Coronavirus and Covid-19 Issues and Defenses in Contracts

By Kathleen J. Smith, Civil Litigation Attorney

Let’s be clear—Covid 19’s pandemic shutdown may affect your company’s ability to perform its contracts, but it’s no panacea for avoiding all your business obligations. Your contracts may contain variously worded “force majeure” clauses. That doesn’t mean you can ignore paying for services already received.

Here is a typical force majeure clause:

Force Majeure. Any delay or failure by either party hereto in performance hereby shall be excused if, and only to the extent that, such delays or failures are caused by occurrences beyond such party’s control, including Acts of God, decrees or restraints of governments, strikes or other labor disturbances, war, sabotage, and any other cause or causes which cannot be controlled by such party. Notification of such delay or failure in performance shall be promptly provided to the other party, including the cause thereof, and the extent of the performance which will be delayed or not performed.

See that? If the pandemic shutdown qualifies as a “decree or restraint of government” causing delay or failure in your performance, you have to promptly notify the other party about the effect on performance. Many commercial landlords have tenants who failed or delayed paying rent without ever telling the landlord that the shutdown caused the failure or delay.

On the other hand, if normal business vagaries and risk exposure caused the failure  or delay in performance, force majeure is not a trump card. “A force majeure clause is not intended to buffer a party against the normal risks of a contract. The normal risk of a fixed-price contract is that the market price will change. If it rises, the buyer gains at the expense of the seller ...; if it falls, as here, the seller gains at the expense of the buyer.... A force majeure clause interpreted to excuse the buyer from the consequences of the risk he expressly assumed would nullify a central term of the contract.” Horsemen's Benevolent & Protective Assn. v. Valley Racing Assn., 4 Cal. App. 4th 1538, 1565 (1992), modified (Apr. 6, 1992) citing Northern Indiana Pub. Serv. v. Carbon County Coal (7th Cir.1986) 799 F.2d 265 at 275.

If the pandemic shutdown makes it illegal for you to perform—think live stage performances—then you have a defense to a breach of contract claim.

Witkin says: The excuse of impossibility is covered in several Code sections:

“A condition in a contract, the fulfillment of which is impossible or unlawful … , or which is repugnant to the nature of the interest created by the contract, is void.” (C.C. 1441.)

“The object of a contract must be lawful when the contract is made, and possible and ascertainable by the time the contract is to be performed.” (C.C. 1596.)

Performance is excused “[w]hen it is prevented or delayed by an irresistible, superhuman cause, or by the act of public enemies of this state or of the United States.” (C.C. 1511(2); see Pub.Contr.C. 7105(a), (b), infra, § 1027.)

In sales, California Commercial Code 2615 provides excuse by failure of a presupposed condition that there would be no pandemic. But the seller may be required to make/produce whatever product they are able and allocate among buyers. Section  2615 provides:

Except so far as a seller may have assumed a greater obligation and subject to the preceding section on substituted performance:

(a) Delay in delivery or nondelivery in whole or in part by a seller who complies with paragraphs (b) and (c) is not a breach of his duty under a contract for sale if performance as agreed has been made impracticable by the occurrence of a contingency the nonoccurrence of which was a basic assumption on which the contract was made or by compliance in good faith with any applicable foreign or domestic governmental regulation or order whether or not it later proves to be invalid.

(b) Where the causes mentioned in paragraph (a) affect only a part of the seller's capacity to perform, he must allocate production and deliveries among his customers but may at his option include regular customers not then under contract as well as his own requirements for further manufacture. He may so allocate in any manner which is fair and reasonable.

(c) The seller must notify the buyer seasonably that there will be delay or nondelivery and, when allocation is required under paragraph (b), of the estimated quota thus made available for the buyer.

Lawsuits are still happening, even with the shutdown of many law offices and courthouses. Contact our litigation experts today! We can remotely intake any new case and enforce contract rights in court with complete efficiency.  Pleadings are filed electronically. Court hearings are telephonic. Even mediations and arbitrations are done on videoconferencing platforms. Lawsuits happen—completely untouched by human hands, with personal attention remotely applied.

Law and Social Distancing With Covid-19

Coronavirus has forced lawyers to try out new remoting practices. This week, our Ventura County Superior Court closed to general civil litigation for a week. The first three days were treated as court holidays, so any deadlines just got extended three days. Expect to see some very finely written briefs and pleadings in the pipeline. Also expect some delays in getting your case heard.

Attorneys scrambled to find out what happened to their civil hearings, and many learned that their cases were suddenly delayed by thirty days when the court sua sponte continued hearings for a month. Stipulations to continue trials burned up the interwebs. Depositions, looming in the witnesses’ consciousness, were postponed or rescheduled as videoconferences.

Suddenly settlements that looked reasonable became unfundable when business shutdowns choked off business incomes intended to fund the settlements. Clients fretted over legal bills, incurred in the previous month when many believed Covid-19 was not headed our way. Supply chains from overseas dwindled, and clients with contracts to fulfill were left emptyhanded.

Civil litigation can continue in a time of WFH—working from home. A law firm’s VPN or cloud computing combined with the California Electronic Transactions Act (Civil Code § 1633.1 et seq.) give the law office everything they need to continue pleading and briefing right on schedule. Our firm’s VPN provides access to my office desktop, containing our shared drive with all client files; our timekeeping program; and our email. Setting up our office voicemail to record as an email means no one knows if we’re WFH or WFO.

An electronic signature is defined as “an electronic sound, symbol, or process attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the electronic record. For purposes of this title, a “digital signature” as defined in subdivision (d) of Section 16.5 of the Government Code is a type of electronic signature.”

With remote computing, a litigation brief can be drafted with legal research through traditional online tools, and the final brief can be electronically signed and e-filed and e-served. Electronic service is available by agreement or consent. (Civ. Proc. § 1010.6) When everyone’s in the same boat, they’ll see the wisdom of agreeing.

By: Kathleen Smith, Esq.

Kathi Smith Featured in Attorney At Law Magazine

Attorney Kathi Smith's article, "Prevailing Party Attorney's Fees" was recently published in Attorney at Law Magazine!

Prevailing Party Attorney’s Fees

By Kathleen J. Smith

When the parties’ contract provides that the prevailing party shall recover reasonable attorney’s fees in any dispute arising out of the contract, fees sought must be unreasonable in relation to the services performed. If the opponent’s case was over-lawyered, if  fees are block-billed, if clerical tasks are included in the billings, then their Motion for Award of Attorney’s Fees can be attacked. In opposition, ask the court to recalculate the lodestar—the hours times the rate-- and then reduce the lodestar by an amount sufficient to render a reasonable fee.

Although most billing software takes the effort out of item-billing, some attorneys still block bill. Block billing occurs when “a block of time [is assigned] to multiple tasks rather than itemizing the time spent on each task.” (Mountjoy v. Bank of America, N.A. (2016) 245 Cal.App.4th 266, 279, quoting Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 1010.) Block billing is disfavored as it prevents the court from determining reasonableness. (E.g. Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1329)

In Christian Research, defendant prevailed in an anti-SLAPP motion to strike, and was entitled to recover their fees incurred in bringing the motion. Defendant sought recovery for 600 hours of attorney time, but, due to block-billing, was only awarded fees for 71 hours. The block-billing resulted in vague entries that the court, in the exercise of discretion, refused to agree were expended in performing legal work on the motion to strike. The block-billing destroyed credibility and the fees were severely reduced.

In an attorney’s fees motion, frequently the prevailing party’s attorney will submit their billing records without deleting charges for unnecessary work. Time spent on unnecessary tasks should be disallowed as unreasonable.

Clerical tasks are not billable. Attorneys in small firms may have minimal help from clerical staff, and therefore have to do much of the clerical work themselves. Clerical tasks like collating exhibits and uploading and serving their closing brief should not be allowed, even if done by attorneys.

After reducing the lodestar to a reasonable sum, then the lodestar can be further reduced to reflect the Thayer factors.  This court is empowered to reduce downward the amount of fees incurred based on by applying a negative 'multiplier' to take into account a variety of factors, including the quality of the representation, the novelty and complexity of the issues, the results obtained, and the contingent risk presented. (Thayer v. Wells Fargo Bank (2001) 92 Cal.App.4th 819, 833.)

For instance, the first Thayer factor may help in reducing the lodestar. If the quality of representation was lacking, the court will recall observing deficient actions and consider reducing the lodestar.  Another example is the second Thayer factor, where the novelty and complexity of the issues was not sufficient to maximize the attorney’s fee award.

On the other hand, if the attorneys are experts in the area of the law addressed in the case, the courts may take a harder look at the amount of time they spend on legal research and preparation of briefs. Recently, in Clifford v. Trump, the court reduced the fee award by 25% because, “given the sophistication of counsel and their substantial billing rates (partner’s rate-- $841.64; the most junior associate--$307.60 per hour), this case should have been litigated much more efficiently without sacrificing quality." Clifford v. Trump (C.D.Cal.) Dec. 11, 2018, No. CV 18-06893-SJO (FFMx)) 2018 U.S.Dist.LEXIS 211297, at *16.) In Clifford, President Donald Trump had hired “incredibly qualified” attorneys to defend a Tweet-based defamation case, but the attorneys spent too much time collecting plaintiff Clifford’s (AKA Stormy Daniels) adult filmography as evidence in an anti-SLAPP motion. The court considered the filmography but determined it was extraneous to the motion.

The California Supreme Court in Serrano v. Priest stated, “The experienced trial judge is the best judge of the value of professional services rendered in his or her court.” (Serrano v. Priest (1977) 20 Cal. 3d 25, 49.) “When the trial court is informed of the extent and nature of the legal services rendered, it may rely on its own experience and knowledge in determining their reasonable value.” (Estate of Straus (1904) 144 Cal. 553, 557–558)

In Elconin v. Yalen (1929) 208 Cal. 546, 549-50, the Supreme Court upheld a trial court’s finding that the reasonable value of an attorney’s services was $300 rather than $1,500. The Court stated that the trial court had before it detailed evidence regarding the nature and extent of the services rendered and could use its own experience and judgment to determine the reasonable value, with or without the aid of witnesses’ testimony.

Based on the trial court’s familiarity with the legal services rendered, the court should be urged to recalculate the loadstar and then reduce the lodestar by a reasonable percentage to reflect the value of the work in connection with the services rendered.

If you have questions about prevailing party attorney’s fees, our attorneys at Schneiders & Associates can help! Contact us today to schedule a consultation.

Prevailing Party Attorney’s Fees

By Kathi Smith

When the parties’ contract provides that the prevailing party shall recover reasonable attorney’s fees in any dispute arising out of the contract, fees sought must be reasonable in relation to the services performed. If the opponent’s case was over-lawyered, if  fees are block-billed, if clerical tasks are included in the billings, then their Motion for Award of Attorney’s Fees can be attacked. Your attorney could ask the court to recalculate the lodestar—the hours times the rate-- and then reduce the lodestar by an amount sufficient to render a reasonable fee.

Although most billing software takes the effort out of item-billing, some attorneys still block bill. Block billing occurs when “a block of time [is assigned] to multiple tasks rather than itemizing the time spent on each task.” (Mountjoy v. Bank of America, N.A. (2016) 245 Cal.App.4th 266, 279, quoting Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 1010.) Block billing is disfavored as it prevents the court from determining reasonableness. (E.g. Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1329)

In an attorney’s fees motion, frequently the prevailing party’s attorney will submit their billing records without deleting charges for unnecessary work. Time spent on unnecessary tasks should be disallowed.

Clerical tasks are not billable. Attorneys in small firms may have minimal help from clerical staff, and therefore have to do much of the clerical work themselves. Clerical tasks like collating exhibits and uploading and serving their closing brief should not be allowed, even if done by attorneys.

After reducing the lodestar to a reasonable sum, then the lodestar can be further reduced to reflect the Thayer factors.  This court is empowered to reduce downward the amount of fees incurred based on by applying a negative 'multiplier' to take into account a variety of factors, including the quality of the representation, the novelty and complexity of the issues, the results obtained, and the contingent risk presented. (Thayer v. Wells Fargo Bank (2001) 92 Cal.App.4th 819, 833.)

For instance, the first Thayer factor may help in reducing the lodestar. If the quality of representation was lacking, the court will recall observing deficient actions and consider reducing the lodestar.  Another example is the second Thayer factor, where the novelty and complexity of the issues was not sufficient to maximize the attorney’s fee award.

The Supreme Court in Serrano v. Priest stated, “The experienced trial judge is the best judge of the value of professional services rendered in his or her court.” (Serrano v. Priest (1977) 20 Cal. 3d 25, 49.) “When the trial court is informed of the extent and nature of the legal services rendered, it may rely on its own experience and knowledge in determining their reasonable value.” (Estate of Straus (1904) 144 Cal. 553, 557–558) In Elconin v. Yalen (1929) 208 Cal. 546, 549-50, the Supreme Court upheld a trial court’s finding that the reasonable value of an attorney’s services was $300 rather than $1,500. The Court stated that the trial court had before it detailed evidence regarding the nature and extent of the services rendered and could use its own experience and judgment to determine the reasonable value, with or without the aid of witnesses’ testimony.

Based on this court’s familiarity with the legal services rendered, the court should recalculate the loadstar and then reduce the lodestar by a reasonable percentage to reflect the value of the work in connection with the services rendered.

            If you have questions about prevailing party attorney’s fees, our attorneys at Schneiders & Associates can help! Contact us today to schedule a consultation.

Umbrella Insurance: What It Is and Why You Need It

Umbrella Insurance: What It Is and Why You Need It

Lawsuits are everywhere. What happens when you are found to be at fault in an accident, and a significant judgment is entered against you? A child dives head-first into the shallow end of your swimming pool, becomes paralyzed, and needs in-home medical care for the rest of his or her lifetime. Or, you accidentally rear-end a high-income executive, whose injuries prevent him or her from returning to work. Either of these situations could easily result in judgments or settlements that far exceed the limits of your primary home or auto insurance policies. Without additional coverage, your life savings could be wiped out with the stroke of a judge’s pen. The legal fees spent defending any such claim could be devastating to your finances.

Typical liability insurance coverage is included as part of your home or auto policy to cover an injured person’s medical expenses, rehabilitation or lost wages due to negligence on your part. The liability coverage contained in your policy also covers expenses associated with your legal defense, should you find yourself on the receiving end of a lawsuit. Once all of these expenses are added together, the total may exceed the liability limits on the home or auto insurance policy. Once insurance coverage is exhausted, your personal assets could be seized to satisfy the judgment.

However, there is an affordable option that provides you with added liability protection. Umbrella insurance is a type of liability insurance policy that provides coverage above and beyond the standard limits of your primary home, auto or other liability insurance policies. The term “umbrella” refers to the manner in which these insurance policies shield your assets more broadly than the primary insurance coverage, by covering liability claims from all policies “underneath” it, such as your primary home or auto coverage.

With an umbrella insurance policy, you can add an additional $1 million to $5 million – or more – in liability coverage to defend you in negligence actions. The umbrella coverage kicks in when the liability limits on your primary policies have been exhausted. This additional liability insurance is often relatively inexpensive compared to the cost of the primary insurance policies and potential for loss if the unthinkable happens.

Generally, umbrella insurance is pure liability coverage over and above your regular policies. It is typically sold in million-dollar increments. These types of policies are also broader than traditional auto or home policies, affording coverage for claims typically excluded by primary insurance policies, such as claims for defamation, false arrest or invasion of privacy.

If you like to learn more about umbrella insurance and how it may be beneficial to you, please make an appointment to speak with an attorney at Schneiders & Associates, L.L.P. today!

By: Roy Schneider, Esq. 

Win Your Real Estate Lawsuit With Interlocutory Judgment

It’s not unusual for family relatives to co-own real estate: parents leave the family home to all their offspring as investment property, or siblings pool their inheritance from a deceased parent and purchase investment property. But then time passes, and eventually, there will be a sibling who does not wish to co-own property with her siblings any more. Or one of the co-owners is unable or unwilling to contribute financially to upkeep, taxes or other expenses.

Code of Civil Procedure section 872.720 (a) provides, “If the court finds that the plaintiff is entitled to partition, it shall make an interlocutory judgment that determines the interests of the parties in the property and orders the partition of the property and, unless it is to be later determined, the manner of partition.”

Code of Civil Procedure section 872.710 (b) states, “Except as provided in Section 872.730 [having to do with partnership property], partition as to concurrent interests in the property shall be as of right unless barred by a valid waiver.” (emphasis added) Parties’ interests are “concurrent” where the subject property is owned in undivided interests. [E.g. LEG Investments v. Boxler (2010) 183 Cal. App. 4th 484, 493(owner of undivided interest had absolute right to partition).]

Partition “in kind” is typically not feasible where the real estate is a single legal parcel. In that case, the court will find that partition “in kind” would be inequitable. The court has the power, in such circumstances, to order partition by sale. Code of Civil Procedure section 872.820 provides,

Notwithstanding Section 872.810, the court shall order that the property be sold and the proceeds be divided among the parties in accordance with their interests in the property as determined in the interlocutory judgment in the following situations:

(a)  The parties agree to such relief, by their pleadings or otherwise.

(b)  The court determines that, under the circumstances, sale and division of the proceeds would be more equitable than division of the property. For the purpose of making the determination, the court may appoint a referee and take into account his report.

In most real estate partition cases, it would be more equitable to sell the property than to order division. In one case we litigated, the subject property was a single residential parcel in Ventura County, and there were two residences on the parcel, which were rented out. The residences were different types, one being a small, low-rent residence and the other being a three-bedroom higher rent residence.

Courts have held that partition actions are subject to the Subdivision Map Act  Government Code section 66410.[E.g. Pratt v. Adams (1964) 229 Cal. App. 2d 602 (disallowing landowners’ attempt to circumvent Map Act by partition action because partition should not be used to defeat salutary purposes of Act).] The fact that the subject property was a single parcel meant it was more equitable to partition “by sale.”

Code of Civil Procedure section 873.240 states, “Where real property consists of more than one distinct lot or parcel, the property shall be divided by such lots or parcels without other internal division to the extent that it can be done without material injury to the rights of the parties.” Since the subject property in that case was one parcel consisting of two street addresses, dividing the property into thirds would have done material injury to the owners’ rights.

Code of Civil Procedure section 873.010 (a) provides, “The court shall appoint a referee to divide or sell the property as ordered by the court.” Section 873.040 (a) provides, “The court shall appoint as referee under this title any person or persons to whose appointment all parties have consented.” Plaintiff nominates a qualified individual to act as referee. Once the referee agrees to accept the appointment, the court will appoint the referee and the sale will occur.

We encourage you to contact the real estate attorneys at Schneiders & Associates, L.L.P. for more information or to schedule a consultation.

Wage and Hour Settlement Needs Court Approval

By: Kathleen Smith, Esq.

When the volleys of accusations and defenses have played out in litigation, parties usually agree to settle their lawsuit. Typically, litigants are free to negotiate a mutually agreeable—and mutually disagreeable—settlement without involving the court other than to file a Request for Dismissal. But in a PAGA case, the parties must obtain a court order approving settlement of Plaintiff’s penalty claims. [Labor Code §2699(l)(2)]

The Labor Code “Private Attorney Generals Act” (“PAGA” Labor Code section 2698 et seq.) enables an individual “aggrieved employee” to enforce Labor Code penalties for wage and hour violations against the employer if the Labor and Workforce Development Agency (LWDA) does not do so. The Plaintiff is empowered to settle the entire penalty assessment, for all employees whom Plaintiff represents in the PAGA representative action.

New rules in 2016 require the parties to notify the LWDA within 10 days after entry of the judgment or order approving settlement. Upon resolution of the dispute, either at trial or by settlement, if penalties are assessed against the employer, 75% of the recovered penalties is paid to the LWDA and 25% of the recovered penalties is paid to the Plaintiff. Additionally, Plaintiff is entitled to recover attorney’s fees.

An employer will probably defend the PAGA case on the grounds that it is extremely unrealistic that PAGA penalties should be assessed because there is a good faith dispute as to whether and when the wages were due. The PAGA law allows the court to award a lesser amount than the maximum civil penalty. The lesser amount is possible where, based on the facts and circumstances of the particular case, the maximum penalty would result in an award that is unjust, arbitrary and oppressive, or confiscatory. [Labor Code §2699(e)(2)]

So, in settlement, the parties will typically reach a compromise of the penalty amounts that are set forth in the Labor Code. For the settlement to be valid, the parties must show the court why the settlement is a fair and reasonable compromise of the PAGA penalties.

In a wage and hour context--where PAGA penalties typically represent a large portion of the claimed recovery--the court has the power to approve a settlement that allocates settlement recovery to the PAGA claims.  Nordstrom Commission Cases (2010) 186 Cal.App.4th 576, 589 (approving wage and hour class settlement of PAGA claims, even though no funds allocated to PAGA claims and no portion of settlement paid to LWDA).

Since we know that the vast majority of litigation results in settlement rather than judgment by verdict or motion, we should know how to properly conclude the settlement under the PAGA. Since we know that a good settlement is one where neither party is happy, at least we can make the client happy with a properly prepared settlement that concludes the litigation completely.

If your legal dispute has risen to the level of civil litigation, contact the attorneys at Schneiders & Associates, L.L.P.  We will be pleased to meet with you for a consultation so that you can explain your case, ask your questions and make sure you are comfortable with our law firm.  For more information, please call our Oxnard or Westlake Village office at (805) 764-6370.

Oral Contracts & The Statute of Frauds- Is The Agreement Binding?

By Ted Schneider, Esq.

There is a widespread misconception that verbal contracts are unenforceable.  A contract made orally with another party, without embodying the particular terms in a signed writing, can still be valid and binding. However, without a signed writing, any disagreement between the parties concerning the deal terms will create multiple problems for both parties. In order for a court to enforce a verbal contract, each party will have to try to prove its version of the terms of the deal, and that there was in fact a meeting of the minds of the parties. This could involve pricey litigation and an extensive discovery process. Therefore, it is advisable to have an attorney draft any contractual agreement.

Moreover, according to the Statute of Frauds, there are certain contracts that must be in writing in order to be legally binding. This includes: (i) contracts for the sale of land or real estate, (ii) surety agreements (in which one person guarantees to take over another's contractual obligations), and (iii) agreements that cannot be performed within one year. Other agreements that must be written to be legally binding include agreements “made in the consideration of marriage,” and those made for the sale of goods valued at $500 or more. If the requirements for contractual validity are not met, either party runs the risk of the other party rescinding the contract by declaring it void.

In an effort to prevent deception and fraud, the Statute of Frauds requires specific written terms for a contract to be valid. The Statute of Frauds requires the document to include a description of the “subject matter” of the agreement, the primary conditions of the deal, and the signatures of the parties. These requirements may vary with the sale of goods under the Uniform Commercial Code, where a signature only by the “party to be charged” (rather than both parties) may be sufficient. For a sale of goods, the terms should include the price and quantity of the goods to ensure the contract will be enforced.

Often, even if the contract is unenforceable under the Statute of Frauds, it may be saved if one party suffered damage or cost by relying on the oral contract (i.e., the verbal promises made by the other party), and if the injured party can prove this reliance in court. Likewise, an exception may exist if “specially manufactured goods” were provided under the contract or one party “partially performed” what was required by the agreement. The outcome may also vary if two merchants were the contracting parties, rather than a business and a consumer.

Seek advice from an experienced business law and contract attorney at Schneiders & Associates, LLP to draft your agreements to ensure they are legally enforceable, or to have one our attorneys evaluate a verbal agreement that you may be trying to enforce.

Schneiders & Associates, L.L.P. Welcomes Experienced Litigation Attorney Georgianna Pennington Regnier to the Firm

Ventura County business law firm Schneiders & Associates, L.L.P. welcomes attorney Georgianna Pennington Regnier to the firm. Georgianna practices in the areas of business and civil litigation, employment law in State and Federal courts and in administrative forums with an emphasis on Federal Civilian Employees. Georgianna will be joining Attorney Kathleen Smith at Schneiders & Associates, L.L.P., in the firm’s litigation practice. Kathi comments on the expansion of the firm’s litigation team, “I am enthusiastic about the new opportunity to work with Georgianna. Georgie is an outstanding attorney who is widely respected for practicing civil litigation in our courts for decades, and will enhance the firm’s exemplary complex litigation practice . The growth in our litigation department is an energizing increase in strength for our clients.”

Georgianna is experienced in dispute resolution and served as a court appointed arbitrator and as Pro Tem Mandatory Settlement Conference Judge for many years. She recently prevailed before the United States Court of Appeals for the Federal Circuit on appeal from a United States Federal Court of Claims judgment. Georgianna has prevailed on groundbreaking federal anti-discrimination cases and was awarded $2,200,000 in a sexual abuse trial.

Georgianna’s license to practice extends from all California courts to Washington, D.C.  She also advises non-profit charitable corporations and serves as general counsel on various local and international boards.

Georgianna also serves as general counsel for the family owned corporation she co-founded−managing trademarks, contracts and corporate matters and overseeing operations.

Schneiders & Associates, L.L.P. is a multi service law firm successfully counseling individual and business clients in matters relating to business transactions, business litigation, employment law, estate planning, real estate law, bankruptcy, non-profit law, homeowners associations, family law, intellectual property, and land use and entitlements. For more information on Schneiders & Associates, LLP, please contact us through www.rstlegal.com or call (805) 764-6370.

 

Common Lawsuits Brought Against Small Businesses

By Ted Schneider, Esq.

It is impossible to predict every lawsuit that a small business might possibly face. There is nothing to prevent angry vendors, entitled customers, or disgruntled employees from filing a lawsuit, even if there is no legitimate basis for it. The more a business owner delegates responsibilities to employees, the greater the risk that an employee makes a mistake and exposes the business to a lawsuit. Even the most vigilant, hands on business owner could make a mistake that can lead to a complaint filed against the business.

The most common lawsuits brought against businesses are brought by employees – typically discrimination, wrongful termination suits or claims for wage and hour violation. The impetus for such a suit can be anything from a fired employee feeling slighted to an employee being demoted or passed over for an advancement opportunity. If the employee or candidate believes that the action was taken for a reason related to race, gender, religion, sexual orientation, gender identity, or another protected classification, that employee might file a lawsuit. It is important to document any sort of negative or positive behaviors at work, so that if an employee does complain of discrimination, the court can see the employee’s work history and the real reason why he or she may have been terminated or passed over for a promotion. Disparaging remarks made about any of these protected classes have no business in a work place as they can create a hostile work environment and lead to lawsuits as well. In the event that an employer is faced with a lawsuit, or threat of a lawsuit by an employee or former employee, it is advisable that the employer seek counsel immediately from a knowledgeable attorney experienced in employment law and employment litigation.

Other common lawsuits brought against businesses concern overtime pay. Many employers deny their employees overtime pay in the interest of saving money, often through misclassifying the employee as “exempt” and paying the employee on a salary basis. This can be significantly more expensive in the long run because, if an employee sues, he or she may be entitled to back pay (potentially up to four years), penalties, and applicable attorneys’ fees. It is a good idea to discuss the new federal overtime rules with an experienced employment law attorney and to have contracts or offer letters clearly establishing the relationship between an employer and an employee to minimize confusion. Working with an experienced attorney is the best solution for drafting these agreements and avoiding these types of lawsuits.

It also makes sense to put agreements with vendors and customers in writing. The contracts should include a general description of the work to be performed, a list of any items to be delivered, a project schedule with deadlines, the fee, and the circumstances under which additional fees might be charged, warranties included with the work, indemnification, how long the contract lasts, how it can be terminated, and how disputes will be resolved.

Personal injury lawsuits against businesses are also common. In addition to keeping a place of business in safe condition, it is important that employees are properly classified as employees or independent contractors, and that the business carries the correct worker’s compensation insurance. Most states require employers to carry insurance in case of a workplace injury. Additionally, employees who are injured at work are usually precluded from suing their employer and are instead referred to worker’s compensation courts; however, an employer may be responsible for an injury and associated damages of an employee that has been misclassified as an independent contractor, and therefore no workers’ compensation insurance coverage was in place for the employee.

The attorneys at Schneiders & Associates L.L.P. are well versed in the areas of employment law, contracts, and litigation. For more information on any of the above, please contact us at www.rstlegal.com, info@rstlegal.com, or 805-764-6370.