Navigato & Battin Partner Appointed USD Law Adjunct Professor

Posted by on Aug 1, 2019 in Newsflash | 0 comments

Navigato & Battin, LLP is pleased to announce that partner Michael Battin has been appointed as an Adjunct Professor at the University of San Diego School of Law.  Mr. Battin will be teaching in the Experiential Advocacy Practicum in Fall, 2019.  This unique course – a requirement for all first year law students at USD — entails a combination of large lectures and small-section classes. In the small sections, which Mr. Battin will be teaching, the students will get an opportunity to practice the litigation skills they are being taught.  These critical litigation skills will include: conducting a client interview, preparing and conducting (or defending) a deposition, and preparing and conducting a closing argument. “I am excited to bring what I’ve learned over the years – sometimes the hard way – to a new generation of lawyers.” Mr. Battin noted.  “I think the EAP course, with its emphasis on practical skills and active student participation, is an excellent introduction to litigation and a great bridge from the theoretical to the actual practice of law.”  Mr. Battin has also taught Secured Transactions at California Western School of Law and, previously, taught several courses in the Paralegal Program at University of California, San Diego.  Mr. Battin looks forward to continuing his mentorship of law students and younger lawyers for many years to...

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Navigato & Battin Hosts Client Appreciation Event

Posted by on Aug 1, 2019 in Newsflash | 0 comments

Navigato & Battin thanks its clients and friends who attended Opening Day at the Del Mar Thoroughbred Club on July 17, 2019. Between mingling with old friends and new, enjoying the food, and wagering on the races, fun was had by all. “Every year, we get to show our gratitude to our clients by putting on this event at a beloved San Diego tradition. This event also lets us have face-to-face time with our clients and interact outside of the projects we’re working on for them,” says partner Dan Navigato of the day. For over 20 years, Navigato & Battin has hosted its client appreciation event at Opening Day. We enjoyed catching up, reminiscing, and showing our appreciation to each and every client who has put their trust in us for over two decades. Whether you were able to attend this year or not, we look forward to seeing you there in...

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Mid-2019 Check-In: Have you completed sexual harassment training?

Posted by on Jul 1, 2019 in Newsflash | 0 comments

California employers with 50 or more employees have been required to train and educate their supervisory employees on sexual harassment prevention since 2005. However, as we reported in the beginning of the year, this law is being expanded effective January 1, 2020. By the beginning of next year, every California employer with five or more employees must provide at least two hours of sexual harassment prevention training to all supervisory employees, and at least one hour to non-supervisory employees. This training must be provided every two years. These trainings can be completed as a group or individually, whichever may be more appropriate for the employer and employees. While the new law requires the Department of Fair Employment and Housing (DFEH) to provide online training courses which may be used to comply with this new law, DFEH does not anticipate these courses being widely available until later this year. In the meantime, DFEH has created a toolkit for employers to use, including a sample sexual harassment and abusive conduct prevention training manual. This toolkit can be found here by clicking on the links provided. A training must explain: The definition of sexual harassment under the Fair Employment and Housing Act and Title VII of the federal Civil Rights Act of 1964; The statutes and case law prohibiting and preventing sexual harassment; The types of conduct that can be sexual harassment; The remedies available for victims of sexual harassment; Strategies to prevent sexual harassment; Supervisors’ obligation to report harassment; Practical examples of harassment; The limited confidentiality of the complaint process; Resources for victims of sexual harassment, including to whom they should report it; How employers must correct harassing behavior; What to do if a supervisor is personally accused of harassment; The elements of an effective anti-harassment policy and how to use it; “Abusive conduct” under Government Code section 12950.1, subdivision (g)(2); and The concepts of harassment based on gender identity, gender expression, and sexual orientation, which shall include practical examples of harassment based on gender identity, gender expression, and sexual orientation. Until the online courses are available, the new law requires that in person or webinar trainings with a trainer must be utilized. Typically, these trainers will be attorneys with at least two years of experience whose practice includes employment law; human resource professionals or harassment prevention consultants with at least two years of practical experience; and professors in law schools, colleges, or universities who have a post-graduate degree or California teaching credential and either 20 instruction hours or two years of experience teaching employment law. This training, whether it be one or two hours, may not occur during the employee’s personal time. This means the training must take place during work hours or some other time when the employee is compensated. DFEH has issued guidance stating that those employers who are not in compliance by the January 1, 2020 deadline may be reported to DFEH by their employees. DFEH will review these complaints in light of all the circumstances, including whether DFEH’s online training course is available. In the event DFEH finds an employer is indeed not in compliance, DFEH will work with the employer to become compliant. Employers should take care to ensure they are in compliance by the time January 1, 2020 rolls around. If you would like...

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Supreme Court Alters Trademark Standards in Favor of First Amendment

Posted by on Jul 1, 2019 in Newsflash | 0 comments

We previously published an article about the requirements for registering a trademark with the United States Patent and Trademark Office (USPTO) here. Our past article did not explore in any great detail the numerous reasons the USPTO might deny a trademark application. However, one basis the USPTO has historically relied on to deny an application is where the applied-for mark is deemed to “consist or comprise of immoral or scandalous matter.” On June 24, 2019, the Supreme Court of the United States (SCOTUS) issued a decision rendering the “immoral and scandalous” standard as a basis to reject a trademark unconstitutional. In Iancu v. Brunetti, Erik Brunetti wanted to register a trademark for his clothing line, “FUCT.” Brunetti argued the trademark was to be read as an acronym, “F-U-C-T,” standing for “Friends You Can’t Trust.” However, as noted by the majority opinion, “you might read it differently and, if so, you would hardly be alone.” The USPTO denied Brunetti’s application as being immoral and scandalous. Brunetti appealed, arguing this rejection violated his First Amendment right to free speech. SCOTUS agreed. An important tenet of First Amendment law is that laws which ban speech based on viewpoint are unconstitutional. These so called “viewpoint-based” laws are considered unconstitutional because it is not for the government to decide which viewpoints should be silenced and which should be allowed to be heard. Instead, all viewpoints (with exceptions for incitements of violence, threats, and so on) are to be equally allowed and unrestrained. In light of this, SCOTUS in 2017 decided Matal v. Tam, which challenged a USPTO decision rejecting a trademark application for the mark “SLANTS.” The USPTO held this trademark violated the rule banning trademarks which “disparage” any person, living or dead. In the Matal decision, SCOTUS held the so-called “disparagement” bar was viewpoint-based because it was not for the USPTO to decide what types of terms disparaged a person or group of persons, living or dead. SCOTUS expanded on the Matal decision in Iancu, holding that the USPTO deciding whether certain terms are scandalous or immoral is similarly viewpoint-based. The law allowing the USPTO to reject scandalous or immoral trademarks provides that material is scandalous or immoral when its message does not comply with society’s sense of decency or propriety. Certainly in 2019, there are many different ideas as to what this sense of decency or propriety actually is, given the subjective and ever-changing nature of the concept. Because there is no uniform standard to help the USPTO establish the current society’s sense of decency and propriety, allowing the USPTO to unilaterally determine where this line is drawn and to restrain speech based on the examining attorney’s subjective views as to which side of the line a particular mark falls would necessarily call for the USPTO to exercise viewpoint-based discretion, which the First Amendment forbids. Whether this decision opens the floodgates for trademarks previously rejected as scandalous or immoral or whether Congress will revise the statute to allow the USPTO to once again reject these types of trademark applications remains to be seen. In arguing before SCOTUS, the government proposed using a different interpretation of the law which would only preclude those trademarks which were lewd, sexually explicit, or profane. SCOTUS rejected this solution, finding the proposed interpretation was so different from the...

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Topics to Avoid in Hiring Interviews

Posted by on Jun 3, 2019 in Newsflash | 0 comments

When you interview a candidate for hire at your company, you likely have a list of questions you plan to ask him or her. This list can be as simple as why the candidate wants to work for you, or substantially more complex. It is not uncommon for interviewers to ask a question during an interview only to discover later that the answer to the question included information companies are not supposed to obtain during an interview. California has a list of off-limits topics which cannot be touched during the interview. As many companies begin interviewing new graduates for positions, this list should be reviewed before compiling questions for the candidates. 1. How old are you? Beyond confirming a candidate is of legal age to be employed by your company, questions either directly or indirectly aimed at discovering the candidate’s age should not be asked. One innocent way this topic may be stumbled upon is asking a candidate when he or she graduated high school. In doing so, you are able to calculate when he or she was born and thus, his or her age. Although you may be able to make an estimate as to the age of a candidate, you may not ask directly. Similarly important, you may not advertise jobs as open only to a certain age group. This can include using advertising algorithms to have your posting reach only certain demographic groups, or by simply stating your preference for a certain demographic within the job posting. Of the latter, the California Labor and Workforce Development Agency provides examples of inappropriate qualifiers, such as “college age” or “digital native. 2. Where were you born? Questions which could reveal a candidate’s immigration status are off-limits. This is especially important to remember for employers in Southern California who may be interviewing persons who currently live in or have immigrated from Mexico or Central or South America. The California Labor and Workforce Development Agency has clarified that regardless of immigration status, California’s labor laws apply equally to all persons employed in California. This means all laws prescribing what topics may and may not be broached during an interview apply to all persons being interviewed in California. You may, however, ask the candidate whether he or she has a legal right to work in the United States to ensure the candidate may actually be hired. 3. Have you ever been convicted of a crime? A question that used to appear on just about every job application, a candidate’s past convictions are now not to be considered in hiring. We discussed California’s “ban the box” law which went into effect on January 1, 2018, in a past article. While you will be allowed to run a criminal background check after extending a conditional offer of employment to a candidate, you may not probe into a candidate’s criminal history during an interview. 4. Are you married? Do you have kids? Whether a candidate is married, has children, or is planning to have children is off-limits during an interview. Although this may seem like small talk, questions about familial status which reveal information that could lead to potentially discriminatory decisions should not be asked. Questions aimed at this information can be phrased in many ways. Regardless of the phrasing and how innocent it...

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Out-of-State Retailers Could Be Subject to California’s Sales and Use Taxes

Posted by on Jun 3, 2019 in Newsflash | 0 comments

When it came to certain state taxes, physical presence used to be the primary factor determining whether a retailer was required to collect and remit those taxes. However, after the South Dakota v. Wayfair, Inc. ruling on June 21, 2018, physical presence is no longer of utmost importance. California is one of about 30 states who have codified this ruling. As adopted, AB 147 now requires retailers who are not physically present in California but who generate over $100,000 in annual sales from California, or complete more than 200 transactions with California residents within the preceding calendar year to collect and remit state sales tax. Additionally, the law requires those out-of-state retailers selling over $500,000 of tangible personal property for delivery into California in the current or preceding calendar year to charge and remit California use tax. Finally, those retailers who do a certain amount of business within a California district where they do not have a physical presence are required to charge and remit those district taxes. In its Wayfair ruling, the Supreme Court of the United States ruled that retailers being exempt from collecting and remitting certain taxes in states where the retailers were not physically located was “unsound and incorrect.” The Supreme Court abandoned this previous physicality requirement and instead held that any retailer with certain economic and virtual contacts with a state could be subject to that state’s sales tax rules. No guidance was provided as to what exactly these contacts should be in order to subject retailers to these tax rules. California, among other states, took steps to codify this ruling and provide clarity as to the contacts required. AB 147, signed into law on April 25, 2019, provides the guidelines for requiring out-of-state retailers to collect and remit certain state taxes. This rule does not apply to all out-of-state retailers who sell goods in California. Instead, the minimum threshold to be subject to this new rule is $100,000 in sales or 200 completed transactions for sales taxes and $500,000 in sales for use taxes. Any retailer who meets these thresholds over a one year period is required to comply with this rule. Because of the one year limit to this threshold, an out-of-state retailer may be subject to this rule for some months while not subject to it for others. The starting date for determining whether an out-of-state retailer is subject to this rule is April 1, 2019. Thus, out-of-state retailers will start measuring their deliverables to California from April 1, 2019, going forward. Although tedious for the out-of-state retailers, this rule alleviates the responsibility of California consumers to report certain California taxes on these same items. California charges sales and use taxes on goods purchased outside of California; however, for goods delivered into California by these out-of-state retailers, the tax is usually to be reported and paid by the consumer. Now, those out-of-state retailers subject to this rule will be required to collect and remit the tax, instead of the consumer reporting and paying the same directly to the taxing authorities. Beyond these taxes, those out-of-state retailers who meet the minimum thresholds and deliver a certain amount of goods to particular districts within California will be required to collect and remit district taxes as well. The rule provides exemptions for certain types of...

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Supreme Court Denies Class Arbitration

Posted by on May 1, 2019 in Newsflash | 0 comments

In a decision announced April 24, 2019, the Supreme Court of the United States overturned a Ninth Circuit decision allowing a class to arbitrate claims against their employer. The case arose after a Lamps Plus, Inc. employee was duped into revealing 1,300 employees’ tax information to a hacker. Among those employees whose information was disclosed was Frank Varela. Varela filed suit against Lamps Plus in federal court on his own behalf and on behalf of all employees whose information was similarly disclosed. Lamps Plus moved to compel the individual claim to arbitration, and to dismiss the class claim. Lamps Plus relied on the arbitration clauses signed by all of its employees who were included in this class. The federal court granted Lamps Plus’ motion to compel arbitration, but allowed the class claim to be arbitrated. Lamps Plus appealed to the Ninth Circuit, which upheld the decision. Relying on the statement that “[a]rbitration is strictly a matter of consent,” SCOTUS overturned the Ninth Circuit’s decision, allowing only Varela’s individual claim to be arbitrated. In Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., SCOTUS found that an arbitration clause which was silent on class arbitration could not allow for class arbitration to be compelled. Although the Ninth Circuit distinguished this case from Stolt-Nielsen because the arbitration clause at issue here was ambiguous regarding class arbitration, SCOTUS found Stolt-Nielsen was controlling. In Stolt-Nielsen, the parties had specifically stipulated that the arbitration provision was silent on class arbitration. Because the parties had stipulated to this and courts will not infer consent to participation in class arbitration without an affirmative contractual basis to do so, SCOTUS declined to allow class arbitration. In Lamps Plus’ case, SCOTUS found that despite the ambiguity in the arbitration provision, Lamps Plus had not provided the necessary affirmative contractual basis to allow class arbitration to be compelled. In other words, Lamps Plus had not expressly consented to be subjected to class arbitration under this arbitration provision. Whereas the majority opinion focused on Lamps Plus’ rights, Justice Ginsburg’s dissenting opinion, joined by all of the other dissenting justices, focused on Varela’s rights. Namely, Varela and the other class members’ right to bring a class claim against Lamps Plus. This dissenting opinion found the majority’s focus on Lamps Plus’ rights to be misplaced. As the party with substantially more bargaining power, Varela and the class’ rights should have been the main focus. The majority disregarded whether Varela and the class members had given up their right to bring a class claim against Lamps Plus – either in court or through arbitration. Varela, following this opinion, will have the opportunity to arbitrate his individual claim, and each and every other class member may do the same. However, in light of the low prospective damage award and Lamps Plus’ ability to out-arbitrate Varela and the other class members, it seems unlikely that any significant number of class members will choose to pursue their claims against Lamps Plus. This was the concern of all dissenting opinions: that by disallowing class arbitration without a clear surrender of the right to class claims, Varela and the class members were being deprived of their right to pursue their claims in any meaningful way, and effectively, Lamps Plus was walking away from a significant wrongdoing scot free. Companies who manufacture or...

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Is Your Website Complying with Privacy Laws?

Posted by on May 1, 2019 in Newsflash | 0 comments

A hot button topic as of late has been the collection of personal data online, whether it be information actively inputted by the user or information passively collected by the websites themselves. The issue is whether and to what extent the users of these websites should be able to block the websites from collecting their data. The internet has become an integral part of daily life, so much so that perhaps there is no way an average person can avoid giving up some level of privacy. The European Union and California, however, have enacted privacy laws to curb the amount of information websites may gather without being granted permission to do so. In 2016, the European Union adopted the General Data Protection Regulation (GDPR). The GDPR was the first marked attempt by a governmental body to significantly regulate the collection of personal information online. The policy behind the GDPR was that every person has a right to privacy with respect to his or her personal information. The GDPR became effective in May of 2018, and many companies with websites were prompted to update their policies as a result. The most significant changes the GDPR brought were the creation of new rights for individual internet users to access the information companies had gathered about them, the imposition of new requirements for data management for companies, and the creation of a new fine scheme. Shortly after the GDPR went into effect, California enacted its own privacy laws which regulate largely the same area as the GDPR. California’s privacy laws are not set to become effective until 2020, but companies would be well served to become familiar with the new laws and make any and all necessary updates to their privacy policies and beyond. California’s privacy laws provide protections to California residents, defined as any person “enjoying the benefit and protection of [California’s] laws and government” who is in California for more than a temporary or transitory purpose. While this class of persons is not surprising, the class of businesses which will be bound to abide by the new privacy laws is vast. The laws provide that all for profit entities which both collect and process the personal information of California residents and do business in California will be subject to these laws, so long as they meet one of the following criteria: (a) the business generates over $25 million in annual gross revenue per year; (b) the business receives or shares over 50,000 people’s personal information per year; or (c) the business derives 50 percent or more of its annual revenue by selling California residents’ personal information. For purposes of California’s privacy laws, “personal information” means “information that identifies, relates to, describes, is capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular consumer or household.” “Household” is not defined explicitly, but will certainly expand the definition of personal information beyond that attributed to it before. This personal information can include what is normally considered personal information, e.g. names, social security numbers, driver’s license number, but will also include less obvious information which could be used to reasonably identify a person, e.g. device identifiers and other tracking technologies. There are four main new rights given to individuals under the new privacy laws: (1) individuals have...

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Proposed State and Federal Employment Law Changes Could Significantly Impact Companies

Posted by on Apr 1, 2019 in Newsflash | 0 comments

Employers, especially in California, are required to comply with a vast and complex set of laws regarding their employees. Proposals to change some of the more well-known laws have been submitted at both state and federal levels. In California, AB 5 was introduced as a placeholder bill in December 2018. This bill intends to codify the Dynamex decision which was published last April. Dynamex adopted a new test to determine when a worker is an employee rather than an independent contractor, and has caused many employers to rethink its classification procedures. At the federal level, the Department of Labor (DOL) published for comment its long awaited proposal for the overtime rule in the Federal Labor Standards Act (FLSA). This law provides a test to determine when an employee is eligible for overtime pay under the FLSA. Part of the test involves the employee’s salary. The DOL’s proposed change increases this salary amount. California’s AB 5 We covered the Dynamex decision when it was published in 2018 here. In this decision, the California Supreme Court adopted Massachusetts’s ABC test for determining whether a worker is an employee or an independent contractor. In short, this test analyzes: (a) whether the hiring entity exercises significant control over the worker, (b) whether the worker is engaging in activities which are within the hiring entity’s regular course of business, and (c) whether the worker is engaged in an independently established trade, occupation, or business doing the services the worker is providing for the hiring entity. Importantly, Dynamex made clear that workers would be presumed to be employees, and that it is up to the employer to prove the worker is in fact an independent contractor. The Dynamex decision has left significant confusion and uncertainty in its wake. To curtail this, AB 5 was introduced at the beginning of California’s legislative season, and is aiming to codify Dynamex‘s ABC test as well as clarify some of the uncertainty surrounding the test. Notably, AB 5 is also reportedly intending to broaden the reach of this test. The Court in Dynamex was careful to note the ABC test would only apply to Wage Order issues – meaning it would not apply for discrimination, harassment, and other claims not covered by the Wage Orders. AB 5 intends to broaden the ABC test to apply to these additional claims. AB 7 was also introduced at the beginning of the legislative season as a placeholder bill. This bill intends to disregard the Dynamex decision and go back to the Borello test which had previously been used to determine whether a particular individual is an employee or an independent contractor. Department of Labor’s Overtime Rule A number of state and federal laws provide a statutory framework governing overtime. The FLSA is one of those laws, providing that employers must pay their employees who work more than 40 hours in one week at least 1.5 times their regular rate of pay. However, one exception to this rule, the “white collar exception,” operates to allow employers with employees who meet certain criteria to be exempt from the FLSA’s overtime rules. The basic test to determine whether an employee falls within the FLSA’s “white collar exception” is: (a) whether the employee is paid a predetermined and fixed salary, not based on hours, (b) whether...

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Maintaining the Protection You Intended Your Corporation to Provide

Posted by on Apr 1, 2019 in Newsflash | 0 comments

For corporate clients of Navigato & Battin, you likely received a letter in the mail accompanied by a questionnaire, asking about your corporation’s activities for 2018. One purpose of this questionnaire is to allow our office to draft unanimous written consents for your corporation’s shareholders and directors in lieu of annual shareholder and director meetings, should you wish to utilize these options. We published an article about the importance of annual minutes a while back, which can be found here. California requires all corporations to hold annual shareholders’ meetings where, at the very least, directors are elected. While California does not require annual meetings for the directors, we recommend the directors meet after the shareholders elect them. Luckily, California allows both shareholders and directors to execute unanimous written consents instead of holding these meetings. But why are these minutes or consents important? One of the main reasons corporations are formed is to protect those who own the corporation (i.e., the shareholders) from liability. For example, if a corporation enters into a contract requiring it to pay a certain amount of money each month and the corporation later defaults on the contract, the shareholders generally will not be liable for the amounts owed by the corporation. To avoid people taking advantage of this protection, the so-called “corporate veil” (which otherwise shields the corporation’s shareholders from liability) can be pierced if certain circumstances are found by a court, which may lead to individual shareholder liability for what seemed to have been corporate debts or liabilities. Piercing the corporate veil is a two-step process. First, a number of factors are considered to determine whether the shareholders have treated the corporation as an “alter ego.” These factors include: commingling of corporate and personal funds, failing to observe corporate formalities (including maintaining corporate minutes), and failing to contribute sufficient capital. Second, allowing the shareholders to be shielded from liability must result in an “injustice.” Based on the first step, it is critical to maintain your corporation’s annual minutes, whether they be in the form of actual minutes from a meeting or in the form of a unanimous written consent in lieu of the meeting. Additionally, funds belonging to the corporation must not be commingled with your personal funds, and vice versa. This factor is generally problematic with single-person corporations. However, it can be easily avoided with careful accounting to ensure corporate monies are deposited into the corporation’s bank accounts and only distributed to the shareholders through proper methods. Lastly, your corporation must be properly capitalized throughout its existence. The second step usually poses a trickier analysis. The basic idea, though, is that shareholders of a company should not be able to wrongfully hide behind the company to avoid liability which really should be assessed against the individual shareholders. Usually when a court finds the first step is satisfied, meaning one or more of the shareholders has treated the corporation as his “alter ego,” this second step is also satisfied. When a shareholder uses the corporation as his own personal piggy bank (commingling funds, not properly accounting for money being distributed to the shareholder and/or loaned or contributed to the corporation, and disregarding corporate formalities), it is more likely that a court may find that the shareholder should not be able to avoid individual liability...

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