Articles Posted in Business Disputes

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A Judge has forced a legal dispute to go to mediation instead of hearing the matter in a trial. The matter is over a natural gas and energy plant issue and involves real estate and land being optioned between two energy plants. Both sides of the dispute have been postponed and to be heard back in court later. The Judge did not want to deal with the matter, as he felt that a resolution could be made.

How did the Court become Involved?

The way the court became involved was with an appeal being filed by the Lordstown Industrial Park.  The Court of Appeals was to decide whether real estate matters should be determined by court or arbitration.

Does Arbitration or Mediation Produce a Different Outcome?

Sometimes channeling through a different medium to litigation produces a different result.  In this case, that is what one of the parties’ feel.  The result may not be reasonable, the decision will then be made to go to litigation which will then drive up time and costs.  One party wants resolution, the other does not.  In their defense, mediation has been a tried option several times and has failed each time.  Issues that cannot be resolved remain outstanding, and it is not just one but quite a few. Continue reading

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Walking the tightrope of business ethics and practice becomes more and more under scrutiny in a climate where minorities are divided.  Business owners want to maximize potential, please customers and, let’s face it, the money does matter! Have a business and then be implicated with being racist will come into play in affect image negatively.  That’s where allegations of a racist slur have hit the founder of Papa Johns. He came under fire for criticizing the National Football League’s leadership when it came to the anthem “take-a-knee” protests by players. Comments made have come to haunt him in such a way to put him in trouble and, eventually, have led to suit.  In the suit filed, company documents are to be inspected due to the company’s treatment of him since the publication of a rumor.  He says they are false.

The incident surrounds a conference call made and use of the N-word when it came to Colonel Sanders and KFC.  Papa Johns was a sponsor of the National Football League and the context of the conversation came about when national anthem protests were being discussed. In asking him to resign from the company, he feels ousted without proper investigation into the matter. This has, in turn, lead to a “breach of fiduciary duties” in cutting him off from the company.  All marketing materials and commercials, including logos have been edited to remove his name or image as well.  It is likely that all materials that he is entitled to will be brought into the lawsuit.  He feels he will be exonerated. Continue reading

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Most people associate Fuji and Xerox with an office setting involving photocopying and printing. If you go to their website at: https://www.fujixerox.com They advertise smart work innovation that liberates from Restraints with an open professional expertise.  These are work aspects that most professionals want to aspire to be a part of and probably one of the reasons why they have taken off in the US market.

Fuji Xerox Co., Ltd., is a joint venture partnership between Fujifilm Holdings and Xerox, both being document related services.  Operating out of Tokyo, it was set to be one of the most powerful alliances held between the Japanese and Americans. Continue reading

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When small companies compete against larger, more established companies working in the same space, they often rely on their unique selling points to set them apart from their competition and establish their own niche in the marketplace. But succeeding with that tactic becomes much more difficult if your competition starts using your own tactics against you.

According to a recent lawsuit against Ray Borg, the UFC flyweight allegedly stole trade secrets and took them to a competitor, broke his contract with a gym and a management company without warning, and committed fraud, among other things.

The lawsuit was filed by Wild Bunch Management, which is run by Tim Vaughn, who’s a team member of the gym, Fit NHB. According to the complaint, Borg was working out at Fit NHB and had a three-year contract with Wild Bunch in which the management company would arrange fights for Borg, as well as train and promote the fighter and manage the business side of his fighting career. For his end of the deal, Borg was allegedly supposed to pay Wild Bunch 20% of everything he earned in the cage up to $10,000, plus 10% of any bonuses of $10,000 or more. The contract also allegedly included a non-compete clause in which Borg agreed not to teach martial arts within 50 miles of Fit NHB for the first year after his contract with Wild Bunch had been terminated.

Wild Bunch had allegedly negotiated Borg’s five-fight contract with UFC when Borg allegedly broke off all ties with both the gym and the management company after just the first fight and without any warning. After that point, Borg allegedly switched to Jackson Wink MMA in Albuquerque, a direct competitor of Wild Bunch that’s located across town. Continue reading

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The past few years of Shari Redstone’s life sound like something taken directly from a soap opera after her aging father, Sumner Redstone, fell ill and required a full-time nurse to take care of him.

You probably know Sumner Redstone as the media mogul who ran the National Amusements theater chain (which owns CBS) for more than half a century. When he got sick, Shari kicked his long-time girlfriend out of his mansion, moved in herself, and took control of her father’s media company. Sumner’s girlfriend is suing Shari for having kicked her out and allegedly turned Sumner against her.

But now Shari Redstone has a bigger problem on her hands. Leslie Moonves, the CBS chief executive, has led a sort of a coup against her with other CBS directors. Moonves and the board of directors are suing Redstone for allegedly acting in her own best interests, even when it allegedly went in direct opposition to the best interests of the company’s shareholders. As a result, they are seeking to dilute Redstone’s voting rights as the majority shareholder of CBS and to strip her of much of her control over the media company.

Since Redstone has the power to fire anyone from the board of directors, why would they do all this at the risk of their own jobs? Continue reading

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Janitors can be seen as caretakers of a building; custodians. Their role can be either undermined or seen as part of what makes the world go around. They have also hit headlines recently when it comes to the push to have their pay raised. Their recognition has made its way into the realm of Contract Law and that trend is continuing. Janitor tests ended up setting the standard in non-compete cases and situations.

The Janitor Test and Non-Compete Agreements 

A non-compete agreement is a contract between an employee and an employer in which the employee agrees not to enter into competition with the employer during or after employment. These legal contracts prevent employees from entering into markets or professions considered to be in direct competition with the employer. Restricting covenants have had their application in the utilization of a concept that some courts and litigants refer to as the “janitor analogy” or the “janitor test,” when questioning the breadth and scope of a non-compete provision. The test has evolved over the years, which shows us that janitors and the test will stay.

The first case we can look at is Reading & Language Learning Center v. Sturgill (2016). That case arguably had an overbroad, unenforceable agreement because the agreement did not clearly define the capacity in which scope of services could be provided. The speech therapist could even be prohibited from services other than the function in which that person worked previously, including but not limited to, selling furniture, providing cleaning services or plan school functions.

This line of reasoning was also applied in Distributor Service, Inc. v. Stevenson (2014). The Court stated, “[t]he bottom line is that the plain language of the Non-Compete Provision would prohibit Mr. Stevenson from being an ‘employee’ of any entity who engages in ‘Competitive Business Activity,’ whether he is in sales, works as a janitor, or maintains the second employer’s lawn. Thus, it is overbroad and unenforceable.”

When scope was limited, a “janitor analogy” did not go far because the scope of services was limited to areas in which that person had worked previously. The confidential information could, therefore, be used.

The more recent case of Medix Staffing Solutions, Inc. v. Dumbrauf (2018) had “janitor clauses”. It just goes to show that their use is another example of why these sorts of clauses can prove costly to employers. Courts will even be reluctant to want to modify them. On its face, the clause excluded an employee from taking any position with another company that engages in the same business, without regard to whether that position is similar to the prior position held. Accordingly, it was argued that the covenant was “too restrictive” and that the “covenant bars him from taking positions with those companies extend beyond roles that were similar to those he previously held to any position whatsoever at other companies in the industry.” The argument extended so far as to say that he couldn’t even work as a janitor for another company. The question of the justification of broader restrictions vs. legitimate business interests was the main crux of in which way the court was likely to lean. Continue reading

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Anyone who thought the story of Stormy Daniels’s alleged affair with Donald Trump would blow over quickly should think again. Not only is Daniels not going anywhere, but she’s drawing other people into the scandal, including Keith Davidson, her former attorney.

Davidson represented Daniels in the negotiations between her and Trump for the non-disclosure agreement she signed regarding the affair she and Trump allegedly had in 2006. Under the terms of the non-disclosure agreement, Daniels was to keep quiet about the affair in exchange for $130,000.

Daniels kept her end of the deal for the first five years. Then, in 2011 she tried to sell the story of the affair to a magazine, which had agreed to pay her $15,000 for the story. But Trump’s attorney, Michael Cohen, allegedly threatened to sue the magazine, which backed out and never paid Daniels for the story.

Daniels said she was also threatened by a man in a parking lot while she was with her daughter, who was an infant at the time. The man allegedly told Daniels to leave Trump alone, saying it would be “a shame” if anything were to happen to her.

Although that kept Daniels quiet for the next five years, she has since come out and spoken publicly about the affair she allegedly had with Trump all those years ago.

At first, Daniels merely hinted at the possibility of an affair and refused to explicitly confirm or deny its existence. She received lots of media attention and was invited to be on various talk shows, but she consistently cited her non-disclosure agreement as the reason she could not directly talk about the alleged affair. It wasn’t until a few months ago that Daniels started talking more openly about the affair and its aftermath, claiming the non-disclosure agreement was invalid because Trump never actually signed it. Continue reading

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There are some things that doctors can also not be immune to: conflict in the workplace.  There is a growing recognition that professional behaviors and manners should not only extend to the patient.  Rather, they should encompass doctor to doctor relationships, as well as others that work with them.

Having a safe and less conflict in a workplace promotes better professional life quality overall.  This is because conflict creates opportunities to have less understanding amongst peers and undermines communication skills.  Toxic workplace environments become stressful, negative, increase anxiety and give rise to professional burnout.  This, in turn, affects the level of professional care delivered to patients and increases factors for the delivery of medical care with greater liability when it comes to malpractice suits.  Better understandings lead to fewer misunderstandings.

Rather than fearing or avoiding conflict (as is often the case), it can be seen in some cases as a positive opportunity to better understand other points of view, to grow as an individual, and to improve communication and interactions within an organization.

Sources of conflict arise from expectations that were not set clearly, lack of resources, competition for goals, values or resources. For those reasons, identification of sources of conflict early on should be a goal of achieving a workplace culture that fosters respect and effective workplace engagement for all workers collectively.

Tips for managing conflict can include the setting the standards of expectation via an effective employee handbook.  It must also be in compliance with state and federal laws and is always best if run past an attorney prior to implementation.  Having an attorney to mediate disputes is always handy as well.

Avoiding conflict means issues fester and can place issues on a lower scale of measure.  Time gets delayed and suits can follow. Continue reading

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There are so many changes that are made in accounting, auditing, tax and consulting standards that the overlooking of how disputes are solved is a very real possibility.  This is why users and providers of these services should be familiar with the benefits and disadvantages of the various different Alternative Dispute Resolution (ADR) Services.  We will, therefore, suggest that ADR clauses be used in the engagement of services contracts.

CPAs have to consider the wording of any ADR clause approved by a professional liability insurer and legal counsel. These days, most professional liability insurers advocate for the use of non-binding forms of dispute resolution and some may even require this in order to reap the benefits of insurance.

The most common ADR methods available are mediation and arbitration. These are also governed by the AAA’s Accounting and Related Services Arbitration Rules and Mediation Procedures. The process is fair and impartial. To ensure that the ADR clause does not affect a CPA’s independence, the wording must be drafted carefully and in line with the   AICPA Code of Professional Conduct  Rule in Section 1.228.  This gives a generic guide on the use of dispute resolution forums and liability limitation clauses. The inclusion of such clauses does not absolve liability of being unable to meet professional standards.  CPA’s may also need to be required to report a judgment in excess of $25,000 whether granted in court or arbitration.  This amount varies from jurisdiction to jurisdiction.  For that reason, knowledge of the rules is important.

Negotiation

The first step in the settlement of a dispute must always include negotiation.  Parties must make an effort to resolve in the best and least expensive way possible.  Sometimes, ego can come into play and undermine the process.  However, if parties are able to manage their emotions, it will be the most economic outcome, utilizing less time and money.  Negotiations can never take place in bad faith.  If so, involve an attorney that can carefully oversee and draft the proper terms.  They can also intervene on your behalf.  Continue reading

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It may have once been thought that officers constituted as being fiduciaries in a manager-managed LLC setting. Who or what are fiduciaries? Fiduciaries are individuals in whom another has placed the utmost trust and confidence to manage and protect property or money. The relationship wherein one person has an obligation to act for another’s benefit. Typically, it has been those members who operated the business that owed fiduciary duties of loyalty and reasonable care to non-managing LLC owners.  They normally uphold legal positions of trust with one or more parties and  take care of money or assets for another person.  Now, a managing member of an LLC is an individual who holds an ownership interest in the company, participates in its day-to-day management and has authority to contract on behalf of the company. So are managing members fiduciaries? Since most states have codified the fiduciary duties owed by officers and directors, a recent First District Court has affirmed a trial court finding that this is NOT the case.

In the case of 800 South Wells Commercial LLC v. Cadden, 2018 IL App (1st) 162882 (May 9, 2018) Cook Co., 3rd Div, (FITZGERALD SMITH), the courts looked at these issues in greater depth and length and gave more definitive answers in terms of scopes and duties of member-managed LLCs.  It looked at a situation that involved a manager-managed Illinois LLC which was formed to obtain a leasehold interest in River City Complex’s commercial space and parking garage and the manager and member appointed Cadden to be the LLC’s vice president. Within four years, the LLC defaulted on both its mortgages. The LLC claimed that fiduciary duties were owed only because he held the title of vice president. The Court was quick to grant summary judgment which went further to say that there was no evidentiary basis to demonstrate that any fiduciary duty was owed to the LLC.  Consequently, there was no breach.  Continue reading