Indemnification And The Circle Of Litigation

Cycle Graphic

An employee sues his employer for, among other things, violations of the California Labor Code.  The quondam employer responds with a counterclaim against its erstwhile employee claiming that to the extent it is liable, the employee is partially liable for creating that liability.  The employee responds with a reply counterclaim seeking indemnification based on Section

Assembly To Consider Mandatory Indemnification Of LLC Agents

The California legislature operates on a two-year schedule.  Cal. Const. Art. IV, Sec.3(a).  The legislature will convene for the second year of the current biennium next Monday (Jan. 6).  J.R. 51(a).  One immediate job for the returning legislators will be to consider pending bills introduced in the first year.  Under the Joint Rules of the

Court Decides Employer Had No Obligation To Pay Employee’s Attorney

Mention indemnification to a corporate lawyer, and you’re like to hear about Section 317 of the Corporations Code, the articles of incorporation and bylaws.  But a corporate agent’s indemnification rights are not necessarily cabined by the Corporations Code.  If the agent is an employee, she may have a right to indemnification by her employer pursuant to Labor Code Section 2802, which provides

When Officers Must Indemnify The Corporation

Much attention is focused on the power of corporations to indemnify corporate officers and other agents.  In California, this is addressed by Corporations Code Section 317, which establishes the power to provide indemnification, and Section 204(a)(11) which allows corporations to include a provision in the articles authorizing indemnification in excess of that expressly permitted by Section

But Wait, California May Require Even More In Annual Reports To Shareholders

Yesterday’s blog discussed California’s requirement that many domestic and foreign corporations send financial statements to their shareholders.  If a corporation has 100 or more holders of record (determined in accordance with Section 605), then the annual report must also provide a brief description of the following: Any transaction during the previous fiscal year involving an amount in excess

Bill Would Mandate Indemnification Of LLC Agents

California’s current limited liability act permits indemnification of any person (including any manager, member, officer, employee, or agent of the limited liability company) against judgments, settlements, penalties, fines, or expenses of any kind incurred as a result of acting in that capacity.  Cal. Corp. Code § 17155(a).  The statute excepts indemnification against liability for a manager’s

Are Charter Indemnification Provisions Contracts?

Public companies typically include provisions in their articles and bylaws that mandate indemnification of directors and officers.  Often, these provisions include a statement to the effect that the rights to indemnification are a contract right.  However, declaring that a contract exists does not necessarily establish a contract.  Fortunately, the California Civil Code provides some rules for

Should The Articles Of Incorporation Define “Officers”?

Today’s post is devoted to what may seem an unlikely question: should the articles of incorporation define “officers”?  This is an unlikely question because it is the bylaws that typically identify the titles of officers and their duties.  Cal. Corp. Code § 312(a).  Nevertheless, it occurs to me that in at least one circumstance, a

Should Your Articles Of Incorporation Include A Choice of Law Provision?

In yesterday’s post, I considered the fundamental question of why indemnification provisions are included in articles of incorporation.  State general corporation laws typically contain express provisions empowering or authorizing corporations to indemnify other persons, including directors, officers and agents.  For example, California has its Section 317, Delaware has Section 145 and Nevada has NRS 78.7502.  When an indemnity provision is

Some Observations On Indemnification Provisions In Articles Of Incorporation

Over the years, I’ve read many articles of incorporation that include provisions relating to indemnification of officers, directors and others.  Today’s post will cover a few questions and observations that have occurred to me over the years.  I’ll cover more of these “Why is there air?” type questions in future posts. Vice Admiral James Stockdale