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When entering into a new venture, it is not uncommon for a new legal entity to be formed in order to insulate an existing company from the liabilities associated with the new business. While the law absolutely permits this, a recent case in the Bankruptcy Court, In Re Cameron Construction & Roofing, is a good reminder that achieving true insulation requires more than simply filing another set of Articles of Incorporation.In 2000, Cameron Construction & Roofing, Inc. (“Inc.”) was formed by Wilfred Cameron, who was the corporation’s President, Treasurer, Clerk and sole Director. Two years later, Mr. Cameron formed Cameron Construction LLC (“LLC”), and he was named its Managing Member. Further, Mr. Cameron owned 99.9% of the equity in LLC, with the remaining 0.1% being held by Inc.By 2014, Inc. had become insolvent, and it filed a Chapter 7 Bankruptcy Petition. A Trustee was appointed to marshal and distribute Inc.’s assets, and LLC was joined as a defendant in the bankruptcy proceeding. Specifically, the Trustee sought to have the Court rule that assets of LLC could be used to satisfy the debts of Inc. LLC objected to this, arguing, that it was undisputed that the two … Keep reading

While companies, like people, are entitled to protect privileged communications with their counsel, companies only can act through individuals. So what happens when the former CEO wants to disclose a privileged communication he had with his company’s corporate counsel? As SEC v. Present highlights, if the company does not want that communication disclosed, the former CEO may be barred from making such a disclosure.… Keep reading

On November 22, the U.S. District Court for the Eastern District of Texas granted the request of 21 states to temporarily halt the effective date the U.S. Department of Labor’s Final Rule (“Final Rule”) raising the salary threshold to qualify for the white collar exemptions from minimum wage and overtime requirements from taking effect. Accordingly, the Final Rule will not take effect on December 1, 2016.… Keep reading

It’s human nature to engage in an emotional exhale after reaching an agreement in principle to settle a long-standing or hard-fought dispute. While doing so is all well and good, it is critical that you don’t let that deter you from exercising extreme focus on documenting that settlement in a carefully crafted agreement. Indeed, as the plaintiff in Zvi Construction v. Levy found out a few weeks ago, failing to do so can leave your client in a position where it is unable to obtain the fruits that it rightfully deserves.… Keep reading

So your company is considering getting into a new area of business, and to do so, it will have to hire a variety of talent. While the launch of the new venture is not a certainty, the prospects of it are enticing, and time is of the essence. Thus, when talking to potential new hires, you want to focus on the positives and the possibilities. As a recent decision from the federal District Court, Bhammer v. Loomis Sayles and Company, Inc., makes clear, however, failing to disclose factors that may affect the viability of the new opportunity can be fraught with peril.… Keep reading

In an ideal world, any modification of a contract would be in writing, signed by the parties, notarized and witnessed by an independent third party. In the real world, not only are contracts modified, or terms waived, without all of those formalities; but it is not at all unusual for business people to modify agreements orally with little more than a handshake.  Nevertheless, the enforceability of a specific oral modification or waiver can be as unpredictable as the New England weather.… Keep reading

We have all heard stories about the dangers of social media, whether it be an inappropriate tweet, a regrettable Facebook posting or a misdirected “sexting.” The decision issued by the Massachusetts Land Court in St. John’s Holdings, LLC v. Two Electronics, LLC  adds another peril to that list. It held that a text message sufficient to satisfy the signature requirement under the Statute of Frauds. … Keep reading

In Exercising Contractual Rights Can Be Risky If It Is for an Ulterior Purpose, I discussed how a business can subject itself to multiple damages and attorneys’ fees under Mass. General Laws, Chapter 93A if it attempts to enforce its contractual rights maliciously. In a recent, parallel decision, Robert and Ardis James Foundation v. Meyers, the Supreme Judicial Court held that a party can be liable for contract damages – even if it does not breach the terms of the agreement – if it acts in bad faith and deals unfairly towards its business partner.  … Keep reading

trade secrets

whistle blower trade secretsThe new Defend Trade Secrets Act (“DTSA”) allows owners of trade secrets to now bring a civil action in federal court to protect their trade secrets and confidential information. Further, under the DTSA, a trade secret owner may be awarded actual damages, injunctive relief, restitution, the extraordinary relief of ex parte seizure orders and, if there is willful or malicious misappropriation, exemplary damages (up to double damages) and attorneys’ fees. Although the DTSA is a big win for employers seeking to protect their trade secrets and confidential information, employers may be precluded from being awarded exemplary damages and attorneys’ fees if the employee’s confidentiality agreement does not contain an express exception for disclosures related to whistleblowing.… Keep reading