As a business and corporate law attorney I find it interesting that many business owners do not understand there are significant advantages to forming a separate legal entity, such as an LLC or a corporation, to run a business, but fail to realize the full benefit these entities can provide.
As a way to relate why it is important to get advice from a corporate attorney here is a story told of a poor farmer whose friends all told him he should buy a horse to help on the farm. With a horse, his friends said, the farmer could grow more crops and relieve himself of some of the hard labor required on the farm. So the farmer saved up his money for many years to purchase a prize horse. After he purchased the horse, however, the farmer realized that he did not know how to use the horse to help with the farm work. He was too embarrassed to ask someone, and so he continued to do all of the farm work alone. The farmer failed to realize the full benefit of the powerful animal he had worked so hard to acquire.
One significant advantage to using a corporate form is that it can keep a person from being personally liable for a business obligation. For example, if an LLC is sued for a breach of contract, the business owners often cannot be sued so long as they properly used the LLC in running the business. Simply having a corporation, however, does not provide sufficient protection. The people owning the business must also properly disclose the existence of the corporate entity, usually by using the proper designation such as “LLC,” “Inc.” or “Corporation.” It must be clear to other people that a person is operating on behalf of a corporate entity.
By way of illustration, suppose that John Doe forms the entity Acme, LLC for operating his farm. If Mr. Doe signs a contract for the sale of crops on behalf of Acme but only uses the name “Acme” instead of “Acme, LLC,” then Mr. Doe risks being personally liable for the farm crops and, in the event the farm breaches the contract, Mr. Doe can be sued.
Many potential problems can be avoided by simply using the proper corporate designation on contracts and other documents. Of course, there are other things business owners should be careful about to protect themselves, such as not commingling business assets with personal assets and being honest in business transactions. If you are starting a new business or have questions about an existing business, we have experienced business and corporate law attorneys that would be glad to meet with you to discuss ways to help yourself and your company.
Attorney Profile: Nathaniel Wadsworth, Business and Corporate Law Attorney
Being a business law attorney it came to my attention, as I walked down the snack food aisle at the grocery store, and noticed a product that looked similar to a “Twinkie” that product copying can clearly be a problem for a business owner. The snack cake I saw was clearly not a “Twinkie”, however, and had a completely different name. Since the return of the true “Twinkie” in 2013, certainly there are loyal customers everywhere who will want the real thing and not an imposter.
If not for certain legal protections, any person could copy the product of another to make a competing product, even using the same name as the competing product, like “Twinkie.” Fortunately, federal and state laws related to copyrights, patents, and trademarks provide protections for intellectual property, such as names and designs. For example, an Arizona statute, Arizona Revised Statute § 44-1460.05, sets forth some of the rights a person may receive by registering a trade name in this state:
The registration of a trade name if prior in time to the filing of articles of incorporation or the reservation of a corporate name shall give to the holder of the registered trade name exclusive right to the use of such name.
This does not necessarily mean that no one can use the same name for any purpose, but the law in many cases does provide protection specific to the type of product or business associated with the name. Moreover, even the continual use of a name without registering it may be sufficient to establish some trade name rights. Other laws provide protections for such things as trade dress (the way a product or service is packaged–think the shape of a bottle of Coca Cola for example), designs, and written works.
Of course the existence of these laws does not mean that no one will ever attempt to copy the work of another to gain an unfair advantage. Also, if the owner of a name or design does not take the proper steps to protect his intellectual property, he might limit his ability to legally protect it. To better protect an idea and/or to stop others who may be infringing on one’s intellectual property rights, a person should contact a qualified business law attorney to determine what legal steps to take. If we cannot provide the help you need, we can refer you to others who can.
Attorney Profile: Nathaniel Wadsworth, Business Law Attorney
When people come together to begin a business, they may not think the time will come when they will not get along. But if, after many years, you and your business partner no longer see eye-to-eye when it comes to how to operate your business, what is to be done? The late Mickey Rooney once quipped: “A lot of people have asked me how short I am. Since my last divorce, I think I’m about $100,000 short.” There are many who could say the same thing about a business divorce, and you are going to need an experienced business attorney to help you.
If you planned ahead, then you may have a detailed agreement to direct you on how to move forward. Such direction may involve one partner buying out another, for example. However, if you failed to plan ahead, you may be facing the possibility of leaving the fate of your business up to a court.
Under Arizona’s statutory scheme, a shareholder of a corporation or a member of a limited liability company can petition a court for the dissolution of a company if there is a deadlock in the management of the company which adversely affects the business. See, A.R.S. §§ 10-1430, 29-785 To Read Click Here. And even though the court might allow one shareholder to buy out another in order for the business to continue on (see A.R.S. § 10-1434) To Read Click Here, there is no guarantee that the business will survive one owner’s efforts at dissolution. Such an action may even involve the appointment of a receiver to take over the operations of the business while the court case plays out. Whether or not the business survives such a court action, the financial cost to the business and its owners may be enormous. This is especially true if the action involves claims of wrongdoing.
At Rowley Chapman & Barney, we have experienced business law attorneys and we can help you prepare for disagreements that may arise between business partners by use of such things as a shareholder agreement, operating agreement or buy/sell agreement. If you are past that point, we are also experienced in litigating business divorces and will aggressively fight to protect your interests. Please give us a call today if you are facing these or other legal issues.
Attorney Profile: Nathaniel Wadsworth, Business & Litigation Attorney
The power of words is undeniable. Joseph Conrad expressed it in these terms: “My task, which I am trying to achieve is, by the power of the written word, to make you hear, to make you feel—it is, before all, to make you see.” Today, because of the accessibility of social media, nearly any person can publish any words in an attempt to make others see things a certain way.
From blogs to Facebook to Twitter, the options for sharing one’s opinions with the world are numerous, and social media allows words to be used for good and bad. A Vatican court recently announced that those who follow the Pope on Twitter can receive indulgences that will allow them to spend less time in purgatory. For believers, this is certainly one positive thing resulting from life in the digital age.
The ability to anonymously publish words that are untrue, hurtful or irresponsible is another thing that draws people to the internet. Without any accountability, a person may use social media to publicly proclaim thoughts he would never want associated with his name. For example, the “comments” section following an online news article is often filled with derogatory and disrespectful remarks, in addition to well-reasoned and enlightening opinions. All of these comments are made anonymously, with a clever screen name being the only identification of the person behind the words.
But anonymity extends beyond harmless two- or three-sentence comments. I know of a person—call him Jack—who recently found a Facebook account in his name. Jack was not the person who created the account and had no knowledge of it. Instead, an unidentified third-party created the account and filled it with multiple false and demeaning statements about Jack. Any unsuspecting friend or acquaintance of Jack (or even a prospective employer) could have easily found the web page and believed that Jack had written it, thereby severely damaging Jack’s relationships and reputation.
The good news is that there are often ways to discover who is behind false or defamatory statements that appear on the web. With court subpoena powers and other helpful laws, a person’s supposed anonymity is not without limits. If you discover that someone has anonymously made damaging false statements about you or your company, there may be a way to discover who it is and hold that person accountable for his or her words. Also, if you are one who likes to post things online, you should know that words do not always remain anonymous.
Attorney Profile: Nathaniel Wadsworth, Litigation Attorney
The First Amendment to the United States Constitution provides that “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof . . .”
Earlier this month, the United States Supreme Court ruled that the town of Greece, New York did not violate the First Amendment by its practice of inviting local clergy from different religious congregations to take turns in offering an opening prayer at the beginning of town board meetings. Because most of the local congregations were Christian, most of the prayers were Christian in nature. The citizens who brought the case against Greece argued that the town gave preference to Christians over other religions and thus violated the First Amendment. The Court’s opinion rejected this argument and ruled that as long as the town did not discriminate against non-Christian religions, it was not required to look outside of its town boundaries to find clergy from other congregations to offer prayers. The Court further recognized the value of opening prayers to lend gravity to law-making sessions:
From the earliest days of the Nation, these invocations have been addressed to assemblies comprising many different creeds. These ceremonial prayers strive for the idea that people of many faiths may be united in a com¬munity of tolerance and devotion. Even those who disagree as to religious doctrine may find common ground in the desire to show respect for the divine in all aspects of their lives and being. Our tradition assumes that adult citizens, firm in their own beliefs, can tolerate and per¬haps appreciate a ceremonial prayer delivered by a person of a different faith.
Later this year, the Supreme Court will issue its decision in another, more famous case with First Amendment implications. The company Hobby Lobby is seeking an order that parts of the Affordable Care Act (Obamacare) are unconstitutional because of the requirement that employers provide birth control as part of an employee’s health care coverage. The owners of Hobby Lobby argue that the law infringes on their free exercise of religion since their religious beliefs prohibit them from providing contraceptive drugs and other devices that end human life after conception. Regardless of how the Court rules, the case will have far-reaching impacts in the area of First Amendment law and in how the exercise of religion is defined.
Arizona has its own protections regarding religious freedom. For example, the state’s Constitution provides that “No public money or property shall be appropriated for or applied to any religious worship, exercise, or instruction, or to the support of any religious establishment. No religious qualification shall be required for any public office or employment, nor shall any person be incompetent as a witness or juror in consequence of his opinion on matters of religion, nor be questioned touching his religious belief in any court of justice to affect the weight of his testimony.” And specific to the employment context, the law in Arizona makes it unlawful for an employer “to fail or refuse to hire or to discharge any individual or otherwise to discriminate against any individual with respect to the individual’s compensation, terms, conditions or privileges of employment because of the individual’s . . . religion.” A.R.S. § 41-1463.
However, it is not always clear how a court will apply the law in a given case, which is why decisions from courts are necessary to help further define and explain the law. Recently, a former state supreme court justice from a neighboring state made the observation that the law on religious freedom is not well-developed. “I would say to people who are interested in the free exercise of religion, get a lawyer and go to court and develop the law.”
What we are seeing in the Town of Greece case and in the Hobby Lobby case is part of the development of that law.
As an employment law attorney I’ve been following recent events and unless you avoid sports-related news, you have heard that Donald Sterling, the coach of the NBA’s Los Angeles Clippers, was recently banned for life from the NBA because of racist comments he made in private conversation. Before the ban was announced, there was a lot of talk in the media about whether the players for the Clippers would or should refuse to play their scheduled playoff games against the Golden State Warriors. The NBA’s ban of Sterling apparently made such a boycott unnecessary.
The situation raises multiple legal questions, including, for example: is it legal to record a private conversation without the other party’s consent? What rights does the NBA have in terms of punishing Sterling? Can the Clippers basketball players refuse to play without being in breach of contract? Can Sterling be sued for employment discrimination?
No doubt these types of questions and others will be discussed among the parties involved and their attorneys over the next several days and beyond. And while most of us do not play in the NBA, many people can relate to the basketball players who were offended by their boss. It is also good to know that there are laws to protect people from undue discrimination in the workplace.
Generally, an employer in Arizona may not take an adverse employment action (such as firing or demoting an employee) based on a discriminatory motive such as race, sex, or disability. But what if an employer makes discriminatory remarks without actually firing or demoting a person? In such a case, an employee might be able to quit his job and then sue the employer for what is called a constructive discharge.
Under Arizona Revised Statute section 23-1502, a claim for constructive discharge can be established if there exist “objectively difficult or unpleasant working conditions to the extent that a reasonable employee would feel compelled to resign.” However, unless the employer’s actions rise to the level of
“outrageous conduct” (this includes conduct such as “sexual assault,” “threats of violence,” or “a continuous pattern of discriminatory harassment”), it is necessary for the employee to give the employer notice of the unpleasant working conditions and a chance to correct them.
At Rowley Chapman & Barney, we have represented many employees and employers who have faced questions of discrimination in the workplace. If you have any questions arise regarding your own situation, we would be glad to meet with you to determine what legal options might exist to help in your case.
Recently the United States was surpassed by Mexico as the most obese nation. Of course this doesn’t change the fact that many people in the United States are overweight. While reasonable minds may disagree as to the severity of the issue or what to do about it, from my perspective as an Arizona employment attorney, at least we can all agree that the law should not allow a person’s weight to affect his or her ability to make a living. Or should it?
Tara Costa, a former contestant on the popular reality television show “Biggest Loser,” reportedly lost 155 pounds during her time on the show. Now her weight is at issue in a different context, with a company suing Ms. Costa, alleging that she breached a contract by putting on too much weight.
According to news reports out recently, a lawsuit filed by the company FC Online Marketing, Inc. alleges that, following Ms. Costa’s success on “Biggest Loser,” FC Online hired Ms. Costa as a spokesperson. However, after Ms. Costa regained 45 pounds (as the company alleges), she was unfit to be a spokesperson and was in breach of her contract.
Whether Ms. Costa actually gained weight and whether that resulted in a breach of contract will depend on the evidence and on the terms of her contract. While not all of the details of this case are available, it does raise some interesting questions. For example, is it legal for a person to be fired for being overweight?
In Arizona, state law provides that the employment relationship “is severable at the pleasure of either the employee or employer” unless there is a written contract which would limit a person’s right to terminate the employment relationship. (Arizona Revised Statutes § 23-1501). Where there is no written contract, generally a person can quit or be fired at any time. However, there are important exceptions to this rule.
For example, the law does not allow anyone to be terminated based on the person’s race or sex. Likewise, a person with a legally-recognized disability cannot be terminated for having the disability where an employer’s reasonable accommodation will allow the person to perform the required job duties. A disability may be a hearing or speech impairment, AIDS, diabetes, or a number of other things. However, what qualifies as a disability is not always clear and often depends on the court hearing the case. On the question of whether obesity is a disability for purposes of employment discrimination has been handled different by various courts in different jurisdictions. At the very least, an employer takes a risk by terminating an employee because of a weight issue. A person facing termination because of being overweight is well-advised to meet with an attorney to discuss his legal options.
We frequently advise both employees and employers regarding the termination of an employment relationship. If you have any questions about what your rights are as an employee or as an employer, you will likely benefit by meeting with a qualified employment law attorney to discuss your specific situation.
The Cleveland Cavaliers surprised the basketball world by choosing Anthony Bennett as the first selection in the NBA draft. Nerlens Noel, whom many predicted would be the first pick, was not chosen until the sixth pick in the draft. Even Noel apparently expected to go higher in the draft, and reportedly said of the teams who did not select him earlier that he would “make them pay.” Noel’s disappointment may stem from his relying too much on what others—e.g., reporters, agents, even friends and family—told him would happen on draft day.
Similar to Noel’s experience, parties involved in litigation often expect to obtain a resounding judgment in their case. These expectations are not always well-founded and may be based on the opinions of others, including legal counsel. There is more one story of an attorney’s unfulfilled promise of victory. Things do not always go as hoped in life and in litigation. There is always risk involved in litigation, and, continuing with the basketball theme, there is rarely a “slam-dunk” case.
At Rowley Chapman & Barney, we will not make you promises that we cannot keep, and we will not guarantee any results in your litigation. What we will do, is give you an honest and informed opinion on the merits of your case and promise to do put forth our “A game” in working to obtain the relief you seek. If you have a questions about a lawsuit or litigation case call us at (480) 833-1113 and we will determine the merits of your case together.
It is not uncommon for a person to receive notice that a default judgment has been entered against them in a lawsuit, even though the person may have not ever known of the existence of the lawsuit. Although this may happen for a number of reasons, the first thing a person in this situation should do is contact an experienced lawsuit or litigation attorney to determine whether the default judgment can be set aside. The law provides for the setting aside of a default judgment under certain circumstances. For example, if a person can show he was never served with the lawsuit or that his failure to respond to the lawsuit was the result of “excusable neglect” then the court may set aside the judgment and allow the litigation to start over.
There are other things a court will consider in determining whether to set aside a default judgment, and an experienced lawsuit or litigation attorney can help you understand what those things are and whether they apply in your case. If you have any qustions about judgments call us at (480) 833-1113 and we will advise you about your best course of action.