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CALIFORNIA CORPORATE & SECURITIES LAW

California Court Issues Non-Competition Order

Covenants not to compete have been in legislative disfavor in California since 1872.  This animus is currently codified at Section 16600 of the Business and Professions Code which provides that with certain statutory exceptions “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that…

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Court Rejects Use Of Alter Ego Doctrine To “Borrow” Contractor License

California’s Contractors’ State License Law, Business & Professions Code Section 7000 et seq., requires contractors to be licensed unless they are exempt from licensure.  Those who perform contracting work without a license run a very real risk of working for free.  Section 7031(b) provides, with one exception, that a person who uses an unlicensed contractor may bring…

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Classifying A Coterie Of Covenants

Yesterday, I wrote about Judge Lucy Koh’s decision in SriCom, Inc. v. eBisLogic, Inc., 2012 U.S. Dist. LEXIS 131082 (N.D. Cal., Sept. 13, 2012) concerning the enforceability of a no-hire agreement.  Judge Koh mentions an earlier ruling by Judge Marilyn Hall Patel that describes five categories of covenants not to compete, Thomas Weisel Ptnrs. LLC v. BNP…

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Court Says “No Way” To No-Hire

California is known for its hostility to covenants not to compete.  Legal antipathy to these kind of agreements didn’t start here, however.  According to some, it began in Roman times.  Eugene McQuillen, Validity of Contracts in Restraint of Trade, The Am. L. Reg. 219 (April 1885).  The Dyer’s case, (1414) 2 Hen. V, fol. 5, pl.…

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No Surprises Here – California Court Won’t Enforce Non-Compete

Employers like covenants not to compete; California doesn’t.  Anyone who doubts these two propositions should read the opinion issued last Friday by the Fourth District Court of Appeal in Fillpoint, LLC v. Maas, 2012 Cal. App. LEXIS 914 (Aug. 24, 2012). The facts of the case are relatively straightforward.  When Michael Maas sold his stock in a corporation,…

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Non-Competition Contract Doesn’t Vitiate Agents’ Duty Of Loyalty

California has codified various legal and equitable maxims in its Civil Code. However, a quick read of some of these maxims leaves one wondering whether the legislature has simply codified the sayings of Yoda. For example, Civil Code Section 3536 cryptically provides “The greater contains the less” while Section 3538 helpfully adds some certainty by…

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