Business Law Journal

In MSY Trading Inc., et al. v. Saleen Automotive, Inc., the California Court of Appeal recently ruled on a question of first impression: whether a postjudgment, independent action to establish alter ego liability for a judgment on a contract is subject to an award of attorney fees (pursuant to the contract) for a prevailing party, even if the prevailing party had not signed that contract.  The Court of Appeal affirmed that any prevailing party, having prevailed in an action based on the contract, could properly seek attorney fees as allowed by the contract.  The Court of Appeal also noted that had such alter ego allegations been made in the prior breach of contract action, the prevailing party would most certainly have been entitled to recover its attorney’s fees —  therefore, the postjudgment, independent action to establish alter ego liability on that judgment must be considered an action based on the contract.

On Friday, May 29, 2020, the California Department of Public Health approved Los Angeles County’s variance request to move further into Stage Two of the California Resiliency Roadmap, allowing Los Angeles County restaurants to provide in-person dining service and hair salons and barbershops to reopen.

On April 23, 2020, the United States Supreme Court ruled that a trademark holder need not prove that the infringement of its trademark was willful in order to recover an award of the infringer’s profits.  The Court’s decision in Romag Fasteners, Inc. v. Fossil, Inc. resolves a longstanding circuit split and may make it easier for trademark holders in many jurisdictions, including the Ninth Circuit, to recover damages in trademark infringement cases. 

On March 23, 2020, the Supreme Court unanimously held in Allen v. Cooper that, absent consent, states cannot be sued for copyright infringement and are shielded from such actions under the doctrine of sovereign immunity.  The Court found that the Copyright Remedy Clarification Act of 1990 (CRCA), which expressly provided that states “shall not be immune” under any doctrine of sovereign immunity for copyright infringement, was an unconstitutional abrogation of state sovereign immunity.  However, the Court also noted that its decision would “not prevent Congress from passing a valid copyright abrogation law in the future” that is more tailored to pass constitutional muster.

In the midst of the ongoing Coronavirus (COVID-19) pandemic, many state and local governments are recommending or imposing restrictions on gatherings of people, including at places of business. In some cases, certain businesses such as bars and restaurants are being required to close or modify their business operations. Additionally, many individuals are staying home and avoiding public places.

As more and more businesses shut down or scale back due to the Coronavirus pandemic, Federal, State and local governments are quickly realizing that these businesses and their employees are facing devastating financial consequences. 

Owners conducting business through a legal entity often do so to limit personal liability and to protect assets unrelated to the business from commercial risks.  However, once formed, owners sometimes jeopardize those exposure limiting objectives by filing away their incorporation documents and neglecting corporate formalities.  That approach may work fine until, of course, an adverse party argues that the business entity should be disregarded as an ‘alter ego’ of the owners. 

In Techno Lite, Inc. v. Emcod, LLC, the California Court of Appeal recently affirmed the finding that an employee can be liable for fraud when said employee violates his promise not to compete with his employer while still employed.  Though public policy in California places strict limitations on non-compete agreements after an employee has left employment, this shield was never meant to become a sword by which an employee could undermine his employer with impunity even before his employment ends.

On December 11, 2019, the Supreme Court unanimously ruled in Peter v. NantKwest, Inc. that the United States Patent and Trademark Office (USPTO) cannot recover the salaries of its attorneys or paralegals as “expenses” in district court cases filed under 35 U.S.C. § 145.

In Magic Carpet Ride LLC, et al. v. Rugger Investment Group, LLC, the California Court of Appeal recently reversed a trial court’s decision to grant summary adjudication on a breach of contract claim where the defendant was eight days late in depositing a required lien release.   Even though the contract stated that “time is of the essence” and the late deposit violated the strict terms of the contract, the Court of Appeal clarified that it could be considered substantial performance, creating a triable issue of material fact which made summary adjudication improper.