It is natural for businesses to seek referrals and positive feedback from customers and clients. Even when mistakes are made and customers or clients are unhappy as a result, negative reviews can deter future customers and reflect badly upon a business. However, the manner in which businesses respond to negative reviews and feedback is important- in fact, if handled badly, it could lead to costly litigation and affect your company’s reputation on a much larger scale.
Business Insider’s Hayley Peterson reports that online retailer KlearGear.com is being sued for approximately $75,000 by former customers John and Jen Palmer after allegedly charging them $3,500 for publishing a less-than-complimentary review. According to the Palmers, they posted a review regarding KlearGear.com on RipoffReport.com after they did not promptly receive a desk toy and keychain they had ordered from KlearGear.com, experienced difficulties getting in contact with company reps by phone, and were finally informed by a KlearGear rep that they had not actually purchased the items. Kleargear.com contacted the Palmers via email over three years subsequent to this incident and stated that a $3,500 fine would be imposed should their negative review remain on RipoffReport.com for an additional 72 hours pursuant to KlearGear’s ”non-disparagement clause that prohibits customers from ‘taking any action that negatively impacts’ the company.” KlearGear.com also informed the Palmers that they would have 30 days within which to pay the fine, and in the event that they failed to promptly pay, a third party collection firm would take over the matter and report to credit reporting agencies. The Palmers also found out that the fee to remove a review from RipoffReport.com would cost $2,000.00. The Palmers declined to pay the $3,500 fine within the required timeframe, and KlearGear.com allegedly reported this to credit agencies, which adversely affected the Palmers’ credit score. The issues raised in the Palmers’ lawsuit include violations of the Fair Credit Reporting Act, defamation, and emotional distress; the Palmers aver that they have been unable to obtain credit and have experienced difficulty obtaining loans as a result of the incident.
Regardless of whether KlearGear.com had the legal right to apply a non-disparagement clause and fine in its particular situation, the question becomes: is it really worth all the business has faced as a result? In most circumstances, it’s not. Businesses shouldn’t take negative customer or client remarks personally or go to extreme measures to deter them; it is better to learn from each experience, improve over time, and respond to customer concerns with respect rather than act in a manner that is much more likely to jeopardize future business.
For a free consultation regarding your small business issues, please contact The McKellar Law Firm.
Kinda cute, or downright creepy? That is the question surrounding a new industry called “snuggling/cuddling,” as described in a story by the Associated Press. The AP reports that businesses have opened in Madison, WI, San Francisco, CA, Boulder, CO, and Rochester, NY that offer cuddling services with “Snuggle Stars”… for a price. The AP further reports that some individuals have actually received training to become “professional snugglers” and “group snuggle session” leaders. The cuddlers maintain that their services fulfill a need for intimacy.
According to the AP, lawmakers and district attorneys have questioned the legitimacy of the cuddling enterprise, particularly in the case of the Wisconsin business, “Snuggle House.” The AP states that an assistant city attorney remarked that the owner of Snuggle House originally lacked training protocols, a business plan, and business insurance; however, the business owner has since reportedly established rules, sought to perform background checks, and installed “panic buttons” and surveillance cameras. The AP continues that the assistant city attorney fears that the the cuddling business could ultimately lead to prostitution or sexual assault; accordingly, she is in the process of drafting ordinances to require licenses and health inspections for these businesses. The AP states that police may also visit Snuggle House undercover to ensure that no inappropriate activity is taking place.
Business owners can gain some legal insights from the experiences of entrepreneurs in the professional cuddling business. For one, the laws are always changing to address new potential issues, and it is important for owners to ensure that their businesses are in compliance with state and federal rules and regulations required of their particular area. Secondly, business owners who conduct a business that could potentially incur liability can better protect themselves by considering forming a business entity that is separate and distinct from themselves (such as a limited liability company or corporation). Third, even with the appropriate business entity, maintaining sufficient insurance and running a business in a reasonably prudent fashion are still essential to ensuring and maximizing liability protection.
For a free consultation regarding business entities in Tennessee, please contact The McKellar Law Firm. For free additional information on business entities in Tennessee, please visit our website. For free hugs/cuddling services, please look elsewhere.
It has been a busy and drama-filled few weeks for Apple and its new monitor, Michael Bromwich of Goodwin Procter law firm, who was appointed via an order by Judge Denise Cote, U.S. District Judge of the Southern District of New York to ensure that Apple was following an e-book antitrust decree. An article by CNNMoney’s Roger Parloff asserts that the dispute between Apple and Bromwich may ultimately indicate exactly how far a court can delve into the details of a company’s business.
Parloff states that Judge Cote had previously found Apple liable for violating Section 1 of the Sherman Act (for an “illegal restraint of trade”) by being a part of ”a pre-existing horizontal price-fixing conspiracy” along with several well-known book publishers, supposedly to encourage Amazon to increase its e-book prices for retailers via the agency pricing model and standardized contracts. Parloff continues that Judge Cote issued an injunction prohibiting Apple from its antitrust conduct and appointed an antitrust monitor (which Apple said was uncalled for in light of the publishers’ and Apple’s compliance for several years). According to Parloff, Apple’s appeal of the ruling to the U.S. Court of Appeals for the Second Circuit is pending.
Parloff states that on November 27th, Apple submitted a document to the Court averring that Bromwich’s attorney fees are excessive ($1,100/hour), that he is engaging in work that is unnecessary and non-productive (such as meeting with all of the Apple executive Board and team- even those who are irrelevant to the present litigation), that he may be engaging in ex-parte communications with the Judge (and is permitted to do so via a November 21st order which also permits public filing of various Apple documents under certain conditions)), and that he is behaving in a quasi-prosecutorial fashion toward Apple. Parloff continues that arguments have ensued via email and in letters between Bromwich and various attorneys representing Apple regarding the reasonableness of Bromwich’s demands and whether he is exceeding the scope of his court-appointed role. Parloff continues that in its court filings from November 27th, Apple states: “The injunction… vests the monitor with wide-ranging, intrusive, and excessive inquisitorial powers of a sort reserved to prosecutors.” Parloff informs that Judge Cote issued an order on December 2nd stating that she had not and would not seek ex-parte communications with the Bromwich in his role as monitor for Apple and that Apple should address its other arguments with the state attorneys general and Justice Department prior to approaching her.
Small business owners seeking health insurance for their employees will have no choice but to purchase it directly from insurance brokers, agents, or companies unless their state elects to form its own state-wide online small business marketplace. An article by Carla K. Johnson from CIO Today avers that the Obama administration recently postponed the start date of its federal SHOP online marketplace for health insurance website until November 2014, and that the delay has presented a inconvenience and annoyance for small business owners. Johnson informs readers that the government SHOP website is intended to maintain low insurance premiums and make comparing and accessing information regarding health insurance options more convenient for small business owners. She states that the HealthCare.gov website has reportedly experienced a variety of difficulties and delays recently.
According to an ObamaCare website, beginning in 2015, business owners who have at least fifty (50) full-time equivalent employees will be required to offer affordable health insurance coverage to their employees; if business owners fail to do so, they will be required to pay penalty fines on a per-employee basis. Please visit this link for helpful information and a flowchart regarding whether your business will be subject to insurance coverage requirements or could potentially face penalty fines: http://obamacarefacts.com/obamacare-employer-mandate.php
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.