Distress Claims. The viewing of an event in real-time via camera IS sufficient for a bystander to a tort to bring a claim for intentional infliction of emotional distress. Ko v. Maxim Healthcare Servs, Inc.

5. Limits of Liability upon “Controlling Affiliate” of Entity. A controlling affiliate (such as a parent company) of an entity that breaches a contract is NOT liable for interference with contract unless the affiliate acts in bad faith. Surf’s UP Legacy Partners, LLC v. Virgin Fest, LLC.

6. Partnership Law. A partner has a direct claim for damages for breach of a partnership agreement where the breach damages the value of the partner’s partnership interest. Cooke v. Karlseng.

7. Corporate Management. Courts reserve the right to provide equitable relief to invalidate “otherwise lawful board actions tainted by inequitable conduct.” In this case, a board member was “tricked” in order to achieve a quorum without notifying him of the important board action to be taken by the board. Backer v. Palisades Growth Cap. (Delaware).

8. Corporate Liability for Punitive Damages. A corporation may be held liable for punitive damages even if the act of a “particular” corporate officer cannot be shown as acting with malice. Instead, the injured party can show that the structure of the management decision-making “permits an inference that the information in question moved upward to a point where corporate policy was made.” Morgan v. J-M Mfg.

9. Corporate Director Liability. Directors may have personal liability (in this case to a shareholder) for “participating in directing or authorizing” tortious conduct. Holistic Supplements, LLC v. Start.

10. Electronic Contracts. In another online contract formation case, the court held that the process must provide “reasonable notice” of the (contract’s) terms and conditions, and when the  contract is formed online, then the court may review the “clarity and simplicity” of the interface including, for example, (a) how many clicks or taps it takes to see the contract’s terms, (b) the placement of the link to the terms, and ( c) the title of the screen. Kauders v. Uber (Mass).

Source: Business Law News (CA Lawyers Association) (Issue 1, 2022), pp. 4-13.

Thought for the Day

 “The one thing that doesn’t abide by majority rule is a person’s conscience.”

Gregory Peck in his portrayal of Atticus Finch in the 1962 movie To Kill a Mockingbird based upon Harper Lee’s classic book of the same name which had been released just

two years earlier (1960).

 

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