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CALIFORNIA CORPORATE & SECURITIES LAW

California And Liquidated Damage Clauses

California Civil Code Section 1671(b) provides that “a provision in a contract liquidating the damages for the breach of the contract is valid unless the party seeking to invalidate the provision establishes that the provision was unreasonable under the circumstances existing at the time the contract was made”.  There are several key exceptions to this standard.  First,…

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Court of Appeal Defines Good Faith Defense Under The UFTA

In 2015, the California legislature refurbished the Uniform Fraudulent Transfer Act and rechristened it as the Uniform Voidable Transactions Act.  2015 Cal. Stats. Ch. 44 (SB 161 (Vidak)).  The UFTA has not left the stage entirely as courts continue to address disputes arising under the former law. In Nautilus, Inc. v. Yang, 2017 Cal. App. LEXIS…

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Best Efforts – A California Perspective

UCLA Law School Professor Stephen Bainbridge posted some thoughts yesterday on the meaning of contractual “best efforts” requirements.  See What do “best efforts” and variants mean? A proposed set of definitions.  The springboard for Professor Bainbridge’s piece was the Delaware Supreme Court’s recent decision in Williams Cos. v. Energy Transfer Equity, L.P., 2017 Del. LEXIS 128 (Del.…

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Can It Be That California, “The Biggest Loser” Is Also Number One?

In February, I published a post entitled Is California “The Biggest Loser”.  My reference was to Professor Lynn LoPucki’s finding that “California, home to 1,210 [public] companies but state of incorporation for only 112, is the biggest loser”.  However, California is not last in all things.  SEC economists Drs. Vladimir I. Ivanov and Anzhela Knyazeva recently issued a…

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Why Some Delaware Corporations May Be Concerned With California’s Supermajority Vote Requirements

Section 710(b) of the California Corporations Code defines a “supermajority vote” as a requirement set forth in a corporation’s articles of incorporation (or certificate of determination) that specified actions be approved by a larger proportion of the outstanding shares than a majority, or by a larger proportion of the outstanding shares of a class or series than…

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Can The Legislature Hire Its Own Lawyer?

In early January, California Senate President pro Tempore Kevin de León and Assembly Speaker Anthony Rendon jointly announced that the California Legislature had hired outside legal counsel to advise on potential legal challenges with the incoming administration of Donald Trump.  I found this interesting as I could not recall a prior circumstance in which the legislature had ever…

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Should California Employers Be Insecure About California’s State-Run Retirement Savings Program?

Last September, California Governor Jerry Brown signed into law SB 1234 (De León) which implements the California Secure Choice Retirement Savings Program.  2016 Cal. Stat. ch. 804. If you haven’t heard of the program, California State Treasurer John Chiang describes it as the “most ambitious push to expand retirement security since the passage of Social Security in the…

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This Definition Of A Factor May Surprise You

The creditable H.W. Fowler described “factor” as “one of those words . . . which are so popular as thought-saving reach-me-downs that all meaning is being rubbed off them by constant use.”  Fowler’s Modern English Usage (2d ed. p. 184). When I think of factoring in the legal sense, I think of someone who is engaged…

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Pay By Another Name Might Be Salt

Yesterday’s post concerned the classification of directors and officers as employees for purposes of California’s workers’ compensation law. Effective January 1, 2017, California Labor Code Section 3351(c) will define “employee” to include all “officers and members of boards of directors of quasi-public or private corporations while rendering actual service for the corporations for pay” (read…

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Why You Should Have Read Last Week’s Posts On California’s D&O Loan Ban

I spent the better part of last week writing about California Corporations Code Section 315.  The statute general prohibits a corporation (Section 162) from making a loan of money or property to, or guaranteeing the obligation of, an officer or director without specified shareholder approval.  What happens if a prohibited loan is made? The good…

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