Articles Posted in Commercial Law

by
Nearly ten years ago, U-Haul Co. of California (UHC) sued Robinson, one of UHC’s independent dealers, for breach of contract and unfair competition after he terminated their contract and began renting Budget trucks from the former UHC dealership. UHC alleged a covenant not to compete in its dealer contract prohibited Robinson from offering the products of UHC’s competitors while a Yellow Pages ad, running at UHC’s expense, was still promoting Robinson’s business. Robinson sought a judicial declaration that the covenant was void due to fraud in the inducement. After UHC lost its request for a preliminary injunction and dismissed its complaint, Robinson filed a separate action alleging malicious prosecution by UHC in the prior lawsuit and violation of Business and Professions Code section 17200, the unfair competition law (UCL). A jury awarded Robinson $195,000 in compensatory damages for malicious prosecution. The trial court issued a permanent injunction prohibiting U-Haul from initiating or threatening judicial proceedings to enforce the noncompetition covenant. It awarded Robinson $800,000 in attorney’s fees as a private attorney general on his UCL cause of action. The court of appeal affirmed, holding that the injunction was proper and the court did not abuse its discretion in allowing Robinson to file a late motion for attorney’s fees. View "Robinson v. U-Haul Co. of Cal." on Justia Law

by
In 2003, several class action lawsuits were filed against automobile manufacturers and trade associations, alleging antitrust conspiracy, Bus. & Prof. Code, 167201, and unfair business practices, Bus. & Prof. Code, 17200, on behalf of individuals who purchased or leased new vehicles in California within a certain time period. The lawsuits, which were eventually coordinated, alleged conspiracy to restrict the movement of lower-priced Canadian vehicles into the U.S. market, to avoid downward pressure on U.S. new vehicle prices. After years of litigation, the court granted summary judgment in favor of the two remaining defendants, Ford U.S. and Ford Canada, concluding that there was not sufficient evidence of an actual agreement among Ford and the other manufacturers to restrict the export of new vehicles from Canada to the U.S. The court of appeal affirmed with respect to Ford U.S., but concluded that the admissible evidence was sufficient to demonstrate a material factual issue as to whether Ford Canada participated in an illegal agreement to restrict the export of automobiles. The court noted an expert economic analysis indicating that the manufacturers would not have continued to restrict exports during the alleged conspiracy period absent an agreement that none of them would break ranks and reap the profits available in the export market; parallel conduct by the manufactures during the same period; and deposition testimony. View "In re: Auto. Antitrust Cases I and II" on Justia Law

by
The manufacturer sells telecommunications equipment to telephone companies, which pay for the equipment, written instructions on using the equipment, a copy of the computer software that makes the equipment work, and the right to copy that software onto the equipment’s hard drive and use the software to operate the equipment. An almost identical transaction was previously found to satisfy the requirements of California’s technology transfer agreement statutes (Rev. & Tax. Code 6011(c)(10) & 6012(c)(10)), so that the manufacturer was responsible for paying sales taxes only on tangible portions of the transaction (equipment and instructions), but not the intangible portions (software and rights to copy and use it). The State Board of Equalization nonetheless assessed a sales tax. The manufacturer paid the taxes and sought a refund. The court of appeal held that the Board’s assessment of the sales tax was erroneous. The manufacturer’s decision to give the telephone companies copies of the software on magnetic tapes and compact discs (rather than over the Internet) does not turn the software or the rights to use it into “tangible personal property” subject to the sales tax. View "Lucent Techs., Inc. v. State Bd. of Equalization" on Justia Law

by
Plaintiff claims that she entered into a credit card purchase from defendants, which did not involve mail order, shipping or cash advances, but that she “was asked for personal identification information, in the form of her email address, by defendants’ employee attending to the transaction.” Plaintiff provided the requested personal identification information, which was entered into the electronic sales register at the checkout counter adjacent to both defendants’ employee and plaintiff.” The amended complaint alleged violation of the Song-Beverly Credit Card Act, Civil Code 1747.08, which provides that: [N]o person, firm, partnership, association, or corporation that accepts credit cards for the transaction of business shall . . . request, or require as a condition to accepting the credit card as payment in full or in part for goods or services, the cardholder to provide personal identification information, which the person, firm, partnership, association, or corporation accepting the credit card writes, causes to be written, or otherwise records upon the credit card transaction form or otherwise.” The trial court declined to certify a class in plaintiff’s suit. The court of appeal affirmed, agreeing that does not prohibit the collection of personal identification information once a credit card transaction has been concluded. View "Harrold v. Levi Strauss & Co." on Justia Law

by
Environmental Law Foundation (ELF), sued Beech-Nut and other food manufacturers, distributors, and retailers, seeking enforcement of the Safe Drinking Water and Toxic Enforcement Act of 1986, commonly referred to as Proposition 65 (Health & Saf. Code, 25249.5). ELF alleged certain of defendants’ products contain toxic amounts of lead sufficient to trigger the duty to provide warnings to consumers. The trial court entered judgment in favor of defendants, concluding they had no duty to warn because they satisfactorily demonstrated that the average consumer’s reasonably anticipated rate of exposure to lead from their products falls below relevant regulatory thresholds. The court of appeal affirmed, analyzing regulations promulgated by the Office of Environmental Health Hazard Assessment. View "Environmental Law Found. v. Beech-Nut Nutrition" on Justia Law

by
Subject to exceptions, the Song-Beverly Credit Card Act of 1971 (Civ. Code, 1747) generally prohibits a retailer from requesting and recording a customer’s “personal identification information” when the customer is purchasing goods or services with a credit card. Lewis filed a putative class action against Safeway, alleging violation of the Act when Safeway’s clerk requested and recorded Lewis’s date of birth in Safeway’s cash register system when he purchased an alcoholic beverage with a credit card. The trial court held that Safeway’s conduct was exempted by the obligation-imposed-by-law exception. The court of appeal agreed. To satisfy its obligations under the Alcoholic Beverage Control Act, a licensee is obligated to verify the age of a customer purchasing an alcoholic beverage (Bus. & Prof Code, 25658(a), 25659), to keep records of its sales of alcoholic beverages, and to make those records available to the Department of Alcoholic Beverage Control. View "Lewis v. Safeway" on Justia Law

by
Animal Legal Defense Fund (plaintiff) sued LT and Frank, the head chef at Napa restaurant La Toque, (defendants), alleging defendants sold foie gras in their Napa restaurant in violation of Health and Safety Code 25982. Frank has been a vocal opponent of the 2004 ban on foie gras. After the ban went into effect, plaintiff paid an investigator to dine at La Toque three times; each time he requested foie gras and was told that if he ordered an expensive tasting menu he would receive foie gras. Twice it was described as a “gift” from the chef. He ordered the tasting menus and was served foie gras. He was not told he was served foie gras in protest against the ban and was not provided information about defendants’ opposition to the ban. The city declined to prosecute. Defendants unsuccessfully moved to strike under the anti-SLAPP statute, Code of Civil Procedure, 425.16. The court of appeal affirmed, construing the term “sold” in Section 25982 to encompass serving foie gras as part of a tasting menu, regardless of whether there is a separate charge, whether it is listed on the menu, and whether it is characterized as a “gift,” plaintiff established a probability of prevailing on its claim. View "Animal Legal Def. Fund v. LT Napa Partners, LLC" on Justia Law

by
Husband and wife acquired a 25 percent interest in the LLC. Hartley served as president and managing member. A judgment dissolving the marriage awarded wife one-half of the LLC share. Husband's other obligations to wife were secured by his LLC share. Wife did not file a UCC Financing Statement, but gave Hartley and other LLC members written notice. Amendments to the LLC’s records and its tax returns showed her interest. Husband defaulted on his obligations to wife. Hartley loaned husband $200,000 from his pension plan, secured by the same membership share pledged to wife. Hartley did not disclose the loan or his security interest to wife. Wife notified Hartley that she intended to take the LLC share and sued to foreclose "judicial liens" created by the dissolution judgment. Hartley determined that she had not filed a financing statement and filed his own. A court ordered husbandto transfer his share to wife. He complied. Husband failed to repay the Hartley loan; the pension plan published "Notice of Disposition" announcing sale of husband's LLC interest to satisfy the debt. The trial court declared that wife has a 25 percent membership interest, not encumbered by the Hartley claims. The court of appeal affirmed. Where a perfected security interest is created by breaching a fiduciary duty owed to another, equitable principles may give priority to an earlier unperfected security interest.View "Feresi v. The Livery, LLC" on Justia Law

by
This appeal arose from a judgment entered after a demurrer by three banks to plaintiff’s second amended complaint was sustained without leave to amend. The three banks were US Metro Bank, Wilshire State Bank, and Pacific City Bank. An employee of a corporation with responsibility to gather incoming checks made payable to the corporation and deposit those checks into the corporation’s bank account (in this case, the corporation’s accounting manager) stole some of the incoming checks and took them to a check cashing service where she forged the signature of one of the officers of the corporation and received hard cash in return. After discovery of the thefts, the corporation fired the accounting manager and tried to recoup at least some of its losses. In this case, the corporation’s recoupment effort included suing its own bank, the three check cashing services where the employee took the checks, and the three banks which received those checks from the check cashing services for deposit into those companies’ own accounts. The legal issue presented in this appeal was one of first impression in California: Does the interposition of the check cashing services between (a) the employee who stole the checks and (b) the three banks who took the checks from three check cashing companies and credited the accounts of those check cashing companies, relieve the banks of all duty of care under section 3405 of California’s Commercial Code? The Court of Appeal concluded the answer was no: the three banks were the first banks to process the checks through the banking system, and, as “first banks,” they had a duty of care in the processing of those checks “‘to make certain all endorsements [were] valid; banks subsequently taking the paper have a right to rely on the forwarding bank.’” Check cashing companies are not banks, and should not be treated as banks for purposes of California’s Uniform Commercial Code.View "HH Computer Systems v. Pacific City Bank" on Justia Law

Posted in: Banking, Commercial Law