It’s like Groundhog Day of the oh-so-familiar drama that unfolded several years ago between Facebook founder and CEO Mark Zuckerburg and the Winklevoss twins. According to an article by Henry Blodget, like the Winklevoss twins, a young man named Reggie Brown has sued CEO Evan Spiegal, CTO Bobby Murphy, and investors of a popular app called “Snapchat” (which allows users to share photos and videos with friends; these photos and videos disappear within a set period of time). Blodget indicates that the three young men attended Stanford University, where they were fraternity brothers together. An article by Alyson Shontell states that in his lawsuit, Reggie avers that he was also an essential co-founder of the business and the source of Snapchat’s disappearing picture concept, that he assisted in working on Picaboo (an initial version of the program), and that he assisted in selecting Murphy to join the Snapchat team . Blodget states that Brown devoted approximately four months to working on the program before Spiegal and Murphy removed him from management; he also maintains that the three fraternity brothers entered a verbal agreement to each own 1/3 interest in the company. Shontell’s article states that Spiegal and Murphy, while they seem to concede that Brown contributed to the development of the app, assert that Brown was merely an “intern” and that their own skills were crucial to its success; Blogdget’s article states that Spiegal and Murphy deny any sort of agreement to give Brown an interest in the company. Blodgett suspects that since Snapchat has an estimated worth at least approximately $3 billion, Brown could ultimately receive over $100 million for his contributions to the program.
The Snapchat lawsuit is a prime example of why it is imperative that business partners clearly define their relationship with one another in a formal and written manner. No matter the business entity, a legal document such as a partnership agreement or operating agreement not only serves to clarify daily responsibilities for the management of your business, but also (and perhaps even more importantly) documents each person’s exact role and interest in the company. Please contact The McKellar Law Firm for a free consultation regarding how to best document your intentions, or visit our website for more information.
So you have decided to create a Limited Liability Company (LLC) entity to protect your personal assets from the liability of your business… but you don’t like using the name of the LLC to market your business because it’s too general or overly formal. What are your options?
Tennessee allows you to file an “Application for Assumed Limited Liability Company Name” in order to transact business under a different name than your LLC name. See Tenn. Code Ann. Section 48-249-106(d). In order to transact business under an assumed name, you must submit a a filing fee along with an application to the Tennessee Secretary of State that provides the following information:
“(A) The true name of the applicant;
(B) The jurisdiction in which the applicant is formed;
(C) The applicant’s intention to transact business under an assumed name; and
(D) The assumed name that the applicant proposes to use.”
See Tenn. Code Ann. Section 48-249-106(d)(2).
You can find an application for an assumed LLC name on the Tennessee Secretary of State website: http://www.tn.gov/sos/forms/ss-4230.pdf
Each application lasts for five (5) years. To renew your use of a trade name, you will need to refile your application within two months of the five-year deadline and pay the renewal fee. Each renewal lasts for five additional years. See Tenn. Code Ann. Section 48-249-106(d)(3)-(4).
While you may want to use the assumed name to market your business, it would still be wise to use your official LLC name on all bank accounts, contracts, and other important business documents.
In honor of Halloween, this week’s blog post focuses on a celebrity who is the queen of creative and eccentric costumes. Lady Gaga (aka: Stefani Germanotta) is as famous for her musical talents as she is for donning dramatic wigs and meat dresses. Lady Gaga’s former roommate, friend, and personal assistant, Jennifer O’Neill, has been anything but “starstruck” by the singer, who she asserts failed to pay her for overtime. According to an Associated Press article by Larry Neumeister, O’Neill had handled communications and carried multiple bags of luggage for Lady Gaga while serving as her personal assistant, in return receiving a salary that increased from $50,000 per year to $75,000 per year in her two years of working for her. Neumeister continues that O’Neill sued Lady Gaga in a Wage and Hour claim in New York District Court for her refusal to pay O’Neill overtime wages at the beginning of 2009 and for approximately one year in 2010-early 2011. Neumeister states that O’Neill averred that Lady Gaga required her to be “on-call” at all times- O’Neill alleges that Lady Gaga refused to even purchase her a hotel room during tours, instead requiring her to share a bed with the singer. When deposed, Lady Gaga stated: “You don’t get a schedule… this is when I need you, you’re available.” Obviously, while Lady Gaga is fully comfortable telling others “stop telephonin’ me, I’m kinda busy”, she expects her assistants to answer her calls right away…
The matter was to proceed to trial on November 4th; however, the parties recently reached a confidential settlement.
Infosys, an Indian software company, has finally settled civil charges in Texas of “systemic visa fraud and abuse” dating back to 2008 for a hefty and unprecedented $34 million price tag. According to New York Times writer Julia Preston, whistle-blower Jack Palmer voiced his suspicions of the visa fraud in 2011 in a lawsuit in Alabama (which was later dismissed), having personally observed and shared concerns regarding Indian temporary workers being hired and brought into the country on visas and paid lower wages than U.S. workers would have been. Preston’s article states that these workers allegedly came into the country using dishonest reasons for their entry- for example, asserting that they were business visitors who would not be employed in America in order to get here more quickly than those who applied to be employed on H-1B visas (which are highly competitive and subject to a quota). The alleged actions of Infosys in misrepresenting facts and failing to keep accurate hiring records made it impossible for qualified U.S. workers to obtain employment there. Perhaps most troubling of all, an article by CBS asserts that Infosys allegedly assisted the Indian workers with perpetuating dishonesty on immigration officials by advising and instructing them on what to say. CBS states that Mr. Palmer explained that Infosys’ reason for bringing over Indian workers in this fashion was “purely profit.” However, according to Preston’s article, Infosys asserts that the allegations are false and that any actions undertaken were done “for legitimate business purposes.” Pursuant to federal false claims law, $5 million of Infosys’ settlement payment may ultimately be paid to Jay Palmer.
While Infosys’ situation is obviously an extreme example, it is crucial that business owners be aware of and comply with frequently-changing immigration laws. If you do not believe a qualified U.S. worker is available to fill a position at your company and want to use a qualified worker from another country, you would be well-advised to consult with an immigration attorney regarding your objectives, visa options, and the immigration process. While it is true that the process can be time-intensive and expensive when done right, the costs (financial and otherwise) can be devastating when done wrong. Please contact The McKellar Law Firm for a free consultation regarding your business’ compliance with the law.
No bones about it: with Halloween on the horizon, many pet owners have been eagerly planning their canine’s costume. Some of us may have even gone so far as to dress our dog as “Max” from “How the Grinch Stole Christmas” for our Christmas cards. No matter the occasion, there is one costume that your pet should not ever wear: the backpack or vest of a service animal.
According to an article written by Associated Press journalist Sue Manning, business owners (in particular, those in restaurants and retail) have experienced an increase of people bringing untrained dogs adorned in service vests and/or backpacks into their business, falsely claiming that they are “service dogs.” Such misrepresentation constitutes a federal crime pursuant to the Americans with Disabilities Act (“ADA”), and 25% of states have established additional laws to further penalize such conduct. However, Manning avers that it is extremely challenging for business owners to detect service animal misrepresentation under the current law, which only allows business owners to ask those entering their business with a service animal: (1) “Is this a service animal?”and (2) “What is it trained to do for you?” No documentation or license exists to indicate that an animal is trained and qualified for service. Business owners are prohibited by the ADA from barring persons with service animals from entering their businesses. Manning’s article shows that unfortunately, those who choose to misrepresent their dogs as service animals are causing problems for these businesses when their dogs urinate, bark, scratch, or behave aggressively toward people and even actual service dogs. Although it is fairly easy to distinguish a real service dog from a fake service dog just based on behavior alone, Manning states that business owners who fear violating the ADA have no real method by which to prove that the dog is a fake service animal.
One suggested remedy has been to issue service animals a photo identification that can be verified by business owners; however, individuals with disabilities have expressed legitimate concerns regarding their privacy. Corey Hudson, chief executive officer of Canine Companions for Independence in San Rafael and president of Assistance Dogs International, started writing to the U.S. Department of Justice approximately a year and a half ago requesting open discussion on potential remedies to the problem. Others fear that opening these talks with the Department may have an adverse effect on the rights of the disabled that are currently in place.
Clearly, there is no easy solution. Business owners should not be left to suffer the damages of untrained dogs who are not entitled to be on the business premises, and disabled persons should be able to access businesses with their trained service animals without compromising their privacy or safety.
According to a recent article in the Associated Press by Erik Schelzig, Tennessee supermarkets and convenience stores are presently only allowed to sell beer that is a maximum of 5% alcohol by weight (or 6.5% alcohol by volume). Only liquor stores can sell alcoholic beverages that contain a higher alcohol content than this percentage.
Mr. Schelzig asserts that State Representative Matthew Hill, the chair of the House Local Government Committee, previously voted against the bill but recently asserted that he is “willing to reconsider” and will reverse his vote as long as concerns regarding the bill can be addressed. Public opinion polls show that many people are in favor of the bill.
Schelzig continues that liquor store owners have opposed the bill due to concerns of a potential decrease in business and the possibility of providing minors with increased access to high-proof alcohol. As of today, liquor stores are only permitted to sell liquor and lottery tickets. Some amendments have been proposed to the Senate version of the bill attempting to reconcile these issues, such as requiring supermarkets to adhere to a curfew for selling wine, permitting liquor stores to remain open on holidays and Sundays and, even if the supermarket wine sales aren’t approved, granting liquor stores the ability to sell items such as beer, ice, and snacks. According to Hill, liquor stores are warming up to the idea of supermarkets selling wine and “realize that this is not a matter of if, but when.”
Schelzig advises that should the bill pass, Tennesseans should be on the lookout for wine sales in their local supermarkets sometime in 2014.
In summer 2012, after watching over seven hours of bar prep lecture, while stressed and exhausted, I backed my car up… right into a metal pole. The metal pole was entirely unaffected; the rear bumper of my car, however, was a different story. Accidents happen (thank goodness for auto insurance!) but thankfully, no one was injured and nothing was damaged (well… except for my car).
An article by Peter Whoriskey of The Washington Post states that former president George W. Bush (apparently understanding that people have a tendency to back their cars into objects/other cars/people) signed a bill in 2008 aiming to avoid these dangerous issues by mandating greater federal regulations that would increase rear visibility (NOTE: the Transportation Department interprets this law to mean that back-up cameras must be installed in all new cars sold in America). Whoriskey asserts that the Transportation Department avers that back-up cameras, which would run an additional fifty to one hundred dollars on each automobile, “would save about 100 lives per year, many of them children, and prevent 7,000 injuries.”
Safety groups are in the process of filing a lawsuit requiring the federal government to enforce the bill since Bush’s law still has yet to be implemented. However, automobile manufacturers aver that the decision as to whether to install (and pay money for) additional features such as back-up cameras should rest solely with the consumer.
While the federal government may have the ability to control safety features on automobiles in this manner as part of its interstate commerce power, a question arises as to whether the decision should be left to the consumer and the consumer alone. Although the legislation is clearly well-intentioned, if rearview cameras become mandatory, my fear is that it will result in a slippery slope whereby the federal government could require new and innovative automobile safety features to also become mandatory. Will sunroofs or retractable covers be phased out in order to protect people from sun exposure that could potentially lead to deadly skin cancer? Will GPS navigation systems be required to protect the directionally-challenged by preventing them from having to MapQuest directions on their cell phones or resort to GPS iPhone apps while driving? How is it fair to automobile manufacturers to require them to find a means to mass-produce and install rearview cameras (and possibly, eventually, other safety features)? Some choices should, as the auto manufacturers have stated, rest with the consumer. If the additional safety a feature provides proves worthwhile, consumers will be willing to pay for it.
The 2012 JOBS (“Jumpstart Our Business Startups”) Act has provided a useful option for new businesses—the opportunity to publicly request a maximum of one million dollars annually (as long as they do so from individuals having over $200,000 per year in income or $1 million net worth) in equity investments without being required to register any shares for public trading. According to an article by Jenna Wortham of The New York Times that was published in The Boston Globe, this new law encompasses “emerging growth” companies. Wortham’s article states that formerly, young businesses had to resort to private investors in order to obtain capital; the policy underlying this requirement was to protect the public from underhanded business owners who had the potential to commit fraud and take advantage. Wortham avers that entrepreneurs hope that the change in the law will enable them to access other outlets for funding and enable the public to have a say in what projects they deem worthwhile. Eventually, Wortham states that the requirements for accredited investors may be even lessened to open up even more avenues for potential revenue sources.
However, feelings regarding the new legislation aren’t exactly all sunshine and roses—Wortham writes that businesses will be expected to show audited financial records if they receive over $500,000 via public investor funds. She also states that investors may be disappointed in how slowly entrepreneurs begin working toward business endeavors and that investors will probably anticipate certain results—Wortham maintains that Kickstarter and other fundraising websites differ from businesses affected by the new law since these sites solicit donations rather than investments. Also, Wortham alleges that some individuals fear that investors may be tricked into supporting companies that are not likely to succeed. However, Wortham asserts that there are methods by which investors can ensure they are dealing with trustworthy entrepreneurs—for instance, by running background checks, as the business ForeFund Capital intends to do.
Tennessee businesses seeking public investors should carefully document all transactions and be aware of investor expectations. Also, Tennessee investors should ask questions and evaluate the individual businesses as well as the entrepreneurs making the request for funding to ensure as much as they possibly can that the cause is worthwhile and the entrepreneurs are honest, diligent, and capable enough to follow through with their proposals.
Grocery baggers, beware: if that plastic bag breaks, you or your employer could very well find yourselves facing a lawsuit. And grocery shoppers, beware: if that plastic bag breaks and a heavy can falls on your foot, you may find yourself cut by metal that causes an infection that spreads throughout your entire body and eventually kills you. Paranoid yet?
Well, you should be. The Associated Press published an article this week stating that an angry Nebraska customer instituted a lawsuit in the U.S. District Court on Omaha against Wal-Mart. The reason? He blames his wife’s untimely demise on a broken grocery bag.
According to the article, the customer claims that his wife shopped at Wal-Mart in April 2010 and the grocery bagger gave her one bag containing one two-pound bag of rice and two 42-ounce cans of La Choy. On the way to her vehicle, the bag ripped. A can of La Choy fell on the customer’s wife’s foot, which resulted in her big toe becoming both fractured and split open. The customer’s wife subsequently suffered from an infection; she was treated with antibiotics, two surgeries, and hospitalizations, but the infection ultimately spread and claimed her life approximately one year later.
According to UPI.com, the lawsuit names as defendants the following entities: the manufacturer of the bags, Hilex Poly Co. of Spartanburg, South Carolina; the distributor of the bags, Bunzle Distribution of St. Louis, Missouri; and, of course, Wal-Mart, Inc. for neglecting to properly instruct its employees to double-bag heavy items or place fewer contents in each bag. The lawsuit seeks compensation for the man’s loss of consortium in addition to the woman’s pain and suffering, funeral and burial expenses, and $656,000 in medical expenses.
In order to prevail on the theory that the bag was defective, the Nebraska man will have to prove two elements. First, he must prove that the product suffers from either a defect in design or manufacturing. Second, he must prove that the defect existed at the time when it left the defendant’s control. In order to prevail on the theory that Wal-Mart was negligent in training its employees, the man must prove: (1) that Wal-Mart had a duty of care to train its employees in regard to proper bagging technique; (2) that Wal-Mart breached, or in other words, failed in, this duty by failing to properly train its employees; (3) that this breach was the proximate cause of the woman’s death; and (4) what the exact damages were.
In the unfortunate event that your business is facing a lawsuit, please contact The McKellar Law Firm for a free consultation.
To be blunt, it’s a novel idea. According to The Puget Sound Business Journal and author Valerie Bauman, the joint efforts of a young Washington state attorney, Hilary Bricken, her law firm (Harris & Moore), and her clients has enabled clients to begin and grow their recreational marijuana businesses. Washington state legalized recreational marijuana use via Initiative 502 approximately one year ago, two years after approving medical marijuana dispensaries. Ms. Bauman states that Harris & Moore, which refers to its marijuana practice as “Canna Law Group”, has advertised via their blog and at symposiums and events, and that the firm is exploring options of expanding to other states in which marijuana is legal. According to Ms. Bauman, Ms. Bricken’s legal responsibilities include assisting businesses with matters including: complying with the legal requirements contained in I-502, trademarks and copyrights, zoning, insurance, taxes, investment strategy, and shareholder agreements. Ms. Bauman references other law firms in addition to Harris & Moore that are involved in this new market- various business attorneys and criminal attorneys in the area have also started marketing to marijuana entrepreneurs by combining their respective areas of expertise.
Just as a reminder: marijuana use and distribution REMAINS ILLEGAL in the state of Tennessee and could subject you to a variety of criminal penalties… so aspiring entrepreneurs in Tennessee will have to find other outlets for business opportunities. However, entrepreneurs can learn several things from how Harris & Moore and other law firms have taken advantage of the legalization of marijuana in their state. First of all, don’t be afraid to be creative in both developing and marketing your business! Consider the unique needs of potential clients and customers that are perhaps not adequately being met by other businesses. Harris & Moore was one of the first Washington firms to become aware that the passing of new legislation could enable their attorneys to assist a new market of clients; the firm developed expertise in a unique niche area, and it has paid off well. Also, Harris & Moore have used a variety of outlets to market to its specific clients- the firm’s attorneys take the time to attend events because they know it will increase the new practice area’s visibility. Secondly, never discount the importance of an attorney when setting up your new business. An attorney can assist you with navigating the legalese contained in legal statutes and regulations and making sure your business remains within the confines of the law. An attorney can also help you prepare contracts, shareholder agreements, and other legal documents that will protect your business from future liability. Third and finally, consider joining forces with other business owners and a business coach- you can support and assist one another like the criminal and business attorneys in Washington state have done, combining your knowledge, ideas, and past experience to better serve the needs of your clients and customers.