Automobile Recalls and Product Liability

Automobile Recalls and Product Liability

The state of California pioneered strict product liability legislation in the 1960s, and since then, the idea has spread throughout the United States. The frequency of automobile recalls has been a major consequence of this legislation. The relationship between product liability law and automobile recalls is not as straightforward as it might seem, however.

California Strict Product Liability in a Nutshell

Under California strict product liability law, the manufacturer of a product (an automobile or an automobile part, for example) acts as an insurer of the safety of that product if it contains a design defect, a manufacturing defect, or inadequate product warnings. Anyone injured by a defective product can win a product liability personal injury lawsuit against the manufacturer without proving that the manufacturer was negligent or at fault in any way. This liability extends to any actor in the stream of distribution of the product, including wholesale and retail distributors.

How Recalls Work

A recall occurs when the manufacturer discovers that a product it manufactured contains defects that might make the product unsafe to use – a gas tank that easily explodes upon rear-end impact, for example. The manufacturer might discover the defect on its own, or a defect may be discovered by the Food and Drug Administration or the Consumer Product Safety Commission.

Once a recall is issued, the manufacturer will issue a detailed notice of the recall and the reasons for it to all parties in the product’s chain of distribution. It will also alert the media and attempt to directly notify all known purchasers through various means. The manufacturer typically offers to repair, replace, or refund the value of the defective product..   

Does a Recall Establish Manufacturer Liability?

Suppose that a consumer is injured by a defective auto part that has already been recalled, and he then proceeds to file a product liability lawsuit against the manufacturer. Is the fact that the product had already been recalled enough to prove that the product was defective in the first place? In a nutshell, the answer is, “no.” The consumer must still prove that the product was defective. The fact that a recall was issued, however, can be used as evidence in his favor.

Does Issuing a Recall Shield a Manufacturer from Liability?

You might think that a recall is simply a clever way of allowing a manufacturer to shield itself from liability once it has already sold a product. This is not necessarily true, although the issuance of a recall can help a manufacturer avoid liability.

To avoid liability that would otherwise be imposed, the manufacturer must prove that adequate notice of the recall was issued directly to the injured plaintiff (not just to a media outlet), and that the plaintiff ignored it and continued using the product. Even then, the manufacturer is not assured of winning a product liability claim against it.

Let Us Help You Fight Back

If you are the subject of an automobile-related, product liability claim, or if you anticipate this scenario, call CKB Vienna today or fill out our online contact form to schedule a consultation. We serve clients in Rancho Cucamonga, San Bernardino County, Los Angeles County, Orange County, and Riverside County.

Real Estate Mediation under a California Association of REALTORS® Residential Purchase Agreement

Real Estate Mediation under a California Association of REALTORS® Residential Purchase Agreement

The California Association of REALTORS®, a statewide organization that represents over 170,000 realtors, has issued a Residential Purchase Agreement (RPA) that functions as something of a template for real estate purchase and sale agreements throughout the state. Since it contains a dispute resolution clause that requires mediation prior to litigation or arbitration, it is a good idea to familiarize yourself with mediation before you sign it.    

The Requirement to Mediate

The requirement to mediate, quite frankly, has saved a lot of people a lot of money. Once a dispute escalates to litigation or even arbitration, costs begin to mount in terms of time, money, and energy. The requirement to mediate is a contractual obligation. If you refuse to even attempt to mediate your dispute, you will be denied the right to demand that the other side pay your attorney’s fees in any subsequent contentious proceedings, even if you win.

How Mediation Works

In mediation, a third-party mediator is assigned to your case. He will be trained in the art of mediation, and it will be his job to help you reach a mutually satisfactory resolution to your dispute. The mediator cannot impose a resolution on any party -- all he can do is facilitate. If an agreement is reached, it will be memorialized in a settlement agreement that all parties will sign. Once it is signed, it will become a contract that binds all parties who signed it.

Who Attends the Mediation

The RPA requires the buyer and the seller to participate in mediation along with the mediator. You might ask a third party to attend, such as a real estate agent or an inspector, but the RPA does not require the attendance of any third party (and third parties are usually reluctant to attend). Another contract, such as a broker’s contract, might require the participation of a third party, however. You can bring your lawyer, or you can have your lawyer appear in your stead.

Costs of Mediation

Mediators range from novices to retired judges with intimate knowledge of real estate disputes. Many community organizations, courts, and online resources offer lists of qualified mediators and may even offer mediation facilities for a fee. You are likely to have to pay a mediator (costs are typically split equally). The more expertise the mediator possesses, the higher the price is likely to be. If your dispute involves a large amount of money, however, it could be well worth it.

Nobody Takes Advantage of Our Clients.

If you are involved in a real estate dispute or if you anticipate becoming involved in one, representing yourself is not a good idea. It’s also not a good idea to hire a jack-of-all trades lawyer with no particular expertise in the field of real estate law. Contact CKB Vienna by calling us today, or by contacting us online to schedule an in-person meeting or a telephone consultation.

We serve clients in Rancho Cucamonga, San Bernardino County, Los Angeles County, Orange County, and Riverside County.

How Divorce Depositions Work

How Divorce Depositions Work

For some people, the idea of being deposed is almost as much the stuff of nightmares as being cross-examined in court, especially when the stakes are high. In contentious divorce proceedings, however, depositions are sometimes (but not always) necessary. In addition to knowing how to defend yourself at a deposition, you may need to mount an effective offense.   

Party Depositions vs. Witness Depositions

Normally, there are only two parties to a divorce case: the two divorcing spouses. To depose your spouse, your lawyer normally notifies your spouse’s lawyer. Your spouse must follow the same procedure to notify you of a deposition. To depose a third-party witness, a deposition subpoena must be issued by a judge and you must convince the judge to issue it. You can also request that any party produce certain documents.

What Are Divorce Depositions Like?

At a divorce deposition, your lawyer asks questions under oath to your spouse or to a witness;  your spouse’s lawyer asks questions under oath to you or to a witness; or both. Although you can skip the deposition if you are not being asked any questions, it is a good idea to accompany your lawyer to the deposition in any case.

The deposition will likely take place in a private law office. A court reporter will swear in the people being questioned and will record all of the proceedings. In most cases, depositions are limited to seven hours of testimony. Since breaks will be taken during this time, the total elapsed time may be greater than seven hours.   

How to Handle Yourself When Answering Questions at a Deposition

Observe the following practices during a deposition:

  • Relax, but don’t relax too much.

  • Always tell “the truth, the whole truth and nothing but the truth,” because you can be charged with a felony if you don’t.

  • If you are unsure about a question, ask for clarification before you answer it.

  • Never guess at an answer. If you don’t know the answer to a question, say so.

  • Do not answer any question that is not asked.

  • Do not interrupt your spouse during testimony or break into an argument.

  • Review the transcript after the deposition. You can ask for changes, but requesting significant changes might be used against you in court.

Preparation Is Key

Nothing is more important for a deposition than preparation. You will need access to all relevant documents at the time you begin preparing in earnest, and you will need to use them as exhibits to make your case at the deposition. If you are the one asking the questions, they must be prepared carefully. If you are the one answering them, you may need coaching from your lawyer to avoid accidentally contradicting yourself or making misleading statements.

Contact the Professionals

If you are involved in a divorce or if you anticipate such a scenario, you need legal representation, right away. Call CKB Vienna today, or contact us online to schedule a time for us to discuss your options and answer your questions. We serve clients in Rancho Cucamonga, San Bernardino County, Los Angeles County, Orange County, and Riverside County.

Grandparents’ Visitation Rights in California

Grandparents’ Visitation Rights in California

With the explosion of the divorce rate over the past few decades, much has been made of the visitation rights of non-custodial parents. But what about the rights of grandparents? Grandparents do have visitation rights in California under certain circumstances. If you are a grandparent, it is a good idea to know your rights before they come under fire.

Visitation Rights When the Child’s Parents Are Married

First the bad news. The general rule is that grandparents do not have visitation rights if the parents are still married. California family law does allow certain exceptions, however, such as in cases where:

  • The parents are married but in the midst of a long-term separation;

  • The parents have been missing for at least a month;

  • One parent consents to grandparent visitation rights, and allowing visitation is in the best interests of the child;

  • The child does not live with his parents, and allowing visitation is in the child’s best interests; or

  • A stepparent adopts the grandchild.

Visitation Rights When the Child’s Parents Are Not Married

Your chances of securing visitation rights are better if the child’s parents are not married. In this case, there are three requirements that you must meet in order to be granted visitation rights:

  • You must have a pre-existing relationship with the child;

  • There must be an emotional bond between you and the child; and

  • All things considered, the “best interests of the child” must outweigh the rights of the child’s biological parents to make decisions about who their child associates with.  

All of these factors must operate in your favor in order for you to be granted visitation rights.

How to File for Visitation Rights: Procedure

The following procedure is required to obtain grandparents’ visitation rights:

  • Determine whether a family court case is already open involving the child. If so, you will need to file a petition under that particular case. Otherwise, you must open your own case (see below).

  • Complete Form FL-300 with the help of its associated information sheet, Form FL-300-INFO. You might also need Form FL-311 and Form MC-031.

  • Make three (3) copies of all of your forms (a total of four). The original is for the court, one is for you, and the other two go to the child’s parents.

  • File your forms with the court clerk along with the filing fee. The clerk will give you a court date and perhaps a date for a meeting with a mediator.

  • Serve your papers on the child’s parents and anyone else who has physical custody of the child. You must strictly follow certain procedures.

  • Have your server fill out proofs of service on Form FL-330 or Form FL-335 and send them to the child’s parents.

  • Attend your court hearing and/or mediation. The child’s parents have the right to attend.

All of the foregoing steps must be performed flawlessly. A single mistaken detail could result in significant delays.

We’re Ready to Fight for Your Rights

If you seek visitation or custody rights with respect to your grandchildren or if you are involved in a family law dispute, call CKB Vienna today or contact us online to schedule an appointment to discuss your options. We serve clients in Rancho Cucamonga, San Bernardino County, Los Angeles County, Orange County, and Riverside County.

California Small Businesses: Drafting a Well Written Employee Handbook

California Small Businesses: Drafting a Well Written Employee Handbook

Most businesses have issued a written employee handbook that explains work rules and other relevant issues. If your company hasn’t done so yet, or if your existing employee handbook is out of date, you need to rectify this problem immediately. This is because a non-existent or inadequate employee handbook is a liability time bomb waiting to go off.  

Why You Need One

There are dozens of ways that issuing an employee handbook can help your company operate smoothly and minimize its legal risk. A few of these ways are listed below:

  • It can help you prove that your company’s policies are lawful in the event of a contrary claim.

  • It can help you remain in compliance with complex employment regulations at both the state and federal level.

  • It can help your company guarantee fair treatment to your employees.

  • It can provide new employees with a valuable orientation tool.

  • Written expectations can help avoid misunderstandings that might otherwise lead to conflict or even lawsuits.

  • It can be used to train supervisors and management staff.

Topics

A comprehensive employee handbook should deal with the following topics, at the very least:

  • Discrimination, retaliation, and harassment policy: Required by law to be included if your company employs five or more people, but you should include it anyway.

  • FMLA/CFRA leave: Required by law to be included if the company has 50 or more employees, but you should include it anyway.

  • New parent leave: Required by law for companies with 20 or more employees, but you should include it anyway.

  • Pregnancy disability leave: Required by law for companies with five or more employees, but you should include anyway.

  • Paid sick leave: Required by law even if the company has only one employee.

  • Accommodations for disabled employees.

  • Employee timekeeping

  • Overtime, meal breaks, and rest breaks

If any of your employees might not be able to read the employee handbook in English, you must provide it in their native language.

Document Drafting Concerns

California employee handbooks are governed by the California Labor Code, and it is most decidedly a legal document -- and drafting a legal document is a very different exercise than writing a letter. Legal documents sometimes appear to be drafted in “legalese,” and there is a reason for this. Two reasons, actually. One reason is simply bad writing skills, which should not be tolerated in such an important document because it is downright dangerous.

The other reason, one that is, to some extent, unavoidable, is that the language must be drafted so literally and precisely that nobody (a litigious employee, for example) can hope to “poke a hole in it” and attempt to assert that it means anything other than its obvious literal meaning. This process requires skill, and it is not for someone who lacks experience drafting legal documents. When it comes to drafting legal documents, an experienced business lawyer is a near-necessity.

We Stand Ready to Assist You

If you need help drafting an employee handbook, or if you are involved in a dispute with an employee over the content of an employee handbook, contact CKB Vienna by calling us today or by filling out ur online intake form to schedule a consultation.

We serve clients in Rancho Cucamonga, San Bernardino County, Los Angeles County, Orange County, and Riverside County.

California Employment Law Update: New Legislation That Takes Effect in 2019

California Employment Law Update: New Legislation That Takes Effect in 2019

California employment law has become an edifice of complexity -- and like California itself, it undergoes seismic changes with alarming frequency. It is critical that you keep up with these changes to protect your company from unexpected liability because, unsurprisingly, few of the major changes are employer-friendly. Some of the changes appear to have been inspired by the #MeToo movement.

The following are some of the most important changes that took effect in early 2019.

  • SB 1300 is an amendment to the Fair Housing and Employment Act (FEHA) that allows even a single inappropriate remark to constitute unlawful workplace harassment. Although the amendment seems to be aimed at combating sexual harassment, the harassment complained of need not be sexual in nature to trigger the application of SB 1300.

  • SB 1343 requires all employers with five or more employees to provide two hours of sexual harassment training to all of their employees.

  • SB 224 expands sexual harassment prohibitions to cover, not only employers, but also independent contractors, investors, and other people with a relationship to the company’s business.

  • AB 3109 prevents employers from inserting language into employment contracts and settlement agreements that prevent the employee from testifying in criminal and sexual harassment cases. Note that the employee’s consent to such language is irrelevant; such language is barred even with mutual consent.

  • SB 820  goes further than AB 3109 by barring employers from inserting language into settlement agreements that prohibits employees from disclosing facts about claims related to sexual misconduct. SB 820 is broader than AB 3109 because it is not limited to employee testimony; it could include private statements to investigators, for example. Like AB 3109, employee consent is irrelevant.

  • SB 1431 Language is often inserted into severance and settlement agreements, requiring an employee to waive any claims he may have against the employer. Controversy arises when the employee signs the agreement and only later discovers a previously unknown claim against the employer.
    Although employers often seek to have the employee waive both “known and unknown claims,” this can only be accomplished by inserting certain statutory language into the agreement. This statutory language has changed in 2019, and employers who fail to take note of it could find themselves facing new claims from former employees months or even years down the road.

  • SB 826 requires public California companies to include at least one female on their board of directors by December 31, 2020. This requirement rises to two females by 2021 if there are at least five total members on the board of directors, and three if there are at least six total members on the board. Strictly speaking, this is not an employment-related change, but it does indirectly effect on the employer-employee relationship.

Contact Us Today

California imposes one of the heaviest regulatory burdens upon businesses of any state, and failing to keep up with what is required of you is a dangerous way to do business. If you have questions about California business law, or if you need to take legislative changes into account with your business planning, call CKB Vienna today or contact us online to schedule a consultation.

We serve clients in Rancho Cucamonga, San Bernardino County, Los Angeles County, Orange County, and Riverside County.

California Business Law: What Is a Certificate of Qualification?

California Business Law: What Is a Certificate of Qualification?

A Certificate of Qualification is essentially a license for a foreign company to “transact business” in California. In this case, “foreign” doesn’t mean from another country -- it means from out of state. In particular, it refers to a company that was organized under the laws of another state or another country. A company based in California but incorporated in Delaware, for example, is considered a foreign company even if it has never done business outside of California.

Does Your Company Need to Register?

California law requires registration for any foreign company that “transacts intrastate business” in California. What exactly is that, though? According to the California Corporations Code, it means entering into repeated transactions in California, not counting interstate or foreign commerce. Since a certain amount of ambiguity remains in this definition, California provides a list of activities that do not count as “transacting intrastate business.” These activities include:

  • Participating in a lawsuit or arbitration

  • Convening meetings of shareholders or board of directors

  • Establishing in-state bank accounts

  • Renting or owning office space dedicated to the disposition of the company’s own securities

  • Using independent contractors to sell goods or services

  • Soliciting or obtaining orders that require out-of-state acceptance before they are legally binding

  • Creating a record of debt, mortgages, lien, or security interests

  • Conducting a single transaction within a period of 180 days

Consider the foregoing list a “safe harbor” – you are safe if you clearly comply with its terms. If you don’t comply, however, a closer look at your involvement with the California economy may be required.  

How to Register

To register, you must file the appropriate form with the California Secretary of State. Depending on your form of business organization, you would use the Application to Register a Foreign Limited Liability Company (LLC) or the Statement and Designation by Foreign Corporation. You will also have to file other documents such as a Certificate of Good Standing from your home state and a Statement of Information. You must also appoint an in-state agent and pay a filing fee.

Consequences of Failure to Register

The purpose of requiring registration is to make sure that the company pays its state taxes. As such, the penalties for non-registration are not that severe as long as you file a tax return anyway. The only absolute ”penalty” is the inability to file a lawsuit. If an unregistered foreign company fails to file a California tax return, however, it can be fined and its in-state contracts may be voidable by the other party

Contact CKB Vienna

California law is unique in many ways, and the regulatory burden of doing business in-state is higher than in most states. A major problem faced by out-of-state companies doing business in California is that they don’t know when they have run into a legal issue. This can be dangerous to say the least.

If you are concerned about your company’s legal status in California, call CKB Vienna today or fill out our online contract form to schedule a consultation. We serve clients in Rancho Cucamonga, San Bernardino County, Los Angeles County, Orange County, and Riverside County.

What Is a “Material Breach” of Contract in California?

What Is a “Material Breach” of Contract in California?

You breach a contract  by violating one of its terms. California contract law, however, distinguishes between “material” and “immaterial” breaches. A material breach is a serious breach, while an immaterial breach is not so serious. Paying your rent a day late, for example, might be seen as an immaterial breach while paying it two months late would probably be considered a material breach.

The difference in effect is significant. If the breach is material, the other side has the right to quit the contract immediately (and file a lawsuit for breach of contract). If the breach is immaterial, the other side is entitled to damages but is still bound to the contract. Whether a particular breach of contract is “material” or “immaterial” is a significant source of uncertainty – a non-breaching party is frequently unsure of whether it is entitled to terminate the contract.

Definition of “Material Breach”

A contract is a bargained-for exchange in which each party anticipates benefiting in some way. A material breach “gets to the heart of the contract” in the sense that it would defeat the purpose of the contract (from the standpoint of the non-breaching party) if the breach were to remain unrectified. An immaterial breach, on the other hand, is the violation of a minor contractual obligation such that the essence of the deal is unaffected – notwithstanding the breach.

Unfortunately, despite this definition, a certain amount of ambiguity remains concerning whether or not a particular breach is “material.” The following contract drafting guidelines might help reduce this ambiguity.

Contract Drafting Concerns

The contract should provide a detailed list of “material” breaches.

Include a carefully drafted section that lists specific acts and omissions and identifies them as material breaches justifying termination of the contract. Use “Including but not necessarily limited to” language, if appropriate, to prevent one party from arguing that his breach was not material simply because his action was not specifically listed in the contract.

The contract should include a “Notice and Opportunity to Cure” clause.

Consider drafting a section that obligates the non-breaching party to notify the breaching party in writing of his breach, allows a certain period (30 days, for example) for him to “cure” (rectify) his breach, and provides that the non-breaching party has the right to terminate the contract if the breaching party has not cured his breach within the specified time frame.

Set objective standards to determine whether or not a breach occurred. Don’t hide behind ambiguous wording such as “reasonable” or “best efforts” unless it is necessary (and sometimes it will be!). Where possible, set up numerical or otherwise objectively verifiable standards to determine whether or not a material breach occurred.

Contact the Professionals

If you are stuck in a contractual relationship that you don’t feel safe in terminating, or if you need to draft a contract that will remove as much ambiguity as possible, contact CKB Vienna by calling or by filling out our online form to schedule a consultation where we can explore your options. Our firm serves clients in Rancho Cucamonga, San Bernardino County, Los Angeles County, Orange County, and Riverside County.

How to End Alimony Payments in California

How to End Alimony Payments in California

Spousal support, commonly known as alimony, is designed to protect the spouse in the weaker financial position in the event of divorce. In many marriages, one partner will quit school or work in order to raise children, for example, while the other spouse will act as the breadwinner. If the marriage breaks up, one spouse may be left without financial support unless the other spouse provides it. This is the purpose of alimony.

Any system can be gamed, however, and the alimony system is frequently abused by spouses who demand too much alimony, who do not desire to work, or who have regained the ability to support themselves but expect payments to continue. All too often, courts, unaware of the situation, lend their authority to these unfair arrangements. You can rectify this injustice with proper grounds, however, by filing Form FL-300 seeking termination of alimony payments.

Grounds for Termination of Alimony

The following are some of the most commonly used grounds for a petition seeking termination of alimony obligations:

Expiration: Short-Term Marriages

In California, a “short-term marriage” is generally thought to be a marriage that lasted less than ten years. Under most circumstances, alimony payments should end by the halfway point of the length of the marriage. In other words, if the marriage lasted six years, alimony payments should last no longer than three years. If it hasn’t, you should petition the court for termination of alimony payments.  

Expiration: Long-Term Marriages

In California, a “long-term marriage” is a marriage that lasted ten years or more. Although the “halfway point” rule still applies, judges are more flexible than they are in the case of short-term marriages. Consequently, your request for termination of alimony is more likely to be turned down. For example, if you were been married for 30 years, alimony might be terminated after 15 years but the judge still has plenty of discretion to order them to continue beyond that point.

Change in Circumstances

If you are not in a position to argue that your alimony obligation has expired, you might still be able to get it terminated by alleging a change in circumstances, such as:

  • The receiving ex-spouse is able, but unwilling, to work;

  • Financial difficulties not of your own making are rendering it impossible for you to continue meeting your alimony obligations;

  • The ex-spouse is cohabiting with another partner and receiving financial support; or

  • Your ex-spouse supporting him/herself without difficulty.

Mutual Agreement

You can end alimony payments at any time if you can talk your spouse into signing a properly drafted document agreeing to end alimony payments.

Remarriage

Under California law, in most cases, your alimony obligations automatically end the moment your spouse remarries. The family court is not necessarily aware of the remarriage, however, and it will be your job to inform the court and file Form FL-300.

Take Action Today

Alimony was designed to secure justice, not to turn someone into an indentured servant. If you are currently paying alimony that you would like to see reduced or terminated, call CKB Vienna today or fill out our online intake to schedule a consultation with us. We serve clients in Rancho Cucamonga, San Bernardino County, Los Angeles County, Orange County, and Riverside County.

Child Custody Modification in California

Child Custody Modification in California

Child custody in California is enforced by court orders, the violation of which can result in a contempt of court charge or even jail time. So what happens when circumstances change such that the existing child custody order no longer makes sense? Fortunately, the California family court system offers a process for modifying a child support order. Like many things in life, however, there is an easy way and a hard way to go about it.

The Easy Way: Mutual Agreement

The easiest way to modify a California child custody order is to reach an agreement with the other spouse. The agreement must be put into writing, both parents must sign it, and it must be submitted to the family court judge. The judge will evaluate the request based on the “best interests of the child” standard, and if he approves it, he will sign it. The agreement then becomes legally binding on both parents.

The Hard Way: Allege a Change in Circumstances

If you cannot reach an agreement with the other parent, you will need to proceed unilaterally by alleging a change in circumstances that justifies modification of the current custody arrangements. This procedure is essentially adversarial although the court may have both parents meet together with a mediator in an attempt to reach an agreement before an adversarial hearing takes place.

Examples of Changes in Circumstances

California family courts will not accept just any change in circumstances as justification for modifying a child custody order. The following are some examples of typical changes in circumstances that might motivate a court to modify a child custody order:

  • The child’s primary residence is or has become unsafe in some way (including psychologically).

  • One parent has become unable to comply with the child custody order due to being convicted of a crime.

  • The parent with primary physical custody has failed to adequately provide for the child’s needs.

  • One parent needs to change residences (due to a job offer, for example), and the new residence is some distance away from the child’s primary residence.

  • The child has grown older and wishes to change custody arrangements (the judge is not bound to accept the child’s wishes, however).

  • One parent has become unable to care for the child due to the onset of an illness.

Procedure

To modify a California child custody order without an agreement with the other parent, you will need to fill out certain forms such as Form FL-300, file the forms with the court clerk, have a third person personally notify the other parent of the proceedings, and attend a hearing. The court might require you to attend mediation before the hearing.

This is a job that must be done right.

A single error in filing for child custody modification could result in significant delay or in modifications that were different than what you expected. Your application could even be turned down. Call CKB Vienna now, or fill out our online contact form to schedule a consultation so that we can help you give it your best shot. We serve clients in Rancho Cucamonga, San Bernardino County, Los Angeles County, Orange County, and Riverside County.

Basic Features of a California Employment Contract

Basic Features of a California Employment Contract

It is never a good idea to draft an employment contract using a template that you found on the Internet. Every employment arrangement is unique, and subtle drafting mistakes could result in serious consequences that are difficult to foresee without the benefit of legal training. Nevertheless, most employment contracts have certain basic features in common. Some of these are listed below.

Employee’s Duties: This section should clearly describe the position and what is expected of the employee. If you have published an Employee Handbook that includes work rules (and you definitely should have), you can refer them to this section rather than putting them all in the contract.

Employer’s Duties: This section should include a listing of the support the employer will provide (a personal computer, work tools, etc.). You should also list the expenses for which the employer will compensate the employee (work-related travel, for instance) as well as general employer duties.

Contract Term: Employment can be at-will (until the employee is fired or quits) for a fixed term (one year, for example) or until the completion of a particular project.

Events of Termination: Which events will automatically terminate the contract? You should list certain offenses for which the employee can be immediately terminated as well as other termination events such as mutual agreement, company bankruptcy, etc.

Compensation and Benefits: List the employee’s salary, bonuses, disability benefits, death benefits, insurance, severance pay, company automobile, etc., as well as the terms and conditions that apply to these benefits (how the employee qualifies for a bonus, for example).

Confidentiality: This clause should be drafted with particular care if the employee will have access to company trade secrets. It is usually OK to define all work-related information as “confidential.”

Intellectual Property: Intellectual property might not matter much if you are hiring a cake decorator, but it will be critical if you are hiring a software engineer. Be sure to include a clause defining all employee-generated intellectual property as “works for hire” so that the employee cannot claim ownership of, say, a software source code.

Damages for Breach: Damages for breach of an employment contract are fixed by California law even in the absence of an employment contract. You could, however, include a carefully drafted liquidated damages clause, especially with respect to intellectual property infringement.  

Dispute Resolution: In the event of a dispute, must the parties attempt negotiation first? If negotiations fail, do they go to court or to arbitration? All of this should be settled in a clearly-worded dispute resolution clause.

Boilerplate: Severability, survival, merger, force majeure, and similar clauses that appear in most business contracts are almost always necessary. These sections may look like meaningless “legalese,” but they are frequently of critical importance once a dispute erupts. Don’t use a template – have a lawyer draft these clauses for you.

Do not include a non-compete clause that binds the employee’s choice of employers after the termination of employment. This is because California does not enforce non-compete clauses except under very limited circumstances. Including a non-compete clause and failing to include a severance clause could result in invalidation of the entire agreement during a dispute.

Contacting Us Now Could Save You a Lot of Trouble Later

A poorly drafted employment contract is like a time bomb waiting to go off – except that the fuse can burn for years before an explosion occurs. If you need help drafting an employment contract or resolving an employment dispute, call CKB Vienna today or fill out our online contact form to schedule a consultation. We serve clients in Rancho Cucamonga, San Bernardino County, Los Angeles County, Orange County, and Riverside County.


Questions That California Employers Cannot Ask Job Applicants

Questions That California Employers Cannot Ask Job Applicants

Not all speech is protected by the First Amendment – and rightfully so since it would not do to allow someone to shout “Fire!” in a crowded theater. California and federal law prohibits employment discrimination based on race, religion, nationality, and a dozen other human characteristics. To enforce these prohibitions, California employment law forbids employers from asking job applicants certain types of questions that could be used to evade anti-discrimination laws.

The following types of questions either cannot be asked or can only be asked under certain circumstances:

“Are you a US citizen?”:  The more appropriate question to ask is: “Do you have the legal right to work in the United States,” which is certainly relevant. Non-citizen permanent residents may work in the US, and even temporary visitors may work if they have been issued a work permit.

“Are you male or female?”: This question is forbidden unless gender is a “bona fide occupational qualification (BFOQ) reasonably necessary to the normal operation of the business or enterprise.” An airline, for example, cannot hire only female flight attendants, but the Hooters restaurant chain is entitled to hire only female servers.

Are you married? Do you have children?”: Questions about family status are generally off-limits. One exception is: “Are you related to anyone who works here?” – under limited circumstances.  

“Are you pregnant?”: You might think that asking this question would be legal since employers are typically liable for the costs of maternity leave. Nevertheless, it is forbidden along with questions such as: “Do you plan to have children” or “Do you breastfeed your child?”

“What are your religious beliefs?”: This question is off limits unless it is a bona fide occupational qualification. It is acceptable, for example, to ask an applicant for pastor what his religious beliefs are and to turn down his application based purely on his religious beliefs (or lack thereof).

“How old are you?”: Questions about age are off limits unless it is a bona fide occupational qualification. As an example, many jobs cannot be legally performed by anyone under 18, and it is OK to confirm that the applicant meets legal age requirements.

“Are you disabled?”: This question is acceptable to the extent of a disability that would affect job performance or would require the employer to make special accommodations.

“Please provide a photograph of yourself”: It is illegal to require the applicant to submit a photograph prior to hiring him unless appearance is a bona fide occupational qualification – a position as a fashion model, for example.

Questions about the applicant’s gender identity: “Were you born female?”, for example, is a prohibited question because, among other reasons, it is designed to determine whether or not an applicant’s gender identity matches his biological sex.

Questions about the applicant’s race: Such questions are forbidden in all but the rarest circumstances in which an applicant’s race is a bona fide occupational qualification (a movie director is hiring an actor to play the role of a particular historical figure, for example).

The foregoing list is not exhaustive. Any question that appears designed to evade anti-discrimination laws could draw scrutiny, such as asking when an applicant graduated from college as a means of determining their age.

Contact Us for a Consultation

California does not recognize “lack of knowledge” as a justification for violating the law – notwithstanding the fact that much of California’s business law is counterintuitive. If you have any questions, or if you are involved in a dispute, call CKB Vienna now or contact us online to schedule a consultation. We serve clients in Rancho Cucamonga, San Bernardino County, Los Angeles County, Orange County, and Riverside County.

Common Errors in Drafting California Business Contracts

Common Errors in Drafting California Business Contracts

Contracts are critical business documents, because without them, strangers could not afford to trust each other enough to do business with each other. It is not the least bit of an exaggeration to say that, without enforceable contracts, the economy would collapse. On a smaller scale, a poorly drafted contract could cause your business to collapse. The following are some of the most common contract drafting errors:

  • Creating a contract through an exchange of emails. Although such a contract is potentially enforceable, imagine the results if the terms of the memos conflict, a dispute erupts, and a judge ends up determining the terms of your contract. You need a unifield, logically-consistent document that has been signed and sealed by both sides.

  • Failing to specify what constitutes a “material breach.”  A material breach is different from an ordinary breach. In an ordinary breach, for example, a debtor might make a payment two days late. The victim of the breach has no right to terminate the contract on this basis but may demand compensation for the breach.

If the breach is “material” (serious), the aggrieved party is entitled to terminate the contract and sue for damages. It is critical that you identify what conduct constitutes a material breach. Does 60 days in arrears constitute a material breach?  Also, beware of legal terms of art: “time is of the essence” in a real estate contract, for example, could mean that delaying closing by only one day could give the other party the right to cancel the entire transaction.

  • Failing to provide an exit clause.  Circumstances change, and there may come a time when one of the parties may need out of the contract. Most business deals would benefit from an escape clause – maybe even your side. Consider a clause that allows either party to unilaterally terminate the contract with proper written notice: 30 days, for example, or 90 days.

  • A “no assignment” clause. You wouldn’t want a party performing personal services for you to subcontract the performance of those services to another party without your permission. Likewise, you wouldn’t want a party paying you to perform services to assign the obligation to pay you to someone whose credit rating is untrustworthy.

  • A carefully written confidentiality clause. Most business deals involve the exchange of trade secrets that cannot be protected by patent or copyright law. Although trade secret law can protect you to some extent, a carefully drafted confidentiality clause can fill in loopholes in the law that the other party might otherwise be able to exploit.

There’s a Lot More to Drafting a Business Contract Than Meets the Eye

The foregoing represents only a few of many considerations that you might want to codify in your business contract – in fact, a full list could fill up an entire volume. A skilled business contract lawyer can help guide you through this complex maze. At CKB Vienna LLP, we can help you identify the issues and address your particular circumstances and concerns,.

Call us at 909-980-1040 or fill out our online contact form to learn how we can assist you. We serve clients from all over the Rancho Cucamonga area.

When Is an Auto Dealership Liable for a Defect under California Products Liability Law?

When Is an Auto Dealership Liable for a Defect under California Products Liability Law?

An automobile dealership doesn’t design or manufacture automobiles, so why should it be held liable for automobile defects that it had no hand in creating? Like it or not, California products liability law allows injured parties to sue not only the manufacturer, but also the automobile dealership for injuries sustained as a result of an automobile defect – without even proving fault on the part of either the dealership or the manufacturer.

Types of Defects That Can Trigger Liability

Products liability law covers three types of defects:

  • Design defects: Design defects typically cover all automobiles of the same make and model as the one that injured the defendant, and losing a design defect case can result in the need for an expensive recall.

  • Manufacturing defects: A manufacturing defect, such as a malfunctioning brake drum, might affect only one vehicle (but it could also affect many vehicles).

  • Failure to warn: Liability for “failure to warn” occurs when the defendant failed to warn of a hazard that might not have been considered unreasonably dangerous if it had been warned of.

Prerequisites to Seller Liability

A plaintiff must prove each of the following elements on a “more likely than not” basis:  

  • The product was in defective condition and unreasonably dangerous.

  • The defendant was in the business of selling automobiles or automobile parts.

  • The defect existed at the time the automobile was sold.

  • The vehicle was used only in an intended or foreseeable manner (not as a racecar, for example, unless the car was designed for such use).

  • The vehicle reached the user without substantial damage. The user need not be the defendant since even an injured passenger can file a products liability lawsuit.

What Is “Unreasonably Dangerous”?

There is no universally applicable definition of “unreasonably dangerous” – it’s a judgment call. Some defects (such as defective upholstery) are not considered unreasonably dangerous. Other defects (such as a cruise control cutoff mechanism that is activated by a button on the steering wheel rather than by tapping the brakes) might considered unreasonably dangerous, but only if they were not warned of. Other defects are considered unreasonably dangerous no matter what.

Defective Automobiles Are “Hot Potatoes” in California

In the case Ibarra v. Todey Motor Co. (2013), a California appeals court held an automobile dealer strictly liable (liable without fault) in a products liability design defect lawsuit. The dealer’s liability arose from a “pass-through” transaction between General Motors and the buyer, from which the dealer did not even profit.  Any vehicle that passes through your hands could subject you to liability.

At CKB Vienna, we don’t let anybody push our clients around, including the California court system. We know how to handle frivolous lawsuits and opportunistic plaintiffs. If you are subject to a products liability claim or anticipate such a claim, call us at 909-980-1040 or contact us online so that we can set up a consultation to explore your options. We serve clients from all over Rancho Cucamonga, including Alta Loma and Etiwanda.

Paternity Testing Law in California

Paternity Testing Law in California

In modern times, there is no reason to wonder long about the paternity of a child. Since the advent of DNA testing, paternity can usually be established with a high degree of certainty in the event of a dispute. Establishing paternity is critically important, because it determines not only whether any form of custody will be granted to the putative father, but it also determines child support obligations. It is important, however, to know what California law says about paternity testing.

Marriage and the Presumption of Paternity

If a child is born in wedlock, California law presumes that the mother’s husband is the biological father. If the couple divorces while the child is still a minor, the husband could be assessed with child support obligations even if he is not the child’s biological father. This might sound outrageously unfair when applied to a situation where the child is the product of an adulterous affair.

All is not lost if the mother’s husband is not the father, however. This is because the word “presumes” leaves a legal loophole whereby paternity can be attributed to the actual biological father if, and only if, the mother’s husband can prove that he is not the biological father of the child. Normally, a court-ordered paternity test is required. Until then, child support obligations will continue to be assessed against the mother’s husband.

Unmarried Parents

When an unwed mother gives birth, there is no presumption one way or the other concerning the identity of the child’s biological father. A simple way to establish paternity, however, is to execute a Voluntary Declaration of Paternity. Both the mother and the putative father must sign this document for it to be valid.

If a dispute arises concerning the identity of the father, even a paternity test by itself will not establish the identity of the father for legal purposes – a court order is required. A court can order a paternity test to be carried out by a laboratory that is recognized as reputable by the court, and the result can be sealed so that any tampering can be easily detected.

The Role of the Local Child Support Agency (LCSA)

Your local LCSA can open a paternity case on behalf of the child, and either the mother or the putative father can initiate such an action. If you request Cal-Works or Medi-Cal on behalf of your child, the LCSA will automatically commence an action on its own initiative. LCSA lawyers do not represent either the mother or the putative father, and you will be able to retain your own lawyer even after the LCSA initiates a paternity action.

The Stakes Are Too High for You to Hesitate

Mistaken paternity determinations can have far-reaching effects, not only on the putative father but on the biological father and the child as well. This is something you have got to get right. At CKB Vienna LLP, we know how to work with the system to maximize your chances of a fair determination.

Pick up the phone today and call us at 909-980-1040, orfill out our online contact form to schedule a consultation with us. We serve clients from Rancho Cucamonga as well as elsewhere in California.

Common Mistakes in California Prenuptial Agreements

Common Mistakes in California Prenuptial Agreements

A prenuptial agreement (lawyers like to call them “antenuptial agreements”) is an agreement between a couple who plans to marry. It operates in the event of an eventual divorce to distribute the couple’s assets in a manner that is inconsistent with the distribution that would occur under California’ community property law. They generally work to the advantage of the richer of the two spouses.

Since the validity of prenuptial agreements is specifically regulated by California statutory law in a manner that most contractual relationships are not, they must be drafted with great care to avoid a nasty surprise years or even decades down the road. The following are some of the most common errors committed by aspiring spouses when creating prenuptial agreements.

Failing to Put the Agreement into Writing

A kiss does not establish the validity of a prenuptial agreement – at least not in the eyes of the law. Although some types of verbal contracts can be enforced (if their terms can be proven, which can be difficult when the terms are not reduced to writing), in California, a prenuptial agreement must be in writing and signed by both parties in order to be enforceable.

Failing to Arrange for Independent Representation for Each Spouse

Each spouse should be represented by their own lawyer; otherwise, you are asking for trouble down the road. Although independent representation is not an absolute requirement that applies under every circumstance, in many cases, it can provide the party seeking to undermine the agreement with a loophole that can be easily exploited.

Coercion

Your spouse’s signature on the agreement must not be coerced in any way. Obviously, securing a signature at gunpoint is coercion, but what about waiting until the last minute to seek your spouse’s signature? After all, if he or she doesn’t sign, you’ll have to cancel the wedding at the last minute. That, too, can be considered a form of coercion. Without more, however, making the signing of a prenuptial agreement a condition of agreeing to marry does not constitute coercion.

Failing to Disclose Your Assets and Liabilities

Failing to disclose the full extent of your assets and liabilities is one of the best ways to ensure that your prenuptial agreement will be invalidated. Insist on full disclosure in writing and attach it to the agreement.

Careless Wording

The best way to draft a prenuptial agreement is to imagine that there is a little gremlin sitting on your shoulder who is constantly trying to twist your words around to make them mean something that you didn’t intend. Draft the agreement in a manner that silences your gremlin. The end product should be a well-drafted prenuptial agreement that will minimize your chances of conflict and maximize your chances of victory if conflict does erupt.

Contact Us Today

At CKB Vienna LLP, we can help you draft a prenuptial agreement that will maximize your chances of fulfilling your original intentions in the unfortunate event that such a document is needed to protect your interests. If it is already too late for that, we can help you protect your interests at the negotiating table or, if necessary, in court.

Call us at 909-980-1040 or fill out our online form to schedule a consultation with us. We serve clients from Rancho Cucamonga as well as elsewhere in California.

Shareholders’ Personal Liability for Unpaid Wages in California

Shareholders’ Personal Liability for Unpaid Wages in California

It’s a nightmare scenario that becomes all too real for many shareholders in closely-held corporations. Your company goes bankrupt owing hundreds of thousands of dollars in unpaid wages, the employees demand back pay, and a court holds you personally liable for the entire amount. Here is some of what you need to know to prevent that nightmare from coming true.

Limited Liability Entities

California law provides for a wide variety of possible business entities to choose from. The most common limited liability entities are the corporation and the Limited Liability Company (LLC). Under the theory of limited liability, your liability is limited to the amount you chose to invest into the company in the first place and your personal assets outside of this investment are not at risk, even if the company goes bankrupt owing large sums of money. There are exceptions, however.

The Alter Ego Doctrine

Under the “alter ego” doctrine, a company shareholder is supposed to treat the company as a separate entity – almost as if it were a separate person. If, instead, the shareholder treats the company as his own private piggy bank, a court might consider the company to be his “alter ego” and hold the shareholder personally liable for company debts. This risk is particularly acute in California employment disputes, because California law is notoriously employee-friendly.

Factors

There is no bright-line rule that will tell you under exactly what circumstances a court will hold you personally liable for unpaid wages in the event of company dissolution. Although courts look at such claims on a case by case basis, they will balance the following factors (among many others) to reach a conclusion:

  • Whether personal and company funds were co-mingled;

  • Whether company funds were used to pay personal expenses;

  • Whether the shareholder exercised dominion over company assets;

  • In a corporation, whether the shareholder failed to observe corporate formalities such as obtaining a board resolution before issuing new shares;

  • Insufficient capitalization to meet reasonably anticipated company liabilities; and

  • Failure to file company tax returns.

All of these factors need not be present for personal liability to be assessed.

Joint and Several Liability

When a California court finds that a limited liability entity is the alter ego of the shareholders and that personal liability should be imposed, it may find each of the shareholders jointly and severally liable for corporate debts. Facing joint and several liability is not an enviable position to be in.

Suppose, for example, that 10 shareholders each own 10 percent of company shares. A court could allow aggrieved employees to sue any one of these 10 shareholders for 100 percent of their claim. It would then be up to that shareholder to seek proportionate contribution from the other shareholders. However, this might not be possible if, for example, the other nine shareholders are insolvent or bankrupt.

Take Decisive Action Today

The potential personal liability of a shareholder in a closely held company is much greater than most people realize, especially in employee-friendly California. At CKB Vienna LLP, our first concern is to help you prevent a claim being lodged against you in the first place. Should a claim arise, however, we are more than ready to fight for you and win – whether at the negotiating table or in court.

Telephone us at 909-980-1040, or contact us online to schedule a consultation with us. We serve clients from Rancho Cucamonga as well as elsewhere in California.

GPS Tracking of Employee Locations: The Legal Implications in California

GPS Tracking of Employee Locations: The Legal Implications in California

New technology means it is easier than ever to use GPS tracking to keep track of the locations of your employees. This could be critical to productivity in positions where employees often work off-site and must be trusted to make productive use of their time. GPS tracking, however, raises privacy concerns under the California constitution, and it requires employers to observe certain limitations.

Legal Precedent: Moreno v. S.F. Bay Area Rapid Transit District

The Moreno v. S.F. Bay Area Rapid Transit District case is an important legal precedent that provides two of the primary legal principles applicable to determining the legality of GPS tracking:

  • A link to a privacy policy that appears when an app with a GPS tracking function is being installed is not enough to impute consent to tracking to an employee who uses the app.

  • Tracking a user through an ID number does not raise the same privacy concerns that tracking a user through his personal information does.  

Chip Implants

Chip implants, permanent implants that are inserted under the skin, raise acute privacy concerns because they are invasive and can be used to track employees 24/7. They might also raise religious freedom concerns since some conservative Christians are already identifying chip implants as the “mark of the beast” described in the Bible. Penalizing an employee who refuses to use an implant for religious reasons might raise First Amendment concerns.

Company-Owned Devices

You enjoy much greater freedom to track the location of company-owned devices such as a cell phone. If all you are tracking is the location of the device itself, then it is generally permissible to track it even when the employee is off-duty. After all, tracking tells you only the location of the device, not necessarily the employee. Two caveats: (i) the same might not apply to tracking the location of a chip implant, and (ii) employees should still consent to tracking.   

How Employers Can Protect Themselves against Liability

Observing the following guidelines should greatly reduce your legal risk:

  • Employees should be tracked by ID number, not by name or personal data.

  • Employees should be specifically notified that their location will be tracked, and their specific consent to tracking should be obtained.

  • Track employees only during working hours – even lunch breaks are off limits.

  • Take reasonable measures to prevent interception by third-party eavesdroppers.

  • Do not use chip implants.

Act Decisively to Mitigate Your Legal Risk

Privacy is a big deal in California, and state courts tend to show bias in favor of employees in the event of a dispute. Put these two concerns together and you could end up with the proverbial “perfect storm.” At CKB Vienna LLP, however, we can help you prepare and implement policies that can help you minimize the risk that a dispute will erupt in the first place and maximize your chances of victory should you be dragged into a dispute by an employee or a third party.

Call us at 909-980-1040 or fill out our online contact form to schedule an appointment to discuss your concerns. We serve clients from Rancho Cucamonga as well as elsewhere in California.

How the Business Judgment Rule Protects Rancho Cucamonga Corporate Directors

How the Business Judgment Rule Protects Rancho Cucamonga Corporate Directors

Corporate directors are responsible for making decisions that can cost shareholders a lot of money. These costs can be imposed by bad decisions, of course, but they can also be imposed by good decisions that don’t satisfy everyone. If a director could be sued in his personal capacity by any shareholder who disagreed with his decisions, few people would dare to act as a corporate director. The business judgment rule limits the personal liability of directors.

The Duties and Liabilities of Corporate Directors

Two broad principles govern the decision making of California corporate directors:

  • The fiduciary duty of loyalty: A director must act with loyalty to the corporation, not his personal financial interests. A director is not allowed to use corporate resources for his own benefit (beyond his salary) even if the corporation is not thereby harmed.

  • The fiduciary duty of care: A director must exercise diligence, competency, and “good faith” (laudable motivations) when making corporate decisions.  

Breach of either of these duties can subject a director to personal liability.

The California Business Judgment Rule

The business judgment rule is designed to prevent shareholders and courts from second-guessing the decisions of corporate directors. It serves as a counterweight to, and to an extent a restatement of, the potential liability that directors face for breach of their fiduciary duties. Under the California business judgment rule, a director cannot be held personally liable if the following conditions are met:

  • The director acted on an informed basis;

  • The director acted in good will; and

  • The director honestly believed that the decision at issue was in the corporation’s best interests (regardless of whether it actually was or not).

If a director is sued by a shareholder, the director can assert that he complied with the business judgment rule and ask the court to dismiss the lawsuit. This is without ever reaching the question of whether the director’s decision was right or wrong under the circumstances.

Loopholes

Although the business judgment rule can be overcome, in a civil lawsuit it, is the party asserting director liability who has the burden of proving, under a “more likely than not” standard, that the business judgment rule does not apply to the dispute. Some examples of loopholes through which liability has been successfully asserted include:

  • Establishing that the director violated his fiduciary duty of loyalty or care. A major red flag occurs if the director personally benefited from a decision he made (he gave himself a raise, for example).

  • Establishing that the director’s decision wasted corporate resources, even if no violation of the duties of care and loyalty occurred.

Once a plaintiff has submitted evidence that the business judgment rule does not apply to his claim, the director can still put forth evidence that his decision was right (because it was reasonable and fair, for example). This time, however, the burden of proof will be on the director, not the shareholder.


Here at CKB Vienna, we understand the difference between the “lawyer’s solution” to a business problem and a more effective business solution that takes into account surrounding circumstances and business realities. We stand ready to help you craft a tailor-made solution to your problem. Call us at 909-980-1040 or contact us online to schedule a consultation in our Rancho Cucamonga Office. We serve clients all over town including Alta Loma and Etiwanda.

What Are the Qualifications for a Trade Secret?

What Are the Qualifications for a Trade Secret?

Trade secrets are considered a form of intellectual property; nevertheless, they lack the protection that other forms of intellectual property enjoy. So why would a business settle for trade secret protection of proprietary information rather than protection under patent, copyright, or trademark law? There are two main reasons:

  • Certain forms of proprietary information fall between the cracks in intellectual property law and are not eligible for protection under either patent, copyright, or trademark law; and

  • A company may wish to retain exclusive access to its secrets for longer than the term of protection for the intellectual property protection for which it is eligible. Imagine, for example, if Coca-Cola applied for patent protection of its formula. They would have to publicly reveal it, and anyone could use it legally after the 20-year duration of patent protection expired.

The Uniform Trade Secrets Act

California trade secret law is based on the Uniform Trade Secret Act. A uniform act is an act that is drafted at the national level and then sent to each state as suggested legislation in the hopes that all states will enact it, thereby harmonizing the law among the various states. States are not required to enact such legislation, and indeed some don’t, while other states enact it in modified form (in other words, the trade secret law of most states is similar but with state-specific idiosyncrasies).

What Counts as a Trade Secret?

A  trade secret can be any secret information legally possessed by a company that provides it with a competitive advantage, including (but not limited to):

  • Customer lists

  • Marketing information

  • Unpatented inventions

  • Computer software

  • Formulas

  • Recipes (KFC’s “17 different herbs and spices”, for example)

  • Techniques

  • Processes

  • Other information

Trade Secret Qualifications

To qualify as a trade secret:

  • The information must be commercially valuable.

  • The information must be difficult for others to legitimately acquire or independently produce.

  • The information must be unknown outside the company (including its employees and others involved in the business).

  • The company must have taken reasonable measures to keep the information secret. Typically, this is accomplished through the use of nondisclosure agreements with company employees.

What Is Trade Secret Misappropriation?

Under California law, there are two forms of trade secret misappropriation:

  • Using dishonest means to acquire trade secrets; and

  • Inappropriate disclosure or use of trade secrets (by a former employee who establishes a competitive company, for example).

A party who independently invents the same information that another company already claims as a trade secret does not thereby misappropriate it.  

Liability

A company commits misappropriation of a trade secret of another party, even if it did not know that it was someone else’s trade secret, as long as it “had reason to know” of the information’s status as someone else’s trade secret. Misappropriation liability can include court-ordered injunctions, damages, and criminal liability.


At CKB Vienna, our business litigation lawyers are knowledgeable, committed, and absolutely relentless in their pursuit of their clients’ best interests. If you possess trade secrets that need protection, or if you are concerned about liability for trade secret misappropriation, call us at 909-980-1040 or contact us online. We serve clients in Rancho Cucamonga, including Alta Loma and Etiwanda, as well as other nearby areas.