California Supreme Court Decision Adds Clarity on Intentional Interference with At -Will Contracts and Clears Up Confusion on the Validity of Non-Compete Clauses in Business-to-Business Agreements

Posted by on Sep 1, 2020 in Newsflash | 0 comments

The California Supreme Court answered two questions in its opinion in Ixchel Pharma, LLC v. Biogen, Inc., clearing up uncertainty in California’s business tort law. Is a plaintiff required to plead an independently wrongful act in order to state a claim for tortious interference with a contract that is terminable at will? What is the proper standard to determine whether section 16600 of the California Business and Professions Code voids a contract by which a business is restrained from engaging in a lawful trade or business with another business? Providing guidance on the bounds of legitimate business competition under California tort and antitrust law, the Court held that: (1) To state a claim for tortious interference with an at-will contract, a plaintiff must plead and prove an independently wrongful act, beyond interfering with the contract itself (overruling conflicting lower court decisions which did not require an independent wrongful act); and (2) California’s statutory prohibition on contract provisions restraining trade-when applied to one business restraining another-is subject to the same rule of reason analysis prescribed by antitrust common law (as opposed to the strict analysis under Business and Professions Code §16600, which deems contracts in restraint of trade to be void except under certain very specific circumstances). Historically, California has long recognized two related but distinct economic relations torts: interference with the performance of a contract and interference with a prospective economic relationship. California Courts originally treated both torts generally the same; the only difference was that interference with contractual relations required the existence of a binding contract. The decision in Della Penna v. Toyota Motor Sales, U.S.A., Inc. (1995) 11 Cal.4th 376, however, drew a sharper “distinction between claims for the tortious disruption of an existing contract and clams that a prospective contractual or economic relationship has been interfered with.” In Della Penna, the Court held that a plaintiff seeking to recover damages for interference with prospective economic advantage (a business relationship which has not yet been formalized with a contract but which is likely to lead to a future business relationship) must plead as an element of the claim that the defendant’s conduct was “wrongful by some legal measure other than the fact of interference itself.” An act is independently wrongful if it is “unlawful, that is, if it is proscribed by some constitutional, statutory, regulator, common law, or other determinable legal standard.”  A plaintiff asserting intentional interference with a contractual relationship it had with another person or entity did not have to establish such an “independent wrong,” as the existence of contractual relationship itself warranted additional protection which simply does not exist in a prospective business relationship. Relying on this framework, the California Supreme Court found that interference with an at-will contract more closely resembles interference with prospective economic advantage, rather than interference with contractual relations. The Court concluded that “like parties to a prospective economic relationship, parties to at-will contracts have no legal assurance of future economic relations.” Therefore, stating a claim for interference with an at-will contract required pleading an independent wrongful act. The Court reasoned that allowing claims of interference with at-will contracts without requiring independent wrongful conduct would risk chilling legitimate competition and could “expose routine and legitimate busines competition to litigation.” The Court also differentiated contracts not terminable at-will for their concreteness...

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City of San Diego Extends Eviction Moratorium in Eleventh Hour

Posted by on Jul 1, 2020 in Newsflash | 0 comments

We discussed the City of San Diego’s eviction moratorium in last month’s newsletter. As promised, we have kept up with the latest news and learned the City Council voted to extend the eviction moratorium through September 30. This extension is longer than the previous 30 day extension and likely is the result of increasing COVID-19 numbers and the decisions to shut certain businesses back down. The newly extended moratorium will work the same way as before, requiring tenants to provide written notice to their landlords prior to the date rent is due and within one week of providing such notice, provide supporting documentation. More information about this moratorium can be found here. In conjunction with this extension, the City Council also approved a $15.1 million rent relief program. This program is aimed to assist those affected the most by COVID-19 and the government’s response to the pandemic. Once it receives final approval, this plan intends to award up to $4,000 to certain households meeting the criteria set out. The monies will be paid straight to landlords. This rent relief program comes as a welcome reprieve to tenants and landlords alike who have been unable to either pay or collect rent due to layoffs and business closures. Some sources suggest the program will only be able to help about 3,500 households, given its current size. Landlords whose tenants have been unable to pay rent during the last few months may want to approach their tenants about applying for this lottery-style program. If you have any questions about this program or process, contact the attorneys at Navigato &...

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NavBat Says Goodbye to Brie Collings

Posted by on Jul 1, 2020 in Newsflash, Uncategorized | 0 comments

After two years with NavBat, associate Brie Collings has left the firm to return to her home state of Nevada. Collings was a valued member of the NavBat team, providing corporate clients with guidance, drafting various agreements, and assisting the partners with litigation. “I am eternally grateful to have started my career practicing law with the NavBat team, and I cannot thank Dan, Mike, and Travis enough for all of the mentorship and guidance they have provided me. I am undoubtedly a better attorney for having worked with each of them,” says Collings, reflecting on her time with the firm. Although she will miss the firm and its clients immensely, Collings is looking forward to being back in her home state and closer to her family. Collings will join Robertson Johnson Miller Williamson in Reno as an associate, where she will specialize in commercial litigation and business entity governance. She will practice in both Nevada and California with the firm. NavBat wishes Collings the best of luck on her new endeavors, and looks forward to announcing the newest addition to the firm in next month’s...

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Don’t Forget Your 2020 Corporate Actions

Posted by on Jun 2, 2020 in News, Newsflash | 0 comments

Corporate clients of Navigato & Battin received an email back in March requesting they fill out a questionnaire regarding their company’s operations during 2019. The information included in these questionnaires allows us to draft Shareholder and Board of Director Actions for your corporation which ratify all actions taken in the preceding year, elect directors for the year, and appoint officers for the year. These annual actions – taken in lieu of annual meetings – are part of the annual corporate formalities corporations are required to observe to maintain their status. Other such formalities include but are not limited to filing an annual Statement of Information with the California Secretary of State, listing the corporation’s address, officers, and directors. California law requires corporations to hold annual shareholder meetings. At the absolute minimum, the shareholders in attendance at such a meeting must elect the directors of the corporation. While the law does not require annual director meetings, we recommend our corporate clients hold such director meetings immediately following the shareholder meetings. For closely held corporations, these meetings will usually largely consist of the same persons. The directors are responsible for appointing all officers the corporation may have, and this can and should be done in this meeting. Furthermore, the directors should ratify all major actions taken by the corporation’s officers in the preceding year. Especially now, gathering all the corporation’s shareholders and directors may prove difficult. Luckily, the corporate code allows for unanimous written consents to take the place of these meetings. These written consents are writings including all resolutions and actions which would have been taken at a meeting of the shareholders or directors and require each and every shareholder and director to sign off, respectively. These written consents can be very helpful for those corporations whose shareholders and directors are numerous and not able to meet. They can also be helpful during the current pandemic, when gatherings are limited to a certain number of people and recommended social distancing and face coverings may cause in person meetings to be quite difficult. The purpose of these annual meetings or unanimous written consents is to observe certain required formalities of the corporation. In the event the corporation is named as a defendant in a lawsuit, failure to observe the corporate formalities, among other factors, may cause a judge to find the corporation is simply an alter ego of the shareholders and thus hold the shareholders liable for the corporation’s debts. Since one of the primary reasons business owners form corporations (or LLCs) is to shield themselves from the company’s obligations, this is a less than desirable result. To properly observe the corporate formality requiring annual shareholder meetings, please fill out and return the corporate questionnaire you received from our office in March. If you did not receive this or need another copy, do not hesitate to email or Once your questionnaire is returned, we will prepare Shareholder and Board of Director Actions for a flat...

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San Diego Extends Eviction Moratorium Extra Month

Posted by on Jun 2, 2020 in News, Newsflash | 0 comments

As the effects of COVID-19 continue to alter everyday life, including the continued closure of many businesses, San Diego has extended its Eviction Moratorium Order through June. This Order originally became effective March 25, 2020, in response to the growing concerns that many residents and businesses would be unable to pay rent in the coming months due to the pandemic. The act has allowed many tenants to defer rent during the pandemic if they have been affected by COVID-19 and will continue to provide some reprieve to tenants during the month of June. The Order imposes a temporary moratorium within the City of San Diego on evictions for nonpayment of rent by residential and commercial tenants affected by COVID-19. Persons or businesses wishing to avail themselves of this moratorium must provide their landlords with written notice of their intent to not pay rent either on or before the day rent was due, and must attribute their inability to pay to “financial impacts related to COVID-19.” These financial impacts, when pertaining to an individual, are defined as a substantial decrease in household income due to loss of hours or wages, layoffs, or substantial out-of-pocket medical expenses. For a business, financial impact means a substantial decrease in business income due to closure, loss of compensable hours of work, or layoffs. For these impacts to be related to COVID-19, they must be caused by either the pandemic itself or the governmental response to the pandemic. Within one week of providing such notice to their landlord, tenants must provide supporting financial documentation, or other objective documentation, to the landlord. This documentation must evidence the financial impacts the tenant is experiencing as a result of COVID-19. If this documentation is not provided, the tenant will not be excused from paying rent on or before the due date for such rent. While the Order disallows landlords to evict tenants who provide proper notice, it does not excuse the tenant from paying rent for these months. Instead, the Order provides the tenant with up to six months from the date of the Ordinance or the withdrawal of Governor Newsom’s Executive Order N-28-20 (imposing stay at home requirements and closing all non-essential businesses), whichever occurs sooner, to pay all unpaid rent. When this Order first became effective, the San Diego Superior Court was shut down, so there could be no challenges to tenants who may be wrongfully taking advantage of the moratorium. However, the San Diego Superior Court reopened for remote proceedings and began accepting filings on May 26, 2020, and thus landlords may begin challenging tenant’s claims to have been financially impacted by COVID-19 such that they could not be evicted under the moratorium. What remains to be seen is how exactly the courts will interpret and enforce this moratorium. If you need assistance in availing yourself of this moratorium for the month of June (or any subsequent month during which this Order is extended), do not wait to contact us. We can assist you in providing sufficient notice to your landlord and gathering and providing the supporting...

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Are Your Trade Secrets Protected During Work-from-Home?

Posted by on May 1, 2020 in Newsflash | 0 comments

By necessity, remote offices have become at least the short term standard for many California businesses, but in quickly implementing work-from-home programs businesses may not have given enough consideration to the protection of their trade secrets in the process. Employees working from home are likely utilizing their own computers, telephones, and internet services. While businesses can control and implement a certain level of security over these devices and the internet in the workplace, employees working from home may not implement the same practices. Businesses in this situation should remind their employees of any confidentiality agreements they have signed and assist them in setting up a system which will help them to abide by those agreements. The primary goal of taking this action is to protect the trade secrets from misappropriation, but a secondary and equally important goal is to ensure the trade secret status of the information is not lost. We discussed trade secrets in depth in a previous article, here. A trade secret is information which is beneficial to the company holding the information because the information is not known to others, and which the company takes steps to keep from being discovered by others. Each of these components of a trade secret is important to address in light of the new work-from-home policies that have been implemented. In fact, even if businesses already had these policies in place, they should be revisited due to the unforeseeable circumstances that now govern remote work. Some of these circumstances include the amount of time employees have been working from home and the fact that employees’ household members are also likely at home for many hours per day while the employee is working. The following are some actions companies should consider taking to protect their trade secrets: Redistribute any existing confidentiality agreements to all employees and reiterate the importance of confidentiality, especially while working from home. Discourage hard copies of trade secret documents being taken from the workplace to a home office or being printed at home. If hard copies are necessary, request that all documents be kept in a safe place in the home office so they can be properly disposed of by the business. Caution employees about the danger of having others in their workspace where the business’s trade secrets may be viewed or overheard. While employees may not be concerned about their household members misappropriating this information, business’s must take steps to protect the information and maintain its secrecy. Ensuring the information is out of sight and earshot of others is a simple action that can show a business’s efforts to maintain the secrecy of a trade secret. Prompt employees to set their computers to lock after a short time of inactivity to protect any information visible on the screen. These computers should also be password protected. Remind employees to refrain from emailing documents to their personal emails or otherwise use personal software to facilitate working from home. Some companies may wish to disable employees’ ability to attach documents to emails to preserve trade secrets. To the extent possible, encourage employees to work in an area separated from the remainder of the household which can be locked or otherwise secured. This will ensure telephone conversations are not overheard and documents are not inadvertently viewed, thus protecting trade secrets....

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Paycheck Protection Program: Making Sure You’re Eligible for Forgiveness

Posted by on May 1, 2020 in Newsflash, Uncategorized | 0 comments

In the wake of COVID-19, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which includes a Payroll Protection Program (PPP). The PPP initially granted over $300 billion in loans to small businesses before running out of funding. The PPP was refunded on April 24, 2020, but with the additional funding came additional guidance from the Small Business Administration (SBA), which is tasked with distributing these funds. One attractive characteristic of the PPP loans is that the funds can be forgiven in full, so long as certain conditions are fulfilled. If your business is like a significant number of others affected by COVID-19, you may have already applied for and received, or are awaiting funding of a PPP loan. Regardless of the stage you are in, you should be aware of the conditions that must be fulfilled for the PPP loan to be forgiven and take careful note of what is required. Is my business eligible for a PPP loan? The threshold question for any business which is thinking of applying for, has already applied for, and/or has already received a PPP loan is whether the business is actually eligible for the loan. The SBA issued guidance on April 23, 2020, which clarified the criteria for business recipients of the PPP loans (which guidance appears to apply with equal force to a business which has already received PPP funds and to a business which receives PPP funds in the future). This clarification came after many large businesses received PPP loans, which are intended for small businesses only. All recipients, regardless of when funds were received, should ensure they still fit the criteria for the PPP loan (it should be noted that SBA’s “guidance” is subject to continuing changes and clarifications). When applying for the PPP loan, businesses must certify that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” This certification must be made in good faith. The SBA’s latest guidance, however, has clarified that this certification must be made in good faith and must take into account the company’s current activity and its ability to access other sources of liquidity to support the business which will not be significantly detrimental to the company. Many key terms within the newly-issued guidance are not further defined, creating a great deal of uncertainty for many small businesses which have already obtained (and spent) PPP funds. These additional considerations likely will eliminate public companies and those companies backed by private equity from being eligible. All businesses who are currently applying or have already applied and/or received PPP loans should evaluate whether their certification is still made in good faith, taking these new considerations into account. The SBA is allowing those businesses who may now question their eligibility for the PPP loan to return any and all PPP loan amounts they have received without any penalty. These funds must be returned by May 7, 2020. What can I use the PPP loan for? Once you have confirmed you can make the above certification in good faith and have received your PPP loan, you must ensure you are spending the funds on the appropriate expenses. The expenses that are eligible for forgiveness are: payroll expenses, interest payments on a mortgage, rent payments, and utility...

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New Law Mandates New Workplace Posters

Posted by on Apr 1, 2020 in Newsflash | 0 comments

April 1, 2020 — As you likely know from our previous emails this month, the Families First Coronavirus Relief Act (FFCRA) becomes effective today. This law provides increased sick leave for employees as well as expands the Family and Medical Leave Act. We have written extensively about this new law here. The Department of Labor has created new posters for the workplace relating to the FFCRA. The poster for non-federal employees can be found here. The poster for federal employees can be found here. If your business is still open, the applicable poster(s) must be either posted in the workplace alongside the other state and federally required workplace postings, or, if your workforce is remote during this time, must be emailed to each employee, uploaded to an employee information internal or external website, or uploaded to an employee message board. If your workforce is both remote and onsite, you should post and electronically deliver the applicable poster(s) so that all employees are able to access the information. If your business is currently closed, you may want to email these posters to any employees that are still on payroll. When your business reopens, you should post the posters in the workplace. As always, if you have any questions, do not hesitate to contact us. We are here to assist you as the situation continues to develop. Stay safe, and take care of yourselves and each...

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California Releases “Essential Critical Infrastructure Workers” List

Posted by on Mar 21, 2020 in Newsflash, Uncategorized | 0 comments

March 21, 2020 — As we begin Day 2 of staying at home pursuant to the order issued by Governor Newsom on March 19, 2020, many of our clients are wondering whether they fall into one of the “essential critical infrastructure workers” categories. If so, these businesses may remain open until further notice. If not, businesses which continue to operate and require employees to work at the physical location will be in violation of the order. The Governor’s office released a memorandum last night describing those industries which are “essential” during this time and descriptions of the types of workers who may remain working. This memorandum can be found here. We know there will still be questions about whether your business can remain open and operating for the time being. We remain here and available to provide as much guidance as possible to our clients during this uncertain time. Stay safe, and take care of yourselves and each...

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Employer-Related Provisions of the Families First Coronavirus Response Act

Posted by on Mar 20, 2020 in News and Highlights, Newsflash | 0 comments

March 20, 2020 — THE EMERGENCY FAMILY AND MEDICAL LEAVE EXPANSION ACT Part of the Act makes significant changes to the Family and Medical Leave Act (“FMLA”). Generally speaking, the FMLA applies to employers with 50 or more employees who worked at least 20 weeks during either the current year or preceding year, and covers employees who have worked for an employer for at least 12 months and 1,250 hours within the last 12 months. Based on these guidelines, many smaller businesses are not required to comply with the FMLA. However, the new Public Health Emergency Leave provided under the Act greatly expands the number of employers who must comply with the newly passed law and also greatly expands the number of employees who are eligible for protection. The new law is set to take effect no later than 15 days after enactment (April 2), and will remain in effect until December 31, 2020 (unless otherwise expanded). The new law will cover ALL employers with fewer than 500 employees, which encompasses a huge number of employers who are not subject to FMLA requirements. Likewise, the new law will cover all employees who have been on payroll for at least 30 days, drastically increasing the number of employees eligible for protection and benefits. The new law provides up to 12 weeks of job-protected leave to eligible employees who miss work due to a qualifying need related to a public health emergency (as defined). The first 10 days of the leave may be unpaid, and during this time an employee may utilize accrued PTO, vacation time, or sick leave if the employee chooses to do so (employers may not force employees to use this time). After this initial 10 day period, the employer is required to provide paid leave to the employee for 10 weeks. The paid leave requires that the employer provide paid leave at a rate which is at least two-thirds of the employee’s regular rate of pay and based on the employee’s normally-scheduled work weeks. Such pay is not to exceed $200 per day or $10,000 over the course of the leave. Employees are eligible to use the new leave where such employee is not able to work (either physically at work or remotely) in order to care for the employee’s minor child if the child’s school or caregiver establishment is closed due to an emergency relating to COVID-19 declared by a federal, state, or local authority. To the extent possible, the employee is to provide the employer with as much advance notice as is practicable, but notice will likely be minimal. Because the leave is protected, the employer is required to allow the employee to return to his/her position (or its equivalent) at the conclusion of the leave. For a business with less than 25 employees, an exception may be granted where: (1) that employee’s position no longer exists due to economic conditions or other changes in the employer’s operating conditions resulting from the public health emergency; and (2) despite the employer’s reasonable efforts, an equivalent position is not available. In such circumstances, the employer has an affirmative duty to make reasonable efforts to contact the employee if an equivalent position becomes available for a period of one year. There are indications that the Secretary of Labor...

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