As experienced Los Angeles business attorneys we understand the issues franchisees often face in running a franchise.  Recently, a former 7-Eleven executive allegedly blew the whistle on company executives who put him in charge of ‘Operation Take-Back,’ a project that was designed to rid the franchise stores in New Jersey of South Asian and Indian franchisee owners, deemed no longer a part of the company’s vision.

According to a news article at NJ.com, Ian Shehaiber was hired by 7-Eleven as a district manager/field consultant in 2010.  Soon after, he was given a $1,500 cash reward and named 2011 Rookie Field Consultant of the Year.  However, all of that changed when his bosses placed Shehaiber in charge of the project in 2012.

Shehaiber filed suit against 7-Eleven in December in state Superior Court in Middlesex County, thereafter the company requested a change of venue to the U.S. District Court due to federal labor and discrimination law issues.  According to Gerald Marks, Shehaiber’s attorney, the franchise has taken action over the past two years to interrogate, dehumanize, and ridicule Indian franchisees in their effort to retake the 7-Eleven stores and resell them at a profit.

Margaret Chabris, a spokeswoman for 7-Eleven, said in a statement that “The allegations made in this complaint are false.”  She went on in the statement to say that the franchise is dedicated to protecting other franchisees, employees, and guests by terminating the relationship with franchisees who violate the franchise agreement or the law when appropriate, and that “a few” franchisees had been caught in violation of the law and/or their contractual obligations.  Shehaiber’s attorney did not comment on Chabris’ statement.

The lawsuit claims that Shehaiber was instructed to take part in the project in mid 2012, the goal being to identify franchisees who had stolen money from the franchise.  Shehaiber also claims in the suit that meetings regarding the take-back were fueled by aggressive anti-Indian tactics and racial remarks.  He said that he was constantly in fear that he would be terminated if he spoke up; Shehaiber also claims in the lawsuit that due to his Christian faith and his supervisor’s contempt for those who are non-Muslim, he was discriminated against and forced to work in a hostile environment.

Executives at 7-Eleven who were allegedly involved in ‘Operation Take-back’ claimed that franchise owners who were Indian made a habit of attempting to take advantage of others.

It will be interesting to learn how this all turns out, and whether 7-Eleven is able to put the stores in question under corporate control.

Whether you are a franchisor or franchisee, it is important to consult with a Los Angeles business attorney specializing in franchising when problems or issues surface that you are not certain how to deal with.  At Spotora & Associates, our staff has the skill, knowledge, and experience to successfully advise and handle any and all franchise issues.

Recently, Cupertino-based Apple Inc. has been hit with a slew of new patent infringement lawsuits after the company was ordered last week to pay more than $530 million for infringing on the patents of a Texas company, according to an article at the LA Times.

Texas-based Smartflash was awarded $532.9 million by a jury, then filed an additional lawsuit on February 25 alleging that Apple violated the company’s patents in relation to devices that debuted after the original lawsuit was already in court. In the midst of all this, Ericsson, a pioneer in the Swedish mobile phone industry, hit Apple hard when the company filed seven federal lawsuits against Apple in an ongoing patent dispute, along with two complaints filed with the U.S. International Trade commission alleging that Apple had infringed on more than 40 patents in relation to various technologies relevant to iPads and iPhones.

In January of this year, a licensing agreement between Apple and Ericsson regarding royalties to be paid to the Swedish technology company for its mobile technology expired. Since that time, the companies have traded lawsuits, with Apple filing a suit against Ericsson in January regarding a fair rate for the rights to Ericsson’s patents. A spokeswoman for Apple revealed a statement made by Apple saying, “We’ve always been willing to pay a fair price to secure the rights to standards essential patents covering technology in our products. Unfortunately, we have not been able to agree with Ericsson on a fair rate for their patents so, as a last resort, we are asking the courts for help.”

Some of the patents Ericsson is taking legal action against Apple for include 2G, 3G, and 4G/LTE high-speed wireless technology; complaints filed in federal court also indicate Ericsson has taken legal action in regards to GPS technology.

While the initial lawsuit filed by Smartflash against Apple claimed infringement on three patents including devices that use iTunes and iTunes software, the new lawsuit filed by Smartflash LLC accused Apple of continuing to infringe on patents such as those for payment for songs, games, and other data in addition to methods utilized to manage digital rights. Apple denies the allegations, saying that the company manufactures no products, has no presence in the U.S., creates no jobs, and has no employees, and that Smartflash is exploiting Apple’s patent system in order to claim royalties for technology that Apple actually invented.

Spotora & Associates is a skilled team of Los Angeles intellectual property attorneys highly experienced and knowledgeable in the areas of patents, trademarks, copyright, trade secrets, and other areas of Internet law. Contact us today for unsurpassed legal guidance, support, and representation in matters regarding intangible rights.

Recently, a $90 million award against ABM Security was overturned by a California appeals court after the court found that the facts of the case were indisputable. The security company provided security guards with regular rest breaks, and the guards took them. In question was whether it was lawful for the security company to require the guards to leave radios/pagers on during these breaks, in addition to responding to security issues as needed while on break.

Essentially, plaintiffs in the case, which went to trial almost three years ago, claimed that ABM Security was not in compliance with California law because the company required guards to remain “on call” even during rest breaks. Plaintiffs maintained that during rest breaks, they should be relieved of all duties and not be required to respond to security issues, or leave pagers and radios on during these breaks. Following a lengthy court battle, plaintiffs in the case, Augustus v. ABM Security, which included thousands of former and current security guards with the company, were awarded a summary judgment.

The appeals court found that while meal breaks, or breaks that are unpaid, do not require security guards to remain on call, rest breaks do not require that employees are relieved of being on duty, only that security guards are relieved of performing actual work while on rest breaks under state law. The appeals court determined that being on call did not mean that employees perform work, however being available to work was not one and the same as performing actual work. The Court also noted that security guards for ABM engaged in activities such as making personal telephone calls and surfing the Internet while on rest break.

Ultimately, the California appeals court specified that meal breaks required that guards or employees are relieved of all duty in regards to work, while the definition of rest breaks contained no similar language.

What did this mean for employers? The bottom line is that while Department of Labor Standards Enforcement opinions and prior court rulings do not agree in regards to the extent of control employers have over employees during rest breaks, employers are not required to relieve employees of all duties during these breaks, but cannot require that security guards or other employees perform actual work.

As experienced Los Angeles employment lawyers, we realize the issues employers face in regards to employment policies and issues. For unsurpassed legal guidance and support, trust the skilled and dedicated staff at Spotora & Associates.

You are excited about owning a franchise, have asked those you know who are franchisees about their experiences and success, and perhaps have already begun work on your business plan. Is this enough, or do you need to do more to protect ensure you are protected from a legal standpoint? The quick answer – you need to hire an experienced Los Angeles franchise lawyer. Here are a few of the reasons why taking this step is so important to your success.

Franchise attorneys understand what really matters. From FDD’s or Franchise Disclosure Documents to contracts, lawyers who focus in this area of the law know what is essential to ensuring you are up-to-date with the latest franchise laws, and the various restrictions/obligations you must abide by as a franchise owner in order to avoid termination.

Guidance on how to set up your franchise business. Few franchisees understand the various options when it comes to setting up their business as a C-Corporation, LLC (Limited Liability Corporation), or Subchapter S Corporations. What are the differences, and which is best in your situation in regards to how your business will be taxed? A skilled franchise lawyer in LA can provide the guidance you need in this area of your business.

When it looks like you are destined to fail, you need an attorney’s expertise. You never expected your franchise to fail, but it does happen – all too frequently, unfortunately. The location you chose may not have been the best, or you failed to profit fast enough to stay in the game. Perhaps the franchisor is partially to blame for the failure of your business. Franchisors have a responsibility to help franchisees with the “ins and outs” of the business in regards to location, the development of new services or products, the success of other franchisees, competitive factors such as price, and other details. Another reason it’s important to hire a capable franchise lawyer – and to thoroughly read and understand the FDD.

Those involved tell you that hiring an attorney will be a waste of money. If there is one red flag in owning a franchise, this is it! Franchise developers often advise potential franchisees that the agreement contains no negotiable terms, so hiring a lawyer will simply be a waste of money. Essentially, the top priority of the franchisor is to get the agreement signed, without a professional reading over the terms to advise you of any potential problems or issues that may in fact be negotiable.

Are you considering a franchising opportunity? Going forward with this type of business opportunity involves a certain level of uncertainty and stress. By hiring a qualified Los Angeles franchise lawyer, you will enjoy peace of mind – not to mention a more restful sleep at night.

A recent breach or “hack” of Sony Corporation’s security safeguards has been widely in the news in recent weeks, however the real impact of this hack may not yet be completely realized. The breach of the company’s security safeguards has affected not only celebrities, but employees as well. Now, it seems that the thousands of leaked documents are in regards to breach of contract, health privacy, employment, and more. The private information of both celebrities and employees is at risk, but it seems to go much further according to recent news articles.

U.S. government officials feel certain that North Korea was behind the Sony hack. Whoever it was, it has certainly caused an uproar among celebrities, film makers, and the company’s own employees. In fact, intimate details about employees that never would have been made public now have. Some of the information that has been exposed due to the breach include employee social security numbers, disciplinary files, medical records, and according to one source, one of Sony’s senior executives breastfeeding diet. Not only frustrating, but embarrassing for some.

Once source claims that out of 17 employees in the U.S. who earn $1 million per year working for Sony, one is a woman. What may be upsetting to Hannah Minghella, a co-president of production at the company’s Columbia Pictures division, is that Michael DeLuca, her male counterpart, is making nearly one million dollars more for doing the same job.

Following the November 24th attack on Sony’s entertainment division, employees were advised not to connect to the company’s email system and corporate network, as it had become apparent its security system had been infiltrated. Although Sony took quick action and did everything in its power, the infiltration occurred regardless.

Sony is likely to face an untold number of lawsuits in the coming weeks and months, as much of the information leaked is reportedly in regards to salary negotiations, internal communications about specific employees, discussion of termination decisions, performance reviews, and other data that could support claims of discrimination, sexual harassment, unfair termination, and more.

As Los Angeles employment lawyers, we can only imagine the issues Sony has already and will face in the coming days and weeks. Our firm represents clients in a wide array of employee-related matters including harassment, wrongful termination, age, race, sexual preference, or religious discrimination, wage and hour law, ERISA, and more. While taking preventive measures initially in a business setting to protect against these types of claims, it is still common for employees to file claims against employers. Contact our skilled team of professionals for unsurpassed legal guidance and representation.

As Beverly Hills business attorneys, we realize how pleasant it would be if business agreements could be entered into without disputes cropping up – but that just isn’t how it happens in the real world.  In the “ideal” situation, both parties would be satisfied with the outcome and thereby benefit from the agreement, but this is simply not always the case.  There are many reasons a contract is not successfully carried out, including delays, unforeseen circumstances and financial issues.

What does ‘breach of contract’ actually mean?

When two or more parties enter into an agreement, there are specific obligations which are expected to be met by those parties (individuals or companies).  However, when one or more of those parties fail to meet the express obligations, it is known as a ‘breach’ in legal terms.  There are many actions (or even inactions) that can be considered a breach, depending on the terms of the agreement.  A breach may occur when one of the parties does not perform according to the agreement’s terms, does not perform within the time guideline outlined in the contract, or simply fails to perform at all.

When a contract is breached, or allegations made that an agreement has been breached, either party or both may desire to enforce the terms of the contract or agreement, or recover financial compensation for losses which were a result of the alleged breach.  This may be approached in a variety of ways from a legal standpoint including litigation, through mediation, binding arbitration, or other alternative methods of dispute resolution.

Examples of remedies or “relief” for breach of contract under the law

There are several remedies which may be awarded to one party by the other to settle a dispute over a contract that has been breached, including specific performance, damages, or cancellation of the contract or agreement and restitution.

Specific performance – when damages are not an option, the party who did not breach the contract may seek specific performance which simply means that the party breaching the contract may be ordered by the court to perform a specific duty so that the non-breaching individual or party essentially ends up in the position they were initially intended.  This is usually only a remedy when the terms contained in the contract are unique or rare.

Damages – damages may be compensatory, punitive, nominal or liquidated, and are the most common remedy sought when a contract is breached.  Essentially, the party who breached the contract will make payment in some form to the non-breaching party.

Cancellation and restitution – the contract or agreement may be cancelled by the non-breaching party; this party may then take action and file a lawsuit for restitution provided the party who breached the contract has been given a benefit by the non-breaching party.  Cancellation essentially relieves both parties of all obligation, and voids the contract; restitution allows the non-breaching party to reclaim the benefit given to the breaching party, putting the non-breaching party back in the position it was in before the breach occurred.

For further explanation of breach of contract and legal options, contact the Beverly Hills business attorneys at the Law Offices of Spotora & Associates.

If you’ve been tossing around the idea of incorporating your business, there are some compelling reasons why you should.  In the eyes of the law, a corporation is a “legal person,” a legal entity which exists apart and separately from the individuals who created the corporation and operate the business.  Essentially, incorporating protects you (within limits) from corporate debts and obligations and personal liability.

Not to say incorporating is for every Los Angeles business, because it is not.  There are circumstances in which becoming a corporation can be detrimental, particularly for new businesses.

The tax advantages alone are reason enough for many businesses, particularly those that are sole proprietors, to incorporate.  According to statistics, Schedule C businesses (sole proprietors) are much more likely to be audited by the IRS than corporations.  Additionally, corporations generally enjoy lower tax rates as owners may distribute at least a portion of business profits as income not considered self-employment income.

Below are some additional advantages of incorporating:

• ŸCorporations can have an unlimited life, which means the corporation can continue on even after the owner/partners are deceased.  Additionally, corporations create tax benefits in some situations, and can easily transfer ownership by transferring securities.
• ŸConfidentiality is another advantage of incorporating for those who prefer privacy, and who would rather the general public did not know all of the business affairs.
• Credibility.  There is no doubt that having CORP or INC at the end of your company’s name creates an aura of trust.  While it’s really a simple matter of how people perceive things, it still matters.  Your business is more likely to flourish, because potential clients feel more confident and secure in dealing with a corporation.

While there aren’t many disadvantages of incorporating, there are a few:

• ŸAdded paperwork.  When you incorporate your business, you will be required to pay annual fees and file with the state periodically, therefore legal record-keeping means additional paperwork.
• ŸAdded expense.  Setting up a corporation is a bit more costly than just starting to work as a sole proprietor.
• Certain formalities must be observed by owners and directors; annual meetings are required as well.

Sometimes it’s difficult for an individual or partners to determine if it would be to their benefit to incorporate.  This is where an experienced Los Angeles business incorporation attorney can help.  At Spotora & Associates, we understand that the business entity you choose can have a huge impact on whether you succeed or fail.  Contact us today, and let us counsel you on the best business formation for your company.

As companies vie to remain profitable and increase shareholder revenue, some may strategically decide to spin off business lines that can be viable, standalone companies. Last year, spinoff transactions happened at notable companies such as Kraft Foods, Sara Lee, Tyco International, McGraw-Hill, and Abbott Laboratories. The Washington Post called 2011 the “Year of the Oops” as companies decided to “…sever business lines into separate companies underscored [by] new thinking about strategy.” Many sought to “…undo strategic shifts that had been panned by investors and threatened their valuable franchises.”

When spinoffs occur, two or more public companies can be created and these businesses would be well advised to hire an experienced business attorney to consider the legal issues and potential ramifications that must be addressed.

First, the board of directors must deem that a spinoff is in the best interests of shareholders and other key stakeholders. Spinoffs can be a complex, challenging task, so the board must balance their interests with the need to treat the decision with care and fairness. It is not just about increasing share price or calming shareholder activists; spin off companies should be created for best interests in the long-term.

Companies should remember that extensive disclosures to shareholders must be completed when a spinoff transaction occurs. Legal counsel can help to prepare these required disclosure documents and inform directors of the new company what their responsibilities are in conjunction with securities regulations. Thorough due diligence is also needed to separate assets and liabilities between the original company and the spinoff. Decisions on these matters can affect the company’s future growth and risk profile, so bringing in a business attorney and financial experts can make this undertaking more successful.

Spinning off can also involve decisions on how the management team will change. This can involve employment contracts, pension plans, option and incentive plans, and collective agreements. Legal counsel can review changes in these matters to ensure that the decisions are fair and appropriate. Arrangements must also be made so that any shared services and business opportunities do not create conflicts.

Spin offs can be created without big tax implications, and legal counsel can review the requirements needed to lessen or eliminate taxes. These requirements include that the company being spun off must have been operating for at least five years and will need to have three years of audited financials. Additionally, at least 80 percent of the spinoff’s equity must be distributed to existing shareholders to avoid large capital gains tax.

Anthony Spotora is a Los Angeles business lawyer and Los Angeles business litigation lawyer. To learn more, visit Spotoralaw.com.

When a corporation is being sold, merged, or acquired, the duties of the board of directors shift.
The board members must not think of the business’ survival and instead focus on getting the best price and upholding the shareholders’ interests. Of utmost importance is the duty of care for the directors to utilize and gather all the materially accurate information to be able to determine the most appropriate buyer and make the most informed decision.

The business judgment rule will be used by the courts to see if the duty of care was upheld. This rule analyzes if actions were done in good faith and in line with how a reasonable person would have acted.

Board members should not be acting with self interest, bias, or only looking to preserve their roles. This duty of loyalty also includes the board of directors disclosing any conflicts of interest and a duty of confidentiality to prevent potentially harmful publicity or crises.

In real terms, all efforts must be made to receive the highest value for the corporation. Any preference for one bidder over another should be in line with getting the maximum price. If bias is discovered or a dispute ensues because favoritism is occurring for the wrong reasons, a breach of fiduciary duty can be claimed.

The courts recognize that even when the sale of a corporation is completed, some amount of business risk is taken. If the board of directors has made a decision that is in the shareholders’ best interests to further its’ goals, board members will be greatly protected from liability. But if the duties of care, loyalty, and disclosure are not upheld, a lawsuit can ensue. When wrongdoing is proven and shown to have caused damage to the shareholders, compensation for actual damages and sometimes even punitive damages can be sought. Courts do not rule favorably in circumstances where a board of directors or select individuals on the board have a conscious disregard for their duties in a sale, merger, or acquisition.

It is therefore advised to have a team in place to help the board of directors make the soundest judgments when an opportunity arises for the business to change ownership. An experienced business attorney is essential for the board of directors to have to review their duties and actions as the research and transactions unfold. Enlisting a competent attorney ahead of time can help to minimize risk and comply with all pertinent regulations.

Anthony Spotora is a Los Angeles business lawyer and Los Angeles business litigation lawyer. To learn more, visit Spotoralaw.com.

In-N-Out Burger has a following of restaurant-goers that crave its “fresh to order” hamburgers. Since 1948, the company has excelled in burgers, fries, shakes and a devout commitment to clean, efficient fast food. It has also relied on its boomerang logo and signage to stand out from the competition since its inception. No wonder that In-N-Out Burger was recently shocked to find that another restaurant was using a very similar boomerang to promote its company.

The lawsuit, In-N-Out Burgers vs. Pappas Restaurants alleges that Pappas’ used boomerang arrow signage outside its Houston, Texas airport location. In-N-Out Burgers has more than 260 locations throughout California, Texas, Arizona, Nevada and Utah. They allege that the boomerang logo is closely identified in the marketplace for In-N-Out Burgers and could cause confusion amongst the public. Thus, Pappas’ is allegedly engaging in trademark infringement under federal laws and unfair competition under Texas law, In-N-Out Burgers claims.

Pappas Burger has three burger restaurants in Houston and uses a yellow boomerang that bends with lights similar to In-N-Out’s signage. Case watchers say that the case will come down to how similar the signs are and how much confusion the two signs could have caused. What is interesting is that its logo is more of a baseball-oriented font and feel but the Houston signage does largely use a boomerang.

When companies go after each other for trademark infringement for a sign or logo, it shows that they are concerned about consumers being deceived, confused, or mistaking one company for another. Businesses spend a lot of time and money on signage and logos to have the public associate a set of words and images to their brand. Packaging, advertising, and promotions can also mirror the large-scale logo. Unless there is a partnership or marketing agreement that allows one business to utilize key parts of another’s logo for mutual benefit, trademark infringement can be charged.

An experienced trademark attorney is essential to protecting a logo and associated intellectual property assets. When a problem arises, a company can request a temporary injunction to prevent further harm, amongst other pursuits of resolution. Lost profits and losing part of a customer base can be devastating to a business when a trademark dispute arises. Moreover, in instances where a rival is acting in bad faith or confusion can be proven, monetary awards can be given. Punitive damages and attorney’s fees can also be sought after. Unjust enrichment and deterrence to continue the act of infringement is something that the courts will also look at when deciding a trademark case.

Anthony Spotora is a Los Angeles trademark attorney, Los Angeles intellectual property attorney, and Los Angeles business attorney. To learn more, visit Spotoralaw.com.